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As filed Pursuant to Rule 424(b)(1)
Registration No. 333-64199
PROSPECTUS
US$883,900,000
[LOGO]
(ACN 000 049 472)
IN ITS CAPACITY AS ISSUER TRUSTEE OF THE
SERIES 1999-1G WST TRUST
US$883,900,000 CLASS A MORTGAGE BACKED FLOATING RATE NOTES DUE MAY 19, 2030
Interest on the Class A Mortgage Backed Floating Rate Notes (the "Class A
Notes") offered hereby and issued by Westpac Securities Administration Limited
solely in its capacity as issuer trustee of the Series 1999-1G WST Trust (the
"Trust") (the "Issuer Trustee") will be payable quarterly on the 19th day of
each of February, May, August and November (or if such 19th day is not a
Business Day (as defined herein), the next succeeding Business Day), commencing
August 19, 1999 (each, a "Payment Date"). The principal of the Class A Notes
will be payable on the maturity date indicated above, subject to earlier
redemption in whole or in part as described herein. Only the Class A Notes are
offered hereby.
The Issuer Trustee will also issue Class B Mortgage Backed Floating Rate
Notes (the "Class B Notes") with an aggregate face value of A$33,750,000 at the
same time as it issues the Class A Notes. The Class A Notes will be senior in
priority of distribution of principal and interest to the Class B Notes. Under
certain limited circumstances, the Issuer Trustee may issue certain additional
securities, the RFSs, which in certain circumstances will convert to RFS Class A
Notes. The RFSs will be senior in priority of distributions of principal to the
Class A Notes and the RFS Class A Notes (except with respect to enforcement, in
which case such classes will be PARI PASSU) and senior in priority of
distributions of principal and interest to the Class B 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 and senior in priority of distributions of
principal and interest to the Class B Notes. The Class B Notes, RFSs and RFS
Class A Notes are not offered hereby. See "SUMMARY OF TERMS--Class B Notes" and
"--Redraws, RFSs and RFS Class A Notes."
(CONTINUED ON NEXT PAGE)
------------------------------
PROSPECTIVE INVESTORS IN THE NOTES SHOULD REVIEW THE INFORMATION SET FORTH
UNDER "RISK FACTORS" BEGINNING ON PAGE 34 HEREIN.
THE CLASS A NOTES REPRESENT OBLIGATIONS OF THE ISSUER TRUSTEE IN ITS CAPACITY AS
TRUSTEE OF THE TRUST 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 CLASS A 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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Proceeds to Issuer
Price to Public Underwriting Fees Trustee(1)
<S> <C> <C> <C>
Class A Notes............................................ 100% (2) 100%
</TABLE>
(1) Expenses, estimated to be US$900,561.20, will be paid by Westpac Banking
Corporation.
(2) Westpac Banking Corporation will pay fees to the Underwriters equal to 0.15%
of the Initial Invested Amount of the Class A Notes.
(3) The total underwriting fees paid to the Underwriters are equal to
$1,325,850.
Application has been made to the London Stock Exchange Limited (the "London
Stock Exchange") for the Class A Notes to be admitted to the Official List.
Copies of this Prospectus (which includes Appendices I and II), which comprise
Listing Particulars with regard to the Issuer Trustee and the Class A Notes in
accordance with the listing rules made under Part IV of the Financial Services
Act of 1986, have been delivered to the Registrar of Companies in England and
Wales for registration in accordance with Section 149 of that Act.
The Class A 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 Class A Notes will be made in book-entry form through the
facilities of The Depository Trust Company ("DTC"), Cedelbank ("Cedelbank") and
Morgan Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear") on or about May 13, 1999 against payment
therefore in immediately available funds.
J.P. MORGAN & CO. MORGAN STANLEY DEAN WITTER
WESTPAC BANKING CORPORATION
J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated and Westpac
Banking Corporation are acting as joint lead managers and joint bookrunners in
connection with the activities relating to this offering
DEUTSCHE BANK SECURITIES
WARBURG DILLON READ
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NOMURA INTERNATIONAL PLC
The date of this Prospectus is May 7, 1999.
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(CONTINUED FROM THE COVER PAGE)
The Class A Notes will be collateralized by a pool of variable and fixed
rate residential housing loans secured by Mortgaged Properties (as defined
herein) located in Australia (the "Housing Loans") which are repayable in
Australian dollars, rights under certain insurance policies with respect to the
Housing Loans, amounts on deposit in certain accounts, amounts invested in
Authorized Investments (as defined herein) and the Issuer Trustee's rights under
the Transaction Documents (as defined herein) (collectively, the "Trust
Assets"). 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 its business. The Housing Loans will
be sold either by Westpac or the Seller Trustee (as defined herein) to the
Issuer Trustee. The Class A Notes and the Transaction Documents (other than
certain of the Swap Agreements) are governed by, and shall be construed in
accordance with, the laws of New South Wales, Australia.
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 will be formed on or about May 6,
1999 pursuant to the Notice of Creation of Trust (as defined herein) executed by
the Issuer Trustee and Westpac Securitisation Management Pty Limited (the "Trust
Manager"). The Issuer Trustee will issue the Class A Notes in its capacity as
trustee of the Trust.
The Class A 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 Class A Notes. The Class
A 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 (the "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 (as defined herein), 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 CLASS A
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,"
"--Form of the Class B Notes," "--Interest Payable on the Class B Notes" and
"--Subordination of the Class B Notes; Priority of Payment of Principal to
RFSs." The Class B Notes, RFSs and the RFS Class A Notes are not being offered
hereby.
The Class A Notes may not, in connection with their initial distribution, be
offered or sold, directly or indirectly, in the Commonwealth of Australia, its
territories or possessions or to any resident of Australia.
The Class A Notes should not be acquired by any associate (as defined in
Section 128F of the Income Tax Assessment Act of 1936 of Australia) of the
Issuer Trustee (which for these purposes, is Westpac and its associates).
The Issuer Trustee's liability to make payments in respect of the Class A
Notes is limited to its right of indemnity from the assets of the Trust which
are from time to time available for this purpose pursuant to the Master Trust
Deed, the Series Notice and the Security Trust Deed. All claims against the
Issuer Trustee
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in relation to the Class A Notes may only be satisfied out of the assets of the
Trust, and are limited in recourse to the assets of the Trust.
Each Noteholder is required to accept any distribution of moneys under the
Security Trust Deed in full and final satisfaction of all moneys owing to it,
and any debt represented by any shortfall that exists after any such final
distribution is extinguished. The Issuer Trustee shall not be liable to satisfy
any obligations or liabilities in relation to the Class A Notes from its
personal assets except arising from (and to the extent of) any fraud, negligence
or breach of trust on the part of the Issuer Trustee.
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 Class A 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.
THE CLASS A NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER
OF INSURANCE OF THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF
INSURANCE RULED UPON THE ACCURACY OR THE ADEQUACY OF THIS PROSPECTUS.
ANNOUNCEMENT
By distributing or arranging for the distribution of this Prospectus to the
Underwriters and the persons to whom this Prospectus is distributed, the Issuer
Trustee announces to the Underwriters and each such person that: (1) the Class A
Notes will be issued in the form of one or more Book-Entry Notes issued to and
lodged with Cede & Co. as nominee of DTC; (2) in connection with the issue, DTC
will confer rights in relation to the Class A Notes and Noteholders and will
record the existence of those rights; and (3) as a result of the issue of the
Class A Notes in this manner, such rights will be able to be created.
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes (as defined herein) are issued, periodic
and annual unaudited reports containing information concerning the Trust and the
Class A 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 Class A Notes pursuant to the Note Trust Deed. See DESCRIPTION OF THE CLASS
A 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. DTC and its participants will make such
reports available to holders of interests in the Class A 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 Class
A Notes are in book-entry form. Upon the issuance of fully registered,
certificated Class A 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 June 2000.
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DISCLAIMERS WITH RESPECT TO SALES TO NON-U.S. INVESTORS
This section applies only to the offer to subscribe for, or purchase, the
Class A Notes in any country outside the United States of America. The Issuer
Trustee's responsibility for, and liability in respect of, this Prospectus is
limited accordingly.
This Prospectus does not constitute an offer of, or an invitation by or on
behalf of, the Issuer Trustee or the Underwriters or any of them, to subscribe
for or purchase any of the Class A Notes.
No action has been or will be taken by the Issuer Trustee or the
Underwriters that would permit a public offer of the Class A Notes in any
country or jurisdiction (other than in the United States of America) where
action for that purpose is required. Accordingly, the Class A Notes may not be
offered or sold, directly or indirectly, and neither this Prospectus nor any
offering circular, prospectus, form of application, advertisement or other
offering material may be issued or distributed or published in any country or
jurisdiction, except in circumstances that will result in compliance with all
applicable laws and regulations and the Underwriters have represented that all
offers and sales by them have been and will be made on such terms. Persons into
whose possession this document comes are required by the Issuer Trustee and the
Underwriters to inform themselves about and to observe any such restrictions.
For a description of certain further restrictions on offers and sales of Class A
Notes, see "UNDERWRITING."
The Issuer Trustee accepts responsibility for the information contained in
this Prospectus (which includes the Appendices). To the best of the knowledge
and belief of the Issuer Trustee (which has taken all reasonable care to ensure
that such is the case), the information contained in this Prospectus (which
includes the Appendices) is in accordance with the facts and does not omit
anything likely to affect the import of such information.
The Currency Swap Providers (as defined herein) accept responsibility for
the information contained in "CURRENCY SWAP PROVIDERS" and "DESCRIPTION OF THE
SWAP AGREEMENTS-- Description of Currency Swaps". To the best of the knowledge
and belief of the Currency Swap Providers (which have taken all reasonable care
to ensure that such is the case), such information is in accordance with the
facts and does not omit anything likely to affect the import of such
information. The Currency Swap Providers do not accept responsibility for any
other information contained in this Prospectus. Save for the above information,
the Currency Swap Providers have not separately verified the information
contained herein. No representation, warranty or undertaking, express or
implied, is made and no responsibility or liability is accepted by the Currency
Swap Providers as to the accuracy or completeness of any of the information in
this Prospectus (other than the information described above) or any other
information supplied in connection with the Class A Notes or their distribution.
None of the Seller Trustee, the Servicer, Trust Manager, Westpac, the
Security Trustee, the Note Trustee, any Mortgage Insurer or the Underwriters
accepts any responsibility for any information contained in this Prospectus and
none of them has separately verified the information contained herein. No
representation, warranty or undertaking, express or implied, is made and no
responsibility or liability is accepted by the Seller Trustee, the Servicer, the
Trust Manager, Westpac, the Security Trustee, the Note Trustee, any Mortgage
Insurer or the Underwriters as to the accuracy or completeness of any
information contained in this Prospectus or any other information supplied in
connection with the Class A Notes or their distribution. Each person receiving
this Prospectus acknowledges that such person has not relied on the Seller
Trustee, the Servicer, the Trust Manager, Westpac, the Security Trustee, the
Note Trustee, any Mortgage Insurer or the Underwriters nor on any person
affiliated with any of them in connection with its investigation of the accuracy
of such information or its investment decisions.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the issue or sale of the Class A Notes and, if given or made, such information
or representation must not be relied upon as having been authorized by the
Issuer Trustee or any of the Underwriters. Neither the delivery of this
Prospectus nor any sale made in connection
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herewith shall, under any circumstances, create any implication that there has
been no material change in the affairs of the Issuer Trustee or any other party
named in the Prospectus since the date hereof or the date upon which this
document has been most recently amended or supplemented or that there has been
no material adverse change in the financial position of the Issuer Trustee or
any other party named in the Prospectus since the date hereof or the date upon
which this document has been most recently amended or supplemented or that any
other information supplied in connection with the Class A Notes is correct as of
any time subsequent to the date on which it is supplied or, if different, the
date indicated in the document containing the same. The Underwriters expressly
do not undertake to review the financial condition or affairs of the Issuer
Trustee or any other party named in the Prospectus during the life of the Class
A Notes.
Neither this Prospectus nor any other information supplied in connection
with the Class A Notes is intended to provide the basis of any credit or other
evaluation and should not be considered as a recommendation by the Issuer
Trustee, the Note Trustee, the Currency Swap Providers or any of the
Underwriters that any recipient of this Prospectus, or any other information
supplied in connection with the Class A Notes, should purchase any of the Class
A Notes. Each investor contemplating purchasing any of the Class A Notes should
make its own independent investigation of the financial condition and affairs,
and its own appraisal of the creditworthiness of the Issuer Trustee and each
investor should seek its own tax, accounting and legal advice as to the
consequences of investing in any of the Class A Notes and none of the Servicer,
Trust Manager, the Seller Trustee, Westpac, the Note Trustee, the Security
Trustee, any Mortgage Insurer or any of the Underwriters accept any
responsibility or make any representation as to the tax consequences of
investing in the Class A Notes.
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 Class A 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."
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AUSTRALIAN DISCLAIMERS
(a) The Class A Notes do not represent deposits or other liabilities of
Westpac or associates of Westpac.
(b) The holding of the Class A 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 Class A 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 Seller Trustee, the Issuer Trustee, the Servicer or
the Trust Manager guarantees the payment of interest or the repayment of
principal due on the Class A Notes.
(e) None of the obligations of the Trust Manager are guaranteed in any way
by Westpac or any associate of Westpac.
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ENFORCEMENT OF FOREIGN JUDGMENTS IN AUSTRALIA
The Trust Manager 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 Trust Manager in
respect of a Class A 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
Trust Manager 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 Trust Manager expressly submits 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. The Trust Manager has appointed
Lewis E. Love, Jr., its Director and Secretary, 575 Fifth Avenue, 39th Floor,
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 Trust Manager,
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 Class A 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
Trust Manager 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$0.6620=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 on April 30, 1999. 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.
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TABLE OF CONTENTS
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SUMMARY OF TERMS........................................................................................... 13
STRUCTURAL CHART........................................................................................... 28
CASH FLOW SUMMARY.......................................................................................... 29
Collections........................................................................................ 29
Gross Principal Collections........................................................................ 29
Principal Losses................................................................................... 30
Income Collections................................................................................. 31
Liquidity Support.................................................................................. 31
Currency Swaps..................................................................................... 31
CASH FLOW CHART............................................................................................ 32
NOTEHOLDER PRINCIPAL DISTRIBUTIONS......................................................................... 33
RISK FACTORS............................................................................................... 34
Limited Liability under the Class A Notes.......................................................... 34
Risk of Equitable Assignment of Housing Loans Rather than Legal Assignment......................... 34
Risk of Losses and Delays from Enforcement of the Housing Loans.................................... 35
Mortgage Insurance Policies Are Subject to Exclusions and Limitations.............................. 35
Risks Associated with High LVR Housing Loans....................................................... 35
Risks Associated with Westpac's Ability to Set Rates on Variable Rate Housing Loans at Its
Discretion......................................................................................... 36
Ability to Change Housing Loan Features and Options May Result in Changes to the Mortgage Pool and
Higher Rates of Principal Prepayment on the Class A Notes.......................................... 36
Risks of Currency Exchange Controls................................................................ 36
Risks Related to a Termination of the Swap Agreements.............................................. 37
Delinquency and Default Risk....................................................................... 38
Risk of Early Defaults............................................................................. 39
Principal Prepayment and Yield Considerations...................................................... 39
No Gross-Up; Tax Redemption........................................................................ 40
Reinvestment Risk.................................................................................. 40
Servicer Risk...................................................................................... 40
Priority of RFSs and RFS Class A Notes Owned by Australian Resident Investors...................... 40
Credit Enhancement Provides Only Limited Protection Against Losses................................. 41
Limitations on the Liquidity Support............................................................... 41
Exercise of Clean-up Offer May Result in Shortfalls to Noteholders................................. 41
Redemption of the Notes............................................................................ 41
Geographic Concentration May Affect Performance.................................................... 42
Consumer Credit Legislation........................................................................ 42
Risk of Commingling................................................................................ 43
Risks Associated with Year 2000 Compliance......................................................... 43
Limited Liquidity.................................................................................. 44
Ratings of the Notes; Factors Affecting Ability to Maintain Ratings................................ 44
Book-Entry Notes................................................................................... 44
Risks Associated with the Introduction of a Goods and Services Tax in Australia.................... 45
Other Considerations............................................................................... 46
FORMATION OF THE TRUST..................................................................................... 47
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Westpac Securitisation Trust Programme............................................................. 47
Series 1999-1G WST Trust........................................................................... 47
Trust Assets....................................................................................... 48
SECURITY FOR THE NOTES..................................................................................... 48
Charge............................................................................................. 48
Security Trustee................................................................................... 48
Nature of Security................................................................................. 49
Enforcement........................................................................................ 49
Priorities under the Security Trust Deed........................................................... 50
Security Trustee's Fees and Expenses............................................................... 52
Retirement and Removal............................................................................. 52
Additional Provisions of the Security Trust Deed................................................... 53
THE TRUST FUND............................................................................................. 54
General............................................................................................ 54
Transfer and Assignment of Housing Loans........................................................... 54
Representations and Warranties..................................................................... 55
Breach of Representations and Warranties........................................................... 56
Housing Loan Statistics............................................................................ 57
THE ISSUER TRUSTEE......................................................................................... 66
Incorporation...................................................................................... 66
Share Capital...................................................................................... 66
Business........................................................................................... 66
Experience......................................................................................... 66
Directors.......................................................................................... 67
Powers............................................................................................. 67
Duties............................................................................................. 67
Delegation......................................................................................... 68
Issuer Trustee Fees and Expenses................................................................... 69
Removal of the Issuer Trustee...................................................................... 69
Voluntary Retirement of the Issuer Trustee......................................................... 69
Limitation of Issuer Trustee's Liability........................................................... 69
Rights of Indemnity of Issuer Trustee.............................................................. 70
Limitation of Seller Trustee's Liability and Rights of Indemnity................................... 70
Rights of Indemnity of Seller Trustee.............................................................. 71
THE NOTE TRUSTEE........................................................................................... 71
ORIGINATOR OF THE HOUSING LOANS............................................................................ 71
THE SERVICER............................................................................................... 72
General............................................................................................ 72
Servicing of Housing Loans......................................................................... 72
Document Custody................................................................................... 72
Collection and Enforcement Procedures.............................................................. 72
Delinquencies and Mortgagee in Possession with respect to the Securitized Portfolios............... 73
THE TRUST MANAGER.......................................................................................... 78
General............................................................................................ 78
Incorporation...................................................................................... 78
Share Capital...................................................................................... 78
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Directors.......................................................................................... 78
Duties and Role of the Trust Manager............................................................... 78
Removal of the Trust Manager....................................................................... 79
Voluntary Retirement of the Trust Manager.......................................................... 80
Limitation of Trust Manager's Liability............................................................ 80
WESTPAC RESIDENTIAL LOAN PROGRAM........................................................................... 80
Origination of Housing Loans....................................................................... 80
Underwriting of Housing Loans...................................................................... 80
Servicing of Housing Loans......................................................................... 81
Housing Loan Products.............................................................................. 82
Housing Loan Features and Options.................................................................. 83
THE MORTGAGE INSURANCE POLICIES............................................................................ 85
Mortgage Insurance Policies--General............................................................... 85
The HLIC Mortgage Pool Insurance Policy............................................................ 86
Primary Mortgage Insurance Policies................................................................ 90
PREPAYMENT AND YIELD CONSIDERATIONS........................................................................ 91
General............................................................................................ 91
Prepayments........................................................................................ 91
Weighted Average Lives............................................................................. 92
DESCRIPTION OF THE CLASS A NOTES........................................................................... 94
General............................................................................................ 94
Collections and Payment............................................................................ 95
Collections........................................................................................ 95
Calculation of Total Available Funds............................................................... 96
Available Income................................................................................... 96
Principal Draws.................................................................................... 98
Liquidity Draws.................................................................................... 98
Remaining Liquidity Shortfall...................................................................... 98
Distribution of Total Available Funds.............................................................. 99
Excess Available Income............................................................................ 101
Gross Principal Collections........................................................................ 102
Principal Collections.............................................................................. 103
Distribution of Principal Collections.............................................................. 103
Payments of Principal on the Notes................................................................. 103
Application of Principal Charge Offs............................................................... 107
Payments into US$ Account.......................................................................... 108
Payments out of US$ Account........................................................................ 108
Prepayment Costs and Prepayment Benefits........................................................... 109
Description of the Redraw Facility, the Redraw Funding Securities and the RFS Class A Notes........ 109
Redraw Facility.................................................................................... 109
Issuance of Redraw Funding Securities.............................................................. 113
RFS Class A Notes.................................................................................. 113
Form of the RFSs and the RFS Class A Notes......................................................... 113
Interest Payable on the RFSs and the RFS Class A Notes............................................. 114
Form of the Class B Notes.......................................................................... 114
Interest Payable on the Class B Notes.............................................................. 114
Subordination of the Class B Notes; Priority of Payment of Principal to RFSs....................... 114
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Substitution of Housing Loans...................................................................... 115
Prescription....................................................................................... 115
Clean-up Offer..................................................................................... 115
Redemption of the Notes............................................................................ 115
Withholding or Tax Deductions...................................................................... 116
Redemption of the Class A Notes for Taxation or Other Reasons...................................... 116
Termination of the Trust........................................................................... 117
Trust Accounts..................................................................................... 117
General............................................................................................ 118
Determination Date--Calculations and Reports to Noteholders........................................ 118
Book-Entry Registration............................................................................ 119
Definitive Notes................................................................................... 123
Modification of Master Trust Deed, Series Notice and the Note Trust Deed Without Noteholder
Consent............................................................................................ 123
Modification of Master Trust Deed, Series Notice and the Note Trust Deed With Noteholder Consent... 124
Meetings of Voting Mortgagees...................................................................... 124
Voting of Class A Noteholders; Modification; Consents; Waiver...................................... 124
Events of Default; Rights Upon Event of Default.................................................... 125
Enforcement of the Security Trust Deed............................................................. 126
Certain Covenants.................................................................................. 129
Annual Compliance Statement........................................................................ 130
The Note Trustee................................................................................... 130
Governing Law...................................................................................... 130
London Stock Exchange Listing...................................................................... 130
DESCRIPTION OF THE SERVICING AGREEMENT..................................................................... 130
General............................................................................................ 130
Servicing.......................................................................................... 130
Document Custody................................................................................... 134
Amendment.......................................................................................... 135
Termination of Servicing Agreement................................................................. 135
THE LIQUIDITY FACILITY..................................................................................... 135
General Description................................................................................ 136
Liquidity Draws.................................................................................... 136
Conditions Precedent to a Liquidity Draw........................................................... 136
Deposit into a Collateral Account.................................................................. 136
Interest on Liquidity Draws........................................................................ 137
Commitment Fee..................................................................................... 137
Repayment of Liquidity Drawings.................................................................... 137
Events of Default.................................................................................. 137
Consequences of Default............................................................................ 138
Termination........................................................................................ 138
DESCRIPTION OF THE SWAP AGREEMENTS......................................................................... 139
Description of Interest Rate Swap Agreements....................................................... 139
Description of Currency Swaps...................................................................... 141
Replacement of Currency Swaps...................................................................... 143
Downgrade of Currency Swap Providers............................................................... 143
Cross Support...................................................................................... 143
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CURRENCY SWAP PROVIDERS.................................................................................... 144
CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS................................................................. 144
General............................................................................................ 144
Nature of Housing Loans as Security................................................................ 145
Enforcement of Housing Loans....................................................................... 147
Penalties and Prohibited Fees...................................................................... 147
Consumer Credit Legislation........................................................................ 148
Bankruptcy......................................................................................... 149
Environmental...................................................................................... 149
Insolvency Considerations.......................................................................... 149
Treatment of Interest Payments with respect to Australian Housing Loans............................ 150
USE OF PROCEEDS............................................................................................ 150
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.............................................................. 150
General............................................................................................ 150
Sales of Notes..................................................................................... 151
Market Discount.................................................................................... 151
Premium............................................................................................ 152
Backup Withholding................................................................................. 152
AUSTRALIAN TAX MATTERS..................................................................................... 153
Payments of Principal, Premiums and Interest....................................................... 153
Profit on Sale..................................................................................... 154
Other Taxes........................................................................................ 154
ERISA CONSIDERATIONS....................................................................................... 154
RATINGS OF THE NOTES....................................................................................... 155
LEGAL INVESTMENT CONSIDERATIONS............................................................................ 155
UNDERWRITING............................................................................................... 156
United Kingdom..................................................................................... 157
Australia.......................................................................................... 157
LISTING AND GENERAL INFORMATION............................................................................ 157
Listing............................................................................................ 157
Authorization...................................................................................... 158
Litigation......................................................................................... 158
Euroclear and Cedelbank............................................................................ 158
Documents Available for Collection and Inspection.................................................. 158
Temporary Australian Foreign Exchange Controls..................................................... 159
Consents to Opinions............................................................................... 159
LEGAL MATTERS.............................................................................................. 159
APPENDIX I--GLOSSARY OF AUSTRALIAN LEGAL TERMS............................................................. I-1
APPENDIX II--TERMS AND CONDITIONS OF THE CLASS A NOTES..................................................... II-1
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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 in the "Index of Defined Terms."
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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 trustee of the Series 1999-1G WST Trust
(the "Trust") (the "Issuer Trustee") will issue the Class
A 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 (a "Sale
Notice") between Westpac and the Issuer Trustee or the
Seller Trustee (as defined herein) 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 direct 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), between the Issuer Trustee and the Trust
Manager dated on or about the Closing Date. See "FORMATION
OF THE TRUST."
Note Trustee.................... Citibank, N.A., London office, 11 Old Jewry, London, EC2R
8DU, England (the "Note Trustee"), in its capacity as note
trustee with respect to the Class A Notes under the Note
Trust Deed among the Issuer Trustee, the Trust Manager and
the Note Trustee dated on or about May 13, 1999 as amended
from time to time (the "Note Trust Deed"). See "THE NOTE
TRUSTEE."
Security Trustee................ 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 its capacity as
security trustee under the Security Trust Deed among the
Issuer Trustee, the Trust Manager, the Note Trustee and
the Security Trustee dated on or about May 6, 1999 as
amended from time to time (the "Security Trust Deed").
Seller Trustee.................. Westpac Securities Administration Limited in its capacity
as trustee of any other WST trust established under the
Master Trust Deed (in that capacity, the "Seller
Trustee"). The Seller Trustee may sell
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housing loans relating to such other trusts to the Trust
and may repurchase the Housing Loans relating to the Trust
upon the exercise of the Clean-up Offer (as defined
herein).
Paying Agents and Note
Registrar..................... Citibank, N.A., 5 Carmelite Street, London, EC4Y 0PA,
England, will act as the principal paying agent
("Principal Paying Agent") and note registrar for the
Class A Notes (the "Note Registrar"). The Principal Paying
Agent and any other paying agents are referred to herein
as the "Paying Agents".
Roles of the Security Trustee
and Note Trustee.............. The structure of the Series 1999-1G WST Trust transaction
employs several different trustees. The Security Trustee
is the entity that holds a security interest over the
Trust Assets (as defined herein) and has the
responsibility of securing such assets and distributing
the proceeds received upon the liquidation of such assets
upon the occurrence of a default and enforcement of the
security interest in accordance with the provisions of the
Security Trust Deed. The Note Trustee is the entity which
represents the interests of the Class A Noteholders. The
provisions of the Security Trust Deed require the Security
Trustee to consult with, and obtain the prior written
consent of, the Class B Noteholders and the Note Trustee
on behalf of the Class A Noteholders (together, the
"Noteholder Mortgagees") before taking certain actions.
Thus, not only does the Security Trustee owe fiduciary
duties to the Note Trustee (and the Class A Noteholders
and the other secured creditors), it has contractual
obligations to consult with and act at the Noteholder
Mortgagees' direction in accordance with the Security
Trust Deed. The Note Trustee owes fiduciary duties to the
Class A Noteholders and must act in accordance with those
duties when voting to direct the Security Trustee to act
or not to act. The roles of the Note Trustee and the
Security Trustee together approximate the role of an
indenture trustee in a typical United States transaction.
Securities Offered.............. The Issuer Trustee, in its capacity as trustee of the
Series 1999-1G WST Trust, which was formed under the laws
of New South Wales, will issue the Class A Mortgage Backed
Floating Rate Notes due May 19, 2030 in the aggregate
principal amount of US$883,900,000 (the "Class A Notes").
The Class A Notes only are offered hereby.
Class B Notes................... The Class B Mortgage Backed Floating Rate Notes due May
19, 2030 in the aggregate principal amount of A$33,750,000
(the "Class B Notes") will be denominated in Australian
dollars and will be made available only in Australia to
Australian residents and are NOT offered hereby. The Class
B Notes will be in book-entry form and will not be
registered with the Securities and Exchange Commission in
the United States and will not be registered with the
Australian Securities and Investments Commission ("ASIC"),
the relevant companies authority in Australia.
Redraws, RFSs and RFS Class A
Notes......................... Certain Housing Loans provide the relevant Borrower (as
defined herein) with the ability to "reborrow" from
Westpac amounts that
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have been previously paid by the Borrower which are in
excess of scheduled repayments required under the
contractual amortization schedule for the relevant Housing
Loan. Such amounts drawn by Borrowers on principal
repayments made in excess of scheduled payments are called
"redraws". Westpac is entitled to be reimbursed by the
Issuer Trustee for such redraws from Gross Principal
Collections (as defined herein) prior to any payments
being made on the Class A Notes from such Collections.
On or before the Closing Date, Westpac as provider of the
Redraw Facility (as defined herein) will enter into a
Redraw Facility Agreement (as defined herein). If Gross
Principal Collections for a period are insufficient to
fund a redraw provided to a Borrower by Westpac, drawings
will be made under the Redraw Facility Agreement to fund
the redraw (up to the limit set out in the Redraw Facility
Agreement).
If there are insufficient amounts available under the
Redraw Facility Agreement to fund redraws, the Trust
Manager may direct the Issuer Trustee to issue additional
debt securities known as "Redraw Funding Securities" or
"RFSs". The RFSs and payments under the Redraw Facility
Agreement will be senior in priority of distributions of
principal to the Class A Notes and RFS Class A Notes (as
defined herein). Interest on the RFSs, RFS Class A Notes
and Class A Notes and fees with respect to the Redraw
Facility Agreement will rank PARI PASSU in respect of
priority.
If any RFSs are not repaid on the fifth Collection
Determination Date following the date such RFSs were
issued, they shall convert into RFS Class A Notes (the
"RFS Class A Notes"), the holders of which will rank PARI
PASSU with the Class A Notes as to the payment of interest
and principal and have certain rights of payment senior to
those rights of holders of the Class B Notes. The RFSs,
RFS Class A Notes, the Class A Notes and the Class B Notes
are referred to herein as the "Notes."
The RFSs and RFS Class A Notes, if issued, will be
denominated in Australian dollars and issued in Australia
to Australian residents only. The Class B Notes, RFSs and
RFS Class A Notes will be in book-entry form and will not
be registered with the Securities and Exchange Commission
in the United States and will not be registered with ASIC.
The RFSs and RFS Class A Notes are not offered hereby.
For a description of the RFSs, the RFS Class A Notes and
the priority of their payment, see "Priority of
Distribution with respect to the Class A Notes, RFSs and
RFS Class A Notes" herein and "DESCRIPTION OF THE CLASS A
NOTES--Description of the 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; Priority of
Principal Payments to RFSs" herein.
Cut-Off Date.................... March 31, 1999 (the "Cut-Off Date").
Closing Date.................... On or about May 13, 1999 (the "Closing Date").
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Maturity Date................... May 19, 2030 (the "Maturity Date").
Terms of the Class A Notes
General....................... Payments of interest and principal on the Class A Notes
will be made quarterly on the 19th day of each of
February, May, August and November (or if such 19th day is
not a Business Day, the next succeeding Business Day),
commencing on August 19, 1999 (each such date, a "Payment
Date").
As used in this Prospectus, "Business Day" means (a) in
relation to the Note Trust Deed, the Agency Agreement, any
Class A Note and any US$ payments under a Currency Swap,
any day, other than a Saturday, Sunday or public holiday,
on which banks are open for business in London and New
York City; and (b) in relation to any Notes, except Class
A Notes, A$ payments under a Currency Swap and any other
Transaction Document, any day, other than a Saturday,
Sunday or public holiday, on which banks are open for
business in Sydney. If a public holiday is occurring in
any of the referenced locales, then such day is not a
Business Day, and no scheduled payments will be made on
such day.
Payments of interest and principal will be made to the
holders of the Class A Notes (the "Class A Noteholders")
of record as of the day which is two Business Days
preceding the Payment Date (so long as the Class A 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 Class A Note bears
interest on its Invested Amount. The "Invested Amount" of
the Class A Notes, Class B Notes, RFSs or RFS Class A
Notes (each, a "Class") is equal to the Initial Invested
Amount (as defined herein) of such Note less all payments
previously made in respect of principal in respect of such
Note. The "Initial Invested Amount" of a Note is its
principal amount on the date of its issuance. Each
"Interest Period" (other than the initial Interest Period
and the final Interest Period) with respect to the Class A
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 Class A 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
Interest Period is equal to USD-LIBOR-BBA on the related
Interest Determination Date (as defined herein) plus
0.20%. The Interest Rate on the Class A Notes for the
first Interest Period will be determined on May 11, 1999.
See "DESCRIPTION OF THE CLASS A NOTES--Calculation of
USD-LIBOR-BBA" herein. The "Interest Rate" for the Class B
Notes for a particular Interest Period is equal to the
Bank Bill Rate on the first day of such Interest Period
plus 0.63%. The Interest Rate on the Class B Notes for the
first Interest Period will be determined on May 11, 1999.
On the second London banking day before the beginning of
each Interest Period (each an "Interest Determination
Date"), Citibank, N.A., London office (the "Agent Bank")
will determine the rate
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"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.
With respect to any Payment Date, interest on the Class A
Notes and Class B 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 with respect to the Class A Notes,
or, with respect to the Class B Notes, 365 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 Notes will no longer accrue interest
because the related Class will have been redeemed pursuant
to the terms of the Transaction Documents. The "Stated
Amount" of a Note is the Invested Amount of the Note less
the Carryover Charge Offs (as defined herein) applied
against it.
If Total Available Funds (as defined herein) available
after payment of any Accrued Interest Adjustment (as
defined herein),
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interest or fees payable under the Liquidity Facility (as
defined herein), Trust Expenses (as defined herein) and
certain amounts payable to any Interest Rate Swap Provider
(as defined herein) are sufficient to pay Interest on the
Class A Notes, Interest will be payable in arrears on each
Payment Date to the Class A 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 Class A 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 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, the Class B Notes or any payment in
respect of the Redraw Facility (as defined herein) or
through a payment to the Currency Swap Providers (as
defined herein) with respect to the Class A 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 CLASS A NOTES" herein.
Principal....................... On each Payment Date, Gross Principal Collections (as
described herein) will be used first to reimburse Westpac
for any Redraws (as defined herein) funded by Westpac
during the related Collection Period. See "WESTPAC
RESIDENTIAL LOAN PROGRAM-- Housing Loan Features--Redraw."
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
Westpac, in its capacity as the provider of the Redraw
Facility (the "Redraw Facility Provider"), to repay any
Principal Outstanding (as defined herein) under the Redraw
Facility Agreement; (iii) to fund any Principal Draw (as
defined herein) 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 Noteholders, the Currency Swap
Providers to enable the Issuer Trustee to make payments to
the Class A Noteholders, and the Class B Noteholders in
the amounts and priorities set forth herein under
"DESCRIPTION OF THE CLASS A NOTES--Payments of Principal
on the Notes."
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Priority of Distribution with
respect to the Class A Notes,
RFSs and RFS Class A Notes,
Class B Notes................. 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 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 payment of principal and
interest with the Class A Notes. The RFSs and any
repayments under the Redraw Facility will be senior to the
Class A Notes and the RFS Class A Notes in priority of
distributions of principal. Interest on the RFSs, the RFS
Class A Notes and the Class A Notes and fees with respect
to the Redraw Facility will rank PARI PASSU in respect of
priority. Payments of principal and interest in respect of
the Class B Notes are subordinated to the extent set forth
herein to such payments in respect of Class A Notes, RFSs
and RFS Class A Notes. See "RISK FACTORS--Priority of RFSs
and RFS Class A Notes Owned by Australian Resident
Investors" and "DESCRIPTION OF THE CLASS A
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; Priority of
Principal Payments to RFSs."
Credit Enhancement with respect
to the Class A Notes.......... 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 on the
Class B Notes to payments on the Class A Notes.
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 Pty
Limited (ACN 071 466 334) of 259 George 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 a Loan to
Value Ratio ("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$45,000,000. HLIC is a
private insurance company which is a subsidiary of GE
Capital Australia (ACN 008 562 534).
For a description of HLIC, see "THE MORTGAGE INSURANCE
POLICIES--The HLIC Mortgage Pool Insurance Policy."
Each Housing Loan with an LVR of greater than 80% at the
time of origination (or a lower LVR where required by
Westpac's
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standard credit policy) will have been insured under a PMI
Policy issued by one of the following: Royal & Sun
Alliance Lenders Mortgage Insurance Limited (ACN 001 825
725) of Level 9, 465 Victoria Avenue, Chatswood NSW
("Royal & Sun"), MGICA Limited (ACN 000 511 071) 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. Approximately 43.75% 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, Royal & Sun, 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 (as defined herein) 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 Class A Noteholders receiving less than
their Initial 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 RFSs (if
any), Class A Notes, RFS Class A Notes (if any) and the
Redraw Facility Provider to the extent set forth herein.
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 RFSs (if any) and the Redraw
Facility Provider with respect to repayments pursuant to
the Redraw Facility Agreement and to the holders of the
Class A Notes and RFS Class A Notes (if any). For a
description of the priority among the RFSs, Class A Notes,
RFS Class A Notes and the Redraw Facility Provider, see
"Priority of Distribution with respect to the Class A
Notes, RFSs and RFS Class A Notes" herein. 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 Class A Noteholders and to afford
such holders protection against losses on the Housing
Loans. See "DESCRIPTION OF THE CLASS A NOTES--Collections
and Payment" herein.
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Security for the Class A Notes
General....................... The Class A Notes are debt obligations of the Issuer
Trustee in its capacity as trustee of the Trust only (and
therefore the Issuer Trustee's liability to make payments
of interest and principal on the Class A Notes is limited
to the collections received by the Issuer Trustee from the
Trust Assets) and except in certain limited circumstances
are not the personal obligation of the Issuer Trustee. See
"THE ISSUER TRUSTEE--Limitation of Issuer Trustee's
Liability." The Class A Notes are issued with the benefit
of, and subject to the terms of, the Transaction
Documents. The Issuer Trustee's liability in respect of
the Class A 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 Class
A Notes and, except in certain limited circumstances, the
Issuer Trustee will not be personally liable in respect of
the Class A Notes.
A. The Housing Loans............ The Housing Loans will consist of 12,886 Housing Loans
with an aggregate Balance Outstanding on the Cut-Off Date
of A$1,383,157,099. The Housing Loans are also referred to
herein as the "Mortgage Pool." The Housing Loans will be
secured by Mortgaged Properties (as defined herein)
located in any of the six states or two territories of
Australia. A "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 or if the
Housing Loan is not secured by a first ranking mortgage
the Approved Seller will assign to the Issuer Trustee all
prior ranking registered mortgages in relation to that
Housing Loan. "Registered" means the mortgage has been
filed with the lands office in the relevant Australian
State or Territory, granting certain rights with respect
to the applicable Mortgaged Property. See "APPENDIX
I--GLOSSARY OF AUSTRALIAN LEGAL TERMS."
Each Housing Loan requires that the 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. If Scheduled Payments are not received with
respect to certain Housing Loans on the related due date a
default rate of interest may be charged on any overdue
amount and there will be a compounding of interest.
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.
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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, as of the Cut-Off
Date, range from approximately 5.00% per annum to 9.95%
per annum. The weighted average Mortgage Rate of the
Housing Loans on the Cut-Off Date is approximately 6.31%
per annum. The Cut-Off Date Balances Outstanding of the
Housing Loans ranged from approximately A$10,023 to
A$513,202. The average Cut-Off Date Balance Outstanding of
the Housing Loans is approximately A$107,338. The weighted
average original term to stated maturity of the Housing
Loans is approximately 310.00 months. The weighted average
remaining term to stated maturity of the Housing Loans is
approximately 300.89 months. As of the Cut-Off Date, the
weighted average number of months that had elapsed since
origination of the Housing Loans is approximately
9.11months.
Housing Loans representing approximately 17.76% of the
Cut-Off Date Pool Balance are secured by Mortgaged
Properties which are investment properties (based solely
upon statements made by the related Mortgagors at the time
of origination of the related Housing Loans).
