<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 4, 2001
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FILED ON
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
HOMESIDE MORTGAGE SECURITIES, INC.
HOMESIDE GLOBAL MBS MANAGER, INC.
(Exact name of registrants as specified in governing instruments)
7301 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 281-3000
(address of principal executive offices)
ROBERT J. JACOBS
HOMESIDE MORTGAGE SECURITIES, INC.
HOMESIDE GLOBAL MBS MANAGER, INC.
7301 BAYMEADOWS WAY
JACKSONVILLE, FLORIDA 32256
(904) 281-3422
(name and address of agent for service)
------------------------------
COPIES TO:
JOHN ARNHOLZ
BROWN & WOOD LLP
1666 K STREET, NW
WASHINGTON, DC 20006
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon the
effective date of this registration statement, and 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
AMOUNT TO BE OFFERING AGGREGATE OFFERING AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED REGISTERED (1) PRICE PER UNIT (2) PRICE (2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Mortgage Backed Floating Rate Notes,
Series 2001-1, Class A................ $1,000,000 100% $1,000,000 $250.00
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
--------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IN NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE OR FOREIGN JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED JANUARY 4, 2001
US$ Mortgage Backed Floating Rate Notes, Series 2001-1, Class A
HOMESIDE MORTGAGE SECURITIES TRUST 2001-1
<TABLE>
<S> <C> <C>
[LOGO]
[LOGO]
NATIONAL AUSTRALIA BANK LIMITED
(ABN 12 004 044 937)
SELLER AND SERVICER
PERPETUAL TRUSTEE COMPANY LIMITED
(ABN 42 000 001 007)
ISSUER TRUSTEE
HOMESIDE GLOBAL MBS MANAGER, INC.
TRUST MANAGER
</TABLE>
THE CLASS A NOTES
The Class A notes will be issued by the issuer trustee
in its capacity as trustee of the HomeSide Mortgage
Securities Trust 2001-1.
THE TRUST
The HomeSide Mortgage Securities Trust 2001-1 will be
established by the trust manager, HomeSide Global MBS
Manager, Inc. The trust will be formed under, and governed
by, the laws of the Australian Capital Territory.
THE MORTGAGE LOANS
The Class A notes will be secured by a pool of first
ranking mortgage loans originated by National Australia
Bank Limited which are, in turn, secured by residential
properties located in Australia. The mortgage loans will
be serviced by National Australia Bank Limited, trading as
HomeSide, in the manner described in this prospectus.
LISTING
An application has been made to list the Class A notes
on the Luxembourg Stock Exchange.
<PAGE>
Neither the Class A notes nor the underlying mortgage loans are insured or
guaranteed by any governmental agency or instrumentality. The Class A notes are
not deposits or other liabilities of the National Australia Bank Limited or any
of its affiliates for any purpose, including the Banking Act of 1959 in
Australia.
INVESTING IN THE CLASS A NOTES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE A-18. THE CLASS A NOTES REPRESENT OBLIGATIONS OF THE ISSUER TRUSTEE IN ITS
CAPACITY AS TRUSTEE OF THE HOMESIDE MORTGAGE SECURITIES TRUST 2001-1 ONLY AND
ARE NOT GUARANTEED BY ANY OTHER ENTITY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE CLASS A NOTES OR DETERMINED THAT THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY CONTRARY REPRESENTATION IS A
CRIMINAL OFFENSE.
<TABLE>
INITIAL INITIAL PROCEEDS TO
PRINCIPAL INTEREST PRICE TO UNDERWRITING ISSUER
BALANCE RATE PUBLIC DISCOUNTS TRUSTEE
<S> <C> <C> <C> <C> <C>
Class A Notes............... $ % % % $
</TABLE>
You should refer to "Plan of Distribution" for additional information on the
offering of the Class A notes.
<TABLE>
<S> <C> <C>
DEUTSCHE BANC J.P. MORGAN & CO. NATIONAL AUSTRALIA BANK LIMITED
ALEX. BROWN (CO-LEAD MANAGER) (LONDON BRANCH) (CO-LEAD
(CO-LEAD MANAGER AND MANAGER)
GLOBAL BOOKRUNNER)
</TABLE>
BANC OF AMERICA SECURITIES LLC
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
The date of this prospectus is January , 2001.
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
This prospectus consists of two parts: (1) part A, which describes the
specific terms of the HomeSide Mortgage Securities Trust 2001-1 and the related
offering of Class A notes and (2) part B, which provides general information
about the HomeSide Securitization Program.
