<PAGE>
As filed with the Securities and Exchange Commission on August 11, 1999
Registration No. 333
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM S-11
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------
CRUSADE MANAGEMENT LIMITED
(ACN 072 715 916)
(Exact name of registrant as specified in its governing instruments)
Level 4
4-16 Montgomery Street
Kogarah NSW 2217
Australia
Telephone: 612 9952 1315
(Address, including zip code/post code, and telephone number, including area
code, of registrant's principal executive offices)
---------
agent for service
CT Corporation System
1633 Broadway
New York, New York 10019
Telephone: 212-479-8247
(Name, address, including zip code and telephone number, including
area code, of agent for service)
With a copy to:
Paul Gibbeson Diane Citron, Esq.
Company Secretary Mayer, Brown & Platt
Crusade Management Limited 1675 Broadway
Level 4 New York, New York 10019
4-16 Montgomery Street
Kogarah NSW 2217
Australia
---------
Approximate date of commencement of proposed sale to the public: From
time to time on or after the effective date of the registration statement, as
determined by market conditions.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. /_/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount to be Offering Price Aggregate Offering Amount of
Securities to Be Registered Registered Per Unit Price* Registration Fee
<S> <C> <C> <C> <C>
Mortgage Backed Floating Rate
Notes........................ $1,000,000 100% $1,000,000 $278.00
</TABLE>
* Estimated for the purpose of calculating the registration fee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Name and Caption in Form S-11 Caption in Prospectus
<S> <C> <C>
1. Forepart of Registration Statement and Front Cover of Registration Statement;
Outside Front Cover Page of Prospectus Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page of Prospectus;
of Prospectus Outside Back Cover Page of Prospectus
3. Summary Information, Risk Factors and Summary; Risk Factors
Ratio of Earnings to Fixed Charges
4. Determination of Offering Price *
5. Dilution *
6. Selling Security Holders *
7. Plan of Distribution Method of Distribution
8. Use of Proceeds Use of Proceeds
9. Selected Financial Data *
10. Management's Discussion and Analysis of Description of the Trust; Description of the
Financial Condition and Results of Assets of the Trust
Operations
11. General Information as to Registrant The Issuer Trustee, St.George Bank and the
Manager - The Manager
12. Policy with respect to Certain Activities Description of the Class A Notes
13. Investment Policies of Registrant Description of the Transaction Documents
14. Description of Real Estate The Assets of the Trust; St.George Residential
Loan Program
15. Operating Data *
16. Tax Treatment of Registrant and Its Security United States Federal Income Tax Matters,
Holders Australian Tax Matters
17. Market Price of and Dividends on the *
Registrant's Common Equity and Related
Stockholder Matters
18. Description of Registrant's Securities Description of the Class A Notes
19. Legal Proceedings *
20. Security Ownership of Certain Beneficial The Issuer Trustee, St.George Bank and the
Owners and Management Manager
21. Directors and Executive Officers *
22. Executive Compensation *
23. Certain Relationships and Related *
Transactions
24. Selection, Management and Custody of Description of the Class A Notes; Description
Registrant's Investments of the Transaction Documents; St.George
Residential Loan Program
25. Policies with Respect to Certain Transactions Description of the Class A Notes
26. Limitations of Liability Description of the Transaction Documents
27. Financial Statements and Information *
28. Interests of Named Experts and Counsel *
29. Disclosure of Commission Position on Part II of Registration Statement
Indemnification for Securities Act Liabilities
30. Quantitative and Qualitative Disclosures *
about Market Risk
* Not Applicable
2
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
Subject to Completion, Dated , 1999
US$_____
(Approximate)
CRUSADE GLOBAL TRUST NO. 1 OF 1999
CRUSADE MANAGEMENT LIMITED (ACN 072 715 916)
Manager
ST.GEORGE BANK LIMITED (ACN 055 513 070)
Seller and Servicer
AXA TRUSTEES LIMITED (ACN 004 029 841)
Issuer Trustee
</TABLE>
<TABLE>
<CAPTION>
Initial Underwriting Proceeds
Principal Initial Price to Discounts and to Issuer
Balance Interest Rate Public Commissions Trustee
--------- ------------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Class A-1 Notes ....... $_____ LIBOR + _____% _____% _____% _____%
Class A-2 Notes ....... $_____ LIBOR + _____% _____% _____% _____%
Total ................. $_____ $_____ $_____ $_____
</TABLE>
The notes will be collateralized by a pool of housing loans secured by
properties located in Australia. The trust will be governed by the laws of New
South Wales, Australia.
Please consider carefully the risk factors beginning on page 20 in the
prospectus.
The notes are not deposits and neither the notes nor the underlying
housing loans are insured or guaranteed by any governmental agency or
instrumentality. The notes represent obligations of the Crusade Global Trust No.
1 of 1999 only and do not represent obligations of or interests in, and are not
guaranteed by, Crusade Management Limited or St.George Bank Limited.
We have made an application to the London Stock Exchange Limited to admit
the Class A-1 and Class A-2 notes to the Official List.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
Credit Suisse First Boston
The date of this prospectus is [_____].
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Disclaimers with Respect to Sales to Breach of Representations and
Non-U.S. Investors.......................... Warranties ...............................
Australian Disclaimers ....................... Substitution of Housing Loans ..............
Summary ...................................... Other Features of the Housing
Parties to the Transaction ................. Loans .....................................
Structural Diagram ......................... Details of the Housing Loan Pool............
Summary of Crusade Global Housing Loan Information ...............
Trust No. 1 of 1999 Terms ............... St.George Residential Loan
Structural Overview ....................... Program ....................................
Credit Enhancements ........................ Origination Process ..........................
Liquidity Enhancements .................... Special Features of the Housing
Redraws .................................... Loans ....................................
Limited Substitution ....................... Additional Features ........................
Hedging Arrangements ....................... The Mortgage Insurance Policies ..............
Optional Termination ....................... General ....................................
The Housing Loan Pool ...................... Coverage ...................................
Withholding Tax ............................ Timely Payment Cover .......................
U.S. Tax Status ............................ Requirement and Restrictions ...............
Legal Investment ........................... Description of the Mortgage
ERISA Considerations ....................... Insurer ...................................
Book-Entry Registration .................... Description of the Class A Notes .............
Collections ................................ General ....................................
Interest on the Class A Notes .............. Form of the Class A Notes ..................
Allocation of Cash Flows.................... Distribution of the Notes ....................
Distribution of Total Available Key Dates and Periods ........................
Funds on a Payment Date .................... Calculation of Total Available
Distribution of Principal Collections Funds ....................................
on a Payment Date .......................... Distribution of Total Available
Risk Factors ................................. Funds ....................................
Capitalized Terms ............................ Interest on the Notes ......................
U.S. Dollar Presentation ..................... Excess Available Income ....................
The Issuer Trustee, St.George Bank Gross Principal Collections ................
and the Manager ............................ Principal Distributions ....................
The Issuer Trustee ......................... Redraws ....................................
St.George Bank ............................. Application of Principal Charge
The Manager ................................ Offs .....................................
Description of the Trust ..................... Payments into US$ Account ..................
St.George Bank Securitisation Payments out of US$ Account ................
Trust Programme ......................... The Interest Rate Swaps ....................
Crusade Global Trust No. 1 of The Currency Swap ..........................
1999 .................................... Withholding or Tax Deductions ..............
Assets of the Trust ........................ Redemption of the Notes for
Description of the Assets of the Taxation or Other Reasons ................
Trust ...................................... Redemption of the Notes ....................
General .................................... Clean-up Offer .............................
Transfer and Assignment of Termination of the Trust ...................
Housing Loans .............................. Prescription ...............................
Representations and Warranties .............
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Voting of Noteholders; Consumer Credit Legislation .............
Modification; Consents; Waiver.............. United States Federal Income Tax
Reports to Noteholders ....................... Matters..................................
Description of the Transaction General..................................
Documents .................................... Sale of Notes............................
Trust Accounts ............................... Market Discount..........................
The Standby Bank Guarantee ................... Premium..................................
Liquidity Reserve ............................ Backup Withholding.......................
Modifications Without Australian Tax Matters ....................
Noteholder Consent ........................... Payments of Principal, Premiums
Modifications With Noteholder and Interest ..........................
Consent ...................................... Profit on Sale...........................
The Issuer Trustee ........................... Goods and Services Tax...................
The Manager .................................. Other Taxes..............................
The Note Trustee ............................. Enforcement of Foreign
Security Trust Deed .......................... Judgments in Australia...................
The Redraw Facility .......................... Exchange Controls and Limitations..........
The Servicing Agreement ...................... ERISA Considerations.......................
The Custodian Agreement ...................... Legal Investment Considerations............
Seller Loan Agreement ........................ Available Information......................
The Servicer ................................... Ratings of the Notes.......................
Servicing of Housing Loans ................... Method of Distribution
Servicer Delinquency Experience............... Underwriting.............................
St.George Bank Year 2000 Offering Restrictions ...................
Programme .................................... Listing and General Information ...........
Prepayment and Yield........................... Listing..................................
Considerations ............................... Authorization............................
General ...................................... Litigation...............................
Prepayments .................................. Euroclear and Cedelbank..................
Weighted Average Lives ....................... Documents Available for
Use of Proceeds ................................ Inspection.............................
Legal Aspects of the Housing Consents to Opinions ....................
Loans ........................................ Announcement...............................
General ...................................... Legal Matters..............................
Nature of Housing Loans as Glossary..................................
Security ................................... Appendix I
Enforcement of Housing Loans ................. Terms and Conditions of the
Penalties and Prohibited Fees ................ Class A-1 Notes.........................
Bankruptcy ................................... Appendix II
Environmental ................................ Terms and Conditions of the
Insolvency Considerations .................... Class A-2 Notes.........................
Tax Treatment of Interest on
Australian Housing Loans ...................
</TABLE>
3
<PAGE>
Disclaimers with Respect to Sales to Non-U.S. Investors
This section applies only to the offering of the notes in countries other
than the United States of America. AXA Trustees Limited, in its capacity as
trustee of the trust, is not responsible or liable for this prospectus in the
United States of America. Crusade Management Pty Limited is responsible and
liable for this prospectus in the United States of America.
Other than in the United States of America, no person has taken and or
will not take any action that would permit a public offer of the notes in any
country or jurisdiction. The notes may be offered privately in other
jurisdictions. The notes may not be offered or sold, directly or indirectly, and
neither this prospectus nor any form of application, advertisement or other
offering material may be issued, distributed or published in any country or
jurisdiction, unless permitted under all applicable laws and regulations. The
underwriters have represented that all offers and sales by them have been and
will comply with all applicable laws and regulations. You should inform yourself
about and observe any of these restrictions. For a description of further
restrictions on offers and sales of the notes, see "Method of Distribution."
This prospectus does not and is not intended to constitute an offer to
sell or a solicitation of any offer to buy any of the notes by or on behalf of
AXA Trustee Limited, in its capacity as trustee of the trust, in any
jurisdiction in which the offer or solicitation is not authorized or in which
the person making the offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make an offer or solicitation in such
jurisdiction.
For the purposes of the Financial Services Act 1986 of the United Kingdom
and the London Stock Exchange only, AXA Trustees Limited, in its capacity as
trustee of the trust, accepts responsibility for the information contained in
this prospectus, other than with respect to those matters for which St.George
Bank Limited, _______, Morgan Guaranty Trust Company of New York or Credit
Suisse First Boston accept responsibility in the following four paragraphs. To
the best of the knowledge and belief of AXA Trustees Limited, in its capacity as
trustee of the trust, which has taken all reasonable care to ensure that such is
the case, the information contained in this prospectus for which it accepts
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of the information for which it accepts responsibility
contained in this prospectus.
St.George Bank Limited accepts responsibility for the information
contained in "The Issuer Trustee, St.George Bank and the Manager - St.George
Bank" and "- the Manager", "Description of the Assets of the Trust", "St.George
Residential Loan Programme", "Description of the Class A Notes - Form of the
Class A Notes" and "- The Interest Rate Swaps", "The Servicer" and "St.George
Bank Year 2000 Programme". To the best of the knowledge and belief of St.George
Bank Limited, which has taken all reasonable care to ensure that such is the
case, the information contained in those sections is in accordance with the
facts and does not omit anything likely to affect the import of the information
contained in this prospectus.
o accepts responsibility for the information contained in "Description of
the Class A Notes - The Interest Rate Swaps - The Standby Swap Provider". To the
best of the knowledge and belief of _______, which has taken all reasonable
care to ensure that such is the case, the information contained in this section
is in accordance with the facts and does not omit anything likely to affect the
import of the information contained in this prospectus.
4
<PAGE>
Morgan Guaranty Trust Company of New York accepts responsibility for the
information contained in "Description of the Class A Notes - The Currency Swap
- - The Currency Swap Provider". To the best of the knowledge and belief of Morgan
Guaranty Trust Company of New York, which has taken all reasonable care to
ensure that such is the case, the information contained in this section is in
accordance with the facts and does not omit anything likely to affect the import
of the information contained in this prospectus.
Credit Suisse First Boston accepts responsibility for the information
contained in "Description of the Transaction Documents - The Standby Bank
Guarantee - The Standby Guarantor". To the best of the knowledge and belief of
Credit Suisse First Boston, which has taken all reasonable care to ensure that
such is the case, the information contained in this section is in accordance
with the facts and does not omit anything likely to affect the import of the
information contained in this prospectus.
Except as described in the preceding four paragraphs, St.George Bank
Limited, in its individual capacity and as seller, servicer, fixed-floating rate
swap provider and basis swap provider, AXA Trustees Limited, Crusade Management
Limited, as manager, National Mutual Life Nominees Limited, as security trustee,
Bankers Trust Company, as note trustee, St.George Custodial Pty Limited, as
custodian, ________, as standby fixed-floating rate swap provider and standby
basis swap provider, Morgan Guaranty Trust Company of New York, as currency swap
provider, Credit Suisse First Boston, as standby guarantor, Housing Loan
Insurance Corporation Pty Limited and the underwriters: do not accept any
responsibility for any information contained in this prospectus and have not
separately verified the information contained in this prospectus; make no
representation, warranty or undertaking, express or implied, as to the accuracy
or completeness of any information contained in this prospectus or any other
information supplied in connection with the notes; do not recommend that any
person should purchase any of the notes; and do not accept any responsibility or
make any representation as to the tax consequences of investing in the notes.
Each person receiving this prospectus: acknowledges that he or she has
not relied on the entities listed in the preceding paragraph nor on any person
affiliated with any of them in connection with his or her investigation of the
accuracy of the information in this prospectus or his or her investment
decisions; acknowledges that this prospectus and any other information supplied
in connection with the notes is not intended to provide the basis of any credit
or other evaluation; acknowledges that the underwriters have expressly not
undertaken to review the financial condition or affairs of the trust or any
party named in the prospectus during the life of the notes; should make his or
her own independent investigation of the trust and the notes; and should seek
its own tax, accounting and legal advice as to the consequences of investing in
any of the notes.
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 notes. If such information or representation is given
or received, it must not be relied upon as having been authorized by AXA
Trustees Limited, in its capacity as trustee of the trust, or any of the
underwriters.
Neither the delivery of this prospectus nor any sale made in connection
with this prospectus shall, under any circumstances, create any implication
that:
5
<PAGE>
o there has been no material change in the affairs of the trust or any
party named in this prospectus since the date of this prospectus or
the date upon which this prospectus has been most recently amended or
supplemented; or
o any other information supplied in connection with the 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.
6
<PAGE>
Australian Disclaimers
o The notes do not represent deposits or other liabilities of St.George
Bank Limited (ACN 055 513 070) or associates of St.George Bank
Limited.
o The holding of the notes is subject to investment risk, including
possible delays in repayment and loss of income and principal
invested.
o Neither St.George Bank Limited, any associate of St.George Bank
Limited, AXA Trustees Limited, in its capacity as trustee of the
trust, National Mutual Life Nominees Limited, as security trustee,
Bankers Trust Company, as note trustee nor any underwriter in any way
stands behind the capital value or the performance of the notes or the
assets of the trust except to the limited extent provided in the
transaction documents for the trust.
o None of St.George Bank Limited, in its individual capacity and as
seller, servicer, basis swap provider and fixed-floating rate swap
provider, AXA Trustees Limited, in its capacity as trustee of the
trust, Crusade Management Limited, as manager, National Mutual Life
Nominees Limited, as security trustee, Bankers Trust Company, as note
trustee, St.George Custodial Pty Limited, as custodian, _______, as
standby fixed-floating rate swap provider and standby basis swap
provider, Morgan Guaranty Trust Company of New York, as currency
swap provider, Credit Suisse First Boston, as standby guarantor or
any of the underwriters guarantees the payment of interest or the
repayment of principal due on the notes.
o None of the obligations of AXA Trustees Limited, in its capacity as
trustee of the trust, or Crusade Management Limited, as manager, are
guaranteed in any way by St.George Bank Limited or any associate of
St.George Bank Limited.
7
<PAGE>
Summary
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. This summary contains an overview of some of the concepts
and other information to aid your understanding. All of the information
contained in this summary is qualified by the more detailed explanations in
other parts of this prospectus.
Parties to the Transaction
Trust:................................ Crusade Global Trust No. 1 of 1999
Issuer Trustee:....................... AXA Trustees Limited (ACN 004 029 841),
in its capacity as trustee of the Trust
Manager:.............................. Crusade Management Limited
(ACN 072 715 916), 4-16 Montgomery
Street, Kogarah NSW 2217
612-9320-5605
Note Trustee:......................... Bankers Trust Company
Security Trustee:..................... National Mutual Life Nominees Limited
(ACN 004 387 133)
Seller:............................... St.George Bank Limited (ACN 055 513 070)
Servicer:............................. St.George Bank Limited (ACN 055 513 070)
Custodian:............................ St.George Custodial Pty Limited
(ACN 003 017 411)
Principal Paying Agent:............... HSBC Issuer Services
Calculation Agent:.................... HSBC Issuer Services
Residual Beneficiary:................. Crusade Management Limited (ACN 072
715 916)
Underwriters:......................... Credit Suisse First Boston Corporation
Listing Agent:........................ Credit Suisse First Boston Limited
Redraw Facility Provider:............. St.George Bank Limited (ACN 055 513 070)
Mortgage Insurer:..................... Housing Loans Insurance Corporation
Pty Limited (ACN 071 466 334)
Standby Guarantor:.................... Credit Suisse First Boston, Melbourne
Branch
Fixed-Floating Rate Swap
Provider:............................. St.George Bank Limited (ACN 055 513 070)
Standby Fixed-Floating Rate
Swap Provider:........................
Basis Swap Provider:.................. St.George Bank Limited (ACN 055 513 070)
Standby Basis Swap Provider:..........
Currency Swap Provider:............... Morgan Guaranty Trust Company of
New York, London Branch
Rating Agencies:...................... Fitch IBCA (Australia) Pty Limited
Moody's Investor Service, Inc.
Standard & Poor's Ratings Group
8
<PAGE>
<TABLE>
<S> <C> <C> <C>
Structural Diagram
-----------------
SELLER
St. George Bank
Limited
-----------------
|
| Equitable assignment
| of housing loans
|
-------------------------------------
| |
| |
| ISSUER TRUSTEE |
| National Mutual Trustees Limited |
- -------------------- | |
MANAGER | | ------------------------------- | Charge over
Crusade Management |------| | | the assets ----------------------
Limited | | | | | of the Trust | SECURITY TRUSTEE
- -------------------- | | | | | National Mutual Life
| | |-------------------------| Nominees Limited
- -------------------- | | | | ----------------------
SERVICER | | | | | Mortgage
St.George Bank |------| | | Insurance -------------------
Limited | | | Crusade | | Policies | MORTGAGE INSURER
- -------------------- | | Global |-------------------------| HLIC
CUSTODIAN | | | Trust | | -------------------
St. George Custodial|------| No. 1 | |
Pty Limited | | | of | |
- -------------------- | | 1999 | | -------------------
| | | | | RESIDUAL
- -------------------- | | | | | BENEFICIARY
REDRAW FACILITY | | | |--------------------------| Crusade
PROVIDER | | | | | | Management Limited
St. George Bank |------| | | -------------------
Limited | | | | |
- -------------------- | | | | -------------------
| | |--------------------------| Class A notes |
- -------------------- | | | | | and Class B notes |--
FIXED-FLOATING | | | | | Payments on ------------------- |
RATE SWAP | | | | | the notes | |
PROVIDER |------| | | | |
St. George Bank | | | | | ------------------- |
Limited | | ------------------------------- | NOTE TRUSTEE |
- -------------------- --------|--------------------|------- Bankers Trust |
| | | ------------------- |
| | | |
- -------------------- ----------------- ----------------- |
STANDBY FIXED- BASIS SWAP CURRENCY SWAP |
FLOATING RATE PROVIDER PROVIDER |
SWAP PROVIDER St. George Bank Morgan Guaranty |
[ ] Limited Trust Company |
- -------------------- ----------------- of New York |
| ---------------- |
| | |
| | |
----------------- --------------------- |
STANDBY BASIS PRINCIPAL PAYING |
SWAP PROVIDER AGENT |
[ ] HSBC Issuer Services |
----------------- --------------------- |
| |
| |
------------------ |
THE DEPOSITORY |
TRUST COMPANY |
CLEARING SYSTEM |
------------------ |
| |
| |
------------------ |
Noteholders |-----------------------------------------
------------------
</TABLE>
9
<PAGE>
Summary of Crusade Global Trust No. 1 of 1999 Terms
The issuer trustee will also issue Class B notes collateralized by the
same pool of housing loans. The Class B notes have not been registered in the
United States and are not being offered by this prospectus. The term "notes"
will mean the Class A notes and the Class B notes when used in this prospectus.
<TABLE>
<CAPTION>
The NotesClass A-1/Class A-2Class B
- ------------------------------------------------------------------
<S> <C> <C>
% of Total: __%/__% __%
Anticipated Ratings:
Fitch IBCA (Australia)
Pty Limited AAA AAA
Moody's Investor
Service, Inc. Aaa Aa1
Standard & Poor's
Ratings Group AAA AAA
Interest Rate before the three-month LIBOR + three-month Australian
quarterly payment date in __%/ bank bill rate + __%
__, 20__: three-month LIBOR + __%
Interest Rate on and after three-month LIBOR + three-month Austrialian
the quarterly payment date __%/ bank bill rate + __%
in __, 20__: three-month LIBOR + __%
Interest Accrual Method: actual/360 actual/365
Quarterly Payment Dates: 15th day or, if 15th day is 15th day or, if 15th day is
not a business day, then not a business day, then
the next business day, of the next business day, of
each of November, each of November,
February, May and February, May and
August, beginning in August, beginning in
November, 1999 November, 1999
Final Maturity Date: __, 20__ __, 20__
Clearance/Settlement: DTC/Euroclear/Cedelbank Offered in Australia only
Cut-Off Date: __, 1999 __, 1999
Pricing Date: __, 1999 __, 1999
Closing Date: __, 1999 __, 1999
</TABLE>
10
<PAGE>
Structural Overview
St.George Bank established the Crusade Global Trust Programme pursuant to a
master trust deed dated March 14, 1998 among St.George Bank, Crusade Management
Limited and the issuer trustee. The master trust deed provides the general terms
and structure for securitizations under the programme. A supplementary terms
notice among the issuer trustee, St.George Bank, as seller and servicer, Crusade
Management Limited, as manager, St.George Custodial Pty Limited, as custodian,
Bankers Trust Company, as note trustee, and National Mutual Life Nominees
Limited, as security trustee, will set out the specific details of the Crusade
Global Trust No.1 of 1999 and the notes, which may vary from the terms set
forth in the master trust deed. Each securitization under the programme is a
separate transaction with a separate trust. The assets of the Crusade Global
Trust No. 1 of 1999 will not be available to pay the obligations of any other
trust, and visa versa. See "Description of the Trust."
The Crusade Global Trust No. 1 of 1999 involves the securitization of
housing loans originated by St.George Bank or its predecessors and secured by
mortgages over residential property located in Australia. St.George Bank will
equitably assign the housing loans to the trust, which will in turn issue the
floating rate notes to fund the acquisition of the housing loans.
The issuer trustee will grant a first ranking floating charge over all of
the assets of the trust under the security trust deed in favor of National
Mutual Life Nominees Limited, as security trustee, to secure the trust's payment
obligations to the noteholders and its other creditors. A first ranking floating
charge is a first priority security interest over a class of assets, but does
not attach to specific assets unless or until it crystalizes. For a description
of floating charges, see "Security Trust Deed--Nature of the Charge".
Payments of interest and principal to the notes will come only from the
housing loans and other assets of the trust. If there are losses on the housing
loans, the trust may not have sufficient assets to repay the notes.
Credit Enhancements
Payments of interest and principal to the notes will be supported by the
following forms of credit enhancement:
Subordination and Allocation of Losses
The Class B notes will always be subordinated to the Class A-1 and A-2
notes in their right to receive interest and principal payments. They will bear
all losses on the housing loans before the Class A-1 and A-2 notes. The support
provided by the Class B notes is intended to enhance the likelihood that the
Class A-1 and A-2 notes will receive expected quarterly payments of interest and
principal. The following chart sets forth the initial support percentage of the
Class B notes:
Initial
Credit Support
Class(es) Support Percentage
--------- ------- ----------
A-1 and A-2 B o
11
<PAGE>
You should note that the initial support percentage in the preceding table
is the initial balance of the Class B notes, as a percentage of the housing loan
pool balance as of the cut-off date.
Mortgage Insurance Policies
Mortgage insurance policies issued by Housing Loans Insurance Corporation
Pty Limited will provide full coverage for all principal payments and timely
interest payments for up to twenty-four months in the aggregate for each of the
housing loans.
Excess Interest Collections
Any interest collections on the housing loans remaining after payments of
interest on the notes and the trust's expenses will be available to cover any
losses on the housing loans that are not covered by mortgage insurance.
Liquidity Enhancements
To cover possible liquidity shortfalls in the payment obligations of the
trust, the issuer trustee will have the following forms of liquidity
enhancements:
Principal Draws
The manager may direct the issuer trustee to allocate principal collections
on the housing loans to cover any shortfalls in its payment obligations on a
monthly payment date.
Liquidity Reserve
At the closing date, A$*, representing 0.25% of the initial outstanding
principal balance of the notes, will be deposited into a liquidity account. The
issuer trustee, if directed by the manager, will use the money in the liquidity
account to cover any shortfalls in its payment obligations on a payment date
which are not covered by principal draws. The liquidity reserve amount will be
reduced from time to time so that it will equal 0.25% of the aggregate principal
amount outstanding of the housing loans. Any additional amounts in the liquidity
account will be treated as a principal collection.
Timely Payment Cover
The mortgage insurance policies guarantee the timely payment of interest
and principal on each of the housing loans for up to 24 months.
Redraws
Under the terms of each variable rate housing loan, a borrower may, at the
discretion of St.George Bank, redraw previously prepaid principal. A borrower
may redraw an amount equal to the difference between the scheduled principal
balance of his or her loan and the current principal balance of the loan.
St.George Bank will be reimbursed for any redraws it advances to borrowers from
principal collections on the housing loans. Thus, the trust will have less funds
available to pay principal on the next payment date, but will have a
corresponding greater amount of assets with which
12
<PAGE>
to make future payments. The amount that St.George Bank may advance in respect
of a loan from time to time is limited to the amount of principal that has been
prepaid on the loans at that time. See "St.George Residential Loan Program".
Limited Substitution
At the direction of the manager, the issuer trustee must use the proceeds
from the repurchase of a housing loan by the seller because of a breach of a
representation or warranty to purchase an eligible substitute housing loan, if
available.
Hedging Arrangements
To hedge its interest rate and currency exposures, the issuer trustee will
enter into the following hedge arrangements:
o a basis swap to hedge the basis risk between the interest rate on the
housing loans which are subject to a discretionary variable rate of
interest and the floating rate obligations of the trust, which
includes the issuer trustee's payments under the currency swap.
o a fixed-floating rate swap to hedge the basis risk between the
interest rate on the housing loans which are subject to a fixed rate
of interest and the floating rate obligations of the trust, which
includes the issuer trustee's payments under the currency swap and
"Description of the Transaction Documents--The Redraw Facility".
o a currency swap to hedge the currency risk between the collections
on the housing loans and the amounts received by the issuer trustee
under the basis swap and the fixed-floating rate swap, which are
denominated in Australian dollars, and the obligation of the trust
to pay interest and principal on the Class A notes, which are
denominated in U.S. dollars.
Optional Termination
The seller may repurchase the housing loans from the trust at a price equal
to their outstanding principal balance upon the earlier of the quarterly payment
date falling in November, 2006 or the quarterly payment date when the current
total outstanding principal balance of the notes, as reduced by principal charge
offs, is less than 10% of the total initial principal balance of the notes. If
the seller repurchases the housing loans, the noteholders will receive a payment
equal to the outstanding principal balance of the notes, together with accrued
interest, unless the noteholders consent to receiving the outstanding principal
balance of the notes, as reduced by principal chargeoffs, together with accrued
interest.
The Housing Loan Pool
The housing loan pool will consist of fixed rate and variable rate
residential housing loans secured by mortgages on one-to-four family residential
properties. The housing loans will have original terms to stated maturity of no
more than 30 years. St.George Bank expects the pool of housing loans to have the
following characteristics:
13
<PAGE>
Selected Housing Loan Pool Data as of o, 1999
Number of Housing Loans ......................................... o
Housing Loan Pool Size .......................................... o
Average Housing Loan Balance .................................... o
Maximum Housing Loan Balance .................................... o
Minimum Housing Loan Balance .................................... o
Total Valuation ................................................. o
Weighted Average Property Value ................................. o
Maximum Term to Maturity ........................................ o
Weighted Average Term to Maturity ............................... o
Weighted Average Seasoning ...................................... o
Weighted Average Original Loan-to-Value Ratio ................... o
Maximum Current Loan-to-Value Ratio ............................. o
Weighted Average Current Loan-to-Value Ratio .................... o
The Original Loan-to-Value Ratio of a housing loan is calculated by
comparing the initial amount of the housing loan to the value at the date of
origination of the property that is still currently securing the housing loan.
Thus, if collateral has been released from the mortgage securing a housing loan
since the housing loan was originated, the Original Loan-to-Value Ratio of that
housing loan will be inflated.
Before the issuance of the notes, housing loans may be added to or removed
from the housing loan pool. New housing loans may also be substituted for
housing loans in the housing loan pool. In no case will the housing loan pool
size vary by more than plus or minus 5%. This may result in changes in the
housing loan pool characteristics shown in the preceeding table and could affect
the weighted average lives and yields of the notes.
Withholding Tax
Payments of principal and income on the Class A notes will be made subject
to any applicable withholding taxes. The issuer trustee is not obligated to pay
any additional amounts to the Class A noteholders to cover any withholding
taxes.
If the Commonwealth of Australia requires the withholding of amounts from
payment of principal or interest to the Class A noteholders or if the issuer
trustee ceases to receive the total amount of interest payable by borrowers on
the housing loans, the manager may direct the issuer trustee to redeem all of
the notes. However, Class A noteholders owning 75% of the aggregate outstanding
principal balance of the Class A notes may direct the issuer trustee not to
redeem the Class A notes. See "Description of the Class A Notes - Redemption of
the Notes for Taxation or Other Reasons."
U.S. Tax Status
In the opinion of Mayer, Brown & Platt, special tax counsel for the issuer
trustee, 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, agrees
to treat the notes as indebtedness. See "United States Federal Income Tax
Matters."
Legal Investment
The Class A notes will not constitute "mortgage-related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984. No
representation is made as to whether the notes constitute legal investments
under any applicable
14
<PAGE>
statute, law, rule, regulation or order for any entity whose investment
activities are subject to investment laws and regulations or to review by
regulatory authorities. You are urged to consult with your own legal advisors
concerning the status of the Class A notes as legal investments for you. See
"Legal Investment Considerations".
ERISA Considerations
In general, the Class A notes will be eligible for purchase by retirement
plans subject to the Employee Retirement Income Security Act. Investors should
consult their counsel with respect to the consequences under the Employee
Retirement Income Security Act and the Internal Revenue Code of the plan's
acquisition and ownership of the certificates.
Book-Entry Registration
Persons acquiring beneficial ownership interests in the Class A notes will
hold their Class A notes through the Depository Trust Company in the United
States or Cedelbank or Euroclear outside of the U.S. Transfers within the
Depository Trust Company, Cedelbank or Euroclear will be in accordance with the
usual rules and operating procedures of the relevant system. Crossmarket
transfers between persons holding directly or indirectly through the Depository
Trust Company, on the one hand, and persons holding directly or indirectly
through Cedelbank or Euroclear, on the other hand, will take place in the
Depository Trust Company through the relevant depositories of Cedelbank or
Euroclear.
Collections
The issuer trustee will receive for each monthly and quarterly collection
period the following amounts, which are known as collections:
o payments of interest, principal and fees and prepayments of
principal under the housing loans;
o proceeds from enforcement of the housing loans;
o amounts received under mortgage insurance policies;
o amounts received from the seller or servicer for breaches of
representations or undertakings; and
o interest on amounts in the collection account.
Collections will be allocated between income and principal. Collections
attributable to income, less some amounts, are known as available income. The
collections attributable to principal, less some amounts, are known as gross
principal collections.
Available income is normally used to pay fees, expenses and interest on the
notes. Gross principal collections are normally used to pay principal on the
notes. However, if there is not enough available income to pay fees, expenses
and interest on the notes, gross principal collections will be treated as income
and applied in the income stream. If there is an excess of available income
after payment of fees, expenses and interest on the notes, the excess income
will be treated as principal and applied in the principal stream. The charts on
the pages o and o summarize the flow of payments.
Interest on the Class A Notes
Interest on the notes is payable quarterly in arrears on each quarterly
payment date. Interest will be paid proportionately between the Class A-1 and
Class A-2 notes. Interest will be paid on the Class B notes only after the
payments of interest on the
15
<PAGE>
Class A-1 and Class A-2 notes are made. Interest on the Class A notes is
calculated for each interest period as follows:
o at the note's interest rate;
o on the outstanding principal balance of that note at the beginning
of that interest period; and
o on the basis of the actual number of days in that interest period
and a year of 360 days.
Allocation of Cash Flows
On each quarterly payment date, the issuer trustee will repay principal and
interest to each noteholder to the extent that there are collections received
for payment on that quarterly payment date. On each quarterly payment date, the
outstanding principal balance of each note will be reduced by the amount of the
principal payment made on that quarterly payment date on that note. The charts
on the next two pages summarize the flow of payments.