The lowest and highest LVR as of the Cut-Off Date of the
Housing Loans were approximately 1.82% and 94.85%. 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
servicing system of the Servicer (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. The Mortgaged
Property is generally valued at the time of origination.
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").
Initially, the Collections Account shall be maintained
with Westpac. 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 CLASS A
NOTES--Collections and Payment."
D. Liquidity Support............ 1. PRINCIPAL DRAWS: If the Trust Manager determines on any
Collection Determination Date that the Available Income
(as defined herein) 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
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"Principal Draw"). See "DESCRIPTION OF THE CLASS A
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 (as
defined herein) 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 by an amount equal to the amount of any 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
temporarily funding certain income shortfalls in the
Trust, up to an aggregate amount being the lesser of: (1)
A$46,000,000, (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 1999- 1G WST Trust (the
"Trust") will be created pursuant to the Master Trust
Deed, the Notice of Creation of Trust 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 CLASS A NOTES."
SECURITY TRUST DEED: Pursuant to the Security Trust Deed,
the Issuer Trustee will grant a first ranking floating
charge over the Trust
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Assets to the Security Trustee, in order to secure the
Issuer Trustee's obligations to the Class A Noteholders,
the Class B Noteholders, the Note Trustee, the Trust
Manager, the Swap Providers (as defined herein), the
Security Trustee, each Paying Agent, each provider of a
Support Facility (other than the provider of a Mortgage
Insurance Policy), to the Approved Sellers in respect of
any Accrued Interest Adjustment, to Westpac in respect of
Redraws, 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 (as defined herein) or any of the Mortgage
Insurance Policies. See "SECURITY FOR THE NOTES."
The Issuer Trustee will grant a "floating charge" over the
Trust Assets to the Security Trustee in order to secure
the Issuer Trustee's obligations in respect of the Notes
and the Transaction Documents. A "charge" is a proprietary
interest created in property. A floating charge is a grant
of a proprietary interest which "floats" over a group of
assets which assets may change or be dealt with from time
to time. A floating charge allows the person or entity
granting the charge (the "chargor") to deal with the
assets and to give third parties title to those assets
free from any encumbrance, provided such dealings and
transfers of title are in the ordinary course of the
chargor's business. For a description of a floating charge
and the crystallization of floating charges, see "SECURITY
FOR THE NOTES--Nature of Security", "--Charge" and
"APPENDIX I--GLOSSARY OF AUSTRALIAN LEGAL TERMS."
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 Class A Notes. See
"DESCRIPTION OF THE CLASS A NOTES."
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"
are constituted by three 1991 ISDA Master Agreements (each
an "ISDA Master Agreement"), the schedules supplementing
such agreements and written swap confirmations confirming
the Variable Rate Basis Swap, two Fixed Rate Basis Swaps
and the Currency Swaps. See "DESCRIPTION OF THE SWAP
AGREEMENTS."
AGENCY AGREEMENT: Pursuant to the Agency Agreement, the
Issuer Trustee will appoint paying agents and an agent
bank with respect to the Class A Notes. The terms and
conditions of these appointments are set forth in the
Agency Agreement.
LIQUIDITY FACILITY AGREEMENT: Under the Liquidity Facility
Agreement, the Liquidity Facility Provider agrees to make
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advances to the Issuer Trustee for the purpose of
providing liquidity to cover certain income shortfalls in
the Trust. See "THE LIQUIDITY FACILITY."
REDRAW FACILITY AGREEMENT: 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 herein, to fund the amount of any
Redraws not funded by Gross Principal Collections. See
"DESCRIPTION OF THE CLASS A NOTES--Redraw Facility."
The Master Trust Deed, the Series Notice, the Servicing
Agreement, the Security Trust Deed, the Note Trust Deed,
the Swap Agreements, the Agency Agreement, the Liquidity
Facility Agreement and the Redraw Facility Agreement are
collectively referred to herein as the "Transaction
Documents."
Clearance and Settlement........ Persons acquiring beneficial ownership interests in the
Class A Notes will hold their Class A Notes through any of
DTC (in the United States) or Cedelbank or Euroclear (in
Europe). Transfers within DTC, Cedelbank 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
Cedelbank or Euroclear, on the other, will be effected in
DTC through the Relevant Depositaries (as defined herein)
of Cedelbank or Euroclear. See "DESCRIPTION OF THE CLASS A
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 "Clean-up
Offer"). 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. With respect to any Housing Loan and date, "Housing
Loan Principal" shall be the unpaid principal amount of
that Housing Loan on such date. "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. The "Fair Market Value" with
respect to any non-performing Housing Loans is the fair
market
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value of such Housing Loan agreed on by the Trust Manager
(based on appropriate expert advice) and the Approved
Seller.
Redemption for Taxation or Other
Reasons....................... If the Trust Manager satisfies the Issuer Trustee and the
Note Trustee immediately prior to giving the notice
referred to below that either (i) on the next Payment Date
the Issuer Trustee would be required to deduct or withhold
from any payment of principal or interest (or
corresponding payment under a Currency Swap) in respect of
any Class A Notes any amount for or on account of any
present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by the Commonwealth of
Australia or any of its political subdivisions or any of
its authorities (a "Withholding Tax Event") or (ii) the
total amount payable in respect of interest in relation to
any of the Housing Loans for a Collection Period ceases to
be receivable (whether or not actually received) by the
Issuer Trustee during such Collection Period by reason of
any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by the Commonwealth of
Australia or any of its political subdivisions or any of
its authorities, the Issuer Trustee must, when so directed
by the Trust Manager (at any time at the Trust Manager's
option) (provided that the Issuer Trustee will be in a
position on such Payment Date to discharge (and will so
certify to the Issuer Trustee and the Note Trustee) all
its liabilities in respect of the Class A Notes and any
amounts required under the Security Trust Deed to be paid
in priority to or PARI PASSU with the Class A Notes) upon
having given not more than 60 nor less than 30 days notice
to the Noteholders of the Class A Notes, redeem all, but
not some, of the Class A Notes at their Invested Amount
(or at the option of the holders of 75% of the aggregate
Invested Amount of the Class A Notes, at their Stated
Amount), together with accrued interest to the date of
redemption on any subsequent Payment Date, provided that
the holders of 75% of the aggregate Invested Amount of the
Class A Notes may elect, and shall notify the Issuer
Trustee and the Trust Manager, that they do not require
the Issuer Trustee to redeem the Class A Notes in the
circumstances described above. See "RISK FACTORS--No
Gross-Up; Tax Redemption."
Legal Investment
Considerations................ The Class A 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 Class A 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 Class A Notes as
legal investments for such purchasers. See "LEGAL
INVESTMENT CONSIDERATIONS" herein.
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Tax Status...................... In the opinion of Mayer, Brown & Platt, special tax
counsel for the Trust, the Class A Notes will be
characterized as debt for U.S. federal income tax
purposes. Each Class A Noteholder, by acceptance of a
Class A Note, will agree to treat the Class A Notes as
indebtedness. See "UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES" herein.
Payments of principal and Interest in respect of the Class
A Notes will be made subject to withholding tax (if any)
applicable to the Class A Notes without the Issuer Trustee
being obliged to pay any additional amounts to the Class A
Noteholders in respect of such withholding tax. See "RISK
FACTORS--No Gross-Up; Tax Redemption."
ERISA Considerations............ Subject to the considerations discussed under "ERISA
CONSIDERATIONS," the Class A Notes are eligible for
purchase by employee benefit plans.
Ratings of the Class A 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"), "Aaa" by Moody's Investors Service, Inc.
("Moody's") and "AAA" by Fitch IBCA, Inc. ("Fitch").
Moody's, Fitch and Standard & Poor's are referred to
herein as the "Rating Agencies." The security ratings of
the Class A 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
certain of the Swap Agreements) are governed by, and shall
be construed in accordance with, the laws of New South
Wales, Australia. 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 Class A Notes.
Risk Factors.................... In considering an investment in the Class A Notes,
investors should recognize that there are risks associated
with such an investment. See "Risk Factors" herein.
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STRUCTURAL CHART
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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 CLASS A 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 (see
"CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS--Enforcement of Housing Loans");
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 (sequentially or serially, as described below).
6. Sixth, to pay principal outstanding under the Class B Notes under the
sequential or serial methods referred to below.
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Initially all Principal Collections distributed to Noteholders will be
applied "sequentially," meaning that such Principal Collections will be applied
to the RFSs (if any), Class A Notes and RFS Class A Notes (if any), pro rata,
until such classes are paid in full. The Class B Notes are then entitled to
Principal Collections.
If certain distribution tests have been met, Principal Collections will be
applied "serially," entitling the Class A Notes and the Class B Notes to share
in Principal Collections. There are two serial distribution tests which focus on
whether the subordination provided by the Class B Notes to the Class A Notes
effectively doubles from the initial level of subordination at the start of the
transaction, whether the distribution of Principal Collections is occurring
prior to a certain date and whether certain credit tests focusing on
delinquencies and losses on the Housing Loans have been met. For a complete
description of the serial distribution tests, see the definitions of "Serial
Method 1 Distribution Test" and "Serial Method 2 Distribution Test" set forth in
"DESCRIPTION OF THE CLASS A NOTES--Payments of Principal on the Notes."
PRINCIPAL LOSSES
It may be that principal losses are incurred in respect of a Housing Loan
during a Collection Period.
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 interest 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
Principal Outstanding under the Redraw Facility.
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 in subsequent Collection Periods 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.
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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 Swaps 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. Once distributed to Westpac, such amounts will no longer be available to
the Issuer Trustee to meet the obligations of the Trust, including the Class A
Notes.
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$46,000,000) to provide liquidity to allow Total Payments to be made.
CURRENCY SWAPS
All payments required to be made to Class A Noteholders will be made in
Australian dollars to the Currency Swap Providers, who will swap the amounts
into US dollars.
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CASH FLOW CHART
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NOTEHOLDER PRINCIPAL DISTRIBUTIONS
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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 Class A Notes.
LIMITED LIABILITY UNDER THE CLASS A NOTES
The Class A 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 Class A 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 Class A Notes and, except in certain
limited circumstances, the Issuer Trustee will not be personally liable in
respect of the Class A Notes. See "THE ISSUER TRUSTEE--Limitation of Issuer
Trustee's Liability."
In addition, the Class A 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 to the extent referred to above). The only obligations of the
foregoing entities with respect to the Class A 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 Class A Notes will not be guaranteed or insured by any
governmental agency or instrumentality, or by the Issuer Trustee, 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. 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 Class A
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 Class A Notes.
RISK OF EQUITABLE ASSIGNMENT OF HOUSING LOANS RATHER THAN LEGAL ASSIGNMENT
Although the Housing Loans and the related Mortgages could have been legally
assigned by the Seller Trustee to the Issuer Trustee, they will initially only
be equitably assigned until a Title Perfection Event (as defined below) occurs.
A "Title Perfection Event" in relation to the Housing Loans is the occurrence of
any of the following: (i) Westpac ceases to have a long term credit rating of at
least "BBB" from Standard & Poor's, "BBB" from Fitch and, so long as the Class A
Notes are outstanding, "Baa2" from Moody's; (ii) an Insolvency Event occurs with
respect to Westpac; and (iii) Westpac fails to transfer Collections within five
Business Days after receiving notice from the Issuer Trustee or the Trust
Manager to do so. Until such time, pursuant to the Transaction Documents, the
Issuer Trustee is not permitted to take any steps to perfect legal title and it
cannot, and will not, notify the Borrowers of the equitable assignment of the
Housing Loans to the Issuer Trustee. If a Title Perfection Event occurs, the
Issuer Trustee, with the assistance of the Servicer, is required take such steps
as are necessary to perfect the Issuer Trustee's legal title in the Housing
Loans.
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;
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(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 (the "Servicer's Security Undertaking"); 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.
So long as the Issuer Trustee holds equitable title, rather than legal
title, to a Housing Loan, the Issuer Trustee's interest in such Housing Loan may
be impaired by the creation or existence of any higher or equal ranking security
interest over the related Mortgaged Property if the Servicer fails to adhere to
the Servicer's Security Undertaking. Such failure may result in losses to
Noteholders.
RISK OF LOSSES AND DELAYS FROM ENFORCEMENT OF THE HOUSING LOANS
Substantial delays could be encountered in connection with the liquidation
of a Housing Loan and result in shortfalls in distributions to Class A
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, Class A 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.
MORTGAGE INSURANCE POLICIES ARE SUBJECT TO EXCLUSIONS AND LIMITATIONS
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. See "THE
MORTGAGE INSURANCE POLICIES" for further details.
RISKS ASSOCIATED WITH HIGH LVR HOUSING LOANS
Approximately 36.11% of the Housing Loans by aggregate principal balance of
the related Housing Loans as of the Cut-Off Date, had an LVR in excess of 80%.
Housing Loans with higher LVRs may present a greater risk of delinquency.
Although each Housing Loan in the Trust with an LVR in excess of 80% is covered
by a PMI Policy which insures the full amount of the Unpaid Balance of the
related Housing Loan, if a Borrower fails to make payments under such a Housing
Loan and the applicable Mortgage Insurer cancels the relevant PMI Policy,
reduces the amount of a claim or fails to honor its obligation under the PMI
Policy, proceeds from a liquidation of such Housing Loan may be insufficient to
cover the Unpaid Balance thereof. As a result, Class A Noteholders may
experience losses including Principal Charge Offs (as defined herein) with
respect to the Class A Notes. For a description of such coverage, see "THE
MORTGAGE INSURANCE POLICIES."
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RISKS ASSOCIATED WITH 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 Payments and accordingly, may become delinquent or may 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 Class A Notes to experience higher rates of principal
prepayment on the Class A Notes than initially anticipated.
ABILITY TO CHANGE HOUSING LOAN FEATURES AND OPTIONS MAY RESULT IN CHANGES TO THE
MORTGAGE POOL AND HIGHER RATES OF PRINCIPAL PREPAYMENT ON THE CLASS A NOTES
During the term of any Housing Loan, Westpac may from time to time or at the
request of the related Borrower change certain features or options of such
Housing Loan. A Borrower may request, among other changes, (a) additional funds
with respect to its Housing Loan (a "top up"), (b) a substitution or
modification of the security for the related Mortgage, (c) a switch to another
type of Housing Loan product, (d) a draw on principal repayments made in excess
of scheduled repayments (a "Redraw"), (e) an interest rate switch from variable
to fixed or vice versa, (f) reduced payments due to maternity or paternity
leave, (g) a repayment holiday if a prepayment of certain amounts has resulted
in a buffer of funds and (h) a switch from owner occupied to investment property
status or vice versa (which may result in a change in interest rates). For a
more detailed discussion of the various features available to Borrowers, see
"WESTPAC RESIDENTIAL LOAN PROGRAM--Housing Loan Features."
In addition, Westpac may initiate certain changes to the Housing Loans. Most
frequently, Westpac will change the Mortgage Rate. The change to the Mortgage
Rate can be either product or individual loan specific. In addition, subject to
certain conditions, Westpac may begin to offer additional product features with
respect to the Housing Loans which are not set forth herein. See "WESTPAC
RESIDENTIAL LOAN PROGRAM--Housing Loan Features-Additional Features."
As a result of both Borrower and Westpac initiated changes, the
characteristics of the Housing Loans as of the Cut-Off Date may differ from the
characteristics of the Housing Loans at any other time. In addition, certain
types of modifications to a Housing Loan result in the removal of such Housing
Loan from the Mortgage Pool, which in turn could cause investors in the Class A
Notes to experience higher rates of principal prepayment on the Class A Notes
than initially anticipated. Similarly, if Westpac elects to change certain
features of the Housing Loans, Borrowers may elect to refinance their loan with
another lender to obtain more favorable features, which also could lead to
higher principal prepayment on the Class A Notes than initially anticipated. See
"PREPAYMENT AND YIELD CONSIDERATIONS."
RISKS OF CURRENCY EXCHANGE CONTROLS
The Issuer Trustee will receive Australian dollar payments on the Housing
Loans in Australia and, under the Currency Swaps, is required to pay certain
collections to the Currency Swap Providers as required under the Series Notice.
It is possible that in the future the Australian Government may impose exchange
controls that affect the availability of Australian dollar payments for making
payments under the Currency Swaps. The Class A Noteholders will bear the risk of
the imposition of foreign exchange controls by the Australian government that
impact upon the 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 of the amounts in Australian dollars which it is
required by the Transaction Documents to pay to the Currency Swap Providers
under the Currency Swaps, the Currency Swap Providers are only required to pay
the U.S. dollar equivalent of the
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amounts they actually receive. In such event, it is unlikely that the Trust
would have sufficient U.S. dollars to make the payments due on the Class A
Notes.
RISKS RELATED TO A TERMINATION OF THE SWAP AGREEMENTS
By entering into the Swap Agreements, the Issuer Trustee intends to transfer
to the Interest Rate Swap Provider and Currency Swap Providers, as applicable,
the risks set forth below that the Trust would otherwise have with respect to
payments on the Class A Notes and the Housing Loans.
(a) Currency Exchange Risk. Interest and principal on the Class A Notes is
payable in U.S. dollars and the Trust's primary source for funding its payments
on the Class A Notes is its collections on the Housing Loans, which will be in
Australian dollars. If the Currency Swap Providers were to fail to perform under
the Currency Swaps or were to be discharged from such performance because of a
default thereunder by the Trust, the Issuer Trustee 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 Exchange Rate (which is 1.52672
Australian dollars for each U.S. dollar) and might therefore not have sufficient
U.S. dollars to make timely payments on the Class A 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
Class A 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 quarter the Interest Rate Swap Provider will pay the Issuer Trustee
the three month Bank Bill Rate plus a fixed margin and receive from the Issuer
Trustee the weighted average variable housing rate. The margin is fixed for the
life of the swap and will be set with regard for the ongoing expenses of the
Trust.
If Westpac is downgraded below "A-1+" by Standard & Poor's, "A2" by Moody's
or "F-1+" by Fitch, 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 Housing Loan
rates across Westpac's whole portfolio of loans of the same product type may be
set at above market interest rates on the variable rate housing loans to meet
Trust Expenses which could result in the affected Borrowers refinancing their
loans with another bank, which in turn could cause Class A Noteholders to
experience higher rates of principal repayment on the Class A Notes than
initially anticipated. If the Variable Rate Basis Swap is terminated, the Trust
may be subject to reinvestment risk to the extent that any payments and
prepayments invested in Authorized Investments do not earn a sufficient rate of
interest to cover the interest owing on the Notes.
(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 Class A 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 on the Closing Date to hedge
that portion of the pool earning a Fixed Rate of interest as of the 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
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or about 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 or from an existing fixed
rate of interest to a new 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 "A-1+" by Standard & Poor's, "A2" by Moody's
or "F-1+" by Fitch, 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, who shall make such decision at the direction of the Trust
Manager. If the Fixed Rate Swap remains in place, the Rating Agencies may
consider downgrading the Class A Notes and an investor may then be holding Class
A Notes which have been downgraded. If the Fixed Rate 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 Class A Notes). If the
relevant Fixed Rate Basis Swap is terminated, the Trust will be subject to the
risk that the floating rate obligations of the Trust may change in such a way
that the discretionary fixed rate set by Westpac on those Housing Loans being
charged a fixed rate of interest will be insufficient to make payments on such
floating rate obligations.
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 Class A Noteholders.
The Issuer Trustee's obligation to pay principal in respect of the Class A
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
Class A 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 CLASS A 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 (as defined
herein), 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.
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 Class A 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.
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RISK OF EARLY DEFAULTS
Although little data is available and no empirical verification has been
made by the Trust Manager, 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.
PRINCIPAL PREPAYMENT AND YIELD CONSIDERATIONS
The yield to maturity experienced by a Class 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 Class A Noteholders earlier than would otherwise have been
the case. For example, early payments of principal may occur in the following
situations:
(1) refinancing by Borrowers with other financiers;
(2) receipt by the Issuer Trustee of enforcement proceeds due to a Borrower
having defaulted on its Housing Loan;
(3) receipt by the Issuer Trustee of insurance proceeds in relation to a
claim under a Mortgage Insurance Policy in respect of a Housing Loan;
(4) 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");
(5) receipt by the Trust of any net amount attributable to principal from
another WST trust established under the Master Trust Deed with respect to the
substitution of a Housing Loan;
(6) repurchase of the Housing Loans as a result of a Clean-Up Offer or a
redemption for taxation or other reasons (see "DESCRIPTION OF THE CLASS A
NOTES--Clean-Up Offer" and "--Redemption of the Class A Notes for Taxation or
Other Reasons");
(7) receipt of proceeds of enforcement of the Security Trust Deed prior to
the Maturity Date of the Notes (see "DESCRIPTION OF THE CLASS A
NOTES--Redemption of the Notes"); or
(8) receipt of proceeds of the sale of Housing Loans if the Trust is
terminated while Class A 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 CLASS A NOTES--the Redraw Facility, the Redraw Funding
Securities and the RFS Class A Notes")), the Issuer Trustee may transfer Housing
Loans which comprise assets of the Trust to another WST trust established under
the Master Trust Deed. 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 principal payment experience may be affected by a wide
variety of factors, including general economic conditions, interest rates, the
availability of alternative financing and homeowner mobility. Furthermore,
unlike the United States, under Australian law, interest on loans used to
purchase a person's primary place of residence is not ordinarily deductible for
taxation purposes. Conversely, interest payments on mortgage loans and other
non-capital expenditures relating to investment properties that generate taxable
income are generally allowable as tax deductions. This is one contributing
factor to borrowers prepaying housing loans relating to owner-occupied
properties in Australia in a manner that differs from the United States. See
"CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS-- Treatment of Interest Payments
with respect to Australian Housing Loans".
See "PREPAYMENT AND YIELD CONSIDERATIONS."
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NO GROSS-UP; TAX REDEMPTION
In the event that any withholding tax is imposed on payments of interest on
any of the Class A Notes, the holders of the Class A Notes will not be entitled
to receive grossed-up amounts to compensate for such withholding tax.
Consequently, there can be no assurance that the remaining payments on the
Housing Loans would be sufficient to make timely payments of Interest on and
payment of principal at the maturity date of the Class A Notes. In addition,
upon the occurrence of a Withholding Tax Event, the Issuer Trustee (at the
direction of the Trust Manager) may on any Payment Date simultaneously redeem in
whole but not in part, at the redemption prices specified herein, the Class A
Notes in accordance with the procedures described under "DESCRIPTION OF THE
CLASS A NOTES--Redemption of the Class A Notes for Taxation or Other Reasons"
herein. Holders of 75% of the Invested Amount of the Class A Notes may also
elect not to redeem the Class A Notes in the event of a Withholding Tax Event.
REINVESTMENT RISK
The Interest Rate Swap Agreements transfer the reinvestment risk detailed
below to the applicable Swap Provider. In the event that the Variable Rate Basis
Swap is terminated, the reinvestment risk will transfer back to the Issuer
Trustee. 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 Class A Notes at the then
current Interest Rate 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 Class A Notes may affect
the ability of the Issuer Trustee to pay interest in full on the Class A 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 CLASS A
NOTES--Available Income" and "--Principal Draws."
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 (a) 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 or (b) that an Eligible Servicer will be able
to service the Housing Loans with the same level of skill and competence as the
initial 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 RFSS AND RFS CLASS A NOTES OWNED BY AUSTRALIAN RESIDENT INVESTORS
In certain limited circumstances, the Issuer Trustee will issue RFSs and RFS
Class A Notes, which will be issued to Australian resident investors only. The
RFSs will be senior to the Class A Notes with respect to payments of principal
and 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 being made on the Class A Notes.
Additionally, if RFSs are not repaid on the fifth Collection Determination Date
following
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the date such RFSs were issued, such RFSs will convert to RFS 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. 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 principal, Interest and fees. If proceeds from the
liquidation of the assets included in the Trust following the enforcement of the
Security Trust Deed are not sufficient to pay all obligations of the Issuer
Trustee in its capacity as trustee of the Trust, Noteholders with a lower
priority of payment are at a greater risk for losses on their investment. See
"DESCRIPTION OF THE CLASS A 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 on the Class B Notes to payments
to the Class A Notes. Although the credit enhancement is intended to reduce the
risk of delinquent payments or losses to the Class A 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 Class A Notes. As a result, the available credit enhancement may be
insufficient to reduce the risk of delinquent payments and losses to the Class A
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 Class A Notes, Class A Noteholders may suffer losses. In addition, the
Liquidity Facility does not provide any credit enhancement with respect to the
Class A Notes. See "DESCRIPTION OF THE CLASS A NOTES--Principal Draws" and "THE
LIQUIDITY FACILITY."
EXERCISE OF CLEAN-UP OFFER MAY RESULT IN SHORTFALLS TO NOTEHOLDERS
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. The proceeds of sale will be applied by the Issuer
Trustee to repay moneys owing to Class A Noteholders at that time in accordance
with the priorities for applying payments of Interest and principal between the
Classes of Notes. In the event that a Housing Loan is non-performing, the
purchase price for such Housing Loan will be based on the Fair Market Value.
Fair Market Value with respect to a Housing Loan may be less than the Unpaid
Balance of such Housing Loan. If a significant number of Housing Loans are
non-performing, the total proceeds from exercising the Clean-up Offer may be
less than amounts owing to Class A Noteholders and Class A Noteholders may
suffer losses. See "DESCRIPTION OF THE NOTES--Clean-up Offer."
REDEMPTION OF THE NOTES
If an Event of Default occurs under the Security Trust Deed while the Class
A Notes are outstanding, the Security Trustee may (subject to the prior written
consent of the Noteholder Mortgagees in accordance with the provisions of the
Security Trust Deed), and will (if so directed by the Noteholder Mortgagees
where they are the only Voting Mortgagees 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
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Loans for their then current 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, including the Class A 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 holders of 75% of the votes of all 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 CLASS A NOTES-- Termination of the Trust."
GEOGRAPHIC CONCENTRATION MAY AFFECT PERFORMANCE
Approximately 46.59%, 16.02%, 15.71% and 15.27% (by Cut-Off Date Principal
Balance) of the Housing Loans are secured by Mortgaged Properties in the regions
of New South Wales, Victoria, Queensland and Western Australia, 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, the Housing Loans in that region 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 has the right
to apply to a court to, among other things:
(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 if the
interest rate is changed in a way which is unconscionable;
(3) have certain provisions of the Housing Loan or relevant Mortgage which
are in breach of the legislation declared unenforceable;
(4) obtain an order for a civil penalty against Westpac or, after a Title
Perfection Event, the Issuer Trustee, in relation to a breach of certain key
requirements of the Consumer Credit Legislation, the amount of which may be set
off against any amount payable by the Borrower under the Housing Loan; or
(5) obtain restitution or compensation from either Westpac or, after a Title
Perfection Event, the Issuer Trustee, in relation to breaches of the Consumer
Credit Legislation in relation to the Housing Loan or the 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 Class A Notes).
In addition, 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
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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. Such procedures and negotiations may also affect the
timing or amount of interest or principal payments or repayments under the
Housing Loans.
Breaches of the Consumer Credit Legislation may also lead to 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 Class A 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 representations and warranties are set forth in "THE TRUST
FUND--Representations and Warranties." 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 a loss in connection with a breach
of the Consumer Credit Legislation which is caused by a breach of a relevant
representation or undertaking. See "CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS."
RISK OF COMMINGLING
Collections under the Housing Loans are received by Westpac or the Servicer.
As described in "DESCRIPTION OF THE CLASS A NOTES--Collections," provided that
Westpac has a short term rating of at least "A-1+" from Standard & Poor's, "P-1"
from Moody's and "F-1+" from Fitch 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 Collections 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.
RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE
The origin of the Year 2000 "millennium bug" problem lies in the way
information in computer systems relating to calendar dates has been stored.
Computer systems, built when data storage was expensive, saved only the last two
digits of a year for date calculations in order to reduce data storage
requirements. These systems are therefore unable to differentiate, for example,
between the years 1900 and 2000. This inability to differentiate between the
different centuries could result in discrepancies such as erroneous interest
rate calculations, inaccurate statement reporting and delays in the receipt of
payments from Borrowers. The Mortgage Pool Insurance Policy does not cover any
loss resulting from the failure of Westpac's computer systems or other items to
be Year 2000 compliant.
In recognition of the seriousness of the problem, work within the Westpac
Group began in 1996 when a Year 2000 project was initiated. The estimated cost
of remediation of Westpac Group's applications is
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not expected to exceed A$85 million (which estimate includes a substantial
contingency allowance). To the maximum extent possible, the Year 2000 project
continues to utilize existing Westpac Group resources.
As of March 31, 1999, all of Westpac's core critical systems and
applications had been Year 2000 remediated, with any internal and external
testing on track for substantial completion by June 30, 1999. Any other
applications, deemed critical at business unit level, which have not yet been
remediated and Year 2000 tested, are scheduled for completion by June 1999.
However, completion of a number of these applications is dependent upon third
party vendors, in which case contingency plans will be put into effect if
required. During 1999, the focus of Westpac's Year 2000 project will
increasingly concentrate on the complexities of internal, global and
industry-wide testing together with transition management, including contingency
planning.
LIMITED LIQUIDITY
There will be no market for the Class A 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 Class A Noteholders with liquidity of
investment or that it will remain for the term of any Class A Notes. The
Underwriters presently expect to make a secondary market in the Class A 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, "AAA" by Standard & Poor's and "AAA" by Fitch and that the
Class B Notes be rated at least "AA-" by Standard & Poor's and "AA-" by Fitch. A
rating is not a recommendation to purchase, hold or sell the Class A Notes,
inasmuch as such rating does not comment as to market price or suitability for a
particular investor. The rating of the Class A Notes addresses the likelihood of
the payment of principal and interest on the Class A 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 Providers, the Mortgage Insurance Providers or a reduction in the foreign
currency rating of Australia) in the future so warrant. The ratings of the Class
A 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 Policies, the availability of the Liquidity
Facility, the creditworthiness of the Interest Rate Swap Provider, the Currency
Swap Providers and the Mortgage Insurers and the foreign currency rating of
Australia. In the context of an asset securitization, the foreign 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 Class A Notes in book-entry form may reduce the liquidity of
such Notes in the secondary trading market since investors may be unwilling to
purchase Class A Notes for which they cannot obtain physical certificates. Since
transactions in the Class A Notes can be effected only through DTC, Cedelbank,
Euroclear, participating organizations, indirect participants and certain banks,
the ability of a Note Owner (as defined herein) to pledge a Class A Note to
persons or entities that do not participate in the DTC, Cedelbank or Euroclear
systems or otherwise to take actions in respect of such Class A Notes, may be
limited due to lack of a physical certificate representing the Class A Notes.
Note Owners may experience some delay in their receipt of distributions of
interest and principal on the Class A Notes since such distributions will be
forwarded by the Principal Paying Agent to DTC and DTC will credit such
distributions to the accounts of its Participants (as defined herein) which will
thereafter credit them to the
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accounts of Noteholders either directly or indirectly through indirect
participants. See "DESCRIPTION OF THE CLASS A NOTES--Book-Entry Registration"
herein.
RISKS ASSOCIATED WITH THE INTRODUCTION OF A GOODS AND SERVICES TAX IN AUSTRALIA
On December 2, 1998 the Australian Federal Government introduced a series of
bills to introduce a Goods and Services Tax (a "GST"), which were subsequently
amended on April 21, 1999 (the "GST Legislation"). The main bill is titled "A
New Taxation System (Goods and Services Tax) 1998." As the GST Legislation is
still in draft form (and is likely to change substantially prior to enactment)
it is not possible to identify risks specific to participants in this offering.
However, among other things, and based on the current draft of the GST
Legislation, some of the relevant issues are:
(1) GST will apply at the rate of 1/11th of the GST inclusive value of
supplies of goods, services and other things connected with Australia from July
1, 2000, except to the extent that the supply is: (a) "GST-free" (ie. the
supplier is not liable to tax on the supply and can obtain full input tax
credits for GST paid on things acquired to make the supply); or (b) "input
taxed", which includes "financial supplies" (the supplier does not pay GST on
the supply, but is not entitled to input tax credits for GST paid on things
acquired to make the supply). Special transitional rules will apply to contracts
which span July 1, 2000.
(2) GST will impact the cost of repairing or replacing damaged or destroyed
buildings on Mortgaged Properties offered as security for Housing Loans after
July 1, 2000. However, it is a condition of Westpac's standard mortgage
documentation that the mortgagor must maintain full replacement value property
insurance at all times. In addition, Westpac currently maintains a blanket
insurance policy with Cigna Insurance Asia Pacific Pty Limited which covers loss
from a mortgage default which follows from physical loss, destruction or damage
to a Mortgaged Property which is not otherwise covered by adequate property
insurance. See "WESTPAC RESIDENTIAL LOAN PROGRAM--Underwriting of Housing
Loans".
(3) Services provided to the Issuer Trustee in the Series 1999-1G WST Trust
will be a mixture of taxable and input taxed supplies for GST purposes. If a
supply is taxable, the supplier has the primary obligation to account for GST in
respect of that supply and must rely on a contractual provision to recoup that
GST from the Issuer Trustee. It is not possible at this stage to identify which
services supplied to the Trust will be taxable supplies. However, under the
Series Notice, certain fees paid by the Issuer Trustee (namely the Trust Manager
Fee, the Issuer Trustee Fee and the Servicing Fee) will only be able to be
increased by reference to the supplier's GST liability (if any) if:
(a) the Issuer Trustee, the Trust Manager and the recipient of the relevant
fee agree (which agreement shall not be unreasonably withheld); and
(b) the increase will not result in the downgrading or withdrawal of the
rating of any Notes.
If other fees payable by the Issuer Trustee are treated as the consideration for
a taxable supply under the GST Legislation or otherwise may be increased by
reference to the relevant supplier's GST liability, the Issuer Trustee may not
be entitled to an input tax credit for that increase and the Trust Expenses will
increase, resulting in a net reduction in Excess Available Income.
(4) The GST Legislation may, in certain circumstances, deem creditors to
make a taxable supply if the creditor enforces security by selling the charged
assets of a debtor and applying the proceeds of sale to satisfy the debt owed.
The creditor will have to account for GST out of the sale proceeds, with the
result that the remaining sale proceeds may be insufficient to cover the unpaid
balance of the related loan.
However, the creditor is only deemed to make a taxable supply on a sale of
the charged assets under these provisions if, had the related debtor made the
supply, the supply would have been a taxable supply (e.g. if the debtor in
question is a registered business for GST purposes, such as a company,
partnership, trading trust or sole trader). The general position is that a sale
of residential property is an input taxed supply for GST purposes. Thus the
enforced sale of property offered as security under Housing Loans in
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the Mortgage Pool will generally not be treated as a taxable supply under these
provisions. However, in limited circumstances the Issuer Trustee may have to
account for GST out of the proceeds of sale recovered under an enforced Housing
Loan and mortgage, noteably, where the debtor is a registered person (or is
required to be registered) for GST purposes and uses the Mortgaged Property as
an asset of its enterprise and (i) the premises are no longer being used as a
residence, or (ii) the premises are used as commercial residential premises such
as a hostel or boarding house, or (iii) the debtor is the first vendor of the
premises (e.g. the vendor built the premises), or (iv) the premises being sold
have not been used predominantly for residential accommodation.
Any reduction in the net amount recovered by the Issuer Trustee under an
enforced Housing Loan and mortgage due to GST will reduce Excess Available
Income (to the extent not covered by a Mortgage Insurance Policy). If 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 insurer under a Mortgage Insurance Policy
fails to perform its obligations and the subordination of Excess Available
Income is not sufficient. The extent to which the Issuer Trustee is able to
recover an amount on account of the GST, if any, payable on the proceeds of sale
in the circumstances described above, will depend on the terms of the related
Mortgage Insurance Policy. See "RISK FACTORS-- Mortgage Insurance Policies Are
Subject to Exclusions and Limitations" for further details.
(5) Where an insured party (for example, the Issuer Trustee under the
Mortgage Pool Insurance Policy) is a registered person for GST purposes, the
insured may have to account for GST in respect of any claim payment. However,
under the current draft of the GST Legislation, where the claim payment is made
in respect of an insurance policy on which the insured was not entitled to an
input tax credit on the premium payable, the insured does not have to account
for GST in respect of the claim payment.
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.
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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 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 WST 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 Series
1999-1G WST 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 1999-1G WST TRUST
The detailed terms of the Trust will be 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 the Trust, the Trust Manager and the
Issuer Trustee have executed a notice of creation of trust dated on or about May
6, 1999 (the "Notice of Creation of Trust").
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 Class A
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. The Master Trust Deed and a form
of the Series Notice have been filed as exhibits to the Registration Statement
of which this Prospectus is a part. The summaries herein do not purport to be
complete and are subject to the provisions of such documents.
The issuance of the Class A 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"). The Seller Trustee owes a fiduciary duty to
Westpac, the entity which is the beneficiary of each "warehouse" trust
established under the Master Trust Deed.
In addition, the Trust may issue certain additional debt securities as
discussed herein under "DESCRIPTION OF THE CLASS A NOTES--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 certain accounts established pursuant to the
Master Trust Deed, including the Collections Account and amounts invested in
Authorized Investments; and
4. the Issuer Trustee's rights under the Transaction Documents.
SECURITY FOR THE NOTES
CHARGE
Pursuant to the Security Trust Deed, dated on or about May 6, 1999 among the
Issuer Trustee, the Trust Manager, the Note Trustee and the Security Trustee,
the Issuer Trustee will grant 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 Class A Noteholders, the Class B Noteholders, the
Note Trustee, the Trust Manager, the Interest Rate Swap Provider, the Currency
Swap Providers, the Security Trustee, each Paying Agent, the Agent Bank, the
Note Registrar, each other provider of a Support Facility (other than any
provider of a Mortgage Insurance Policy), the Approved Sellers in respect of any
Accrued Interest Adjustment (as defined herein), to Westpac in respect of
Redraws, to 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 Trust Assets in trust for each Mortgagee in
accordance with the terms and conditions of the Security Trust Deed.
Subject to the provisions 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), the RFS Class A Notes (if any), the Class A
Noteholders (which shall be determined by the Note Trustee acting on their
behalf) and the Class B Noteholders. 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, 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, 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 any particular reference to the Security Trustee.
The Security Trustee expressly disclaims and takes no responsibility for any
other part of this Prospectus. 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.
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The Security Trustee does not guarantee the success of the Class A Notes nor
the payment of principal or Interest on the Class A Notes.
NATURE OF SECURITY
If a company grants a fixed security over any of its assets, those assets
may not be dealt with by such 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, provided such
dealings and transfers of title are in the ordinary course of a chargor's
business. 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 mortgage 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 "CERTAIN LEGAL ASPECTS OF THE HOUSING
LOANS" and "APPENDIX I-- GLOSSARY OF AUSTRALIAN LEGAL TERMS" herein.
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). See "DESCRIPTION OF THE CLASS A
NOTES--Events of Default; Rights Upon Event of Default." The Security Trustee
may waive (such waiver, being subject to the prior written consent of the
Noteholder Mortgagees 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 the Secured Moneys (as defined herein) (including amounts
outstanding under the Notes, plus accrued and unpaid interest) immediately
due and payable;
(3) crystallize the floating charge created under the Security Trust
Deed in relation to any or all of the Secured Property (for a description of
the crystallization process, see "--Nature of Security" above); 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.
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"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
Transaction Document.
Every question submitted to a meeting shall be decided in the first instance
by a show of hands and in case of equality of votes the chairman shall both on a
show of hands and on a poll have a casting vote in addition to the vote or votes
(if any) to which he may be entitled as Voting Mortgagee or as a Representative
(as defined herein). On a show of hands, every person holding, or being a
Representative holding or representing other persons who hold, Secured Moneys
shall have one vote except that the Note Trustee shall represent each Class A
Noteholder who has directed the Note Trustee to vote on its behalf under the
Note Trust Deed. On a poll, every person who is present shall have one vote for
US $10,000 or its equivalent (but not part thereof) of the Secured Moneys that
he holds or in which he is a Representative. A "Representative" is in the case
of any Noteholder, a person or body corporate appointed as a proxy for that
Noteholder.
A resolution of all the Voting Mortgagees (including an Extraordinary
Resolution) may be passed, without any meeting or previous notice being
required, by an instrument or notes in writing which have been signed by all of
the Voting Mortgagees.
The Security Trustee cannot exercise the powers referred to above unless
directed by an Extraordinary Resolution in the manner outlined above. 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 Noteholder Mortgagees are the only Voting
Mortgagees, they 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 Noteholder
Mortgagees are the only Voting Mortgagees, unless the Noteholder Mortgagees
otherwise consent.