Neither part A nor part B contains all of the information included in the
registration statement filed with the Securities and Exchange Commission. The
registration statement also includes copies of the various contracts and
documents referred to in this prospectus. You may obtain copies of these
documents for review. See "Where You Can Find More Information" in part B of
this prospectus.
------------------------
iii
<PAGE>
TABLE OF CONTENTS FOR PART A
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Important Notice About Information Presented in this
Prospectus................................................ iii
U.S./Australian Dollar Presentation......................... vi
Australian Disclaimers...................................... vi
Disclaimers with Respect to Sales to Non-U.S. Investors..... vi
Information and Notices in Connection with Luxembourg
Listing................................................... ix
Structural Diagram.......................................... x
Summary..................................................... A-1
Risk Factors................................................ A-18
The Trust................................................... A-32
General................................................... A-32
Assets of the Trust......................................... A-32
The Mortgage Loans........................................ A-33
Transfer and Assignment of the Mortgage Loans............. A-33
Representations, Warranties and Eligibility Criteria...... A-33
Description of the Pool of Mortgage Loans................... A-34
General................................................... A-34
Details of the Pool of Mortgage Loans..................... A-34
Description of the Class A Notes............................ A-35
General................................................... A-35
Governing Law............................................. A-35
Form of Class A Notes..................................... A-35
Collections; Distributions on the Class A Notes........... A-36
Key Dates and Periods..................................... A-38
Determination of Total Available Income................... A-39
Liquidity Facility Advance................................ A-40
Distribution of Total Available Income.................... A-40
Interest on the Notes..................................... A-41
Determination of Available Principal Collections.......... A-42
Distribution of Available Principal Collections........... A-43
Allocation of Principal to Class A Notes and Class B
Notes................................................... A-43
Redraws................................................... A-45
Principal Charge-offs..................................... A-46
The Interest Rate Swaps................................... A-48
The Currency Swaps........................................ A-51
Withholding or Tax Deductions............................. A-56
Redemption of the Notes for Taxation or Other Reasons..... A-57
Redemption of the Notes upon an Event of Default.......... A-57
Optional Redemption of the Notes.......................... A-59
Final Maturity Date....................................... A-60
Redemption upon Final Payment............................. A-60
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
No Payments of Principal in Excess of Stated Amount....... A-60
The Liquidity Facility.................................... A-60
The Redraw Facility....................................... A-63
Seller Deposit............................................ A-65
The Mortgage Insurance Policies............................. A-66
General................................................... A-66
Description of the Mortgage Insurers...................... A-68
Description of the Trustees................................. A-69
The Issuer Trustee........................................ A-69
The Security Trustee...................................... A-69
The Note Trustee.......................................... A-70
Servicing................................................... A-70
The Servicer.............................................. A-70
Servicing of Mortgage Loans............................... A-70
Collection and Enforcement Procedures..................... A-70
Optional Repurchase of Defaulted Mortgage Loans........... A-71
Delinquency, Foreclosure and Loss Statistics.............. A-71
Prepayment and Yield Considerations......................... A-75
General................................................... A-75
Prepayments............................................... A-75
Rate of Payments.......................................... A-76
Prepayment Rate Model and Modeling Assumptions............ A-76
Additional Information...................................... A-79
Legal Investment Considerations............................. A-79
ERISA Considerations........................................ A-79
Plan of Distribution........................................ A-80
Underwriting.............................................. A-80
Offering Restrictions..................................... A-81
Exchange Controls and Limitations......................... A-82
Announcement................................................ A-83
Ratings of the Class A Notes................................ A-83
Legal Matters............................................... A-83
Listing and General Information............................. A-84
Listing................................................... A-84
Authorization............................................. A-84
Appendix A-I Mortgage Loan Pool Characteristics............. A-I-1
Appendix A-II Terms and Conditions of the Class A Notes..... A-II-1
</TABLE>
v
<PAGE>
U.S./AUSTRALIAN 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
U.S.$ = 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 , 2001. 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.
AUSTRALIAN DISCLAIMERS
- The Class A notes do not represent deposits or other liabilities of
National Australia Bank Limited, the originator of the mortgage loans and
the indirect parent of HomeSide Global MBS Manager, Inc., the trust
manager, and HomeSide Mortgage Securities, Inc., the depositor, or any
other affiliates of National Australia Bank Limited.
- The holding of the Class A notes is subject to investment risk, including
possible delays in repayment and loss of income and principal invested.