16
<PAGE>
Distribution of Total Available Funds on a Payment Date
Total Available Funds = Available Income + Principal Draws + Liquidity Draws
-------------------------------------------------
On the first payment date only, pay to St. George
Bank Limited the Accrued Interest Adjustment
-------------------------------------------------
|
|
-------------------------------------------------
Repay the Standby Guarantor for any
Recovered Amount relating to income
-------------------------------------------------
|
|
-------------------------------------------------
Repay the mortgage insurer any timely
cover payments relating to income
-------------------------------------------------
| |
| |
On monthly payment dates On quarterly payment dates
(Other than quarterly payment dates) |
| |
| |
- ----------------------- ----------------------------------------------------
Pay interest owed under Pay the Fixed-Floating Rate Swap Provider any break
the Redraw Facility payments received from borrowers or mortgage insurer
- ----------------------- ----------------------------------------------------
| |
| |
- ----------------------- ----------------------------------------------------
Repay any outstanding Pay Trust Expenses
Liquidity Draws
- ----------------------- ----------------------------------------------------
|
|
----------------------------------------------------
Pay pari passu and rateably:
o fees under the Redraw Facility
o Fees under the Basis Swap
o Fees under the Fixed-Floating Rate Swap
----------------------------------------------------
|
|
----------------------------------------------------
Pay any unpaid amounts from previous quarterly
payment dates (other than amounts owed to the
Currency Swap Provider)
----------------------------------------------------
|
|
----------------------------------------------------
Pay pari passu and rateably:
o interest under the Redraw Facility
o payments under the Basic Rate Swap of the
Fixed-Floating Rate Swap
o any outstanding Liquidity Draws
o the Currency Swap Provider Interest to be
paid on the Class A-1 and Class A-2 notes
----------------------------------------------------
|
|
----------------------------------------------------
Pay any unpaid amounts owing to the Currency Swap
Provider from previous quarterly payment dates
----------------------------------------------------
|
|
----------------------------------------------------
Pay the Currency Swap Provider Interest to be
paid on the Class B notes
----------------------------------------------------
|
|
----------------------------------------------------
Distribute any remaining amounts to the
Residual Beneficiary
----------------------------------------------------
17
<PAGE>
Distribution of Principal Collections on a Payment Date
Principal Collections = Gross Principal Collections - Reimbursement of Current
Period Redraws - Any Amount Paid by the Issuer Trustee to Replace a Housing Loan
-----------------------------------------------------------------------------
Repay the Standby Guarantor any Recovered Amount relating to principal
-----------------------------------------------------------------------------
|
|
-----------------------------------------------------------------------------
Repay the Mortgage Insurer for any timely cover payments relating to principal
-----------------------------------------------------------------------------
|
|
-----------------------------------------------------------------------------
Allocate any required Principal Draw to Total Available Funds
-----------------------------------------------------------------------------
|
|
-----------------------------------------------------------------------------
Retain in the collection account funds to cover any anticipated shortfalls
-----------------------------------------------------------------------------
| |
On monthly payment dates On quarterly payment dates
(Other than quarterly |
payment dates) |
| |
------------------------------- -----------------------------------------
Repay any principal outstanding Repay the Seller for any Redraws
under the Redraw Facility it has funded
------------------------------- -----------------------------------------
|
|
-----------------------------------------
Repay any principal outstanding
under the Redraw Facility
-----------------------------------------
|
|
-----------------------------------------
Retain the Redraw Retention Amount
in the collection account
-----------------------------------------
|
|
-----------------------------------------
Pay to the Currency Swap Provider
principal to be paid on the Class A-1
and Class A-2 notes
-----------------------------------------
|
|
-----------------------------------------
Pay to the Currency Swap Provider
principal to be paid on the Class B notes
-----------------------------------------
18
<PAGE>
Risk Factors
The Class A notes are complex securities issued by a foreign entity and
secured by property located in a foreign jurisdiction. You should possess,
either alone or together with an investment advisor, the expertise necessary to
evaluate the information contained in this prospectus in the context of your
financial situation and your tolerance for the prepayment, credit, liquidity
and market risks related to the notes.
You should consider the following risk factors in deciding whether to
purchase the Class A notes.
The notes will be paid only from o The notes are debt obligations
the assets of the trust of the issuer trustee only in its
capacity as trustee of the
trust. The notes do not represent
an interest in or obligation of
any of the other parties to the
transaction. The assets of the
trust will be the sole source of
payments on the notes. The issuer
trustee's other assets will only
be available to make payments on
the notes if the issuer trustee
is negligent, commits fraud or in
some circumstances where the
issuer trustee falls to comply
with an obligation expressly
imposed upon it by written
direction from the manager. Thus,
if the assets of the trust are
insufficient to make the required
payments on the notes, you will
suffer losses. Therefore, if the
assets of the trust are
insufficient to pay the interest
and principal on your notes when
due, there will be no other
source from which to receive
these payments and you may not
get back your entire investment
or the yield you expected to
receive.
You face an additional o Although St.George Bank could
possibility of loss because the have legally assigned legal title
issuer trustee will initially not to the housing loans to the
hold legal title to the housing issuer trustee, it will initially
loans only equitably assign the housing
loans. The housing loans will be
legally assigned to the issuer
trustee only upon the occurrence
of a title perfection event, as
described in "Description of the
Assets of the Trust - Transfer
and Assignment of the Housing
Loans." Because the issuer
trustee does not hold legal title
to the housing loans you will be
subject to the following risks,
which may lead to a failure to
receive collections on the
housing loans, delays in
receiving the collections or
losses to you:
o The issuer trustee's
interest in a housing loan
may be impaired by the
creation or existence of an
equal or higher ranking
security interest over the
related mortgaged
19
<PAGE>
property created after the
creation of the issuer
trustee's equitable interest
but prior to it acquiring a
legal interest in the
housing loans.
o Until a borrower has notice
of the assignment, that
borrower is not bound to
make payments under its
housing loan to anyone other
than the seller. Until a
borrower receives notice of
the assignment, if he or she
makes the payments under his
or her housing loan to the
seller, the borrower will
have validly discharged his
or her obligations under his
or her housing loan even if
the issuer trustee does not
receive the payments from
the seller. Therefore, if
the seller does not deliver
collections to the issuer
trustee, for whatever
reason, neither the issuer
trustee nor you will have
any recourse against the
related borrowers for such
collections.
o The issuer trustee may not
be able to initiate any
legal proceedings against a
borrower to enforce a
housing loan without the
involvement of the seller.
The seller and servicer may o Before the seller or the
commingle collections on the servicer remits collections
housing loans with their assets to the collection account, the
collections may be commingled
with the assets of the seller or
servicer. If the seller or the
servicer becomes insolvent, the
issuer trustee may only be able
to claim those collections as an
unsecured creditor of the
insolvent company. This could
lead to a failure to receive the
collections on the housing loans,
delays in receiving the
collections, or losses to you.
There is no way to predict the The rate of principal and
actual rate and timing of interest payments on pools of
payments on the housing loans housing loans varies among pools,
and is influenced by a variety of
economic, demographic, social,
tax, legal and other factors,
including prevailing market
interest rates for housing loans
and the particular terms of the
housing loans. Australian housing
loans have features and options
that are different from housing
loans in the United States, and
thus will have different rates
and timing of payments. There is
no guarantee as to the actual
rate of prepayment on the housing
loans, or that the actual rate of
prepayments will conform to any
model described in this
20
<PAGE>
prospectus. The rate and timing
of principal and interest
payments on the housing loans
will affect the rate and timing
of payments of principal and
interest on your notes.
Unexpected prepayment rates could
have the following negative
effects:
o If you bought your notes for
more than their face amount,
the yield on your notes will
drop if principal payments
occur at a faster rate than
you expect.
o If you bought your notes for
less than their face amount,
the yield on your notes will
drop if principal payments
occur at a slower rate than
you expect.
Losses and delinquent payments o If borrowers fall to make
on the housing loans may affect payments of interest and
the return on your notes principal under the housing loans
when due and the credit
enhancement described in this
prospectus is not enough to
protect your notes from their
failure to pay, then the issuer
trustee may not have enough funds
to make full payments of interest
and principal due on your notes.
Consequently, the yield on your
notes could be lower than you
expect and you could suffer
losses.
Enforcement of the housing o Substantial delays could be
loans may cause delays in encountered in connection with
payment and losses the liquidation of a housing
loan, which may lead to
shortfalls in distributions to
you to the extent not covered by
a mortgage insurance policy.
o If the proceeds of the sale of a
mortgaged property, net of
preservation and liquidation
expenses, are less than the
amount due under the related
housing loan, the issuer trustee
may not have enough funds to make
full payments of interest and
principal due to you, unless the
difference is covered under a
mortgage insurance policy.
The Class B notes provide only o The amount of credit enhancement
limited protection against losses provided through the
subordination of the Class B
notes to the Class A notes is
limited and could be depleted
prior to the payment in full of
the Class A notes. If the
principal amount of the Class B
notes is reduced to zero, you may
suffer losses on your notes.
21
<PAGE>
The mortgage insurance policies o The mortgage insurance policies
may not be available to cover are subject to some exclusions
losses on the housing loans from coverage and rights of
termination which are described
in "The Mortgage Insurance
Policies - Restrictions".
Therefore, a borrower's payments
that are expected to be covered
by the mortgage insurance
policies may not be covered
because of these exclusions, and
the issuer trustee may not have
enough money to make timely and
full payments of principal and
interest on your notes.
You may not be able to resell o The underwriters are not required
your notes to assist you in reselling your
notes. A secondary market for
your notes may not develop. If a
secondary market does develop, it
might not continue or might not
be sufficiently liquid to allow
you to resell any of your notes
readily or at the price you
desire. The market value of your
notes is likely to fluctuate,
which could result in significant
losses to you.
The termination of any of the o The issuer trustee will exchange
swaps may subject you to losses the interest payments from the
from interest rate or currency fixed rate housing loans for
fluctuations variable rate payments based upon
the three month Australian bank
bill rate. If the fixed floating
rate swap is terminated or the
fixed floating rate swap provider
falls to perform its obligations,
you will be exposed to the risk
that the floating rate of
interest payable on the notes
will be greater than the
discretionary fixed rate set by
the servicer on the fixed rate
housing loans, which may lead to
losses to you.
o The issuer trustee will exchange
the interest payments from the
variable rate housing loans for
variable rate payments based upon
the three-month Australian bank
bill rate. If the basis swap is
terminated, the manager will
direct the servicer to set the
interest rate on the variable
rate housing loans at a rate high
enough to cover the payments owed
by the trust. If the rates on the
variable rate housing loans are
set above the market interest
rate for similar variable rate
housing loans, the affected
borrowers will have an incentive
to refinance their loans with
another institution, which may
lead to higher rates of principal
repayment than you initially
expected and affect the yield on
your notes.
o The issuer trustee will receive
payments from the borrowers on
the housing loans in
22
<PAGE>
Australian dollars and make
payments to you in U.S. dollars.
The currency swap counterparty
will exchange Australian dollars
for U.S. dollars pursuant to the
cross currency swap. If the cross
currency swap counterparty falls
to perform its obligation or if
the cross currency swap is
terminated, the issuer trustee
might have to exchange its
Australian dollars for U.S.
dollars at an exchange rate that
does not provide sufficient U.S.
dollars to make payments to you
in full.
Prepayments during a collection o If a prepayment is received on a
period may result in you not housing loan during a collection
receiving your full interest period, interest on the housing
payments loan will cease to accrue on that
portion of the housing loan that
has been prepaid, starting on the
date of prepayment. The amount
prepaid will be invested in
investments that may earn a rate
of interest lower than that paid
on the housing loan. If it is
less, the issuer trustee may not
have sufficient funds to pay you
the full amount of interest due
to you on the next payment date.
The proceeds from the o If the security trustee enforces
enforcement of the security trust the security interest over the
deed may be insufficient to pay assets of the trust after an
amounts due to you event of default under the
security trust deed, there is no
assurance that the market value
of the assets of the trust will
be equal to or greater than the
outstanding principal and
interest due on the notes, or
that the security trustee will be
able to realize the full value of
the assets of the trust. The
issuer trustee, the security
trustee, the note trustee, the
swap providers and other service
providers will generally be
entitled to receive the proceeds
of any sale of the assets of the
trust, to the extent they are
owed fees and expenses, before
you. Consequently, the proceeds
from the sale of the trust assets
after an event of default under
the security trust deed may be
insufficient to pay you principal
and interest in full.
If the manager directs the issuer o If the manager directs the issuer
trustee to redeem the notes trustee to redeem the notes
earlier, you could suffer losses earlier as described in
and the yield on your notes "Description of the Class A
could be lower than expected Notes - Clean-up Offer",
noteholders owning at least 75%
of the aggregate outstanding
amount of the notes may consent
to receiving an amount equal to
the outstanding principal amount
of the notes, less chargeoffs. As
a result, you may not fully
recover your investment. In
addition, the
23
<PAGE>
purchase of the housing loans
will result in the early
retirement of your notes, which
will shorten their average lives
and potentially lower their
yields.
The imposition of a withholding o If a withholding tax is imposed
tax will reduce payments to you on payments of interest on your
and may lead to an early notes, you will not be entitled
redemption of the notes to receive grossed-up amounts to
compensate for such withholding
tax. Thus, you will receive less
interest than is scheduled to be
paid on your notes.
o If the option to redeem the notes
affected by withholding tax is
exercised, you may not be able to
reinvest the redemption payments
at a comparable interest rate.
St.George Bank's ability to set o The interest rates on the
the interest rate on variable rate variable rate housing loans are
housing loans may lead to not tied to an objective interest
increased delinquencies or rate index, but are set at the
prepayments sole discretion of St.George
Bank. If St.George Bank increases
the interest rates on the
variable rate housing loans,
borrowers may be unable to make
their required payments under the
housing loans, and accordingly,
may become delinquent or may
default on their payments. In
addition, if the interest rates
are raised above market interest
rates, borrowers may refinance
their loans with another lender
to obtain a lower interest rate.
This could cause higher rates of
principal prepayment than you
expected and affect the yield on
your notes.
The features of the housing o The features of the housing
loans may change, which could loans, including their interest
affect the timing and amount of rates, may be changed by
payments St.George Bank, either on its
own initiative or to you at a
borrower's request. Some of these
changes may include the addition
of newly developed features which
are not described in this
prospectus. As a result of these
changes and borrower's payments
of principal, the concentration
of housing loans with specific
characteristics is likely to
change over time, which may
affect the timing and amount of
payments you receive.
o If St.George Bank changes the
features of the housing loans,
borrowers may elect to refinance
their loan with another lender to
obtain more favorable features.
In addition, the housing loans
included in the trust are not
permitted to have some features.
If a borrower opts to add one of
these features to his or her
housing
24
<PAGE>
loan, the housing loan will be
removed from the trust. The
refinancing or removal of housing
loans could cause you to
experience higher rates of
principal prepayment than you
expected, which will affect the
yield on your notes.
There are limits on the amount o If the interest collections
of available liquidity to insure during a collection period are
payments of interest to you insufficient to cover fees,
expenses and the interest
payments due on the notes on the
next payment date, principal
collections collected during the
collection period may be used to
cover these amounts. If principal
collections are not sufficient to
cover the shortfall, the issuer
trustee will draw funds from the
liquidity account. In the event
that there is not enough money
available under the liquidity
account, you may not receive a
full payment of interest that
payment date, which will reduce
the yield on your notes.
The use of principal collections o If principal collections are
to cover to cover liquidity shortfalls may drawn upon shortfalls in interest
lead to principal losses collections, and there is
insufficient excess interest
collections in succeeding
collection periods to repay such
principal draws, you may not
receive full repayment of
principal on your notes.
Consumer protection laws may o Some of the borrowers may attempt
affect the timing or amount of to make a claim to a court
interest or principal payments to requesting changes in the terms
you and conditions of their housing
loans or compensation or
penalties from the seller for
breaches of the Consumer Credit
Legislation. Any changes which
allow the borrower to pay less
principal or interest under his
or her housing loan may delay or
decrease the amount of payments
to you. In addition, if the
issuer trustee obtains legal
title to the housing loans, the
issuer trustee will be subject to
the penalties and compensation
provisions of the applicable
consumer protection laws instead
of the seller. To the extent that
the issuer trustee is unable to
recover any such liabilities
under the consumer protection
laws from the seller, the assets
of the trust will be used to
indemnify the issuer trustee.
This may delay or decrease the
amount of collections available
to make payments to you.
25
<PAGE>
The removal or resignation of o If St.George Bank is removed from
St.George Bank as servicer may or resigns its position as
cause you to suffer servicer of the housing loans,
the issuer trustee will service
the housing loans if a
replacement servicer is not
found. There is no guarantee that
a replacement servicer, or the
issuer trustee, if no replacement
servicer is found, will be able
to service the housing loans with
the same level of skill and
competence as St.George Bank.
This could lead to an increase in
delinquencies and defaults on the
housing loans, which may cause
you to suffer losses to the
extent not covered by mortgage
insurance.
The concentration of housing o If the trust contains a high
loans in specific geographic concentration of housing loans
areas may increase the secured by properties located
possibility of loss on your notes within a single state or region,
any deterioration in the real
estate values or the economy of
any of those states or regions
could result in higher rates of
delinquencies, foreclosures and
loss than expected on the housing
loans. In addition, these states
or regions may experience natural
disasters, which may not be fully
insured against and which may
result in property damage and
losses on the housing loans.
These events may in turn have a
disproportionate impact on funds
available to the trust, which
could cause you to suffer losses.
The failure of St.George, its o St.George Bank has developed a
affiliates or third parties to be plan, which is described in
year 2000 computer ready could "St.George Bank Year 2000
disrupt the distributions on your Programme", to address the year
notes 2000 issue. St.George Bank cannot
guarantee, however, that its
efforts to achieve year 2000
readiness will be fully
effective. Moreover, St.George
Bank cannot guarantee that the
borrowers' banks or any of its
third-party service providers,
such as the issuer trustee, the
swap providers, the paying agents
and DTC, will be year 2000 ready.
St.George Bank also cannot assure
you that any future developments
in connection with its year 2000
readiness or the readiness of
third parties will be those that
have been anticipated.
o The failure of St.George Bank,
its affiliates or third-parties
to become fully year 2000 ready
could disrupt, at least
temporarily, the servicer's
ability to carry out the
servicing duties described in
this prospectus, including the
calculation of amounts
distributable to you and the
timely transfer of funds to the
issuer trustee for your benefit.
Your investment in the notes
could consequently suffer.
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<PAGE>
The implementation of the new o From July 1, 2000, a Goods and
Goods and Services Tax in Services Tax will be payable by
Australia is likely to decrease all entities which make taxable
the funds available to the trust supplies in Australia. Although
to pay you legislation has been passed to
enact the Goods and Services Tax,
it is not yet certain how the
legislation will be applied to
transactions of the type
described by this prospectus.
However, to the extent that the
issuer trustee or entities
providing services to the issuer
trustee are subject to the Goods
and Services Tax in relation to
the trust, the issuer trustee
will have less funds available to
meet its obligations, and you may
suffer losses.
You will not receive physical o Your ownership of the notes will
notes representing your notes, be registered electronically
which can cause delays in through DTC, Euroclear and
receiving distributions and Cedelbank. The lack of physical
hamper your ability to pledge or certificates could:
resell your notes
o cause you to experience delays
in receiving payments on the
notes because the principal
paying agent will be sending
distributions on the notes to
DTC instead of directly to
you;
o limit or prevent you from
using your notes as
collateral;
o and hinder your ability to
resell the notes or reduce
the price that you receive for
them.
Capitalized Terms
The capitalized terms used in this prospectus, unless defined elsewhere in
this prospectus, have the meanings set forth in the Glossary starting on
page ____.
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$" are references
to Australian currency. Unless otherwise stated in this prospectus, any
translations of Australian dollars into U.S. dollars have been made at a rate
of US$___ = A$ 1.00, the noon buying rate in New York City for cable transfers
in Australian dollars as certified for customs purposes by the Federal Reserve
Bank of New York on _____, 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.
27
<PAGE>
The Issuer Trustee, St.George Bank and the Manager
The Issuer Trustee
The issuer trustee was incorporated on July 30, 1887 as National Trustees
Executors and Agency Company Australasia Limited under the Companies State 1864
of Victoria as a public company. After name changes in 1987 and 1999, AXA
Trustees Limited now operates as a limited liability public company under the
Corporations Law of Australia, with its registered office at Level 15, 447
Collins Street, Melbourne. AXA Trustees Limited's principal business is the
provision of fiduciary, trustee and other commercial services. In this regard,
AXA Trustees Limited is an authorized trustee corporation and holds a Securities
Dealers Licence No 16424, both under the Corporations Law of Australia.
AXA Trustees Limited has issued 31,127,695 shares as of the date of this
prospectus. There are 29,072,305 with a paid amount of A$1.00, 1,500,000 shares
with a paid amount of A$0.10 and 555,390 shares with a paid amount of A$0.50,
giving a total share capital of A$29,500,000. The issuer trustee has not agreed
to issue any additional shares. The shares are all held by National Mutual Life
Nominees Limited (ACN 004 387 133).
Directors
The directors of the issuer trustee are as follows:
Name Business Address Principal Activities
- ---- ---------------- --------------------
Gregory Mark Armour 16th Floor, 447 Collins Chief Executive, Funds
Street, Melbourne, Victoria Management
3000, Australia
Alan Cowan Level 3, 4 Bank Place, Director
Melbourne, Victoria 3000,
Australia
John Wallace Nairn 9th Floor, 447 Collins General Manager,
Street, Melbourne, Victoria Corporate Affairs
3000, Australia
Matthew John Walsh Level 28 Rialto, 525 Solicitor
Collins Street, Melbourne,
Victoria 3000, Australia
Elaine Henry OAM The Smith Family, 16 Director
Larkin Street,
Camperdown, New South
Wales, 2050
Matthew John Walsh is a partner of Mallesons Stephens Jaques, Melbourne
office.
St.George Bank
St.George Bank commenced operations as a group of building societies in
1937, and converted into a bank, becoming a public company registered in New
South Wales on July 1, 1992. Following a merger with Advance Bank Australia
Limited in January 1997, St.George Bank is the fifth largest banking group in
Australia in terms of total assets, which, at March 31, 1999, totaled A$44.7
billion with shareholders'
28
<PAGE>
equity of A$3.8 billion. St.George Bank's registered office is 4-16 Montgomery
Street, Kogarah, New South Wales.
St.George Bank's primary business is providing retail banking services,
including residential mortgage loans for owner occupied and investment housing
and retail call and term deposits. For a further description of the business
operations of St.George Bank, see "The Servicer."
The Manager
The manager is a wholly owned subsidiary of St.George Bank. Its principal
business activity is the management of securitization trusts established under
St.George Bank's Crusade Trust and Crusade Euro Trust Programmes. The manager's
registered office is Level 4, 4-16 Montgomery Street, Kogarah NSW 2217,
Australia.
Description of the Trust
St.George Bank Securitisation Trust Programme
St.George Bank established its Securitisation Trust Programme pursuant to a
Master Trust Deed for the purpose of enabling AXA Trustees Limited, as trustee
of each trust established pursuant to the Securitisation Trust Programme, to
invest in pools of assets originated or purchased from time to time by St.George
Bank. The Master Trust Deed provides for the creation of an unlimited number of
trusts. The Master Trust Deed establishes the general framework under which
trusts may be established from time to time. It does not actually establish any
trusts. The Crusade Global Trust No. I of 1999 is separate and distinct from any
other trust established under the Master Trust Deed. The assets of the Crusade
Global Trust No. I of 1999 are not available to meet the liabilities of any
other trust and the assets of any other trust are not available to meet the
liabilities of the Crusade Global Trust No. I of 1999.
Crusade Global Trust No. I of 1999
The detailed terms of the Crusade Global Trust No. I of 1999 will be as set
out in the Master Trust Deed and the Supplementary Terms Notice. To establish
the trust, the manager and the issuer trustee will execute a Notice of Creation
of Trust.
The Supplementary Terms Notice, which supplements the general framework
under the Master Trust Deed with respect to the trust, does the following:
o specifies the details of the notes;
o establishes the cashflow allocation;
o sets out the various representations and undertakings of the parties
specific to the housing loans, which supplement those in the Master
Trust Deed; and
o amends the Master Trust Deed to the extent necessary to give effect
to the specific aspects of the trust and the issue of the notes.
You should read both the Master Trust Deed and the Supplementary Terms
Notice, along with the other documents described in this prospectus, when
determining the rights, powers and obligations of the issuer trustee, the
manager, the seller and other parties in relation to the trust.
29
<PAGE>
Assets of the Trust
The assets of the trust will include the following:
o the pool of housing loans, including all:
o principal payments paid or payable on the housing loans at any
time from and after the cut-off date; and
o interest payments paid or payable on the housing loans after the
closing date;
o rights under the mortgage insurance policies issued by Housing Loan
Insurance Corporation and the individual property insurance policies
covering the mortgaged properties relating to the housing loans;
o amounts on deposit in the accounts established in connection with
the creation of the trust and the issuance of the notes, including
the collection account, and any instruments in which these amounts
are invested; and
o the issuer trustee's rights under the Transaction Documents.
Description of the Assets of the Trust
General
The primary assets of the trust will be housing loans secured by registered
first ranking mortgages on properties located in Australia. The housing loans
are from St.George Bank's general residential mortgage product pool and have
been originated by St.George Bank in the ordinary course of its businesses. Each
housing loan will be one of the types of products described in "St.George Bank
Residential Loan Program - St.George Product Types." Each housing loan may have
some or all of the features described in the "St.George Bank Residential Loan
Program - Special Features of the Housing Loans." The housing loans are either
fixed rate or variable rate loans. Each housing loan is secured by a registered
first ranking mortgage over the related mortgaged property or, if the relevant
mortgage is not a first ranking mortgage, the seller will equitably assign to
the issuer trustee all other prior ranking registered mortgages relating to that
housing loan. The mortgaged properties consist of owner-occupied properties and
one-to-four family investment properties, but do not include mobile homes which
are not permanently affixed to the ground, commercial properties or unimproved
land.
Transfer and Assignment of Housing Loans
On the closing date, the housing loans purchased by the trust will be
specified in a sale notice from St.George Bank, in its capacity as originator of
the housing loans, to the issuer trustee.
The seller will equitably assign the housing loans, the mortgages securing
those housing loans and the mortgage insurance policies and insurance policies
on the mortgaged properties relating to those housing loans to the issuer
trustee pursuant to the sale notice, after which the issuer trustee will be
entitled to receive collections on the housing loans. If a Title Perfection
Event occurs, the issuer trustee must use the irrevocable power of attorney
granted to it by St.George Bank to take the actions necessary to perfect its
legal title in the housing loans.
The seller may in some instances equitably assign a housing loan to the
issuer trustee secured by an "all moneys" mortgage, which may also secure
financial
30
<PAGE>
indebtedness that has not been sold to the trust, but is instead retained by the
seller. The issuer trustee will hold the proceeds of enforcement of the related
mortgage, to the extent they exceed the amount required to repay the housing
loan, as bare trustee in relation to that other financial indebtedness. The
mortgage will secure the housing loan equitably assigned to the trust in
priority to that other financial indebtedness. If a housing loan is secured on
the closing date by a first mortgage over one property and a second mortgage
over a second property, the seller will assign to the trust both the first and
second mortgages over that second property. The housing loan included in the
trust will then have the benefit of security from both properties ahead of any
financial indebtedness owed to St.George Bank which is secured by the second
property.
Representations and Warranties
The seller will make various representations and warranties to the issuer
trustee with respect to the housing loans being equitably assigned by it to the
issuer trustee, including that:
o the housing loans are assignable and all consents required for
the assignment have been obtained;
o each housing loan is legally valid, binding and enforceable
against the related borrower(s) in all material respects,
except to the extent that it is affected by laws relating to
creditors' rights generally or doctrines of equity;
o each housing loan is the subject of a mortgage insurance
policy;
o each housing loan was originated in the ordinary course of the
seller's business and entered into in compliance in all
material respects with the seller's underwriting and
operations procedures, as agreed upon with the manager;
o at the time each housing loan was entered into and up to and
including the closing date, it complied in all material
respects with applicable laws, including, the Consumer Credit
Legislation, if applicable;
o the performance by the seller of its obligations in respect of
each housing loan and related security, including its
variation, discharge, release, administration, servicing and
enforcement, up to and including the closing date, complied in
all material respects with applicable laws including the
Consumer Credit Legislation, if applicable;
o each housing loan is denominated and payable only in
Australian dollars in Australia;
o the loan agreement for each housing loan includes a clause to
the effect that the borrower waives all rights of set-off as
between the borrower and the seller; and
o as of the cut-off date, each housing loan satisfies the
following eligibility criteria:
o it is from the seller's general residential housing loan
product pool;
o it is secured by a mortgage which constitutes a first ranking
mortgage over residential owner-occupied or investment land
situated in capital
31
<PAGE>
city metropolitan areas or regional centres in Australia, which
mortgage is or will be registered under the Real Property
Legislation or, where a mortgage is not, or will not be when
registered, a first ranking mortgage, the Sale Notice includes an
offer for all prior ranking registered mortgages;
o it is secured by a mortgage over a property which has erected on
it a residential dwelling and which is required under the terms
of the mortgage to be covered by general insurance by an insurer
approved in accordance with the Transaction Documents;
o it has a loan-to-value ratio less than or equal to 95% for
owner occupied properties and 90% for investment properties;
o it was not purchased by the seller, but was approved and
originated by the seller in the ordinary course of its business;
o the borrower does not owe more than A$500,000 under the housing
loan;
o the borrower is required to repay such loan within 30 years of
the cut-off date;
o no payment from the borrower is in arrears for more than 30
consecutive days;
o the sale of an equitable interest in the housing loan, or the
sale of an equitable interest in any related mortgage or
guarantee, does not contravene or conflict with any law;
o 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;
o it is on fully amortizing repayment terms;
o it is secured by a mortgage that is covered by the mortgage
insurance policy for 100% of amounts outstanding under such
loan, which policy includes a timely payment cover;
o it is fully drawn;
o it complies in all material respects with applicable laws,
including, if applicable, the Consumer Credit Legislation; and
o it is subject to the terms and conditions of St.George Bank's
Great Australian Home Loan product, its Standard Variable Rate
Loan, including loans entitled to a "loyalty" rate due to a home
loan relationship with St.George Bank of 5 years or more, or
loans that bear a fixed rate of interest for up to 5 years as of
the cut-off date.
The issuer trustee has not investigated or made any inquiries regarding the
accuracy of these representations and warranties and has 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 to the contrary.
Breach of Representations and Warranties
If St.George Bank, the manager or the issuer trustee becomes actually
aware that a representation or warranty from St.George Bank relating to any
housing loan or mortgage is incorrect within 120 days after the closing date, it
must notify the other
32
<PAGE>
parties and the rating agencies within ten business days. If the breach is not
waived or remedied to the satisfaction of the issuer trustee within ten business
days then, without any action being required by either party, St.George Bank
shall be obligated to repurchase the affected housing loan and mortgage for an
amount equal to its Unpaid Balance.
Upon payment of the Unpaid Balance, the issuer trustee shall cease to
have any interest in the affected housing loan and mortgage and St.George Bank
shall hold both the legal and beneficial interest in such housing loan and
mortgage and be entitled to all interest and fees that are paid 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 which
will be limited to an amount equal to the Unpaid Balance of that housing loan at
the time St.George Bank pays the damages.
Substitution of Housing Loans
Seller Substitution
The issuer trustee must, at the manager's direction and option, at any time
replace a housing loan which has been repurchased by the seller following a
breach of representation using the funds received from the repurchase to
purchase a substitute housing loan from the seller. The seller may elect to sell
a substitute housing loan to the issuer trustee, which the issuer trustee shall
acquire if the manager directs it to do so, provided the substitute housing loan
satisfies the following requirements;
o it complies with the Eligibility Criteria;
o at the time of substitution, the substitute housing loan has a
maturity date no later than the date being 2 years prior to the
Final Maturity Date;
o the mortgage insurer has confirmed that the substitute housing loan
will be insured under the mortgage insurance policy; and
o the substitution will not adversely affect the rating of the notes.
Other Substitutions
The issuer trustee must, at the manager's direction at any time:
o replace a housing loan;
o allow a borrower to replace the property securing a housing loan; or
o allow a borrower to refinance a housing loan to purchase a new
property,
provided all of the following conditions are met:
o the same borrower continues to be the borrower under the new housing
loan;
o either the replacement mortgage or the replacement property does not
result in the related housing loan failing to comply with the
Eligibility Criteria or the refinanced housing loan satisfies the
Eligibility Criteria, as the case may be;
o any such replacement or refinancing occurs simultaneously with the
release of the previous mortgage, property or housing loan, as the
case may be; and
33
<PAGE>
o the principal outstanding under the related housing loan is, after the
replacement or refinancing, the same as before that replacement or
refinancing.
Selection Criteria
The manager will apply the following criteria, in descending order of
importance, when selecting a substitute housing loan or approving a
substitution:
o the substitute housing loan will have an Unpaid Balance within
A$30,000 of the outgoing housing loan's Unpaid Balance, as
determined at the time of substitution;
o an outgoing housing loan secured by an owner-occupied or investment
property will be replaced by another housing loan secured by an
owner-occupied or investment mortgage, as the case may be;
o the substitute housing loan will have a current loan-to-value ratio
no more than 5% greater than the outgoing housing loan's current
loan-to-value ratio, as determined at the time of substitution;
o an outgoing housing loan will be replaced by a housing loan with a
mortgage over a property located in the same state or territory;
o an outgoing housing loan will be replaced by an housing loan with a
mortgage over a property with the same or similar postcode; and
o in the case of a selection of substitute housing loan, the
substitute housing loan will have the closest possible original loan
amount to that of the outgoing housing loan.
Other Features of the Housing Loans
The housing loans have the following features.
o Interest is calculated daily and charged in arrears.
o Payments can be on a monthly, bi-weekly or weekly basis. Payments are
made by borrowers using a number of different methods, including
cash payments at branches, checks and in most cases automatic
transfer.
o They are governed by the laws of one of the following Australian
States or Territories:
o New South Wales;
o Victoria;
o Western Australia;
o Queensland;
o South Australia;
o Northern Territory;
o Tasmania; or
o the Australian Capital Territory
Details of the Housing Loan Pool
The information in the following tables set forth in tabular format various
details relating to the housing loans proposed to be sold to the trust on the
closing date. The information is provided as of the cut-off date. All amounts
have been rounded to the nearest Australian dollar.
34
<PAGE>
Note that these details may not reflect the housing loan pool as of the
closing date because between the cut-off date and the closing date, the seller
may substitute loans proposed for sale with other eligible housing loans. The
seller will find it necessary to do this because, for example, the loans
originally selected are repaid early. In no case will the aggregate outstanding
principal balance of the housing loans vary by more than plus or minus 5% from
$0.