The Noteholder Mortgagees will be the only Voting Mortgagees for so long as
the amounts outstanding under the Class A Notes and the Class B Notes are 75% or
more of all Secured Moneys. Any reference to the Noteholder Mortgagees where
they are the only Voting Mortgagees or where their consent is required under the
Security Trust Deed in relation to a discretion or act of the Security Trustee
means Noteholder Mortgagees representing more than 50% of the aggregate combined
Invested Amount of the Class A Notes and the Class B Notes.
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
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similar employee benefits and certain auditor's fees. Subject to the foregoing,
the proceeds from enforcement of the Security Trust Deed will be distributed as
follows:
(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 PARI PASSU and rateably:
(i) any fees and other expenses (including Trust 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;
(3) third, to pay PARI PASSU and rateably any unpaid Accrued Interest
Adjustment due to an Approved Seller;
(4) fourth, to pay PARI PASSU and rateably:
(i) all Secured Moneys (as defined herein) owing to the providers of
each Support Facility (other than the Currency Swap Providers);
(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 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 WST 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 Providers under a
confirmation relating to the 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);
(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; and
(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
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<PAGE>
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
equitable 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 and each of its officers, employees and
advisers from and against all claims, actions, proceedings, demands,
liabilities, losses, damages, costs and expenses arising out of or in connection
with: (i) the Transaction Documents, the Notice of Creation of Trust, each Note
and the Mortgage Insurance Policies; or (ii) the Security Trustee's engagement
as Security Trustee, which it or any of its officers, employees or advisers may
suffer as a result of the Issuer Trustee failing to perform any of its
obligations, or any claim that the Security Trustee or any of its officers,
employees or advisers has any liability under the Securities Act or the Exchange
Act in relation to the issue of securities in connection with the Trust. The
Issuer Trustee is not responsible under the Security Trust Deed for any
liabilities, losses, damages, costs or expenses resulting from fraud, willful
default or negligence on the part of the Security Trustee or any of its
officers, employees and advisers.
RETIREMENT AND REMOVAL
Subject to the appointment of a successor Security Trustee, 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 Security Trustee
may resign in favor of a successor Security Trustee only if the Rating Agencies
confirm that such resignation will not cause a withdrawal, downgrade or
qualification of the ratings of the Notes.
Subject to the appointment of a successor Security Trustee and prior notice
being given to each of the Rating Agencies, an Extraordinary Resolution of the
Voting Mortgagees may at any time remove the Security Trustee.
Subject to the appointment of a successor Security Trustee and prior notice
being given to each of 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 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.
Upon notice of resignation or removal of the Security Trustee, the Trust
Manager has the right to appoint a successor Security Trustee who has been
previously approved by an Extraordinary Resolution of the Voting Mortgagees and
who accepts the appointment. If no successor Security Trustee is appointed
within 30 days after notice, the retiring Security Trustee may on behalf of the
Mortgagees appoint a successor Security Trustee (other than Westpac or a related
corporation of Westpac) who accepts the appointment. There are currently several
third party security trustee organizations in Australia which may be available
to replace a resigning or removed security trustee.
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<PAGE>
ADDITIONAL PROVISIONS OF THE SECURITY TRUST DEED
The Security Trust Deed may be amended by the Issuer Trustee and the
Security Trustee with the written approval of the Trust Manager and the
Noteholder Mortgagees 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, any other Transaction Document,
any Note, the Notice of Creation of Trust or any Mortgage Insurance Policy.
(2) The Security Trustee is not required to exercise its powers under
the Security Trust Deed without being directed to do so by the Noteholder
Mortgagees 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 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. The Security
Trustee will be taken not to have knowledge of the occurrence of an Event of
Default unless the Security Trustee has received notice from a Voting
Mortgagee or the Issuer Trustee stating that an Event of Default has
occurred and describing such Event of Default.
(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 Class A 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 on behalf of the Class A Noteholders and 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 without
inquiry 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 independent 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,
any Note, the Notice of Creation of Trust or any Mortgage Insurance Policy.
(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, any Note, the Notice of Creation of Trust or
any Mortgage Insurance Policy or otherwise without having to account to the
Mortgagees.
(12) The Security Trustee has no liability under or in connection with
the Security Trust Deed, any other Transaction Document, any Note, the
Notice of Creation of Trust or any Mortgage Insurance Policy (whether to any
Mortgagee, the Issuer Trustee, the Trust Manager or any person)
53
<PAGE>
other than to the extent to which the liability is able to be satisfied in
accordance with the Security Trust Deed out of the property held by it on
trust under the Security Trust Deed and it is actually indemnified for the
liability. This limitation of liability does not apply to a liability of the
Security Trustee to the extent that it is not satisfied because there is a
reduction in the extent of the Security Trustee's indemnification as a
result of its fraud, negligence or willful default.
THE TRUST FUND
GENERAL
The Housing Loans are expected to include 12,886 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 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 variable and fixed rate loans originated by Westpac.
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 Trustee or 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. Generally each Housing
Loan is secured by a registered first ranking mortgage over the related
Mortgaged Property or, if the Housing Loan is not secured by a first ranking
mortgage, the Approved Seller will equitably assign to the Issuer Trustee all
prior ranking Registered Mortgages in relation to that Housing Loan. 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, 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, with the assistance of the
Trust Manager and Westpac, 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, if any, 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 equitably 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
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<PAGE>
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
equitably 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 equitably 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 Trustee, 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 equitably assigned by it (e.g., as to title) to the Issuer
Trustee.
The Issuer Trustee has not investigated or made any inquiries regarding the
accuracy of these 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
the event that any representation or warranty is incorrect are described in
"--Breach of Representations and Warranties" below.
WESTPAC REPRESENTATIONS
Westpac will make representations and warranties with respect to each
Housing Loan as of the date the Housing Loan is offered to the Issuer Trustee
(except as specified below) and the Closing Date, and in relation to paragraph
(3) below, as of the Cut-Off Date, including that:
(1) it is subject to a Mortgage Insurance Policy (in the case of the
Mortgage Pool Insurance Policy, at the Closing Date);
(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 Issuer Trustee);
(3) in relation to the Housing Loans to be sold by Westpac to the Issuer
Trustee, 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 equitably assign such mortgages
to the Issuer Trustee;
(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 Fixed Options Home Loan, a Special
Offer Fixed Option Home Loan, a
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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; and
(xiv) the Borrower is a resident of Australia; and
(4) at the time each Housing Loan and Mortgage which is specified in the
Sale Notice and each Related Security was entered into it complied in all
material respects with applicable laws, including, without limitation, where
the Consumer Credit Legislation applies, the Consumer Credit Legislation.
SERVICER REPRESENTATIONS
In relation to the Housing Loans to be sold by the Seller Trustee 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) as of the Closing Date, 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 in respect of the warehouse
trust.
(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.
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
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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 12,886 Housing Loans secured by Mortgages
on Mortgaged Properties located in the six states and two territories in
Australia, New South Wales ("NSW"), Victoria ("Vic"), Queensland ("QLD"), South
Australia ("SA"), Western Australia ("WA"), Tasmania ("TAS"), Northern Territory
("NT") and the Australian Capital Territory ("ACT"). The aggregate Cut-Off Date
Balances Outstanding of the Housing Loans (the "Cut-Off Date Pool Balance")
totalled approximately A$1,383,157,099. The Housing Loans bear interest at
variable and fixed rates. As of the Cut-Off Date, 70.97% of the Housing Loans by
Cut-Off Date Loan Balance are variable rate loans (the "Variable Rate Housing
Loans") and 29.03% 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 6.57%
per annum. The weighted average Mortgage Rate for the Variable Rate Housing
Loans as of the Cut-Off Date was approximately 6.20% per annum. The lowest
Cut-Off Date Balance Outstanding of any Housing Loan was approximately A$10,023
and the highest was approximately A$513,202. The average Cut-Off Date Balance
Outstanding of the Housing Loans was approximately A$107,338. The weighted
average original term to stated maturity of the Housing Loans was approximately
310.00 months. The weighted average remaining term to stated maturity of the
Housing Loans was approximately 300.89 months. As of the Cut-Off Date, the
weighted average number of months that have elapsed since origination of the
Housing Loans was approximately 9.11 months. The lowest and highest LVR of the
Housing Loans at Cut-Off Date were approximately 1.82% and 94.85%, respectively.
The weighted average LVR of the Housing Loans was approximately 69.59%
Housing Loans representing approximately 17.76% of the Cut-Off Date Pool
Balance are secured by Mortgaged Properties which are investment properties
(based solely upon statements made by the related Borrowers at the time of
origination of the related Housing Loans).
As of the Cut-Off Date, no Housing Loans were more than 30 days Delinquent.
Set forth below is a description of certain additional characteristics with
respect to the Housing Loans held by the Trust and are not indicative of
Westpac's entire portfolio of housing loans. All percentages are approximate and
may not total 100% due to rounding.
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(ALL AMOUNTS EXPRESSED IN AUSTRALIAN DOLLARS)
(ALL %'S ARE APPROXIMATE AND MAY NOT TOTAL 100% DUE TO ROUNDING)
BALANCE OUTSTANDING DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED WEIGHTED
NUMBER SECURITY BALANCE AVERAGE AVERAGE % BY
BALANCE OF LOANS VALUE A$* OUTSTANDING A$ BALANCE A$ LVR (%) NUMBER
- ------------------------------------------- -------- -------------- -------------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
A$10,000-A$20,000.......................... 446 $ 73,820,150 $ 7,101,233 $ 15,922 33.54% 3.46%
A$20,001-A$30,000.......................... 617 $ 101,584,950 $ 15,852,194 $ 25,692 43.89% 4.79%
A$30,001-A$40,000.......................... 669 $ 106,667,800 $ 23,830,776 $ 35,621 47.47% 5.19%
A$40,001-A$50,000.......................... 793 $ 125,504,700 $ 36,440,139 $ 45,952 53.71% 6.15%
A$50,001-A$100,000......................... 4,520 $ 740,900,014 $ 347,235,741 $ 76,822 66.30% 35.08%
A$100,001-A$150,000........................ 3,300 $ 675,341,117 $ 407,302,765 $123,425 73.61% 25.61%
A$150,001-A$200,000........................ 1,390 $ 400,299,567 $ 240,326,678 $172,897 71.79% 10.79%
A$200,001-A$250,000........................ 580 $ 206,605,264 $ 129,811,982 $223,814 72.37% 4.50%
A$250,001-A$300,000........................ 356 $ 152,034,150 $ 97,647,499 $274,291 71.88% 2.76%
A$300,001-A$350,000........................ 117 $ 55,707,250 $ 37,620,213 $321,540 73.57% 0.91%
A$350,001-A$400,000........................ 55 $ 35,194,600 $ 20,655,640 $375,557 68.54% 0.43%
A$400,001-A$450,000........................ 26 $ 16,596,000 $ 11,105,782 $427,145 70.49% 0.20%
A$450,001-A$500,000........................ 15 $ 10,636,800 $ 7,203,200 $480,213 73.46% 0.12%
Above A$500,000............................ 2 $ 1,460,000 $ 1,023,257 $511,629 70.11% 0.02%
-------- -------------- -------------- ---------- -------- ----------
Total.................................... 12,886 $2,702,352,362 $1,383,157,099 $107,338 69.59% 100.00%
-------- -------------- -------------- ---------- -------- ----------
-------- -------------- -------------- ---------- -------- ----------
<CAPTION>
% BY
BALANCE BALANCE
- ------------------------------------------- ----------
<S> <C>
A$10,000-A$20,000.......................... 0.51%
A$20,001-A$30,000.......................... 1.15%
A$30,001-A$40,000.......................... 1.72%
A$40,001-A$50,000.......................... 2.63%
A$50,001-A$100,000......................... 25.10%
A$100,001-A$150,000........................ 29.45%
A$150,001-A$200,000........................ 17.38%
A$200,001-A$250,000........................ 9.39%
A$250,001-A$300,000........................ 7.06%
A$300,001-A$350,000........................ 2.72%
A$350,001-A$400,000........................ 1.49%
A$400,001-A$450,000........................ 0.80%
A$450,001-A$500,000........................ 0.52%
Above A$500,000............................ 0.07%
----------
Total.................................... 100.00%
----------
----------
</TABLE>
- ------------------------
* Total Security Value is the mortgage property value determined by either
contract of sale, valuation by a registered panel valuer or in remote areas,
a branch manager's assessment as reported on the system as of the Cut-Off
Date. See "WESTPAC RESIDENTIAL LOAN PROGRAM--Underwriting of Housing Loans."
MORTGAGE RATES OF THE FIXED RATE HOUSING LOANS AS OF THE CUT-OFF DATE*
<TABLE>
<CAPTION>
WEIGHTED
NUMBER CURRENT BALANCE MINIMUM MAXIMUM AVERAGE % BY % BY
CURRENT RATES OF LOANS OUTSTANDING A$ RATE (%) RATE (%) RATE (%) NUMBER BALANCE
- -------------------------------------- ----------- --------------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
4.501% less than=5%................... 1 $ 176,317 5.00% 5.00% 5.00% 0.03% 0.04%
5.001% less than=5.5%................. 163 $ 21,269,362 5.10% 5.49% 5.44% 4.58% 5.30%
5.501% less than=6%................... 418 $ 48,298,296 5.95% 6.00% 5.99% 11.75% 12.03%
6.001% less than=6.5%................. 947 $ 107,229,293 6.10% 6.50% 6.28% 26.62% 26.71%
6.501% less than=7%................... 1,671 $ 184,720,375 6.55% 7.00% 6.85% 46.96% 46.00%
7.001% less than=7.5%................. 295 $ 32,723,416 7.08% 7.50% 7.24% 8.29% 8.15%
7.501% less than=8%................... 37 $ 4,108,991 7.55% 8.00% 7.72% 1.04% 1.02%
8.001% less than=8.5%................. 9 $ 1,308,182 8.20% 8.50% 8.25% 0.25% 0.33%
8.501% less than=9%................... 14 $ 1,382,953 8.60% 8.95% 8.72% 0.39% 0.34%
9.001% less than=9.5%................. 1 $ 36,890 9.40% 9.40% 9.40% 0.03% 0.01%
9.501% less than=10%.................. 2 $ 269,311 9.75% 9.95% 9.82% 0.06% 0.07%
----- --------------- ----------- ----------- ----------- ---------- ----------
Total............................... 3,558 $ 401,523,386 5.00% 9.95% 6.57% 100.00% 100.00%
----- --------------- ----------- ----------- ----------- ---------- ----------
----- --------------- ----------- ----------- ----------- ---------- ----------
</TABLE>
- ------------------------
* Each Fixed Rate Housing Loan can convert, in whole or in part, to a Variable
Rate Housing Loan subject to certain related fees.
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<PAGE>
MORTGAGE RATES OF THE VARIABLE RATE HOUSING LOANS AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
WEIGHTED
NUMBER CURRENT BALANCE MINIMUM MAXIMUM AVERAGE % BY % BY
CURRENT RATES OF LOANS OUTSTANDING A$ RATE (%) RATE (%) RATE (%) NUMBER BALANCE
- -------------------------------------- ----------- --------------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
5.001% less than=5.5%................. 1 $ 235,804 5.49% 5.49% 5.49% 0.01% 0.02%
5.501% less than= 6%.................. 3,835 $ 521,026,590 5.74% 6.00% 5.94% 41.11% 53.08%
6.001% less than= 6.5%................ 5,091 $ 426,828,379 6.09% 6.49% 6.48% 54.58% 43.48%
6.501% less than= 7%.................. 401 $ 33,542,940 6.59% 6.65% 6.59% 4.30% 3.42%
----- --------------- ----------- ----------- ----------- ---------- ----------
Total............................... 9,328 $ 981,633,714 5.49% 6.65% 6.20% 100.00% 100.00%
----- --------------- ----------- ----------- ----------- ---------- ----------
----- --------------- ----------- ----------- ----------- ---------- ----------
</TABLE>
GEOGRAPHIC DISTRIBUTION BY REGION*
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
NUMBER SECURITY BALANCE AVERAGE AVERAGE % BY % BY
REGION OF LOANS VALUE A$ OUTSTANDING A$ BALANCE A$ LVR (%) NUMBER BALANCE
- ----------------------------- ----------- ---------------- ---------------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ACT-Metro.................... 175 $ 30,860,367 $ 16,696,623 $ 95,409 68.38% 1.36% 1.21%
NSW-Metro.................... 3,691 $ 1,139,038,326 $ 532,048,453 $ 144,148 66.57% 28.64% 38.47%
NSW-Other.................... 1,260 $ 204,067,800 $ 112,259,370 $ 89,095 72.02% 9.78% 8.12%
NT-Metro..................... 138 $ 27,932,701 $ 16,479,634 $ 119,418 74.13% 1.07% 1.19%
NT-Other..................... 57 $ 10,485,000 $ 6,079,094 $ 106,651 75.76% 0.44% 0.44%
QLD-Metro.................... 977 $ 173,547,421 $ 95,188,510 $ 97,429 71.49% 7.58% 6.88%
QLD-Other.................... 1,302 $ 217,084,103 $ 122,122,951 $ 93,796 71.38% 10.10% 8.83%
SA-Metro..................... 349 $ 52,755,200 $ 27,089,916 $ 77,622 72.83% 2.71% 1.96%
SA-Other..................... 99 $ 10,602,750 $ 6,728,902 $ 67,969 77.37% 0.77% 0.49%
TAS-Metro.................... 103 $ 13,841,180 $ 7,502,435 $ 72,839 70.84% 0.80% 0.54%
TAS-Other.................... 118 $ 12,470,950 $ 8,137,207 $ 68,959 77.30% 0.92% 0.59%
Vic-Metro.................... 1,813 $ 356,839,823 $ 190,792,427 $ 105,236 71.36% 14.07% 13.79%
Vic-Other.................... 452 $ 50,475,450 $ 30,777,957 $ 68,093 75.17% 3.51% 2.23%
WA-Metro..................... 1,876 $ 334,749,441 $ 172,603,076 $ 92,006 70.09% 14.56% 12.48%
WA-Other..................... 476 $ 67,601,850 $ 38,650,543 $ 81,199 70.69% 3.69% 2.79%
----------- ---------------- ---------------- ----------- --------- ---------- ----------
Total........................ 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- ---------------- ---------------- ----------- --------- ---------- ----------
----------- ---------------- ---------------- ----------- --------- ---------- ----------
</TABLE>
- ------------------------
* Geographic distributions are split by State or Territory and by metropolitan
(Metro) or country (Other). The distributions are based on the postal 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.
59
<PAGE>
LVR RATIO DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
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% less than = 5%................. 47 $ 29,462,500 $ 1,100,190 $ 23,408 3.97% 0.36% 0.08%
5% less than = 10%................ 173 $ 57,081,300 $ 4,390,209 $ 25,377 7.96% 1.34% 0.32%
10% less than = 15%............... 225 $ 64,507,000 $ 7,927,347 $ 35,233 12.75% 1.75% 0.57%
15% less than = 20%............... 285 $ 81,336,750 $ 13,396,642 $ 47,006 17.78% 2.21% 0.97%
20% less than = 25%............... 340 $ 99,151,678 $ 20,419,040 $ 60,056 22.66% 2.64% 1.48%
25% less than = 30%............... 380 $ 103,324,995 $ 25,782,256 $ 67,848 27.71% 2.95% 1.86%
30% less than = 35%............... 428 $ 116,320,900 $ 35,039,008 $ 81,867 32.51% 3.32% 2.53%
35% less than = 40%............... 500 $ 135,063,760 $ 45,792,007 $ 91,584 37.66% 3.88% 3.31%
40% less than = 45%............... 530 $ 135,140,350 $ 52,788,622 $ 99,601 42.62% 4.11% 3.82%
45% less than = 50%............... 587 $ 143,021,880 $ 59,520,456 $ 101,398 47.53% 4.56% 4.30%
50% less than = 55%............... 614 $ 146,396,895 $ 67,063,179 $ 109,223 52.52% 4.76% 4.85%
55% less than = 60%............... 653 $ 155,183,515 $ 75,245,715 $ 115,231 57.54% 5.07% 5.44%
60% less than = 65%............... 708 $ 164,592,417 $ 84,643,376 $ 119,553 62.50% 5.49% 6.12%
65% less than = 70%............... 675 $ 144,328,250 $ 82,832,477 $ 122,715 67.61% 5.24% 5.99%
70% less than = 75%............... 786 $ 158,287,425 $ 94,096,034 $ 119,715 72.64% 6.10% 6.80%
75% less than = 80%............... 1,676 $ 322,978,697 $ 213,756,959 $ 127,540 78.14% 13.01% 15.45%
80% less than = 85%............... 758 $ 118,813,264 $ 82,694,634 $ 109,096 82.99% 5.88% 5.98%
85% less than = 90%............... 1,858 $ 285,005,697 $ 213,217,405 $ 114,756 87.91% 14.42% 15.42%
90% less than = 95%............... 1,663 $ 242,355,089 $ 203,451,542 $ 122,340 92.77% 12.91% 14.71%
----------- --------------- --------------- ----------- ----- --------- ---------
Total:........................ 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- --------------- --------------- ----------- ----- --------- ---------
----------- --------------- --------------- ----------- ----- --------- ---------
</TABLE>
MORTGAGE INSURER DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
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.............................. 7,455 $ 1,846,969,099 $ 778,009,999 $ 104,361 58.14% 57.85% 56.25%
HLIC.............................. 1,837 $ 306,625,335 $ 215,041,378 $ 117,061 80.18% 14.26% 15.55%
MGICA............................. 31 $ 4,927,000 $ 2,911,088 $ 93,906 79.79% 0.24% 0.21%
Royal & SUN/WLMI.................. 3,563 $ 543,830,928 $ 387,194,635 $ 108,671 86.65% 27.65% 27.99%
----------- --------------- --------------- ----------- ----- --------- ---------
Total......................... 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- --------------- --------------- ----------- ----- --------- ---------
----------- --------------- --------------- ----------- ----- --------- ---------
</TABLE>
60
<PAGE>
PRODUCT DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
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>
First Option................... 2,368 $ 506,488,234 $ 293,724,877 $ 124,039 70.65% 18.38% 21.24%
Fixed Options.................. 2,097 $ 479,036,840 $ 220,746,922 $ 105,268 69.30% 16.27% 15.96%
IPL--First Option.............. 500 $ 115,290,600 $ 63,558,296 $ 127,117 63.13% 3.88% 4.60%
IPL--Fixed Rate................ 885 $ 216,762,800 $ 112,224,064 $ 126,807 64.38% 6.87% 8.11%
IPL--Special Fixed Rate........ 127 $ 30,155,400 $ 16,304,067 $ 128,378 63.70% 0.99% 1.18%
IPL--Variable Rate............. 532 $ 111,245,750 $ 53,560,387 $ 100,677 65.70% 4.13% 3.87%
Premium Option................. 5,928 $ 1,165,668,267 $ 570,790,153 $ 96,287 70.74% 46.00% 41.27%
Special Options Fixed Rate..... 449 $ 77,704,471 $ 52,248,332 $ 116,366 77.26% 3.48% 3.78%
----------- --------------- --------------- ----------- ----- --------- ---------
Total...................... 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- --------------- --------------- ----------- ----- --------- ---------
----------- --------------- --------------- ----------- ----- --------- ---------
</TABLE>
SETTLEMENT PERIOD DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
NUMBER SECURITY BALANCE AVERAGE AVERAGE % BY % BY
SETTLEMENT PERIOD OF LOANS VALUE A$ OUTSTANDING A$ BALANCE A$ LVR (%) NUMBER BALANCE
- ---------------------------------- ----------- --------------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Prior 01/11/1996.................. 263 $ 47,652,450 $ 21,766,876 $ 82,764 60.24% 2.04% 1.57%
After 01/11/1996.................. 12,623 $ 2,654,699,912 $ 1,361,390,223 $ 107,850 69.74% 97.96% 98.43%
----------- --------------- --------------- ----------- ----- --------- ---------
Total......................... 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- --------------- --------------- ----------- ----- --------- ---------
----------- --------------- --------------- ----------- ----- --------- ---------
</TABLE>
61
<PAGE>
FIXED RATE HOUSING LOAN REPRICING DISTRIBUTION
<TABLE>
<CAPTION>
MONTH/YEAR
CONVERSION FROM
FIXED RATE HOUSING LOAN
TO TOTAL CURRENT WEIGHTED
VARIABLE RATE HOUSING NUMBER SECURITY BALANCE AVERAGE AVERAGE % BY % BY
LOAN OF LOANS VALUE A$ OUTSTANDING A$ BALANCE A$ LVR (%) NUMBER BALANCE
- ------------------------- ----------- ----------- -------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Apr-1999................. 131 $23,467,100 $ 14,194,537 $ 108,355 76.33% 3.68% 3.54%
May-1999................. 161 $28,660,521 $ 16,465,956 $ 102,273 74.01% 4.53% 4.10%
Jun-1999................. 136 $26,384,947 $ 15,418,118 $ 113,369 73.98% 3.82% 3.84%
Jul-1999................. 148 $28,801,350 $ 16,903,306 $ 114,212 73.83% 4.16% 4.21%
Aug-1999................. 70 $12,437,000 $ 7,742,641 $ 110,609 76.03% 1.97% 1.93%
Sep-1999................. 66 $11,474,000 $ 7,889,702 $ 119,541 77.20% 1.85% 1.96%
Oct-1999................. 83 $15,327,600 $ 9,805,832 $ 118,143 75.45% 2.33% 2.44%
Nov-1999................. 121 $23,211,800 $ 13,866,727 $ 114,601 74.26% 3.40% 3.45%
Dec-1999................. 107 $21,507,250 $ 13,049,180 $ 121,955 73.31% 3.01% 3.25%
Jan-2000................. 54 $10,952,364 $ 7,030,064 $ 130,186 74.81% 1.52% 1.75%
Feb-2000................. 59 $11,901,400 $ 6,271,570 $ 106,298 68.78% 1.66% 1.56%
Mar-2000................. 149 $32,629,850 $ 16,380,329 $ 109,935 67.56% 4.19% 4.08%
Apr-2000................. 126 $28,194,415 $ 14,098,650 $ 111,894 65.73% 3.54% 3.51%
May-2000................. 65 $14,013,050 $ 7,798,719 $ 119,980 69.00% 1.83% 1.94%
Jun-2000................. 58 $15,164,000 $ 7,372,909 $ 127,119 69.08% 1.63% 1.84%
Jul-2000................. 88 $20,539,000 $ 10,080,115 $ 114,547 64.95% 2.47% 2.51%
Aug-2000................. 48 $11,215,250 $ 5,291,160 $ 110,232 65.76% 1.35% 1.32%
Sep-2000................. 28 $ 6,804,300 $ 3,174,807 $ 113,386 66.13% 0.79% 0.79%
Oct-2000................. 27 $ 5,221,500 $ 2,720,368 $ 100,754 69.14% 0.76% 0.68%
Nov-2000................. 46 $10,926,500 $ 5,394,293 $ 117,267 68.46% 1.29% 1.34%
Dec-2000................. 33 $ 9,459,000 $ 4,355,804 $ 131,994 68.64% 0.93% 1.08%
Jan-2001................. 26 $ 5,743,500 $ 2,801,160 $ 107,737 66.33% 0.73% 0.70%
Feb-2001................. 16 $ 3,712,500 $ 1,923,330 $ 120,208 62.50% 0.45% 0.48%
Mar-2001................. 43 $12,712,000 $ 5,419,981 $ 126,046 64.68% 1.21% 1.35%
Apr-2001................. 43 $10,646,500 $ 5,072,992 $ 117,977 63.00% 1.21% 1.26%
May-2001................. 53 $11,870,150 $ 5,466,996 $ 103,151 62.83% 1.49% 1.36%
Jun-2001................. 76 $17,761,375 $ 8,699,235 $ 114,464 66.29% 2.14% 2.17%
Jul-2001................. 164 $42,897,449 $ 18,315,780 $ 111,682 64.68% 4.61% 4.56%
Aug-2001................. 94 $20,532,500 $ 9,299,062 $ 98,926 69.12% 2.64% 2.32%
Sep-2001................. 55 $12,468,000 $ 5,476,514 $ 99,573 65.86% 1.55% 1.36%
Oct-2001................. 56 $13,314,250 $ 6,828,262 $ 121,933 70.74% 1.57% 1.70%
Nov-2001................. 36 $ 8,819,100 $ 3,411,771 $ 94,771 67.65% 1.01% 0.85%
Dec-2001................. 34 $ 8,500,200 $ 3,712,014 $ 109,177 64.68% 0.96% 0.92%
Jan-2002................. 19 $ 5,151,450 $ 2,466,216 $ 129,801 71.67% 0.53% 0.61%
Feb-2002................. 5 $ 1,133,000 $ 549,664 $ 109,933 79.93% 0.14% 0.14%
Mar-2002................. 7 $ 1,317,700 $ 788,326 $ 112,618 83.07% 0.20% 0.20%
Apr-2002................. 7 $ 1,074,000 $ 496,405 $ 70,915 57.59% 0.20% 0.12%
May-2002................. 7 $ 1,331,000 $ 706,344 $ 100,906 68.90% 0.20% 0.18%
Jun-2002................. 11 $ 2,586,000 $ 924,662 $ 84,060 59.28% 0.31% 0.23%
Jul-2002................. 51 $13,902,000 $ 5,329,691 $ 104,504 59.93% 1.43% 1.33%
Aug-2002................. 15 $ 3,704,500 $ 1,512,232 $ 100,815 65.05% 0.42% 0.38%
Sep-2002................. 12 $ 3,081,000 $ 1,761,509 $ 146,792 67.57% 0.34% 0.44%
Oct-2002................. 14 $ 3,477,750 $ 1,774,799 $ 126,771 62.93% 0.39% 0.44%
Nov-2002................. 18 $ 4,222,400 $ 2,165,788 $ 120,322 67.84% 0.51% 0.54%
Dec-2002................. 7 $ 1,794,500 $ 791,565 $ 113,081 66.28% 0.20% 0.20%
Jan-2003................. 5 $ 854,500 $ 571,559 $ 114,312 78.21% 0.14% 0.14%
Feb-2003................. 17 $ 2,693,250 $ 1,656,228 $ 97,425 73.25% 0.48% 0.41%
Mar-2003................. 55 $13,121,900 $ 5,926,085 $ 107,747 65.78% 1.55% 1.48%
Apr-2003................. 57 $15,394,950 $ 6,521,494 $ 114,412 62.63% 1.60% 1.62%
May-2003................. 57 $15,640,000 $ 6,256,207 $ 109,758 62.35% 1.60% 1.56%
Jun-2003................. 42 $10,883,350 $ 4,842,113 $ 115,288 64.68% 1.18% 1.21%
Jul-2003................. 185 $46,875,740 $ 20,998,439 $ 113,505 64.38% 5.20% 5.23%
Aug-2003................. 138 $34,596,050 $ 15,867,947 $ 114,985 65.05% 3.88% 3.95%
Sep-2003................. 107 $28,445,000 $ 12,112,433 $ 113,200 63.36% 3.01% 3.02%
Oct-2003................. 92 $24,364,000 $ 11,349,529 $ 123,364 68.62% 2.59% 2.83%
Nov-2003................. 78 $18,171,750 $ 8,351,643 $ 107,072 66.55% 2.19% 2.08%
Dec-2003................. 25 $ 5,982,500 $ 2,706,804 $ 108,272 67.09% 0.70% 0.67%
Jan-2004................. 20 $ 5,517,000 $ 2,639,825 $ 131,991 68.54% 0.56% 0.66%
Feb-2004................. 4 $ 721,000 $ 401,300 $ 100,325 63.98% 0.11% 0.10%
Mar-2004................. 3 $ 353,500 $ 322,696 $ 107,565 91.32% 0.08% 0.08%
----- ----------- -------------- ----------- ----- --------- ---------
Total.................. 3,558 $803,659,511 $401,523,386 $ 112,851 68.73% 100.00% 100.00%
----- ----------- -------------- ----------- ----- --------- ---------
----- ----------- -------------- ----------- ----- --------- ---------
</TABLE>
62
<PAGE>
MORTGAGES BY YEAR OF MATURITY
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
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>
2000..................... 6 $ 1,146,000 $ 131,192 $ 21,865 21.60% 0.05% 0.01%
2001..................... 16 $ 3,040,000 $ 376,590 $ 23,537 26.40% 0.12% 0.03%
2002..................... 29 $ 4,848,500 $ 782,620 $ 26,987 25.63% 0.23% 0.06%
2003..................... 82 $ 14,114,500 $ 2,412,145 $ 29,416 29.67% 0.64% 0.17%
2004..................... 33 $ 4,849,500 $ 1,278,147 $ 38,732 39.78% 0.26% 0.09%
2005..................... 48 $ 8,679,000 $ 1,711,266 $ 35,651 32.79% 0.37% 0.12%
2006..................... 42 $ 7,489,500 $ 2,378,480 $ 56,630 44.55% 0.33% 0.17%
2007..................... 40 $ 10,583,500 $ 2,620,005 $ 65,500 44.98% 0.31% 0.19%
2008..................... 277 $ 49,298,150 $ 14,111,825 $ 50,945 45.64% 2.15% 1.02%
2009..................... 52 $ 9,386,000 $ 2,923,720 $ 56,225 42.78% 0.40% 0.21%
2010..................... 48 $ 8,291,350 $ 3,342,171 $ 69,629 59.09% 0.37% 0.24%
2011..................... 47 $ 8,774,000 $ 3,984,791 $ 84,783 55.88% 0.36% 0.29%
2012..................... 60 $ 18,026,000 $ 5,389,213 $ 89,820 49.66% 0.47% 0.39%
2013..................... 365 $ 67,066,086 $ 25,294,319 $ 69,300 55.04% 2.83% 1.83%
2014..................... 53 $ 9,970,500 $ 4,415,598 $ 83,313 57.74% 0.41% 0.32%
2015..................... 49 $ 10,271,900 $ 5,186,707 $ 105,851 60.70% 0.38% 0.37%
2016..................... 47 $ 9,597,250 $ 4,825,053 $ 102,661 60.30% 0.36% 0.35%
2017..................... 87 $ 21,078,500 $ 8,551,738 $ 98,296 61.45% 0.68% 0.62%
2018..................... 469 $ 90,324,000 $ 40,330,685 $ 85,993 62.12% 3.64% 2.92%
2019..................... 90 $ 16,709,800 $ 8,638,029 $ 95,978 66.92% 0.70% 0.62%
2020..................... 100 $ 19,861,500 $ 10,285,195 $ 102,852 68.11% 0.78% 0.74%
2021..................... 193 $ 38,432,650 $ 17,667,466 $ 91,541 64.14% 1.50% 1.28%
2022..................... 772 $ 171,043,300 $ 88,539,502 $ 114,688 67.98% 5.99% 6.40%
2023..................... 5,324 $1,154,385,823 $617,522,684 $ 115,988 69.97% 41.32% 44.65%
2024..................... 243 $ 50,398,400 $ 26,036,788 $ 107,147 69.35% 1.89% 1.88%
2025..................... 48 $ 8,458,900 $ 5,240,144 $ 109,170 72.36% 0.37% 0.38%
2026..................... 100 $ 18,385,875 $ 10,154,455 $ 101,545 71.59% 0.78% 0.73%
2027..................... 204 $ 41,024,900 $ 20,215,150 $ 99,094 74.84% 1.58% 1.46%
2028..................... 3,591 $ 745,771,178 $405,062,470 $ 112,799 74.04% 27.87% 29.29%
2029..................... 371 $ 81,045,800 $ 43,748,952 $ 117,922 69.35% 2.88% 3.16%
----------- ------------- -------------- ----------- ----- --------- ---------
Total:................. 12,886 $2,702,352,362 1$,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- ------------- -------------- ----------- ----- --------- ---------
----------- ------------- -------------- ----------- ----- --------- ---------
</TABLE>
63
<PAGE>
YEAR OF ORIGINATION (QUARTERLY)
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED
NUMBER SECURITY BALANCE AVERAGE AVERAGE % BY % BY
YEAR OF ORIGINATION OF LOANS VALUE A$ OUTSTANDING A$ BALANCE A$ LVR (%) NUMBER BALANCE
- ----------------------------- ----------- ---------------- ---------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 Q2...................... 76 $ 12,863,000 $ 6,134,810 $ 80,721 61.80% 0.59% 0.44%
1996 Q3...................... 143 $ 27,424,950 $ 12,057,864 $ 84,321 57.72% 1.11% 0.87%
1996 Q4...................... 163 $ 31,347,241 $ 15,692,758 $ 96,275 63.45% 1.26% 1.13%
1997 Q1...................... 163 $ 32,545,150 $ 15,278,626 $ 93,734 61.12% 1.26% 1.10%
1997 Q2...................... 222 $ 46,141,450 $ 22,546,406 $ 101,560 63.85% 1.72% 1.63%
1997 Q3...................... 393 $ 80,696,383 $ 44,125,278 $ 112,278 69.63% 3.05% 3.19%
1997 Q4...................... 539 $ 110,614,282 $ 62,083,445 $ 115,183 71.70% 4.18% 4.49%
1998 Q1...................... 1,264 $ 253,755,937 $ 137,553,821 $ 108,824 72.03% 9.81% 9.94%
1998 Q2...................... 2,984 $ 613,768,571 $ 330,609,370 $ 110,794 71.47% 23.16% 23.90%
1998 Q3...................... 3,157 $ 689,269,011 $ 334,745,319 $ 106,033 69.30% 24.50% 24.20%
1998 Q4...................... 3,140 $ 668,654,837 $ 333,952,381 $ 106,354 68.53% 24.37% 24.14%
1999 Q1...................... 642 $ 135,271,550 $ 68,377,021 $ 106,506 68.35% 4.98% 4.94%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
Total:....................... 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
----------- ---------------- ---------------- ----------- ----- ---------- ----------
</TABLE>
YEAR OF FIXED RATE MATURITY
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED WEIGHTED
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............................. 1,023 $ 191,271,568 $115,335,998 $ 112,743 74.69% 28.75% 28.72%
2000............................. 781 $ 177,020,629 $ 89,968,789 $ 115,197 67.88% 21.95% 22.41%
2001............................. 696 $ 168,977,524 $ 76,427,096 $ 109,809 65.92% 19.56% 19.03%
2002............................. 173 $ 42,775,300 $ 19,267,201 $ 111,371 65.71% 4.86% 4.80%
2003............................. 858 $ 217,022,990 $ 97,160,482 $ 113,241 65.20% 24.11% 24.20%
2004............................. 27 $ 6,591,500 $ 3,363,820 $ 124,586 70.18% 0.76% 0.84%
----- -------------- -------------- ----------- ----- ---------- ----------
Total:........................... 3,558 $ 803,659,511 $401,523,386 $ 112,851 68.73% 100.00% 100.00%
----- -------------- -------------- ----------- ----- ---------- ----------
----- -------------- -------------- ----------- ----- ---------- ----------
</TABLE>
OCCUPANCY OF MORTGAGE PROPERTY DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED WEIGHTED
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>
Investment................... 2,044 $ 473,454,550 $ 245,646,815 $ 120,179 64.30% 15.86% 17.76%
Owner Occupied............... 10,842 $ 2,228,897,812 $ 1,137,510,285 $ 104,917 70.74% 84.14% 82.24%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
Total........................ 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
----------- ---------------- ---------------- ----------- ----- ---------- ----------
</TABLE>
64
<PAGE>
PAYMENT TYPE DISTRIBUTION
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED WEIGHTED
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................ 403 $ 122,107,350 $ 59,647,005 $ 148,007 62.66% 3.13% 4.31%
Principal & Interest......... 12,483 $ 2,580,245,012 $ 1,323,510,095 $ 106,025 69.91% 96.87% 95.69%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
Total........................ 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
----------- ---------------- ---------------- ----------- ----- ---------- ----------
</TABLE>
HOUSING LOANS PROPERTY TYPES
<TABLE>
<CAPTION>
TOTAL CURRENT WEIGHTED WEIGHTED
NUMBER SECURITY BALANCE AVERAGE AVERAGE % BY % BY
PROPERTY TYPE OF LOANS VALUE A$ OUTSTANDING A$ BALANCE A$ LVR (%) NUMBER BALANCE
- ----------------------------- ----------- ---------------- ---------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
detached house............... 10,978 $ 2,297,356,450 $ 1,160,950,796 $ 105,752 69.26% 85.19% 83.93%
semi-detached house.......... 198 $ 46,703,500 $ 23,681,647 $ 119,604 70.92% 1.54% 1.71%
townhouse.................... 178 $ 39,888,550 $ 21,643,913 $ 121,595 68.97% 1.38% 1.56%
unit......................... 1,532 $ 318,403,862 $ 176,880,743 $ 115,457 71.72% 11.89% 12.79%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
Total........................ 12,886 $ 2,702,352,362 $ 1,383,157,099 $ 107,338 69.59% 100.00% 100.00%
----------- ---------------- ---------------- ----------- ----- ---------- ----------
----------- ---------------- ---------------- ----------- ----- ---------- ----------
</TABLE>
65
<PAGE>
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.