- None of National Australia Bank Limited (in its individual capacity or as
seller, servicer, basis swap provider, fixed rate swap provider, a
currency swap provider, liquidity facility provider or redraw facility
provider), HomeSide Mortgage Securities, Inc., HomeSide Global MBS
Manager, Inc., or any affiliate of the foregoing entities, the issuer
trustee, the security trustee, the note trustee, the note registrar, any
paying agent, the calculation agent nor any underwriter in any way stands
behind the value and/or performance of the Class A notes or the assets of
the trust, or guarantees the payment of interest or the repayment of
principal due on the Class A notes, except to the limited extent provided
in the transaction documents for the trust.
- None of the obligations of Perpetual Trustee Company Limited, in its
capacity as issuer trustee of the trust, or HomeSide Global MBS
Manager, Inc., as trust manager in respect of the Class A notes, are
guaranteed in any way by National Australia Bank Limited or any affiliate
of National Australia Bank Limited or by Perpetual Trustee Company Limited
(in its individual capacity) or any affiliate of Perpetual Trustee Company
Limited. The issuer trustee and the security trustee do not guarantee the
success or performance of the trust nor the repayment of capital or any
particular rate of capital or income return.
DISCLAIMERS WITH RESPECT TO SALES TO NON-U.S. INVESTORS
This section applies only to the offering of the Class A notes in countries
other than the United States of America. References to Perpetual Trustee Company
Limited in this section are to that company in its capacity as trustee of the
HomeSide Mortgage Securities Trust 2001-1, and not its individual capacity.
HomeSide Mortgage Securities, Inc., the depositor, and HomeSide Global MBS
Manager, Inc., the trust manager, are responsible and liable for this prospectus
in the United States of America.
The underwriters are offering the Class A notes globally for sale in those
jurisdictions in the United States, Europe, Asia and elsewhere where it is
lawful for the relevant underwriter to make such offers. The distribution of
this prospectus and the offering and sale of the Class A notes in certain
foreign jurisdictions may be restricted by law. This prospectus does not
constitute, and may not be used in connection with, an offer by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to any
person to whom it is unlawful to make such offer or solicitation. Each
underwriter
vi
<PAGE>
has agreed to comply with all applicable securities laws and regulations in each
jurisdiction in which it purchases, offers, sells or delivers Class A notes or
possesses or distributes this prospectus or any other offering material. See
"Plan of Distribution" in part A of this prospectus. You should also inform
yourself about and observe any of these restrictions.
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 Class A notes by or on behalf
of Perpetual Trustee Company Limited, HomeSide Mortgage Securities, Inc. or
HomeSide Global MBS Manager, Inc. 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.
HomeSide Mortgage Securities, Inc. and HomeSide Global MBS Manager, Inc.
accept responsibility for the information contained in this prospectus other
than the information for which Perpetual Trustee Company Limited, National
Australia Bank Limited, The Bank of New York or Deutsche Bank AG (New York
Branch) take responsibility as set forth in the fifth, sixth, seventh and eighth
paragraphs of this section. To the best of the knowledge and belief of each such
entity (and each such entity has taken reasonable care to ensure that such is
the case), the information contained in the prospectus is in accordance with the
facts and does not omit anything likely to affect the import of such
information.
Perpetual Trustee Company Limited accepts responsibility for the information
contained in "Description of the Trustees--The Issuer Trustee" in part A of this
prospectus. To the best of the knowledge and belief of Perpetual Trustee Company
Limited, which has taken reasonable care to ensure that such is the case, the
information contained in that section is in accordance with the facts and does
not omit anything likely to affect the import of that information. Perpetual
Trustee Company Limited expressly disclaims and takes no responsibility for any
other part of this prospectus. Perpetual Trustee Company Limited does not
guarantee the success or performance of the HomeSide Mortgage Securities Trust
2001-1 nor the repayment of capital or any particular rate of capital or income
return on the Class A notes.
National Australia Bank Limited, as seller, servicer, fixed rate swap
provider, basis swap provider, a currency swap provider, liquidity facility
provider and redraw facility provider, accepts responsibility for the
information contained in "Summary--The Mortgage Loans," "Description of the Pool
of Mortgage Loans," "Servicing" and Appendix A-I (Mortgage Loan Pool
Characteristics) in part A of this prospectus and "HomeSide Securitization
Program," "National Australia Bank Limited," "The Servicer," "The Seller" and
"The Seller's Residential Loan Program" in part B of this prospectus. To the
best of the knowledge and belief of National Australia 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 that information.