Housing Loan Information
Seasoning Analysis
<TABLE>
<CAPTION>
Number of Balance Average
Loan Outstanding Balance % by % by
Year Sequences (AS) (AS) Number Balance
- ----- ---------- ----------- -------- ------- ---------
<S> <C> <C> <C> <C> <C>
less than 1 year .........
1-2 Years ................
2-3 Years ................
3-4 Years ................
greater than 4 Years .....
---------- ----------- -------- -------- ---------
Total ========== =========== ======== ======== =========
</TABLE>
Pool Profile by Geographic Distribution
<TABLE>
<CAPTION>
Total
Number of Valuation % by % by
Properties (AS) Number Valuation
---------- ----------- ------ ------------
<S> <C> <C> <C> <C>
Region (Metro vs. Country).......... __________ ___________ ______ ____________
Australian Capital Territory........
========== =========== ====== ============
New South Wales - Metro............ __________ ___________ ______ ____________
New South Wales - Non Metro.........
========== =========== ====== ============
Victoria - Metro.................... __________ ___________ ______ ____________
Victoria - Non Metro................
========== =========== ====== ============
Queensland - Metro.................. __________ ___________ ______ ____________
Queensland - Non Metro .............
========== =========== ====== ============
South Australia - Metro ............ __________ ___________ ______ ____________
South Australia - Non Metro.........
========== =========== ====== ============
Western Australia - Metro........... __________ ___________ ______ ____________
Western Australia - Non Metro.......
========== =========== ====== ============
__________ ___________ ______ ____________
Total...............................
========== =========== ====== ============
</TABLE>
35
<PAGE>
Pool Profile by Balance Outstanding
<TABLE>
<CAPTION>
Total Balance
Number of Valuation Outstanding Average % by % by
Current Balance (AS) Loans (AS) (AS) LVR (%) Number Balance
- ------------------- --------- --------- ---------- -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Total..............
--------- --------- ---------- -------- ------ ---------
========= ========= ========== ======== ====== =========
</TABLE>
Pool Profile by LVR
<TABLE>
<CAPTION>
Total Balance
Number of Valuation Outstanding Average % by % by
Current LVR (%) Loans (AS) (AS) LVR (%) Number Balance
- ---------------- --------- --------- ----------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total........
--------- --------- ----------- ------- ------- ----------
========= ========= =========== ======= ======= ==========
</TABLE>
Pool Profile by Year of Maturity
<TABLE>
<CAPTION>
Number of Balance Average
Loans Outstanding Balance Average % by % by
Maturity Year Sequences (AS) (AS) LVR Number Balance
- ---------------- ----------- ----------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Total ..........
--------- --------- ----------- ------- ------- ----------
========= ========= =========== ======= ======= ==========
</TABLE>
Pool Profile by Security Type
<TABLE>
<CAPTION>
Total Balance
Number of Valuation Outstanding Average % by % by
Loans (AS) (AS) LVR (%) Number Balance
--------- --------- ----------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
House ..................
Unit/Villa/T-Hse........
Total...................
--------- --------- ----------- ------- ------- ----------
========= ========= =========== ======= ======= ==========
</TABLE>
36
<PAGE>
Pool Profile by Occupancy
<TABLE>
<CAPTION>
Total Balance
Number of Valuation Outstanding Average % by % by
Loans (AS) (AS) LVR (%) Number Balance
--------- --------- ----------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Owner Occupied
Investment ...............
Total ....................
--------- --------- ----------- ------- ------- ----------
========= ========= =========== ======= ======= ==========
</TABLE>
Pool Profile by Loan Purpose
<TABLE>
<CAPTION>
Total Balance
Number of Valuation Outstanding Average % by % by
Loans (AS) (AS) LVR (%) Number Balance
--------- --------- ----------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Purchase ..............
New Construction ......
Refinance..............
Home Equity............
Home Improvement ......
Total..................
--------- --------- ----------- ------- ------- ----------
========= ========= =========== ======= ======= ==========
</TABLE>
Pool Profile by Settlement Period Distribution
<TABLE>
<CAPTION>
Total Balance
Number of Valuation Outstanding Average % by % by
Year Loans (AS) (AS) LVR (%) Number Balance
- -------- --------- --------- ----------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Prior 01/11/96 .........
After 01/11/96 .........
Total .................
--------- --------- ----------- ------- ------- ----------
========= ========= =========== ======= ======= ==========
</TABLE>
Fixed/Variable Loans
<TABLE>
<CAPTION>
Number of
Loan Balance % by % by
Type Sequences Outstanding Number Balance
- -------- --------- ----------- -------- --------
<S> <C> <C> <C> <C>
1 Year....................
2 Year....................
3 Year....................
4 Year....................
5 Year....................
Total Fixed ..............
Total Variable............
Total.....................
---------- ----------- --------- --------
========== =========== ========= ========
</TABLE>
37
<PAGE>
St.George Residential Loan Program
Origination Process
The housing loans were originated by St.George Bank from new loan
applications and refinancings of acceptable current St.George Bank housing
loans. St.George Bank sources its housing loans through its national branch
network, the national telemarketing center, St.George Direct, accredited
mortgage brokers, mobile lenders and through the internet.
Approval and Underwriting Process
Each lending officer must pass a formal training program conducted by
St.George Bank to obtain an approval authority limit. The lending officer's
performance and approval authority is constantly monitored and reviewed by
St.George Bank. This ensures that all loans are approved by a lending officer
with the proper authority level and that the quality of the underwriting process
by each individual lending officer is maintained.
Housing loans being processed through the credit system will either be
approved or declined by a lending officer or referred to a credit specialist. A
loan will generally be referred to a credit specialist where the lending
officer's delegated authority is exceeded.
All housing loan applications must satisfy St.George Bank's residential
housing loan credit policy and procedures. St.George Bank does not divide its
borrowers into groups of differing credit quality. All borrowers must satisfy
St.George's underwriting criteria and are not charged different rates of
interest based on their credit quality.
The approval process consists of determining the valuation of the
proposed security property, verifying the borrowers details and ensuring these
details satisfy St.George Bank's underwriting criteria. This process is
conducted by St.George Bank. Once it is established that the loan application
meets St.George Bank's credit standards, the loan must be approved by an
authorized bank officer.
The property to be secured is required to be appraised by a registered
panel valuer if the loan-to-value ratio of the property is above 80% and in the
following circumstances:
o newly constructed homes and other dwellings not previously occupied
o refinancings from other financial institutions;
o the purchase of vacant land with the commitment to build a house
immediately; and
o if the loan amount exceeds A$250,000 if the related mortgaged
property is located in the Sydney metropolitan area, or A$200,000 if
located elsewhere.
In non valuation cases, St.George Bank requires a copy of the stamped
contract of sale settlement which confirms the value. In addition, St.George
Bank requires valuers to be members of the Australian Property Institute. A
housing loan may be secured by more than one property, in which case the
combined value of the properties is considered. The loan-to-value ratio may not
exceed 95% for owner occupied properties or 90% for investment properties.
Verification of an applicant's information is central to the approval
process. St.George Bank verifies all income on all loan applications by
procedures such as
38
</Page>
<PAGE>
employment checks, including a review of the applicant's last three years of
employment history, and tax returns. It also conducts credit checks and
enquiries through the Credit Reference Association of Australia in accordance
with current credit criteria. A statement of the applicant's current assets and
liabilities is also obtained.
The prospective borrower must have a satisfactory credit history, stable
employment, evidence of a genuine savings pattern and a minimum 5% deposit plus
costs in genuine savings. Gifts, inheritance and money borrowed from other
sources are not genuine savings and are not considered as part of the 5% deposit
plus costs.
St.George Bank requires all borrowers to satisfy a minimum disposable
income level after all commitments, including allowances for living expenses and
the proposed housing loan, with an allowance for interest rate increases. This
is to ensure that the applicant has the capacity to repay loans from his or her
current income over time.
All borrowers in respect of housing loans are natural persons, corporations
or trusts. Housing loans to corporations and trusts may be secured, if deemed
necessary, by guarantees from directors. Guarantees may also be obtained in
other circumstances.
St.George Bank conducts a review of a sample of approved housing loans on a
monthly basis to ensure individual lending officers maintain all policy
standards. Once a verified application is accepted, St.George Bank provides each
loan applicant with a loan contract comprised of a loan offer document together
with a general terms and conditions booklet. Upon receipt of acceptance of this
offer from all borrowers under the particular loan, the loan will proceed to
execution of the mortgage documentation and certification of title. When
St.George Bank or its solicitors have received these documents, settlement will
occur. Upon settlement, the mortgage is registered and the documents stored at
St.George Bank's Head Office at Kogarah, Sydney. A condition of settlement is
that the mortgagor establish and maintain full replacement property insurance on
the related property.
St.George Bank's credit policies and approval procedures are subject to
constant review. Improvements in procedures are continuous. Credit policy may
change from time to time due to business conditions and legal or regulatory
changes.
St.George Bank's Product Types
St.George Great Australian Home Loan
The St.George Great Australian Home Loan product has a low variable
interest rate which is not linked to, and historically has been lower than,
St.George Bank's standard variable rate. Further, the interest rate of the
St.George Great Australian Home Loan could fluctuate independently of standard
variable rates.
The St.George Great Australian Home Loan product is not convertible to a
fixed rate mortgage product without the payment of a switch fee. Additionally,
no interest offset account is available under this product and loan payments may
be made monthly, bi-monthly or weekly and must be made by automatic transfer.
Lump sum payments are permitted under the St.George Great Australian Home Loan
Product at any time without penalty and there is no provision to stop automatic
transfers when payments are made in advance.
Standard Variable Rate Loan
This type of loan is St.George Bank's traditional standard variable rate
product. There is not a stated or defined explicit link to the interest rates in
the financial markets, although in general the standard variable rate does
follow movements in the
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financial markets. Standard variable rate loans are convertible to a fixed rate
mortgage product.
An additional subproduct of the standard variable rate loan is the
St.George Bank loyalty loan. Existing and previous St.George Bank home loan
customers with a St.George Bank home loan relationship of 5 years or more are
entitled to a "loyalty" rate whenever their loan is at the standard variable
rate. New St.George Bank customers and Advance Bank home loan customers are not
entitled to the "loyalty" rate. The "loyalty" discount rate is guaranteed to be
0.25 percentage points below the standard variable rate until January 1, 2006.
Fixed Rate Loan
Some of the housing loans bear a fixed rate of interest for up to 5 years
as of the cut-off date. At the expiry of that fixed rate period, unless the
interest rate is re-fixed at a rate and for a term agreed between the borrower
and St.George Bank, the loans will automatically convert to the standard
variable rate of interest.
Should the interest rate on a fixed rate loan be re-fixed at the end of its
fixed rate term, that loan will only remain in the housing loan pool if it will
not result in a downgrade or withdrawal of the rating of the notes.
Special Features of the Housing Loans
Each housing loan may have some or all of the features described in this
section. In addition, during the term of any housing loan, St.George Bank may
agree to change any of the terms of that housing loan from time to time at the
request of the borrower.
Switching Interest Rates
Most housing loans allow the relevant borrower the option to request a
change from a fixed interest rate to a variable interest rate, or vice versa.
Any of these converted loans will remain in the housing loan pool provided that
no downgrade of the notes will result. Any variable rate converting to a fixed
rate product will automatically be matched by an increase in the fixed-floating
rate swap to hedge the fixed rate exposure.
Increase Loans
A borrower who is not a St.George Great Australia Home Loan borrower may
apply to St.George Bank to borrow additional funds secured by the existing
mortgage. The proceeds from these "increase" loans may be used by the borrower
for any purpose.
Some of the loans in the housing loan pool as of the cut-off date were
originated as these increase loans. All of these increase loans will be assigned
to the trust, together with each related housing loan, and form part of the
assets of the trust.
Where a borrower seeks to obtain an increase loan with respect to a housing
loan after the cut-off date, and the aggregate of the existing housing loan and
the increase loan meets the Eligibility Criteria, the increase loan will be
approved and settled by St.George Bank. St. George Bank will provide the funding
for the increase loan which will be secured by the existing mortgage. In the
event, however, that it becomes necessary to enforce the loan or the related
mortgage, the Master Trust Deed requires that any proceeds of that enforcement
be applied in satisfaction of all amounts - actual or contingent - owing under
the housing loan included in the assets of the trust, before any amounts may be
applied in satisfaction of the increase loan.
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St.George Bank will provide all funding for that increase loan, which will
be secured by the related mortgage. Under the Master Trust Deed, the servicer
will, at the direction of the manager, in the event of enforcement of a housing
loan, distribute the proceeds to the issuer trustee of all housing loans which
are assets of the trust in priority to any increase loan advanced by St.George
Bank after the cut-off date.
Substitution of Security
A borrower may apply to the servicer to achieve the following:
o substitute a different security property in place of the existing
security property securing a housing loan;
o add a further mortgage as security for a loan; or
o release a security property from a mortgage.
If the servicer's credit criteria are satisfied and another property is
substituted for the existing security for the housing loan, the mortgage which
secures the existing housing loan may be discharged without the borrower being
required to repay the housing loan.
If all of the following conditions occur then the housing loan will remain
in the housing loan pool, secured by the new mortgage:
o a new property subject to a mortgage satisfies the Eligibility
Criteria,
o the principal outstanding under the housing loan does not
increase;
o the purchase of the new property by the borrower occurs
simultaneously with the discharge of the original mortgage; and
o the new property is acceptable to the Mortgage Insurer.
If any of the following conditions occur then the Unpaid Balance will be
repaid and the housing loan will cease to be an asset of the trust:
o the new property does not satisfy the Eligibility Criteria,
o the principal outstanding under the housing loan will change
(increase), or
o settlement does not occur simultaneously with discharge.
That payment of the Unpaid Balance will form part of the collections for
the relevant collection period.
Redraw
Each of the variable rate housing loans allows the borrower to redraw
principal repayments made in excess of scheduled principal repayments during the
period in which the relevant housing loan is charged a variable rate of
interest. Redraws must be for at least $2,000 per transaction. Borrowers may
request a redraw at any time, but its availability is always at the discretion
of St.George Bank. The borrower is required to pay a fee in connection with a
redraw. Currently, St.George Bank does not permit redraws on fixed rate housing
loans. A redraw will not result in the housing loan being removed from the
trust.
Payment Holiday
The documentation for a housing loan may allow the borrower a payment
holiday where the borrower has prepaid principal, creating a difference between
the outstanding principal balance of the loan and the scheduled amortized
principal
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balance of the housing loan. The borrower is not required to make any payments
until the outstanding principal balance of the housing loan plus unpaid interest
equals the scheduled amortized principal balance. The failure by the borrower to
make payments during a payment holiday may not necessarily lead the relevant
housing loan to be considered delinquent.
Early Repayment
A borrower will not incur break fees if an early repayment or partial
prepayment of principal occurs under a variable rate housing loan contract.
However, a borrower may incur break fees if an early repayment or partial
prepayment of principal occurs on a fixed rate housing loan. Any housing loan
approved before November 1, 1996 has a break fee of up to three months' interest
on the portion of principal prepaid on the housing loan. Any housing loan
approved before May 15, 1999 will be subject to an economic break fee equal to a
maximum of:
o 3 months interest, if the housing loan had an original fixed rate term
of 1 to 3 years;
o 4 months interest, if the housing loan had an original fixed rate
term of 4 years; or
o 5 months interest, if the housing loan had an original fixed rate
term of 5 years.
Any housing loan approved on or after May 16, 1999 will not be subject to
these limits on break fees.
Currently, the servicer's policy is not to charge break fees in respect of
a housing loan if prepayments for that housing loan are less than A$5,000 in
any 12 month period while the interest rate is fixed. Where break fees are
payable, payment is required upon receipt of the prepayment or discharge. In
some circumstances, the break fees will be capitalized.
Switching to an Investment or Owner-Occupied Housing Loan
A borrower may elect to switch the use of the security property from
owner-occupied property to investment or vice versa. The related housing loans
will remain an asset of the trust if it meets the Eligibility Criteria.
St.George Bank requires notification from the borrower of a switch and reserves
the right to change the interest rate charged with respect to the housing loan.
Capitalized Fees
A borrower may request St.George Bank to provide product features under its
housing loan contract without having to pay the usual up-front fee relating to
that product. In those cases, St.George Bank may capitalize the fee, which will
thus constitute part of the principal to be amortized over the life of the
housing loan.
Combination or "Split" Housing Loans
A borrower may elect to split its loan into separate funding portions which
may, among other things, be subject to different types of interest rates. Each
part of the housing loan is effectively a separate loan contract, even though
all the separate loans are all secured by the same mortgage.
If a housing loan is split, each separate loan will remain in the trust as
long as each individual loan matures before the Final Maturity Date. If any loan
matures
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after the final maturity date, that loan will be removed from the trust and the
Unpaid Balance of the loan will be repaid by St.George Bank. The other segments
of the "split" loan which mature before the final maturity date will remain in
the trust.
Loan Offset
St.George Bank offers borrowers an interest offset product under which the
interest rate accrued on the borrower's deposit account is offset against
interest on the borrower's housing loan on a monthly basis. St.George Bank does
not actually pay interest to the borrower on the loan offset account, but
reduces the amount of interest which is payable by the borrower under its
housing loan. The borrower continues to make its scheduled mortgage payment with
the result that the portion allocated to principal is increased by the amount of
interest offset. St.George Bank will pay to the trust the aggregate of all
interest amounts offset on a monthly basis. These amounts will constitute
Finance Charge Collections for the relevant period. The loan offset account must
be in the same name as the housing loan.
If, following a Title Perfection Event, the trust obtains legal title to a
housing loan, St.George Bank will no longer be able to offer an interest offset
arrangement for that housing loan.
Under the housing loan documentation, borrowers have waived the right to
set off against all deposits held with St.George Bank.
Additional Features
St.George Bank may from time to time offer additional features in relation
to a housing loan which are not described in the preceeding section. However,
before doing so, St.George Bank must satisfy the manager that the additional
features would not affect any mortgage insurance policy covering the housing
loan and would not cause a downgrade or withdrawal of the rating of any notes.
The Mortgage Insurance Policies
General
Each housing loan is insured under a mortgage insurance policy by Housing
Loans Insurance Corporation Pty Limited (ACN 071 466 334) of 259 George Street,
Sydney, NSW 2000, Australia. The seller will equitably assign its interest in
each mortgage insurance policy to the issuer trustee on the closing date. The
consent of the mortgage insurer is required for the equitable assignment of the
mortgages and the mortgage insurance policies to the issuer trustee and for the
servicer to service the housing loans. The seller will ensure that this consent
is obtained on or prior to the closing date. This section is a summary of the
general provisions of the policies.
Coverage
The amount covered by each mortgage insurance policy will be the amount
owed with respect to the related housing loan, including unpaid principal,
accrued interest at any non-default rate up to specified dates, fines, fees,
charges and proper enforcement costs, less all amounts recovered from
enforcement of the mortgage on the related property, including sale proceeds,
compensation for compulsory acquisition of the related property and any rents or
profits received by the issuer trustee.
Timely Payment Cover
Each mortgage insurance policy also includes a timely payment cover for
losses resulting from the failure of a borrower to pay all or part of a regular
installment payment when due. The loss covered by a timely payment cover is the
amount by
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which the actual payment, if any, received by the issuer trustee is less than
the amount of the regular payment, calculated at the non-default interest rate
for the housing loan. A timely payment cover will cover up to 24 monthly
payments on a housing loan.
Requirement and Restrictions
There are a number of requirements and restrictions imposed on the insured
under each mortgage insurance policy which may entitle the mortgage insurer to
cancel the mortgage insurance policy or reduce the amount of a claim with
respect to a housing loan, including:
o the failure to pay any premium when due or within the relevant grace
period;
o the failure to file a claim on time;
o the failure of the servicer to be approved by the mortgage insurer;
o the failure of the related mortgaged property to be insured under a
general insurance policy;
o a material omission or misstatement by the insured in relation to the
policy;
o the existence of an encumbrance or other interest which affects or
has priority over the related mortgage;
o the related mortgage or any guarantee or indemnity relating to the
mortgage, ceasing to be effective;
o the issuer trustee fails to comply with its reporting obligations;
o the housing loan or related mortgage is modified without the mortgage
insurer's consent; and
o the occurrence of other circumstances which affect the insured's
rights or recoveries under the relevant housing loan or related
mortgage.
The manager will perform the issuer trustee's obligations under the
mortgage insurance policies on its behalf
Description of the Mortgage Insurer
The mortgage insurer is owned by GE Capital Australia, which is a wholly
owned subsidiary of GE Capital Services Inc. GE Capital Services is a
diversified industrial and financial services company with operations in over
100 countries. GE Capital Services is rated AAA by Fitch IBCA, Aaa by Moody's
and AAA by Standard & Poor's. It has significant lender's mortgage insurance
business around the world, operating in the United States, United Kingdom,
Canada and Australia and has over US$200 billion of loans insured globally. The
mortgage insurer has been given a AAA claims paying rating in its own right by
Fitch IBCA, a Aal rating by Moody's and a AAA rating by Standard & Poor's.
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Description of the Class A Notes
General
The issuer trustee will issue the Class A notes on the closing date
pursuant to a direction from the manager to the issuer trustee to issue the
notes and the terms of the Master Trust Deed, the Supplementary Terms Notice and
the Note Trust Deed. The notes will be governed by the laws of New South Wales.
The following summary describes the material terms of the Class A notes. The
summary does not purport to be complete and is subject to the terms and
conditions of the Class A notes, which are attached as appendices to this
prospectus.
Form of the Class A Notes
Book-Entry Registration
The Class A notes will be issued only in permanent book-entry format in
minimum denominations of US$100,000. Unless definitive notes are issued, all
references to actions by the Class A noteholders will refer to actions taken by
DTC upon instructions from its participating organizations and all references in
this prospectus to distributions, notices, reports and statements to Class A
noteholders will refer to distributions, notices, reports and statements to DTC
or its nominee, as the registered noteholder, for distribution to owners of the
Class A notes in accordance with DTCs procedures.
Class A noteholders may hold their interests in the notes through DTC, in
the United States, or Cedelbank or the Euroclear System, in Europe, if they are
participants in those systems, or indirectly through organizations that are
participants in those systems. Cede & Co., as nominee for DTC, will hold the
Class A notes. Cedelbank and Euroclear will hold omnibus positions on behalf of
their respective participants, through customers' securities accounts in Cedel's
and Euroclear's names on the books of their respective depositaries. The
depositaries in turn will hold the positions in customers' securities accounts
in the depositaries' names on the books of DTC.
DTC has advised the manager and the underwriters that it is:
o a limited-purpose trust company organized under the New York Banking
Law;
o a "banking organization" within the meaning of the New York Banking
Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered under the provisions of Section 17A of
the Exchange Act.
DTC holds securities for its participants and facilitates the clearance and
settlement among its participants of securities transactions, including
transfers and pledges, in deposited securities through electronic book-entry
changes in its participants' accounts. This eliminates the need for physical
movement of securities. DTC participants include securities brokers and dealers,
banks, trust companies, clearing corporations and other organizations. Indirect
access to the DTC system is
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also available to others including securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Transfers between participants on the DTC system will occur in accordance
with DTC rules. Transfers between participants on the Cedelbank system and
participants on the Euroclear system will occur in accordance with their 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 by DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by that system's depositary. However, these cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in that 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 its
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 their system's depositary.
Because of time-zone differences, credits of securities in Cedelbank or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date. The credits for any transactions in these
securities settled during this processing will be reported to the relevant
Cedelbank participant or Euroclear participant on that business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank participant or a Euroclear participant to a DTC participant
will be received and available on the DTC settlement date. However, it will not
be available in the relevant Cedelbank or Euroclear cash account until the
business day following settlement in DTC.
Purchases of Class A notes held through the DTC system must be made by or
through DTC participants, which will receive a credit for the Class A notes on
DTC's records. The ownership interest of each actual Class A noteholder is in
turn to be recorded on the DTC participants' and indirect participants' records.
Class A noteholders will not receive written confirmation from DTC of their
purchase. However, noteholders are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the DTC participant or indirect participant through which the
noteholder entered into the transaction. Transfers of ownership interests in the
Class A notes are to be accomplished by entries made on the books of DTC
participants acting on behalf of the Class A noteholders. Class A noteholders
will not receive notes representing their ownership interest in offered notes
unless use of the book-entry system for the Class A notes is discontinued.
To facilitate subsequent transfers, all securities deposited by DTC
participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of securities with DTC and their registration in the name of Cede &
Co. effects no change in beneficial ownership. DTC has no knowledge of the
actual noteholders of
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the Class A notes; DTC's records reflect only the identity of the DTC
participants to whose accounts the Class A notes are credited, which may or may
not be the actual beneficial owners of the Class A notes. The DTC participants
will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to DTC participants,
by DTC participants to indirect participants, and by DTC participants and
indirect participants to Class A noteholders will be governed by arrangements
among them and by any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. will consent or vote on behalf of the notes.
Under its usual procedures, DTC mails an omnibus proxy to the issuer trustee as
soon as possible after the record date, which assigns Cede & Co.'s consenting or
voting rights to those DTC participants to whose accounts the Class A notes are
credited on the record date, identified in a listing attached to the proxy
Principal and interest payments on the Class A notes will be made to DTC.
DTC's practice is to credit its participants' accounts on the applicable
distribution date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
that distribution date. Standing instructions, customary practices, and any
statutory or regulatory requirements as may be in effect from time to time will
govern payments by DTC participants to Class A noteholders. These payments will
be the responsibility of the DTC participant and not of DTC, the issuer trustee,
the note trustee or the principal paying agent. Payment of principal and
interest to DTC is the responsibility of the trustee, disbursement of the
payments to DTC participants is the responsibility of DTC, and disbursement of
the payments to Class A noteholders is the responsibility of DTC participants
and indirect participants.
DTC may discontinue providing its services as securities depository for the
notes at any time by giving reasonable notice to the principal paying agent.
Under these circumstances, if a successor securities depository is not obtained,
definitive notes are required to be printed and delivered.
DTC management is aware that some computer applications, systems, and the
like for processing data that are dependent upon calendar dates, including dates
before, on, and after January 1, 2000, may encounter Year 2000 problems. DTC has
informed its participants and other members of the financial community that it
has developed and is implementing a program so that its systems continue to
function appropriately, as the same relate to the timely payment of
distributions to securityholders, book-entry deliveries, and settlement of
trades within DTC. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which it expects to complete within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including issuers and their agents, DTC's direct and
indirect participants, third party vendors from whom DTC licenses software and
hardware, and third party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers. DTC has informed the manager that it is contacting, and
will continue to contact, third party vendors from whom DTC acquires services
to impress upon them the importance of these services being Year 2000 compliant
and determine the extent of their efforts for
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Year 2000 remediation and testing of their services. In addition, DTC is in the
process of developing contingency plans as it deems appropriate.
According to DTC, the foregoing information about DTC has been provided for
informational purposes only and is not intended to serve as a representation,
warranty, or contract modification of any kind.
Cedelbank is incorporated under the laws of Luxembourg as a professional
depository. Cedelbank holds securities for its participating organizations 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
notes. Transactions may be settled in Cedelbank in any of 32 currencies,
including U.S. dollars.
Cedelbank participants are financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
and clearing corporations. Indirect access to Cedelbank is also available to
others, including banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Cedelbank participant, either
directly or indirectly.
The Euroclear System was created in 1968 to hold securities for its
participants and to clear and settle transactions between Euroclear participants
through simultaneous electronic book-entry delivery against payment. This
eliminates the need for physical movement of notes. Transactions may be settled
in any of 32 currencies, including U.S. dollars.
The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office, the Euroclear operator, under contract with
Euroclear Clearance System, Societe Cooperative, a Belgium cooperative
corporation, the Euroclear 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
Euroclear cooperative. The board of the Euroclear cooperative establishes policy
for the Euroclear System.
Euroclear participants include banks, including central banks, securities
brokers and dealers and other professional financial intermediaries. Indirect
access to the Euroclear System is also available to other firms that maintain a
custodial relationship with a Euroclear participant, either directly or
indirectly.
Securities clearance accounts and cash accounts with the Euroclear operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System. These terms and conditions
govern transfers of securities and cash within the Euroclear System, withdrawal
of securities and cash from the Euroclear System, and receipts of payments for
securities in the Euroclear System. All securities in the Euroclear System are
held on a fungible basis without attribution of specific notes to specific
securities clearance accounts. The Euroclear operator acts under these 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 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 its depositary. These distributions must be reported for
tax purposes in accordance with United States tax laws and regulations.
Cedelbank or the Euroclear operator, as
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the case may be, will take any other action permitted to be taken by a Class A
noteholder on behalf of a Cedelbank participant or Euroclear participant only in
accordance with its rules and procedures, and depending on its depositary's
ability to effect these actions on its behalf through DTC.
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 these procedures and these procedures may be discontinued at
any time.
Definitive Notes
Notes issued in definitive form are referred to in this prospectus as
"definitive notes." A class of notes will be issued as definitive notes, rather
than in book entry form to DTC or its nominees, only if one of the following
events occurs:
o the principal paying agent advises the manager in writing that DTC
is no longer willing or able to discharge properly its
responsibilities as depository for the class of notes, and the
manager is not able to locate a qualified successor;
o the issuer trustee, at the direction of the manager, advises the
principal paying agent in writing that it elects to terminate the
book-entry system through DTC; or
o after the occurrence of an event of default, the note trustee, at
the written direction of noteholders holding a majority of the
outstanding principal balance of a class of notes, advises the
issuer trustee and the principal paying agent, that the continuation
of a book-entry system is no longer in the best interest of the
noteholders of that class.
If any of these events occur, DTC is required to notify all of its
participants of the availability of definitive notes. The Class A notes will be
serially numbered if issued in definitive form.
Definitive notes will be transferable and exchangeable at the offices of
the transfer agent and registrar, which is initially the principal paying agent.
The transfer agent and registrar will not impose a service charge for any
registration of transfer or exchange, but may require payment of an amount
sufficient to cover any tax or other governmental charge. The transfer agent and
registrar will not be required to register the transfer or exchange of
definitive notes within the thirty days preceding a quarterly distribution date
for the definitive notes.
Distributions on the Notes
Collections in respect of interest and principal will be received during
each monthly collection period. Collections include the following:
o interest and principal receipts from the housing loans;
o proceeds from enforcement of the housing loans;
o proceeds from claims under the mortgage insurance policies; and
o payments by the seller, the servicer or the custodian relating to
breaches of their representations or undertakings.
The issuer trustee will make some payments on a monthly basis on each
monthly payment date, which will primarily be to the providers of support
facilities to the
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trust. The issuer trustee will make the majority of its payments on a quarterly
basis on each quarterly payment date, including payments to noteholders. On each
quarterly payment date, the principal paying agent will distribute principal and
interest, if any, to the registered Class A noteholders as of the related
quarterly determination date if the Class A notes are held in book-entry form,
or, if the Class A notes are held in definitive form, the last day of the prior
calendar month.
Key Dates and Periods
The following are the relevant dates and periods for the allocation of
cashflows and their payments.
<TABLE>
<S> <C>
Monthly Collection Period ............... in relation to a monthly payment date, means
the calendar month which precedes the
calendar month in which the monthly payment
date occurs. However, the first and last monthly
collection periods are as follows:
o first: period from and including the
cut-off date to and including ______, 1999
o last: period from but excluding the last
day of the calendar month preceding the
termination date to and including the
termination date
Monthly Determination Date .............. The date which is 2 business days before a
monthly payment date
Monthly Payment Date .................... 15th day of each of January, March, April,
June, July, September, October and December,
or, if 15th day is not a business day, then the
next business day, beginning in _________, 1999
Quarterly Collection Period ............. in relation to a quarterly payment date, means
the three monthly collection periods that
precede the calendar month in which the
quarterly payment date falls. However, the first
and last quarterly collection periods are as
follows:
o first: period from and including the cut-
off date to and including ________, 1999.
o last: period from but excluding the last
day of the prior quarterly collection
period to and including the termination
date.
Quarterly Determination Date ............ The date which is 2 business days before a
quarterly payment date
Quarterly Payment Date .................. 15th day of each of November, February, May
and August, or, if 15th day is not a business
day, then the next business day, beginning in
November, 1999
</TABLE>
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Example Calendar
The following example calendar for a quarter assumes that all relevant
days are business days:
<TABLE>
<S> <C>
Monthly Collection Period ................. August 1st to August 31st
Monthly Determination Date ................ September 13th
Monthly Payment Date ...................... September 15th
Monthly Collection Period.................. September 1st to September 30th
Monthly Determination Date ................ October 13th
Monthly Payment Date ...................... October 15th
Monthly Collection Period ................. October 1st to October 31st
Quarterly Collection Period ............... August 1st to October 31st
Quarterly Determination Date .............. November 13th
Quarterly Payment Date .................... November 15th
Interest Period ........................... August 15th to November 14th
</TABLE>
Calculation of Total Available Funds
On each determination date, the manager will calculate the Available
Income, Principal Draws and Liquidity Draws for the immediately preceding
collection period. The sum of those amounts is the Total Available Funds.
Available Income
Available Income for a monthly collection period means the aggregate of:
o the Finance Charge Collections for that collection period, which
are:
o the aggregate of all amounts received by or on behalf of the
issuer trustee during that collection period in respect of
interest, fees and other amounts in the nature of income
payable under or in respect of the housing loans and related
security and other rights with respect to the housing loans,
including:
o amounts on account of interest recovered from the enforcement
of a housing loan;
o any payments by the seller to the issuer trustee on the
repurchase of a housing loan during that collection period
which are attributable to interest;
o any break fees paid by borrowers under fixed rate housing loans
received during that collection period; and
o any amount paid to the issuer trustee by the seller equal to
the reduction in interest payable by a borrower in respect of
their housing loan where that reduction is attributable to
amounts standing to the credit of the borrower's loan offset
account;
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o all other 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:
o from the seller, the servicer, the manager, the issuer
trustee in its personal capacity, in respect of a breach in
relation to which it is not entitled to be indemnified out
of the assets of the trust, or the custodian, in respect of
any breach of a representation, warranty or undertaking
contained in the Transaction Documents; and
o from the seller, the servicer, the indemnifier, the manager
or the custodian, under any obligation under the
Transaction Documents, to indemnify or reimburse the issuer
trustee for any amount or from the issuer trustee in its
personal capacity under any obligation under the
Transaction Documents to indemnify the trust,
in each case which the manager determines to be in respect of
interest, fees and other amounts in the nature of income payable
under the housing loans and related security and other rights with
respect thereto; and
o recoveries in the nature of income received, after a Finance
Charge Loss or Principal Loss has arisen, by or on behalf of the
issuer trustee during that collection period;
less:
o governmental charges collected by or on behalf of the issuer trustee for
that collection period; and
o the aggregate of all bank fees and charges due to the servicer or the
seller from time to time as agreed by them and consented to by the issuer
trustee, that consent not be unreasonably withheld, and collected by the
seller or the servicer during that collection period; plus
o to the extent not included in Finance Charge Collections:
o any amount received by or on behalf of the issuer trustee in
relation to that collection period on or by the payment date
immediately following the end of that collection period with
respect to net receipts under the basis swap or the fixed-floating
rate swap;
o any interest income received by or on behalf of the issuer trustee
during that collection period in respect of funds credited to the
collection account;
o amounts in the nature of interest otherwise paid by the seller,
the servicer or the manager to the issuer trustee in respect of
collections held by it;
o all other amounts received by or on behalf of the issuer trustee
in respect of the assets of the trust in the nature of income; and
o all amounts received by or on behalf of the issuer trustee in the
nature of interest during that collection period from any provider
of a support facility, other than the redraw facility, under a
support facility, including any amounts received under a mortgage
insurance policy by way of a timely payment cover, and which the
manager determines should be accounted for in respect of a Finance
Charge Loss;
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o but excluding any interest credited to a collateral account of a
support facility.