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 5, 50 Pitt Street,
Sydney.
The Issuer Trustee will issue Notes in its capacity as trustee of the Trust.
SHARE CAPITAL
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$8.5 billion in this capacity and has been servicing Westpac and Westpac's
clients since 1944.
The Issuer Trustee is an Authorized Trustee Corporation under 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$3.8 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$108.7 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, 1998
showed Total Shareholder's Equity as A$17.4 million.
66
<PAGE>
DIRECTORS
The directors of the Issuer Trustee are as follows:
<TABLE>
<CAPTION>
NAME OFFICE ADDRESS PRINCIPAL ACTIVITIES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Martyn John Berry Level 36, Westpac Plaza Investment Fund Executive
50 Margaret Street
Sydney NSW 2000, Australia
David Matthew Fite Level 36, Westpac Plaza Bank Executive
50 Margaret Street
Sydney NSW 2000, Australia
John Charles Lawson Level 36, Westpac Plaza Banker
50 Margaret Street
Sydney NSW 2000, Australia
Robert McDonald Level 36, Westpac Plaza Finance Executive
50 Margaret Street
Sydney NSW 2000, Australia
Michael Anthony Migro Level 36, Westpac Plaza Manager
50 Margaret Street
Sydney NSW 2000, Australia
Shaun Albert Mays Level 36, Westpac Plaza Manager
50 Margaret Street
Sydney NSW 2000, Australia
</TABLE>
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, 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 (other than the Housing Loans) 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.
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<PAGE>
Each Noteholder acknowledges that:
(1) In the absence of fraud, negligence or breach of trust on its part
or on the part of any of its officers, employees, agents or delegates, the
Issuer Trustee shall not be liable personally in the event of failure to
make payments on the Payment 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 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 (including, without limitation, the
Class A Notes) 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.
(5) In making any such determination, the Issuer Trustee will seek and
rely on advice given to it by its advisors 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, the Beneficiary or the Approved Seller on
specified dates;
(iv) the amount of, or allocation of, Collections; or
(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 to the contrary. The
Issuer Trustee is not liable to any person in any manner whatsoever in
respect of these matters.
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.
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<PAGE>
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 in writing 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 or any event occurs 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 such removal. The Issuer Trustee will indemnify the Trust Manager
and the Trust for such 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.
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, or on
the part of any of its officers, employees, agents or delegates, the Issuer
Trustee shall not be liable personally in the event of failure to
69
<PAGE>
pay moneys on the Payment 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 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 on the
part of the Issuer Trustee. Any liability arising under or in connection with a
Transaction Document (including, without limitation, any Class A Note) 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 to the extent that 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. The Approved Sellers have also indemnified the Issuer Trustee in
relation to such payments and the Issuer Trustee is required to first call on
the indemnity from the Approved Sellers.
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 except to the extent that it is caused by the Issuer Trustee's
or its officer's, employee's, agent's or delegate's fraud, negligence or breach
of trust. 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.
RIGHTS OF INDEMNITY OF ISSUER TRUSTEE
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 part) 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.
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 Payment 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 to the extent that there is a
reduction in the Seller
70
<PAGE>
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.
RIGHTS OF INDEMNITY OF SELLER TRUSTEE
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 part) 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 Seller Trustee has not been involved in the preparation of, and does not
accept responsibility for, this Prospectus.
THE NOTE TRUSTEE
Citibank, N.A., London office (the "Note Trustee"), in its capacity as note
trustee under the Note Trust Deed among the Issuer Trustee, the Trust Manager
and the Note Trustee dated on or about May 13, 1999, as amended from time to
time (the "Note Trust Deed").
ORIGINATOR OF THE HOUSING LOANS
Westpac Banking Corporation ("Westpac"), Level 4, 60 Martin Place, Sydney,
NSW 2000, Australia, was the first bank to be established in Australia. Westpac
was founded in 1817 and was incorporated in 1850 as Bank of New South Wales by
an Act of the New South Wales Parliament. In 1982, the Bank acquired The
Commercial Bank of Australia Limited, and the Bank changed its name to Westpac
Banking Corporation.
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 (including investment management, superannuation,
life and general insurance products and services) and finance company
operations.
The Australian banking activities of Westpac come under the regulatory
supervision of the Australian Prudential Regulation Authority ("APRA"), an
agency formed by the Australian government on July 1, 1998. Prior to this date
the Reserve Bank of Australia was responsible for the prudential regulation of
banks in Australia. The Reserve Bank of Australia retains responsibility for
monetary policy and the maintenance of overall financial system stability.
At September 30, 1998, the Westpac Group's shareholder equity totaled A$8.6
billion and total assets equaled A$137.3 billion. The audited consolidated
financial balance sheets of the Westpac Group as of September 30, 1997 and 1998,
respectively, and the consolidated statements of income, changes in
shareholders' equity and changes in financial position for each of the one-year
periods ended September 30th for the years 1996, 1997 and 1998, together with
accompanying notes are included on pages 85 through 135 of the 1998 Annual
Report to shareholders. The 1998 Annual Report is Exhibit 3 to the Bank's Annual
Report on Form 20-F, for the year ending September 30, 1998, which was filed
with the Commission. Westpac 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 20-F referred to above. Written requests should be directed to Westpac
Banking Corporation, 575 Fifth Avenue, 39th Floor, New York, New York 10017,
Attention: Vice President, Legal Services.
71
<PAGE>
THE SERVICER
GENERAL
In 1996, Westpac established a wholly owned subsidiary, The Mortgage Company
Pty Limited ("TMC") of Level 25, 60 Martin Place, Sydney 2000, Australia, to
provide mortgage servicing capability to both Westpac and to third parties. TMC
operates from a servicing center in Adelaide, known as the Mortgage Centre
("MPC"). The MPC employs over 1,700 staff, and processes approximately 500 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: (i)
in accordance with the Servicing Agreement; (ii) in accordance with 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 installment under the
relevant loan documents. Payments are credited to the Housing Loan on the day of
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
installment 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 of the Borrower, equity in the
Mortgaged 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 the Housing Loan's progress
and all follow-up actions are taken by Westpac and the Servicer.
When a Housing Loan is 10 days delinquent, it is identified in the Mortgage
Servicing System and transferred to the collection system of the MPC. Generally,
once a housing loan is 15 days delinquent, a
72
<PAGE>
computer generated letter is sent to the borrower advising of the arrears and
requesting that the borrower make payments so that his account is current. When
the account reaches between 23 and 29 days delinquent, the Borrower will be
contacted by telephone or, if not contacted, a second letter will be sent by day
30. Between day 30 and day 45 generally the Borrower will again be contacted by
telephone. When the account reaches between 45 and 58 days delinquent, a third
letter is generally issued which requests that the account be made current
within 15 days of the date thereof. Generally, after an account is between 62
and 73 days overdue, a demand for full arrears is issued. Between 97 and 110
days, if the account continues to be in arrears, a demand notice will generally
be issued to the Borrower and the process of contract enforcement and loss
recovery begins. The time periods specified herein assume the borrower has
either taken no action or has not honored any commitments made in relation to
the arrears.
After a default by a borrower a mortgagee can exercise its power of sale of
the Mortgaged Property. To exercise this power, a mortgagee must comply with the
statutory restrictions of the relevant state or territory as to notice
requirements (see "CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS-- Enforcement of
Housing Loans"). The length of time between the decision to exercise its power
of sale and final completion of the sale will be dependent on factors outside
the control of the Servicer, such as whether the relevant mortgagor contests the
sale and the market conditions at the time.
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 Mortgage Servicing 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.
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 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. "Mortgagee in Possession" or "MIP"
means a mortgagee in possession of the related Mortgaged Property who, following
an enforcement of the relevant mortgage, is able to deal with the Mortgaged
Property without becoming the absolute owner of the Mortgaged Property. The
portfolios of securitized housing loans (the "Securitized Portfolios") consist
of the Housing Loans relating to the Series 1997-1 WST Trust, Series 1997-2 WST
Trust, the Series 1997-3 WST Trust, the Series 1997-4E WST Trust and the Series
1998-1G WST Trust. The indicated periods of delinquency are based on the number
of days past due on a contractual basis. Similar information with respect to the
Series 1999-1G WST Trust will be contained in the reports presented through
Reuters for access by investors. Such reports 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 1997-1 WST TRUST
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1999
---------------------------------------------------
PERCENT
BY PERCENT BY
BY NO. DOLLAR BY NO. DOLLAR
OF LOANS AMOUNT OF LOANS AMOUNT
------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-1 Portfolio
Period of Delinquency:
30-59 Days................ 37 3,193,291 0.91% 0.98%
60-89 Days................ 10 1,175,483 0.25% 0.36%
90 Days or more........... 13 1,571,983 0.32% 0.48%
Total Delinquent Loans...... 60 5,940,757 1.48% 1.82%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00%
<CAPTION>
<S> <C>
Series 1997-1 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 1997-2 WST TRUST
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 14, 1998 SEPTEMBER 14, 1998
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-2 Portfolio
Period of Delinquency:
30-59 Days................ 48 4,640,750 0.90% 1.05% 44 3,664,321 0.88%
60-89 Days................ 14 1,523,661 0.26% 0.34% 14 1,594,007 0.28%
90 Days or more........... 16 1,773,819 0.30% 0.40% 8 332,668 0.16%
Total Delinquent Loans...... 78 7,938,230 1.46% 1.79% 66 5,590,996 1.32%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1997-2 Portfolio
Period of Delinquency:
30-59 Days................ 0.91%
60-89 Days................ 0.40%
90 Days or more........... 0.08%
Total Delinquent Loans...... 1.39%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 14, 1998 MARCH 14, 1999
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-2 Portfolio
Period of Delinquency:
30-59 Days................ 37 3,756,498 0.80% 1.02% 47 4,888,909 1.08%
60-89 Days................ 7 1,030,886 0.15% 0.28% 16 1,746,619 0.37%
90 Days or more........... 9 618,472 0.20% 0.17% 14 1,389,351 0.32%
Total Delinquent Loans...... 53 5,405,856 1.15% 1.47% 77 8,024,879 1.77%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1997-2 Portfolio
Period of Delinquency:
30-59 Days................ 1.44%
60-89 Days................ 0.52%
90 Days or more........... 0.41%
Total Delinquent Loans...... 2.37%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
- ------------------------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
74
<PAGE>
DELINQUENCIES AND MIP
SERIES 1997-3 WST TRUST
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 14, 1998 SEPTEMBER 14, 1998
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-3 Portfolio
Period of Delinquency:
30-59 Days................ 55 5,393,494 0.89% 0.98% 42 4,535,157 0.72%
60-89 Days................ 14 1,533,029 0.23% 0.28% 8 1,070,262 0.14%
90 Days or more........... 11 1,291,713 0.18% 0.23% 11 907,077 0.19%
Total Delinquent Loans...... 80 8,218,236 1.29% 1.49% 61 6,512,496 1.04%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1997-3 Portfolio
Period of Delinquency:
30-59 Days................ 0.90%
60-89 Days................ 0.21%
90 Days or more........... 0.18%
Total Delinquent Loans...... 1.29%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 14, 1998 MARCH 14, 1999
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-3 Portfolio
Period of Delinquency:
30-59 Days................ 41 4,442,983 0.75% 0.96% 44 4,447,118 0.86%
60-89 Days................ 8 633,682 0.15% 0.14% 21 2,036,713 0.41%
90 Days or more........... 15 1,410,744 0.28% 0.30% 18 1,621,495 0.35%
Total Delinquent Loans...... 64 6,487,409 1.18% 1.40% 83 8,105,326 1.62%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1997-3 Portfolio
Period of Delinquency:
30-59 Days................ 1.03%
60-89 Days................ 0.47%
90 Days or more........... 0.38%
Total Delinquent Loans...... 1.88%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
- ------------------------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
75
<PAGE>
DELINQUENCIES AND MIP
SERIES 1997-4E WST TRUST
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 9, 1998 SEPTEMBER 9, 1998
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-4E Portfolio
Period of Delinquency:
30-59 Days................ 29 3,014,489 0.48% 0.49% 36 4,185,922 0.63%
60-89 Days................ 10 939,207 0.16% 0.15% 2 136,504 0.03%
90 Days or more........... 6 513,358 0.10% 0.08% 8 852,519 0.14%
Total Delinquent Loans...... 45 4,467,054 0.74% 0.72% 46 5,174,945 0.80%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1997-4E Portfolio
Period of Delinquency:
30-59 Days................ 0.74%
60-89 Days................ 0.02%
90 Days or more........... 0.15%
Total Delinquent Loans...... 0.91%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 9, 1998 MARCH 9, 1999
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1997-4E Portfolio
Period of Delinquency:
30-59 Days................ 28 2,601,869 0.52% 0.49% 35 3,452,068 0.68%
60-89 Days................ 6 571,323 0.11% 0.11% 13 1,121,084 0.25%
90 Days or more........... 10 1,817,825 0.18% 0.34% 7 922,192 0.14%
Total Delinquent Loans...... 44 4,991,017 0.81% 0.94% 55 5,495,344 1.07%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1997-4E Portfolio
Period of Delinquency:
30-59 Days................ 0.70%
60-89 Days................ 0.23%
90 Days or more........... 0.19%
Total Delinquent Loans...... 1.12%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
- ------------------------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
76
<PAGE>
DELINQUENCIES AND MIP
SERIES 1998-1G WST TRUST
<TABLE>
<CAPTION>
AS OF AS OF
JULY 9, 1998 OCTOBER 9, 1998
--------------------------------------------------- ----------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
------------- ---------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1998-1G Portfolio
Period of Delinquency:
30-59 Days................ 68 7,429,754 0.33% 0.34% 69 7,842,351 0.35%
60-89 Days................ 9 1,139,773 0.04% 0.05% 17 2,446,465 0.09%
90 Days or more........... 1 29,901 0.00% 0.00% 10 1,188,550 0.05%
Total Delinquent Loans...... 78 8,599,428 0.37% 0.39% 96 11,477,366 0.49%
Housing Loans in MIP(1)..... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1998-1G Portfolio
Period of Delinquency:
30-59 Days................ 0.39%
60-89 Days................ 0.12%
90 Days or more........... 0.06%
Total Delinquent Loans...... 0.57%
Housing Loans in MIP(1)..... 0.00%
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JANUARY 9, 1998 APRIL 9, 1999
--------------------------------------------------- --------------------------------------
PERCENT
BY PERCENT BY BY PERCENT
BY NO. DOLLAR BY NO. DOLLAR BY NO. DOLLAR BY NO.
OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS AMOUNT OF LOANS
----------- ------------ ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Series 1998-1G Portfolio
Period of Delinquency:
30-59 Days............... 97 9,956,559 0.51% 0.52% 130 13,867,902 0.71%
60-89 Days............... 21 2,407,709 0.11% 0.13% 32 3,625,382 0.18%
90 Days or more.......... 14 1,281,139 0.07% 0.07% 23 2,682,144 0.13%
Total Delinquent Loans..... 132 13,645,407 0.69% 0.72% 185 20,175,428 1.02%
Housing Loans in MIP(1).... 0 0 0.00% 0.00% 0 0 0.00%
<CAPTION>
PERCENT
BY
DOLLAR
AMOUNT
-----------
<S> <C>
Series 1998-1G Portfolio
Period of Delinquency:
30-59 Days............... 0.78%
60-89 Days............... 0.20%
90 Days or more.......... 0.15%
Total Delinquent Loans..... 1.13%
Housing Loans in MIP(1).... 0.00%
</TABLE>
- ------------------------
(1) Housing Loans in MIP are also included under the heading "Total Delinquent
Loans."
As of the date hereof, the Securitized Portfolios set forth above have not
realized any gains or losses (except for losses covered by a Primary Mortgage
Insurance Policy or covered by the repurchase of the related housing loan by the
relevant Approved Seller because of a breach of a representation or warranty).
Accordingly, no gain/loss tables are presented herein.
It is unlikely that the delinquency experience of the Housing Loans
comprising the Series 1999-1G 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 1999-1G
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 1999-1G WST Trust.
77
<PAGE>
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 25, 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 one fully paid share of A$1.00.
Such share is held by Westpac Equity Holdings Pty Ltd.
DIRECTORS
The directors of the Trust Manager are as follows:
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL ACTIVITIES
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
R. Patrick Handley Level 4, 60 Martin Place Bank Executive
Sydney, NSW 2000
Australia
Chris Skilton Level 4, 60 Martin Place Sydney, NSW Bank Executive
2000
Australia
Lewis E. Love, Jr. 575 Fifth Avenue Legal Counsel
39th Floor
New York, New York 10017-2422
Marten Touw Level 4, 60 Martin Place Group Treasurer
Sydney, NSW 2000
Australia
Kimberley Gire Level 4, 60 Martin Place Head of Group Securitization
Sydney, NSW 2000
Australia
</TABLE>
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 without limitation 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.
78
<PAGE>
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 in writing 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 such 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 information
provided by, or action taken by, the Servicer, or if the Trust Manager has
not received information from the Servicer which the Trust Manager requires
to comply with the obligation or duty); 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.
79
<PAGE>
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 default 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 following are the primary sources for the origination of housing loans
for Westpac: the Westpac branch network, mobile finance managers, accredited
brokers, national telemarketing centers and through the internet. 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 application.
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 decisioning system. The decisioning system
is based on proprietary information, such as Westpac's own historical credit
underwriting experience and credit underwriting rules.
80
<PAGE>
The process also includes a reference from the Credit Reference Association of
Australia. Housing loans passing through the credit decisioning system will
either be approved, declined or referred to a credit specialist. Westpac's
criteria do not seek to segment borrowers who pass the credit decisioning system
into groups of differing credit quality. All borrowers must meet Westpac's
standard underwriting criteria and therefore are not charged different rates of
interest based on their credit quality. 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$750,000 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, by an accredited sales
manager if the application is within their credit approval limits 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 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 generally involves checking
annual accounts and/or other financial information.
Applicants are generally 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.
A valuation of the security property is required where lender's mortgage
insurance is required, or where the Housing Loan Principal is greater than
A$250,000 (although the Housing Loan Principal may be lower if the relevant
Mortgaged Property is in a particular geographic area). Substantiation of the
property value can be obtained by contract of sale, valuation by a registered
panel valuer (who is a member of the Australian Property Institute) or valuation
undertaken by a Westpac manager in accordance with bank policy. 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.
All broker originated loans are required to comply with Westpac's credit
policy. Where a valuation is not specifically required, the contract must be
reviewed by a credit manager.
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. Westpac
currently maintains a blanket insurance policy with Cigna Insurance Asia Pacific
Pty Limited which covers Westpac's loss from a mortgage default which follows
from physical loss, destruction or damage to a Mortgaged Property which is not
otherwise covered by adequate property insurance.
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."
81
<PAGE>
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 Options Home Loan,
Variable Rate Investment Property Loan, Fixed Rate Investment Property Loan,
First Option Investment Property Loan, Investment Loan with 1 Year Guaranteed
Rate 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 and
options 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 options
(as described below) can be activated on request by the borrower for a fee. The
current maximum term for this product is 30 years.
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 options 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 and then convert to a Premium
Option Home Loan. Apart from the introductory fixed rate period, the loan has
the same options as the Premium Option Home Loan. Certain product options are
not available during the fixed rate period. Some additional conditions apply to
these loans, such as a special offer administration charge.
SPECIAL OFFER FIXED OPTIONS 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 options 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.
FIXED OPTIONS 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 options (E.G., redraw) are not available during the fixed rate
period.
INVESTMENT PROPERTY LOANS
FIRST OPTION INVESTMENT PROPERTY LOANS: These loans are low variable rate
loans which assist with the purchase or refinancing of residential property for
investment purposes such as rental income or capital gain.
Additional loan options (described below) can be activated on request by the
borrower for a fee. The maximum term for this product is 30 years.
VARIABLE RATE INVESTMENT PROPERTY LOANS: These loans are variable rate
loans which assist with purchase or refinancing of residential property for
investment purposes such as rental income or capital
82
<PAGE>
gain. Additional loan options (described below) can be activated on request by
the borrower generally at no fee or a reduced fee. The maximum term for this
product is 30 years.
INVESTMENT LOANS WITH 1 YEAR GUARANTEED RATE: These loans have an
introductory discounted fixed rate for 12 months then convert to a Variable Rate
Investment Property Loan. Certain product options are not available during the
fixed rate period. Some additional conditions apply to this loan, such as a
special offer administration charge.
FIXED RATE INVESTMENT PROPERTY LOANS: These loans are fixed rate loans
which assist with purchase or refinancing of residential property for investment
purposes such as rental income or capital gain. The maximum term is 30 years.
The loans may provide for interest only payments for a maximum of 5 years and
then must convert to the required payment of principal and interest. These loans
may also provide for interest only in advance for 13 months. 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.
HOUSING LOAN FEATURES AND OPTIONS
GENERAL
Housing Loans originated by Westpac may have some or all of the features or
options described below. In addition, during the term of any Housing Loan,
Westpac may change any of the features or options of such Housing Loan from time
to time at the request of the related Borrower. For the risks associated with
the change in features or options, see "RISK FACTORS--Ability to Change Housing
Loan Features May Result in Changes to the Mortgage Pool and Higher Principal
Prepayment on the Class A Notes."
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 if 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 CLASS A NOTES--Description of the Redraw Facility,
Redraw Funding Securities and RFS Class A Notes."
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REPAYMENT HOLIDAY
The loan agreement relating to 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.
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 for which Westpac provides 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 capitalize 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 or part
into their Housing Loan account. If this amount exceeds the amortized scheduled
balance at that time, surplus funds are created therein that may be redrawn.
This feature will allow the customer in the aggregate up to fifteen automatic
disbursements in each payment cycle against these surplus funds to other
accounts. These disbursements will be treated as Redraws.
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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 one to five 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 options
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.
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 OR OPTIONS
Westpac may, in relation to a Housing Loan in the Mortgage Pool, from time
to time seek to offer additional features or options 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 Class A 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 Pty Limited (ACN 071 466 334) of
259 George 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$45,000,000.
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 Royal & Sun Alliance Lenders Mortgage
Insurance Limited (ACN 001 825 725) of Level 9, 465 Victoria
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Avenue, Chatswood NSW ("Royal & Sun"), MGICA Limited (ACN 000 511 071) 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, Royal
& Sun, WLMI or an MGICA Insurance Policy) (see "--Primary Mortgage Insurance
Policies" below).
PERIOD OF COVER
The Issuer Trustee has the benefit of the Mortgage Pool Insurance Policy in
respect of each relevant Housing Loan from the date the Housing Loan and the
relevant Mortgage are beneficially assigned to it until the earliest of:
(i) other than with respect to the assignment to the Security Trustee
under the Security Trust Deed, the date the Housing Loan or the relevant
Mortgage is equitably assigned, transferred or mortgaged to a person other
than a person who is or becomes insured under the Mortgage Pool Insurance
Policy;
(ii) the date the Housing Loan is repaid in full;
(iii) the date the Housing Loan ceases to be secured by the relevant
Mortgage (other than in the case where the Mortgage is discharged by the
operation of a compulsory acquisition or sale by a government for public
purposes);
(iv) the maturity date set out in the "Certificate of Insurance" (as
defined in the Mortgage Pool Insurance Policy), or as extended with the
consent of the Mortgage Insurer or as varied by a court under the Consumer
Credit Legislation; and
(v) the date the Mortgage Pool Insurance Policy is cancelled in respect
of the Housing Loan in accordance with the Mortgage Pool Insurance Policy.
COVER FOR LOSSES
HLIC is obliged to pay to the Issuer Trustee the loss as at the Loss Date
(as defined herein) in respect of a Housing Loan, equal to the aggregate of:
(i) the principal amount outstanding under such Housing Loan together
with any interest, fees or charges (whether capitalized or not), that are
outstanding at the Loss Date;
(ii) fees and charges paid or incurred by the Issuer Trustee; and
(iii) such other amounts (including fines or penalties) which HLIC
approves in its absolute discretion;
which the Issuer Trustee is entitled to recover under the relevant Housing
Loan contract and Mortgage LESS deductions including:
(iv) any sale proceeds or compensation for compulsory acquisition of the
Mortgaged Property;
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(v) in the event of foreclosure, the value of the Issuer Trustee's
interest in the Mortgaged Property;
(vi) any amount received by the Issuer Trustee under any collateral
security;
(vii) amounts paid to the Issuer Trustee by way of rents, profits or
proceeds in relation to the Mortgaged Property or under any policy of
insurance relating to the Mortgaged Property not applied in restoration or
repair;
(viii) any interest whether capitalized or not that exceeds interest at
the (non-default) interest rate (in accordance with the Consumer Credit
Legislation, if applicable) payable in relation to that Housing Loan;
(ix) any fees or charges, whether capitalized or not, that are not of a
type, or which exceed certain maximum amounts, as specified in the Mortgage
Pool Insurance Policy;
(x) losses directly arising out of physical damage to the Mortgaged
Property (other than from fair wear and tear) or losses recovered and
applied in the restoration or repair of the Mortgaged Property prior to the
Loss Date or which were recovered under a policy of insurance and applied to
reduce the amount outstanding under the Housing Loan; and
(xi) any amounts by which a claim may be reduced under the Mortgage Pool
Insurance Policy.
"Loss Date" means, in respect of a Housing Loan:
(a) where, following an event on or following which the Approved Seller
or the Issuer Trustee's power of sale in relation to the relevant Mortgaged
Property becomes exercisable whether immediately or at the option of the
Approved Seller or the Issuer Trustee or upon the expiration of any notice
or period of time and whether or not the power of sale only arises if before
the expiration of the notice or period of time the default remains
unremedied (a "Mortgage Default"), the Approved Seller or the Issuer Trustee
or a prior mortgagee in respect of the Mortgaged Property sells the
Mortgaged Property, the date on which the sale is completed;
(b) where, following a Mortgage Default, the Approved Seller or the
Issuer Trustee or an approved prior mortgagee in respect of the Mortgaged
Property becomes the absolute owner by foreclosure, the date on which that
event occurs;
(c) where, following a Mortgage Default, the Borrower sells the
Mortgaged Property with the prior approval of the Approved Seller, the
Issuer Trustee and HLIC, the date on which the sale is completed;
(d) where the Mortgaged Property is compulsorily acquired or sold by a
government for public purposes and there is a Mortgage Default (or where the
Mortgage has been discharged by the operation of the compulsory acquisition
or sale and there is a default in repayment of the loan secured by the
Mortgage which would have been a Mortgage Default but for the occurrence of
that event), the date being the later of the date of the completion of the
acquisition or sale or the date twenty-eight days after the date of the
Mortgage Default; and
(e) where HLIC has agreed or determined to pay a claim under the
Mortgage Pool Insurance Policy, the date specified in that agreement or
determination.
If the Consumer Credit Legislation applies to a Mortgage, the liability of
HLIC 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$45,000,000.
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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:
(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.
REFUSAL OR REDUCTION IN CLAIM
The amount of a claim may be reduced or cancelled by HLIC in the following
circumstances:
(i) any premium is not paid within twenty-eight days of the due date
therefor;
(ii) the Housing Loan contract for the relevant Mortgaged Property does
not require the Mortgaged Property to be insured under a general insurance
policy;
(iii) there ceases to be a Servicer approved by HLIC to service the
Housing Loans for the Issuer Trustee;
(iv) a claim is not lodged within twenty-eight days of the relevant Loss
Date;
(v) there is any representation or statement (deemed or otherwise) in a
proposal for a Mortgage Pool Insurance Policy that is incorrect or the duty
of disclosure under the Mortgage Pool Insurance Policy is breached;
(vi) the Issuer Trustee or the Servicer does not comply with the
reporting obligations under the Mortgage Pool Insurance Policy;
(vii) the relevant Mortgage has not been duly registered with the land
titles office in the jurisdiction where the related Mortgaged Property is
located; and
(viii) the Housing Loan contract, the Mortgage or any collateral security
for the relevant Mortgaged Property has not been duly stamped in each
relevant jurisdiction.
Under the Servicing Agreement, the Servicer undertakes to perform (and
indemnifies the Issuer Trustee against) certain obligations of the Issuer
Trustee, including the Issuer Trustee's duties of disclosure and its reporting
obligations under the Mortgage Pool Insurance Policy. See "--Servicer
Undertakings with Respect to Insurance Policies". This arrangement is
acknowledged in the Mortgage Pool Insurance Policy.
Circumstances in which claims under the Mortgage Pool Insurance Policy may
be reduced or cancelled also include the following events occurring in relation
to the Issuer Trustee without the approval of the Mortgage Insurer:
(i) the making of any additional advance (other than Redraws) upon the
security of a Mortgaged Property that ranks for payment ahead of the Housing
Loan;
(ii) materially altering the terms of a Housing Loan contract, any
related Mortgage or any collateral security other than an alteration made in
accordance with the Consumer Credit Legislation;
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(iii) allowing its rights to be reduced against the Borrower, the
relevant mortgagor, any mortgage guarantor, any provider of any collateral
security or the Mortgaged Property by compromise, postponement, partial
discharge or otherwise;
(iv) approving any transfer or assignment of the Mortgaged Property
without full discharge of the Housing Loan;
(v) a violation by the Issuer Trustee of any provision of such Mortgage
Pool Insurance Policy; and
(vi) consenting to a further advance by a prior mortgagee previously
approved by HLIC upon the security of an approved prior mortgage.
EXCLUSIONS
The Mortgage Pool Insurance Policy does not cover any loss arising from: (i)
any war or warlike activities; (ii) nuclear contamination; (iii) the existence
or escape of any pollution or environmentally hazardous material; (iv) the fact
that the Housing Loan contract, the relevant Mortgage or any collateral security
is void or unenforceable; (v) where the Consumer Credit Legislation applies, any
failure of the Housing Loan contract, the relevant Mortgage or any collateral
security to comply with the requirements of the Consumer Credit Legislation or
(vi) the failure of the insured's computer systems or other items to be Year
2000 compliant. See "CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS--Consumer Credit
Legislation" and "RISK FACTORS--Risks Associated with Year 2000 Compliance."
CLAIMS
A claim may only be made under the Mortgage Pool Insurance Policy following
the Loss Date for the relevant Mortgage. If a Housing Loan has been in default
for at least 6 months HLIC may in its absolute discretion pay the claim for the
loss even if the Loss Date has not occurred. Claims are payable within 14 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 (at the Issuer Trustee's expense) of rights against the
Borrower or any mortgagor or require the Issuer Trustee to take action, or
empower HLIC to take action, in relation to the relevant Housing Loan or related
Mortgage.
VARIATIONS
HLIC may not vary the Mortgage Pool Insurance Policy for any Housing Loan
except where the variation is generally applied to all insured customers of the
same type in relation to the same type of insurance and where the variation is
necessitated to ensure that, as a consequence of a change in law after the date
of the Mortgage Pool Insurance Policy, HLIC is not in breach of the law.
HLIC
HLIC was established in 1965 by the Commonwealth Government of Australia 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"). 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. It has significant LMI business
around the world, operating in the United States, United Kingdom, Canada and now
Australia and has over US$152 billion of loans insured globally. HLIC has been
given a "AAA" claims paying rating in its own right by Standard & Poor's, a
"Aa1" rating by Moody's and a "AAA" rating by Fitch.
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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
Royal & Sun, MGICA, WLMI or HLIC (a "PMI Policy"). Westpac is required to
equitably assign its interest in each PMI Policy to the Issuer Trustee on the
Closing Date. The consent of Royal & Sun, MGICA, WLMI and HLIC is required for
the assignment of the relevant Mortgages and the PMI Policies, and for the
Servicer to service the insured Housing Loans. Westpac must ensure that these
consents are obtained on or prior to the Closing Date.
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 PMI Policy;
(4) that any premium is not paid when due or 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;
(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 ROYAL & SUN, MGICA AND WLMI:
The Royal & Sun Alliance Group entered into the lenders mortgage insurance
market in Australia in 1989. Royal & Sun's Mortgage Insurance Division operates
as one of the major divisions of the Royal & Sun Alliance Group. Royal & Sun is
a subsidiary of Royal & Sun Alliance Insurance Australia Limited, which is one
of the five largest insurers in Australia with premium revenue of some A$1.246
billion, assets
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in excess of A$2.66 billion and a net asset position at December 31, 1998 of
over A$386 million. Royal &Sun Alliance Lenders Mortgage Insurance Limited is
rated "AA-" by Standard & Poor's for its claim paying ability and "A2" by
Moody's for its claim paying ability, and is owned by the Royal & Sun Alliance
group. Royal & Sun is currently on negative outlook by Standard & Poor's. Under
a deed of indemnity, Royal & Sun is explicitly indemnified for past, present and
future obligations arising from insurance contracts net of reinsurance by the
Australian holding company for the group, Royal & Sun Alliance Insurance
Australia Holdings Limited. The business address of Royal & Sun 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, AMP Limited ("AMP"), Australia's largest insurance
company. MGICA is rated "AA-" by Standard & Poor's for its claim paying ability
and "A1" by Moody's for its claims paying ability. MGICA is strongly capitalized
after receiving an injection of A$30 million of capital from its parent, AMP, in
1998. 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 & Sun Alliance Lenders Mortgage
Insurance Limited, both dated August 27, 1996, Royal & Sun agrees to provide
management and administration services to WLMI and accepts 65% of the obligation
on each and every policy issued by WLMI. WLMI retains the remaining 35% of the
obligation. Under a Deed of Guarantee, Royal & Sun will unconditionally and
irrevocably guarantee the obligations of WLMI arising under policies issued by
WLMI prior to the termination of the deed, 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 Class A
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 Class A Notes, the aggregate amount of
distributions on the Class A Notes and the yield to maturity of the Class A
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 Class A 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
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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 Class A Note may vary from the anticipated yield will depend upon the degree
to which a Class 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, the availability of alternative financing and homeowner mobility.
WEIGHTED AVERAGE LIVES
Generally, greater than anticipated prepayments of principal will increase
the yield on Class A Notes purchased at a price less than par and will decrease
the yield on Class A 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 Class A 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 Class A 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 Class A 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").
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. 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 Class A Notes to
predict the amount or the timing of receipt of prepayments on the Housing Loans.
Since the following tables were 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 Class A 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
Class A 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 Closing
Date for the Class A Notes is May 13, 1999, (ii) payments on the Class A Notes
are made on the 19th day of each Quarter regardless of the day on which the
Payment Date actually occurs, commencing in August 1999 and are made in
accordance with the priorities described herein, (iii) 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 April 1999 (with no defaults), (iv)
all prepayments are prepayments in full received on the last day of each month
and include 30 days' interest thereon, (v) Principal Collections are distributed
according to the rules of distribution set forth in "DESCRIPTION OF THE CLASS A
NOTES--Payments of Principal on the Notes"; (vi) no optional termination is
exercised (except with respect to the line titled "Weighted Average Life--To
Call (Years)"); (vii) the Initial Subordinated Percentage is 2.44% and (viii) to
the extent that the sum of the A$ Equivalent of the total Initial Invested
Amount of the Class A Notes and the total Initial Invested Amount of the Class B
Notes issued by the Issuer Trustee exceeds the Housing Loan Principal as of the
Cut-off Date, the amount of this difference will be treated as Gross Principal
Collections and will be passed through to Noteholders on the first Payment Date.
The preceding clauses are the assumptions used
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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 pay at any assumed CPR to
maturity or that all Housing Loans will prepay at the same rate. The assumed CPR
for this transaction is 21%. In addition, the diverse remaining terms to
maturity of the Housing Loans (which include recently originated Housing Loans)
could produce slower or faster distributions of principal than as indicated in
the tables at the assumed CPRs 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.
PERCENT OF ORIGINAL INVESTED AMOUNT OUTSTANDING AT THE FOLLOWING PERCENTAGES OF
CPR(1)
<TABLE>
<CAPTION>
CLASS A NOTES:
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DATE 0% 10% 15% 20% 21% 25% 35%
- -------------------------------------------------- --------- --------- --------- --------- --------- --------- ---------
Initial Percent................................... 100 100 100 100 100 100 100
May 19, 2000...................................... 98 86 81 75 74 69 58
May 19, 2001...................................... 96 76 67 58 57 50 37
May 19, 2002...................................... 94 67 55 45 43 37 23
May 19, 2003...................................... 92 58 46 35 34 27 15
May 19, 2004...................................... 90 51 38 28 26 20 9
May 19, 2005...................................... 87 45 31 22 20 14 6
May 19, 2006...................................... 85 39 26 17 15 10 3
May 19, 2007...................................... 82 34 21 13 12 8 2
May 19, 2008...................................... 79 30 17 10 9 5 1
May 19, 2009...................................... 76 26 14 8 7 4 0
May 19, 2010...................................... 73 22 12 6 5 3 0
May 19, 2011...................................... 69 19 9 4 4 2 0
May 19, 2012...................................... 66 16 8 3 3 1 0
May 19, 2013...................................... 62 14 6 2 2 1 0
May 19, 2014...................................... 57 12 5 2 1 0 0
May 19, 2015...................................... 53 10 4 1 1 0 0
May 19, 2016...................................... 48 8 3 1 0 0 0
May 19, 2017...................................... 43 6 2 0 0 0 0
May 19, 2018...................................... 38 5 1 0 0 0 0
May 19, 2019...................................... 33 4 1 0 0 0 0
May 19, 2020...................................... 27 3 0 0 0 0 0
May 19, 2021...................................... 21 2 0 0 0 0 0
May 19, 2022...................................... 14 1 0 0 0 0 0
May 19, 2023...................................... 7 0 0 0 0 0 0
May 19, 2024...................................... 0 0 0 0 0 0 0
May 19, 2025...................................... 0 0 0 0 0 0 0
Weighted Average Life(2)--
To Maturity (Years)............................. 15.540 6.930 5.079 3.904 3.716 3.104 2,116
To Call (Years)................................. 15.480 6.597 4.735 3.603 3.421 2.866 1.943
<CAPTION>
<S> <C>
DATE 45%
- -------------------------------------------------- ---------
Initial Percent................................... 100
May 19, 2000...................................... 48
May 19, 2001...................................... 25
May 19, 2002...................................... 13
May 19, 2003...................................... 7
May 19, 2004...................................... 3
May 19, 2005...................................... 1
May 19, 2006...................................... 0
May 19, 2007...................................... 0
May 19, 2008...................................... 0
May 19, 2009...................................... 0
May 19, 2010...................................... 0
May 19, 2011...................................... 0
May 19, 2012...................................... 0
May 19, 2013...................................... 0
May 19, 2014...................................... 0
May 19, 2015...................................... 0
May 19, 2016...................................... 0
May 19, 2017...................................... 0
May 19, 2018...................................... 0
May 19, 2019...................................... 0
May 19, 2020...................................... 0
May 19, 2021...................................... 0
May 19, 2022...................................... 0
May 19, 2023...................................... 0
May 19, 2024...................................... 0
May 19, 2025...................................... 0
Weighted Average Life(2)--
To Maturity (Years)............................. 1.542
To Call (Years)................................. 1.429
</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 three decimal places.
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DESCRIPTION OF THE CLASS A NOTES
GENERAL
The Class A Notes will be issued pursuant to the terms of the Transaction
Documents. The following section contains summaries of the material terms of the
Transaction Documents. The summaries do not purport to be complete and are
subject to the provisions of the Transaction Documents. A copy of the Master
Trust Deed, and a form of each of 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.
Pursuant to the Transaction Documents, on the Closing Date the Issuer
Trustee will issue two classes of notes, consisting of one class of senior
notes, designated as the Class A Mortgage Backed Floating Rate Notes due May 19,
2030 in the original principal amount of US$883,900,000 (the "Class A Notes")
and one class of subordinated notes, designated as the Class B Mortgage Backed
Floating Rate Notes, due May 19, 2030 in the original principal amount of
A$33,750,000 (the "Class B Notes"). In addition to the Class A Notes and the
Class B Notes, the Issuer Trustee may from time to time issue RFSs, which may
convert to RFS Class A Notes in certain circumstances. The Class A Notes, Class
B Notes, RFSs and the RFS Class A Notes are referred to herein as the "Notes."
See "--Form of the Class B Notes," "--Interest Payable on the Class B Notes" and
"--Subordination of Class B Notes, Priority of Payment of Principal to RFSs,"
and "--Description of the Redraw Facility, the Redraw Funding Securities and the
RFS Class A Notes" herein.