The Bank of New York accepts responsibility for the information contained in
"Description of the Trustees--The Note Trustee" in part A of this prospectus and
"Powers, Duties and Liabilities under the Transaction Documents--The Note
Trustee" in part B of this prospectus. To the best of the knowledge and belief
of The Bank of New York, 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 that
information.
Deutsche Bank AG (New York Branch) accepts responsibility for the
information contained in "Description of the Class A Notes--The Currency
Swaps--Deutsche Bank AG, Acting through its New York Branch". To the best of the
knowledge and belief of Deutsche Bank AG (New York Branch), which has taken all
reasonable care to ensure that such is the case, the information
vii
<PAGE>
contained in those sections is in accordance with the facts and does not omit
anything likely to affect the import of that information.
None of National Australia Bank Limited, in its individual capacity and as
seller, servicer, fixed rate swap provider, basis swap provider, a currency swap
provider, liquidity facility provider and redraw facility provider, HomeSide
Mortgage Securities, Inc., as depositor, HomeSide Global MBS Manager, Inc., as
trust manager or Perpetual Trustee Company Limited, as issuer trustee, P.T.
Limited, as security trustee, The Bank of New York, as note trustee, note
registrar, principal paying agent, calculation agent and a paying agent or
Deutsche Bank AG (New York Branch), as a currency swap provider, accepts any
responsibility for any information contained in this prospectus and has not
separately verified the information contained in this prospectus and makes 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 Class A notes except with respect to
the information for which it accepts responsibility in the preceding five
paragraphs.
Except as described in the preceding six paragraphs, National Australia Bank
Limited, in its individual capacity and as seller, servicer, fixed rate swap
provider, basis swap provider, a currency swap provider, liquidity facility
provider and redraw facility provider, Perpetual Trustee Company Limited, in its
individual capacity and as issuer trustee, HomeSide Mortgage Securities, Inc.,
as depositor, HomeSide Global MBS Manager, Inc., as trust manager, P.T. Limited,
in its individual capacity and as security trustee, The Bank of New York, as
note trustee, note registrar, principal paying agent, calculation agent and a
paying agent, Deutsche Bank AG (New York Branch), as a currency swap provider,
and the underwriters do not recommend that any person should purchase any of the
Class A notes and do not accept any responsibility or make any representation as
to the tax consequences of investing in the Class A 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 Class A 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 Class A notes;
- should make their own independent investigation of the trust and the
Class A notes; and
- should seek their own tax, accounting and legal advice as to the
consequences of investing in any of the Class A 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 Class A notes. If such information or representation is
given or received, it must not be relied upon as having been authorized by
National Australia Bank Limited, Perpetual Trustee Company Limited, HomeSide
Mortgage Securities, Inc., HomeSide Global MBS Manager, Inc. or any of the
underwriters.
viii
<PAGE>
Neither the delivery of this prospectus nor any sale made in connection with
this prospectus shall, under any circumstances, create any implication that:
- 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
- any other information supplied in connection with the Class A notes is
correct as of any time subsequent to the date on which it is supplied or,
if different, the date indicated in the document containing the same.
Perpetual Trustee Company Limited's liability to make payments of interest
and principal on the Class A notes is limited to the assets of the trust
available to be applied towards those payments in accordance with the
transaction documents. All claims against Perpetual Trustee Company Limited in
relation to the Class A notes may only be satisfied out of the assets of the
trust and are limited in recourse to the assets of the trust.
INFORMATION AND NOTICES IN CONNECTION WITH LUXEMBOURG LISTING
In connection with the listing of the Class A notes on the Luxembourg Stock
Exchange, the note trustee undertakes to provide Class A noteholders, a copy of
any of the transaction documents related to this offering. Written or oral
requests for such copies should be directed to The Bank of New York (New York
Branch), 101 Barclay Street, 21W, New York, New York, 10286.
This registration statement, including the prospectus, will be available
free of charge at the office of Kredietbank S.A., Luxembourgeoise, 43, Boulevard
Royal, L-2955 Luxembourg.
Notices to holders of the Class A notes will be valid if published in a
leading daily newspaper in the City of New York, in London, and, so long as the
notes are listed on the Luxembourg Stock Exchange, in Luxembourg. It is expected
that publication will be made in the City of New York in THE WALL STREET
JOURNAL, in London in the FINANCIAL TIMES, and in Luxembourg in the LUXEMBOURGER
WORT. Any such notice shall be deemed to have been given on the date of such
publication or, if published more than once, on the date of the first such
publication.