Principal Draws
If the manager determines on any determination date that the Available
Income of the trust for the collection period ending immediately prior to that
determination date is insufficient to meet Total Payments of the trust for that
collection period, then the manager will direct the issuer trustee to apply
Principal Collections collected during that collection period to the Payment
Shortfall to the extent available.
Principal Draws will be reimbursed out of any Excess Available Income
available for this purpose on subsequent payment dates.
Liquidity Draws
If the manager determines on any determination date that the related
Payment Shortfall, if any, will not be covered fully by a Principal Draw, the
manager must direct the issuer trustee to draw on the liquidity account in an
amount equal to the lesser of the amount of the shortfall or the amount
remaining in the liquidity account.
Distribution of Total Available Funds
In relation to a collection period, all amounts payable by the issuer
trustee as described in one of the next two subsections, as applicable, on the
payment date relating to that collection period, constitute Total Payments.
Monthly Total Payments
On each monthly payment date, but not a quarterly payment date, based on
the calculations, instructions and directions provided to it by the manager, the
issuer trustee must pay or cause to be paid out of Total Available Funds, in
relation to the monthly collection period ending immediately before that monthly
payment date, the following amounts in the following order of priority:
o first, an amount equal to the Accrued Interest Adjustment to the
seller;
o second, repayment to the standby guarantor of any Recovered
Amount;
o third, repayment to the mortgage insurer, of any payment in the
nature of income received from a borrower for which the mortgage
insurer previously paid under the related mortgage insurance
policy by way of a timely payment cover;
o fourth, any interest payable by the issuer trustee under the
redraw facility; and
o fifth, any repayment of a Liquidity Draw made on or prior to the
previous monthly payment date.
Quarterly Total Payments
On each quarterly payment date, based on the calculations, instructions
and directions provided to it by the manager, the issuer trustee must pay or
cause to be paid out of Total Available Funds, in relation to the quarterly
collection period ending immediately before that quarterly payment date, the
following amounts in the following order of priority:
o first, an amount equal to the Accrued Interest Adjustment to the
seller;
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o second, repayment to the standby guarantor of any Recovered Amount
allocable, as determined by the manager, to income;
o third, repayment to the mortgage insurer, of any payment in the
nature of income received from a borrower for which the mortgage
insurer previously paid under the related mortgage insurance
policy by way of a timely payment cover;
o fourth, payment to the fixed-floating rate swap provider under the
fixed-floating rate swap of any break fees received from a
borrower or the mortgage insurer during the quarterly collection
period;
o fifth, unless specified later in this paragraph, Trust Expenses
which have been incurred prior to that quarterly payment date and
which have not previously been paid or reimbursed, in the order
set out in the definition of Trust Expenses;
o sixth, pro rata between themselves:
o any fees payable by the issuer trustee under the redraw
facility;
o any fees payable by the issuer trustee under the basis
swap; and
o any fees payable by the issuer trustee under the
fixed-floating rate swap;
o seventh, any amounts that would have been payable under this
paragraph, other than under the tenth clause of this section, on
any previous quarterly payment date, if there had been sufficient
Total Available Funds, which have not been paid by the issuer
trustee, in the order they would have been paid under that prior
application of funds as described in this section;
o eighth, pro rata between themselves;
o any interest payable by the issuer trustee under the redraw
facility;
o any amounts payable by the issuer trustee under the basis
swap or the fixed-floating rate swap not included in the
preceding clauses;
o any repayment of a Liquidity Draw made on or prior to the
previous payment date;
o the payment to the currency swap provider of the A$
Class A-1 Interest Amount at that date, which is thereafter
to be applied to payments of interest on the Class A-1
notes; and
o the payment to the currency swap provider of the A$
Class A-2 Interest Amount at that date, which is thereafter
to be applied to payments of interest on the Class A-2
notes;
o ninth, any amounts that would have been payable under the next
clause, on any previous quarterly payment date, if there had been
sufficient Total Available Funds, which have not been paid by the
issuer trustee; and
o tenth, the payment to the currency swap provider of the A$ Class B
Interest Amount at that date, which is thereafter to be applied to
payments of interest on the Class B notes.
The issuer trustee shall only make a payment described in any of the
preceeding clauses to the extent that any Total Available Funds remain from
which to make the payment after amounts with priority to that payment have been
distributed.
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Trust Expenses
Trust Expenses are, in relation to a collection period, in the following
order of priority:
o first, taxes payable in relation to the trust for that collection
period;
o second, any expenses relating to the trust for that collection
period which are not already covered in the following seven
clauses;
o third, pro rata, the issuer trustee's fee, the security trustee's
fee and the note trustee's fee for that collection period;
o fourth, the servicer's fee for that collection period;
o fifth, the manager's fee for that collection period;
o sixth, the custodian's fee for that collection period;
o seventh, pro rata, any fee or expenses payable to the principal
paying agent, any other paying agent or the calculation agent
under the Agency Agreement;
o eighth, any costs, charges or expenses, other than fees, incurred
by, and any liabilities owing under any indemnity granted to, the
underwriters, the manager, the security trustee, the servicer, the
note trustee, a paying agent or the calculation agent in relation
to the trust under the Transaction Documents, for that collection
period; and
o ninth, any amounts payable by the issuer trustee to the currency
swap provider upon the termination of the currency swap.
Interest on the Notes
Calculation of Interest Payable on the Notes
Up to, but excluding, the quarterly payment date falling in _______, the
interest rate for the Class A-1 notes for a particular Interest Period will be
equal to LIBOR on the quarterly determination date immediately prior to the
start of that Interest Period plus __%. If the issuer trustee has not redeemed
all of the Class A-1 notes by the quarterly payment date falling in ______, the
interest rate will be equal to LIBOR on the related quarterly determination date
plus __%. The interest rate on the Class A notes for the first Interest Period
will be determined on ______, 1999.
Up to, but excluding, the quarterly payment date falling in ______, the
interest rate for the Class A-2 notes for a particular Interest Period will be
equal to LIBOR on the quarterly determination date immediately prior to the
start of that Interest Period plus __%. If the issuer trustee has not redeemed
all of the Class A-2 notes by the quarterly payment date falling in ______, the
interest rate will be equal to LIBOR on the related quarterly determination date
plus __%. The interest rate on the Class A notes for the first Interest Period
will be determined on ______, 1999.
Up to, but excluding, the quarterly payment date falling in ______, the
interest rate for the Class B notes for a particular Interest Period will be
equal to the Three Month Bank Bill Rate on the quarterly determination date
immediately prior to the start of that Interest Period plus __%. If the issuer
trustee has not redeemed all of the Class B notes by the quarterly payment date
falling in ______, the interest rate will be equal to the Three Month Bank Bill
Rate on the related quarterly determination date plus __%.
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The interest rate on the Class B notes for the first Interest Period will be
determined on ______, 1999.
With respect to any payment date, interest on the notes will be
calculated as the product of:
o the outstanding principal balance 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;
o the interest rate for such class of notes for that Interest
Period; and
o a fraction, the numerator of which is the actual number of days in
that Interest Period and the denominator of which is 360 days for
the Class A notes, or 365 days for the Class B notes.
A note will stop earning interest on any date on which the Stated Amount
of the note is zero or, if the Stated Amount of the note is not zero on the due
date for redemption of the note, then that date, unless payment of principal is
improperly withheld or refused following which the note will continue to earn
interest until the later of the date on which the note trustee or principal
paying agent receives the moneys in respect of the notes and notifies the
holders of that receipt or the Stated Amount of the note has been reduced to
zero. The Stated Amount of a note on a quarterly payment date is equal to:
o the initial outstanding principal balance of the note; less
o the aggregate of all principal payments previously made on the
note; less
o Carryover Charge Offs on the note; less
o principal to be paid on the note on the next payment date; less
o Charge Offs to be applied against the note on the next payment
date; plus
o any Excess Available Income to be applied to reinstating Carryover
Charge Offs on the note.
A note will begin earning interest again from and including any date that
its Stated Amount becomes greater than zero.
Calculation of LIBOR
On the second London banking day before the beginning of each Interest
Period, the calculation agent will determine LIBOR for the next Interest Period
as the applicable Floating Rate Option under the Definitions of the
International Swaps and Derivatives Association, Inc.
Excess Available Income
General
On each quarterly determination date, the manager must determine the
amount, if any, by which the Total Available Funds for the quarterly collection
period ending immediately prior to that quarterly determination date exceeds the
Total Payments for that same quarterly collection period.
Distribution of Excess Available Income
On each quarterly determination date, the manager must apply any Excess
Available Income for the quarterly collection period relating to that quarterly
determination date in the following order of priority:
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o first, to reimburse all Principal Charge Offs for that quarterly
collection period;
o second, pro rata between themselves;
o to pay the currency swap provider the A$ Equivalent of any
Carryover Class A Charge Offs; and
o to repay the redraw facility, as a reduction of, and to the
extent of, any Carryover Redraw Charge Offs;
o third, to repay all Principal Draws which have not been repaid as
of that quarterly payment date;
o fourth, as a payment to the Class B noteholders in or towards
reinstating the Stated Amount of the Class B notes to the extent
of any Carryover Class B Charge Offs;
o fifth, to pay the standby guarantor for any amounts due under the
Standby Bank Guarantee that it has paid to the issuer trustee
under the Standby Bank Guarantee which have not been repaid as of
that quarterly payment date; and
o sixth, at the direction of the manager, to pay the residual
beneficiary any remaining Excess Available Income.
The issuer trustee shall only make a payment described in the preceeding
clauses if the manager directs it in writing to do so and only to the extent
that any Excess Available Income remains from which to make the payment after
amounts with priority to that payment have been distributed.
Any amount applied pursuant to the first four clauses above will be
treated as Principal Collections.
Once distributed to the residual beneficiary, any Excess Available Income
will not be available to the issuer trustee to meet its obligations in respect
of the trust in subsequent periods unless there has been a manifest error in the
relevant calculation of the amount distributed to the residual beneficiary. The
Issuer trustee will not be entitled or required to accumulate any surplus funds
as security for any future payments on the notes.
Gross Principal Collections
On each determination date, the manager must determine Gross Principal
Collections for the collection period ending immediately prior to that
determination date. Gross Principal Collections are the sum of:
o all amounts received by or on behalf of the issuer trustee from or
on behalf of borrowers under the housing loans in accordance with
the terms of the housing loans during that collection period in
respect of principal, including principal prepayments;
o all other amounts received by or on behalf of the issuer trustee
under or in respect of principal under the housing loans and
related security and other rights with respect thereto during that
collection period including:
o amounts on account of principal recovered from the
enforcement of a housing loan, other than under a mortgage
insurance policy; and
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o any payments by the seller to the issuer trustee on the
repurchase of a housing loan under the Master Trust Deed during
that collection period which are attributable to principal;
o all amounts received by or on behalf of the issuer trustee during
that collection period from any provider of a support facility,
other than the currency swap, under the related support facility and
which the manager determines should be accounted for in respect of a
Principal Loss;
o all amounts received by or on behalf of the issuer trustee during
that collection period:
o from the seller, the servicer, the manager, AXA Trustees
Limited, in its personal capacity, or the custodian in respect
of any breach of a representation, warranty or undertaking
contained in the Transaction Documents, and in the case of AXA
Trustees Limited and the manager, in respect of a breach of
which it is not entitled to be indemnified out of the assets of
the trust; and
o from the seller, the servicer, the indemnifier, the manager or
the custodian under any obligation under the Transaction
Documents to indemnify or reimburse the issuer trustee for any
amount or from AXA Trustees Limited, in its personal capacity,
under any obligation under the Transaction Documents to
indemnify the trust,
in each case, which the manager determines to be in respect of
principal payable under the housing loans and related mortgages;
o 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 assets of the trust, including the A$ Equivalent of any
amount received by the issuer trustee on the issue of the notes
which was not used to purchase a housing loan, and which the manager
determines is surplus to the requirements of the trust;
o any amount of Excess Available Income to be applied to pay a
Principal Charge Off or a Carryover Charge Off; and
o any amount of Excess Available Income to be applied to repay
Principal Draws made on a previous payment date.
On the closing date, the aggregate of the A$ Equivalent of the total
initial outstanding principal amount of the Class A notes and the total
initial outstanding principal 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.
Principal Collections for a collection period means:
o the Gross Principal Collections for that collection period; less
o any amounts deducted by or paid to the seller in that collection
period to reimburse redraws funded by the seller for which the
seller has not previously been reimbursed; less
o any amounts paid by the issuer trustee to replace a housing loan.
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Principal Distributions
Monthly
On any monthly payment date in accordance with the calculations,
instructions and directions provided to it by the manager, the issuer trustee
must distribute or cause to be distributed out of Principal Collections, in
relation to the monthly collection period ending immediately before that
monthly payment date, the following amounts in the following order of
priority:
o first, repayment to the standby guarantor of any Recovered Amount
allocable, as determined by the manager, to principal;
o second, repayment to the mortgage insurer of any payment in the
nature of principal received from a borrower for which the mortgage
insurer previously paid under the relevant mortgage insurance policy
by way of a timely payment cover;
o third, to allocate to Total Available Funds any Principal Draw;
o fourth, to retain in the collection account as a provision such
amount as the manager determines is appropriate to make for any
anticipated shortfalls in Total Payments on the following monthly
payment date or quarterly payment date; and
o fifth, subject to the limits described under "Description of the
Transaction Documents - The Redraw Facility", to repay all Redraw
Principal Outstanding under the redraw facility on the payment date.
Quarterly
On each quarterly payment date, and based on the calculations,
instructions and directions provided to it by the manager, the issuer trustee
must distribute or cause to be distributed out of Principal Collections, in
relation to the quarterly collection period ending immediately before that
quarterly payment date, the following amounts in the following order of
priority:
o first, repayment to the standby guarantor of any Recovered Amount
allocable, as determined by the manager, to principal;
o second, repayment to the mortgage insurer of any payment in the
nature of principal received from a borrower for which the mortgage
insurer previously paid under the relevant mortgage insurance policy
by way of a timely payment cover;
o third, to allocate to Total Available Funds any Principal Draws;
o fourth, to retain in the collection account as a provision such
amount as the manager determines is appropriate to make for any
anticipated shortfalls in Total Payments on the following monthly
payment date or quarterly payment date;
o fifth, subject to the limits described under "Description of the
Transaction Documents - The Redraw Facility", to repay any redraws
provided by the seller in relation to housing loans to the extent
that it has not previously been reimbursed in relation to those
redraws;
o sixth, to repay all Redraw Principal Outstanding under the redraw
facility on that payment date;
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o seventh, to retain in the collection account as a provision to
reimburse further redraws an amount equal to the Redraw Retention
Amount for the next quarterly collection period;
o eighth, pro rata as between themselves:
o as a payment to the currency swap provider under the
confirmation relating to the Class A-1 notes, an amount equal
to the lesser of;
o the remaining amount available for distribution; and
o the A$ Equivalent of outstanding principal balance of all
Class A-1 notes, which is thereafter to be applied to
payments of principal on the Class A-1 notes; and
o as a payment, to the currency swap provider under the
confirmation relating to the Class A-2 notes, of an amount
equal to the lesser of;
o the remaining amount available for distribution; and
o the A$ Equivalent of outstanding principal balance of all
Class A-2 notes, which is thereafter to be applied to
payments of principal on the Class A-2 notes; and
o ninth, as a payment to the Class B noteholders, of an amount equal
to the lesser of
o the remaining amount available for distribution; and
o the A$ Equivalent of the outstanding principal balance of
all Class B notes,
which is thereafter to be applied as payments of principal
on the Class B notes.
o tenth, on the business day immediately following the date on which
all Secured Moneys are fully and finally repaid, and only after
payment of all amounts referred to in the preceeding clauses, the
issuer trustee must pay remaining Principal Collections to the
seller in reduction of the principal outstanding under the loan from
the seller to the issuer trustee, for the purchase of the housing
loans, as a full and final settlement of the obligations of the
issuer trustee under the loan from the seller to the issuer trustee,
for the purchase of the housing loans.
The issuer trustee shall only make a payment under any of the first nine
paragraphs above if the manager directs it in writing to do so and only to the
extent that any Principal Collections remain from which to make the payment
after amounts with priority to that payment have been distributed.
Redraws
The seller, after receiving confirmation that it may do so from the
manager, may make redraws to borrowers under the housing loans. The issuer
trustee and the manager irrevocably authorize the seller to deduct from Gross
Principal Collections to reimburse itself in relation to any redraw for which
it has not previously been reimbursed.
On each quarterly determination date the manager shall determine an
amount, not to exceed 2% of the outstanding principal balance of the notes,
which it
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reasonably anticipates will be required in the quarterly collection period
following that in which that quarterly determination date occurs to fund
further redraws under housing loans in addition to any prepayments of
principal that it anticipates will be received from borrowers during that
quarterly collection period. The manager shall on the day of such
determination advise the issuer trustee of the amount so determined.
In addition to the seller's right of reimbursement, the issuer trustee
shall on each business day it receives a direction from the manager to do so,
reimburse the seller for redraws made on or before that business day for which
it has not yet received reimbursements but only to the extent of the aggregate
of.
o the Redraw Retention Amount for that quarterly collection period to
the extent it has been funded; and
o any amount which the manager is entitled to direct the issuer
trustee to draw under the redraw facility at that time.
If the manager determines on any business day that there is a Redraw
Shortfall, the manager may on that date direct in writing the issuer trustee
to make a drawing under the redraw facility on that business day or any other
business day equal to the amount which the issuer trustee is permitted to draw
under the terms of the redraw facility at that time.
Application of Principal Charge Offs
Allocating Liquidation Loss
On each quarterly determination date, the manager must determine the
following, in relation to the aggregate of all Liquidation Losses arising
during the related quarterly collection period:
o the amount of those Liquidation Losses which are Finance Charge
Losses; and
o the amount of those Liquidation Losses which are Principal Losses;
on the basis that all amounts recovered from the enforcement of housing loans
actually received by or on behalf of the issuer trustee are applied first
against interest, fees and other enforcement expenses, other than expenses
related to property restoration, relating to that housing loan, and then
against the principal outstanding on the housing loan and expenses related to
property restoration relating to that housing loan.
Insurance Claims
If, on any monthly determination date, the manager determines that there
has been a Liquidation Loss in relation to a housing loan during the
immediately preceding monthly collection period, the manager shall direct the
servicer, promptly, and in any event so that the claim is made within the time
limit specified in the relevant mortgage insurance policy without the amount
of the claim becoming liable to be reduced by reason of delay, to make a claim
under that mortgage insurance policy if it has not already done so. The
manager will use best endeavors to ensure that the servicer promptly makes any
claims required by way of a timely payment cover in accordance with the terms
of the Servicing Agreement.
Upon receipt of any amount under this claim, the manager must determine
which part of the amount is attributable to interest, fees and other amounts
in the nature of income, and which part of that amount is attributable to
principal.
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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 the following:
o because the maximum amount available under the mortgage insurance
policy has been exhausted;
o the mortgage insurance policy has been terminated in respect of that
housing loan;
o the mortgage insurer is entitled to reduce the amount of the claim;
o or the mortgage insurer defaults in payment of a claim;
then a Mortgage Shortfall will arise if:
o the total amount recovered and recoverable under the mortgage
insurance policy attributable to principal; plus
o any damages or other amounts payable by the seller or the servicer
under or in respect of the Master Trust Deed, the Supplementary
Terms Notice or Servicing Agreement relating to the housing loan
which the 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
will be applied to reduce the Stated Amounts of the notes as described in the
following subsection.
Principal Charge-Offs
If the Principal Charge Offs for any quarterly collection period exceed
the Excess Available Income calculated on the quarterly determination date for
that quarterly collection period, the manager must do the following, on and
with effect from the quarterly payment date immediately following the end of
the quarterly collection period:
o reduce pro rata as between themselves the Stated Amount of the Class
B notes by the amount of that excess until the Stated Amount of the
Class B notes is zero; and
o if the Stated Amounts of the Class B notes is zero and any amount of
that excess has not been applied under the preceding paragraph,
reduce pro rata as between the Class A notes and the redraw facility
with respect to the balance of that excess:
o rateably as between each of the Class A notes, the Stated
Amount of the Class A notes until the Stated Amount of the
Class A notes is zero; and
o the Redraw Principal Outstanding under the redraw facility,
applied against Redraw Advances in reverse chronological order
of their drawdown dates, until the Redraw Principal Outstanding
is zero.
Payments into US$ Account
The principal paying agent shall open and maintain a US$ account into
which the currency swap provider shall deposit amounts denominated in US$. The
issuer trustee shall direct the currency swap provider to pay all amounts
denominated in US$ payable to the issuer trustee by the currency swap provider
under the currency
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swap into the US$ account or to the principal paying agent on behalf of the
issuer trustee. If any of the issuer trustee, the manager or the servicer
receives any amount denominated in US$ from the currency swap provider under
the currency swap, they will also promptly pay that amount to the credit of
the US$ account.
Payments out of US$ Account
The principal paying agent will distribute the following amounts from the
US$ account in accordance with the Note Trust Deed and the Agency Agreement on
each payment date pro rata between the relevant notes and to the extent
payments relating to the following amounts were made to the currency swap
provider:
o interest on the Class A-1 notes;
o interest on the Class A-2 notes;
o reinstating the Stated Amount of Class A notes, to the extent of
Carryover Class A Charge Offs; and
o principal on the Class A notes, until their outstanding principal
balance is reduced to zero.
The Interest Rate Swaps
Fixed-Floating Rate Swap
The issuer trustee will enter into a swap governed by an ISDA Master
Agreement, as amended by a supplementary schedule and confirmed by a written
confirmation, with the fixed floating rate swap provider and the standby
fixed-floating rate swap provider to hedge the basis risk between the interest
rate on the fixed rate housing loans and the floating rate obligations of the
trust, including the interest due on the notes. The fixed-floating rate swap
will cover the housing loans which bear a fixed rate of interest as of the
cut-off date and those variable rate housing loans which at a later date
convert to a fixed rate of interest. The obligations of the fixed-floating
rate swap provider are supported by the standby fixed floating rate swap
provider.
The issuer trustee will pay the fixed-floating rate swap provider on each
quarterly payment date an amount equal to the sum of the principal balance of
each of the housing loans which is subject to a fixed rate of interest at the
beginning of the quarterly collection period immediately preceding that
quarterly payment date multiplied by the weighted average of those fixed rates
of interest at the beginning of that quarterly collection period times the
actual number of days in the quarterly collection period divided by 365. The
issuer trustee will also pay the fixed-floating rate swap provider all break
fees from borrowers with fixed rate loans received during the related
quarterly collection period.
The issuer trustee will receive from the fixed-floating rate swap
provider an amount equal to the principal balance of each of the housing loans
which is subject to a fixed rate of interest at the beginning of the quarterly
collection period immediately preceding that quarterly payment date multiplied
by 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
or about the closing date. The terms of the fixed-floating rate swap allow for
netting of swap payments for transactions under the one confirmation.
The fixed-floating rate swap, including the obligations of the standby
fixed-floating rate swap provider, commences on the date specified in the
relevant confirmation and terminates on the Final Maturity Date, unless
terminated earlier in accordance with the fixed-floating rate swap.
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Basis Swap
The issuer trustee will enter into a swap governed by an ISDA Master
Agreement, as amended by a supplementary schedule and confirmed by a written
confirmation, with the basis swap provider and the standby basis swap provider
to hedge the basis risk between the discretionary interest rate applicable on
the variable rate housing loans and the floating rate obligations of the trust
to the currency swap provider. The basis swap will cover the housing loans
which bear a variable rate of interest as of the cut-off date and those fixed
rate housing loans which at a later date convert to a variable rate of
interest.
The issuer trustee will pay or cause to be paid the basis swap provider
on each quarterly payment date an amount based on the applicable daily
weighted average of the variable rate on those housing loans which are subject
to a variable rate of interest and receive from the basis swap provider the
applicable 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 obligations of the
trust. The terms of the basis swap allow for netting of swap payments for
transactions under the one confirmation.
The basis swap commences on the date specified in the relevant
confirmation and terminates on the date 364 days later unless the basis swap
provider extends the swap in accordance with the terms of the basis swap. The
obligations of the standby basis swap provider commence on the same day as the
basis swap and terminate 364 days later, unless extended by the standby basis
swap provider in accordance with the basis swap, with the consent of the basis
rate swap provider.
Application of Step-Up Margin
If a Step-up Margin applies to any note, the manager must not direct the
issuer trustee to enter into or extend a swap confirmation unless the manager
is of the opinion that the amounts payable by the relevant swap provider to
the issuer trustee in relation to that confirmation are calculated with
reference to that Step-up Margin.
Standby Arrangement
If a swap provider is obliged to make a payment under a swap and the
relevant standby swap provider receives notice from the manager requiring the
standby swap provider to make the required payment, the standby swap provider
will make the standby payment specified in the notice.
The standby basis swap provider is only obligated to make one payment
relating to the basis swap. After that payment, the basis swap will be
terminated. The standby fixed-floating rate swap provider is obligated to make
all the remaining payments under the fixed-floating rate swap.
Downgrades.
If a swap provider, the related standby swap provider or both are
downgraded by a rating agency and the manager notifies them that a rating
agency requires that swap provider or that standby swap provider to be
replaced by another party or for that swap provider to provide cash collateral
in order to maintain the rating on the notes, then the swap provider must,
within 30 days of receiving notice from the manager, either:
o provide cash collateral equal to its net obligations under the swap;
or
o novate its obligations to a counterparty rated A-I+ by S&P, AA- by
Fitch IBCA and suitably rated by Moody's who will not cause a
reduction or a withdrawal the rating of the notes.
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If the standby basis swap provider does not extend the term of its
obligations relating to the basis swap and the basis swap provider receives
notice from the manager that the rating of the notes will be either reduced or
withdrawn, then the basis swap provider must, within 30 days of receiving
notice from the manager, either:
o provide cash collateral equal to its net obligations under the swap;
or
o novate its obligations to a counterparty rated A-1+ by S&P, AA- by
Fitch IBCA and suitably rated by Moody's who will not cause a
reduction or a withdrawal the rating of the notes.
Swap Collateral Account
If a swap provider provides cash collateral, the issuer trustee must, at
the direction of the manager, as soon as is practicable establish and maintain
in the name of the issuer trustee a swap collateral account with an Approved
Bank having a short term credit rating of A-1+ from S&P, P-1 from Moody's and
F-1+ from Fitch IBCA or which otherwise satisfies the requirements of the
Rating Agencies and deposit the cash collateral in such account.
The issuer trustee may only make withdrawals from the swap collateral
account upon the direction of the manager and only for the purpose of:
o entering into a substitute swap;
o refunding to that swap provider the amount of any reduction in the
swap collateral account, but only if the ratings of the notes are
not thereby withdrawn or reduced;
o withdrawing any amount which has been incorrectly deposited into the
swap collateral account;
o paying financial institutions duty, bank accounts debit tax or
equivalent taxes payable in respect of the swap collateral account;
or
o funding the amount of any payment due to be made by that swap
provider under the relevant swap following the failure by that swap
provider to make that payment.
Threshold Rate
If at any time the basis swap is terminated, the manager must, on the
earlier of three business days after the termination and the determination
date immediately following the termination, calculate the Threshold Rate as of
that date and notify the issuer trustee, the servicer and the seller of the
Threshold Rate on the relevant payment date. The manager must also do this for
each successive determination date for so long as the basis swap has not been
replaced by a similar interest hedge, or until the issuer trustee and manager
agree that the interest rate on the variable rate housing loans no longer
needs to be set at the Threshold Rate, and that does not result in a
downgrading of the notes.
If the servicer is notified by the manager of the Threshold Rate, it
will, not more than seven business days after termination of the basis swap,
ensure that the interest rate payable on each variable rate housing loan is
set not less than the Threshold Rate, and will promptly notify the relevant
borrowers of the change in accordance with the housing loans.
Standby Swap Fees
The standby swap providers will receive a standby fee. These fees accrue
from day to day and are payable quarterly in arrear on each quarterly payment
date.
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Indemnity
St. George Bank agrees to indemnify the standby swap providers against any
loss, charge, liability or expense that the standby swap providers may sustain
or incur as a direct or indirect consequence of the relevant swap provider
failing to comply with its obligations under a swap, or the manager requiring
that standby swap provider to make a payment under the swap.
Standby Swap Providers
The standby fixed-floating rate swap provider and standby basis swap
provider will be US___. [Insert description of the Standby Swap Providers]
The Currency Swap
Collections on the housing loans and under the basis swap and the
fixed-floating rate swap will be denominated in Australian dollars. However,
the payment obligations of the issuer trustee on the notes are denominated in
United States dollars. To hedge its currency exposure, the issuer trustee will
enter into a swap agreement with the currency swap provider.
The currency swap comprises two distinct swap transactions, relating to
the Class A-1 notes and the Class A-2 notes, respectively. The two swap
transactions are separate and several, which means, for example, that any
termination of one of them does not of itself give rise to a right to
terminate the other. The currency swap will be governed by a standard form
ISDA Master Agreement, as amended by a supplementary schedule and confirmed by
three written confirmations, one relating to each class of notes.
Under the currency swap, the issuer trustee will pay to the currency swap
provider on each quarterly payment date an amount in A$ equal to that portion of
Principal Collections and Excess Available Income, if any, to be paid to the
noteholders as described in "Description of the Class A Notes - Payments of
Principal on the Notes," and the currency swap provider is required to pay to or
at the direction of the issuer trustee an amount denominated in US$ which is
equivalent to such A$ payment. The equivalent A$ payment will be calculated
using an exchange rate of US___.
In addition, under the currency swap on each quarterly payment date the
issuer trustee will make A$ floating rate payments to the currency swap
provider and the currency swap provider will make US$ floating rate payments
which are equivalent in amount to the interest payable in US$ to the
noteholders. If on any quarterly payment date, the issuer trustee does not or
is unable to make the full floating rate payment, the US$ floating rate
payment to be made by the currency swap provider on such quarterly payment
date will be reduced by the same proportion as the reduction in the payment
from the issuer trustee.
The purchase price for the notes will be paid by investors in US$, but
the consideration for the purchase by the issuer trustee of equitable title to
the housing loans will be in A$. On the closing date the issuer trustee will
pay to the currency swap provider the net proceeds of the issue of the notes
in US$. In return the issuer trustee will be paid the A$ Equivalent of that
US$ amount, calculated by reference to the exchange rate set out in this
section.
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Termination by the Currency Swap Provider
The currency swap provider shall have the right to terminate the currency
swap in the following circumstances:
o If the issuer trustee fails to make a payment under the currency
swap within the ten business days;
o An Insolvency Event with respect to the issuer trustee occurs or the
issuer trustee merges into another entity without that entity
properly assuming responsibility for the obligations of the issuer
trustee under the currency swap;
o If due to a change in law it becomes illegal for the issuer trustee
or the 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 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 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;
o The currency swap provider has the limited right to terminate where
it is required to gross-up or receive payments from which amounts
have been withheld, but only if all of the notes will be redeemed at
their outstanding principal balance or, if the noteholders have so
agreed, at their Stated Amount, plus accrued interest; or
o Any event of default occurs under the Security Trust Deed or the
conditions of the notes.
Termination by the Issuer Trustee
There are a number of circumstances in which the issuer trustee has the
right to terminate the currency swap. In each of these cases it is only
permitted to exercise that right with the prior written consent of the note
trustee:
o Where the currency swap provider falls to make a payment under the
currency swap within ten business days or the currency swap provider
becomes insolvent or merges into another entity without that entity
properly assuming responsibility for the obligation of the currency
swap provider under the currency swap;
o If due to a change in law it becomes illegal for the issuer trustee
or the currency swap provider to make or receive payments or comply
with any other material provision of the currency swap, the currency
swap requires such party to make 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 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;
o If any event of default under the Security Trust Deed or the
conditions of the notes occurs;
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o If the issuer trustee becomes obliged to make a withholding or
deduction in respect of the notes and the notes are redeemed as a
result; or
o If the currency swap provider breaches its obligation to lodge
collateral or other credit support in the event it is downgraded.
The issuer trustee may only terminate the currency swap following prior
consultation by the note trustee with the currency swap provider as to the
timing of termination. The issuer trustee will exercise such right to
terminate at the direction of the manager. The currency swap provider
acknowledges that the issuer trustee has appointed the manager as manager of
the trust and may exercise or satisfy any of the issuer trustee's rights or
obligations under the currency swap including entering into and monitoring
transactions and executing confirmations.
Downgrade of the Currency Swap Provider
The currency swap provider will give a commitment to provide cash
collateral or other credit enhancement in respect of the currency swap in the
event that the currency swap provider is ever downgraded below A2 by Moody's,
AA- by Fitch IBCA or A-1+ by Standard & Poor's.
Termination Payments
On the Termination Date or the Early Termination Date, each as defined in
the currency swap, in respect of the currency swap, a termination payment will
be due to be paid by the issuer trustee to the currency swap provider or to
the issuer trustee by the currency swap provider in respect of the currency
swap. The termination of a currency swap is an event of default under the
Security Trust Deed unless it is immediately replaced as described in the
subsection titled "Replacement of the Currency Swaps".
The termination payment in respect of a currency swap will be determined
on the basis of quotations from four leading dealers in the relevant market
selected by the currency swap provider to enter into a replacement transaction
that would have the effect of preserving the economic equivalent of any
payment that would, but for the early termination, have been required under
the terms of the currency swap.
Replacement of Currency Swaps
If the currency swap is terminated, the issuer trustee must, at the
direction of the manager, enter into one or more replacement currency swaps
which replace the currency swap, but only on the condition that:
o the Settlement Amount, as defined in the currency swap, if any,
which is payable by the issuer trustee to the currency swap provider
on termination of the currency swap will be paid in full when due in
accordance with the Supplementary Terms Notice and the currency
swap;
o the ratings assigned to the notes are not adversely affected; and
o the liability of the issuer trustee under that replacement currency
swap is limited to at least the same extent that its liability is
limited under the currency swap.