Payments on the Class A Notes will be made by the Principal Paying Agent on
each Payment Date to persons in whose names the Class A Notes are registered as
of the related Record Date (the "Holders" or "Class A Noteholders"). The Payment
Date for the Notes will be the 19th day of each Quarter. A "Quarter" is each
three-month period in a year which period begins on February 1, May 1, August 1
and November 1. If any Payment Date would otherwise fall on a day which is not a
Business Day, it shall be postponed to the next day which is a Business Day. The
first Payment Date will be August 19, 1999 in respect of the period from (and
including) the Closing Date to (but excluding) that date. The Record Date for
any Payment Date will be the second Business Day immediately preceding the
Payment Date (so long as the Class A Notes are held in book-entry form), or the
last day of the prior calendar month (if Definitive Notes have been issued).
A "Business Day" means (1) in relation to the Note Trust Deed, the Agency
Agreement, any Class A Note and any US$ payments under a Currency Swap, any day,
other than a Saturday, Sunday or public holiday, on which banks are open for
business in London and New York City; and (2) in relation to any Notes, except
Class A Notes, A$ payments under a Currency Swap and any other Transaction
Document, any day, other than a Saturday, Sunday or public holiday, on which
banks are open for business in Sydney. If a public holiday is occurring in any
of the referenced locales, then such day is not a Business Day, and no scheduled
payments will be made on such day.
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) August 9, 1999. The last
Collection Period is the period from the last day of the previous Collection
Period to the Termination Date of the Trust.
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 August 19, 1999). 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, the "Interest Determination Date" is the second
London banking day prior to the commencement of that Interest Period. The first
Interest Determination Date, which relates to the Interest Period beginning May
13, 1999, is May 11, 1999. The "Collection Determination Date" is four
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Business Days prior to each Payment Date. The first Collection Determination
Date will be August 13, 1999.
The Class A 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, the "Depository"), except as set forth below. The
Class A Notes, if issued in definitive form, will be serially numbered.
Beneficial interests in the Class A 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 Class A Notes. Unless and until Definitive Notes
are issued under the limited circumstances described herein, no Note Owner (as
defined herein) acquiring an interest in the Class A 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 Class A
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 the Class A Notes will refer to
distributions, notices, reports and statements to the Depository or its nominee,
as the registered Noteholder, for distribution to Note Owners of the Class A
Notes in accordance with the Depository's procedures. See "--Book-Entry
Registration" and "--Definitive Notes."
The Issuer Trustee will maintain a Paying Agent in London until the date the
Class A Notes are redeemed.
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 such 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. Various amounts will also be swapped under the Swap Agreements.
On the Remittance 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.
<TABLE>
<S> <C>
Collection Period............................ 10th May to (and including) 9th August
Collection Determination Date................ 15th August
Remittance Date.............................. 17th August
Interest Determination Date.................. 17th August
Notice Date.................................. 18th August
Payment Date................................. 19th August
Interest Period.............................. 19th May to (but excluding) 19th August
</TABLE>
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, P-1 from Moody's and F-1+ from Fitch and (b) the Collections
Account is maintained with Westpac or a subsidiary
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<PAGE>
of 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 such receipts
had been deposited into the Collections Account five Business Days following
receipt by Westpac or the Servicer (less any relevant tax).
If Westpac has a short term rating of less than A-1+ from Standard & Poor's,
less than P-1 from Moody's or less than F-1+ from Fitch, 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 for so long as it is an Approved Bank. An "Approved
Bank" means: (a) a bank which has a short term rating of at least A-1+ from
Standard & Poor's, P-1 from Moody's and F-1+ from Fitch; 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, P-1 or better from Moody's and F-1 or better from
Fitch.
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 thereof 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 Swaps);
(3) any amount received by or on behalf of the Issuer Trustee under any
Support Facility (other than the Currency Swaps), including under a Mortgage
Insurance Policy, which the Trust Manager determines should be accounted for
to reduce 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;
(6) any net amount attributable to income from another WST trust
established under the Master Trust Deed with respect to the substitution of
a Housing Loan ("Substitution Net Transfer Amount (Income)"); and
(7) all other amounts received by or on behalf of the Issuer Trustee in
respect of the Trust assets in the nature of income,
excluding
(8) any interest credited to a Collateral Account for a Support
Facility; and
(9) any amount received by the Issuer Trustee on entry into a
replacement Currency Swap which is payable to the prior Currency Swap
Providers.
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<PAGE>
"Finance Charge Collections" shall equal:
(1) all amounts received by or on behalf of the Issuer Trustee in
respect of financial institutions duty, bank accounts debit tax or similar
taxes relating to the Housing Loans ("Government Charges"), interest, fees
and other income payable under Housing Loans in the Mortgage Pool,
including:
(i) Liquidation Proceeds received on account of interest;
(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 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 an
introductory 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 (as defined herein) 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
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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.
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 "--Distribution of Total Available Funds") 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 interest payable to the Class B Notes ("Class B
Interest");
(2) second, if the Class B Interest 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
Providers 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 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.
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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 Swaps);
(2) on the A$ Equivalent 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 365 days.
With respect to any Payment Date, "Class B Interest" means all interest on
the outstanding Class B Notes in respect of an Interest Period, "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.
"A$ Equivalent" means, in relation 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 set forth in the Currency
Swaps. "US$ Equivalent" means, in relation to an amount denominated or to be
denominated in Australian dollars, the amount converted to (and denominated in)
U.S. dollars at the applicable exchange rate set forth in the Currency Swaps.
DISTRIBUTION OF TOTAL AVAILABLE FUNDS
GENERAL
On each Payment Date, the Trust Manager shall instruct the Issuer Trustee to
apply the Total Available Funds in making the following payments in respect of
the preceding Collection Period 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
Swaps), PARI PASSU, 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) PARI PASSU, 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 Providers under the swap
confirmation relating to the Class A Notes of the A$ Class A Interest
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 Class B Interest as of that date.
The sum of paragraphs (1) to (6) above represents "Total Payments" for a
Collection Period.
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The Issuer Trustee shall only make a payment described in paragraphs (1)
through (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 for the relevant Collection Period (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;
(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 fees payable to the Principal Paying Agent, the Agent Bank and
any other agents under the Agency Agreement;
(8) PARI PASSU 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 and a Paying Agent and any other agents or the Agent Bank in
relation to the Trust under the Transaction Documents, for that Collection
Period; and
(9) PARI PASSU 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 CLASS A NOTES AND CLASS B NOTES
The "Interest Rate" for the Class A Notes for a particular Interest Period
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
Interest Period will be determined on May 11, 1999. See "--Calculation of
USD-LIBOR-BBA" below. The "Interest Rate" for the Class B Notes for a particular
Interest Period is equal to the Bank Bill Rate on the first day of such Interest
Period plus %. The Interest Rate on the Class B Notes for the first Interest
Period will be determined on May 13, 1999.
With respect to any Payment Date, interest on the Class A Notes and the
Class B 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 with respect to the Class A Notes, or, with
respect to the Class B Notes, 365 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 "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
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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").
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) PARI PASSU and rateably, 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 Providers under the swap
confirmations relating to the Class A Notes, of the A$ Equivalent of any
Carryover Class A Charge Offs; and
(3) as a payment, to the holders of Class B Notes in or towards
reinstating the Stated Amount of such Class B Notes to the extent 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.
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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. The Issuer Trustee does not
intend and is not permitted to accumulate any surpluses.
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 from or
on behalf of Borrowers 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) Liquidation Proceeds received on account of principal;
(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
Swaps) which the Trust Manager determines should be accounted for to reduce
a Principal Loss;
(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
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(9) any net amount attributable to principal 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 ("Substitution
Net Transfer Amount (Principal)");
but excluding a premium receivable by the Issuer Trustee on entry into a
replacement Currency Swap.
On the Closing Date, the aggregate of the A$ Equivalent of the total Initial
Invested Amount of the Class A Notes and the total Initial Invested Amount of
the Class B 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 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 Providers to
enable the Issuer Trustee to make payments to the Class A 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.
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 on which principal payments on the Notes are to be made,
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.
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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, PARI PASSU and rateably, based on their respective
entitlements:
(i) as a payment, denominated in A$, to the Currency Swap Providers
under the swap confirmations relating to the Class A Notes of an amount
equal to the lesser of:
(a) the Class A Forex Percentage of the sum of: (1) the Class A
Percentage of Net Principal Collections; and (2) 50% of the Class B
Percentage of Net Principal Collections; and
(b) the A$ 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$, to the holders of the Class
B Notes of an amount equal to 50% of the Class B Percentage of Net Principal
Collections.
The "Serial Method 1 Distribution Test" is met if, on any Collection
Determination Date the following conditions are all satisfied:
(i) the Subordinated Percentage at the previous Collection
Determination Date was greater than or equal to twice the Initial
Subordinated Percentage;
(ii) that Collection Determination Date occurs on or before May 13,
2002;
(iii) the fraction, expressed as a percentage, the numerator of which
is the Total Invested Amount on such Collection Determination Date and
the denominator of which is the Total Initial Invested Amount, is greater
than or equal to 10%; and
(iv) the Average Quarterly Percentage on such Collection
Determination Date:
(a) does not exceed 2% and the Total Carryover Charge Off on that
Collection Determination Date does not exceed 30% of the US$
Equivalent 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 US$
Equivalent of the Class B Initial Invested Amount; and
(v) the US$ Equivalent of the Stated Amounts of all Class B Notes on
such Collection Determination Date exceeds 0.25% of the sum of (x) the
Initial Invested Amounts of all Class A Notes, (y) the US$ Equivalent of
the Initial Invested Amounts of all Class B Notes and (z) the US$
Equivalent of the Invested Amounts of all RFS Class A Notes (if any).
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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, PARI PASSU and rateably, based on their respective
entitlements:
(i) as a payment, denominated in A$, to the Currency Swap Providers
under the swap confirmations relating to the Class A Notes of an amount
equal to the lesser of:
(a) the Class A Forex Percentage of the Class A Percentage of Net
Principal Collections; and
(b) the A$ 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$, to the holders of the Class
B Notes of an amount equal to the Class B Percentage of Net Principal
Collections.
The "Serial Method 2 Distribution Test" is met if, on any Collection
Determination Date the following conditions are all satisfied:
(i) the Subordinated Percentage at the previous Collection
Determination Date was greater than or equal to twice the Initial
Subordinated Percentage;
(ii) that Collection Determination Date occurs after May 13, 2002;
(iii) the fraction, expressed as a percentage, the numerator of which
is the Total Invested Amount on such Collection Determination Date and
the denominator of which is the Total Initial Invested Amount, is greater
than or equal to 10%;
(iv) the Average Quarterly Percentage as at the Collection
Determination Date:
(a) does not exceed 2% and the Total Carryover Charge Off on that
Collection Determination Date does not exceed 30% of the US$
Equivalent 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 US$
Equivalent of the Class B Initial Invested Amount; and
(v) the US$ Equivalent of the Stated Amounts of all Class B Notes on
such Collection Determination Date exceeds 0.25% of the sum of (x) the
Initial Invested Amounts of all Class A Notes, (y) the US$ Equivalent of
the Initial Invested Amounts of all Class B Notes and (z) the US$
Equivalent of the Invested Amounts of all RFS Class A Notes (if any).
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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, PARI PASSU and rateably, based on their respective
entitlements:
(i) as a payment, denominated in A$, to the Currency Swap Providers
under the swap confirmations relating to the Class A Notes of an amount
equal to the lesser of:
(a) the Class A Forex Percentage of the Net Principal
Collections; and
(b) the A$ 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
(2) second, as a payment, denominated in A$, to the holders of the Class
B Notes of an amount equal to the lesser of (i) the amount remaining after
all distributions in (1) above and (ii) the Class B Stated Amounts for all
Class B Notes.
CERTAIN RELATED DEFINITIONS
With respect to any date, the "Average Quarterly Percentage" is the sum of
the Quarterly Percentages for the four full Quarters preceding that date,
divided by four. With respect to any Collection Period, the "Quarterly
Percentage" equals a fraction, expressed as a percentage, the numerator of which
is the aggregate Housing Loan Principal of all Housing Loans which are
Delinquent for more than 60 consecutive days as of the close of business on the
last day of that Collection Period, and the denominator of which is the
aggregate Housing Loan Principal of all Housing Loans as of the close of
business on the last day of that Collection Period. With respect to any Housing
Loan and date, "Housing Loan Principal" shall be the unpaid principal amount of
that Housing Loan on such date.
The "Class A Forex Percentage" equals a fraction, expressed as a percentage,
the numerator of which is the A$ 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.
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 "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 (as defined herein) for the
preceding Collection Determination Date as a percentage of the sum of the
aggregate of the A$ Equivalent of the Class A Stated Amounts, the RFS Class A
Stated Amounts, the Class B Stated Amounts 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 Class B Stated Amounts for
the preceding Collection Determination Date as a percentage of the sum of the
aggregate A$ Equivalent of the Class A Stated Amounts, the RFS Class A Stated
Amounts, the Class B Stated Amounts and the Redraw Limit calculated as at the
preceding Collection Determination Date.
The "Initial Subordinated Percentage" shall be 2.44%.
The "Subordinated Percentage" means the fraction, expressed as a percentage,
calculated on each Collection Determination Date by the Trust Manager, the
numerator of which is the aggregate of the Class B Stated Amounts and the
denominator of which is the sum of (i) the aggregate of (A) the A$ Equivalent of
the Class A Stated Amounts and (B) the Class B Stated Amounts at that time, (ii)
the
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Redraw Limit at that time, (iii) the aggregate of the RFS Stated Amounts at that
time, and (iv) the aggregate of the RFS Class A Stated Amounts at that time.
"Total Invested Amount" means, at any time, the sum at that time of (a) the
Invested Amounts of all Class A Notes and (b) the US$ Equivalent of the Invested
Amounts of all other Classes of Notes.
"Total Initial Invested Amount" means, at any time, the sum at that time of
(a) the Initial Invested Amounts of all Class A Notes and (b) the US$ Equivalent
of the Inital Invested Amounts of all other Classes of Notes.
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:
(1) applied to reduce the Stated Amounts of the Class B Notes by 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 PARI PASSU and rateably,
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 A$ 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) the US$ Equivalent of all Carryover Class B Charge Offs for all
Class B Notes as at that date;
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(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, PARI
PASSU and rateably 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 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
Providers shall deposit amounts denominated in US$.
(1) The Issuer Trustee shall direct the Currency Swap Providers to pay
all amounts denominated in US$ payable to the Issuer Trustee by the Currency
Swap Providers under the Currency Swaps 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 Providers
under the Currency Swaps 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 a feature 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"). Under 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 under
"--Principal Collections" herein, second, from drawings under the Redraw
Facility and third, from the proceeds of the issuance of RFSs, to the extent
each is available.
If Westpac is not fully reimbursed in relation to a Redraw, 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 and the Trust Manager. 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 (a "Redraw Shortfall")
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$30,000,000. 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 Notes then outstanding.
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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 Available Redraw Amount (as defined herein). A drawing may only be made
under the Redraw Facility on account of a Redraw Shortfall.
"Available Redraw Amount" means at any time the greater of: (a) the Redraw
Limit at such time less (i) the Principal Outstanding at that time; and (ii) the
Carryover Redraw Charge Offs at that time; and (b) zero. The sum of all Redraw
Advances outstanding on any particular date less the Carryover Redraw Charge
Offs at that time shall be the "Principal Outstanding."
A drawing may only be made by the Issuer Trustee delivering 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.
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 from day to day on the amount of each such
Redraw Advance from the date of its advance at a rate equal to the Bank Bill
Rate plus a margin (which varies depending on how long the Redraw Advance is
outstanding), 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.
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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 the date of 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 to the Redraw Facility Provider
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).
With respect to the Issuer Trustee (in its personal capacity and as trustee
of a Trust), the Trust Manager, the Servicer, Westpac 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 to enter 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);
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(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 (4)
(inclusive) or having substantially similar effect, occurs with respect to
the relevant corporation.
The "Termination Date" with respect to the Trust shall be the 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 by the Security Trustee of its rights
under the Security Trust Deed after the occurrence of an Event of Default;
or
(4) at any time after all creditors of the Trust 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; and
(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;
(2) one month after the Class A Notes, the Class B Notes, the RFSs and
the Class A RFS 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 has cancelled the Redraw Limit
in full. The Issuer Trustee may cancel all or part of the Redraw Limit on
not less than five Business Days irrevocable notice to the Redraw Facility
Provider;
(5) the date which is one year after the Maturity Date;
(6) the date on which the Redraw Limit is cancelled in full by the
Redraw Facility Provider; or
(7) at the election of the Redraw Facility Provider, the date on which
Westpac Securitisation Management Pty Limited retires or is removed as Trust
Manager under the Master Trust Deed.
The Redraw Limit may be also be reduced in part by the Redraw Facility
Provider by giving notice to the Issuer Trustee and the Trust Manager. Such a
reduction will not result in a termination of the Redraw Facility.
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ISSUANCE OF REDRAW FUNDING SECURITIES
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 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." Such RFS Class A Note will:
(1) have an Initial Invested Amount equal to the RFS Initial Invested
Amount of the converted 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 the 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 evidenced by a notation in a register maintained by the Issuer
Trustee; and
(8) have a Margin equal to the margin under the Class A Notes.
"Margin" means: (1) in the case of Class A Notes, 0.20% and in the case of
the Class B Notes, 0.63%; (2) in the case of any RFSs, the margin inscribed in
the register maintained by the Issuer Trustee in relation to those RFSs on their
issue date; and (3) in the case of any RFS Class A Note, the Margin for the
Class A Notes plus the spread under the Currency Swaps.
FORM OF THE RFSS AND THE RFS CLASS A NOTES
The RFSs and the RFS Class A Notes will be evidenced by a notation in a
register maintained by the Issuer Trustee, denominated in Australian dollars and
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 Class A Notes. The RFSs and RFS
Class A Notes are not offered hereby.
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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.
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.
FORM OF THE CLASS B NOTES
The Class B Notes will be evidenced by a notation in a register maintained
by the Issuer Trustee, denominated in Australian dollars and will be issued in
Australia to Australian resident investors only. The Class B Notes are not
offered hereby.
INTEREST PAYABLE ON THE CLASS B NOTES
Commencing on the Closing Date, Interest is payable quarterly in arrear on
each 19 February, 19 May, 19 August and 19 November until the Maturity Date or
until the Stated Amount of the Class B Note is reduced to zero (whichever is
earlier). "Interest" with respect to a Class B Note shall be equal to the
interest accrued on the Invested Amount for such Class B Note at a rate equal to
the Bank Bill Rate on the first day of the Interest Period and the margin of
0.63% applicable to the Class B Note, during the period from (and including) the
Payment Date to (but excluding) the next Payment Date, calculated on the actual
number of days in the related Interest Period over 365.
Payments to the holders of Class B Notes will be in Australian dollars.
Payments of Interest on the Class B Notes will be subordinated to Interest
payable on the Class A Notes, the RFSs and the RFS Class A Notes.
SUBORDINATION OF THE CLASS B NOTES; PRIORITY OF PAYMENT OF PRINCIPAL TO RFSS
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 Class A
Noteholders, the holders of the RFS Class A Notes and the Class B Noteholders.
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SUBSTITUTION OF HOUSING LOANS
The Trust Manager may substitute a housing loan from a WST warehouse trust
for a Housing Loan in the Trust. For a housing loan in a WST trust to be
eligible for substitution for a Housing Loan, the housing loan in the other WST
trust must have a maturity date not later than the date which is one year before
the Maturity Date of the Notes, have similar product features to one or more of
the Housing Loans, have an Unpaid Balance within A$30,000 of the Unpaid Balance
of the Housing Loan for which it is being substituted and must otherwise be
suitable for substitution in the Trust Manager's sole and absolute discretion.
The Trust Manager may take into account the geographic location of the
properties securing the Housing Loan and the substituted housing loan. In
addition, the Unpaid Balance of all housing loans acquired by the Trust must be
less than the Unpaid Balance of the Housing Loans transferred to the WST
warehouse trust. The Trust Manager may not substitute a housing loan unless it
has received written confirmation from the Rating Agencies that the substitution
will not result in the downgrade or withdrawal of the rating given to the Notes.
In addition, if the Unpaid Balance of the Housing Loan removed from the Trust is
greater than the Unpaid Balance of the substituted housing loan, the WST
warehouse trust must pay the Issuer Trustee the Substitution Net Transfer Amount
(Principal) and Substitution Net Transfer Amount (Income) with respect to such
Housing Loan.
PRESCRIPTION
A Class A Note shall become void in its entirety unless surrendered for
payment within ten years of the Relevant Date in respect of any payment thereon
the effect of which would be to reduce the Stated Amount of such Class A Note to
zero. After the date on which a Class A Note becomes void in its entirety, no
claim may be made in respect of it.
The "Relevant Date" means the date on which a payment first becomes due but,
if the full amount of the money payable has not been received in New York City
by the Principal Paying Agent or the Note Trustee on or prior to that date, it
means the date on which, the full amount of such money having been so received,
notice to that effect is duly given in accordance with the terms of the 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 Class
A Notes or Class B Notes are outstanding, the Security Trustee may (subject, in
certain circumstances, to the prior written consent of the Noteholder Mortgagees
in accordance with the provisions of the Security Trust Deed), and will (if so
directed by the Noteholder Mortgagees where they are the only Voting Mortgagees,
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.
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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 first refusal for their then
Unpaid Balance. 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. 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 75% of the votes of all 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.
WITHHOLDING OR TAX DEDUCTIONS
All payments in respect of the Class A Notes will be made without
withholding or tax deduction for, or on account of, any present or future taxes,
duties or charges of whatsoever nature unless the Issuer Trustee or any Paying
Agent is required by applicable law to make any such payment in respect of the
Class A Notes subject to any withholding or deduction for, or on account of, any
present or future taxes, duties or charges of whatsoever nature. In the event
that the Issuer Trustee or the Paying Agent (as the case may be) shall make such
payment after such withholding or deduction has been made, it shall account to
the relevant authorities for the amount so required to be withheld or deducted.
Neither the Issuer Trustee nor any Paying Agent will be obliged to make any
additional payments to holders of the Class A Notes in respect to that
withholding or deduction.
REDEMPTION OF THE CLASS A NOTES FOR TAXATION OR OTHER REASONS
If the Trust Manager satisfies the Issuer Trustee and the Note Trustee
immediately prior to giving the notice referred to below that either (i) on the
next Payment Date the Issuer Trustee would be required to deduct or withhold
from any payment of principal or interest (or corresponding A$ payment under a
Currency Swap) in respect of the Class A Notes any amount for or on account of
any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by the
Commonwealth of Australia or any of its political sub-divisions or any of its
authorities or (ii) the total amount payable in respect of interest in relation
to the Housing Loans for a Collection Period ceases to be receivable (whether or
not actually received) by the Issuer Trustee during such Collection Period by
reason of any present or future taxes, duties, assessments or governmental
charges of whatever nature imposed, levied, collected, withheld or assessed by
the Commonwealth of Australia or any of its political sub-divisions or any of
its authorities, the Issuer Trustee must, when so directed by the Trust Manager
(at any time at the Trust Manager's option) (provided that the Issuer Trustee
will be in a position on such Payment Date to discharge (and will so certify to
the Issuer Trustee and the Note Trustee) all its liabilities in respect of the
Class A Notes and any amounts required under the Security Trust Deed to be paid
in priority to or PARI PASSU with the Class A Notes) upon having given not more
than 60 nor less than 30 days' notice to the Noteholders of the Class A Notes
redeem all, but not some, of the Class A Notes at their Invested Amount (or at
the option of the holders of 75% of the aggregate Invested Amount of the Class A
Notes, at their Stated Amount), together with accrued interest to the date of
redemption on any subsequent Payment Date, provided that the holders of 75% of
the aggregate Invested Amount of the Class A Notes may elect, and shall notify
the Issuer Trustee and the Trust Manager, that they do not require the Issuer
Trustee to redeem the Class A Notes in the circumstances described above.
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TERMINATION OF THE TRUST
TERMINATION EVENTS
The Trust shall continue until, and shall terminate on the later of: (i) its
respective Termination Date; (ii) the date on which the Trust Assets have been
sold or realized upon (which such sale shall be completed within 180 days after
the Termination Date of the Trust so far as reasonably practicable and
reasonably commercially viable); and (iii) the date on which the Issuer Trustee
ceases to hold any Housing Loans or Mortgages in relation to the Trust.
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 the holders of 75% of the
aggregate Invested Amount 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 the holders of
75% of the votes of all 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 Issuer 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 Issuer 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.
The Trust Manager shall have the discretion and duty to recommend or to
propose in writing to the Issuer 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 Issuer Trustee
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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" consist
of the following: (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 by the Commonwealth or any State or Territory of the Commonwealth;
(e) notes or 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+ by S&P, P-1 by Moody's and
F-1+ by Fitch; and (g) any other assets of a class of assets that are both: (i)
included within the definition of a "pool of mortgages" in the Duties Act 1997
of New South Wales, 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. No Authorized Investment may have a maturity which
is later than the Maturity Date of the outstanding Notes.
GENERAL
Collections and other amounts credited to the Collection Account will be
allocated by the Trust Manager, and paid by the Issuer 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, deliver to the
Principal Paying Agent on behalf of the Issuer Trustee, a report (the
"Noteholder's Report") containing the following information:
(i) the Invested Amount and the Stated Amount of each Class of Notes;
(ii) the Interest Payments and principal distributions on each Class of
Notes;
(iii) the Available Income;
(iv) the Total Available Funds;
(v) the aggregate of all Redraws made during that Collection Period;
(vi) the Redraw Shortfall;
(vii) the Subordinated Percentage;
(viii) the Initial Subordinated Percentage;
(ix) the Payment Shortfall (if any);
(x) 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;
(xi) the Gross Principal Collections;
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(xii) the Principal Collections;
(xiii) the Liquidity Shortfall (if any);
(xiv) the Remaining Liquidity Shortfall (if any);
(xv) the Principal Charge Off (if any);
(xvi) the Class A Percentage and the Class B Percentage;
(xvii) 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 (The "Bond Factor"
with respect to a Class of Notes is the Initial Invested Amount of such
Class less all principal payments on such Class divided by the Initial
Invested Amount of such Class);
(xviii) 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);
(xix) all Carryover Charge Offs (if any);
(xx) if required, the Threshold Rate at that Collection Determination
Date;
(xxi) the Quarterly Percentage;
(xxii) LIBOR, as at the first day of the related Interest Period ending
immediately after that Collection Determination Date as calculated by the
Agent Bank;
(xxiii) scheduled and unscheduled payments of principal on the Housing
Loans;
(xxiv) aggregate Balances Outstanding of Fixed Rate Housing Loans and
aggregate Balances Outstanding of Variable Rate Housing Loans; and
(xxv) delinquency statistics with respect to the Housing Loans.
The Class A 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 Issuer 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.
The Trust Manager will, on or promptly after the Business Day preceding each
Payment Date (each, a "Notice Date"), prepare and arrange for the publication on
Reuters Screen page WST/SEC 11 to WST/ SEC 12 of summary pool performance data
for the Trust in a format as determined by the Trust Manager.
BOOK-ENTRY REGISTRATION
The Class A Notes will be represented by one or more book-entry Notes (the
"Book-Entry Notes"). Persons acquiring beneficial ownership interests in the
Class A Notes ("Note Owners") will hold their Notes through the Depository Trust
Company ("DTC") in the United States, or Cedelbank 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 the Class A
Notes and will initially be registered in the name of Cede & Co., the nominee of
DTC. Cedelbank and Euroclear will hold omnibus positions on behalf of their
participants through customers' securities accounts in Cedelbank'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, N.A. will act as depositary for Cedelbank,
and Morgan Guaranty Trust Company of New York will act as depositary for
Euroclear (in such capacities, individually,
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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 Note will be Cede & Co., as nominee of DTC. Note Owners will not be
considered holders of the Class A Notes in relation to the Master Trust Deed.
Note Owners are only permitted to exercise their rights indirectly through
participants and DTC.
The Note 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
Cedelbank or Euroclear, as appropriate).
Note Owners will receive all distributions of principal of, and interest on,
the Class A Notes from the Issuer Trustee through DTC and DTC Participants.
While the Class A 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 Class A Notes and is required to receive and transmit distributions of
principal of, and interest on, the Class A Notes. Participants and indirect
participants with whom Note Owners have accounts with respect to Class A 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 (i.e., Definitive Notes) in the Class A
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 Class A Notes only through Participants and indirect participants
by instructing such Participants and indirect participants to transfer Class A
Notes, by book-entry transfer, through DTC for the account of the purchasers of
such Class A Notes, which account is maintained with their respective
Participants. Under the Rules and in accordance with DTC's normal procedures,
transfers of ownership of Class A 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
Cedelbank 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 Cedelbank Participants on such Business Day. Cash received in
Cedelbank or Euroclear as a result of sales of securities by or through a
Cedelbank 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 Cedelbank or Euroclear cash account
only as of the Business Day following settlement in DTC.
Transfers between Participants will occur in accordance with DTC Rules.
Transfers between Cedelbank 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 Cedelbank
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
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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. Cedelbank
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.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations
("Cedelbank Participants") and facilitates the clearance and settlement of
securities transactions between Cedelbank Participants through electronic
book-entry changes in accounts of Cedelbank Participants, thereby eliminating
the need for physical movement of certificates. Transactions may be settled in
Cedelbank in any of 28 currencies, including United States dollars. Cedelbank
provides to its Cedelbank Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally-traded
securities and securities lending and borrowing. Cedelbank interfaces with
domestic markets in several countries. As a professional depository, Cedelbank
is subject to regulation by the Luxembourg Monetary Institute. Cedelbank
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 Cedelbank is
also available to others, such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a Cedelbank
Participant, either directly or indirectly.
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
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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 Principal Paying Agent 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 Principal Paying Agent to Cede & Co. Distributions with respect
to the Class A Notes held through Cedelbank or Euroclear will be credited to the
cash accounts of Cedelbank 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. 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 Class A Notes in the secondary
market since certain potential investors may be unwilling to purchase the Class
A Notes for which they cannot obtain physical certificates.
Quarterly 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 Note 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. Cedelbank or the
Euroclear Operator, as the case may be, will take any other action permitted to
be taken by a Class A Noteholder under the Transaction Documents on behalf of a
Cedelbank 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
Class A Notes which conflict with actions taken with respect to other Class A
Notes.
Although DTC, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Class A Notes among participants
of DTC, Cedelbank and Euroclear, they are under no obligation to perform or
continue to perform such procedures and such procedures may be discontinued at
any time.
Neither the Issuer Trustee, the Servicer nor the Note 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.
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DEFINITIVE NOTES
The Class A Notes will be issued in definitive form to the Note Owners or
their nominees ("Definitive Notes"), rather than to the Depository or its
nominee, only if (i) the Trust Manager advises the Principal Paying Agent in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository with respect to the Class A Notes, or the
Depository or its successor ceases to carry on business and the Trust Manager is
unable to locate a qualified successor, (ii) the Issuer Trustee, at the
direction of the Trust Manager advises the Principal Paying Agent in writing
that the book-entry system through the Depository is or is to be terminated or
(iii) an Event of Default has occurred, and Note Owners representing not less
than a majority of the aggregate Invested Amount of such Class advise the
Principal Paying Agent and the Issuer Trustee through the Participants and the
Depository in writing that the continuation of a book-entry system through the
Depository is no longer in the best interest of the Note Owners.
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. Upon surrender by
the Depository of the definitive certificate representing the Class A Notes and
instructions for registration, the Trustee will execute and the Principal Paying
Agent will authenticate the Class A Notes as Definitive Notes, and thereafter
the Trustee will recognize the Note Owners of such Definitive Notes as Class A
Noteholders under the Transaction Documents.
Distributions of principal and interest on the Class A Notes will be made by
the Principal Paying Agent directly to Class A Noteholders in accordance with
the procedures set forth herein and in the Master Trust Deed, Series Notice, the
Note Trust Deed and Agency Agreement. Interest payments and any principal
payments on each Payment Date will be made to Class A 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 Principal Paying
Agent. The final payment, on any Class A 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 Class A Noteholders. The Trustee will provide
such notice to registered Noteholders.
Definitive Notes will be transferable and exchangeable at the offices of the
transfer agent and registrar, which initially will be the Principal Paying Agent
(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, SERIES NOTICE AND THE NOTE TRUST DEED WITHOUT
NOTEHOLDER CONSENT
The Issuer Trustee, the Trust Manager, the Servicer (with respect to the
Master Trust Deed and the Series Notice) and the Note Trustee (with respect to
the Note Trust Deed) may by way of supplemental deed alter, add to or modify the
Master Trust Deed, the Series Notice and the Note Trust Deed so long as such
alteration, addition or modification was effected upon consent of the
Noteholders or Beneficiaries (see "--Modification of Master Trust Deed, Series
Notice and the Note 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 law or regulation or
with the requirements of any Australian governmental agency;
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(c) appropriate or expedient as a consequence of an amendment to any law
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, SERIES NOTICE AND THE NOTE 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, the Series Notice and the
Note Trust Deed (except an alteration, addition or modification referred to in
"--Modification of Master Trust Deed, Series Notice and the Note Trust Deed
Without 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 holders of 75% of the aggregate Invested
Amount of the Notes, the Class A Notes or the Class B Notes (as the case may be)
or with the prior written consent of the Beneficiaries (as the case may be).
MEETINGS OF VOTING MORTGAGEES
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 Class A Notes and the Class
B Notes are 75% or more of all amounts secured by the Security Trust Deed, the
Noteholder Mortgagees 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 while the Noteholder Mortgagees are the only Voting Mortgagees
unless the Noteholder Mortgagees otherwise consent, if 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.
VOTING OF CLASS A NOTEHOLDERS; MODIFICATION; CONSENTS; WAIVER
The Note Trust Deed contains provisions for the Class A Noteholders to
consider any matter affecting their interests. In general, the holders of a
majority of the aggregate Invested Amount of the Class A Notes may take or
consent to any action permitted to be taken by Class A Noteholders under the
Note Trust Deed. Notwithstanding the foregoing, the consent of holders of 75% of
the aggregate Invested Amount of the Class A Notes shall be required to (i)
direct the Note Trustee to direct the Security Trustee to enforce the security
under the Note Trust Deed, (ii) override any waiver by the Note Trustee of a
breach of any provisions of the Transaction Documents or an Event of Default,
(iii) alter, add, or modify the terms and conditions of the Class A Notes or the
provisions of any of the Transaction Documents if such alteration, addition or
modification is, in the opinion of the Note Trustee, materially prejudicial or
likely to be materially prejudicial to the Class A Noteholders as a whole or the
Class A Noteholders, which shall include any modification to the date of
maturity of the Class A Notes, or a modification which would have
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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 percentage of the aggregate Invested Amount required to consent to
any action 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"). Any
action taken by the requisite percentage of the Invested Amount of the Class A
Noteholders shall be binding on all Class A Noteholders (both present and
future).
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 or necessary to comply with any law or regulation. 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.
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
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 Class
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 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 Noteholder
Mortgagees 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 Noteholder
Mortgagees, for so long as amounts outstanding under the Class A Notes and
the Class B Notes are 75% or more of the Secured Moneys) 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
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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 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
Noteholder Mortgagees 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 Transaction 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 Transaction Documents.
If an Event of Default occurs and is continuing, the Note Trustee shall
deliver to each Class A Noteholder notice of such Event of Default within 90
days of the date that the Note Trustee became aware of such Event of Default,
provided that, except in the case of a default in payment of Interest and
principal on the Class A Notes, the Note Trustee may withhold such notice if and
so long as it determines in good faith that withholding the notice is in the
interests of the Class A Noteholders.
ENFORCEMENT OF THE SECURITY TRUST DEED
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 Noteholder Mortgagees 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 Secured Moneys (including amounts outstanding under the
Notes plus accrued and unpaid interest) to be immediately due and payable;
(3) crystallize 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. 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 Noteholder Mortgagees are the only Voting Mortgagees,
they 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 Noteholder Mortgagees are the only
Voting Mortgagees, unless the Noteholder Mortgagees otherwise consent. The
Noteholder Mortgagees will be the only Voting Mortgagees for so long as the
amounts outstanding under the Class A Notes and the Class B Notes are 75% or
more of all Secured Moneys.
Upon the occurrence of an Event of Default: (i) if the Noteholder Mortgagees
are the only Voting Mortgagees; and (ii) if the Noteholder Mortgagees direct the
Security Trustee to enforce the charge (in the case of the Note Trustee as a
Voting Mortgagee, 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.
No Mortgagee (including any Noteholder) 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 Secured Moneys, the Noteholder
Mortgagees; and
(2) at any other time: (i) the Note Trustee, acting on behalf of the
Class A Noteholders under the Note Trust Deed and the Security Trust Deed;
and (ii) each other Mortgagee under the Security Trust Deed (other than the
Class A Noteholders).
Any reference to the Noteholder Mortgagees where they are the only Voting
Mortgagees or where their consent is required under the Security Trust Deed in
relation to a discretion or act of the Security Trustee means Noteholder
Mortgagees representing more than 50% of the aggregate combined Invested Amount
of the Class A Notes and the Class B Notes.
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 and the Class B Noteholders where they are the only Voting
Mortgagees or to any Extraordinary Resolution of the Voting Mortgagees and shall
comply with all directions given by the Noteholder Mortgagees where they are the
only Voting Mortgagees or contained in or given pursuant to any Extraordinary
Resolution of the Voting Mortgagees in accordance with the Security Trust Deed.
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). The Class B Notes are
subject to similar constraints.
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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.
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
to or in connection with the Security Trust Deed, the Note Trust Deed; or any
Class A Notes, unless directed or requested to do so (i) by an Extraordinary
Resolution of the Class A Noteholders; or (ii) in writing by the holders of at
least one-quarter of the aggregate Invested Amount of the Class A Notes 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.
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 or the Class A Notes (including the
Conditions).
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 by
Extraordinary Resolution of the Voting Mortgagees in accordance with the
Security Trust Deed.
If: (i) the Security Trustee convenes a meeting of the Voting Mortgagees, or
is required by an Extraordinary Resolution to take any action under the Security
Trust Deed, and advises the Voting Mortgagees that it will not act in relation
to the enforcement of the Security Trust Deed unless it is personally
indemnified by the Voting Mortgagees to its reasonable satisfaction against all
actions, proceedings, claims and demands to which it may render itself liable,
and all costs, charges, damages and expenses which it may incur in relation to
the enforcement of the Security Trust Deed and put in funds to the extent to
which it may become liable (including costs and expenses); and (ii) the Voting
Mortgagees refuse to grant the requested indemnity, and put it in funds, then
the Security Trustee is not obliged to act in relation to that enforcement under
the Security Trust Deed. In those circumstances, the Voting Mortgagees may
exercise such of those powers conferred on them by the Security Trust Deed as
they determine by Extraordinary Resolution.
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.
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CERTAIN COVENANTS
So long as any of the Class A Notes remains outstanding, the Issuer Trustee
has made the following covenants for the benefit of Class A 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 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 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.
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(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.
ANNUAL COMPLIANCE STATEMENT
The Trustee will deliver to the Note Trustee annually a written statement as
to the fulfillment of its obligations under the Transaction Documents.
THE NOTE TRUSTEE
Citibank, N.A., London office, will be the Note Trustee. The Note Trustee
may resign after giving three months written notice, 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 Note Trust Deed or if the Note Trustee becomes
insolvent or ceases its business. In addition, holders of 75% of the aggregate
Invested Amount of the Class A Notes may require the Issuer Trustee to remove
the Note Trustee. In such circumstances and others set forth in the Note Trust
Deed, the Issuer Trustee will be obligated to appoint a successor note trustee.
Any resignation or removal of the Note Trustee and appointment of a successor
note trustee will not become effective until acceptance of the appointment by a
successor note trustee and confirmation by the Rating Agencies that such
appointment will not cause a downgrading, qualification or withdrawal of the
then current ratings of the Class A Notes.
The Note Trustee shall, with respect to all the powers, trusts, authorities,
duties and discretions vested in it by the Transaction Documents, except where
expressly provided otherwise, have regard to the interests of the Class A
Noteholders and the Class B Noteholders subject to the proviso in the following
sentence.
GOVERNING LAW
The Notes and the Transaction Documents (other than certain of the swap
agreements) are governed by, and shall be construed in accordance with, the laws
of New South Wales, Australia.
LONDON STOCK EXCHANGE LISTING
For purposes of the listing of the Class A Notes on the London Stock
Exchange, attached hereto as Appendix II are the terms and conditions of the
Class A Notes.
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. The following section contains a summary of the
material terms of the Servicing Agreement. The summary does not purport to be
complete and is subject to the provisions of the Servicing Agreement, which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part.
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
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accordance with the Servicing Agreement 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.