The Luxembourg Stock Exchange takes no responsibility for the contents of
this prospectus, makes no representation as to its accuracy or completeness and
expressly disclaims any liability whatsoever for any loss however arising from
or in reliance upon the whole or any part of the contents of this prospectus.
ix
<PAGE>
STRUCTURAL DIAGRAM*
THE STRUCTURAL DIAGRAM BELOW IDENTIFIES THE PRINCIPAL PARTIES TO THE
TRANSACTION AND SUMMARIZES KEY ASPECTS OF THE TRANSACTION.
[LOGO]
------------------------
* BROKEN LINES INDICATE CASHFLOW; SOLID LINES INDICATE CONVEYANCE OF MORTGAGE
LOANS. SEE "STRUCTURAL OVERVIEW" ON THE FOLLOWING PAGE FOR A SUMMARY
DESCRIPTION OF THE ISSUANCE OF THE NOTES.
x
<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, INCLUDING THE "TERMS AND CONDITIONS OF THE
CLASS A NOTES" AT APPENDIX A-II TO PART A OF THIS PROSPECTUS.
STRUCTURAL OVERVIEW
This prospectus describes the terms and offering of the Mortgage Backed
Floating Rate Notes, Series 2001-1, Class A, the senior class of a series of
notes secured by mortgages on one- to four-family residential properties located
in Australia. The principal parties involved in the issuance and ongoing
administration of the Class A notes are diagrammed on the previous page. See
"Structural Diagram." Their duties and responsibilities differ in certain
respects from their counterparts in U.S. mortgage securitizations and are
summarized below.
All the mortgages underlying the notes were originated by National Australia
Bank Limited (identified as the seller at the top of the preceding diagram).
Prior to issuance of the notes, the mortgages will be conveyed to HomeSide
Mortgage Securities, Inc., a bankruptcy-remote Delaware corporation and
wholly-owned indirect subsidiary of the seller (identified as the depositor in
the preceding diagram), which, in turn, will convey the mortgages to HomeSide
Mortgage Securities Trust 2001-1, an Australian trust. The trust will issue the
notes and otherwise act through Perpetual Trustee Company Limited, as issuer
trustee, an arrangement similar in many respects to the appointment of an owner
trustee in U.S. domestic owner trust securitizations. The Bank of New York, New
York Branch will serve as note trustee for the Class A noteholders and will
perform duties largely comparable to those of an indenture trustee in U.S. debt
offerings (I.E., issuance, administration and representation of the Class A
noteholders in enforcement and judiciary proceedings relating to the note trust
deed and the Class A note terms and conditions as described herein).
To secure payments on the Class A notes, the mortgages will be secured in
favor of P.T. Limited, a separate trustee (identified as the security trustee on
the right-hand side of the diagram) located in Australia. The security trustee's
role in the transaction will be to maintain the security in the mortgages and
other related collateral and take steps to liquidate the assets of HomeSide
Mortgage Securities Trust 2001-1 upon the failure to pay timely noteholders.
Day-to-day administration (I.E., making collections, sending notices) of the
mortgages will be performed by National Australia Bank Limited (trading as
HomeSide), as servicer of the mortgage loans.
Oversight and management of the trust will be maintained by HomeSide Global
MBS Manager, Inc., a Delaware corporation and wholly-owned indirect subsidiary
of the seller, as the trust manager. The duties of the trust manager include
preparation of quarterly reports for noteholders, calculation (and auditing) of
certain amounts (including payments on the notes), maintenance of accounts,
delivery of notices, and other matters.
In addition to originating and selling the mortgages to the trust, National
Australia Bank Limited will act as:
- LIQUIDITY FACILITY PROVIDER. To avoid interruptions in the timely payment
on the notes, the liquidity facility provider will "advance" amounts from
time to time for payment on the notes. Such
A-1
<PAGE>
amounts will be reimbursable to the liquidity provider from future trust
cash flows.
- REDRAW FACILITY PROVIDER. Certain of the mortgage loans permit the
borrower to re-borrow additional amounts from the seller under the
mortgage loan following origination provided certain conditions are
satisfied. The redraw facility provider has been retained to reimburse the
seller for such amounts to the extent trust cash flow is insufficient to
provide that reimbursement. Amounts extended under the redraw facility
will be repaid from future trust cash flow.