If the preceding conditions are satisfied, the issuer trustee must, at
the direction of the manager, enter into the replacement currency swap and if
it does so it must direct the provider of the replacement currency swap to pay
any up-front premium to enter into the replacement currency swap due to the
issuer trustee directly to the
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currency swap provider in satisfaction of and to the extent of the issuer
trustee's obligation to pay the Settlement Amount to the currency swap
provider. To the extent that such premium is not greater than or equal to the
Settlement Amount, the balance must be paid by the issuer trustee as a Trust
Expense.
Currency Swap Provider
The currency swap provider will be Morgan Guaranty Trust Company of New
York, acting through its London Branch.
Morgan Guaranty Trust Company of New York is a wholly owned subsidiary
and the principal assets of J.P. Morgan & Co. Incorporated, 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 Trust Company 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 Trust Company 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 Trust Company
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 J.P Morgan & Co. Incorporated with the Securities
and Exchange Commission. J.P. Morgan & Co. Incorporated 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 in the preceding
paragraph. 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.
Withholding or Tax Deductions
All payments in respect of the 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 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 agents, 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 notes in respect to that
withholding or deduction.
Redemption of the Notes for Taxation or Other Reasons
If the manager satisfies the issuer trustee and the note trustee,
immediately prior to giving the notice to the noteholders as described in this
section, that either:
o on the next quarterly payment date the issuer trustee would be
required to deduct or withhold from any payment of principal or
interest in respect of the notes or the currency swap 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
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o 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;
then the issuer trustee must, when so directed by the manager, at the
manager's option, provided that the issuer trustee will be in a position on
such payment date to discharge, and the manager will so certify to the issuer
trustee and the note trustee, all its liabilities in respect of such class and
any amounts required under the Security Trust Deed to be paid in priority to
or equal with such class, redeem all, but not some, of such class at their
outstanding principal balance, or at the option of the holders of 75% of the
aggregate outstanding principal balance of such class, at their Stated Amount,
together with accrued interest to the date of redemption on any subsequent
quarterly payment date. Noteholders must be given notice of a redemption not
more than 60 nor less than 45 days prior to the date of redemption. The
holders of 75%, of the aggregate outstanding principal balance of a class of
notes may elect, in accordance with the terms of the Note Trust Deed, and the
note trustee shall notify the issuer trustee and the manager, that they do not
require the issuer trustee to redeem their class of notes in the circumstances
described in this section. All amounts ranking prior to or equal with respect
to a class of notes must be redeemed concurrently with such class.
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 some 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. If the
trust terminates while notes are outstanding, St.George Bank has a right of
first refusal to acquire the housing loans. 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 "Description of the
Transaction Documents - The Security Trust Deed."
Clean-up Offer
At the manager's direction, the issuer trustee must purchase or redeem
all of the notes by repaying the outstanding principal balance, or, if the
noteholders, owning at least 75% of the aggregate outstanding amount of the
notes so agree, the Stated Amount, of the notes, together with accrued
interest to, but excluding, the date of repurchase or redemption, on any
quarterly payment date falling on or after the earlier of:
o the quarterly payment date on which the total Stated Amount of all
notes is equal to or less than 10% of the total initial outstanding
principal balance of the notes; and
o the quarterly payment date falling in US__ 20__;
provided that the manager certifies to the issuer trustee and the note trustee
that the issuer trustee will be in a position on this quarterly payment date
to discharge all its liabilities in respect of the notes, at their outstanding
principal balance or their Stated Amount if so agreed by the noteholders, and
any amounts which would be required
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under the Security Trust Deed to be paid in priority to or equal with the
notes if the security for the notes were being enforced. The manager, on
behalf of the issuer trustee, will give not more than 60 nor less than 45
days' notice to noteholders of this repurchase in accordance with the
applicable conditions of the notes.
Termination of the Trust
Termination Events
The Trust shall continue until, and shall terminate on the later of:
its Termination Date;
o the date on which the assets of the trust have been sold or realized
upon, which shall be within 180 days after the Termination Date so
far as reasonably practicable and reasonably commercially viable;
and
o the date on which the issuer trustee ceases to hold any housing
loans or mortgages in relation to the trust.
Realization of Trust Assets
On the occurrence of a Termination Date, subject to St.George Bank's
right of first refusal, 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 the Fair Market Value of
such housing loans and their related security. 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
outstanding principal amount of the relevant noteholders. The servicer will
determine whether a housing loan is performing or non-performing.
Seller's Right of First Refusal
As soon as practical after the Termination Date of the trust, the manager
will direct the issuer trustee to offer, by written notice to St.George Bank,
irrevocably to extinguish in favor of St.George Bank, or if the issuer trustee
has perfected its title, to equitably assign to St.George Bank, its entire
right, title and interest in and to the housing loans 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
St.George Bank has failed to accept the offer within 180 days after the
occurrence of the Termination Date by paying to the issuer trustee the
purchase price. St.George Bank must pay all costs and expenses relating to the
repurchase of any housing loans. If St.George Bank does not accept the offer
within 180 days, the costs and expenses relating to the sale of the housing
loans will be a Trust Expense.
Distribution
After deducting expenses, the 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 in "Distribution
of Total Available Funds" and "Principal Distributions", and in accordance
with any directions given to it by the manager. If all of the notes have been
fully redeemed and the trust's other creditors paid in full, the issuer
trustee shall distribute the assets of the trust to the residual beneficiary
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Prescription
A note will be void in its entirety if not surrendered for payment within
ten years of the Relevant Date in respect of any payment on the note, the
effect of which would be to reduce the Stated Amount of such note to zero.
After the date on which a note becomes void in its entirety, no claim may be
made in respect of it.
Voting of Noteholders; Modification; Consents; Waiver
The Note Trust Deed contains provisions for each class of noteholders to
consider any matter affecting their interests. In general, the holders of a
majority of the aggregate outstanding principal balance of a class of notes
may take or consent to any action permitted to be taken by such class of
noteholders under the Note Trust Deed. Notwithstanding the foregoing, the
consent of holders of 75%, of the aggregate outstanding principal balance of a
class of notes shall be required to accomplish the following:
o direct the note trustee to direct the security trustee to enforce
the security under the Security Trust Deed;
o override any waiver by the note trustee of a breach of any
provisions of the Transaction Documents or an event of default under
the security trust deed;
o removal of the current note trustee or appointment of a new note
trustee; and
o approve the costs and expenses of the note trustee incurred in
enforcing rights under, or prosecuting lawsuits related to, the
Transaction Documents for which the note trustee is entitled to be
indemnified.
The Class A-1 noteholders and the Class A-2 noteholders will be treated
as a single class for voting.
The Note Trust Deed contains provisions limiting the powers of the Class
B noteholders. For example, the document limits their ability to request or
direct the note trustee to take any action that would be materially
prejudicial to the interests of the Class A noteholders. In most
circumstances, the Note Trust Deed imposes no such limitations on the powers
of the Class A noteholders, the exercise of which will be binding on the Class
B noteholders, irrespective of the effect on the Class B noteholders'
interests. Any action taken by the requisite percentage of the outstanding
principal balance of a class of noteholders shall be binding on all
noteholders of such class, both present and future.
Reports to Noteholders
On each quarterly determination date, the manager will, in respect of the
collection period ending before that determination date, deliver to the
principal paying agent and the issuer trustee, a noteholder's report
containing the following information:
o the outstanding principal balance and the Stated Amount of each
class of notes;
o the interest payments and principal distributions on each class of
notes;
o the Available Income;
o the Total Available Funds;
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[FN]
o the aggregate of all redraws made during that quarterly collection
period;
o the Redraw Shortfall, if any;
o the Payment Shortfall, if any;
o the Principal Draw, if any, for that quarterly collection period,
together with all Principal Draws made before the start of that
quarterly collection period and not repaid;
o the Gross Principal Collections;
o the Principal Collections;
o the Liquidity Shortfall, if any;
o the Remaining Liquidity Shortfall, if any;
o the Principal Charge Off, if any;
o the Class A-1 Bond Factor, the Class A-2 Bond Factor and the Class B
Bond Factor;
o the Class A Charge Offs, the Class B Charge Offs and the Redraw
Charge Offs - if any;
o all Carryover Charge Offs - if any;
o if required, the Threshold Rate at that quarterly determination
date;
o the interest rates on the notes for the related Interest Period;
o scheduled and unscheduled payments of principal on the housing
loans;
o aggregate outstanding principal balance of the fixed rate housing
loans and the aggregate principal balance of the variable rate
housing loans; and
o delinquency and loss statistics with respect to the housing loans.
Unless and until definitive notes are issued, 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.
Unless and until definitive notes are issued, periodic and annual
unaudited reports containing information concerning the trust and the Class A
notes will be prepared by the manager and sent on behalf of the issuer trustee
to DTC. DTC and its participants will make such reports available to holders
of interests in the 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 notes are in book-entry form. Upon
the issuance of fully registered, certificated 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 manager will file with the SEC such periodic reports as are
required under the Exchange Act, and the rules and regulations of the SEC
thereunder. However, in accordance with the Exchange Act and the rules and
regulations of the SEC thereunder, the manager expects that the obligation to
file such reports will be terminated following the end of [September] 2000.
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Description of the Transaction Documents
The following summary describes the material terms of the Transaction
Documents. The summary does not purport to be complete and is subject to the
provisions of the Transaction Documents. All of the Transaction Documents,
except for the currency swap, are governed by the laws of New South Wales. The
currency swap is governed by the laws of [the State of New York] [England]. A
copy of the Master Trust Deed and the Servicing Agreement and a form of each
of the other Transaction Documents have been filed as exhibits to the
registration statement of which this prospectus is a part.
Trust Accounts
The issuer trustee will establish and maintain the collection account and
the Liquidity Account with an Approved Bank. Each bank account shall be opened
by the issuer trustee in its name and in its capacity as trustee of the trust.
These accounts will not be used for any purpose other than for the trust.
These accounts will be interest bearing accounts.
The manager shall have the discretion and duty to recommend to the issuer
trustee in writing, 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 assets of
the trust shall be effected and when and how the same should be effected. Each
investment of moneys on deposit in the the trust's accounts shall be in
Authorized Investments that will mature not later than the business day
preceding the applicable payment date.
The Standby Bank Guarantee
General
The Rating Agencies have confirmed that in order to maintain the ratings
of the notes, if the collection account, the liquidity account or a borrower's
loan offset account are to be maintained with St.George Bank, the obligations
of St.George Bank in respect of the guaranteed account must be supported by a
bank which is rated at least F-1+ by Fitch IBCA, P-1 by Moody's and A-1+ by
Standard & Poor's.
Under the Standby Bank Guarantee, the standby guarantor agrees to pay to
the issuer trustee any sum or sums of money which may be demanded by the
manager or, failing demand by the manager, by the issuer trustee from time to
time. Therefore, payment by St.George Bank of amounts due to be deposited in
the collection account when required under the Transaction Documents, less
amounts determined by the manager to be available in the collection account,
will have the benefit of the Standby Bank Guarantee provided by the standby
guarantor, up to the Standby Bank Guarantee Limit from time to time. If any of
the following occurs:
o the amount standing to the credit of the collection account held
with St.George Bank is 85% or more of the Standby Bank Guarantee
Limit;
o as a direct result of an act, omission or default of St.George Bank,
the issuer trustee falls to pay:
o any interest within 10 business days of its due date together
with all interest accrued and payable on that interest; or
o any other Secured Moneys, as defined in the Security Trust
Deed, within 10 business days of the due date for payment or
within any agreed grace period;
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o as a direct result of an act, omission or default of St. George
Bank, the issuer trustee fails to perform or observe any other
provisions of a transaction document where such failure will
effect the timing or amount paid to noteholders and that
default is not remedied within 10 days after written notice, or
such longer period as may be specified in the notice, from the
Security Trustee requiring the failure to be remedied;
o as a direct result of an act, omission or default of St.George
Bank, an Insolvency Event occurs in relating to St.George Bank;
or
o as a direct result of an act, omission or default of St.George,
an event of default under the Security Trust Deed occurs,
the manager must open a collections account with a bank that has a short term
rating of at least F-1+ by Fitch IBCA, P-1 by Moody's and A-1+ by Standard &
Poor's, and, in the case of the first bullet point above, transfer the excess
funds to that new account, or in any other case transfer all funds standing
the credit of the existing collections account to be transferred to the new
collections account.
The amount of payment the manager, or failing which, the issuer trustee,
may demand from the standby guarantor is the lesser of:
o the Standby Bank Guarantee Limit; and
o the Guaranteed Shortfall.
Guaranteed Shortfall means, for a quarterly collection period:
o all amounts deposited, or received by and required to be deposited
by the servicer, on or before the determination date following the
quarterly collection period, to the credit of the Guaranteed
Accounts in respect of the quarterly collection period together with
interest on the amounts payable by the servicer; less
o all amounts which the manager reasonably determines on the
determination date following that quarterly collection period are
available from the amounts above to be paid on the related quarterly
payment date for that quarterly collection period in accordance with
the Transaction Documents,
but not including any amount which is not deposited, received or available
because of any fraud, negligence or Default of or by the issuer trustee or the
breach of contract of the manager.
The Standby Bank Guarantee Limit will initially be A$_____. The amount
has been calculated by the standby bank guarantor to be sufficient to cover the
initial liquidity reserve and any anticipated Principal Collections and Finance
Charge Collections from the closing date to the first quarterly payment date.
The Standby Bank Guarantee Limit will be reduced on quarterly payment dates to
predetermined amounts on the basis that there will be principal repayments and
prepayments under the housing loans over time, which will be applied as
Principal Collections, and thus the potential amount that can be deposited in
the guaranteed accounts will be reduced.
The standby guarantor agrees to pay a total amount up to the applicable
Standby Bank Guarantee Limit for each quarterly collection period until and
including the quarterly collection period ending in ___ ___ 200 ___ ___ .
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Termination of Standby Bank Guarantee.
Each of the following is an event of termination:
o there are no notes outstanding;
o an event of default under the Security Trust Deed occurs, except one
caused by the default of St.George Bank;
o the standby guarantor has made a payment under the Standby Bank
Guarantee;
o any material representation or warranty by St.George Bank under the
Standby Bank Guarantee is incorrect when it is made; or
o the issuer trustee or the manager amends, adds to or revokes
provisions of the Master Trust Deed, the Supplementary Terms Notice
or the Security Trust Deed which relate to payments by the issuer
trustee or the security trustee or the order of priorities in
relation to those payments without the prior written consent of the
standby guarantor.
Where an event of termination has occurred, the standby guarantor may do
all or any of the following:
o terminate the Standby Bank Guarantee with immediate effect by notice
to the issuer trustee and the manager; or
o declare all moneys actually or contingently owing together with
accrued interest and fees and other moneys by St.George under the
Standby Bank Guarantee immediately due and payable.
In addition to its rights under the Transaction Documents, the standby
guarantor may terminate the Standby Bank Guarantee at any time by serving 90
days' written notice on the issuer trustee and St.George Bank.
The manager may by ten business days' written notice terminate the
standby guarantor's obligations under the Standby Bank Guarantee if any of the
following occurs:
o an Insolvency Event occurs in relation to the standby guarantor; or
o the rating agencies confirm that the termination will not result in
downgrading of the ratings of the notes.
If at the time of termination:
o St.George does not have the required ratings;
o a new guarantee of St.George Bank's obligation in relation to that
guaranteed account, is not put in place; or
o the rating agencies have not confirmed that the termination will not
have an adverse impact on the rating of the notes;
then the amounts outstanding to the credit of the guaranteed accounts must be
deposited with an Approved Bank. All Principal Collections and Finance Charge
Collections must be paid into that new account.
Repayment of Drawings under the Standby Bank Guarantee
St.George will pay to the standby guarantor all amounts paid by the
standby guarantor under the Standby Bank Guarantee, together with interest,
upon demand by the standby guarantor. St.George will also indemnify the
standby guarantor
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against any loss, cost, charge, liability or expense that the standby
guarantor may sustain or incur in relation to certain events with respect to
the Standby Bank Guarantee.
Standby Bank Guarantee Fee
St.George Bank will pay any fees in relation to the provision of the
Standby Bank Guarantee.
Standby Guarantor
Credit Suisse First Boston, Melbourne branch, will be the standby
guarantor. Credit Suisse First Boston is a Swiss bank and is one of the
largest banking institutions in the world. As a leading global investment
bank, Credit Suisse First Boston provides a wide range of financial services
from locations around the globe to corporate, institutional and public sector
clients worldwide. Credit Suisse First Boston was established on July 5, 1856
and registered in the Commercial Register of the Canton of Zurich,
Switzerland, on April 27, 1883 for an unlimited duration.
Credit Suisse First Boston's registered head office is located at
Uetlibergstrasse 231, CH-8045, Zurich, Switzerland, and its telephone number
is 41-1-333-5555. Credit Suisse First Boston's Melbourne Branch is located at
101 Collins Street, Melbourne, Victoria 3000, Australia and its telephone
number is 61-3-9280-1666.
Liquidity Reserve
Liquidity Reserve Amount
On the closing date, the issuer trustee, at the direction of the manager,
will establish the liquidity reserve in an amount equal to A$_____ in an
account held by the issuer trustee on behalf of the trust with an Approved Bank.
The amount of the liquidity reserve will be reduced each quarterly determination
date to an amount equal to 0.25% of the aggregate Unpaid Balance of the housing
loans as the manager determines from time to time.
Liquidity Account
The manager shall not direct the issuer trustee to, and the issuer
trustee shall not make any withdrawal from the liquidity account except for
the following purposes:
o to make or fund a Liquidity Draw as described in "Description of the
Class A Notes - Liquidity Draws";
o to transfer the credit balance of the liquidity account in
accordance with the Master Trust Deed where the account is held by a
bank which ceases to be an Approved Bank;
o to pay financial institutions duty, bank accounts debit tax or
equivalent taxes payable in respect of the liquidity account;
o to the extent that the credit balance of the liquidity account
exceeds the liquidity reserve, to distribute that excess as a Gross
Principal Collection; and
o to distribute on the Final Maturity Date or on the date on which the
notes are fully and finally redeemed or repurchased the credit
balance of the liquidity account as a Principal Collection.
Liquidity Draws
If on any monthly determination date the manager determines that there is
a Liquidity Shortfall, the manager must direct the issuer trustee to make a
draw on the liquidity reserve on or before the relevant monthly payment date
equal to the
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Liquidity Shortfall provided that if the balance of the liquidity account at
the time of the direction by the manager is less than the Liquidity Shortfall,
the Liquidity Draw will be in respect only of the balance of the liquidity
account.
The issuer trustee must, if so directed by the manager, make that
Liquidity Draw and cause the proceeds of such Liquidity Draw to be deposited
or transferred into the collection account on or before the relevant monthly
payment date. This amount will be distributed in the manner described in
"Description of the Class A Notes - Liquidity Draws."
Repayment of Liquidity Draws
The issuer trustee must repay outstanding Liquidity Draws on each monthly
payment date and quarterly payment date out of Total Available Funds, to the
extent they are available, as described in "The Description of the Class A
Notes - Distribution of Total Available Funds."
Modifications Without Noteholder Consent
The issuer trustee, the manager and the servicer, with respect to the
Master Trust Deed and the Supplementary Terms Notice, or the note trustee,
with respect to the Note Trust Deed or any other Transaction Document, may by
way of supplemental deed alter, add to or modify the Master Trust Deed, the
Supplementary Terms Notice, the Note Trust Deed or any other Transaction
Document so long as such alteration, addition or modification was effected
upon consent of the noteholders or residual beneficiary in the case of the
Master Trust Deed or Supplementary Terms Notice or is:
o to correct a manifest error or ambiguity or is of a formal,
technical or administrative nature only;
o necessary to comply with the provisions of any law or regulation or
with the requirements of any Australian governmental agency;
o 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 Crusade Securitisation Programme trusts;
o any modification, except a Basic Terms Modification of, or waiver or
authorization of any breach or proposed breach of the Class A notes
or any of the Transaction Documents which is not, in the opinion of
the note trustee materially prejudicial to the interests of the
Class A noteholders; or
o 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
manager's reasonable opinion, to an allocation of expenses.
Modifications With Noteholder Consent
Except an alteration, addition or modification as described in the
preceeding section, where in the reasonable opinion of the issuer trustee a
proposed alteration, addition or modification to the Master Trust Deed, the
Supplementary Terms Notice
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and the Note Trust Deed is prejudicial or likely to be prejudicial to the
interests of the noteholders or a class of noteholders or the residual
beneficiary, 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 outstanding principal balance of the relevant class or classes of
notes or with the prior written consent of the residual beneficiary, as the
case may be.
The Issuer Trustee
The issuer trustee is appointed as trustee of the Trust on the terms set
out in the Master Trust Deed and the Supplementary Terms Notice.
The issuer trustee has all the rights, powers and discretions over and
in respect of the assets of the Trust in accordance with the Transaction
Documents provided that it will take no action or omit to take an action
without the direction of the manager, that could reasonably be expected to
adversely affect the ratings of the notes. The manager is required to give to
the issuer trustee all directions necessary to give effect to its
recommendations and proposals.
The issuer trustee must act honestly and in good faith and comply with
all relevant material laws in performance of its duties and in exercising its
discretions under the Master Trust Deed, 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 and to 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.
Under the Master Trust Deed, each noteholder and the residual beneficiary
acknowledges that:
o the noteholder cannot require the issuer trustee to owe to the
noteholder, or to act in a manner consistent with, any fiduciary
obligation in any capacity;
o the issuer trustee has no duty, and is under no obligation, to
investigate whether a Manager's Default, a Servicer Transfer Event
or a Title Perfection Event has occurred in relation to the Trust
other than where it has actual notice;
o the issuer trustee is required to provide the notices referred to in
the Master Trust Deed in respect of a determination of a Material
Adverse Effect only if it is actually aware of the facts giving rise
to the Material Adverse Effect; and
o in making any such determination, the issuer trustee will seek and
rely on advice given to it by its advisers in a manner contemplated
by the Master Trust Deed;
o in the absence of actual knowledge to the contrary, the issuer
trustee is entitled to rely conclusively on, and is not required to
investigate any notice, report, certificate, calculation or
representation of or by the seller, servicer or manager.
The issuer trustee will be considered to have knowledge or notice of or
be aware of any matter or thing if the issuer trustee has knowledge, notice or
awareness of that matter or thing by virtue of the accrual notice or awareness
of the officers, employees, agents or delegates of the issuer trustee who have
day to day responsibility for the administration of the trust.
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Annual Compliance Statement
The manager, on behalf of the issuer trustee will deliver to the note
trustee annually a written statement as to the fulfillment of the issuer
trustee's obligations under the Transaction Documents.
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
manager, delegate any or all of the duties, powers, discretion or other
functions of the issuer trustee under the Master Trust Deed or otherwise in
relation to the Trust, to a related company of the issuer trustee which is a
trustee company or trustee corporation for the purposes of any State or
Territory legislation governing the operation of trustee companies.
Issuer Trustee Fees and Expenses
The issuer trustee is entitled to a quarterly fee equal to 0.055% of the
aggregate outstanding principal balance of the housing loans on the first day
of each quarterly collection period, payable in arrears on the related
quarterly payment date.
If the issuer trustee is required at any time to undertake duties which
relate to the enforcement of the terms of any Transaction Document by the
issuer trustee upon a default by any other party under the terms of that
Transaction Document, the issuer trustee is entitled to such additional
remuneration as may be agreed between the issuer trustee and the manager or,
failing agreement, such amount as is determined by a merchant bank (acting as
an expert and not as an arbitrator) selected by the issuer trustee. The
determination of such merchant bank shall be conclusive and binding on the
manager and the issuer trustee so far as the law allows.
The issuer trustee will 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, but not general overhead costs and expenses.
Removal of the Issuer Trustee
The issuer trustee is required to retire as trustee after a direction
from the manager in writing following an Issuer Trustee's Default.
A direction given by the manager requiring the issuer trustee to retire
must specify a date for the retirement of the issuer trustee which is no less
than six months from the date of the direction. Alternatively, the manager may
pay to the issuer trustee an amount equal to the fees that the issuer trustee
would earn for that 6 month period in lieu of that notice.
The issuer trustee will bear the reasonable costs of its removal
following an event under the first four bullet points in the definition of
Issuer Trustee Defaults and will indemnify the manager and the trust for those
costs. These costs are not payable out of the assets of the trust.
The manager, subject to giving prior notice to the rating agencies, is
entitled to appoint a replacement statutory trustee on removal or retirement
of the issuer trustee if that appointment will not in the reasonable opinion
of the manager materially prejudice the interests of noteholders. Until the
appointment is completed the manager must act as issuer trustee and will be
entitled to the issuer trustee's fee for the period it so acts as issuer
trustee.
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Voluntary Retirement of the Issuer Trustee
The issuer trustee may resign on giving to the manager, with a copy to
the rating agencies, not less than three months' notice in writing, or such
other period as the 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 manager, or who may be the 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 three months'
notice period the manager shall act as trustee until a successor trustee is
appointed.
Limitation of the Issuer Trustee's Liability
The issuer trustee will not be liable personally for any losses, costs,
liabilities or claims arising from the failure to pay moneys on the due date
for payment to any noteholders, the residual beneficiary, the manager or any
other person or for any loss howsoever caused in respect of the Trust or to
any noteholder, the residual beneficiary, the manager or any other person,
except to the extent caused by the fraud, negligence or Default on the issuer
trustee's part, or on the part of the officers and employees of the issuer
trustee or any of its agents or delegates in respect of whom the issuer
trustee is liable.
The issuer trustee acts as trustee only in its capacity as trustee of the
trust and in no other capacity. A liability arising under or in connection
with the Transaction Documents or the trust can be enforced against the issuer
trustee only to the extent to which it can be satisfied out of the assets of
the trust which are available to satisfy the right of the issuer trustee to be
exonerated or indemnified for the liability. Subject to the following
sentence, 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 Master Trust Deed, the notes, the conditions or the trust. The
limitation will 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 there is a reduction in the extent of the issuer trustee's
exoneration or indemnification out of the assets of the trust as a result of
the issuer trustee's fraud, negligence or Default.
The Master Trust Deed also contains other provisions which regulate the
issuer trustee's liability to noteholders, other creditors and the residual
beneficiary. These include, but are not limited to, the following:
o Subject to the Master Trust Deed, 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
manager of its discretions, or for acting on any instructions or
directions given to it.
o The issuer trustee is not liable for any event associated with the
retirement of the manager, a Servicer Transfer Event or a Title
Perfection Event.
o Without limiting the issuer trustee's obligations under the
Transaction Documents the issuer trustee is not liable for any act,
omission or default of the manager, the servicer, the currency swap
provider, the custodian, the note trustee, the principal paying
agent or any of their successors or assigns, in relation to their
respective duties or obligations under the Transaction
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Documents, or any other person's failure to carry out an agreement
with the issuer trustee with respect to the trust.
The foregoing provisions do not apply to the extent that the relevant act
is caused by the issuer trustee's fraud, negligence or Default.
Rights of Indemnity of Issuer Trustee
The issuer trustee will be indemnified out of the assets of the trust
against all losses and liabilities properly incurred by the issuer trustee in
performing any of its duties or exercising any of its powers under the
Transaction Documents in relation to the trust except for fraud, negligence or
Default.
The issuer trustee is indemnified out of the assets of the trust against
certain payments it may be liable to make under the Consumer Credit
Legislation. The servicer also indemnifies the issuer trustee in relation to
such payments and the issuer trustee is required to first call on the
indemnity from the servicer before calling on the indemnity from the assets of
the trust.
The Manager
Powers
The manager will have full and complete powers of management of the
trust, including the administration and servicing of the assets which are not
serviced by the servicer, borrowings and other liabilities of the trust and
the operation of the trust.
The issuer trustee has no duty to supervise the manager in the
performance of its functions and duties, or the exercise of its discretions.
The manager has the absolute discretion to recommend Authorized
Investments to the issuer trustee and direct the issuer trustee in relation to
those Authorized Investments.
Delegation
The manager may, in carrying out and performing its duties and
obligations contained in the Master Trust Deed, delegate to any of the
manager's officers and employees, all acts, matters and things, whether or not
requiring or involving the 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 manager thinks fit.
Manager's Fees, Expenses and Indemnification
The manager is entitled to a quarterly fee for each quarterly collection
period equal to 0.09% of the aggregate outstanding principal balance of
housing loans on the first day of each quarterly collection period payable in
arrears on the related quarterly payment date.
The manager will be indemnified out of the assets of the trust for any
liability, cost or expense properly incurred by it in its capacity as manager
of the trust.
Removal or Retirement of the Manager
The manager shall retire as trust manager if the issuer trustee so
directs in writing following a Manager's Default. The manager shall bear the
costs of its removal after a Manager's Default. The manager has agreed to
indemnify the issuer trustee and the trust for those costs.
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The manager may resign on giving to the issuer trustee and the note
trustee, with a copy to the rating agencies, not less than 120 days, or
another period as the manager and the issuer trustee may agree, notice in
writing of its intention to do so.
On retirement or removal of the manager, the issuer trustee may appoint
another manager on such terms as the issuer trustee sees fit, including the
amount of the manager's fee, provided the appointment will not have an adverse
affect on the rating of the notes. Until a replacement manager is appointed,
the manager must continue as manager. If a replacement manager is not
appointed within 120 days of the issuer trustee electing to appoint a new
manager, the issuer trustee will be the new manager.
Limitation of Manager's Liability
The principal limitations on the manager's liability are set out in full
in the Master Trust Deed. These include the following limitations:
o the manager will be indemnified out of the trust in respect of any
liability, cost or expense properly incurred by it in its capacity
as manager of the trust; and
o subject to the Master Trust Deed, the 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 manager or on whom the 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 manager, except to the
extent of losses, costs, claims or damages caused or contributed to
by the breach of its obligations under any Transaction Documents.
The Note Trustee
Bankers Trust Company will serve as the note trustee. [Insert description
of Bankers Trust Company]
The note trustee may resign after giving three months' written notice to
the issuer trustee, the manager, the security trustee and each rating agency.
The issuer trustee may also remove the note trustee in the following
circumstances:
o if the note trustee becomes insolvent;
o if the note trustee ceases its business;
o if the note trustee fails to comply with any of its obligations
under any Transaction Document and the issuer trustee determines
that this failure has had, or if continued, will have, a Material
Adverse Effect, and if capable of remedy, the note trustee does not
remedy this failure within 14 days after the earlier of the
following:
o the note trustee becoming aware of this failure; and
o receipt of the note trustee of written notice with respect to
this failure from either the issuer trustee or the manager; or
o if the note trustee falls to satisfy any obligation imposed on it
under the Trust Indenture Act of 1939 with respect to the trust or
the Note Trust Deed.
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In addition, holders of 75% of the aggregate outstanding principal
balance of the Class A notes may require the issuer trustee to remove the 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 notes.
Event of Default
The note trustee may also, without the consent of the noteholders,
determine that any condition, event or act which with the giving of notice,
lapse of time or the issue of a certificate would constitute an event of
default under the Security Trust Deed shall not, or shall not subject to
specified conditions, be treated as such. The note trustee shall not exercise
any of these powers in contravention of any express direction given in writing
by holders representing at least 75% of the aggregate outstanding principal
balance of the Class A notes. 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 by the
manager on behalf of the issuer trustee to the noteholders as specified in the
Transaction Documents as soon as practicable thereafter.
If an event of default under the Security Trust Deed 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 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 relevant class of Class A
noteholders.
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 notes, unless directed or requested to do so in writing by the
holders of at least 75% of the aggregate outstanding principal balance of the
Class A notes and then only if the note trustee is indemnified to its
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 by so doing.
Security Trust Deed
General
National Mutual Life Nominees Limited of Level 2, 65 Southbank Boulevard,
South Melbourne, Victoria, Australia will be the security trustee. National
Mutual Life Nominees Limited's principal activities are the provision of
services as trustee, executors, administrators, attorneys and agents and other
fiduciary services. The issuer trustee will grant a first ranking floating
charge, registered with the Australian Securities and Investments Commission,
over all of the trust assets in favor of the security trustee. The floating
charge will secure the issuer trustee's obligations to the noteholders, the
manager, the security trustee, the servicer, the note trustee, the
underwriters, each paying agent, the seller with respect to the Accrued
Interest Adjustment and redraws, and each provider of a support facility, but
with respect to the Mortgage Insurer, only in respect of all payments by way
of a timely payment cover under the mortgage insurance policies. These secured
parties are collectively known as the Mortgagees.
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Nature of the Charge
A company may not deal with its assets over which it has granted a fixed
charge without the consent of the relevant mortgagee. Fixed charges are
usually given over real property, marketable securities and other assets which
will not be dealt with by the company.
A floating charge, like that created by the Security Trust Deed, does not
attach to specific assets but instead "floats" over a class of assets which
may change from time to time. The company granting the floating charge may
deal with those assets and 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 company's business. The issuer trustee has agreed not
to deal with the trust assets subject to the floating charge except in the
ordinary course of its business and the manager has agreed not to direct the
issuer trustee to take any such actions. If the issuer trustee disposes of any
of the trust assets, including any housing loan, in the ordinary course of its
business, the person acquiring the property will take it free of the floating
charge. The floating charge granted over the trust assets will become a fixed
charge upon the occurrence of specific events set out in the Security Trust
Deed, including notice to the issuer trustee following an event of default
under the Security Trust Deed.
Security Trustee
The security trustee is appointed to act as trustee on behalf of the
Mortgagees and holds the benefit of the charge over the trust assets in trust
for each Mortgagee on the terms and conditions of the Security Trust Deed. If
there is a conflict between the duties owed by the security trustee to any
Mortgagees or class of Mortgagees, the security trustee must give priority to
the interests of the noteholders, as determined by the noteholders or the note
trustee acting on their behalf. In addition, the security trustee must give
priority to the interests of the Class A noteholders if, in the security
trustee's opinion, there is a conflict between the interests of Class A
noteholders and the interests of the Class B noteholders or other Mortgagees.
Additional Provisions of 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:
o The security trustee is not responsible for the adequacy or
enforceability of the Security Trust Deed or other Transaction
Documents.
o The security trustee is not required to monitor compliance by the
issuer trustee or manager with the Transaction Documents or their
other activities.
o Unless required by a Transaction Document, the security trustee need
not give Mortgagees information concerning the issuer trustee which
comes into the possession of the security trustee.
o The security trustee has no duties or responsibilities except those
expressly set out in the Security Trust Deed or any collateral
security.
o Any action taken by the security trustee under the Security Trust
Deed or any collateral security binds all the Mortgagees.
o 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 associates may engage in any kind of business
with the issuer trustee, the
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manager, Mortgagees and others as if it were not security trustee
and may receive consideration for services in connection with any
Transaction Document or otherwise without having to account to the
Mortgagees.