POWERS
Subject to the servicing standards set forth above and the limitations set
forth below, 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 servicing the Housing
Loans and 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
equitable title to the Housing Loans and related Mortgages in the Mortgage
Pool to full legal title 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, on
request from Westpac it will assist Westpac in collecting all moneys due
under those Housing Loans and Mortgages and pay them into the Collections
Account not later than the time Westpac would be required to do so.
(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 not later than the time
Westpac would be required to do so.
(4) If a material default occurs in respect of a Housing Loan, it will
take action in accordance with its normal enforcement procedures 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 do or omit to do anything which could be reasonably expected to
prejudicially affect or limit its rights or the rights of
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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 when each such claim is made.
(6) 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
which would rank before or PARI PASSU with the relevant Housing Loan and
Mortgage or allow the creation or existence of any other security interest
in the Mortgaged Property unless priority arrangements are entered into with
such third party under which the third party acknowledges that the Housing
Loan and the Mortgage ranks ahead in priority to the third party's security
interest on enforcement for an amount not less than the Unpaid Balance of
the Housing Loan plus such other amount as the Servicer determines in
accordance with the Procedures Manual or its ordinary course of business.
(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.
(10) It will give notice in writing to the Issuer Trustee and the Rating
Agencies of it becoming aware of the occurrence of any Servicer Transfer
Event.
(11) It will maintain in effect all qualifications, consents, licenses,
permits, approvals, exemptions, filings and registrations as may be required
under any applicable law in order properly to service the Housing Loans and
Mortgages and to perform or comply with its obligations under the Servicing
Agreement.
(12) It will notify: (i) the Issuer Trustee and the Trust Manager of any
event which it reasonably believes is likely to have an Adverse Effect
promptly after becoming aware of such event; and (ii) the Trust Manager of
anything else which the Trust Manager reasonably requires regarding any
proposed modification to any Housing Loan or Mortgage.
(13) It will provide information reasonably requested by the Issuer
Trustee or the Trust Manager, with respect to all matters relating to the
Trust and the assets of the Trust, and the Issuer Trustee or the Trust
Manager believes reasonably necessary for it to perform its obligations
under the Transaction Documents, and upon reasonable notice and at
reasonable times permit the Issuer Trustee to enter the premises and inspect
the data and records in relation to the Trust and the Relevant Documents.
WESTPAC UNDERTAKINGS
Westpac has undertaken, among other things, the following under the
Servicing Agreement:
(1) It will maintain in effect all qualifications, consents, licenses,
permits, approvals, exemptions, filings and registrations as may be required
under any applicable law in relation to its ownership of any Housing Loan or
Mortgage and to perform or comply with its obligations under the Servicing
Agreement; and comply with all Laws in connection with its ownership of any
Housing Loans and Mortgages where failure to do so would have an Adverse
Effect.
(2) It will cooperate with the Servicer in relation to the performance
by the Servicer of its duties under the Servicing Agreement, including,
without limitation, in relation to the enforcement of any Housing Loan or
Mortgage.
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(3) If a material default occurs in respect to a Mortgage, it will take
such action as the Servicer directs it to take in accordance with the
Servicing Agreement.
(4) It will act in accordance with the terms of any Mortgage Insurance
Policies, and not do or omit to do anything which could be reasonably
expected to prejudicially affect or limit the rights of the Issuer Trustee
under or in respect of a Mortgage Insurance Policy to the extent those
rights relate to a Housing Loan and the Mortgage.
(5) 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
which would rank before or PARI PASSU with the relevant Housing Loan and
Mortgage or allow the creation or existence of any other security interest
in the Mortgaged Property unless priority arrangements are entered into with
such third party under which the third party acknowledges that the Housing
Loan and the Mortgage ranks ahead in priority to the third party's security
interest on enforcement for an amount not less than the Unpaid Balance of
the Housing Loan plus such other amount as the Servicer determines in
accordance with the Procedures Manual or its ordinary course of business.
(6) It will not, except as required by law, release a Borrower from any
amount owing in respect of a Housing Loan or otherwise vary or discharge any
Housing Loan or Mortgage or enter into any agreement or arrangement which
has the effect of altering the amount payable in respect of a Housing Loan
or Mortgage where it would have an Adverse Effect.
(7) It will release any Housing Loan or Mortgage, reduce the amount
outstanding under or vary the terms of any Housing Loan or grant other
relief to a Borrower, if required to do so by any law or if ordered to do so
by a court, tribunal, authority, ombudsman or other entity whose decisions
are binding on Westpac. If the order is due to Westpac breaching any
applicable law then Westpac must indemnify the Issuer Trustee for any loss
the Issuer Trustee may suffer by reason of the order. The amount of the loss
is to be determined by agreement with the Issuer Trustee or failing this, by
Westpac's external auditors.
(8) It will notify the Servicer immediately of each request by a
Borrower to borrow further moneys under or in relation to a Housing Loan or
Mortgage.
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. The Servicer shall not be liable for a breach of the
Servicing Agreement, or be liable under any indemnity, in relation to any action
or inaction on its part, where it has been notified by the Issuer Trustee or the
Trust Manager that the action or inaction is not reasonably likely to, or will
not have, an Adverse Effect.
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.
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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 with respect 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 (as determined by the Issuer Trustee) 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 from the Issuer Trustee, 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.
Subject to certain limitations, the Servicer has indemnified the Issuer
Trustee against any expense, loss, damage or liability 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 and be entitled to the Servicing
Fee.
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 similar 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 Relevant
Documents for Housing Loans in the Mortgage Pool separate from other documents;
(ii) maintaining reports on movements of the Relevant Documents; and (iii) being
able to locate security packets containing the Relevant Documents.
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;
(ii) below Baa2 by Moody's; or
(iii) below BBB by Fitch;
(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 and is subsisting,
then the Servicer must deliver the Relevant Documents to, or at the
direction of, the Issuer Trustee. If the Servicer does not do so within 10
Business Days (or such longer period as the Issuer Trustee permits), then the
Issuer Trustee must enter the premises where the Relevant Documents are kept,
take possession of and remove the Relevant Documents. If the Issuer Trustee does
not have possession of the documents within that period 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 Issuer Trustee
ceases to have any obligation to any creditor in relation to any Trust;
(c) the date on which the Issuer 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
The following section contains a summary of the material terms of the
Liquidity Facility. The summary does not purport to be complete and is subject
to the provisions of the Liquidity Facility, a form of which has been filed as
an exhibit to the Registration Statement of which this Prospectus is a part.
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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$46,000,000;
(2) the Unpaid Balance of all Performing Loans at that date; 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 on or before the Closing
Date.
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 request 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, P-1 from Moody's or F-1+ from Fitch, the
Liquidity Facility Provider must, within five Business Days or such longer
period as the Rating Agencies confirm will not result in a downgrade, withdrawal
or qualification of the Class A Notes, deposit into an account held in the name
of the Issuer Trustee (the "Collateral Account") 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, P-1 from Moody's and
F-1 from Fitch, 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, P-1 from Moody's or
F-1 from Fitch where the bank is Westpac, or F-1+ where the bank is not Westpac,
then the balance of the Collateral Account, and all amounts standing to the
credit of the Collateral Account, must (subject to certain limited restrictions)
within five Business Days (or such
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longer period as the Rating Agencies agree) be transferred to a bank with a
short term credit rating from Standard & Poor's of not lower than A-1+, not
lower than P-1 from Moody's and not lower than F-1+ from Fitch.
If the short term credit rating of the Liquidity Facility Provider is not
less than A-1 from Standard & Poor's, P-1 from Moody's and F-1 from Fitch, 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+, not lower than P-1 from Moody's and not lower than F-1+ from Fitch.
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+ from Standard & Poor's, P-1
from Moody's and F-1+ from Fitch, then the balance in the Collateral Account
must be repaid within five Business Days 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.
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
CLASS A 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 to the Liquidity Facility
Provider under the Liquidity Facility and the Issuer Trustee does not pay
that amount;
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(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 as previously notified to the Rating Agencies;
(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 has cancelled the Liquidity
Limit in full.
Cancellation of the Liquidity Limit is conditional on the Rating Agencies
confirming that such cancellation will not result in a downgrade, withdrawal or
qualification of the credit rating assigned by the Rating Agencies to the Notes.
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DESCRIPTION OF THE SWAP AGREEMENTS
DESCRIPTION OF INTEREST RATE SWAP AGREEMENTS
The following section contains a summary of the material 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 subject to the
provisions of the Swap Agreements.
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"). Each swap will be
governed by an ISDA Master Agreement, as amended by a supplementary schedule and
confirmed by a written confirmation. All such documents will be governed by the
laws of the state of New South Wales. 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
interest rates on Housing Loans with a variable rate 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 or from an existing Fixed Rate of interest to a new Fixed Rate of
interest after the Cut-Off Date. The Issuer Trustee will pay the applicable
daily weighted average Fixed Rate on Housing Loans that have converted to a
Fixed Rate since the Cut-Off Date 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 on Housing Loans that are 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 or
about 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 short term
debt rating below A-1+, A2 or F-1+ by either Standard & Poor's, Moody's or
Fitch, respectively, the Interest Swap Provider will either:
(1) provide cash collateral security sufficient to enable Standard &
Poor's, Moody's and Fitch to confirm that the downgrade will not cause a
reduction in or a withdrawal of the rating of the Notes; or
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(2) arrange for a suitably rated counterparty to intermediate the swap
or act as substitute swap provider.
TERMINATION
The following events are events of default under the Interest Rate Swap
Agreements: (i) failure by Westpac or the Issuer Trustee to make, when due, any
payment or delivery required by the agreement and such failure is not remedied
by the tenth local business day; and (ii) an Insolvency Event has occurred in
respect of Westpac or the Issuer Trustee; provided, however, that 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 Class A Notes. Upon novation of the Swap, the successor Issuer
Trustee will assume the rights and obligations of the Issuer Trustee under the
Interest Rate Swap.
An event which constitutes illegality will be a termination event under the
Interest Rate Swap Agreements. If there is a downgrading of the Interest Rate
Swap Provider's short term debt rating below A-l+, A2 or F-1+ by either Standard
& Poor's, Moody's or Fitch, respectively, and the Interest Rate 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.
Upon the termination of an Interest Rate Basis Swap, a termination payment
calculated pursuant to the Loss Method (as defined in such Interest Rate Basis
Swap) will be due to be paid by the Issuer Trustee to the Interest Rate Swap
Provider or by the Interest Rate Swap Provider to the Issuer Trustee. The
termination payment with respect to the Variable Rate Basis Swap will be zero.
The Issuer Trustee may look to any cash collateral security posted by the
Interest Rate Swap Provider relating to the terminated Interest Rate Basis Swap
for satisfaction of the Interest Rate Swap Provider's termination payment.
NOVATION
Upon the novation of a Interest Rate Swap Agreement, either the Interest
Rate Swap Provider will pay to the substitute Interest Rate Swap Provider an
up-front premium or the substitute Interest Rate Swap Provider will pay to the
Interest Rate Swap Provider an up-front premium to preserve the economic
equivalent of the mark-to-market value of the swap transaction as of the date of
novation. The Issuer Trustee will not bear any risk with respect to the novation
of an Interest Rate Swap unless the Interest Rate Swap Provider is unable to pay
any required up-front premium and there is insufficient cash collateral security
posted with respect to such Interest Rate Swap to cover such premium.
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 (the "Threshold Rate") 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 documents 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. 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).
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DESCRIPTION OF CURRENCY SWAPS
The following sections contain a summary of the material terms of the
Currency Swaps, which the Issuer Trustee will enter into with Morgan Guaranty
Trust Company of New York, acting through its London Branch ("Morgan Guaranty")
and Westpac (together, the "Currency Swap Providers" and together with the
Interest Rate Swap Provider, the "Swap Providers"). The summary does not purport
to be complete and is subject to the provisions of the Currency Swaps. The
Currency Swaps are provided on a "joint and several" basis by Westpac and Morgan
Guaranty. See "--Cross Support."
Collections in relation to the Housing Loans and related Mortgages and under
the Variable Rate Basis Swap and the Fixed Rate Basis Swaps will be denominated
in Australian dollars. However, the payment obligations of the Issuer Trustee in
relation to Interest and principal on the Class A 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
(together, the "Currency Swaps") with the Currency Swap Providers. The Currency
Swaps will be governed by an ISDA Master Agreement dated on or about May 13,
1999, by and between the Issuer Trustee and Morgan Guaranty (governed by New
York law) and an ISDA Master Agreement dated on or about May 13, 1999, by and
between the Issuer Trustee and Westpac (governed by the laws of New South Wales)
respectively. Each ISDA Master Agreement will be amended by a schedule thereto.
Each swap transaction will be confirmed by a written confirmation (such ISDA
Master Agreements, the schedules thereto and the related swap confirmations, the
"Currency Swaps").
Under the Currency Swaps, the Issuer Trustee is required to pay to the
Currency Swap Providers on each Payment Date amounts in A$ equal to a certain
percentage of the amount of any Principal Collections to be paid to the Class A
Noteholders received by the Issuer Trustee (the percentage being that which is
described in the section entitled "DESCRIPTION OF THE CLASS A NOTES--Payments of
Principal on the Notes") and the Currency Swap Providers are 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 related swap confirmations).
In addition, under the Currency Swaps on each Payment Date the Issuer Trustee
will make A$ floating rate payments to the Currency Swap Providers and the
Currency Swap Providers will make US$ floating rate payments which are
equivalent in amount to the Interest payable in US$ to the Class A Noteholders.
If on any Payment Date, the Issuer Trustee does not or is unable to make the
full floating payment, the US$ floating rate payment to be made by the Currency
Swap Providers 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 Class A 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
Swaps, an amount equal to the US$ subscription amounts will be paid to the
Currency Swap Providers, which will pay the A$ Equivalent of such amounts to the
Issuer Trustee.
On the Closing Date the Issuer Trustee will be obliged to pay to the
Currency Swap Providers an amount equal to the proceeds of the issue of the
Class A 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 Series Notice requires that the Issuer Trustee direct the Currency Swap
Providers to pay all US$ amounts to the Principal Paying Agent or the US$
Account. All US$ amounts shall be paid to the Class A Noteholders in accordance
with their entitlements and the priorities set out in "DESCRIPTION OF THE CLASS
A NOTES."
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TERMINATION OF THE CURRENCY SWAPS BY THE CURRENCY SWAP PROVIDERS
Under the Currency Swaps each Currency Swap Provider shall have the right to
terminate its currency swap in the following circumstances:
(1) If the Issuer Trustee fails to make a payment under the Currency
Swap within the 10 Business Days.
(2) If due to change in law it becomes illegal for the Issuer Trustee or
a Currency Swap Provider to make or receive payments or comply with any
other material provision of the Currency Swaps, the Currency Swap requires
such party to make certain efforts to transfer its rights and obligations to
another office or another affiliate to avoid this illegality (so long as the
transfer would not result in a downgrade of the rating of the Notes). If
those efforts are not successful then the applicable 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 Providers have the limited right to terminate
where it is required to gross-up or receive payments from which amounts have
been withheld if the Note Trustee is satisfied that the Noteholders will be
paid in full.
(4) An Insolvency Event with respect to the Issuer Trustee occurs.
(5) Any Event of Default occurs and an Extraordinary Resolution of the
Voting Mortgagees is passed directing the Security Trustee to take certain
actions.
TERMINATION OF THE CURRENCY SWAPS BY THE ISSUER TRUSTEE
There are a number of circumstances in which the Issuer Trustee has the
right to terminate the Currency Swaps with respect to a Swap Provider. 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 Providers fail to make a payment under the
Currency Swap within 10 Business Days or the Currency Swap Providers become
insolvent or merge into another entity without that entity properly assuming
responsibility for the obligations of the Currency Swap Providers under the
Currency Swaps.
(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 Providers are
obliged to make certain efforts to transfer their rights and obligations to
avoid that illegality. If those efforts fail the Currency Swaps may be
terminated.
(3) If the Issuer Trustee becomes obliged under the Currency Swaps to
receive payments from which amounts have been withheld or deducted
(including where this situation arises from a merger affecting the Currency
Swap Providers).
(4) If the Issuer Trustee becomes obliged to make a withholding or
deduction in respect of the Class A Notes and, as a result, the Class A
Notes are redeemed.
The Issuer Trustee (and the Note Trustee) may only terminate the Currency
Swaps following prior consultation by the Note Trustee with the Currency Swap
Providers as to the timing of termination. The Issuer Trustee will exercise such
right to terminate at the direction of the Trust Manager. The Currency Swap
Providers acknowledge that the Trust Manager will perform the day to day
management of the Trust and may exercise or satisfy any of the Issuer Trustee's
rights or obligations under the Currency Swap.
TERMINATION PAYMENTS
On the Termination Date or the Early Termination Date (each as defined in
the Currency Swaps) in respect of the Currency Swaps, a termination payment will
be due to be paid by the Issuer Trustee to the
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Currency Swap Providers or to the Issuer Trustee by the Currency Swap Providers
in respect of the Currency Swaps. The termination of a Currency Swap is an Event
of Default under the Security Trust Deed. If the Security Trust Deed is enforced
after such Events of Default, 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 Swaps 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 Providers) 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 SWAPS
If the Currency Swaps are terminated with respect to a Currency Swap
Provider, the Issuer Trustee may (at the direction of the Trust Manager) enter
into one or more currency swaps which replaces the terminated Currency Swap
(other than by way of transfer to avoid termination of the swap) (a "Replacement
Currency Swap") but only on the condition that the Settlement Amount (as defined
in the ISDA Master Agreement) payable (if any) by the Issuer Trustee to the
Currency Swap Provider upon termination of the original Currency Swap will be
paid in full when due in accordance with the Series Notice and 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 premium payable by the provider of the Replacement Currency Swap to be paid
directly to the applicable Currency Swap Provider in satisfaction of and to the
extent of the Issuer Trustee's obligation to pay the termination payment to such
Currency Swap Provider. If such premium paid by the Replacement Swap Provider is
less than the Settlement Amount due to the Currency Swap Provider, the balance
may be satisfied by the Issuer Trustee as a Trust Expense.
DOWNGRADE OF CURRENCY SWAP PROVIDERS
Each Currency Swap Provider, severally, will give a commitment for as long
as any outstanding Class A Notes are rated AAA/Aaa/AAA by Standard & Poor's,
Moody's and Fitch, respectively, to (a) provide collateral; and/or (as
determined with the relevant Rating Agencies) (b) if applicable, take other
measures acceptable to the relevant Rating Agencies, in respect of the Currency
Swap to which it is a party in the event that the rating that would be given to
senior debt jointly issued by the two Currency Swap Providers is ever downgraded
below Specified Levels. "Specified Levels" means long term debt ratings of
AA-/Aa3/AA- by Standard & Poor's, Moody's and Fitch, respectively, in respect of
clause (a) above, and either long term debt ratings of A- by Standard & Poor's
and Fitch, or short term debt ratings of A-1/F-1 by Standard & Poor's and Fitch,
respectively, in respect of clause (b) above. If a Currency Swap Provider
replaces a defaulting Currency Swap Provider with itself (as described below
under "--Cross Support"), the commitment described above will continue to apply
to the remaining Currency Swap Provider, except the Specified Levels shall apply
in respect of the senior debt of that Currency Swap Provider (rather than to the
joint debt).
CROSS SUPPORT
Each Currency Swap Provider has agreed to pay on demand of the Issuer
Trustee to or at the direction of the Issuer Trustee any amounts that the other
Currency Swap Provider is required to pay pursuant to the relevant Currency Swap
but has failed to pay. So long as a Currency Swap Provider pays such amounts,
the Issuer Trustee shall not be entitled to terminate the relevant Currency Swap
with respect to such default. In any case, a Currency Swap Provider may, in
certain circumstances, elect to replace the defaulting other Currency Swap
Provider with itself or another suitably rated party approved by the Issuer
Trustee, the Trust Manager and the Note Trustee.
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CURRENCY SWAP PROVIDERS
Morgan Guaranty Trust Company of New York, acting through its London Branch,
and Westpac are joint providers of the Currency Swaps.
Morgan Guaranty Trust Company of New York ("Morgan Guaranty") is a wholly
owned subsidiary and the principal asset of J.P. Morgan & Co. Incorporated
("Morgan"), a Delaware corporation whose principal office is located in New
York, New York. Morgan Guaranty 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 March 31, 1999, Morgan Guaranty and its subsidiaries
had total assets of $183.8 billion, total net loans of $25.6 billion, total
deposits of $58.6 billion, and stockholder's equity of $10.7 billion. As of
December 31, 1998, Morgan Guaranty and its subsidiaries had total assets of
$175.2 billion, total net loans of $24.9 billion, total deposits of $56.2
billion, and stockholder's equity of $10.5 billion.
The consolidated statement of condition of Morgan Guaranty as of March 31,
1999, is set forth on page 9 of Exhibit 99 to Form 8-K dated April 14, 1999, as
filed by Morgan with the Securities and Exchange Commission. Morgan Guaranty
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.
For a description of Westpac, see "ORIGINATOR OF THE HOUSING LOANS".
The information with respect to the Currency Swap Providers contained herein
has been obtained from the Currency Swap Providers. The delivery of this
Prospectus will not create any implication that there has been no change in the
affairs of the Currency Swap Providers since the date hereof or that the
information contained or referred to herein is correct as of any time subsequent
to its date. The Currency Swap Providers have not had any involvement in the
preparation of any part of this Prospectus, other than the information with
respect to the Currency Swap Providers set forth in this section and under the
heading "DESCRIPTION OF THE SWAP AGREEMENTS--Description of Currency Swap." The
Currency Swap Providers make no statement or representation in this Prospectus
(other than the information referred to above), have not authorized or caused
the issue of any part of it and take no responsibility for any part of it.
The Class A Notes do not represent an obligation of the Currency Swap
Providers, J.P. Morgan Securities, Inc., Morgan or any of their respective
affiliates. Holders of the Class A Notes will not have any right to proceed
directly against the Currency Swap Providers in respect of the Currency Swap
Providers' obligations under the Currency Swaps.
CERTAIN LEGAL ASPECTS OF THE HOUSING LOANS
The following discussion contains summaries of 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 the law of the applicable State or Territory (which laws may differ
substantially between States and Territories) and the summaries do not reflect
the particular laws of any particular jurisdiction or encompass all relevant
laws of all jurisdictions in which any Mortgaged Property may be situated. The
summaries are subject to the applicable Australian federal and state laws
governing real property and the granting and enforcement of security over real
property.
GENERAL
Generally each Housing Loan will be secured by a mortgage which has 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 or if the Housing Loan is not secured by a first ranking mortgage the
Approved Seller will
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equitably assign to the Issuer Trustee all prior ranking registered mortgages in
relation to that Housing Loan). 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.
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 or leasehold title, interests in which are
created by registration in one or more central land registries 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, registered easements and other
dealings 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, each proprietor has title to, and may
freely dispose of, their unit. All proprietors are members of a "body
corporate", which is vested with the control, management and administration of
the common property and the strata scheme generally, for the benefit of the
proprietors, including the rules governing the apartment block. Certain parts of
the property, such as the land on which the building is erected, the stairwells,
entrance lobbies and the like are known as "common property" and are held by the
body corporate for the benefit of the 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.
URBAN LEASEHOLD
All land in the Australian Capital Territory is owned by the Commonwealth of
Australia and is subject to a leasehold system of land tenure. Mortgaged
Property in that jurisdiction comprises a Crown lease and developments on the
land are subject to the terms of that lease. Any such lease:
(a) cannot have a term exceeding 99 years, although the term can be
extended under a straightforward administrative process in which the only
qualification to be considered is whether the land may be required for a
public purpose; and
(b) where they involve residential property are subject to a nominal
rent of 5 cents per annum on demand.
As with other Torrens title land, the Borrower's leasehold interest in the
land is entered in a central register and the Borrower may deal with their
leasehold interest (including granting a mortgage over the property) without
consent from the government.
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In all cases where Mortgaged Property consists of a leasehold interest, the
unexpired term of the lease exceeds the term of the Housing Loan secured by that
Mortgaged Property.
Leasehold property may become subject to native title claims. Native title
has only quite recently been recognized by Australian courts. Native title to
particular property is based on the traditional laws and customs of indigenous
Australians and is not necessarily extinguished by grants of Crown leases over
that property. The extent to which native title exists over property (including
property subject to a Crown lease) depends on how that property was previously
used by the indigenous claimants asserting native title, and whether the native
title has been extinguished by the granting of the leasehold interest. If the
lease confers the right of exclusive possession over the property (which is
typically the case with residential leases), the current view is that native
title over the relevant property should be extinguished. Whether a lease confers
exclusive possession will depend on a construction of the lease and the
legislation under which the lease was granted.
Housing Loans secured by Mortgaged Property which is leasehold in the
Australian Capital Territory represents only approximately 1.21% (by value) of
all Housing Loans.
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.
In most States and Territories, a mortgagee will retain a duplicate
certificate of title (which mirrors the original certificate of title held at
the relevant land registry office). 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.
In Queensland, under the Land Title Act 1994, duplicate certificates of
title are no longer issued to mortgagees as a matter of practice. A record of
the title is stored on computer at the land registry office and the mortgage is
registered on that computerized title.
Once the mortgagor has repaid the debt, a discharge executed by the
mortgagee is lodged with the relevant registrar by the mortgagor or the
mortgagee and the mortgage is noted as having been released.
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.
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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. In Australia, a lender may sue to recover all
outstanding principal, interest and fees under the personal covenant of a
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; or
(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 the 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 prohibit certain fees and charges. The Consumer Credit legislation
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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 has the right
to apply to a court to, among other things:
(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 if
the interest rate is changed in a way which is unconscionable;
(3) have certain provisions of the Housing Loan or relevant Mortgage
which are in breach of the legislation declared unenforceable;
(4) obtain an order for a civil penalty against Westpac or, after a
Title Perfection Event, the Issuer Trustee, in relation to a breach of
certain key requirements of the Consumer Credit Legislation, the amount of
which may be set off against any amount payable by the Borrower under the
Housing Loan; or
(5) obtain restitution or compensation from either Westpac or, following
a Title Perfection Event, 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 Class A Notes).
In addition, 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.
Such procedures and negotiations may also affect the timing or amount of
interest or principal payments or repayments under the Housing Loans.
Breaches of the Consumer Credit Legislation may also lead to 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 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 a loss in connection with a breach of the Consumer Credit Legislation
which is caused by a breach of a relevant representation or undertaking.
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BANKRUPTCY
The insolvency of a natural person is governed by the provisions of the
Bankruptcy Act 1966 of Australia, 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, 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 interests may
have priority over pre-existing mortgages.
INSOLVENCY CONSIDERATIONS
The current transaction is designed to minimize insolvency risk. For
example, the equitable assignment of the Housing Loans by Westpac to the Issuer
Trustee should ensure that the Housing Loans are not assets available to the
liquidator or creditors of Westpac in the event of an insolvency of Westpac.
Similarly, the assets in the Trust should not be available to other creditors of
the Issuer Trustee in its personal capacity or as trustee of any other trust in
the event of an insolvency of the Issuer Trustee.
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
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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.
TREATMENT OF INTEREST PAYMENTS WITH RESPECT TO AUSTRALIAN HOUSING LOANS
Under Australian law, interest on loans used to purchase a person's primary
place of residence is not ordinarily deductible for taxation purposes.
Conversely, interest payments on mortgage loans and other non-capital
expenditures relating to investment properties that generate taxable income are
generally allowable as tax deductions.
USE OF PROCEEDS
The net proceeds from the sale of the Class A Notes will amount to
US$883,900,000 and will be used by the Issuer Trustee to acquire equitable title
to 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 Class A 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 are urged to consult their own tax
advisors with regard to the application of the tax considerations discussed
below to their particular situations, as well as the consequences to them under,
state, local, non-United States and any other tax law of the purchase, ownership
and disposition of the Class A 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 Class A
Notes will be characterized as debt of the Issuer Trustee. Each Noteholder, by
the acceptance of a Class A Note, will agree to treat the Class A 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 the Class A Notes held by it in accordance with such
Noteholder's method of accounting.
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SALES OF NOTES
A Noteholder's tax basis in a Class A Note will equal its cost of such Class
A Note, reduced by any amortized premium (as described below) and any payments
other than interest made on such Class A Note and increased by any market
discount or original issue discount included in the Noteholder's income. A
Noteholder that sells a Class A Note will recognize gain or loss (in the
aggregate) in an amount equal to the difference between its adjusted tax basis
in the Class A 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 a capital gain or loss if the Class A Note was held as
a capital asset and, if the Class A Note was held for more than one year, will
be long-term capital gain or loss. In the case of an individual taxpayer,
long-term capital gains are eligible for reduced rates of taxation. 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.
MARKET DISCOUNT
A purchaser of a Class A Note will be considered to have acquired such Class
A Note at a "market discount" to the extent the remaining principal amount of
such Class A Note exceeds the Noteholder's tax basis in such Class A 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
Class A Note.
In the case of a sale or other disposition of a Class 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 Class A Note by
gift (and in certain other circumstances), could result in the recognition of
market discount income, computed as if such Class A Note had been sold for its
fair market value.
In the case of a partial principal payment on a Class 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 Class A 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 Class A 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 Class A Note subject to the market discount rules exceeds the interest
(including OID) currently includible in income with respect to such Class A
Note, deductions of such interest must be deferred to extent of the market
discount allocable to the taxable
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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 urged 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 Class A Note at
a premium to the extent the Noteholder's tax basis in such Class A Note exceeds
the remaining principal amount of such Class A Note. In that event, a Noteholder
who holds a Class 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 Class A 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 Class A 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 Class A
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 Class A
Notes. 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 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.
Recently, the Treasury Department issued new regulations (the "New
Regulations") which make certain modifications to the backup withholding and
information reporting rules described above. The New Regulations attempt to
unify certification requirements and modify reliance standards. The New
Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.
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.
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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 CLASS A 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 CLASS A NOTES. ANY SUCH DEALING WOULD NEED TO COMPLY WITH THE SELLING
RESTRICTIONS AND SECURITIES LAW GENERALLY.
PAYMENTS OF PRINCIPAL, PREMIUMS AND INTEREST
In the opinion of Allen Allen & Hemsley, Australian tax counsel to the
Issuer Trustee ("Australian Tax Counsel") under existing Australian tax law,
non-resident holders of the Class A Notes or interests in any Book-Entry 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, including, subject to the
fulfillment of all conditions required by section 128F of the Tax Act as
referred to below, interest withholding tax. Under Article 11 of the 1983 United
States-Australia Tax Treaty, the maximum Australian withholding rate on interest
paid to United States residents who are entitled to the benefit of such Treaty
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 Class A 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 Class A Notes in a way that satisfies an objective public offer test. The
Issuer Trustee will seek to issue the Class A Notes in a way that will satisfy
such test and otherwise meet the requirements of section 128F, including by
listing the Class A Notes.
The test will not be satisfied if the Issuer Trustee knew, or had reasonable
grounds to suspect, that the Class A 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 Tax
Act; or
(2) an associate of the Issuer Trustee within the meaning of section
128F of the Tax Act, other than in the capacity of a dealer, manager or
underwriter in relation to the placement of a Class A 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 debentures be issued outside
Australia and that the interest be paid outside Australia. .. this measure will
remove a tax discrimination in favour of corporate debt issued in foreign
financial markets over corporate debt issued in Australia markets." It is
proposed that these amendments will apply to issues of securities after 2 July
1998. A bill to implement the amendments was introduced into Australian Federal
Parliament on 3 December 1998. That bill is being debated at the date of this
prospectus. It is not currently possible to predict when the amendments will be
enacted.
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PROFIT ON SALE
In the opinion of Australian Tax Counsel, under current Australian law,
non-resident holders of Class A Notes will not be subject to Australian income
tax on profits derived from the sale or disposal of Class A Notes (but see below
for discussion of Australia's capital gains provisions):
(1) if the profits do not have an Australian source; or
(2) where the profits do have an Australian source, if the holder is
resident in a country with which Australia has entered into a double tax
treaty, is entitled to the benefit of that treaty and the profits are
business profits for the purposes of the treaty which are not attributable
to a business carried on through an Australian Establishment.
The source of any profit on the disposal of Class A Notes will depend on the
factual circumstances of the actual disposal. Where the Class A 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 Class A 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) Class A Notes are sold for an amount in excess of their issue price
prior to maturity; or
(2) Class A Notes are sold to an Australian resident in connection with
a "washing arrangement" (as defined in the Tax Act).
In the opinion of Australian Tax Counsel, under provisions for the taxation
of capital gains, non-resident holders of Class A Notes would be subject to
Australian tax on profits derived from the sale or disposal of Class A Notes if
the Class A Notes were at any time prior to the sale or disposal held as part of
a business carried on through an Australian Establishment.
OTHER TAXES
In the opinion of Australian Tax Counsel, no stamp, issue, registration or
similar taxes are payable in Australia in connection with the issue of the Class
A Notes. Furthermore, a transfer of, or agreement to transfer, Class A Notes
executed outside of Australia will not be subject to Australian stamp duty.
ERISA CONSIDERATIONS
Subject to the considerations discussed below, the Class A Notes are
eligible for purchase by employee benefit plans.
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
Class A Notes might be deemed to constitute prohibited transactions under ERISA
and the Code if assets of the Trust 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 Trust 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 Trust and
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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, at the time of their
initial issuance that the Class A Notes should be treated as debt without
substantial equity features for purposes of the Plan Assets Regulation and that
the Class A Notes do not constitute equity interests in the Trust for purposes
of the Plan Assets Regulation. The debt characterization of the Class A Notes
could change after their initial issuance if the Trust incurred losses.
However, without regard to whether the Class A Notes are treated as an
equity interest for such purposes, the acquisition or holding of the Class A
Notes by or on behalf of a Benefit Plan could be considered to give rise to a
prohibited transaction if the Trust, the Issuer Trustee, the Servicer, the Trust
Manager, the Note Trustee, any Approved Seller, the Seller Trustee or the
Security Trustee or any of their 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 Class 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 Class A Note,
each purchaser shall be deemed to represent and warrant that its purchase and
holding of the Class A 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 CLASS A NOTES SHOULD
CONSULT ITS TAX AND/OR LEGAL ADVISORS REGARDING WHETHER THE ASSETS OF THE TRUST
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, "Aaa" by Moody's and "AAA" by Fitch. The security
ratings of the Class A 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. The Class A Notes are pass-through debt
securities. The rating does not address the expected schedule of principal
repayments other than to say that principal will be returned no later than the
final maturity date.
LEGAL INVESTMENT CONSIDERATIONS
The Class A 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 Class A Notes, which, for the
reasons stated herein, do not constitute "mortgage related securities" under
SMMEA. No representation is made as to whether the Class A 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
155
<PAGE>
authorities. Prospective purchasers are urged to consult with their counsel
concerning the status of the Class A Notes as legal investments for such
purchasers.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
by and among the underwriters named below (the "Underwriters"), Westpac, the
Issuer Trustee and Trust Manager, the Issuer Trustee has agreed to sell to the
Underwriters, and each of the Underwriters have severally agreed to purchase,
the principal amount of the Class A Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
OF CLASS A NOTES
UNDERWRITER (US$)
- ----------------------------------------------------------------------- ---------------------
<S> <C>
J.P. Morgan Securities Inc............................................. $ 331,462,500
Morgan Stanley & Co. Incorporated...................................... $ 220,975,000
Westpac Banking Corporation............................................ $ 110,487,500
Deutsche Bank Securities Inc........................................... $ 44,195,000
Warburg Dillon Read (a division of UBS AG)............................. $ 44,195,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated..................... $ 44,195,000
Salomon Smith Barney Inc............................................... $ 44,195,000
Nomura International plc............................................... $ 44,195,000
Total............................................................ $ 883,900,000
---------------------
---------------------
</TABLE>
In the Underwriting Agreement, the Underwriters named therein have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
Class A Notes offered hereby if any Class A 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 Class A 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 0.12% of the Initial Invested Amount of the Class
A Notes.
With respect to the Class A Notes, the Underwriters may allow and such
dealers may reallow, a concession not to exceed 0.10% of the aggregate of the
Initial Invested Amount of the Class A Notes.
In connection with the offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Class A Notes.
Specifically, the Underwriters may overallot the offering, creating a syndicate
short position. In addition, the Underwriters may bid for, and purchase, the
Class A Notes in the open market to cover syndicate shorts or to stabilize the
price of the Class A Notes. Any of these activities may stabilize or maintain
the market price of the Class A Notes 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 Class A Notes, the public offering
price and such concessions may be changed.
Pursuant to the Underwriting Agreement, Westpac Securities Administration
Limited (in its capacity as trustee of the Trust only), Westpac Securitisation
Management Pty Limited and Westpac have agreed to indemnify the Underwriters
against certain liabilities, including civil liabilities under the Securities
Act, or contribute to payments which the Underwriters may be required to make in
respect thereof.
In the ordinary course of its business, certain of the Underwriters and
certain of their affiliates have in the past and may in the future engage in
commercial and investment banking activities with Westpac and its affiliates.
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<PAGE>
OFFERING RESTRICTIONS
UNITED KINGDOM
Each Underwriter has severally represented and agreed with the Issuer
Trustee that:
(i) it has not offered or sold and will not offer or sell any Class A
Notes to persons in the United Kingdom prior to admission of the Class A
Notes to listing in accordance with Part IV of the Financial Services Act
1986 (the "Financial Services Act") except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995 or the Financial Services Act;
(ii) it has complied and will comply with all applicable provisions of
the Financial Services Act with respect to anything done by it in relation
to the Class A Notes in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issues
of the Class A Notes, other than any document which consists of or of any
part of listing particulars, supplementary listing particulars or any other
document required or permitted to be published by listing rules under Part
IV of the Financial Services Act, to a person who is of a kind described in
Article 11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom the document may
otherwise lawfully be issued or passed on.
AUSTRALIA
The Class A Notes may not, in connection with their initial distribution, be
offered or sold, directly or indirectly, in the Commonwealth of Australia, its
territories or possessions ("Australia"), or to any resident of Australia. Each
Underwriter has severally represented and agreed that in connection with the
initial distribution of the Class A Notes it:
(i) has not (directly or indirectly) offered for subscription or
purchase or issue invitations to subscribe for or buy nor has it sold, the
Class A Notes;
(ii) will not (directly or indirectly) offer for subscription or
purchase or issued invitations to subscribe for or buy nor will it sell the
Class A Notes; and
(iii) has not distributed and will not distribute any offering circular,
or any advertisement or other offering material,
in Australia, its territories or possessions or to any person who is (a)
actually known by the Underwriter (without an obligation on the Underwriter to
make any inquiry) to be a resident of Australia for the purposes of section 128F
of the Tax Act or (b) an associate of Westpac within the meaning of that section
(other than in the capacity of a dealer or underwriter in relation to a
placement of the Class A Notes) as identified on a list provided by Westpac.
LISTING AND GENERAL INFORMATION
LISTING
Westpac Banking Corporation, acting through its London branch, will act as
listing agent with respect to the Class A Notes. The listing of the Class A
Notes on the London Stock Exchange will be expressed as a percentage of their
principal amount (exclusive of accrued interest). It is expected that listing of
the Class A Notes on the London Stock Exchange will be granted on or about May
7, 1999, subject to the
157
<PAGE>
issuance of Global Notes. The Class A Notes will be issued in the form of one or
more Global Notes. There will be no temporary global notes.
AUTHORIZATION
The Issuer Trustee has obtained all necessary consents, approvals and
authorizations in connection with the issue and performance of the Notes. The
issue of the Notes has been authorized by the resolutions of the Board of
Directors of the Issuer Trustee passed on March 31, 1999.
LITIGATION
The Issuer Trustee is not, and has not, been involved in any litigation or
arbitration proceedings which may have, or have had during the twelve months
preceding the date of this Prospectus, a significant effect on the Issuer
Trustee's financial position nor, so far as the Issuer Trustee is aware, are any
such litigation or arbitration proceedings pending or threatened.
EUROCLEAR AND CEDELBANK
The Class A Notes have been accepted for clearance through Euroclear and
Cedelbank with a common code of 009756841 for the Class A Notes. The ISIN for
the Class A Notes is US96121RAC60.