- FIXED RATE, BASIS AND CURRENCY SWAP PROVIDERS. To hedge interest rate and
currency exposure, the issuer trustee will enter into several arrangements
with the swap providers listed below. The swap providers (which, in the
case of the currency swaps, will include National Australia Bank Limited
and Deutsche Bank AG (New York Branch) on a joint and several basis),
under separate arrangements, will pay to the trust amounts calculated with
reference to certain interest and currency exchange rates described in
this prospectus in return for specified payments received on the mortgage
loans.
Risk Factors. There are significant risks associated with investment in the
Class A notes, including the general structural risks associated with a
mortgage-backed securitization, such as the financial strength of support
facility providers, special risks associated with an investment in Australian
mortgage loans and special risks associated with certain features of the
seller's mortgage loans to be assigned to the trust. In certain cases, such
risks may overlap one or more of the above categorizations. See "Risk Factors"
in part A of this prospectus.
Governing Law. All of the transaction documents will be governed by the laws
of the Australian Capital Territory, with the exception of the underwriting
documents for the Class A notes, which will be governed by New York law.
PARTIES TO THE TRANSACTION:
<TABLE>
<S> <C>
Trust..................................... HOMESIDE MORTGAGE SECURITIES TRUST 2001-1. The trust was
created by the trust manager pursuant to the master
trust deed and the supplemental deed.
Seller.................................... NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937).
The originator and the seller of the mortgage loans to
the depositor pursuant to an initial sale agreement.
Depositor................................. HOMESIDE MORTGAGE SECURITIES, INC. The depositor, an
indirect U.S. subsidiary of the seller, will acquire the
mortgage loans from the seller pursuant to an initial
sale agreement and immediately thereafter deposit the
mortgage loans to the trust pursuant to the secondary
sale agreement.
Issuer Trustee............................ PERPETUAL TRUSTEE COMPANY LIMITED (ABN 42 000 001 007).
The trustee of the trust and the issuer of the notes
pursuant to the master trust deed and supplemental deed.
Trust Manager............................. HOMESIDE GLOBAL MBS MANAGER, INC. The manager of the
trust appointed pursuant to the master trust deed and
the supplemental deed, and responsible for management of
the assets and liabilities of the trust. HomeSide Global
MBS Manager, Inc. is an indirect U.S. subsidiary of the
seller.
</TABLE>
A-2
<PAGE>
<TABLE>
<S> <C>
Note Trustee.............................. THE BANK OF NEW YORK (New York Branch). The note trustee
appointed pursuant to the note trust deed (I.E., the
indenture) to act for and exercise certain rights of the
Class A noteholders with respect to the Class A notes.
Security Trustee.......................... P.T. LIMITED (ABN 67 004 454 666). The security trustee
will act as trustee for the secured creditors of the
trust holding the benefit of the charge over the assets
of the trust pursuant to the master security trust deed
and the deed of charge.
Servicer.................................. NATIONAL AUSTRALIA BANK LIMITED, trading as HomeSide.
The servicer will act as servicer and custodian of the
mortgage loans on behalf of the issuer trustee pursuant
to the servicing agreement.
Principal Paying Agent and Class A Note
Registrar............................... THE BANK OF NEW YORK (New York Branch)
Paying Agent.............................. THE BANK OF NEW YORK (London Branch)
Calculation Agent......................... THE BANK OF NEW YORK (New York Branch)
Luxembourg Listing Agent.................. KREDIETBANK S.A. LUXEMBOURGEOISE
Luxembourg Paying Agent................... KREDIETBANK S.A. LUXEMBOURGEOISE
Fixed Rate Swap Provider.................. NATIONAL AUSTRALIA BANK LIMITED
Basis Swap Provider....................... NATIONAL AUSTRALIA BANK LIMITED
Currency Swap Providers................... NATIONAL AUSTRALIA BANK LIMITED and DEUTSCHE BANK AG
(New York Branch) on a joint and several basis
Liquidity Facility Provider............... NATIONAL AUSTRALIA BANK LIMITED
Redraw Facility Provider.................. NATIONAL AUSTRALIA BANK LIMITED
Mortgage Insurers......................... GE MORTGAGE INSURANCE PTY LTD, (ABN 61 071 466 344)
(f/k/a HOUSING LOANS INSURANCE CORPORATION PTY LIMITED),
GE CAPITAL MORTGAGE INSURANCE CORPORATION (AUSTRALIA)
PTY LTD (ABN 52 081 488 440) and HOUSING LOANS INSURANCE
CORPORATION (ACN 065 095 721)
Residual Capital Unitholder............... NATIONAL AUSTRALIA BANK LIMITED
Residual Income Unitholder................ NATIONAL AUSTRALIA BANK LIMITED
Underwriters.............................. DEUTSCHE BANK SECURITIES INC., J.P. MORGAN SECURITIES
INC., NATIONAL AUSTRALIA BANK LIMITED (London Branch),
BANC OF AMERICA SECURITIES LLC, LEHMAN BROTHERS INC.,
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED and
SALOMON SMITH BARNEY INC.