Events of Default
Each of the following is an event of default under the Security Trust
Deed:
o the issuer trustee falls to pay:
o any interest within 10 business days of the quarterly payment
date on which the interest was due to be paid to noteholders;
or
o any other amount owing to a Mortgagee 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;
o the issuer trustee fails to perform or observe any other provisions,
other than the obligations already referred to in this section, of a
Transaction Document where such failure will have a material and
adverse effect on the amount or timing of any payment to be made to
any noteholder, and that default is not remedied within 30 days
after written notice from the security trustee requiring the failure
to be remedied;
o an Insolvency Event occurs relating to the issuer trustee, in its
capacity as trustee of the trust;
o the charge created by the Security Trust Deed is not or ceases to be
a first ranking charge over the assets of the trust, or any other
obligation of the issuer trustee, other than as mandatorily
preferred by law, ranks ahead of or equal with any of the moneys
secured by the Security Trust Deed;
o any security interest over the trust assets is enforced;
o all or any part of any Transaction Document, other than the basis
swap, the redraw facility or the currency swap, in respect of a
termination because of a "Tax Event" as defined in the currency
swap, 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 basis swap, the standby basis
swap, the redraw facility or the currency swap; or
o without the prior consent of the security trustee, that consent
being subject in accordance with the terms of the Security Trust
Deed to the prior written consent of the note trustee,
o 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;
o the trust is held or is conceded by the issuer trustee not to
have been constituted or to have been imperfectly constituted;
or
o 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.
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Meetings of Voting Mortgagees
The Security Trust Deed contains provisions for convening meetings of the
Voting Mortgagees to 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. Voting Mortgagees are:
o the Noteholder Mortgagees alone for as long as amounts outstanding
under the notes are 75%, or more of the Secured Moneys, and
o otherwise, the note trustee, acting on behalf of the Class A
noteholders, and each other Mortgagee.
Neither the security trustee nor the manager may call a meeting of Voting
Mortgagees while the Noteholder Mortgagees are the only Voting Mortgagee
unless the Noteholder Mortgagees otherwise consent.
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 under the Security Trust Deed.
Voting Procedures
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. 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 every US$100 or its equivalent, but not part thereof, of the Secured
Moneys that he holds or in which he is a Representative.
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.
Enforcement of the Charge
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 a written resolution signed by all of the
Voting Mortgagees is required to direct the security trustee to do any or all
of the following:
o declare the charge to be enforceable;
o declare all Secured Moneys immediately due and payable;
o convert the floating charge to a fixed charge in any or all of the
trust assets; or
o appoint a receiver over the trust assets or itself exercise the powers
that a receiver would otherwise have under the Security Trust Deed.
If 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
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only do, at the direction of an Extraordinary Resolution of Voting Mortgagees,
including enforcing the charge.
No Mortgagee is entitled to enforce the charge under the Security Trust
Deed, or appoint a receiver or otherwise exercise any power conferred by any
applicable law on charges, otherwise than in accordance with the Security
Trust Deed.
Class A Noteholders as Voting Mortgagees
The rights, remedies and discretion of the Class A noteholders under the
Security Trust Deed, 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.
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 notes, unless directed or requested to do so in writing by the
holders of at least 75% of the aggregate outstanding principal balance 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.
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:
o 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 equal with
the Class A notes; or
o 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
the preceeding paragraph.
Limitations of Actions by the Security 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. 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.
If 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
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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 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.
The security trustee will not 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 secured moneys or relating in any way to the mortgaged property
or 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,
except for the fraud, negligence or breach of trust of the security trustee.
Priorities under the Security Trust Deed
The proceeds from the enforcement of the Security Trust Deed are to be
applied in the order of priority set forth in this subsection, subject to any
other priority which may be required by statute or law. Certain federal taxes,
unpaid wages, long service leave, annual leave and similar employee benefits
and certain auditor's fees, if any, will be paid prior to the Mortgagees.
Subject to the foregoing, the proceeds from enforcement of the Security Trust
Deed will be distributed as follows:
o first, to pay rateably:
o any fees and other expenses due to the security trustee, the
note trustee or the principal paying agent;
o any unpaid fees and paid expenses incurred in relation to the
operation and administration of the trust, including the issuer
trustee's fees and expenses; and
o the receiver's remuneration;
o second, 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;
o third, to pay unpaid Accrued Interest Adjustment due to the seller;
o fourth, to repay the standby guarantor any Recovered Amount under
the Standby Bank Guarantee;
o fifth, repayment to the mortgage insurer of money previously paid
under a mortgage insurance policy by way of a timely payment cover;
o sixth, to pay to the fixed-floating rate swap provider under the
fixed-floating rate swap any break fees received by or on behalf of
the issuer trustee from
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a borrower or the mortgage insurer and which have not previously
been paid to the fixed-floating rate swap provider;
o seventh, to pay, rateably:
o monetary liabilities of the issuer trustee to all providers of
support facilities, other than the currency swap provider;
o monetary liabilities of the issuer trustee to the Class A
noteholders;
o unreimbursed redraws, to the seller; and
o all monetary liabilities of the issuer trustee to the currency
swap provider under a confirmation relating to Class A notes,
but without double-counting above;
o eighth, rateably, any monetary liabilities of the issuer trustee to
Class B noteholders and to the currency swap provider under a
confirmation relating to the Class B notes, but without double
counting;
o ninth, to pay rateably any amounts not covered in this section owing
to any Mortgagee under any Transaction Document;
o tenth, 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
o eleventh, 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.
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. Any claims of the noteholders remaining after realization
of the security and application of the proceeds as aforesaid shall, except in
limited circumstances, be extinguished.
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 receive a quarterly fee in the amount
agreed from time to time by the issuer trustee, the security trustee and the
manager.
Indemnification
The issuer trustee has agreed to indemnify the security trustee from and
against all losses, costs, liabilities, expenses and damages arising out of or
in connection with the Transaction Documents, except to the extent that they
result from the fraud, negligence or breach of trust on the part of the
security trustee.
Retirement and Removal
The security trustee may retire on three months' notice in writing to the
issuer trustee, the manager, the note trustee and the rating agencies if a
successor security trustee is appointed.
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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 remove the security trustee at any time and the
manager may remove the security trustee if:
o an Insolvency Event occurs in relation to the security trustee in
its personal capacity;
o the security trustee ceases business;
o the security trustee falls to comply with any of its obligations
under any Transaction Document and such action has had, or, if
continued will have, a Material Adverse Effect, and, if capable of
remedy, that failure is not remedied within 14 days after the
earlier of:
o the security trustee having become actually aware, by virtue of
the actual awareness of the officers, employees, agents or
delegates of the security trustee who have day to day
responsibility for the administration of the security trust, of
that failure; and
o the security trustee having received written notice with
respect thereto from the manager; or
o there occurs a change in the control of the security trustee from
that existing on the date of the Security Trust Deed, unless
approved by the manager.
Upon notice of resignation or removal of the security trustee, the
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 St.George Bank
or its affiliates. If no person can be found to act as security trustee, the
Voting Mortgagees may elect a Voting Mortgagee to act as security trustee.
Amendment
The issuer trustee and the security trustee may, following notice to the
rating agencies and with the written approval of the manager and the note
trustee, amend the Security Trust Deed to, among other things, correct a
manifest error or ambiguity or which in the opinion of the security trustee is
necessary to comply with the provisions of any law or regulation. If the
amendment is prejudicial or likely to be prejudicial to the interests of the
Mortgagees or a class of Mortgagees, an Extraordinary Resolution of the Voting
Mortgagees is required.
The Redraw Facility
Redraws
If the seller consents to a redraw, it will transmit funds in the amount
of the redraw to the borrower.
The seller is entitled to be reimbursed for the amount of any redraws on
any of the housing loans which it pays to borrowers:
o first, from Gross Principal Collections available at the time the
redraw is made;
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o second, from any available Redraw Retention Amount; and
o third, from drawings under the Redraw Facility Agreement, to the
extent that it is available.
The Redraw Facility Agreement
Under the Redraw Facility Agreement, the redraw facility provider agrees
to make advances to the issuer trustee for the purpose of reimbursing redraws
made by the seller to the extent that Gross Principal Collections and the
available Redraw Retention Amount are insufficient to fund redraws. Under the
redraw facility, the redraw facility provider agrees to make advances to the
issuer trustee up to the redraw limit. The redraw limit is equal to 2% of the
aggregate Stated Amount of the notes, as adjusted by the manager on each
anniversary of the Redraw Facility Agreement or any other amount as agreed
between the redraw facility provider, the issuer trustee and the manager. At
the closing date, the redraw limit is expected to be A$_____. The redraw limit
may not be increased without written confirmation from the rating agencies that
the increase would not result in a downgrading or withdrawal of the rating for
the notes then outstanding. The initial term of the redraw facility is 364 days.
The redraw facility provider may cancel all or part of the redraw limit at any
time immediately on giving notice to the issuer trustee and the manager.
Drawing on the Redraw Facility
A drawing may only be made under the redraw facility for the purpose of
funding a Redraw Shortfall or to repay a previous Redraw Advance. If at any
time during the term of the redraw facility, the manager determines that there
is a Redraw Shortfall, it may direct the issuer trustee to draw down on the
redraw facility for an amount equal to the lesser of:
o the Redraw Shortfall; and
o the redraw limit less the greater of zero and the total principal
amount of all outstanding Redraw Advances plus the total Carryover
Redraw Charge Offs, provided that for the purpose of this
calculation, it is assumed that all Redraw Advances due to be repaid
on or before the date of the draw down have been repaid, and only
where that amount is greater than zero.
Conditions Precedent to Drawing
The obligations of the redraw facility provider to make available each
Redraw Advance are subject to the conditions precedent that:
o there is currently no event of default under the redraw facility;
and
o the representations and warranties by the issuer trustee in the
Redraw Facility Agreement are true as of 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 current facts and
circumstances.
Availability Fee
An availability fee accrues daily from the date of the Redraw Facility
Agreement at a rate of ___ % on an amount equal to the Redraw Limit, less
outstanding Redraw Advances. The availability fee is payable on each quarterly
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.
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Draw Fee
With respect to any Redraw Advance made by the redraw facility provider,
a 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 One Month 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.
Repayment of Redraw Advances
The issuer trustee shall, at the direction of the manager, repay
unreimbursed Redraw Advances 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 Agreement
It is an event of default under the Redraw Facility Agreement if:
o an amount is available for payment to the redraw facility provider
under the Redraw Facility Agreement, and the issuer trustee does not
pay that amount within 10 business days of its due date;
o an Insolvency Event occurs in relation to the trust;
o 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;
o the Termination Date occurs in relation to the trust; or
o an event of default under 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.
Consequences of an Event of Default
At any time after an event of default under the Redraw Facility
Agreement, the redraw facility provider may do all or any of the following:
o declare all moneys actually or contingently owing under the Redraw
Facility Agreement immediately due and payable; and
o cancel the redraw limit.
Termination
The redraw facility will terminate on the earliest of the following:
o the date on which the notes are redeemed in full;
o the date on which the redraw facility provider declares the Redraw
Facility Agreement terminated following an event of default under
the Redraw Facility Agreement;
o the date on which the issuer trustee enters into a replacement
redraw facility;
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o the date on which Crusade Management Limited retires or is removed
as manager;
o the date on which the issuer trustee has canceled all of the redraw
limit;
o the date which is one year after the Final Maturity Date;
o the date on which the redraw limit is canceled in full by the redraw
facility provider; and
o 364 days from the date of the Redraw Facility Agreement, unless the
redraw facility provider has agreed to extend the term of the redraw
facility in accordance with the terms of the redraw facility.
The Servicing Agreement
Servicing of Housing Loans
The servicer is required to administer the housing loans in the following
manner:
o in accordance with the Servicing Agreement;
o in accordance with St.George Bank's procedures manual and policies
as they apply to those housing loans from time to time; and
o with the same degree of diligence and care expected of an
appropriately qualified servicer of similar financial products.
In performing any services under the Servicing Agreement the servicer
shall take into account whether its performance of such services does or does
not have any Material Adverse Effect. The servicer's actions in servicing the
housing loans in accordance with the relevant procedures manual are binding on
the issuer trustee. 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.
Powers
Subject to the standards for servicing set forth in the preceeding
section, the servicer has the express power, among other things:
o 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;
o to waive any right in respect of the housing loans and mortgages in
the ordinary course of servicing the housing loans and mortgages;
and
o to extend the maturity date of a housing loan beyond 30 years from
the date of origination when required to do so by law or a
government agency. These extensions are not subject to the
requirement that the action not have a Material Adverse Effect.
Undertakings by the Servicer
The servicer has undertaken, among other things, the following:
o 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
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housing loans and related mortgages in the mortgage pool to full
legal title by notifying borrowers of the issuer trustee's
interests, registering transfers, delivering documents to the issuer
trustee and taking other action required to perfect title or which
the issuer trustee requires it to do.
o To collect all moneys due under those housing loans and related
mortgages and pay them into the collections account not later than
the time St.George Bank would be required to do so.
o 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.
o To 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 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 manager when each
such claim is made.
o 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 equal with the related 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 related
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 servicer's procedures manual or
its ordinary course of business.
o 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 a Material Adverse Effect.
o It will set the interest rate on the housing loans in accordance
with the requirements of the Supplementary Terms Notice.
o 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.
o 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.
o It will notify the issuer trustee and the manager of any event which
it reasonably believes is likely to have a Material Adverse Effect
promptly after becoming aware of such event; and the manager of
anything else which the manager reasonably requires regarding any
proposed modification to any housing loan or related mortgage.
o It will provide information reasonably requested by the issuer
trustee or the manager, with respect to all matters relating to the
trust and the assets of the
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trust, and the issuer trustee or the 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 housing loan agreements,
mortgages, certificates of title and other documents related to the
housing loans.
Undertakings by the Seller
The St.George Bank, in its capacity as seller, has undertaken, among
other things, the following under the Servicing Agreement:
o 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 a Material Adverse Effect.
o 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.
o 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 equal 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 seller's procedures manual or its ordinary
course of business.
o 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 a
Material Adverse Effect.
o 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 the servicer. If the order is
due to the servicer breaching any applicable law then the servicer
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
the servicer's external auditors.
Collections
The servicer will receive collections on the housing loans from borrowers
in its general collection account. If the servicer satisfies the requirements
of each rating agency such that the ratings on the notes will not be adversely
affected, the servicer
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shall deposit the amount equal to the collections it receives during a
collection period into the collection account two business days prior to the
related payment date, together with an amount equivalent to the interest that
would have been earned on such amounts if they had been deposited into the
collection account five business days following receipt by the servicer, less
any amount for taxes payable in relation to the collections or any amount the
servicer may retain under the Supplementary Terms Notice.
If the servicer does not have the required ratings or otherwise does not
satisfy the requirements of each rating agency so that the ratings on the
notes will not be adversely affected, it must pay all collections in its
possession or control into the collection account no later than two business
days following receipt.
Servicing Compensation and Expenses
The servicer will receive a fee for servicing the housing loans equal to
the product of % and the aggregate outstanding principal of the housing
loans on the first day of each quarterly collection period. This fee will be
payable in arrears on the quarterly payment date following the end of the
quarterly collection period.
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 a housing loan or its related mortgaged property 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.
Liability of the Servicer
The servicer fully indemnifies the issuer trustee against all losses,
liabilities, costs and expenses incurred as a result of the failure by the
servicer to perform its duties under the Servicing Agreement or any action or
conduct undertaken or not taken by the servicer, including as a consequence of
a Servicer Transfer Event. The servicer may rely upon any statement by the
issuer trustee or the manager that, any action or inaction on its part is
reasonably likely to, or will, have a Material 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 manager that the action or
inaction is not reasonably likely to, or will not have, a Material Adverse
Effect.
Removal, Resignation and Replacement of the Servicer
The issuer trustee must terminate the servicer's appointment if the
issuer trustee determines that any of the following Servicer Transfer Events
occurs:
o the servicer suffers an Insolvency Event;
o the servicer falls to pay any amount within ten business days of
receipt of a notice to do so;
o 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, a Material Adverse Effect, as determined by the issuer
trustee and that failure is not remedied within the earlier 30 days
after the servicer becomes aware of that failure and receipt of a
notice from either the issuer trustee or the manager;
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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 45
days after notice from the issuer trustee, and the issuer trustee
determines that breach would have a Material Adverse Effect; or
o it becomes unlawful for the servicer to perform the services under
the Servicing Agreement.
The servicer will indemnify the issuer trustee against any losses,
liabilities, costs and expenses resulting from a Servicer Transfer Event.
Resignation
The servicer may voluntarily resign after giving 120 days notice to the
rating agencies, the manager and the issuer trustee.
Replacement of the Servicer
The manager and the issuer trustee shall use reasonable endeavors to find
an eligible successor servicer. Until a successor servicer is appointed, the
servicer must continue to act as the servicer and will be paid the servicing
fee. If an eligible successor servicer is not appointed by the expiry of the
120 day notice period, the issuer trustee trust itself act as servicer and be
entitled to the servicing fee.
Termination of Servicing Agreement
The Servicing Agreement will terminate on the earlier of:
o the date on which the Servicing Agreement is terminated pursuant to a
Servicer Transfer Event;
o 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;
o the date on which the issuer trustee replaces the servicer with a
successor servicer; and
o the date on which the servicer is replaced after resigning.
Amendment
The servicer and the issuer trustee may amend the Servicing Agreement in
writing after giving prior notice of the proposed amendment to the rating
agencies and the amendment will not result in an adverse effect on the rating
of any notes.
The Custodian Agreement
Document Custody
The custodian is responsible for custody of the title documents for the
mortgaged property, including the loan agreement, mortgage document and
certificate of title for the housing loans on behalf of the issuer trustee,
exercising the degree of diligence and care expected of an appropriately
qualified custodian of documents and in accordance with the custodial
procedures approved in advance by the issuer trustee, the manager and the
ratings agencies.
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The custodian's duties and responsibilities include:
o holding each title document in accordance with the custodial
procedures as if the title documents were beneficially owned by the
custodian;
o ensuring that each title document is capable of identification and
kept in a security packet in a security vault separate from other
documents held by the custodian for other persons; and
o maintaining in safe custody a record of the physical movement of the
title documents.
In performing its services, the custodian must consider if its acts or
omissions will have any Material Adverse Effect.
The custodian undertakes, among other things:
o to comply with applicable laws where the failure to do so would have
a Material Adverse Effect;
o comply with the mortgage insurance policies;
o provide information and access relating to its custodial services if
required by the issuer trustee, the manager or the servicer; and
ensure that the premises holding the documents are appropriately
insured for fire and public risks.
Audit
The custodian will be audited by an independent auditor 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.
Compensation of the Custodian
The custodian will receive a fee based on the aggregate outstanding
principal of the housing loans on the first day of each quarterly collection
period. This fee will be payable in arrears on the quarterly payment date
following the end of the quarterly collection period.
Indemnity
The custodian also indemnifies the issuer trustee against all losses,
liabilities, costs and expenses incurred by the issuer trustee as a result of
a breach by the custodian of its obligations under the Custodian Agreement.
This indemnity is limited to the extent further described in the Custodian
Agreement.
Removal and Retirement of the Custodian
The issuer trustee may terminate the custodian's appointment if the
issuer trustee determines that:
o the custodian has suffered an Insolvency Event;
o if the custodian is a related company of the seller, either
o the long-term rating of the seller falls below:
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o BBB from Fitch IBCA; or
o Baa2 from Moody's, or
o BBB from S&P
o a Title Perfection Event has occurred;
o the custodian has failed to comply with the custodial procedures or
any of its other obligations under any other Transaction Document
and such action has had, or, if continued will have, a Material
Adverse Effect and, if capable of remedy, the custodian does not
remedy that failure within 30 days after the earlier of the
custodian becoming aware of that failure and receipt of a notice
from either the issuer trustee or the manager;
o any representation, warranty or certification made by the custodian
is incorrect when made and is not waived by the issuer trustee or,
if capable of remedy, is not remedied to the issuer trustee's
reasonable satisfaction within 45 days after notice from the issuer
trustee, and the issuer trustee determines that breach will or may
have a Material Adverse Effect;
o it has become unlawful for the custodian to perform its custodial
services;
o a Servicer Transfer Event has occurred; or
o the custodian has not complied with the requirements of the
Custodian Agreement to the satisfaction of its auditor and a further
audit also results in an adverse finding by the auditor.
The custodian will indemnify the issuer trustee against any losses,
liabilities, costs and expenses resulting from its termination. If the
custodian is removed, it must deliver at its expense the title documents and
all other documents and records relating to the housing loans to, or at the
direction of the issuer trustee. If the custodian has not done so within 10
business days, or such longer period as the issuer trustee in its reasonable
discretion permits, the issuer trustee must, with the assistance of the
manager, enter the premises where the title documents are kept, take
possession of and remove the title documents. The issuer trustee may, to the
extent that it has information available to it to do so, lodge caveats in
respect of the housing loans and related mortgages for which it does not hold
the title documents.
Seller Loan Agreement
The value of the housing loan pool as of the cut-off date, and the
consideration payable by the issuer trustee to the seller for the housing
loans, is A$. However, the principal balance of the housing loans is only A$.
Therefore, the seller will lend the balance of the consideration to the
issuer trustee. This loan will not bear interest and will not have the benefit
of the Security Trust Deed. The issuer trustee will be required to repay any
outstanding principal under the loan after the Secured Moneys have been fully
and finally paid, to the extent that moneys are available to pay that
principal, as a full and final settlement of the obligations of the issuer
trustee under the loan.
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The Servicer
Servicing of Housing Loans
Under the Servicing Agreement, St.George Bank will be appointed as the
initial servicer of the housing loans. The day to day servicing of the housing
loans will be performed by the servicer at St.George Bank's head office in
Kogarah and at St.George Bank's retail branches and telephone banking and
marketing centers. Servicing procedures include managing customer enquiries,
monitoring compliance with the loan features and rights applicable to these
loans, and the arrears management of overdue loans. 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. See "Description of the Transaction Documents -- The
Servicing Agreement."
Collection and Enforcement Procedures
Borrowers must make the minimum repayment due under the terms and
conditions of the housing loans, on or before each monthly installment due
date. St.George Bank credits repayments to an individual housing loan on the
date of its receipt. Interest is accrued daily on the balance outstanding
after close of business and charged monthly to each relevant loan account.
A housing loan is subject to arrears actioning whenever the minimum
periodic repayment is not paid by the due date.
When a housing loan is 15 days delinquent, it is identified in the
mortgage service system and transferred to the collections system. The
collection system identifies all accounts which are overdue and provides
detailed lists of those loans for action and follow up.
The collection system allocates overdue loans to designated collection
officers within St.George Bank who action the accounts. The higher delinquent
loans are allocated to the more experienced collection officers.
Actions taken by the bank in relation to delinquent accounts will vary
depending on the following elements and if applicable, with the mortgage
insurer:
o arrears history;
o equity in the property; and
o arrangements made with the borrower to meet overdue payments.
If satisfactory arrangement cannot be made to rectify an overdue housing
loan, St.George Bank will issue legal notices and institute recovery action by
enforcing the mortgage security Collection officers, under legal assistance,
manage this process and pursue many sources of recovery including the
following:
o guarantees;
o government assistance schemes;
o mortgagee sale; and
o claims on mortgage insurance.
It should be noted that St.George Bank reports all actions that it takes
on overdue housing loans to the mortgage insurer in accordance with the terms
of the mortgage insurance policies.
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Collection and Foreclosure Process
When a loan is 15 days delinquent, a computer generated letter is sent to
the borrower advising of the situation and requesting that payment be made to
rectify the situation. When an account reaches 30 days delinquent, a second
letter is sent to the borrower. After a housing loan is 30 days delinquent,
any written contact is also followed up by a telephone call.
When a loan reaches 60 days delinquent, a default notice is sent advising
the borrower if the matter is not rectified within a period of 31 days, the
bank is entitled to commence enforcement proceedings without further notice.
Usually an account which is 91 days delinquent, is issued with a statement of
claim served on the borrower at 120 days delinquent, the bank applies for
judgement in a Supreme Court. Generally at 150 days delinquent, the bank
applies for a writ of possession and by 170 days the sheriff sets an eviction
date. Appraisals and valuations are ordered and a reserve price is set for
sale via auction or private treaty. In most instances if the account continues
to be in arrears an offer on the property would be sought and accepted and the
property settled. These time frames assume that the borrower has either taken
no action or has not honored any commitments made in relation to the
delinquency.
It should also be noted that the mortgagee's ability to exercise its
power of sale on the mortgaged property is dependent upon the statutory
restrictions of the relevant state or territory as to notice requirements. In
addition there may be factors outside the control of the mortgagee such as
whether the mortgagor contests the sale and the market conditions at the time
of sale. These issues may effect the length of time between the decision of
the mortgagee to exercise its power of sale and final completion of the sale.
Under St.George Bank's housing loan product specifications discretionary
variable rate of interest loans enable a borrower to have a payment holiday
where the borrower had made excess payments. The excess payments are the
difference between the total amount paid by the borrower and the amount of the
minimum payments required. In accordance with the product specification if a
borrower with excess payments fail to make some or all of a minimum payment
the servicer will apply the excess payments against that missed payment. As
such the relevant housing loan will not be considered delinquent until such
time as when the amount of missed payments is greater than the excess
payments.
The arrears and security enforcement procedures may change over time as a
result of business change, or legislative and regulatory changes.
Servicer Delinquency Experience
The following table summarizes the delinquency and foreclosure
experience, in outstanding principal balances of one-to-four family housing
loans, serviced by the servicer following its merger with Advance Bank Group
in 1997. Prior to this time, delinquency data was separately reported by each
banking organization. Consequently, the following table summarizes the
delinquency and foreclosure experience, respectively, as of September 30,
1997, March 31, 1998, September 30, 1998 and March 31, 1999, on approximately
$24.4 billion, $24.4 billion, $24.6 billion and $23.7 billion, respectively,
in outstanding principal balances of mortgage loans, including securitized
loans, that are serviced by the servicer. The table expresses the number of
delinquent loans at period end as a percentage of the total number of loans
serviced.
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Loans Secured by One- to Four-Family Residential Properties
<TABLE>
<CAPTION>
As of
-----------------------------------------------
September March September March
1997 1998 1998 1999
--------- ----- --------- ------
<S> <C> <C> <C> <C>
Delinquent Loans at Period End:
30 to 59 days .................................... 1.13% 1.32% 1.10% 1.38%
60 to 89 days .................................... 0.34% 0.39% 0.31% 0.39%
90 to 119 days ................................... 0.21% 0.23% 0.18% 0.19%
120 days or more ................................. 0.29% 0.30% 0.22% 0.19%
---- ---- ---- ----
Total Delinquencies .............................. 1.97% 2.24% 1.81% 2.15%
Foreclosures ..................................... 0.07% 0.06% 0.07% 0.05%
---- ---- ---- ----
Total Delinquencies and Foreclosures ............. 2.04% 2.30% 1.88% 2.20%
---- ---- ---- ----
---- ---- ---- ----
</TABLE>
There can be no assurance that the delinquency and foreclosure experience
with respect to the housing loans comprising the housing loan pool will
correspond to the delinquency and foreclosure experience of the servicer's
mortgage portfolio set forth in the foregoing table. Indeed, the statistics
shown in the preceeding table represent the delinquency and foreclosure
experience for the total one-to-four-family residential mortgage portfolios
for each of the years presented, whereas the aggregate delinquency and
foreclosure experience on the housing loans will depend on the results
obtained over the life of the housing loan pool. In addition, the foregoing
statistics include mortgage loans with a variety of payment and other
characteristics that may not correspond to those of the housing loans.
Moreover, if the one- to fourfamily real estate market should experience an
overall decline in property values such that the principal balances of the
housing loans comprising the housing loan pool become equal to or greater than
the value of the related mortgaged properties, the actual rates of
delinquencies and foreclosures could be significantly higher than those
previously experienced by the servicer. In addition, adverse economic
conditions, which may or may not affect real property values, may affect the
timely payment by borrowers of scheduled payments of principal and interest on
the housing loans and, accordingly, the rates of delinquencies, foreclosures,
bankruptcies and losses with respect to the housing loan pool. You should note
that Australia experienced a period of relatively low and stable interest
rates during the period covered in the preceeding table. If interest rates
were to rise, it is likely that the rate of delinquencies and foreclosures
would increase.
St.George Bank Year 2000 Program
St.George Bank's Year 2000 Efforts
St.George Bank, as well as all the parties to the Transaction Documents,
are faced with the task of addressing the Year 2000 issue. The Year 2000 issue
is the result of computer programs being written using two digits rather than
four to define the applicable year and other programming techniques which
limit date calculations or assign special meanings to some dates. Any of
St.George Bank's or any of the other parties to the Transaction Documents
computer systems that have date sensitive software or microprocessors may
recognize a date using "00" as the year 1900 rather
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than the year 2000. This could result in a system failure or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to account of payments on the housing loans, process transactions,
send bills or servicing or collection facilities. In addition, the Year 2000
issue could affect the ability of borrowers to receive bills for payments on
the housing loans sent by St.George Bank or make payments on these bills. In
addition, if the issuer trustee or those vendors on whom it relies does not
have a computer system that is Year 2000 compliant by the year 2000, the
issuer trustee's ability to make distributions on the notes may be materially
and adversely affected. In addition, a substantial part of St.George Bank's
operations and service delivery to partners and customers could be rendered
inoperable if public utility services fail.
Under the direction of the St.George Bank's Chief Executive Officer, with
sponsorship by the Chief General Manager - Information Technology, an initial
assessment of Year 2000 compliance of St.George Bank's systems commenced in
the middle of 1996. Following a report to the St.George Bank's board of
directors, the directors requested that a formal program structure be formed
and overseen by a Year 2000 Steering Committee, chaired by St.George Bank's
Managing Director. A Year 2000 program office has been established to
centrally drive and guide all projects within the Year 2000 program across the
full breadth of the St.George Bank group. The program office monitors progress
of Year 2000 initiatives and reports monthly to the Year 2000 Steering
Committee.
The Managing Director is kept informed of project progress and updates
are provided, on a regular basis, to St.George Bank's Board and St.George
Bank's Audit Committee.
The Year 2000 Program is divided into five key areas:
1. Critical Applications;
2. IT Infrastructure;
3. Business Units;
4. Property; and
5. Contingency Planning.
St.George Bank's internal audits are complemented by St.George Bank's
external auditors as well as independent consultants to ensure both the
timeliness and the quality of work. St.George Bank provides regular updates to
regulatory authorities such as the Australian Stock Exchange and the
Australian Prudential Regulation Authority.
St.George Bank's approach to achieving compliance of its systems and
services is to take reasonable steps to satisfy itself that its systems and
services will not be materially affected by the year 2000 date change. This
includes pursuing from third parties on whom St.George Bank is critically
dependent, statements of compliance relating to their systems and services.
The St.George Bank Year 2000 Program has approximately 210 personnel
employed either as full-time employees or contractors. More staff from other
divisions of St.George Bank are also involved in Year 2000 work as
commissioned by the Program.
The estimated total cost of St.George Bank's Year 2000 project is AS$66
million or US$__ million. Expenditures to the end of June 1999 were AS$49
million or US$__ million.
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State of Readiness
The three preliminary phases, assessment, audit and inventory, were
completed on schedule during 1997 and 1998. Remediation of critical St George
applications was largely completed in October 1998 and is now finalized. This
included preliminary testing with a variety of year 2000 dates which were
inserted into St.George Bank's IT systems and software. Due to the demands
caused by the integration of IT systems resulting from the merger of St.George
Bank with Advance Bank and Bank SA, compliance testing in a year 2000
environment had to be scheduled for completion by July 31, 1999. All
compliance testing was successfully completed. Regression testing to take
account of further changes introduced by the integration activities will be
ongoing through September 1999.
As of July 31, 1999, progress in each of the five key areas is as
follows:
1. Critical IT Applications.
All target critical applications have achieved compliance.
2. IT Infrastructure, including all mainframe, networking, internal
telecommunications, server and desktop based systems:
o all mainframe and associated components have been remediated;
o all communications management equipment has been remediated;
o network services have been substantially remediated;
o roll out of a standard operating environment desktop is in
progress, scheduled for completion August 30, 1999; and
o systems platform testing has been completed as part of the
compliance testing of applications.
3. Business Units.
Within St.George Bank's business units, the Year 2000 Program
investigated the following major categories of inventory:
o Business services supplied by external vendors:
The process for obtaining compliance statements from all vendors
providing critical external services was completed in January
1999. Some ongoing monitoring of service providers continues as a
result of change in management control. Service vendors who have
not been able to provide acceptable evidence of compliance are
being monitored and pursued. St.George Bank is either replacing
service vendors who continue to provide unsatisfactory responses
or developing appropriate contingency plans for such service
vendors where suitable alternate service suppliers are not
available.
o Major Customers:
All commercial exposures greater than A$1,000,000 and Treasury
customers have been surveyed to determine their level of Year
2000 readiness. To date, 98% of these customers have provided a
response that is satisfactory to St.George Bank.
As of June 30, 1999, customer lists have been reviewed by Group
Credit and Treasury. For customers that have not satisfied
St.George Bank of their
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compliance status, each client will be contacted and reviewed
over the quarter ending September 30, 1999 at which time,
should the client not have satisfied St.George Bank of their
compliance status, action will be commenced to limit activity
or remove the company from the customer list until an
acceptable level of risk can be attained.
References to St.George being "satisfied" as regards customer
compliance are based wholly on a review of answers to
questionnaires or materials published by that party. St.George
Bank has not conducted a Year 2000 audit of such parties and is
not certifying their preparedness.
4. Property
St.George Bank currently occupies leased and owned premises in each
Australian state and territory. Remediation and testing work on these buildings
is complete.
5. Contingency Planning.
Critical business processes were identified and impact assessed in terms
of business closure, liquidity, external factors, occupational health and
safety, operations, customers, counterparties, litigation, reputation and
regulation categories. Contingency plans are completed for critical processes
with high risk of failure.
Contingency plans are completed for buildings over 5,000 square meters
with complex building systems, which are critical to the continuity of Bank
operations, such as those which house core computer systems, and building
services where major tenants are located. The plans take into account
building systems and utilities dependencies.
Contingency plans are completed for IT infrastructure and applications.
Contingency strategies include:
o Full test of disaster recovery test;
o Operating branches off line;
o Retain batch file inputs; and
o Ensure suitable disaster recovery and development testing
environments are available.
The following additional activities are scheduled for the second half of
1999:
o Ongoing maintenance of contingency planning activities in
conjunction with changing risk assessment; and
o Appropriate rehearsal of contingency plans.
Development of Year 2000 transition management plan including:
o Establishment of command centre;
o Integration of contingency plans; and
o Testing systems over the date change weekend.