DOCUMENTS AVAILABLE FOR COLLECTION AND INSPECTION
Copies of the following documents may be inspected during normal business
hours on any weekday (excluding Saturdays, Sundays and public holidays) at the
offices of the Principal Paying Agent at 5 Carmelite Street, London EC4Y 0PA,
during the period of fourteen days from the date of this Prospectus (except for
(a) and (c) (xiii), together the "Transaction Documents"):
(a) the Constitution of the Issuer Trustee;
(b) the Master Trust Deed between the Issuer Trustee and the Trust
Manager dated 14th February 1997;
(c) the following (which, prior to the Closing Date, will be in draft
form):
(i) the Series Notice among the Issuer Trustee, the Trust Manager,
the Approved Seller, the Note Trustee and the Servicer dated on or about
May 13, 1999;
(ii) the Servicing Agreement dated February 18, 1997 and the
Servicing Agreement Amendment Agreement dated on or about May 13, 1999,
each among Westpac, the Servicer and the Issuer Trustee;
(iii) the Note Trust Deed among the Issuer Trustee, the Trust Manager
and the Note Trustee dated on or about May 13, 1999;
(iv) the Agency Agreement among the Issuer Trustee, the Trust
Manager, the Note Trustee, the Principal Paying Agent and the Agent Bank
dated on or about May 13, 1999;
(v) the Security Trust Deed among the Issuer Trustee, the Security
Trustee, the Note Trustee and the Trust Manager dated on or about May 6,
1999;
(vi) the Liquidity Facility Agreement among the Issuer Trustee, the
Liquidity Provider and the Trust Manager dated on or about May 13, 1999;
(vii) the Redraw Facility Agreement among the Issuer Trustee, the
Redraw Facility Provider and the Trust Manager dated on or about May 13,
1999;
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(viii) the Interest Rate Swaps between the Issuer Trustee and Westpac
dated on or about May 13, 1999;
(ix) the Currency Swap between Westpac, as a Currency Swap Provider
and the Issuer Trustee dated on or about May 13, 1999;
(x) the Currency Swap between Morgan Guaranty, as a Currency Swap
Provider, and the Issuer Trustee dated on or about May 13, 1999;
(xi) the Mortgage Pool Insurance Policy between HLIC, Westpac and the
Issuer Trustee;
(xii) the PMI Policies issued by Royal & Sun, MGICA, WLMI and HLIC
which cover individual housing loans for principal and interest losses;
and
(xiii) Underwriting Agreement among the Trust Manager, the Issuer
Trustee, Westpac and the Underwriters dated on or about May 6, 1999;
TEMPORARY AUSTRALIAN FOREIGN EXCHANGE CONTROLS
Under temporary Australian foreign exchange controls, payments to, or on
behalf of:
(1) the Government of Iraq or to its agencies or nationals:
(2) the authorities of the Federal Republic of Yugoslavia (Serbia and
Montenegro); or
(3) the Government of Libya or any public authority or controlled entity
of the Government of Libya, may only be made with the approval of the
Reserve Bank of Australia.
CONSENTS TO OPINIONS
Mayer, Brown & Platt have given and not withdrawn their written consent to
the inclusion in this Prospectus of their opinion in the form and context in
which it is included on pages 27 and 150 and have authorized the content of
their opinion for the purposes of section 152(1)(e) of the Financial Services
Act 1986.
Allen Allen & Hemsley have given and not withdrawn their written consent to
the inclusion in the Prospectus of their opinion in the form and context in
which it is included on pages 7, 153 and 154 and have authorized the content of
their opinion for the purposes of section 152(1)(e) of the Financial Services
Act 1986.
LEGAL MATTERS
Certain legal matters with respect to the Class A Notes will be passed upon
for the Trust Manager and the Issuer Trustee by Mayer, Brown & Platt, New York,
New York, and for the Trust Manager by 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 Class A Notes will be passed upon
for the Trust Manager by Mayer, Brown & Platt, and certain Australian income tax
consequences will be passed upon for the Trust Manager by Allen Allen & Hemsley.
159
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
---------------
<S> <C>
A$............................................................................................... 7
A$ Class A Interest Amount....................................................................... 99
A$ Equivalent.................................................................................... 99
Accrued Interest Adjustment...................................................................... 51
ACN.............................................................................................. 66
ACT.............................................................................................. 57
Additional Termination Event..................................................................... 140
Adverse Effect................................................................................... 43, 148
Agent Bank....................................................................................... 16
AMP.............................................................................................. 91
Approved Bank.................................................................................... 96
Approved Sellers................................................................................. 13
APRA............................................................................................. 71
ASIC............................................................................................. 14
Australia........................................................................................ 157
Australian Establishment......................................................................... 153
Australian Tax Counsel........................................................................... 153
Authorized Investments........................................................................... 118
Availability Fee................................................................................. 111
Available Income................................................................................. 96
Available Liquidity Amount....................................................................... 136
Available Redraw Amount.......................................................................... 110
Average Quarterly Percentage..................................................................... 106
Bank Bill Rate................................................................................... 110
Basic Terms Modification......................................................................... 125
beneficial owner................................................................................. 120
Beneficiary...................................................................................... 102
Benefit Plan..................................................................................... 154
Bond Factor...................................................................................... 119
Book-Entry Notes................................................................................. 95, 119
Borrower......................................................................................... 21
Business Day..................................................................................... 16, 94
Carryover Charge Off............................................................................. 30
Carryover Class A Charge Offs.................................................................... 108
Carryover Class B Charge Offs.................................................................... 108
Carryover Redraw Charge Offs..................................................................... 108
Carryover RFS Class A Charge Offs................................................................ 108
Cede............................................................................................. 3
Cedelbank........................................................................................ 1
Cedelbank Participants........................................................................... 121
Certificate of Insurance......................................................................... 86
charge........................................................................................... 24, I-1
chargor.......................................................................................... 24, 49, I-1
Class............................................................................................ 16
Class A Charge Off............................................................................... 107
Class A Forex Percentage......................................................................... 106
Class A Noteholders.............................................................................. 16, 94
Class A Notes.................................................................................... 1, 14, 94
Class A Percentage............................................................................... 106
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------------
<S> <C>
Class B Charge Off............................................................................... 107
Class B Interest................................................................................. 99
Class B Notes.................................................................................... 1, 14, 94
Class B Percentage............................................................................... 106
Clean-up Offer................................................................................... 25
Closing Date..................................................................................... 15
Code............................................................................................. 150
Collateral Account............................................................................... 136
Collection Account............................................................................... 117
Collection Determination Date.................................................................... 94
Collection Period................................................................................ 94
Collections...................................................................................... 95
Collections Account.............................................................................. 22
Commission....................................................................................... 3
Concessional Fixed Rate.......................................................................... 37
Conference Report................................................................................ 151
Consumer Credit Legislation...................................................................... 42, 148
Cooperative...................................................................................... 121
CPR.............................................................................................. 92
Currency Swap Providers.......................................................................... 141
Currency Swaps................................................................................... 141
Cut-Off Date..................................................................................... 15
Cut-Off Date Balance Outstanding................................................................. 21, 54
Cut-Off Date Pool Balance........................................................................ 57
Definitive Note.................................................................................. 120
Definitive Notes................................................................................. 123
Delinquent....................................................................................... 23, 72, 136
Depository....................................................................................... 95
Draw Fee......................................................................................... 110
DTC.............................................................................................. 1, 119
Eligibility Criteria............................................................................. 55
Eligible Servicer................................................................................ 40
ERISA............................................................................................ 154
Euroclear........................................................................................ 1
Euroclear Operator............................................................................... 121
Euroclear Participants........................................................................... 121
European Depositaries............................................................................ 120
Event of Default................................................................................. 125
Excess Available Income.......................................................................... 101
Excess Collections Distribution.................................................................. 101
Exchange Act..................................................................................... 3
Extraordinary Resolution......................................................................... 49
Fair Market Value................................................................................ 25
Finance Charge Collections....................................................................... 97
Finance Charge Loss.............................................................................. 97
Financial Intermediary........................................................................... 120
Financial Services Act........................................................................... 157
Fitch............................................................................................ 27
Fixed Rate....................................................................................... 37
Fixed Rate Housing Loans......................................................................... 57
floating charge.................................................................................. 24
GE............................................................................................... 89
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------------
<S> <C>
GECA............................................................................................. 89
Government Charges............................................................................... 97
Gross Principal Collections...................................................................... 102
GST.............................................................................................. 45
GST Legislation.................................................................................. 45
HLIC............................................................................................. 19, 85
Holders.......................................................................................... 94
Housing Loan Principal........................................................................... 25, 106
Housing Loans.................................................................................... 2
Initial Invested Amount.......................................................................... 16
Initial Principal Distributions.................................................................. 103
Initial Subordinated Percentage.................................................................. 106
Insolvency Event................................................................................. 111
Interest......................................................................................... 17, 100, 114
Interest Determination Date...................................................................... 16, 94, 100
Interest Period.................................................................................. 16
Interest Rate.................................................................................... 16, 100
Interest Rate Swap Provider...................................................................... 139
Invested Amount.................................................................................. 16, 30
IRS.............................................................................................. 150
ISDA............................................................................................. 17, 100
ISDA Definitions................................................................................. 17, 100
ISDA Master Agreement............................................................................ 24
Issuer Trustee................................................................................... 1, 13, 66
Issuer Trustee Fee............................................................................... 69
Issuer Trustee's Default......................................................................... 69
Liquidation Losses............................................................................... 97
Liquidation Proceeds............................................................................. 97
Liquidity Draw................................................................................... 136
Liquidity Facility Provider...................................................................... 23
Liquidity Limit.................................................................................. 23, 136
Liquidity Shortfall.............................................................................. 136
LMI.............................................................................................. 89
London Stock Exchange............................................................................ 1
Loss Date........................................................................................ 87
LVR.............................................................................................. 19
Margin........................................................................................... 113
Master Trust Deed................................................................................ 13
Maturity Date.................................................................................... 16
MGICA............................................................................................ 20, 86
MIP.............................................................................................. 73, I-1
Moody's.......................................................................................... 27
Morgan........................................................................................... 144
Morgan Guaranty.................................................................................. 141, 144
Mortgage Default................................................................................. 87
Mortgage Insurance Policies...................................................................... 19
Mortgage Insurers................................................................................ 20
Mortgage Pool.................................................................................... 21
Mortgage Pool Insurance Policy................................................................... 19, 86
Mortgage Rates................................................................................... 22
mortgage related securities...................................................................... 26
Mortgage Servicing System........................................................................ 22
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------------
<S> <C>
Mortgage Shortfall............................................................................... 107
Mortgaged Property............................................................................... 21
Mortgagee in Possession.......................................................................... 73
Mortgagees....................................................................................... 24, 48, 54
Mortgages........................................................................................ 54
MPC.............................................................................................. 72
Net Principal Collections........................................................................ 18, 103
New Regulations.................................................................................. 152
Note Owners...................................................................................... 119
Note Registrar................................................................................... 14
Note Trust Deed.................................................................................. 13, 71
Note Trustee..................................................................................... 13, 71
Noteholder Mortgagees............................................................................ 14
Noteholder's Report.............................................................................. 118
Notes............................................................................................ 15, 94
Notice Date...................................................................................... 119
Notice of Creation of Trust...................................................................... 47
NSW.............................................................................................. 57
NT............................................................................................... 57
OID.............................................................................................. 151
P & I............................................................................................ 85
Paying Agents.................................................................................... 14
Payment Date..................................................................................... 1, 16
Payment Shortfall................................................................................ 22, 98
Performing Loan.................................................................................. 23, 136
Plan Assets Regulation........................................................................... 154
PMI Policy....................................................................................... 19, 90
Prepayment Benefit............................................................................... 98
Prepayment Benefit Shortfall..................................................................... 97
Prepayment Calculation Adjustment................................................................ 103
Prepayment Cost.................................................................................. 97
Prepayment Cost Surplus.......................................................................... 97
Principal Charge Off............................................................................. 107
Principal Collections............................................................................ 103
Principal Draw................................................................................... 23, 98
Principal Loss................................................................................... 98
Principal Outstanding............................................................................ 110
Principal Paying Agent........................................................................... 14
Procedures Manual................................................................................ 130
PTCE............................................................................................. 155
QLD.............................................................................................. 57
Quarter.......................................................................................... 94
Quarterly Percentage............................................................................. 106
Rating Agencies.................................................................................. 27
Record Date...................................................................................... 16
Redraw........................................................................................... 36, 83, 109
Redraw Advance................................................................................... 110
Redraw Facility Agreement........................................................................ 25, 109
Redraw Facility Charge Off....................................................................... 107
Redraw Facility Provider......................................................................... 18, 109
Redraw Funding Securities........................................................................ 15
Redraw Limit..................................................................................... 109
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------------
<S> <C>
Redraw Shortfall................................................................................. 109
redraws.......................................................................................... 15
Registered....................................................................................... 21, I-1
Registration Statement........................................................................... 5
Related Security................................................................................. 54
Relevant Date.................................................................................... 115
Relevant Depositary.............................................................................. 120
Relevant Document................................................................................ 54
Remaining Liquidity Shortfall.................................................................... 98
Remittance Date.................................................................................. 96
Replacement Currency Swap........................................................................ 143
Representative................................................................................... 50
RFS Charge Off................................................................................... 107
RFS Class A Charge Off........................................................................... 107
RFS Class A Forex Percentage..................................................................... 106
RFS Class A Interest............................................................................. 99
RFS Class A Note................................................................................. 113
RFS Class A Notes................................................................................ 2, 15
RFS Interest..................................................................................... 99
RFS Series....................................................................................... 113
RFSs............................................................................................. 2, 15
Royal & Sun...................................................................................... 20, 86
Rules............................................................................................ 120
SA............................................................................................... 57
Sale Notice...................................................................................... 13
Scheduled Payment................................................................................ 21
Secured Moneys................................................................................... 50, I-1
Securities Act................................................................................... 5
Securitized Portfolios........................................................................... 73
Security Trust Deed.............................................................................. 13
Security Trustee................................................................................. 13, 48
Security Trustee Fee............................................................................. 52
Seller Trustee................................................................................... 13, 47
Serial Method 1 Distribution Test................................................................ 104
Serial Method 2 Distribution Test................................................................ 105
Series Notice.................................................................................... 23
Service.......................................................................................... 150
Servicer......................................................................................... 13, 54
Servicer Transfer Event.......................................................................... 134
Servicer's Security Undertaking.................................................................. 35
Servicing Agreement.............................................................................. 13
Servicing Fee.................................................................................... 133
SMMEA............................................................................................ 26, 155
Specified Levels................................................................................. 143
Standard & Poor's................................................................................ 27
Stated Amount.................................................................................... 17, 30
Strata title..................................................................................... 145, I-1
Subordinated Percentage.......................................................................... 106
Substitution Net Transfer Amount (Income)........................................................ 96
Substitution Net Transfer Amount (Principal)..................................................... 102
Support Facility................................................................................. 24
Swap Agreements.................................................................................. 24
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------------
<S> <C>
Swap Providers................................................................................... 141
TAS.............................................................................................. 57
Tax Act.......................................................................................... 153
Tax Counsel...................................................................................... 150
Term............................................................................................. 135
Termination Date................................................................................. 112
Terms and Conditions............................................................................. 122
Threshold Rate................................................................................... 37, 140
TIN.............................................................................................. 152
Title Perfection Event........................................................................... 34
TMC.............................................................................................. 13, 72
top up........................................................................................... 36, 84
Torrens title.................................................................................... 145, I-1
Total Available Funds............................................................................ 96
Total Carryover Charge Off....................................................................... 107
Total Initial Invested Amount.................................................................... 107
Total Invested Amount............................................................................ 107
Total Payments................................................................................... 99
Transaction Documents............................................................................ 25, 158
Transfer Agent and Registrar..................................................................... 123
Trust............................................................................................ 1, 13, 23
Trust Accounts................................................................................... 117
Trust Assets..................................................................................... 2
Trust Expenses................................................................................... 100
Trust Manager.................................................................................... 2, 13, 78
Trust Manager Fee................................................................................ 79
Trust Manager's Default.......................................................................... 79
U.S. dollars..................................................................................... 7
Underwriters..................................................................................... 156
Unpaid Balance................................................................................... 23, 25, 116
US$.............................................................................................. 7
US$ Account...................................................................................... 108
US$ Equivalent................................................................................... 99
USD-LIBOR-BBA.................................................................................... 17, 100
USD-LIBOR-Reference Banks........................................................................ 17, 101
Variable Rate Housing Loans...................................................................... 57
VIC.............................................................................................. 57
Voting Mortgagee................................................................................. 127
WA............................................................................................... 57
weighted average life............................................................................ 92
Westpac.......................................................................................... 2, 13, 71
Westpac Group.................................................................................... 47
Withholding Tax Event............................................................................ 26
WLMI............................................................................................. 20, 86
WSML............................................................................................. 78
</TABLE>
vi
<PAGE>
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.
MORTGAGEE IN POSSESSION ("MIP") means a mortgagee in possession of the
related Mortgaged Property who, following an enforcement of the relevant
mortgage, is able to deal with the Mortgaged Property without becoming the
absolute owner of the Mortgaged Property.
"REGISTERED" means the mortgage has been filed with the lands office in the
relevant Australian State or Territory, granting certain rights with respect to
the applicable Mortgaged Property.
"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
Transaction 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.
I-1
<PAGE>
APPENDIX II--TERMS AND CONDITIONS OF THE CLASS A NOTES
TERMS AND CONDITIONS OF THE CLASS A NOTES
THE FOLLOWING, SUBJECT TO AMENDMENTS, ARE THE TERMS AND CONDITIONS OF THE
CLASS A NOTES, SUBSTANTIALLY AS THEY WILL APPEAR ON THE REVERSE OF THE CLASS A
NOTES. CLASS A NOTES IN DEFINITIVE FORM WILL ONLY BE ISSUED IN CERTAIN
CIRCUMSTANCES. WHILE THE CLASS A NOTES REMAIN IN BOOK-ENTRY FORM, THE SAME TERMS
AND CONDITIONS GOVERN THEM, EXCEPT TO THE EXTENT THAT THEY ARE APPROPRIATE ONLY
TO THE CLASS A NOTES IN DEFINITIVE FORM. FOR A SUMMARY OF THE PROVISIONS
RELATING TO THE CLASS A NOTES IN BOOK-ENTRY FORM, SEE THE SUMMARY AT THE END OF
THIS SECTION.
The issue of US$883,900,000 Class A Mortgage Backed Floating Rate Notes due
2030 (the "Class A Notes") of Westpac Securities Administration Limited in its
capacity as trustee of the Series 1999-1G WST Trust (the "Trust"), in such
capacity (the "Issuer Trustee") was authorized by resolutions of the Board of
Directors of the Issuer Trustee passed on March 31, 1999. These Notes, together
with A$33,750,000 Class B Mortgage Backed Floating Rate Notes due 2030 (the
"Class B Notes" and, together with the Class A Notes, the "Notes") of the Issuer
Trustee are (a) issued subject to a Master Trust Deed (the "Master Trust Deed")
dated 14th February 1997 between the Issuer Trustee and The Mortgage Company Pty
Limited, acceded to by Westpac Securitisation Management Pty Limited (the "Trust
Manager"), by a Series Notice (the "Series Notice") dated May 13, 1999 between
(among others) the Issuer Trustee, Citibank, N.A., London office, (the note
trustee for the time being referred to as the "Note Trustee") as trustee for the
holders for the time being of the Class A Notes (the "Class A Noteholders", and
together with the holders for the time being of the Class B Notes (the "Class B
Noteholders"), the "Noteholders") and the Trust Manager, and by these terms and
conditions (the "Class A Conditions"); (b) issued subject to a note trust deed
dated May 13, 1999 (the "Note Trust Deed") between the Issuer Trustee, the Trust
Manager and the Note Trustee; and (c) secured by a Security Trust Deed (the
"Security Trust Deed") dated May 6, 1999 between the Issuer Trustee, the Trust
Manager, the Note Trustee and Perpetual Trustee Company Limited (ACN 000 001
007) (the security trustee for the time being referred to as "Security
Trustee").
The statements set out below include summaries of, and are subject to the
detailed provisions of the Master Trust Deed, the Series Notice, the Security
Trust Deed and the Note Trust Deed. Certain words and expressions used herein
have the meanings defined in those documents. In accordance with an agency
agreement (the "Agency Agreement") dated May 13, 1999 between the Issuer
Trustee, the Trust Manager, the Note Trustee and Citibank, N.A., London office,
as principal paying agent (the "Principal Paying Agent", which expression
includes its successors as principal paying agent under the Agency Agreement)
and as agent bank (the "Agent Bank", which expression includes its successors as
Agent Bank under the Agency Agreement), and under which further paying agents
may be appointed (together with the Principal Paying Agent, the "Paying Agents",
which expression includes the successors of each paying agent as such under the
Agency Agreement and any additional paying agents appointed), payments in
respect of the Class A Notes will be made by the Paying Agents and the Agent
Bank will make the determinations specified in the Agency Agreement. The Class A
Noteholders will be entitled (directly or indirectly) to the benefit of, will be
bound by, and will be deemed to have notice of, all the provisions of the Master
Trust Deed, the Series Notice, the Security Trust Deed, the Note Trust Deed and
the Servicing Agreement as amended (the "Servicing Agreement Amendment
Agreement") dated May 13, 1999 and made between the Issuer Trustee, Westpac
Banking Corporation ("Westpac") and The Mortgage Company Pty Limited as Servicer
(together with any substitute or successor, the "Servicer") (together with the
Currency Swap Agreements (as defined below), those documents the "Relevant
Documents" and, together with certain other transaction documents defined as
such in the Series Notice, the "Transaction Documents"). Copies of the
Transaction Documents are available for inspection at the principal office of
the Principal Paying Agent, being at the date hereof 5 Carmelite Street, London,
EC4Y 0PA.
In connection with the issue of the Class A Notes, the Issuer Trustee has
entered into an ISDA master interest rate and currency exchange agreement dated
May 13, 1999 with Westpac Banking Corporation (in such capacity, the "Interest
Rate Swap Provider") together with three confirmations relating thereto dated
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May 13, 1999 (the "Variable Rate Basis Swap" and the "Fixed Rate Basis Swaps",
respectively and, collectively, the "Interest Rate Swaps"). The Issuer Trustee
has also entered into ISDA master interest rate and currency exchange agreements
dated May 13, 1999 with each of Morgan Guaranty Trust Company of New York,
London Branch, and Westpac Banking Corporation (each, in such capacity, a
"Currency Swap Provider", and together with the Interest Rate Swap Provider, the
"Swap Providers") together with a confirmation relating to each such agreement
dated May 13, 1999 in respect of two distinct swap transactions relating to the
Class A Notes (each, a "Currency Swap", and together the "Currency Swaps").
1. FORM, DENOMINATION AND TITLE
The Class A Notes will be issued in registered form, without interest
coupons, in minimum denominations of US$100,000 and integral multiples thereof.
The Class A Notes will be represented by one or more typewritten fully
registered book-entry notes (each, a "Book-Entry Note" and collectively, the
"Book-Entry Notes") registered in the name of Cede & Co. ("Cede") as nominee of
The Depository Trust Company ("DTC"). Beneficial interests in the Book-Entry
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by DTC and its participants. Morgan Guaranty Trust Company of
New York, Brussels office, as operator of the Euroclear System ("Euroclear") and
Cedelbank, societe anonyme ("Cedelbank"), may hold interests in the Book-Entry
Notes on behalf of persons who have accounts with Euroclear and Cedelbank
through accounts maintained in the names of Euroclear or Cedelbank, or in the
names of their respective depositories, with DTC.
If the Issuer Trustee is obliged to issue Definitive Notes under clause 3.3
of the Note Trust Deed, interests in the applicable Book-Entry Note will be
transferred to the beneficial owners thereof in the form of Definitive Notes,
without interest coupons, in the denominations set forth above. A Definitive
Note will be issued to each Noteholder in respect of its registered holding or
holdings of Class A Notes against delivery by such Noteholders of a written
order containing instructions and such other information as the Issuer Trustee
and Citibank, N.A., London office, acting as note registrar (the "Note
Registrar") may require to complete, execute and deliver such Definitive Notes.
In such circumstances, the Issuer Trustee will cause sufficient Definitive Notes
to be executed and delivered to the Note Registrar for completion,
authentication and dispatch to the relevant Noteholders.
2. STATUS, SECURITY AND RELATIONSHIP BETWEEN THE CLASS A NOTES, THE CLASS B
NOTES, THE RFSS AND THE RFS CLASS A NOTES
The Class A Notes are secured by a first ranking floating charge over all of
the assets of the Trust (which include, among other things, the Loans (as
defined below) and the Mortgages (as defined below) and related securities) (as
more particularly described in the Security Trust Deed) and rank PARI PASSU and
rateably without any preference or priority among themselves.
The Class A Notes are constituted by the Master Trust Deed and the Series
Notice and are secured by the same security as secures the Class B Notes but the
Class A Notes will rank in priority to the Class B Notes in the event of the
security being enforced and in respect of principal and interest (as set out in
Class A Condition 4 and 5).
The proceeds of the issue of the Class A Notes and the Class B Notes are to
be used by the Issuer Trustee to purchase an equitable interest in certain
housing loans (the "Loans") and certain related mortgages (the "Mortgages") from
Westpac or Westpac Securities Administration Limited in its capacity as trustee
of certain other trusts (each a "WST Seller").
In the event that the security for the Class A Notes is enforced and the
proceeds of such enforcement are insufficient, after payment of all other claims
ranking in priority to or PARI PASSU with the Class A Notes under the Security
Trust Deed, to pay in full all principal and interest and other amounts
whatsoever due in respect of the Class A Notes, then the Class A Noteholders
shall have no further claim against the Issuer Trustee in respect of any such
unpaid amounts.
The net proceeds of realisation of the assets of the Trust may be
insufficient to pay all amounts due to the Noteholders. Save in certain limited
circumstances the other assets of the Issuer Trustee will not be
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available for payment of any shortfall arising and all claims in respect of such
shortfall shall be extinguished (see further Class A Condition 15). None of the
Servicer, the Trust Manager, the Seller Trustee, Westpac, the Note Trustee or
the Security Trustee has any obligation to any Noteholder for payment of any
amount by the Issuer Trustee in respect of the Notes.
THE ISSUER TRUSTEE MAY FROM TIME TO TIME ISSUE DEBT SECURITIES ("RFSS")
CONSTITUTED UNDER THE MASTER TRUST DEED AND THE SERIES NOTICE TO FUND AMOUNTS
REDRAWN BY RELEVANT BORROWERS UNDER THE LOANS (UP TO THE SCHEDULED AMORTISED
PRINCIPAL OF THE LOANS) FROM TIME TO TIME ("REDRAWS"). RFSS WILL, ON ISSUE, RANK
PARI PASSU AND PRIOR TO ENFORCEMENT OF THE SECURITY RELATING TO THE RFSS AND THE
CLASS A NOTES RATEABLY WITHOUT ANY PREFERENCE OR PRIORITY WITH THE CLASS A NOTES
IN RELATION TO PAYMENT OF INTEREST, BUT AHEAD OF THE CLASS A NOTES IN RELATION
TO PRINCIPAL. UPON ENFORCEMENT OF THE SECURITY RELATING TO THE RFSS AND THE
CLASS A NOTES, ALL MONEYS OWING TO THE HOLDERS OF THE RFSS AND THE HOLDERS OF
THE CLASS A NOTES WILL (SUBJECT TO AMOUNTS BEING AVAILABLE FOR SUCH PAYMENT) BE
PAID PARI PASSU.
IF, BY THE FIFTH COLLECTION DETERMINATION DATE (AS DEFINED IN CLASS A
CONDITION 5) FOLLOWING THE ISSUE OF AN RFS, THE RFS HAS NOT BEEN REDEEMED, IT
SHALL CONVERT TO AN RFS CLASS A NOTE (EACH, AN "RFS CLASS A NOTE" AND, TOGETHER
THE "RFS CLASS A NOTES"). RFS CLASS A NOTES RANK PARI PASSU AND RATEABLY WITHOUT
PREFERENCE OR PRIORITY WITH CLASS A NOTES IN RELATION TO BOTH INTEREST AND
PRINCIPAL. RFSS AND RFS CLASS A NOTES ARE REGISTERED, AUSTRALIAN-TRADED
INSTRUMENTS DENOMINATED IN AUSTRALIAN DOLLARS ("A$") AND SOLD TO AUSTRALIAN
INVESTORS ONLY AND FOR THE AVOIDANCE OF DOUBT ARE NOT FUNGIBLE WITH THE CLASS A
NOTES.
THE NOTE TRUST DEED CONTAINS PROVISIONS REQUIRING THE NOTE TRUSTEE TO HAVE
REGARD TO THE INTERESTS OF THE CLASS A NOTEHOLDERS AS REGARDS ALL THE POWERS,
TRUSTS, AUTHORITIES, DUTIES AND DISCRETIONS OF THE NOTE TRUSTEE (EXCEPT WHERE
EXPRESSLY PROVIDED OTHERWISE).
THE SECURITY TRUST DEED CONTAINS PROVISIONS REQUIRING THE SECURITY TRUSTEE
TO GIVE PRIORITY TO THE INTERESTS OF THE CLASS A NOTEHOLDERS AND THE HOLDERS OF
RFSS (IF ANY) AND RFS CLASS A NOTES (IF ANY), IF THERE IS A CONFLICT BETWEEN THE
INTERESTS OF SUCH NOTEHOLDERS AND ANY OTHER VOTING MORTGAGEE (AS DEFINED BELOW).
3. COVENANTS OF THE ISSUER TRUSTEE
So long as any of the Class A Notes remains outstanding, the Issuer Trustee
has made certain covenants for the benefit of Class A Noteholders which are set
out in the Master Trust Deed.
These covenants are as follows:
(a) 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.
(b) The Issuer Trustee shall:
(i) act honestly and in good faith in the performance of its duties and
in the exercise of its discretions 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 discretions under the Master Trust
Deed, having regard to the interests of the Class A Noteholders and other
creditors and beneficiaries of the Trust;
(iii) use its best endeavours 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 authorisations) to ensure that it is
able to exercise all its powers and remedies and perform all its
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obligations under 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.
(c) 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 asset of the Trust (the "Trust
Assets").
(d) 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.
(e) The Issuer Trustee will open and operate certain bank accounts in
accordance with the Master Trust Deed and the Series Notice.
(f) 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.
(g) The Issuer Trustee shall properly perform the functions which are
necessary for it to perform under all Transaction Documents in respect of the
Trust.
4. INTEREST
(A) PAYMENT DATES
Each Class A Note bears interest on its Invested Amount (as defined below)
from and including 13 May 1999 or such later date as may be agreed between the
Issuer Trustee and the Managers for the issue of the Class A Notes (the "Closing
Date"). Interest in respect of the Class A Notes will be payable quarterly in
arrears on the 19th day falling in August 1999 in respect of the period from
(and including) the Closing Date to (but excluding) that date, and thereafter on
each 19 February, 19 May, 19 August and 19 November (each such date a "Payment
Date" and each such three month period beginning on each of 1 February, 1 May, 1
August and 1 November a "Quarter"). If any Payment Date would otherwise fall on
a day which is not a Business Day (as defined below), it shall be postponed to
the next day which is a Business Day (as defined below) unless it would thereby
fall into the next calendar month in which event it shall be brought forward to
the immediately preceding Business Day.
"Business Day" in this Class A Condition 4 and in Class A Conditions 5 and 9
below means any day (London time) other than a Saturday, Sunday or public
holiday on which banks are open for business in London and New York City.
The period beginning on (and including) the Closing Date and ending on (but
excluding) the first Payment Date and each successive period beginning on (and
including) a Payment Date and ending on (but excluding) the next Payment Date is
called an "Interest Period". Interest payable on a Class A Note in respect of
any Interest Period or any other period will be calculated on the basis of the
actual number of days elapsed and a 360 day year.
Interest shall cease to accrue on any Class A Note from (and including):
(i) the date on which the Stated Amount (as defined in Class A Condition
5(a)) of that Class A Note is reduced to zero; or
(ii) if the Stated Amount on the due date for redemption is not zero,
the due date for redemption of the Class A Note, unless, upon due
presentation, payment of principal due is improperly withheld or refused,
following which interest shall continue to accrue on the Invested
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Amount of the Class A Note at the rate from time to time applicable to the
Class A Notes until the moneys in respect of that Class A Note have been
received by the Note Trustee or the Principal Paying Agent and notice to
that effect is given in accordance with Class A Condition 12, or the Stated
Amount of that Class A Note has been reduced to zero.
(B) INTEREST RATE
The rate of interest applicable from time to time to the Class A Notes (the
"Interest Rate") will be determined by the Agent Bank on the basis of the
following paragraphs.
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 an 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 US 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 the 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 US 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 US 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 Interest Payment Date.
The Interest Rate applicable to the Class A Notes for such Interest Period
shall be the aggregate of (i) such Interest Rate or arithmetic mean as
determined by the Agent Bank and (ii) the margin of 0.20% applicable to the
Class A Notes.
There is no maximum or minimum Interest Rate.
(C) DETERMINATION OF INTEREST RATE AND CALCULATION OF INTEREST
The Agent Bank will, as soon as practicable after 11.00 am (London time) on
each Interest Determination Date, determine the Interest Rate applicable to, and
calculate the amount of interest payable (the "Interest") for the immediately
succeeding Interest Period. The Interest is calculated by applying the Interest
Rate for the Class A Notes to the Invested Amount (as defined in Class A
Condition 5(a)) of the Class A Note on the first day of the next Interest
Period, multiplying such product by the actual number of days in the relevant
Interest Period and dividing by 360 and rounding the resultant figure down to
the nearest cent (half a cent being rounded upwards). The determination of the
Interest Rate and the Interest by the Agent Bank shall (in the absence of
manifest error) be final and binding upon all parties.
(D) NOTIFICATION AND PUBLICATION OF INTEREST RATE AND INTEREST
The Agent Bank will cause the Interest Rate and the Interest applicable to
each Class A Note for each Interest Period and the relevant Payment Date to be
notified to the Issuer Trustee, the Trust Manager, the Note Trustee, the Paying
Agents, and, for so long as the Class A Notes are listed on the Official List of
the London Stock Exchange Limited (the "London Stock Exchange"), the London
Stock Exchange, and will cause the same to be published in accordance with Class
A Condition 12 on or as soon as possible after the
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date of commencement of the relevant Interest Period. The Interest and the
relevant Payment Date so published may subsequently be amended (or appropriate
alternative arrangements made by way of adjustment) without notice in the event
of a shortening of the Interest Period.
(E) DETERMINATION OR CALCULATION BY THE NOTE TRUSTEE
If the Agent Bank at any time for any reason does not determine the Interest
Rate or calculate the Interest for a Class A Note, the Note Trustee shall do so
and each such determination or calculation shall be deemed to have been made by
the Agent Bank. In doing so, the Note Trustee shall apply the foregoing
provisions of this Condition, with any necessary consequential amendments, to
the extent that, in its opinion, it can do so, and, in all other respects it
shall do so in such a manner as it shall deem fair and reasonable in all the
circumstances.
(F) AGENT BANK
The Issuer Trustee will procure that, so long as any of the Class A Notes
remains outstanding, there will at all times be an Agent Bank. The Issuer
Trustee reserves the right at any time to terminate the appointment of the Agent
Bank. Notice of that termination will be given to the Class A Noteholders. If
any person is unable or unwilling to continue to act as the Agent Bank, or if
the appointment of the Agent Bank is terminated, the Issuer Trustee will, with
the approval of the Note Trustee, appoint a successor Agent Bank to act as such
in its place, provided that neither the resignation nor removal of the Agent
Bank shall take effect until a successor approved by the Note Trustee has been
appointed.
5. REDEMPTION AND PURCHASE
(A) MANDATORY REDEMPTION IN PART FROM PRINCIPAL COLLECTIONS AND
APPORTIONMENT OF PRINCIPAL COLLECTIONS BETWEEN THE CLASS A NOTES, THE CLASS
B NOTES, THE RFS CLASS A NOTES AND THE RFSS
The Class A Notes shall be subject to mandatory redemption in part on any
Payment Date if on that date there are any Principal Collections (as defined
below) available to be distributed in relation to such Class A Notes. The
principal amount so redeemable in respect of each Class A Note prior to
enforcement of the Security Trust Deed (each a "Principal Payment") on any
Payment Date shall be the amount available for payment as set out in Class A
Condition 5(b) on the day which is four Business Days prior to the Payment Date
(the "Collection Determination Date") preceding that Payment Date multiplied by
the Invested Amount of the applicable Class A Note over the total Invested
Amount of all Class A Notes then outstanding (rounded down to the nearest cent
with half a cent being rounded upwards); provided always that no Principal
Payment on a Class A Note on any date may exceed the amount equal to the
Invested Amount of that Class A Note at that date less amounts charged off as at
that date, or to be charged off on the following Payment Date, as described in
Class A Condition 5(c) (that reduced amount being the "Stated Amount" of that
Class A Note).
The "Invested Amount" of a Class A Note is equal to the Initial Invested
Amount (as defined herein) of such Class A Note less all payments previously
made in respect of principal in respect of such Class A Note. The "Initial
Invested Amount" of a Class A Note is its principal balance at the date of its
issuance.
"Principal Collections" means, in respect of a Collection Period (as defined
below) and as applicable on any Collection Determination Date, the aggregate of:
(i) all amounts received by or on behalf of the Issuer Trustee from or on
behalf of borrowers under the Loans during the Collection Period in respect of
principal, in accordance with the terms of the Loans, including principal
prepayments;
(ii) all other amounts received by or on behalf of the Issuer Trustee under
or in respect of principal under the Loans and the Mortgages during that
Collection Period including:
(A) any amounts recovered in respect of enforcement of Loans and
Mortgages (other than under lender's mortgage insurance), on account of
principal;
(B) any payments by Westpac to the Issuer Trustee on the repurchase of a
Loan under the Master Trust Deed during that Collection Period which are
attributable to principal;
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(C) any payments by Westpac Securities Administration Limited (in its
capacity as trustee of any other trust established under the Master Trust
Deed) (the "WST Purchaser") on the purchase by the WST Purchaser of any
assets of the Trust which are attributable to principal;
(D) any Prepayment Costs (as defined in the Series Notice) applied
towards Prepayment Benefits (as defined in the Series Notice) under the
Series Notice; and
(E) any Prepayment Benefit Shortfall (as defined in the Series Notice)
paid by Westpac to the Trust under the Series Notice;
(iii) all amounts received by or on behalf of the Issuer Trustee during that
Collection Period from any provider of a Support Facility (as defined in the
Series Notice) (other than the Currency Swap) under that Support Facility and
which the Trust Manager determines should be accounted for to reduce any
principal loss on a Loan, being the total amount outstanding under a Loan after
applying all proceeds from the enforcement of the Loan and related Mortgages (a
"Liquidation Loss") to the extent that Liquidation Loss is attributable to
principal;
(iv) all amounts received by or on behalf of the Issuer Trustee during that
Collection Period:
(A) from Westpac or the WST Seller Trustee (each an "Approved Seller")
in respect of any breach of a representation, warranty or undertaking
contained in the Master Trust Deed or the Series Notice;
(B) from an Approved Seller under any obligation under the Master Trust
Deed or the Series Notice to indemnify or reimburse the Issuer Trustee for
any amount;
(C) from the Servicer, in respect of any breach of any representation,
warranty or undertaking contained in the Servicing Agreement; and
(D) from the Servicer under any obligation under the Servicing Agreement
to indemnify or reimburse the Issuer Trustee for any amount,
in each case, which are determined by the Trust Manager to be in respect of
principal payable under the Loans and the Mortgages;
(v) any amounts in the nature of principal received by or on behalf of the
Issuer Trustee during that Collection Period pursuant to the sale of any asset
comprised in the Trust (including any amount received by the Issuer Trustee on
the issue of Notes and which was not used to purchase Loans or Mortgages, and
which the Trust Manager determines is surplus to the requirements of the Trust);
(vi) (for the purposes of clause 6.11 of the Series Notice only) any amount
of Excess Available Income (as defined in the Series Notice) to be applied to
pay a Principal Charge Off or a Carryover Charge Off (as defined in the Series
Notice);
(vii) 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 dated May 13, 1999
between the Issuer Trustee, the Trust Manager and Westpac (the "Redraw
Facility");
(viii) any Excess Available Income to be applied to Principal Draws (as
defined in the Series Notice) made on a previous Payment Date;
(ix) any Prepayment Calculation Adjustment (as defined in the Series Notice)
for that Collection Period;
(x) any Substitution Net Transfer Amount (Principal) (as defined in the
Series Notice) received by the Trust from a WST Purchaser with respect to that
Collection Period;
less any amounts deducted by or paid to Westpac to reimburse Redraws funded by
Westpac for which Westpac has not previously been reimbursed. A premium
receivable by the Issuer Trustee on the entry into a replacement Currency Swap
under clause 6.26 of the Series Notice is not treated as a Principal Collection.
"Collection Period" means, in relation to a Payment Date, the period from
(and including) the tenth day of the Quarter preceding the Quarter in which the
Payment Date occurs to (and including) the ninth
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day of the Quarter in which the Payment Date occurs. The first Collection Period
is the period from (but excluding) March 31, 1999 (the "Cut-Off Date") to (and
including) August 9, 1999. The last Collection Period is the period from (but
excluding) the last day of the previous Collection Period to (and including) the
termination date of the Trust.