Rating Agencies........................... FITCH, INC., MOODY'S INVESTORS SERVICE, INC. and
STANDARD & POOR'S RATINGS GROUP
</TABLE>
A-3
<PAGE>
THE MORTGAGE BACKED FLOATING RATE NOTES, SERIES 2001-1
In addition to the Class A notes, the issuer trustee will also issue
Class B notes as part of Series 2001-1 secured by the same pool of mortgage
loans but junior in right of payment to the Class A notes as described below.
THE CLASS B NOTES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED IN THE UNITED
STATES AND ARE NOT BEING OFFERED BY THIS PROSPECTUS. The following chart
summarizes the principal terms of the Series 2001-1 note issuance:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
CLASS A CLASS B
<S> <C> <C>
--------------------------------------------------------------------------------------------
Initial Principal Balance:.................. US$ A$
--------------------------------------------------------------------------------------------
Percentage of total note issuance:..........
--------------------------------------------------------------------------------------------
Anticipated Ratings:
Fitch, Inc.................................. AAA AA
Moody's Investors Service, Inc.............. Aaa Aa2
Standard & Poor's Ratings Group............. AAA AA
--------------------------------------------------------------------------------------------
Interest rate up to but excluding the
payment date in April 2008 (the interest three-month Australian
rate for the first interest period will be three-month LIBOR + Bank Bill Rate plus
%.)...................................... % %
--------------------------------------------------------------------------------------------
Interest rate after and including the
payment date in April 2008 unless on or
after that payment date the issuer trustee
proposes to redeem the notes and redraw
notes on a given payment date at their
outstanding principal balance, as reduced by
losses on the mortgage loans allocated
against such principal balance, plus accrued
interest thereon, instead of their
outstanding principal balance, plus accrued
interest thereon, and is unable to do so
because of a failure to obtain the approval
of 75% of the Class A and Class B
noteholders and redraw noteholders, in which
case the interest rate from and including three-month Australian
that given payment date will be the rate three-month LIBOR + Bank Bill Rate plus
specified in the line above................. % %
--------------------------------------------------------------------------------------------
Interest Accrual Method:.................... Actual/360 Actual/365
--------------------------------------------------------------------------------------------
Payment Dates:.............................. 20th day or if the 20th day is not a business
day, then the next business day, of each
January, April, July and October beginning in
April 2001
--------------------------------------------------------------------------------------------
Clearance/Settlement:....................... DTC/Euroclear/ Offered in Australia
Clearstream- only
Luxembourg
--------------------------------------------------------------------------------------------
Cut-Off Date:............................... Close of business, January 2, 2001
--------------------------------------------------------------------------------------------
Closing Date:............................... On or about January 25, 2001
--------------------------------------------------------------------------------------------
Final Maturity Date:........................ January 20, 2027
--------------------------------------------------------------------------------------------
</TABLE>
A-4
<PAGE>
The issuer trustee may in certain circumstances also issue redraw notes in
order to fund the reimbursement of redraws to the seller. See "--Redraws; Redraw
Facility; Redraw Notes" below and "Description of the Class A
Notes--Redraws--Issue of Redraw Notes" in part A of this prospectus. The ranking
of any such redraw notes in relation to the Class A Notes is described below at
"--Credit Enhancements--Subordination and Allocation of Losses". THE REDRAW
NOTES WILL NOT BE REGISTERED IN THE UNITED STATES AND ARE NOT BEING OFFERED BY
THIS PROSPECTUS.
THE MORTGAGE LOANS
The pool of mortgage loans will consist of fixed rate and variable rate
registered, first ranking residential mortgage loans secured by mortgages on
one- to four-family owner occupied and non-owner occupied residential
properties. The mortgage loans will have original terms to stated maturity of no
more than 25 years. The pool of mortgage loans had the summary characteristics
described below determined as of the close of business on December 15, 2000 (the
"Statistical Cut-off Date").