IT Moratorium
A freeze on changes to any part of the St.George Bank's IT environments,
such as software, hardware and networks, has been imposed from October 1, 1999
to January 15, 2000. In addition, the freeze on changes for all clearing
systems is extended until March 15, 2000. Both these actions are intended to
minimize and manage the risk of Year 2000 errors being re-introduced to the IT
environment.
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Interbank Testing
St.George Bank participated in the testing of electronic payments
clearing systems with nominated external testing partners as requested by the
Australian Payments Clearing Association on behalf of the Australian
Prudential Regulatory Authority. St.George Bank has met or exceeded all
Australian Payments Clearing Association test schedule milestones and has
completed the five designated "test streams" with nominated industry partners
satisfactorily. A further period of "Preservation Testing" has been scheduled
for August and September 1999 by the Australian Payments Clearing Association.
Purchasing Policy and New Systems Development
All activities relating to the acquisition or construction of new IT
systems are governed by corporate policy requiring that any such new items are
Year 2000 compliant at the time of their deployment into production.
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 notes
under the stated assumptions and is not a prediction of the prepayment rate
that might actually be experienced.
General
The rate of principal payments and aggregate amount of distributions on
the notes and the yield to maturity of the notes will relate 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 the seller. Subject, in the case of fixed rate housing
loans, to the payment of applicable fees, the housing loans may be prepaid by
the mortgagors at any time.
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 early distributions of principal
amounts on the notes. Prepayments of principal may occur in the following
situations:
o refinancing by mortgagors with other financiers; receipt by the issuer
trustee of enforcement proceeds due to a mortgagor having defaulted on
its housing loan;
o receipt by the issuer trustee of insurance proceeds in relation to a
claim under a mortgage insurance policy in respect of a housing loan;
o repurchase by the seller as a result of a breach by it of certain
representations;
o receipt by the trust of any net amount attributable to principal from
another trust established under the Master Trust Deed with respect to
the substitution of a housing loan;
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o repurchase of the housing loans as a result of an optional
termination or a redemption for taxation or other reasons;
o receipt of proceeds of enforcement of the Security Trust Deed
prior to the Final Maturity Date; or
o receipt of proceeds of the sale of housing loans if the trust is
terminated while notes are outstanding, for example, if required by
law, and the housing loans are then either
o repurchased by St.George Bank under its right of first refusal;
or
o sold to a third party
Since the rate of payment of principal of the housing loans cannot be
predicted and will depend on future events and a variety of factors, no
assurance can be given to you as to this rate of payment or the rate of
principal prepayments. The extent to which the yield to maturity of any note may
vary from the anticipated yield will depend upon the following factors:
o the degree to which a note is purchased at a discount or premium; and
o the degree to which the timing of payments on the note is sensitive
to prepayments, liquidations and purchases of such housing loans.
A wide variety of factors, including economic conditions, the availability
of alternative financing and homeowner mobility may affect the trust's
prepayment experience with respect to the housing loans.
Weighted Average Lives
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 the note is reduced to zero.
Usually, greater than anticipated principal prepayments will increase the
yield on notes purchased at a discount and will decrease the yield on notes
purchased at a premium. The effect on your yield due to principal prepayments
occurring at a rate that is faster or slower than the rate you anticipated will
not be entirely offset by a subsequent similar reduction or increase,
respectively, in the rate of principal payments. The amount and timing of
delinquencies and defaults on the housing loans and the recoveries, if any, on
defaulted housing loans and foreclosed properties will also affect the weighted
average life of the notes.
The following tables are based on a constant prepayment rate model.
Constant prepayment rate 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. Constant prepayment rate 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 in your pool. Neither of the seller nor the manager believes that
any existing statistics of which it is aware provide a reliable basis for
noteholders to predict the amount or timing of receipt of housing loan
prepayments.
The following tables are based upon the assumptions in the following
paragraph, and not upon the actual characteristics of the housing loans. Any
discrepancies
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between characteristics of the actual housing loans and the assumed housing
loans may have an effect upon the percentages of the principal balances
outstanding and weighted average lives of the notes set forth in the tables.
Furthermore, since these discrepancies exist, principal distributions on the
notes may be made earlier or later than the tables indicate.
For the purpose of the following tables, it is assumed that:
o the housing loan pool consists of fully-amortizing housing loans
having the following approximate characteristics:
Initial Original Remaining
Pool Principal Interest Term Term to
Number Amount Rate to Maturity Maturity
------- --------- -------- ----------- ---------
1
2
3
o the closing date for the notes is _________, 1999;
o payments on the notes are made on the quarterly payment date,
regardless of the day on which payment actually occurs, commencing
in November 1999 and are made in accordance with the priorities
described in this prospectus;
o the housing loans' prepayment rates are equal to the respective
percentages of constant prepayment rate indicated in the tables;
o 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 September 1999, with no defaults;
o there are no redraws or payment holidays with respect to the housing
loans;
o all prepayments are prepayments in full received on the last day of
each month and include 30 days' interest on the prepayment;
o principal collections are distributed according to the rules of
distribution set forth in this prospectus;
o all payments under the swaps are made as scheduled;
o St.George Bank does not exercise optional termination, except with
respect to the line titled "Weighted Average Life - To Call (Years)";
and
o to the extent that the sum of the A$ Equivalent of the total
outstanding principal balance of the notes exceeds the housing loan
principal as of the cut-off date, the issuer trustee will treat the
amount of this difference as Gross Principal Collections and pass the
amount through to noteholders on the first payment date.
It is not likely that the housing loans will pay at any assumed constant
prepayment rate to maturity or that all housing loans will prepay at the same
rate. In addition, the diverse remaining terms to maturity of the housing loans
could produce slower or faster distributions of principal than as indicated in
the tables at the assumed constant prepayment rate specified, even if the
weighted average remaining
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term to maturity of the housing loans is the same as the weighted average
remaining term to maturity of the assumptions described in this section. You are
urged to make your investment decisions on a basis that includes your
determination as to anticipated prepayment rates under a variety of the
assumptions discussed in this prospectus as well as other relevant assumptions.
In all three of the following tables, the percentages have been rounded to
the nearest whole number and the weighted average life of a class of notes is
determined by the following three step process:
o multiplying the amount of each payment of principal thereof by the
number of years from the date of issuance to the related payment date,
o summing the results, and
o dividing the sum by the aggregate distributions of principal referred
to in the first clause above and rounding to two decimal places.
Percent of Initial Principal Outstanding at the Following Percentages of
Constant Prepayment Rate
Class A-1 Notes
<TABLE>
<CAPTION>
Date 0% 10% 15% 20% 25% 35% 45%
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Percent .................100 100 100 100 100 100 100
</TABLE>
Weighted Average Life--
To Maturity (Years)
To Call (Years)
Percent of Initial Principal Outstanding at the Following Percentages of
Constant Prepayment Rate
Class A-2 Notes
<TABLE>
<CAPTION>
Date 0% 10% 15% 20% 25% 35% 45%
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Percent .................100 100 100 100 100 100 100
</TABLE>
Weighted Average Life--
To Maturity (Years)
To Call (Years)
Use of Proceeds
The net proceeds from the sale of the Class A notes will amount to A$______
and will be used by the issuer trustee to acquire from the seller equitable
title to housing loans and related mortgages and for general expenses of the
transaction.
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Legal Aspects of the Housing Loans
The following discussion is a summary of legal aspects of Australian retail
housing loans and mortgages. It is not an exhaustive analysis of the relevant
law. Some of the legal aspects are governed by the law of the applicable State
or Territory. Laws may differ substantially between States and Territories. The
summary does not reflect the laws of any particular jurisdiction or cover all
relevant laws of all jurisdictions in which a mortgaged property may be
situated. The summary is subject to the applicable Australian federal and state
laws governing real property and the granting and enforcement of security over
real property.
General
There are two parties to a mortgage. The first party is the mortgagor, who
is either the borrower and homeowner or, where the relevant loan is guaranteed
and the guarantee is secured by a mortgage, the guarantor. The mortgagor grants
the mortgage over their property The second party is the mortgagee, who is the
lender. 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. If the housing loan is not secured by a first ranking mortgage the
seller will equitably assign to the issuer trustee all prior ranking registered
mortgages in relation to that housing loan. Each borrower under the housing
loans is prohibited under its loan documents from creating another mortgage or
other security interest over the relevant mortgaged property without the consent
of St.George Bank.
Nature of Housing Loans as Security
There are a number of different forms of title to land in Australia. The
most common form of title in Australia is "Torrens title." Only land which is
Torrens title land may be used to secure housing loans, and thus constitute
mortgaged property
"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.
Some Torrens title property securing housing loans and thus comprised in
the mortgaged property, will be "strata title" or "urban leasehold."
Strata Title
"Strata title" was developed to enable 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
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apartment unit. 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 a "body corporate" for the benefit of the
individual proprietors. All proprietors are members of the 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.
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 an apartment 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 title known as urban
leasehold. 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:
o 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
o where it involves residential property, is 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.
In all cases where mortgaged property consists of a leaselhold 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 would 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.
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 some 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 both
the remedies
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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 or
registered title. However, registration does not transfer title in the property
and 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 creditor or proposed creditor 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 his or her 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.
St.George Bank as Mortgagee
St.George Bank is, and until a Title Perfection Event occurs intends to
remain, the registered mortgagee of all the mortgages. The 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 St.George Bank, as servicer, 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 St.George
Bank, to be registered as mortgagee of the mortgages. Until that registration is
achieved, the issuer trustee or the manager is entitled to lodge caveats on the
register publicly to notify its interest in the mortgages.
Enforcement of Housing Loans
Subject to the discussion in this section, if a borrower defaults under a
housing loan the loan documents provide that all moneys under the housing 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:
o 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.
o The mortgagee may, in limited circumstances, lease the property to
third parties.
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o The mortgagee may foreclose on the property. Under foreclosure
procedures, the mortgage extinguishes 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.
o The mortgagee may appoint a receiver to deal with income from
the property or exercise other rights delegated to the receiver by
the mortgagee. A receiver is the agent of the mortgagor and so,
unlike when the mortgagee enters possession of property, in theory
the mortgagee is not liable for the receiver's acts or as occupier
of the property. In practice, however, the receiver will require
indemnities from the mortgagee that appoints it.
o 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 certain 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 in 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 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
also requires that establishment fees, termination fees and prepayment fees must
be reasonable otherwise they may be reduced or set aside.
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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:
o the disposition was made to defraud creditors; or
o the disposition was made by an insolvent debtor within 6 months of the
petition for bankruptcy and that disposition 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:
o 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;
o the transaction occurred within a prescribed period prior to the
commencement of the winding up of the company; and
o when 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 takes 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
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pre-existing mortgages. To the extent that the issuer trustee or a receiver
appointed on its behalf incurs any such liabilities, it will be entitled to be
indemnified out of the assets of the trust.
Insolvency Considerations
The current transaction is designed to mitigate insolvency risk. For
example, the equitable assignment of the housing loans by St.George Bank to the
issuer trustee should ensure that the housing loans are not assets available to
the liquidator or creditors of St.George Bank in the event of an insolvency of
St.George Bank. 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 "Description of the Transaction Documents - Security
Trust Deed - Enforcement of the Charge". 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. The proceeds of enforcement of the Security Trust
Deed are to be applied by the security trustee as set out in "Description of the
Transaction Documents - The Security Trust Deed - Priorities under the Security
Trust Deed." If the proceeds from enforcement of the Security Trust Deed are not
sufficient to redeem the Class A notes in full, some or all of the Class A
noteholders will incur a loss.
Tax Treatment of Interest on 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 loans and other non-capital expenditures
relating to investment properties that generate taxable income are generally
allowable as tax deductions.
Consumer Credit Legislation
Under the Consumer Credit Legislation a borrower has the right to apply to
a court to do the following, amongst other things:
o vary the terms of a housing loan on the grounds of hardship or that
it is an unjust contract or that its material terms were not
disclosed;
o reduce or cancel any interest rate payable on a housing loan if the
interest rate is changed in a way which is unconscionable;
o have certain provisions of a housing loan which are in breach of the
legislation declared unenforceable;
o obtain an order for a civil penalty against the seller, the amount of
which may be set off against any amount payable by the borrower under
the applicable housing loan; or
o obtain restitution or compensation from the seller in relation to
breaches of the Consumer Credit Legislation in relation to a housing
loan.
The issuer trustee will become liable for compliance with the Consumer
Credit Legislation if it acquires legal title to the housing loans. It will take
this legal title
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subject to any breaches of the Consumer Credit Legislation by the seller. In
particular, once the issuer trustee acquires legal title it may become liable to
orders of the type referred to in the last two bullet points listed above in
relation to breaches of the Consumer Credit Legislation. Any order under the
Consumer Credit Legislation 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
to you under the notes. The seller has indemnified the issuer trustee against
any loss the issuer trustee may incur as a result of a failure by the seller to
comply with the Consumer Credit Legislation in respect of a mortgage.
United States Federal Income Tax Matters
Overview
The following is a summary of all material United States federal income tax
consequences of the purchase, ownership and disposition of notes by investors
who are subject to United States federal income tax. This summary is based upon
current provisions of the Internal Revenue Code of 1986, proposed, temporary and
final Treasury regulations under the Code, and published rulings and court
decisions, all of which are subject to change, possibly retroactively, or to a
different interpretation at a later date by a court or by the IRS. The parts of
this summary which relate to matters of law or legal conclusions, represent the
opinion of Mayer, Brown & Platt, special United States federal tax counsel for
the seller, and are as qualified in this summary. We have not sought and will
not seek any rulings from the IRS about any of the United States federal income
tax consequences we discuss, and we cannot assure you that the IRS will not take
contrary positions.
Mayer, Brown & Platt has prepared or reviewed the statements under the
heading "United States Federal Income Tax Matters" and is of the opinion that
these statements discuss all material United States federal income tax
consequences to investors generally of the purchase, ownership and disposition
of the notes. However, the following discussion does not discuss the unique tax
consequences of the purchase, ownership and disposition of the notes by
investors that are given special treatment under the United States federal
income tax laws, including:
o banks and thrifts;
o insurance companies;
o regulated investment companies;
o dealers in securities;
o investors that will hold the notes as a position in a
"straddle" for tax purposes or as a part of a "synthetic security,"
"conversion transaction" or other integrated investment comprised of
the notes and one or more other investments;
o foreign investors;
o trusts and estates; and
o pass-through entities, the equity holders of which are any of the
foregoing.
Additionally, the discussion regarding the notes is limited to the United
States federal income tax consequences to the initial investors and not to a
purchaser in the
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secondary market and to investors who will hold the notes as "capital assets"
within the meaning of Section 1221 of the Code.
We suggest that prospective investors consult their own tax advisors about
the United States federal, state, local, foreign and any other tax consequences
to them of the purchase, ownership and disposition of the notes, including the
advisability of making any election discussed under "Market Discount".
It is anticipated that the issuer trustee will be indemnified for any
United States federal income taxes imposed on it in its capacity as trustee of
the trust. However, based on the representation of the issuer trustee that the
trust is not conducting, and will not conduct any activities in the United
States, other than in connection with its issuance of the notes, in the opinion
of Mayer, Brown & Platt, the issuer trustee, solely in its capacity as trustee
for the trust, will not be subject to United States federal income tax on the
income of the trust.
General
You will be required to report interest income on the notes you hold in
accord with your method of accounting.
Sale of Notes
If you sell a note, you will recognize gain or loss equal to the difference
between the amount realized on the sale, other than amounts attributable to, and
taxable as, accrued interest, and your adjusted tax basis in the note. Your
adjusted tax basis in a note will equal your cost for the note, decreased by any
amortized premium and any payments other than interest made on the note and
increased by any market discount or original issue discount included in your
income. Any gain or loss will generally be a capital gain or loss, other than
amounts representing accrued interest or market discount, and will be long-term
capital gain or loss if the note was held as a capital asset for more than one
year. In the case of an individual taxpayer, the maximum long-term capital gains
tax rate is lower than the maximum ordinary income tax rate. Any capital losses
realized may be deducted by a corporate taxpayer only to the extent of capital
gains and by an individual taxpayer only to the extent of capital gains plus
$3,000 of other U.S. income.
Market Discount
You will be considered to have acquired a note at a "market discount" to
the extent the remaining principal amount of the note exceeds your tax basis in
the note, unless the excess does not exceed a prescribed de minimis amount. If
the excess exceeds the de minimis amount, you will be subject to the market
discount rules of Sections 1276 and 1278 of the Code with regard to the note.
In the case of a sale or other disposition of a note subject to the market
discount rules, Section 1276 of the Code requires that gain, if any, from the
sale or disposition be treated as ordinary income to the extent the gain
represents market discount accrued during the period the note was held by you,
reduced by the amount of accrued market discount previously included in income.
In the case of a partial principal payment of a note subject to the market
discount rules, Section 1276 of the Code requires that the payment be included
in ordinary income to the extent the payment does not exceed the market discount
accrued during the period the note was held by you, reduced by the amount of
accrued market discount previously included in income.
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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 with principal payable in two or more installments, such as the
notes, the manner in which market discount is to be accrued will be described in
Treasury regulations not yet issued. Until these Treasury regulations are
issued, the explanatory conference committee Report to the Tax Reform Act of
1986 indicates that holders of these obligations may elect to accrue market
discount either on the basis of a constant interest rate or as follows:
o for those obligations that have original issue discount market
discount shall be deemed to accrue in proportion to the accrual of original
issue discount for any accrual period; and
o for those obligations which do not have original issue discount,
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 at
the beginning of the accrual period.
Under Section 1277 of the Code, if you incur or continue debt that is used
to purchase a note subject to the market discount rules, and the interest paid
or accrued on this debt in any taxable year exceeds the interest and original
issue discount currently includible in income on the note, deduction of this
excess interest must be deferred to the extent of the market discount allocable
to the taxable year. The deferred portion of any interest expense will generally
be deductible when the market discount is included in income upon the sale,
repayment, or other disposition of the indebtedness.
Section 1278 of the Code allows a taxpayer to make an election to include
market discount in gross income currently. If an election is made, the
previously described rules of Sections 1276 and 1277 of the Code will not apply
to the taxpayer.
Due to the complexity of the market discount rules, we suggest that you
consult your tax advisors as to the applicability and operation of these rules.
Premium
You will generally be considered to have acquired a note at a premium if
your tax basis in the note exceeds the remaining principal amount of the note.
In that event, if you hold a note as a capital asset, you may amortize the
premium as an offset to interest income under Section 171 of the Code, with
corresponding reductions in your tax basis in the note if you have made an
election under Section 171 of the Code. Generally, any amortization is on a
constant yield basis. However, in the case of bonds with principal payable in
two or more installments, like the notes, the previously discussed conference
report indicates a Congressional intent that amortization be in accordance with
the rules that will apply to the accrual of market discount on these
obligations.
Backup Withholding
Backup withholding taxes will be imposed on payments to you at the rate of
31% on interest paid, and original issue discount accrued, if any, on the notes
if, upon issuance, you fail to supply the manager or its broker with a certified
statement, under penalties of perjury, containing your name, address, correct
taxpayer identification
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number, and a statement that you are not required to pay backup withholding.
Exempt investors, such as corporations, tax exempt organizations, qualified
pension and profit sharing trusts, individual retirement accounts or nonresident
aliens who provide certification of their status as non resident are not subject
to backup withholding. Information returns will be sent annually to the IRS by
the manager and to you stating the amount of interest paid, original issue
discount accrued, if any, and the amount of tax withheld from payments on the
notes. We suggest that you consult your tax advisors about your eligibility for,
and the procedure for obtaining, exemption from backup withholding.
Recently, the Treasury Department issued new regulations which make
modifications to the backup withholding and information reporting rules
described in this section. The new regulations will generally be effective for
payments made after December 31, 2000, subject to transition rules. We suggest
that you consult your own tax advisors regarding these new regulations.
Australian Tax Matters
The following statements with respect to Australian taxation are the
material tax consequences to the United States noteholders of holding notes and
are based on advice received by the issuer trustee. Purchasers of notes should
consult their own tax advisers concerning the consequences, in their particular
circumstances under Australian tax laws and the laws of any other taxing
jurisdiction of the ownership of or any dealing in the notes.
Payments of Principal, Premiums and Interest
Under existing Australian tax law, non-resident holders of notes or
interests in any global note, other than persons holding such securities or
interest as part of a business carried on, at or through a permanent
establishment in Australia, are not subject to Australian income tax on payments
of interest or amounts in the nature of interest, other than interest
withholding tax, which is currently 10%, on interest or amounts in the nature of
interest paid on the notes. A premium on redemption would generally be treated
as an amount in the nature of interest for this purpose.
Pursuant to section 128F of the Income Tax Assessment Act 1936 of the
Commonwealth of Australia, an exemption from Australian interest withholding tax
applies provided all prescribed conditions are met.
These conditions are:
o the issuer trustee is a company that is a resident of Australia
when it issues the notes and when interest, as defined in section 128A (lAB) of
the Tax Act, is paid;
o the notes are issued outside Australia for the purposes of raising
finance outside Australia;
o interest is paid outside Australia; and
o the notes, or a global bond or note or interests in such a global bond or
note, are issued in a manner which satisfied the public offer test as prescribed
under section 128F of the Tax Act.
The issuer trustee will seek to issue the notes and interests in any global
note in a way that will satisfy the public offer test and otherwise meet the
requirements of section 128F of the Tax Act including by listing the notes.
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In August 1998 the Australian government announced a legislative change to
section 128F which would explicitly confirm that companies acting as trustees
could qualify as issuers recognized by section 128F. It was proposed that
companies acting as trustees would qualify where the only beneficiaries of the
trusts of which they acted as trustee were companies. It was specifically
recognized that this measure would allow financial institutions involved in
securitisation transactions more easily to access the concession afforded by
section 128F.
After consultation the Australian Taxation Office indicated that section
128F will apply to payments of interest on notes by the issuer trustee as a
corporate trustee, provided the conditions to the application of section 128F
are satisfied.
The public offer test will not be satisfied if the issuer trustee knew or
had reasonable grounds to suspect that the notes were being or would later be
acquired directly or indirectly by:
o a resident of Australia for the purpose of section 128F of the Tax
Act; or
o an associate of the issuer trustee within the meaning of that section,
other than in the capacity of a dealer, manager or underwriter in relation to
the placement of a note.
"Associate" for these purposes is widely defined and means, generally
speaking, in relation to an issuer acting in the capacity of a trustee the
beneficiaries of the trust. Thus the relevant associates of the issuer trustee
in the present case will be the manager as the residual beneficiary of the trust
and the associates of the manager and the other beneficiaries of the trust, if
any, from time to time.
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 of the Tax Act, which, as discussed, would be an
associate of the residual beneficiary, if, at the time of the payment, the
issuer trustee knows, or has reasonable grounds to suspect, that the person is
an associate.
The Taxation Laws Amendment Bill (No. 2) 1999 proposed further
concessionary amendments to section 128F. If the amendments are enacted, section
128F would no longer require that the notes should be issued outside Australia,
or that the interest on such notes should be paid outside Australia. These
measures are being considered by Parliament. If they become law they will be
applicable to the notes because the amendments are applicable to debentures
issued after July 2, 1998.
Profit on Sale
Under existing Australian law, non-resident holders of notes will not be
subject to Australian income tax on profits derived from the sale or disposal of
the notes provided that:
o the notes are not held as part of an Australian Establishment; and
o the profits do not have an Australian source.
The source of any profit on the disposal of notes will depend on the
factual circumstances of the actual disposal. Where the 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.
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There are, however, specific withholding tax rules that can apply to treat
a portion of the sale price of notes as interest for withholding tax purposes
and which amounts are not covered by the exemption conditions in section 128F of
the Tax Act. These rules can apply when:
o notes are sold for any amount in excess of their issue price
prior to maturity to a purchaser who is either a resident who does not acquire
the notes in the course of carrying on business in the country outside Australia
at or through a permanent establishment in that country or a non-resident that
acquires the notes in the course of carrying on a business in Australia at or
through a permanent establishment in Australia; or
o notes are sold to an Australian resident in connection with a
"washing arrangement" as defined in the Tax Act.
Goods and Services Tax
From July 1, 2000, a goods and servicer tax will be payable by all entities
which make taxable supplies in Australia. If an entity, such as the issuer
trustee, makes any taxable supplies on or after July 1, 2000, it will have to
pay goods and services tax equal to 1/11th of the total amount received for the
supply. However, on the basis of the current GST Legislation, it is likely that
the issue of the notes and the payment of interest or principal on the notes to
you will not be taxable supplies.
If the supply is
o "goods and services tax free," the issuer trustee does not pay a
goods and services tax on the supply and can obtain goods and services tax
credits for goods and services taxes paid on things acquired to make the supply;
or
o "input taxed," which includes financial supplies, the issuer trustee
does not pay a goods and services tax on the supply, but is not entitled to
goods and services tax credits for goods and services tax paid on things
acquired to make the supply.
Services provided to the issuer trustee will be a mixture of taxable and
input taxed supplies for goods and services tax purposes. If a supply is
taxable, the supplier has the primary obligation to account for goods and
services tax in respect of that supply and must rely on a contractual provision
to recoup that goods and services tax from the issuer trustee. It is not
possible at this stage to identify which services supplied to the issuer trustee
will be taxable supplies. However, under the Supplementary Terms Notice, certain
fees paid by the issuer trustee, namely the manager's fee, the issuer trustee's
fee, the security trustee's fee and the servicer's fee, will only be able to be
increased by reference to the supplier's goods and services tax liability, if
any, if:
o the issuer trustee, the manager and the recipient of the relevant fee
agree, which agreement shall not be unreasonably withheld; and
o 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 goods and services tax legislation
or otherwise may be increased by reference to the relevant supplier's goods and
services tax liability, the issuer trustee may not be entitled to an input tax
credit for that increase and the
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Trust expenses will increase, resulting in a decrease in the funds available to
the Trust to pay you.
The goods and services tax may increase the cost of repairing or replacing
damaged properties offered as security for housing loans. However, it is a
condition of the St.George Bank standard mortgage documentation that the
borrower must maintain full replacement value property insurance at all times.
The goods and services tax legislation, in certain circumstances, treats
the issuer trustee as making a taxable supply if it enforces security by selling
the mortgaged property and applying the proceeds of sale to satisfy the housing
loan. The issuer trustee will have to account for goods and services tax 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
general position is that a sale of residential property is an input taxed supply
for goods and services tax purposes and so the enforced sale of property which
secures the housing loans will generally not be treated as a taxable supply
under these provisions. As an exception, the issuer trustee may still have to
account for goods and services tax out of the proceeds of sale recovered when a
housing loan is enforced where the borrower is an enterprise which is registered
for goods and services tax purposes, uses the mortgaged property as an asset of
its enterprise and any of the following are relevant:
o the property is no longer being used as a residence; or
o the property is used as commercial residential premises such as a
hostel or boarding house; or
o the borrower is the first vendor of the property - the borrower
built the property; or
o the mortgaged property has not been used predominantly as a residence.
Because the issuer trustee is an insured party under the mortgage insurance
policies, it may have to account for goods and services tax in respect of any
claim payment received. However, under the current draft of the goods and
services tax legislation, where the claim payment is made in respect of an
insurance policy on which the insured was not entitled to an goods and services
tax credit on the premium payable, the insured does not have to account for
goods and services tax in respect of the claim payment.
Any reduction as a result of goods and services tax in the amount recovered
by the issuer trustee when enforcing the housing loans will decrease the funds
available to the trust to pay you to the extent not covered by the mortgage
insurance policies. The extent to which the issuer trustee is able to recover an
amount on account of the goods and services tax, if any, payable on the proceeds
of sale in the circumstances described in this section, will depend on the terms
of the related mortgage insurance policy.
Other Taxes
No stamp, issue, registration or similar taxes are payable in Australia in
connection with the issue of the notes. Furthermore, a transfer of, or agreement
to transfer, notes executed outside of Australia will not be subject to
Australian stamp duty.
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Enforcement of Foreign Judgments in Australia
Crusade Management Limited 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 Crusade Management Limited in respect of 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 Crusade Management Limited 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:
o the proceedings in New York State or United States Federal Court, as
applicable, involved a denial of the principles of natural justice;
o the judgment is contrary to the public policy of the relevant
Australian jurisdiction;
o the judgment was obtained by fraud or duress or was based on a clear
mistake of fact;
o the judgment is a penal or revenue judgment; or
o 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. Crusade Management Limited 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. Crusade Management Limited has appointed CT
Corporation System, 1633 Broadway, New York, New York 10019, as its agent upon
whom process may be served in any such action.
All of the directors and executive officers of Crusade Management Limited,
and certain experts named in this prospectus, 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 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. Crusade Management
Limited has been advised by its Australian counsel Allen Allen & Hemsley, that,
based on the restrictions discussed in this section, 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, which may change in
the future, payments by an Australian resident to, or on behalf of the following
payees may only be made with Reserve Bank of Australia approval:
o the Government of Iraq or its agencies or nationals;
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o the authorities of the Federal Republic of Yugoslavia (Serbia and
Montenegro); or
o the Government of Libya or any public authority or controlled entity
of the Government of Libya.
ERISA Considerations
Subject to the considerations discussed in this section, the notes are
eligible for purchase by employee benefit plans.
Section 406 of the Employee Retirement Income Security Act and 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 from
engaging in certain transactions with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to these
Benefit Plans. A violation of these "prohibited transaction" rules may result in
an excise tax or other penalties and liabilities under ERISA and the Code for
these 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.
Some transactions involving the purchase, holding or transfer of the notes
might be deemed to constitute prohibited transactions under ERISA and the Code
if assets of the trust were deemed to be assets of a Benefit Plan. Under a
regulation issued by the United States Department of Labor, 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 none of the exceptions contained in the regulation is applicable. An
equity interest is defined under the 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 notes should be treated as debt without substantial equity features for
purposes of the regulation and that the notes do not constitute equity interests
in the trust for purposes of the regulation. The debt characterization of the
notes could change after their initial issuance if the trust incurred losses.
However, without regard to whether the notes are treated as an equity
interest for these purposes, the acquisition or holding of the 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 manager, the
note trustee, the seller or the security trustee is or becomes a party in
interest or a disqualified person with respect to these Benefit Plans. In such
case, certain exemptions from the prohibited transaction rules could be
applicable depending on the type and circumstances of the plan fiduciary making
the decision to acquire a note. Included among these exemptions are:
o Prohibited Transaction Class Exemption 96-23, regarding transactions
effected by "in-house asset managers";
o Prohibited Transaction Class Exemption 90-1, regarding investments by
insurance company pooled separate accounts;
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o Prohibited Transaction Class Exemption 95-60, regarding transactions
effected by "insurance company general accounts";
o Prohibited Transaction Class Exemption 91-38, regarding investments
by bank collective investment funds; and
o Prohibited Transaction Class Exemption 84-14, regarding transactions
effected by "qualified professional asset managers."
By your acquisition of a note, you shall be deemed to represent and warrant
that your purchase and holding of the note will not result in a non-exempt
prohibited transaction under ERISA or the Code.
Employee benefit plans that are governmental plans, as defined in Section
3(32) of ERISA, and certain church plans, as defined in Section 3(33) of ERISA,
are not subject to ERISA requirements.
If you are a plan fiduciary considering the purchase of any of the notes,
you should consult your tax and 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.
LEGAL INVESTMENT CONSIDERATIONS
The Class A notes will not constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act of 1984, because the
originator of the housing loans was not subject to United States state or
federal regulatory authority. Accordingly, some U.S. institutions with legal
authority to invest in comparably rated securities based on such housing loans
may not be legally authorized to invest in the Class A notes. No representation
is made as to whether the 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 any regulatory authorities. You are urged to consult with your counsel
concerning the status of the Class A notes as legal investments for you.
AVAILABLE INFORMATION
Crusade Management Limited, as manager, has filed with the SEC a
registration statement under the Securities Act with respect to the Class A
notes offered pursuant to this prospectus. For further information, reference
should be 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 SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the SEC'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, including any amendments or exhibits, may be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. The SEC 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 SEC at the
address "http://www.sec.gov."
RATINGS OF THE NOTES
The issuance of the Class A-1 and Class A-2 notes will be conditioned on
obtaining a rating of "AAA" by Standard & Poor's, "Aaa" by Moody's and "AAA" by
Fitch IBCA. The issuance of the Class B notes will be conditioned on obtaining a
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rating of "AAA" by Standard & Poor's, "Aal" by Moody's and "AAA" by Fitch IBCA.
You should independently evaluate the security ratings of each class of notes
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities. A rating does not address the
market price or suitability of the notes for you. A rating may be subject to
revision or withdrawal at any time by the rating agencies. 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. 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 interest collections after payment of
interest on the notes and the trust's expenses, the mortgage insurance policies,
the availability of the Liquidity Facility, the creditworthiness of the swap
providers and the mortgage insurer and the foreign currency rating of Australia.
The Commonwealth of Australia's current local currency long term debt rating is
"AAA" by Standard & Poor's, "Aaa" by Moody's and "AAA" by Fitch IBCA. 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.
METHOD OF DISTRIBUTION
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated ____ , St.George Bank and the manager have agreed to sell to the
underwriters, for whom Credit Suisse First Boston Corporation is acting as
representative, the following respective principal amounts of the Class A notes:
Principal Principal
Amount Of Amount of
Class A-1 Class A-2
Notes Notes
UNDERWRITER (US$) (US$)
--------- ---------
Credit Suisse First Boston Corporation ......... $_ $_
--------- --------
Total .......................................... $_ $_
The underwriting agreement provides that the underwriters are obligated to
purchase all of the Class A notes if any are purchased.
The underwriters propose to offer the Class A notes initially at the public
offering prices on the cover page of this prospectus and to selling group
members at the price less a concession not in excess of the respective amounts
set forth in the following table, expressed as a percentage of the relative
principal balance. The underwriters and selling group members may reallow a
discount not in excess of the respective amounts set forth in the following
table to other broker deals.
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Selling Reallowance
CLASS Concessions Discount
- ----------- ----------- -----------
A-1 ......................................... _% _%
----------- -----------
A-2 ......................................... _% _%
----------- -----------
----------- -----------
Credit Suisse First Boston Corporation has informed St.George Bank and the
manager that the underwriters do not expect discretionary sales by them to
exceed 5% of the principal balance of the Class A notes.
The underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Over-allotment involves syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the underlying security so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Class A notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the Class A notes originally sold by syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. Stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the Class A notes to be higher than it would
otherwise be in the absence of these transactions. These transactions, if
commenced, may be discontinued at any time.
The public offering price and concessions may be changed after the initial
public offering of the Class A notes.
St.George Bank and the manager have agreed to indemnify the underwriters
against some liabilities, including civil liabilities under the Securities Act,
or contribute to payments which the underwriters may be required to make in
connection with the Securities Act.
In the ordinary course of its business, some of the underwriters and some
of their affiliates have in the past and may in the future engage in commercial
and investment banking activities with St.George Bank and its affiliates.