(B) INITIAL PRINCIPAL DISTRIBUTIONS
Principal Collections will be distributed as follows on each Payment Date
before any payments in respect of the Notes:
(i) first, to repay any Redraws provided by Westpac in relation to Loans to
the extent that Westpac has not previously been reimbursed in relation to those
Redraws;
(ii) second, to repay all principal outstanding under the Redraw Facility on
that Payment Date;
(iii) third, to allocate to Total Available Funds any Principal Draw (as
defined in the Series Notice); and
(iv) fourth, to repay PARI PASSU and rateably all amounts outstanding under
the RFSs (if any).
(C) PRINCIPAL ALLOCATION METHOD
On each Collection Determination Date, the Trust Manager will determine the
aggregate of the Class B Stated Amounts divided by the sum of (i) the aggregate
of (A) the A$ Equivalent of the Class A Stated Amounts and (B) the Class B
Stated Amounts 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 (the "Subordinated Percentage"). The
Trust Manager will calculate the Subordinated Percentage so as to determine the
appropriate principal distribution methodology to apply for that Collection
Period, as described below.
(D) APPLICABILITY OF SERIAL METHOD 1
If, on any Collection Determination Date:
(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 the third
anniversary of the Closing Date;
(iii) the Total Invested Amount as at that Collection Determination Date as
a percentage of the Total Initial Invested Amount, is greater than or equal to
10%:
(iv) the Average Quarterly Percentage as at that 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 US$ Equivalent 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 US$ Equivalent of
the Class B Initial Invested Amount; and
(v) the US$ Equivalent of the Stated Amounts of all Class B Notes as at that
Collection Determination Date exceeds 0.25% of the sum of (x) the Initial
Invested Amounts of all Class A Notes, (y) the US$ Equivalent of the Initial
Invested Amounts of all Class B Notes and (z) the US$ Equivalent of the Invested
Amounts of all RFS Class A Notes (if any);
then Principal Collections will be allocated serially in accordance with Serial
Method 1 set out in paragraph (e) below.
(E) SERIAL METHOD 1
On any Collection Determination Date, if the Trust Manager determines that
Serial Method 1 should apply, the Issuer Trustee (based on instructions from the
Trust Manager) will pay out of Principal Collections for the relevant Collection
Period which remain after the Initial Principal Distributions, on the
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Payment Date following that Collection Determination Date the following amounts
in the following priority:
(i) first PARI PASSU and rateably between themselves:
(A) as a payment, denominated in A$, to the Currency Swap Providers
under the relevant swap confirmations relating to the Class A Notes of an
amount equal to the lesser of:
(1) the Class A Forex Percentage of the sum of:
(aa) the Class A Percentage of Principal Collections remaining
after all Initial Principal Distributions; and
(bb) 50% of the Class B Percentage of those Principal
Collections; and
(2) the A$ Equivalent of the Class A Stated Amounts for all Class A
Notes; and
(B) 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:
(1) the RFS Class A Forex percentage of the sum of:
(aa) the Class A Percentage of Principal Collections remaining
after all Initial Principal Distributions; and
(bb) 50% of the Class B Percentage of those Principal
Collections; and
(2) the RFS Class A Stated Amounts for all RFS Class A Notes (if
any); and
(ii) second, as a payment, denominated in A$, to the holders of the Class B
Notes of an amount equal to 50% of the Class B Percentage of those Principal
Collections remaining after all Initial Principal Distributions.
(F) APPLICABILITY OF SERIAL METHOD 2
If, on any Collection Determination Date:
(i) the Subordinated Percentage at the previous Collection Determination
Date was greater than or equal to twice the Initial Subordinated Percentage;
(ii) that Collection Determination Date occurs after the third
anniversary of the Closing Date;
(iii) the Total Invested Amount as at that Collection Determination
Date, as a percentage of the Total Initial Invested Amount, is greater than
or equal to 10%;
(iv) the Average Quarterly Percentage as at the Collection Determination
Date:
(A) does not exceed 2% and the Total Carryover Charge Off on that
Collection Determination Date does not exceed 30% of the US$ Equivalent
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 US$ Equivalent
of the Class B Initial Invested Amount; and
(v) the US$ Equivalent of the Stated Amount of the Class B Notes as at
that Collection Determination Date exceeds 0.25% of the sum of (x) the
Initial Invested Amounts of all Class A Notes, (y) the US$ Equivalent of the
Initial Invested Amounts of all Class B Notes and (z) the US$ Equivalent of
the Invested Amounts of all RFS Class A Notes (if any);
then Principal Collections will be allocated serially in accordance with Serial
Method 2 set out in paragraph (g) below.
(G) SERIAL METHOD 2
On any Collection Determination Date, if the Trust Manager determines that
Serial Method 2 shall apply, the Issuer Trustee (based on instructions from the
Trust Manager) will pay out of Principal Collections for the relevant Collection
Period which remain after the Initial Principal Distributions on the
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Payment Date following that Collection Determination Date in the following
amounts in the following priority:
(i) first, PARI PASSU and rateably between themselves:
(A) as a payment, denominated in A$, to the Currency Swap Providers
under the relevant swap confirmations relating to the Class A Notes of an
amount equal to the lesser of:
(1) the Class A Forex Percentage of the Class A Percentage of
Principal Collections remaining after all Initial Principal
Distributions; and
(2) the A$ Equivalent of the Class A Stated Amounts for all Class A
Notes; and
(B) 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:
(1) the RFS Class A Forex Percentage of the Class A Percentage of
those Principal Collections remaining after all Initial Principal
Distributions; and
(2) the RFS Class A Stated Amounts for all RFS Class A Notes (if
any); and
(ii) second as a payment, denominated in A$, to the holders of the Class B
Notes of an amount equal to the Class B Percentage of those Principal
Collections.
(H) SEQUENTIAL METHOD
On any Collection Determination Date, if the Trust Manager determines that
neither Serial Method 1 nor Serial Method 2 (set out in Conditions 5(d) to (g)
above) applies, the Issuer Trustee (based on instructions from the Trust
Manager) will pay out of Principal Collections for the relevant Collection
Period which remain after the Initial Principal Distributions the following
amounts in the following priority:
(i) FIRST PARI PASSU and rateably between themselves:
(A) as a payment, denominated in A$, to the Currency Swap Providers
under the relevant swap confirmations relating to the Class A Notes of an
amount equal to the lesser of:
(1) the Class A Forex Percentage of the amount available for
distribution under this paragraph (i) after all Initial Principal
Distributions; and
(2) the A$ Equivalent of the Class A Stated Amounts for all Class A
Notes; and
(B) as a payment, denominated in A$, to the holders of the RFS Class A
Notes (if any) of an amount equal to the lesser of:
(1) the RFS Class A Forex Percentage of the amount available for
distribution under this paragraph (i) after all Initial Principal
Distributions; and
(2) the RFS Class A Stated Amounts for all RFS Class A Notes (if
any); and
(ii) second, as a payment, denominated in A$, to the holders of the Class B
Notes of an amount equal to the lesser of:
(A) the amount available for distribution under this paragraph (ii)
after the application of paragraph (i); and
(B) the Class B Stated Amounts for all Class B Notes.
(I) GENERAL
No amount of principal will be paid to a Noteholder in excess of the Stated
Amount applicable to the Notes held by that Noteholder.
(J) DISTRIBUTION OF EXCESS AVAILABLE INCOME
On each Collection Determination Date Excess Available Income for the
Collection Period relating to that Collection Determination Date will be applied
in the following order of priority:
(i) to reimburse Principal Charge Offs for that Collection Period;
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(ii) PARI PASSU and rateably between themselves (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):
(A) as a payment to the RFSs (if any) in or towards reinstating the
Stated Amount of the RFSs, to the extent of any Carryover RFS Charge Offs;
(B) as a payment to the RFS Class A Notes (if any) in or towards
reinstating the Stated Amount of the RFS Class A Notes, to the extent of any
Carryover RFS Class A Charge Offs;
(C) as a payment to the Currency Swap Providers under the relevant swap
confirmations relating to the Class A Notes, of the A$ Equivalent of any
Carryover Class A Charge Offs; and
(D) as a repayment under the Redraw Facility Agreement, as a reduction
of, and to the extent of, any Carryover Redraw Charge Offs;
(iii) as a payment, denominated in A$, to the holders of the Class B Notes
of the A$ Equivalent of any Carryover Class B Charge Offs; and
(iv) to all Principal Draws which have not been repaid as at that Payment
Date.
Any amount to be paid pursuant to paragraphs (ii) and (iii) will be paid on
the Payment Date immediately following the Collection Determination Date.
(K) US$ ACCOUNT
The Issuer Trustee shall direct the Currency Swap Providers to pay all
amounts denominated in US$ payable to the Issuer Trustee by the Currency Swap
Providers under the Currency Swaps into the US$ Account or to the Principal
Paying Agent under the Agency Agreement on behalf of the Issuer Trustee. The
Issuer Trustee shall pay all such amounts as follows, and in accordance with the
Note Trust Deed and the Agency Agreement:
(i) under Class A Condition 4, PARI PASSU in relation to the Class A Notes
as payments of Interest on those Class A Notes;
(ii) under Class A Condition 5(j)(ii)(C), PARI PASSU in relation to the
Class A Notes in or towards reinstating the Stated Amount of those Class A
Notes, to the extent of the Carryover Class A Charge Offs; and
(iii) under Class A Condition 5(e)(i)(A), 5(g)(i)(A) and 5(h)(i)(A) PARI
PASSU in relation to the Class A Notes as Class A Principal Payments until the
Class A Stated Amounts have been reduced to zero.
(L) CHARGE OFFS
If the Principal Charge Offs (as defined in the Series Notice) for any
Collection Period exceed the Excess Available Income (as defined in the Series
Notice) calculated on the Collection Determination Date for that Collection
Period, the Trust Manager must, on and with effect from the Payment Date
immediately following the end of the Collection Period:
(i) reduce PARI PASSU the Class B Stated Amount of each of the Class B Notes
by the amount of that excess which is attributable to each Class B Note until
the Class B Stated Amount is zero; and
(ii) if the Class B Stated Amount is zero and any amount of that excess has
not been applied under paragraph (i), reduce PARI PASSU and rateably as between
themselves (based on the Stated Amount of the RFSs (if any), the Principal
Outstanding under the Redraw Facility, the Stated Amount of the RFS Class A
Notes (if any) and the A$ Equivalent of the Stated Amount of the Class A Notes):
(A) the Class A Stated Amount on each of the Class A Notes by the US$
Equivalent of the balance of that excess which is attributable to each Class
A Note until the Class A Stated Amount of that Class A Note is zero;
(B) the RFS Class A Stated Amount on each of the RFS Class A Notes (if
any) by the balance of that excess which is attributable to each RFS Class A
Note until the RFS Class A Stated Amount of that RFS Class A Note is zero;
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(C) the RFS Stated Amount on each of the RFSs (if any) by the balance of
that excess which is attributable to each RFS until the RFS Stated Amount is
zero: and
(D) the principal outstanding under the Redraw Facility by the balance
of that excess until the Principal Outstanding is zero.
(M) CALCULATION OF PRINCIPAL PAYMENTS, STATED AMOUNT AND BOND FACTOR
(i) On each Collection Determination Date, the Trust Manager shall
determine:
(A) the amount of any Principal Payment in respect of each Class A Note
on the Payment Date following that Collection Determination Date;
(B) the Stated Amount and Invested Amount of each Class A Note as of the
first day of the next following Interest Period (after deducting any
Principal Payment due to be made in respect of each Class A Note on the next
Payment Date); and
(C) the fraction in respect of each Class A Note expressed as a decimal
to the seventh point (the "Bond Factor" of which the numerator is the
aggregate of the Invested Amount of all Class A Notes at that date less all
Principal Payments to be made on the following Payment Date, and the
denominator is the Initial Invested Amount of the Class A Notes.
(ii) The Trust Manager will notify the Note Trustee, the Principal Paying
Agent, the Agent Bank and (for so long as the Class A Notes are listed on the
London Stock Exchange) the London Stock Exchange by not later than the
Collection Determination Date immediately preceding the relevant Payment Date of
each determination of a Principal Payment, Invested Amount, Stated Amount and
Bond Factor and will immediately cause details of each of those determinations
to be published in accordance with Condition 12. If no Principal Payment is due
to be made on the Class A Notes on any Payment Date a notice to this effect will
be given to the Class A Noteholders in accordance with Class A Condition 12.
(iii) If the Trust Manager does not at any time for any reason determine a
Principal Payment, the Invested Amount, the Stated Amount or the Bond Factor
applicable to Class A Notes in accordance with this paragraph, the Principal
Payment, Invested Amount, the Stated Amount and the Bond Factor shall be
determined by the Note Trustee in accordance with this paragraph and paragraph
(i) above (but based on the information in its possession) and each such
determination or calculation shall be deemed to have been made by the Trust
Manager.
(iv) The Trust Manager will deliver to the Principal Paying Agent a
quarterly servicing report as set forth in clause 11 of the Note Trust Deed.
(N) REDEMPTION FOR TAXATION OR OTHER REASONS
If the Trust Manager satisfies the Issuer Trustee and the Note Trustee
immediately prior to giving the notice referred to below that either (i) on the
next Payment Date the Issuer Trustee would be required to deduct or withhold
from any payment of principal or interest (or corresponding A$ payment under a
Currency Swap) in respect of the Class A Notes any amount for or on account of
any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by the
Commonwealth of Australia or any of its political sub-divisions or any of its
authorities or (ii) the total amount payable in respect of interest in relation
to the Loans for a Collection Period ceases to be receivable (whether or not
actually received) by the Issuer Trustee during such Collection Period by reason
of any present or future taxes, duties, assessments or governmental charges of
whatever nature imposed, levied, collected, withheld or assessed by the
Commonwealth of Australia or any of its political sub-divisions or any of its
authorities, the Issuer Trustee must, when so directed by the Trust Manager (at
any time at the Trust Manager's option) (provided that the Issuer Trustee will
be in a position on such Payment Date to discharge (and will so certify to the
Issuer Trustee and Note Trustee) all its liabilities in respect of the Class A
Notes and any amounts required under the Security Trust Deed to be paid in
priority to or PARI PASSU with the Class A Notes), upon having given not more
than 60 nor less than 30 days' notice to the Class A Noteholders in accordance
with Class A Condition 12 redeem all, but not some only, of the Class A Notes at
their Invested Amount (or at the option of the holders of 75% of the aggregate
Invested
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Amount of Class A Notes at the time, at their Stated Amount), together with
accrued interest to the date of redemption on any subsequent Payment Date,
provided that the holders of 75% of the aggregate Invested Amount of Class A
Notes at the time may elect, and shall notify the Issuer Trustee and the Trust
Manager, that they do not require the Issuer Trustee to redeem the Class A Notes
in the circumstances described above.
(O) OPTIONAL REDEMPTION IN WHOLE
On any Payment Date, and upon giving no more than 60 nor less than 30 days'
notice to the Note Trustee and the Security Trustee, on which the aggregate
principal outstanding of the Loans is less than 10% of the aggregate principal
outstanding of the Loans at the Cut-Off Date, the Issuer Trustee may redeem all
(but not some only) of the Class A Notes at their Stated Amount.
(P) REDEMPTION ON MATURITY
If not otherwise redeemed, the Class A Notes will be redeemed at their
Stated Amount on the Payment Date falling in May, 2030.
(Q) CANCELLATION
All Class A Notes redeemed in full pursuant to the foregoing provisions will
be cancelled forthwith, and may not be resold or reissued.
(R) CERTIFICATION
For the purposes of any redemption made pursuant to this Condition 5 the
Note Trustee may rely upon an officer's certificate under the Note Trust Deed
from the Trust Manager on behalf of the Issuer Trustee certifying or stating the
opinion of each person signing such certificate as:
(i) to the fair value (within 90 days of such release) of the property or
securities proposed to be released from the Security Trust Deed;
(ii) that in the opinion of such person the proposed release will not impair
the security under the Security Trust Deed in contravention of the provisions of
the Security Trust Deed or the Note Trust Deed; and
(iii) that the Issuer Trustee will be in a position to discharge all its
liabilities in respect of the relevant Class A Notes and any amounts required
under the Security Trust Deed to be paid in priority to or PARI PASSU with those
Class A Notes,
and such officer's certificate shall be conclusive and binding on the Issuer
Trustee, the Note Trustee and the holders of those Class A Notes.
(S) PURCHASES
The Issuer Trustee may not purchase any Class A Notes at any time.
6. PAYMENTS
(A) METHOD OF PAYMENT
Any instalment of interest or principal, payable on any Class A Note which
is punctually paid or duly provided for by the Issuer Trustee to the Principal
Paying Agent on the applicable Payment Date or Maturity Date shall be paid to
the person in whose name such Class A Note is registered on the Record Date, by
cheque mailed first-class, postage prepaid, to such person's address as it
appears on the Note Register on such Record Date, except that, unless Definitive
Notes have been issued pursuant to clause 3.3 of the Note Trust Deed, with
respect to Class A Notes registered on the Record Date in the name of the
nominee of DTC (initially, such nominee to be Cede & Co.), payment will be made
by wire transfer in immediately available funds to the account designated by
such nominee and except for the final instalment of principal payable with
respect to such Class A Note on a Payment Date or Maturity Date.
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(B) INITIAL PRINCIPAL PAYING AGENT
The initial Principal Paying Agent is Citibank, N.A., London office, at its
office, at 5 Carmelite Street, London, EC4Y 0PA, England.
(C) PAYING AGENTS
The Issuer Trustee (or the Trust Manager on its behalf after advising the
Issuer Trustee thereof) may at any time (with the previous written approval of
the Note Trustee) vary or terminate the appointment of any Paying Agent and
appoint additional or other Paying Agents, provided that it will at all times
maintain a Paying Agent having a specified office in London and in New York
City. Notice of any such termination or appointment and of any change in the
office through which any Paying Agent will act will be given in accordance with
Class A Condition 12.
(D) DUE DATE FOR REDEMPTION
If the due date for redemption in full of a Class A Note is not a Payment
Date, the interest accrued in respect of the period from the preceding Payment
Date (or from the Closing Date as the case may be) shall be payable only against
presentation or surrender of the relevant Class A Note.
(E) PAYMENTS ON BUSINESS DAYS
If the due date for payment of any amount of principal or Interest in
respect of any Class A Note is not a Business Day then payment will not be made
until the next succeeding Business Day and the holder thereof shall not be
entitled to any further interest or other payment in respect of that delay. In
this Condition 6 the expression "Business Day" means any day (other than a
Saturday, Sunday or a public holiday) on which banks are open for business in
the place where the specified office of the Paying Agent is situated and, in the
case of payment by transfer to a US dollar account, in New York City and prior
to any exchange of the Book-Entry Note (in respect of the Class A Notes) for any
definitive Class A Notes, on which DTC is open for business.
(F) INTEREST
If Interest is not paid in respect of a Class A Note on the date when due
and payable (other than because the due date is not a Business Day), that unpaid
Interest shall itself bear interest at the Interest Rate applicable from time to
time to the Class A Notes until the unpaid interest, and interest on it, is
available for payment and notice of that availability has been duly given in
accordance with Class A Condition 12.
7. TAXATION
All payments in respect of the Class A Notes will be made without
withholding or deduction for, or on account of, any present or future taxes,
duties or charges of whatsoever nature unless the Issuer Trustee or any Paying
Agent is required by applicable law to make any such payment in respect of the
Class A Notes subject to any withholding or deduction for, or on account of, any
present or future taxes, duties or charges of whatsoever nature. In that event
the Issuer Trustee or that Paying Agent (as the case may be) shall make such
payment after such withholding or deduction has been made and shall account to
the relevant authorities for the amount so required to be withheld or deducted.
Neither the Issuer Trustee nor any Paying Agent will be obliged to make any
additional payments to Class A Noteholders in respect of that withholding or
deduction.
8. PRESCRIPTION
A Class A Note shall become void in its entirety unless surrendered for
payment within ten years of the Relevant Date in respect of any payment thereon
the effect of which would be to reduce the Stated Amount of that Class A Note to
zero. After the date on which a Class A Note becomes void in its entirety, no
claim may be made in respect of it.
As used in these Conditions, the "Relevant Date" means the date on which a
payment first becomes due but, if the full amount of the money payable has not
been received by the Principal Paying Agent or the Note Trustee on or prior to
that date, it means the date on which, the full amount of such money having been
so received, notice to that effect is duly given in accordance with Class A
Condition 12.
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9. EVENTS OF DEFAULT
Each of the following is an "Event of Default":
(a) the Issuer Trustee fails to pay:
(i) 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
or holders of RFSs or holders of RFS Class A Notes, or
(ii) any other amount owing to Class A Noteholders, Class B Noteholders
or holders of RFSs or holders of RFS Class A Notes or any other Mortgagee
(as defined in the Security Trust Deed) within 10 Business Days of the due
date for payment (or within any applicable grace period agreed with the
Mortgagee or where the Mortgagee is a Noteholder, with the Note Trustee).
(b) the Issuer Trustee fails to perform or observe any other provisions
(other than an obligation referred to in paragraph (a)) of a Transaction
Document (other than the Underwriting Agreement) where such failure will have a
material and adverse affect 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 to the approval of the Class B Noteholders and the
Note Trustee on behalf of the Class A Noteholders (together, the "Noteholder
Mortgagees") 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 Noteholder Mortgagees,
for so long as amounts outstanding under the Class A Notes and the Class B Notes
are 75% of the Secured Money) after written notice from the Security Trustee
requiring the failure to be remedied.
(c) any of the following occurs in relation to the Issuer Trustee (in its
personal capacity or as Trustee of the Trust):
(i) an administrator of the Issuer Trustee is appointed; or
(ii) except for the purpose of a solvent reconstruction or amalgamation:
(A) an application or an order is made, proceedings are commenced, a
resolution is passed or proposed in a notice of meeting or an application
to a court or other steps (other than frivolous or vexatious
applications, proceedings, notices and steps) are taken for:
(1) the winding up, dissolution or administration of the Issuer
Trustee; or
(2) the Issuer Trustee entering into an arrangement, compromise
or composition with or assignment for the benefit of its creditors or
a class of them; or
(B) the Issuer Trustee 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
(iii) the Issuer Trustee 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,
where this occurs in relation to another trust of which it is the trustee);
or
(iv) a receiver, receiver and manager or administrator is appointed (by
the Issuer Trustee or by any other person) to all or substantially all of
the assets and undertaking of the Issuer Trustee 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
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(v) anything analogous to an event referred to in paragraphs (i) to (iv)
(inclusive) or having substantially similar effect, occurs with respect to
the Issuer Trustee;
(d) 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;
(e) any security interest over the Trust Assets is enforced;
(f) all or any part of any Transaction Document, other than the Redraw
Facility or the Basis Swap (each as defined in the Series Notice), 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 Redraw Facility or the Basis Swap);
or
(g) without the prior consent of the Security Trustee (that consent, in
accordance with the provisions of the Security Trust Deed, being subject to the
prior written consent of the Noteholder Mortgagees 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.
In the event that the security constituted by the Security Trust Deed
becomes enforceable following an event of default under the Notes any funds
resulting from the realization of such security shall be applied in accordance
with the order of priority of payments as stated in the Security Trust Deed.
10. ENFORCEMENT
(a) At any time after an Event of Default occurs, the Security Trustee may,
with the prior written consent of the Noteholder Mortgagees in accordance with
the provisions of the Security Trust Deed and shall, if so directed by (a) the
Noteholder Mortgagees alone, where the Noteholder Mortgagees are the only Voting
Mortgagees, or otherwise (b) an Extraordinary Resolution (being 75% of votes
capable of being cast by Voting Mortgagees present or in person or by proxy of
the relevant meeting or a written resolution signed by all Voting Mortgagees) of
the Voting Mortgagees (which includes the Note Trustee on behalf of the Class A
Noteholders, but not the Class A Noteholders themselves), declare the Class A
Notes immediately due and payable and enforce the Security Trust Deed. If an
Extraordinary Resolution of Voting Mortgagees referred to in sub-paragraph (b)
above elects not to direct the Security Trustee to enforce the Security Trust
Deed, in circumstances where the Security Trustee could enforce, the Noteholder
Mortgagees may nonetheless, and the Note Trustee as a Noteholder Mortgagee,
shall at the direction of the Class A Noteholders, direct the Security Trustee
to enforce the Security Trust Deed on behalf of the Noteholders.
"Voting Mortgagee" means:
(a) 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 and the Noteholder Mortgagees; and
(b) at any other time:
(i) the Note Trustee, acting on behalf of the Class A Noteholders under
the Note Trust Deed and the Security Trust Deed: and
(ii) each other Mortgagee under the Security Trust Deed (other than the
Class A Noteholders).
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Any reference to the Noteholder Mortgagees while they are the only Voting
Mortgagees or where their consent is required under the Security Trust Deed in
relation to a direction or act of the Security Trustee, means Noteholder
Mortgagees representing more than 50% of the aggregate Invested Amount of the
Class A Notes and the Class B Notes.
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 Noteholder Mortgagees where they are the only Voting Mortgagees 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 Class A 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.
(b) 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 realised 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).
(c) Neither the Note Trustee nor the Security Trustee will be liable for any
decline in the value, nor any loss realised 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 Class A 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.
(d) 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 to or in connection with the Security Trust Deed, the Note Trust Deed,
any Class A Notes, unless directed or requested to do so by Noteholders holding
at least 75% of the aggregate Invested Amount of Class A Notes at the time; 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.
(e) 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 these Class A Conditions).
II-17
<PAGE>
(f) The rights, remedies and discretions 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 (as defined in the Master Trust Deed) and payable
to the Liquidity Facility Provider (as defined in the Master Trust Deed) and the
proceeds of cash collateral lodged with and payable to a Swap Provider or other
provider of a Support Facility (as defined in the Master Trust Deed)) will be
applied in the order of priority as set out in the Security Trust Deed. Any
claims of Noteholders remaining after realization of the security and
application of the proceeds as aforesaid shall, except in certain limited
circumstances, be extinguished.
11. REPLACEMENTS OF CLASS A NOTES
If any Class A Note is lost, stolen, mutilated, defaced or destroyed, it may
be replaced at the specified office of the Principal Paying Agent upon payment
by the claimant of the expenses incurred in connection with that replacement and
on such terms as to evidence and indemnity as the Issuer Trustee may reasonably
require. Mutilated or defaced Class A Notes must be surrendered before
replacements will be issued.
12. NOTICES
All notices, other than notices given in accordance with the following
paragraph, to Class A Noteholders shall be deemed given if in writing and
mailed, first-class, postage prepaid to each Class A Noteholder, at his or her
address as it appears on the Note Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Class A Noteholders is given by mail, neither the
failure to mail such notice nor any defect in any notice so mailed to any
particular Class A Noteholder shall affect the sufficiency of such notice with
respect to other Class A Noteholders, and any notice that is mailed in the
manner herein provided shall conclusively be presumed to have been duly given.
A notice may be waived in writing by the relevant Class A Noteholder, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Class A Noteholders shall be filed with the Note
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
Any such notice shall be deemed to have been given on the date such notice
is deposited in the mail.
In case, by reason of the suspension of regular mail services as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Class A Noteholders when such notice is required to be
given, then any manner of giving such notice as the Trustee shall direct the
Note Trustee shall be deemed to be a sufficient giving of such notice.
Any notice specifying a Payment Date, an Interest Rate, Interest payable, a
Principal Payment (or the absence of a Principal Payment), an Invested Amount, a
Stated Amount or a Bond Factor shall be deemed
II-18
<PAGE>
to have been duly given if the information contained in such notice appears on
the relevant page of the Reuters Screen or such other similar electronic
reporting service as may be approved by the Note Trustee and notified to Class A
Noteholders (the "Relevant Screen"). Any such notice shall be deemed to have
been given on the first date on which such information appeared on the Relevant
Screen. If it is impossible or impracticable to give notice in accordance with
this paragraph then notice of the matters referred to in this Condition shall be
given in accordance with the preceding paragraph.
The Principal Paying Agent shall deliver a quarterly servicing report for
each Collection Period to each Class A Noteholder on the Notice date relating to
such Collection Period in the method provided in the first paragraph of this
Condition 12.
13. MEETINGS OF VOTING MORTGAGEES AND VOTES OF CLASS A 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 Noteholder Mortgagees' consent, if 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 Trust Deed contains provisions for the Class A Noteholders to
consider any matter affecting their interests. In general, the holders of a
majority of the aggregate Invested Amount of the Class A Notes may take or
consent to any action permitted to be taken by Class A Noteholders under the
Note Trust Deed. Notwithstanding the foregoing, the consent of holders of 75% of
the aggregate Invested Amount of the Class A Notes shall be required to (i)
direct the Note Trustee to direct the Security Trustee to enforce the security
under the Note Trust Deed, (ii) override any waiver by the Note Trustee of a
breach of any provisions of the Transaction Documents or an Event of Default,
(iii) alter, add, or modify the terms and conditions of the Class A Notes or the
provisions of any of the Transaction Documents if such alteration, addition or
modification is, in the opinion of the Note Trustee, materially prejudicial or
likely to be materially prejudicial to the Class A Noteholders as a whole or the
Class A Noteholders, which shall include any modification to 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
percentage of the aggregate Invested Amount required to consent to any action 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"). Any action taken by the
requisite percentage of the Invested Amount of the Class A Noteholders shall be
binding on all Class A Noteholders (both present and future).
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
authorisation of any breach or proposed breach of the Class A Notes (including
these 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 these
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
II-19
<PAGE>
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, authorisation 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 A Noteholders in accordance with
Class A Condition 12 as soon as practicable thereafter.
14. INDEMNIFICATION AND EXONERATION OF THE NOTE TRUSTEE AND THE SECURITY TRUSTEE
The Note Trust Deed contains provisions for the indemnification of the Note
Trustee and for its relief from responsibility, including provisions relieving
it from taking proceedings to realise the security and to obtain repayment of
the Class A Notes unless indemnified to its satisfaction. Each of the Note
Trustee and the Security Trustee is entitled to enter into business transactions
with the Issuer Trustee and/or any other party to the Relevant Documents without
accounting for any profit resulting from such transactions. Neither the Security
Trustee nor the Note Trustee will be responsible for any loss, expense or
liability which may be suffered as a result of any assets secured by the
Security Trust Deed, Mortgaged Property or any deeds or documents of title
thereto, being uninsured or inadequately insured or being held by or to the
order of the Servicer or any of its affiliates or by clearing organisations or
their operators or by any person on behalf of the Note Trustee.
The Security Trust Deed contains provisions for the indemnification of the
Security Trustee by the Issuer Trustee and for its relief from responsibility,
including provisions relieving it from taking any action in relation to the
enforcement of the Security Trust Deed unless it is indemnified to its
satisfaction. The Security Trustee has no liability under the Security Trust
Deed, any other Transaction Document, any Note, the Notice of Creation of Trust
or any Mortage Insurance Policy other than to the extent to which the liability
is able to be satisfied out of the property held by it on trust under the
Security Trust Deed and it is actually indemnified for the liability, except to
the extent to which it is not satisfied because there is a reduction in the
extent of the Security Trustee's indemnification as a result of its fraud,
negligence or willful default.
15. LIMITATION OF LIABILITY OF THE ISSUER TRUSTEE
(A) GENERAL
Clause 33 of the Master Trust Deed applies to the obligations and
liabilities of the Issuer Trustee in relation to this Class A Note.
(B) LIABILITY OF TRUSTEE LIMITED TO ITS RIGHT OF INDEMNITY
(i) This Class A Note applies to the Issuer Trustee only in its capacity as
trustee of the Trust and in no other capacity. A liability arising under or in
connection with this Class A Note or the Trust 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 this Class A Note or any other Transaction Document 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 this Class A Note or the Trust.
(ii) None of the Note Trustee or the Class A Noteholders may take action
against the Issuer Trustee in any capacity other than as trustee of the Trust or
seek the appointment of a receiver (except under the Security Trust Deed), or a
liquidator, an administrator or any similar person to the Issuer Trustee or
prove in any liquidation, administration or arrangements of or affecting the
Issuer Trustee.
(iii) The provisions of this Condition 15 shall not apply to any obligation
or liability of the Issuer Trustee to the extent that it is not satisfied
because under a Transaction Document or by operation of law
II-20
<PAGE>
there is a reduction in the extent of the Issuer Trustee's indemnification out
of the Trust Assets as a result of the Issuer Trustee's fraud, negligence or
breach of trust.
(iv) It is acknowledged that the Trust Manager, the Servicer, each Paying
Agent, the Agent Bank and the Note Trustee (each a "Relevant Party") are
responsible under the Transaction Documents for performing a variety of
obligations relating to the Trust. No act or omission of the Issuer Trustee
(including any related failure to satisfy its obligations under this Class A
Note or a Transaction Document) will be considered fraud, negligence or breach
of trust of the Issuer Trustee for the purpose of sub-paragraph (iii) of this
Condition 15 to the extent to which the act or omission was caused or
contributed to by any failure by any Relevant Party or any other person who
provides services in respect of the Trust (other than a person who has been
delegated or appointed by the Issuer Trustee and for whom the Issuer Trustee is
responsible under the Transaction Documents, other than a Relevant Party) to
fulfil its obligations relating to the Trust or by any other act or omission of
a Relevant Party or any other person who provides services in respect of the
Trust (other than a person who has been delegated or appointed by the Issuer
Trustee and for whom the Issuer Trustee is responsible under the Transaction
Documents, other than a Relevant Party).
(v) No attorney, agent, receiver or receiver and manager appointed in
accordance with a Transaction Document (including without limitation a Relevant
Party) has authority to act on behalf of the Issuer Trustee in a way which
exposes the Issuer Trustee to any personal liability and no act or omission of
any such person will be considered fraud, negligence or breach of trust of the
Issuer Trustee for the purpose of sub-paragraph (iii), if the Issuer Trustee has
exercised reasonable care in the selection and supervision of such a person.
16. GOVERNING LAW
The Class A Notes and the Relevant Documents (other than the Currency Swap
with Morgan Guaranty Trust Company of New York, London branch, which is governed
by the laws of New York) are governed by, and shall be construed in accordance
with, the laws of New South Wales, Australia.
SUMMARY OF PROVISIONS RELATING TO THE CLASS A NOTES WHILE IN BOOK ENTRY FORM
The Class A Notes will initially be represented by typewritten book-entry
notes (the Book-Entry Class A Notes"), without coupons, in the principal amount
of US$883,900,000. The Book-Entry Class A Notes will be deposited with the
Common Depositary for DTC on or about the Closing Date. Upon deposit of the
Book-Entry Class A Notes with the Common Depositary, DTC will credit each
investor in the Class A Notes with a principal amount of Class A Notes for which
it has subscribed and paid.
The Book-Entry Class A Note will be exchangeable for definitive Class A
Notes in certain circumstances described below.
Each person who is shown in the Note Register as the holder of a particular
principal amount of Class A Notes will be entitled to be treated by the Issuer
Trustee and the Note Trustee as a holder of such principal amount of Class A
Notes and the expression "Class A Noteholder" shall be construed accordingly,
but without prejudice to the entitlement of the holder of the Book-Entry Class A
Note to be paid principal and interest thereon in accordance with its terms.
Such persons shall have no claim directly against the Issuer Trustee in respect
of payment due on the Class A Notes for so long as the Class A Notes are
represented by a Book-Entry Class A Note and the relevant obligations of the
Issuer Trustee will be discharged by payment to the registered holder of the
Book-Entry Class A Note in respect of each amount so paid.
(A) PAYMENTS
Interest and principal on each Book-Entry Class A Note will be payable by
the Principal Paying Agent to the Common Depositary provided that no payment of
interest may be made by the Issuer Trustee or any
II-21
<PAGE>
Paying Agent in the Commonwealth of Australia or its possessions or into a bank
account or to an address in the Commonwealth of Australia or its possessions.
Each of the persons appearing from time to time as the beneficial owner of a
Class A Note will be entitled to receive any payment so made in respect of that
Class A Note in accordance with the respective rules and procedures of DTC. Such
persons will have no claim directly against the Issuer Trustee in respect of
payments due on the Class A Notes which must be made by the holder of the
relevant Book-Entry Class A Note, for so long as such Book-Entry Class A Note is
outstanding.
A record of each payment made on a Book-Entry Class A Note, distinguishing
between any payment of principal and any payment of interest, will be recorded
in the Note Register by the Principal Paying Agent and such record shall be
prima facie evidence that the payment in question has been made.
(B) EXCHANGE
The Book-Entry Class A Note will be exchangeable for definitive Class A
Notes only if:
(a) the Trust Manager advises the Principal Paying Agent in writing that
the Clearing Agency is no longer willing or able properly to discharge its
responsibilities with respect to the Class A Notes or the Clearing Agency
ceases to carry on business, and the Trust Manager is unable to located a
qualified successor;
(b) the Issuer Trustee, at the direction of the Trust Manager (at the
Trust Manager's option) advises the Principal Paying Agent in writing that
the book entry system through the Clearing Agency is or is to be terminated;
or
(c) after the occurrence of an Event, of Default the Class A Note
Owner's representing beneficial interests aggregating to at least a majority
of the aggregate Invested Amount of the Class A Notes advise the Principal
Paying Agent and Issuer Trustee through the Clearing Agency in writing that
the continuation of a book entry system through the Clearing Agency is no
longer in the best interest of the Note Owners,
then the Principal Paying Agent shall notify all Class A Note Owners and the
Issuer Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Class A Note Owners requesting the same. Upon the surrender
of the Book-Entry Notes to the Issuer Trustee by the Clearing Agency, and the
delivery by the Clearing Agency of the relevant registration instructions to the
Issuer Trustee, the Issuer Trustee shall execute and procure the Principal
Paying Agent to authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency.
(C) NOTICES
So long as the Notes are represented by the Book-Entry Class A Note and the
same is/are held on behalf of the Clearing Agency, notices to Class A
Noteholders may be given by delivery of the relevant notice to the Clearing
Agency for communication by them to entitled account holders in substitution for
delivery to each Class A Noteholder as required by the Class A Conditions.
(D) CANCELLATION
Cancellation of any Class A Note required by the Class A Conditions will be
effected by reduction in the principal amount of the relevant Book-Entry Class A
Note.
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<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE CLASS A NOTES OFFERED HEREBY, NOR AN OFFER OF
THE CLASS A NOTES IN ANY STATE OR JURISDICTION IN WHICH, OR TO ANY PERSON TO
WHOM, SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME
DOES NOT IMPLY THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE; HOWEVER, IF ANY MATERIAL CHANGE OCCURS WHILE THE
PROSPECTUS IS REQUIRED BY LAW TO BE DELIVERED, THE PROSPECTUS WILL BE AMENDED OR
SUPPLEMENTED ACCORDINGLY.
------------------------
TABLE OF CONTENTS
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Summary of Terms................................ 13
Structural Chart................................ 28
Cash Flow Summary............................... 29
Cash Flow Chart................................. 32
Noteholder Principal Distributions.............. 33
Risk Factors.................................... 34
Formation of the Trust.......................... 47
Security for the Notes.......................... 48
The Trust Fund.................................. 54
The Issuer Trustee.............................. 66
The Note Trustee................................ 71
Originator of the Housing Loans................. 71
The Servicer.................................... 72
The Trust Manager............................... 78
Westpac Residential Loan Program................ 80
The Mortgage Insurance Policies................. 85
Prepayment and Yield Considerations............. 91
Description of the Class A Notes................ 94
Description of the Servicing Agreement.......... 130
The Liquidity Facility.......................... 135
Description of the Swap Agreements.............. 139
Currency Swap Providers......................... 144
Certain Legal Aspects of the Housing Loans...... 144
Use of Proceeds................................. 150
United States Federal Income Tax Consequences... 150
Australian Tax Matters.......................... 153
ERISA Considerations............................ 154
Ratings of the Notes............................ 155
Legal Investment Considerations................. 155
Underwriting.................................... 156
Listing and General Information................. 157
Legal Matters................................... 159
Index of Defined Terms.......................... i
Appendix I--Glossary of Australian Legal
Terms.......................................... I-1
Appendix II--Terms and Conditions of the Class A
Notes.......................................... II-1
</TABLE>
US$833,900,000
[LOGO]
IN ITS CAPACITY AS ISSUER TRUSTEE OF THE
SERIES 1999-1G WST TRUST
US$883,900,000 CLASS A MORTGAGE
BACKED FLOATING RATE NOTES DUE 2030
---------------------
PROSPECTUS
---------------------
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
WESTPAC BANKING CORPORATION
DEUTSCHE BANK SECURITIES
WARBURG DILLON READ
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
NOMURA INTERNATIONAL PLC
MAY 7, 1999
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