OFFERING
The Class A notes will be offered by the underwriters, subject to prior
sale, if and when they are issued to and accepted by them. 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 on or about the closing date, against delivery of
payment for the notes in immediately available funds.
OFFERING RESTRICTIONS
United Kingdom
Each underwriter has severally represented and agreed with the issuer
trustee that:
o 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
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listing in accordance with Part IV of the Financial Services Act,
except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments, a
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;
o 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
o 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 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, 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:
o 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;
o 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
o 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 any of the
following:
o 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
o an associate of St.George Bank within the meaning of that section,
other than in the capacity of a dealer or underwriter in relation to
a placement of the notes, as identified on a list provided by
St.George Bank.
LISTING AND GENERAL INFORMATION
Listing
We have made an application to the London Stock Exchange Limited to admit
the Class A-1 and Class A-2 notes to the Official List. This prospectus,
constitutes listing particulars with regard to the issuer trustee and the Class
A-1 and Class A-2
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notes, in accordance with the listing rules made under Part IV of the Financial
Services Act. Copies of the Prospectus have been delivered to the Registrar of
Companies in England and Wales for registration in accordance with Section 149
of the Financial Services Act.
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 ________, 1999, subject to the issuance of
the Class A notes. The Class A notes will be issued in the form of one or more
book-entry notes.
Authorization
AXA Trustees Limited has obtained all necessary consents, approvals and
authorizations in connection with the issue and performance of the Class A
notes. The issue of the Class A notes has been authorized by the resolutions of
the board of directors of AXA Trustees Limited passed on _______, 1999.
Litigation
AXA Trustees Limited 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 its financial
position nor, so far as it 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 the following CUSIP numbers, common codes and ISINs for each
class of notes:
CUSIP ISIN
----- ----
Class A-1 ..............................................
Class A-2 ..............................................
Documents Available for Inspection
You may inspect copies of the following documents during normal business
hours on any weekday, excluding Saturdays, Sundays and public holidays, at the
offices of HSBC Services, Mariner House, Pepys Street, London EC3N4DA United
Kingdom, during the period of fourteen days from the date of this prospectus:
o the Constitution of the issuer trustee;
o the Master Trust Deed among St.George Bank, the issuer trustee and
the manager, dated March 14, 1998;
o the Servicing Agreement among the issuer trustee, the manager and the
servicer, dated March 19, 1998;
o the Custodian Agreement among the issuer trustee, the manager and the
custodian, dated March 19, 1998;
o the following, which, prior to the closing date, will be in draft
form:
o the Supplementary Terms Notice among the issuer trustee, the manager,
the security trustee, the note trustee, the seller, the servicer and
the custodian, dated on or about __________ , 1999;
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o the Security Trust Deed among the issuer trustee, the manager,
the security trustee and the note trustee, dated on or about
______________ , 1999;
o the Note Trust Deed among the issuer trustee, the manager and the
note trustee, dated on or about ______________ , 1999;
o the Agency Agreement among the issuer trustee, the manager the
note trustee, the principal paying agent and the calculation agent,
dated on or about ______________ , 1999;
o the Servicing Agreement Amendment Agreement among the issuer
trustee, the manager and the servicer, dated on or about
______________ , 1999;
o the Standby Bank Guarantee among St.George Bank, the issuer
trustee and the standby guarantor, dated on or about
______________ , 1999;
o the Redraw Facility Agreement among the issuer trustee, the
manager and the redraw facility provider, dated on or about
______________ , 1999;
o the basis swap among the issuer trustee, the manager, the basis
swap provider and the standby basis swap provider, together with the
related schedule and confirmation, dated on or about
______________ , 1999;
o the fixed-floating rate swap among the issuer trustee, the
manager, the fixed-floating rate swap provider and the standby
fixed-floating rate swap provider, together with the related
schedule and confirmation, dated on or about ______________ , 1999;
o the currency swap between the issuer trustee and the currency
swap provider, together with the related schedule and confirmations,
dated on or about ______________ , 1999;
o the mortgage insurance policy among St.George Bank, the issuer
trustee and Housing Loan Insurance Corporation, dated on or about
______________ , 1999;
o the powers of attorney from St.George Bank, dated on or about _____,
1999;
o the Seller Loan Agreement among the issuer trustee, the manager and
the seller, dated on or about ______________ , 1999;
o [the Deed of Indemnity between St.George Bank, the issuer trustee, the
manager and the custodian, dated on or about ______________ , 1999;]
o the Underwriting Agreement among St.George Bank the manager and
the underwriters, dated on or about ______________ , 1999.
Consents to Opinions
Mayer, Brown & Platt has 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 __ and __ and has authorized the content of their
opinion for the purposes of section 152(l)(e) of the Financial Services Act.
Allen Allen & Hemsley has 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 __ , __ , __ and __ and has authorized the
content of their opinion for the purposes of section 152(l)(e) of the Financial
Services Act.
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Announcement
By distribution 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:
o the Class A notes will initially be issued in the form of book-entry
notes and will be held by Cede & Co., as nominee of DTC;
o in connection with the issue, DTC will confer rights in the Class A
notes to the noteholders and will record the existence of those
rights; and
o as a result of the issue of the Class A notes in this manner, these
rights will be created.
Legal Matters
Mayer, Brown & Platt, New York, New York, will pass upon some legal matters
with respect to the Class A notes, including the material U.S. federal income
tax matters, for St.George Bank and Crusade Management Limited. Allen Allen &
Hemsley, Sydney, Australia, will pass upon some legal matters, including the
material Australian tax matters, with respect to the Class A notes for St.George
Bank and Crusade Management Limited.
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GLOSSARY
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A$ Class A-1 Interest Amount means, for any quarterly payment date, the amount in Australian
dollars which is calculated:
o on a daily basis at the rate set out in the currency swap
relating to the Class A-1 notes which shall be AUD-BBR-BBSW,
as defined in the ISDA Definitions, as of the first day of
the Interest Period ending on, but excluding, that payment
date with a designated maturity of 90 days, or, in the case
of the first Interest Period, 60 days, plus a margin;
o on the A$ Equivalent of the aggregate of the outstanding
principal balances of the Class A-1 notes as of the first day
of the Interest Period ending on, but excluding, that payment
date; and
o on the basis of the actual number of days in that Interest
Period and a year of 360 days.
A$ Class A-2 Interest Amount means, for any quarterly payment date, the amount in Australian
dollars which is calculated:
o on a daily basis at the rate set out in the currency swap
relating to the Class A-2 notes which shall be AUD-BBR-BBSW,
as defined in the ISDA Definitions, as of the first day of
the Interest Period ending on, but excluding, that payment date
with a designated maturity of 90 days, or, in the case of the
first Interest Period, 60 days, plus a margin;
o on the A$ Equivalent of the aggregate of the outstanding
principal balances of the Class A-2 notes as of the first day
of the Interest Period ending on, but excluding, that payment
date; and
o on the basis of the actual number of days in that Interest
Period and a year of 360 days.
A$ Equivalent ....................... means, in relation to an amount denominated or to be denominated
in US$, the amount converted to and denominated in A$ at the rate
of exchange set forth in the currency swap for the exchange of
United States dollars for Australian dollars.
Accrued Interest Adjustment ......... means the amount equal to any interest and fees accrued on the housing
loans up to, but excluding, the closing date and which were unpaid
as of the close of business on the closing date.
Agency Agreement .................... means the Agency Agreement among the issuer trustee, the principal
paying agent and the calculation dated on or about ___.
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APPROVED BANK ....................... means:
o a bank, other than St.George Bank, which has a short-term
rating of at least F1+ from Fitch IBCA, P-1 from Moody's, and
A-1+ from Standard & Poor's;
o a bank, including St.George Bank, which has a short-term
rating of at least F-1+ from Fitch IBCA, P-1 from Moody's and
A-1 from Standard & Poor's, provided that the total value of
deposits held by the bank in relation to a trust does not
exceed twenty percent of the sum of the aggregate of the
Stated Amounts of the notes; or
o St.George Bank provided that St.George Bank has a short-term
rating at least F-1+ from Fitch IBCA, P-1 from Moody's, and
A-1+ from Standard & Poor's;
Australian Establishment ............ means a business carried on, at or through a permanent
establishment in Australia
Authorized Investments .............. consist of the following:
o cash on hand or at an Approved Bank;
o bonds, debentures, stock or treasury bills of any
government of an Australian jurisdiction;
o debentures or stock of any public statutory body
constituted under the law of any Australian jurisdiction
where the repayment of the principal is secured and the
interest payable on the security is guaranteed by the
government of an Australian jurisdiction;
o notes or other securities of any government of an Australian
jurisdiction;
o deposits with, or the acquisition of certificates of deposit,
whether negotiable, convertible or otherwise, issued by an
Approved Bank;
o 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 an Approved Bank;
o securities which are "mortgage-backed securities" within
the meaning of both the Duties Act, 1997 of New South Wales
and the Trustee Act, 1958 of Victoria;
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o any other assets of a class of assets that are both:
o prescribed for the purposes of sub-paragraph
____ of the definition of a "prescribed property" in the
Duties Act, 1997 of New South Wales or are otherwise
included within the definition of "pool of mortgages"
in that Act, and
o 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.
As used in this definition, expressions will be construed and,
if necessary read down, so that the notes in relation to the
Trust constitute "mortgage-backed securities" for the purposes
of both the Duties Act, 1997 of New South Wales and the Stamps
Act, 1958 of Victoria.
Each of the investments in the second, third, fourth, seventh
and eighth bullet points outlined above must have a long term
rating of AAA or a short term rating of A-1+, as the case may
be, from Standard & Poor's, a long term rating of Aaa or a
short term rating of P-1, as the case may be, from Moody's
and a long term rating of AAA or a short term rating of F1+,
as the case may be, from Fitch IBCA. Each of the investments
in the second to eighth bullet points outlined above,
inclusive, must mature no later than the next quarterly
payment date following its acquisition. Each investment must
be denominated in Australian dollars. Each investment must be
of a type which does not adversely affect the risk weighting
expected to be attributed to the notes by the [Financial
Services Authority] [Bank of England] and must be held by, or
in the name of, the Issuer trustee or its nominee.
Available Income .................... see page ____
Basic Terms Modification ............ means any modification which serves to alter, add, or modify the
terms and conditions of such class of 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 noteholders as a whole or the class of
noteholders, which shall include any modification to the date
of
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maturity of the class of notes, or a modification which would
have the effect of postponing any day for payment of interest in
respect of the class of notes, reducing or canceling the amount
of principal payable in respect of the class of notes or the rate
of interest applicable to the class of notes or altering the
percentage of the aggregate outstanding principal balance
required to consent to any action or altering the currency of
payment of the class of notes or an alteration of the date or
priority of redemption of the class of notes.
Benefit Plan ........................ means a pension, profit-sharing or other employee benefit
plan, as well as individual retirement accounts and certain
types of Keogh Agreement Plans.
Business Day ........................ in relation to the Note Trust Deed, the Agency Agreement, any
Class A note and any US$ payments the currency swap, means:
o any day, other than a Saturday, Sunday or public holiday, on
which banks are open for business in London, New York City and
Sydney and in relation to any other Transaction Documents and
A$ payments under the currency swap, means:
o any day, other than a Saturday, Sunday or public holiday, on
which banks are open for business in Sydney.
Carryover Class A Charge Offs........ means, on any quarterly determination date in relation to a Class A
note, the aggregate of Class A Charge Offs in relation to that
Class A note prior to that quarterly determination date which have
not been reinstated as described in this prospectus.
Carryover Class B Charge Offs ....... means, on any quarterly 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 determination date which have not been reinstated as
described in this prospectus.
Carryover Redraw Charge Offs......... means, on any quarterly determination date in relation the redraw
facility, the aggregate of Redraw Charge prior to that quarterly
determination date which have not been reinstated as described in this
prospectus.
Class A Charge Off .................. means a Principal Charge Off allocated against the Class A notes.
Class B Charge Off .................. means a Principal Charge Off allocated against the Class B notes.
Code ................................ means the Internal Revenue Code of 1986.
Default ............................. means a failure by the issuer trustee to comply with:
o an obligation which is expressly imposed on it by the terms
of a Transaction Document; or
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o a written direction given by the manager in accordance with a
Transaction Document and in terms which are consistent with the
requirements of the Transaction Documents in circumstances where
the Transaction Documents require or contemplate that the issuer
trustee will comply that direction;
in each case within any period of time specified in, or
contemplated by, the relevant Transaction Document for such
compliance. However, it will not be a Default if the issuer
trustee does not comply with an obligation or direction where the
note trustee or the security trustee directs the issuer trustee
not to comply with that obligation or direction.
DTC ................................. the Depository Trust Company
Eligibility Criteria ................ see page ____
ERISA ............................... means the Employee Retirement Income Security Act
o any security interest over the trust assets is enforced;
o all or any part of any Transaction Document (other than
the basis swap, the redraw facility or the currency swap, in
respect of a termination because of a change in the law) 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 basis swap, the
standby basis swap, the redraw facility or the currency
swap); or
o without the prior consent of the Security Trustee, that consent
being subject in accordance with the terms of the Security Trust
Deed to the prior written consent of the Note Trustee;
o 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;
o the trust is held or is conceded by the issuer trustee
not to have been constituted or to have been imperfectly
constituted; or
o 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.
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Excess Available Income ............. see page ____
Exchange Act ........................ means the Securities Exchange Act of 1934, as amended.
Extraordinary Resolution ............ means 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 a written resolution signed by all of the Voting
Mortgagees
Fair Market Value ................... means the fair market value as agreed on by the issuer trustee,
based on appropriate expert advice, and the seller.
Finance Charge Collections .......... see page ____
Finance Charge Loss ................. means, with respect to any housing loan, Liquidation Losses which
are attributable to interest, fees and expenses in relation to
the housing loan.
Financial Services Act .............. means the Financial Services Act 1986 of the United Kingdom
Gross Principal Collections ......... see page ____
Guaranteed Shortfall ................ see page ____
Insolvency Event .................... means with respect to the issuer trustee, in its personal capacity
and as trustee of a trust, the manager, the servicer, St.George
Bank or the custodian, the happening of any of the following
events:
o except for the purpose of a solvent reconstruction or amalgamation:
o 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:
o the winding up, dissolution or administration of the relevant
corporation; or
o 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;
o and is not dismissed, ceased or withdrawn within 15 business days;
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;
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o 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;
o 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
o anything analogous to an event referred to in the four
preceding paragraphs or having substantially similar effect,
occurs with respect to the relevant corporation.
Interest Period ..................... In relation to a quarterly payment date, means the Period from and
including the preceding quarterly date to but excluding the
applicable quarterly payment date. However, the first and last interest
periods are as follows:
o first: period from and including the closing date to but
excluding the first quarterly payment date
o last: if the notes are fully retired upon redemption in full,
the period from and including the quarterly payment date
preceding the date on which the notes are redeemed in full to
but excluding the day on which the notes are redeemed in full.
If the notes are not fully retired upon redemption in full and
payment of principal is improperly refused, the last interest
period will end on the date on which the note trustee or
principal paying agent receives the moneys in respect of the
notes and notifies the holders of that receipt or the date on
which the outstanding principal balance of the note, less
charge offs, has been reduced to zero; provided that interest
on that note shall thereafter begin to accrue from and
including any date on which the outstanding principal balance
of that note, less charge offs, becomes greater than zero.
ISDA Definitions .................... means the Definitions of the International Swaps and Derivatives
Association, Inc.
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Issuer Trustee's Default ............ means
o an Insolvency Event has occurred and is continuing in
relation to the issuer trustee in its personal capacity;
o any action is taken in relation to the issuer trustee in its
personal capacity which causes the rating of any notes to be
downgraded or withdrawn;
o the issuer trustee, or any employee or officer of the issuer
trustee, breaches any obligation or duty imposed on the
issuer trustee under any Transaction Document in relation to
the trust where the manager reasonably believes it may have a
Material Adverse Effect and the issuer trustee falls or
neglects after 30 days' notice from the manager to remedy
that breach;
o the issuer trustee merges or consolidates with another entity
without ensuring that the resulting merged or consolidated
entity assumes the issuer trustee's obligations under the
Transaction Documents; or
o there is a change in effective control of the issuer trustee
from that existing on the date of the Master Trust Deed to a
competitor unless approved by the manager. A competitor is a
bank or financial institution that carries on certain
businesses that are the same as, or substantially similar to
or in competition with, a business conducted by the seller.
LIBOR ............................... means:
o the rate applicable to any Interest Period for three-month, or
in the case of the first Interest Period, two-month, deposits
in U.S. dollars which appears on the Telerate Page 3750 as of
11:00 a.m., London time, on the determination date; or
o 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 calculation agent had specified "USD-LIBOR-
Reference Banks" as the applicable Floating Rate Option under
under the ISDA Definitions.
Liquidation Losses .................. means, with respect to any housing loan for a collection
period, the amount, if any, by which the Unpaid Balance of a housing
loan, together with the expenses relating to the housing loan,
exceeds the Liquidation Proceeds of the housing loan.
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Liquidation Proceeds ................ means, with respect to a housing loan, all amounts recovered from the
enforcement of the housing loan and the related mortgage excluding
proceeds of a mortgage insurance policy.
Liquidity Draw ...................... means a draw on the Liquidity Account to cover
Liquidity Shortfall ................. means, for any determination date, the excess of the
Shortfall over the amount available for a Principal Draw
Manager's Default ................... means
o the manager falls 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;
o an Insolvency Event has occurred and is continuing in relation
to the manager;
o the manager breaches any obligation or duty imposed on the
manager under the Master Trust Deed, any other Transaction
Document or any other deed, agreement or arrangement entered
into by the 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 manager on the
information provided by, or action taken by, the servicer, or
if the manager has not received information from the servicer
which the manager requires to comply with the obligation or
duty; or
o a representation, warranty or statement by or on behalf of
the 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 a Material Adverse
Effect.
Master Trust Deed ................... means the Master Trust Deed dated March 14, 1998, among St.George Bank,
the manager and AXA Trustees Limited.
Material Adverse Effect ............. means, in relation to an event, an event which will materially and
adversely affect the amount or the timing of a payment to a noteholder.
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Mortgage Shortfall .................. See page ____
Mortgagees .......................... see page ____
Noteholder Mortgagees ............... means the note trustee, on behalf of the Class A noteholders and the
Class B noteholders.
Note Trust Deed ..................... means the note trust deed among the issuer trustee, the manager, the
note trustee, the principal paying agent and the calculation agent.
One Month Bank Bill Rate ............ on any date means the rate:
o calculated by taking the simple average of the rates quoted on
the Reuters Screen BBSW Page at approximately 10:00 a.m., Sydney
time, on each of that date and the preceding two business days
for each BBSW 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 30 days;
o eliminating the highest and lowest mean rates;
o taking the average of the remaining mean rates; and
o if necessary, rounding the resultant figure upwards to four
decimal places.
If on any day fewer than five BBSW Reference Banks have quoted
rates on the Reuters Screen BBSW Page, the rate for that day
shall be calculated as above by taking the rates otherwise quoted
by five of the BBSW Reference Banks on application by the parties
for such a bill of the same tenor. If in respect of any day the
rate for that day cannot be determined in accordance with the
foregoing procedures then the rate for that day shall mean such
rate as is agreed between the manager and the issuer trustee
having regard to comparable indices then available, except that
on the first reset date, as defined in the redraw facility, of
any Redraw Advance and the two business days preceding that reset
date the One Month Bank Bill Rate shall be an interpolated rate
calculated with reference to the tenor of the relevant period
from that reset date to, but not including, the next reset date.
Payment Shortfall .................. means, for any determination date, the excess of Total Payments over
Available Income.
Principal Charge Off ............... means, with respect to a collection period, the amount of Mortgage
Shortfalls for that collection period.
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Principal Collections ............... see page ___
Principal Draw ...................... means an application of Principal Collections to cover Payment
Shortfall.
Principal Loss ...................... for a collection period means, with respect to any housing loan,
Liquidation Losses which are to principal in relation to the
housing loan.
Recovered Amount .................... amounts received from St. George by the issuer trustee which related
to amounts previously paid by the standby guarantor to the issuer trustee
allocable, as determined by the manager, to income.
Redraw Advance ...................... means a drawdown on the redraw facility.
Redraw Charge Off ................... means a Principal Charge Off allocated against the Redraw Principal
Outstanding.
Redraw Principal Outstanding......... means the amount by which Gross Principal Collections and the
available Redraw Retention Amount are insufficient to fund
redraws.
Redraw Retention Amount ............. means, for any quarterly collection period, the amount by the
manager on the preceding quarterly determination date, as described in
"Description of Class A Notes - Redraws", on page ____.
Redraw Shortfall .................... means the amount by which Gross Principal Collections and the available
Redraw Retention Amount are insufficient to fund redraws.
Relevant Date ....................... means the date on which a payment first becomes due but, if the full
amount of the money payable has not 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 notes.
Representative ...................... is in the case of any noteholder, a person or body corporate appointed
as a proxy for that noteholder.
Secured Moneys ...................... means all money which the issuer trustee is or at any time may become
actually or contingently liable to pay to or for the account of any
Mortgagee for any reason whatever under or in connection with a
Transition Document.
Servicing Agreement ................. means the Servicing Agreement as amended by the Servicing Agreement Amendment
Agreement, each among the issuer trustee, the manager, the seller, the
servicer and the note trustee.
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Standby Bank Guarantee Limit......... see page ____
Supplementary Terms Notice........... means the supplementary terms notice among the issuer trustee,
the manager, St.George Bank, as seller, servicer and indemnifier,
the security trustee, the note trustee and the custodian.
Tax Act ............................. means the Income Tax Assessment Act of 1936 of the Commonwealth
of Australia.
Termination Date .................... with respect to the trust shall be the earlier to occur of:
o the date which is 80 years after the date of creation of the
trust;
o the termination of the trust under statute or general law;
o full and final enforcement by the security trustee of its
rights under the Security Trust Deed after the occurrence of
an event of default under the Security Trust Deed; or
o at any time after all creditors of the trust have been repaid in
full, the business day immediately following that date.
Three Month Bank Bill Rate........... on any date means the rate:
o calculated by taking the simple average of the rates quoted
on the Reuters Screen BBSW Page at approximately 10:00 a.m.,
Sydney time, on each of that date and the preceding two
business days for each BBSW 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 tenor of 90
days or, where the relevant date is the first day of the
first Interest Period, 60 days;
o eliminating the highest and lowest mean rates;
o taking the average of the remaining mean rates; and
o if necessary, rounding the resultant figure upwards to
four decimal places.
If on any of the days fewer than five BBSW 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 BBSW Reference Banks on application by the
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parties for such a bill of the same tenor. If in respect of any
day the rate for that date cannot be determined in accordance
with the foregoing procedures then the rate for that day shall
mean such rate as is agreed between the manager and St.George
Bank having regard to comparable indices then available.
Threshold Rate ...................... means, at any time, 0.25% per annum plus the rate of interest that
must be set on all of the housing loans, where permitted under the
related loan agreements, which will be sufficient, assuming that
all of the parties to the Transaction Documents and the housing
loans comply with their obligations under the Transaction
Documents and the housing loans, when aggregated with the income
produced by the rate of interest on all other housing loans, to
ensure that the issuer trustee will have sufficient collections
to enable it to meet all of the obligations of the trust, including
the repayment of any Principal Draws.
Title Perfection Event .............. means any of the following:
o the seller ceases to have a long term credit rating of at
least "BBB" from Fitch IBCA, "Baa2" from Moody's, or "BBB"
from Standard & Poor's;
o an Insolvency Event occurs with respect to the seller;
o St.George Bank fails to transfer collections to the issuer
trustee within the time required under the Servicing Agreement;
o if the seller is also the servicer, a Servicer Transfer Event;
o if the seller is also the redraw facility provider, a breach of
its obligations, undertakings or representations under the redraw
facility if such breach will have a Material Adverse Effect; or
o the seller breaches any representation, warranty, covenant or
undertaking in any Transaction Document which is not remedied
within thirty days of the earlier of the seller becoming aware
of or receiving notice of the breach.
Total Available Funds ............... means the sum of Available Income, Principal Draws Liquidity Draws.
Total Payments ...................... means all amounts payable by the issuer trustee on a payment date,
as described on page ____.
Unpaid Balance ...................... means the unpaid principal amount of the housing
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loan plus the unpaid amount of all finance charges, interest
payments and other amounts accrued on or payable under or in
connection with the housing loan or the related mortgage.
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 agreed to by the calculation agent and
the currency swap provider - at approximately 11:00 a.m., London
time, on the quarterly determination date to prime banks in the
London interbank market for a period of three months, or in the
case of the first Interest Period, two months, commencing on the
first day of the Interest Period and in a Representative Amount,
as defined in the ISDA Definitions. The calculation agent 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 calculation agent and the
currency swap provider, at approximately 11:00 a.m., New York
City time, on that quarterly determination date for loans in U.S.
dollars to leading European banks for a period of three months,
or in the case of the first Interest Period, two months,
commencing on the first day of the Interest Period and in a
Representative Amount. If no such rates are available in New York
City, then the rate for such Interest Period shall be the most
recently determined rate in accordance with this paragraph.
Voting Mortgages .................... are:
o the note trustee alone for as long as amounts outstanding under
the notes are 75% or more of Secured Moneys; and
o otherwise, the note trustee, acting on behalf of the noteholders,
and each other Mortgagee.
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APPENDIX I
TERMS AND CONDITIONS OF THE CLASS A-1 NOTES
[copy to come]
AI - 1
<PAGE>
APPENDIX II
TERMS AND CONDITIONS OF THE CLASS A-2 NOTES
[copy to come]
AII - 1
<PAGE>
Crusade Management Limited
$_____
Mortgage Backed
Floating Rate Notes
Crusade Global Trust No. 1 of 1999
[logo of Crusade Management Limited]
----------
PROSPECTUS
----------
Underwriters
Credit Suisse First Boston Corporation
_____________, 1999
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with different information.
We are not offering the securities in any state where the offer is not
permitted.
Until __________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as an underwriter and with respect to unsold allotments
or subscriptions.
<PAGE>
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the notes being registered under this
registration statement, other than underwriting discounts and commissions:
SEC Registration Fee ........................................
Printing and Engraving ......................................
Legal Fees and Expenses .....................................
Trustee Fees and Expenses ...................................
Rating Agency Fees ..........................................
Accounting Fees & Expenses ..................................
Miscellaneous ...............................................
-----------
Total .......................................................
===========
* All amounts except the SEC registration fee are estimates of expenses
incurred in connection with the issuance and distribution of the notes.
Item 14. Indemnification of Directors and Officers.
Pursuant to Section 109 of the Articles of Association of the registrant:
(1) To the extent permitted by law and without limiting the powers of the
registrant, the registrant must indemnify each person who is, or has
been, a director or secretary of the registrant against any liability
which results directly or indirectly from facts or circumstances
relating to the person serving or having served in that capacity in
relation to the registrant or any of its subsidiaries or in the
capacity of an employee of the registrant or any of its subsidiaries:
(a) to any person (other than the registrant or a related body
corporate), which does not arise out of conduct involving a lack
of good faith or conduct known to the person to be wrongful;
(b) for costs and expenses incurred by the person in defending
proceedings, whether civil or criminal, in which judgment is
given in favor of the person or in which the person is acquitted,
or in connection with any application in relation to such
proceedings in which the court grants relief to the person under
the Corporations Law and the Corporations Regulations of
Australia.
(2) The registrant need not indemnify a person as provided for in
paragraph (1) in respect of a liability to the extent that the person
is entitled to an indemnity in respect of that liability under a
contract of insurance.
(3) To the extent permitted by law and without limiting the powers of the
registrant, the board of directors may authorize the registrant to,
and the registrant may enter into any:
(a) documentary indemnity in favor of; or
II - 1
<PAGE>
(b) insurance policy for the benefit of,
a person who is, or has been, a director, secretary, auditor,
employee or other officer of the registrant or of a subsidiary of
the registrant, which indemnity or insurance policy may be in such
terms as the board of directors approves and, in particular, may apply
to acts or omissions prior to or after the time of entering into the
indemnity or policy; and
(4) The benefit of each indemnity given in paragraph (1) of Section 109
continues, even after its terms or the terms of this paragraph are
modified or deleted, in respect of a liability arising out of acts or
omissions occurring prior to the modification or deletion.
Item 15. Recent Sales of Unregistered Securities.
The following information relates to securities of the registrant issued or
sold by the registrant, or for which it has acted as manager with respect to,
that were not registered under the Securities Act:
1. The registrant was incorporated on February 2, 1996. Five fully paid
shares of A$1.00 each were allotted to St.George Bank on February 21,
1996.
2. The registrant acted as manager with respect to the following:
<TABLE>
<CAPTION>
Crusade Trust Crusade Euro Trust Crusade Euro Trust
No 1 of 1997 No 1 of 1998 No 2 of 1998
------------------------- ------------------------- ------------------------
<S> <C> <C> <C>
Date .............. August 1, 1997 March 19, 1998 September 29, 1998
Amount ............ A$500 million US$500 million US$325 million
Type .............. Mortgage Backed Mortgage Backed Mortgage Backed
Floating Rate Notes Floating Rate Notes Floating Rate Notes
Class A Notes $A500m Class A Notes US$496m Class A Notes US$314m
Class B Notes US$4m Class B Notes US$11m
Exemption from 100% domestic issue, not 100% European issue, not 100% European issue, not
Registration ...... offered in the USA. offered in the USA. offered in the USA.
Principal Bankers Trust Australia Deutsche Morgan Grenfell Deutsche Bank BT Alex
underwriters ...... Limited BT Alex Brown Brown International
International UBS Limited Warburg Dillon Read
Underwriting Fees.. A$1,500,000 US$741,000 US$619,000
Offering Price .... BBSW + 23 basis points Class A: LIBOR + 18 Class A: LIBOR + 20
basis points Class B: basis points Class B:
LIBOR + 30 basis points LIBOR + 45 basis points
Weighted Average
Life to call ....... 3.85 years 3.5 years 3.6 years
</TABLE>
Item 16. Exhibits and Financial Statement Schedules.
1.1 Form of Underwriting Agreement.*
3.1 Memorandum of Association of the Registrant.*
3.2 Articles of Association of the Registrant.*
4.1 Master Trust Deed.*
4.2 Form of the Supplementary Terms Notice.*
4.3 Form of the Security Trust Deed.*
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<PAGE>
4.4 Form of the Note Trust Deed.*
4.5 Form of Agency Agreement.*
5.1 Opinion of Mayer, Brown & Platt as to legality of the notes.*
8.1 Opinion of Mayer, Brown & Platt as to certain tax matters (included in
Exhibit 5.1 hereof).*
8.2 Opinion of Allen Allen & Hemsley as to certain tax matters.*
10.1 The Servicing Agreement.*
10.2 Form of Servicing Agreement Amendment.*
10.3 Form of the Redraw Facility Agreement.*
10.4 Form of the Basis Swap.*
10.5 Form of the Fixed-Floating Rate Swap.*
10.6 Form of the Cross Currency Swap.*
10.7 Form of Standby Guarantee.*
10.8 Form of Seller Loan Agreement.*
23.1 Consent of Mayer, Brown & Platt (included in Exhibit 5.1 hereof).*
23.2 Consent of Allen Allen & Hemsley (included in Exhibit 8.2 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Note Trustee.*
99.1 Opinion of Allen Allen & Hemsley as to Enforceability of U.S.
Judgments under Australian Law.*
- ----------
* To be filed by Amendment.
Item 17. Undertakings.
The undersigned registrant hereby undertakes that for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this registration statement as of the time
it was declared effective. For the purposes of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-11 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sydney, Australia, on the 6th day of August 1999.
Crusade Management Limited
By: /s/ Paul Leslie Gibbeson
-------------------------
Name: Paul Leslie Gibbeson
Title: Secretary
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<PAGE>
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Michael Bowan and Diane Citron, or any of
them, his or her true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him or her and his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Gregory Michael Bartlett Principal Executive Officer August 6, 1999
----------------------------
Gregory Michael Bartlett
/s/ Steven George McKerihan Principal Financial Officer August 6, 1999
----------------------------
Steven George McKerihan
/s/ Steven George McKerihan Principal Accounting Officer August 6, 1999
----------------------------
Steven George McKerihan
/s/ Gregory Michael Bartlett Director August 6, 1999
----------------------------
Gregory Michael Bartlett
/s/ Steven George McKerihan Director August 6, 1999
----------------------------
Steven George McKerihan
/s/ Keith Andrew Ward Director August 6, 1999
----------------------------
Keith Andrew Ward
</TABLE>
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<PAGE>
Signature of Authorized Representative
Pursuant to the requirements of the Securities Act of 1933, the undersigned
hereby certifies that it is the agent for service of process in the United
States of the registrant with respect to the Registration Statement and signs
this Registration Statement solely in such capacity.
/s/ Stephanie McDonald
-----------------------------------
Name: Stephanie McDonald
Address: CT Corporation System
1633 Broadway
New York, New York 10019
Telephone: (212) 479-8247
II - 6
<PAGE>
Exhibits Index
<TABLE>
<CAPTION>
Sequential
Exhibit Page
No. Description of Exhibit Number
- ------- ---------------------------------------------------------------------- ----------
<S> <C> <C>
1.1 Form of Underwriting Agreement.*
3.1 Memorandum of Association of the Registrant.*
3.2 Articles of Association of the Registrant.*
4.1 Master Trust Deed.*
4.2 Form of the Supplementary Terms Notice.*
4.3 Form of the Security Trust Deed.*
4.4 Form of the Note Trust Deed.*
4.5 Form of Agency Agreement.*
5.1 Opinion of Mayer, Brown & Platt as to legality of the notes.*
8.1 Opinion of Mayer, Brown & Platt as to certain tax matters (included in
Exhibit 5.1 hereof).*
8.2 Opinion of Allen Allen & Hemsley as to certain tax matters.*
10.1 The Servicing Agreement.*
10.2 Form of Servicing Agreement Amendment*
10.3 Form of the Redraw Facility Agreement.*
10.4 Form of the Basis Swap.*
10.5 Form of the Fixed-Floating Rate Swap.*
10.6 Form of the Cross Currency Swap.*
10.7 Form of Standby Guarantee.*
10.8 Form of Seller Loan Agreement.*
23.1 Consent of Mayer, Brown & Platt (included in Exhibit 5.1 hereof).*
23.2 Consent of Allen Allen & Hemsley (included in Exhibit 8.2 hereof).*
24.1 Power of Attorney (included on signature pages).
25.1 Statement of Eligibility of Note Trustee.*
99.1 Opinion of Allen Allen & Hemsley as to Enforceability of U.S.
Judgments under Australian Law.*
99.1 Opinion of Allen Allen & Hemsley as to Enforceability of U.S.
Judgments under Australian Law.*
</TABLE>
- ----------
* To be filed by amendment.