<TABLE>
<S> <C>
Number of Mortgage Loans.................................... 24,696
Aggregate Mortgage Loan Pool Balance........................ A$1,993,298,573.57
Average Mortgage Loan Balance............................... A$ 80,713.42
Maximum Mortgage Loan Balance............................... A$ 497,206.77
Minimum Mortgage Loan Balance............................... A$ 667.29
Maximum Remaining Term to Maturity (in months).............. 299
Weighted Average Remaining Term to Maturity (in months)..... 255
Weighted Average Original Term to Maturity (in months)...... 278
Weighted Average Original Loan-to-Value Ratio............... 67.17%
Weighted Average Current Loan-to-Value Ratio................ 59.69%
Percentage of Mortgage Loans that are Variable Rate......... 64.48%
Percentage of Mortgage Loans that are Fixed Rate(*)......... 35.52%
Weighted Average Mortgage Rate for Variable Rate Mortgage
Loans..................................................... 8.060%
Weighted Average Mortgage Rate for Fixed Rate Mortgage
Loans..................................................... 7.098%
Weighted Average Number of Months since Origination......... 22
</TABLE>
------------------------
* The term "fixed rate" mortgage loans as used in this prospectus does not
have the same meaning as in U.S. mortgage securitizations, I.E., loans with
a fixed interest rate for the life of the mortgage loan. Rather, the fixed
rate mortgage loans in the seller's portfolio have a fixed rate that is set
for a shorter time period (generally not more than 10 years) than the life
of the loan (generally 25 years) which then converts to a variable rate or
can be refixed for a further period, again generally not more than
10 years.
Before the issuance of the notes on the closing date, mortgage loans may be
added to or removed from the mortgage loan pool. Additionally, new mortgage
loans may be substituted for mortgage loans that are removed from the mortgage
loan pool. This addition, removal or substitution of mortgage loans may result
in changes in the mortgage loan pool characteristics shown in the preceding
table and could affect the weighted average lives and yields of the notes. The
seller will not add, remove or substitute any mortgage loans prior to the
closing date if this would result in a change of more than 5% in any of the
characteristics of the pool of mortgage loans described above. Moreover,
additions or removals of mortgage loans in the mortgage loan pool will not occur
after the closing date, other than through removals as a result of repurchase by
the seller of mortgage loans affected by a breach of the seller's
representations or warranties described under "The Seller--Breach of
Representations and Warranties" in part B of this prospectus or the exercise by
the servicer of its option to repurchase mortgage loans which are 90 days or
more delinquent as described at "Servicing--Optional Repurchase of Defaulted
Mortgage Loans" in part A of this prospectus. SEE APPENDIX A-I TO PART A OF THIS
PROSPECTUS FOR ADDITIONAL STATISTICAL INFORMATION REGARDING THE MORTGAGE LOAN
POOL DETERMINED AS OF THE STATISTICAL CUT-OFF DATE.
A-5
<PAGE>
SOURCES AND APPLICATIONS OF CASH FLOW
COLLECTIONS
The issuer trustee will receive for each collection period amounts, which
are known as collections, which include:
- payments of interest, principal and other amounts under the mortgage
loans, excluding any mortgage insurance premiums and related charges
payable to the servicer or any fees;
- proceeds from the enforcement of the mortgage loans and mortgages and
other securities relating to those mortgage loans;
- amounts received under mortgage insurance policies; and
- amounts received from the seller for breaches of representations,
warranties or undertakings in connection with the mortgage loans or from
the servicer as a result of the purchase of defaulted mortgage loans.
Collections will be allocated between income and principal.
Collections attributable to interest plus certain other amounts in the
nature of income will be used to pay certain fees and expenses of the trust and
interest on the notes and redraw notes. If there is an excess of such
collections after payment of such fees, expenses and interest on the notes and
redraw notes, such excess will first be used to reimburse any losses previously
allocated against the principal balance of the notes, the redraw notes and the
redraw facility. Any remaining excess will be distributed to the residual income
unitholder.
Collections on the mortgage loans attributable to principal and certain
other amounts in the nature of principal will first be applied, among other
things, to repay the seller for advancing redraws under the mortgage loans, to
repay the redraw facility provider, to cover certain payment shortfalls
resulting from a deficiency in interest and other income collections and to pay
principal on the notes and redraw notes. Any remaining excess of principal
collections will be distributed to the residual capital unitholder. See
"Description of the Class A Notes--Collections," "--Distributions on the
Class A Notes"; "--Determination of Total Available Income"; "--Distribution of
Total Available Income"; "--Determination of Available Principal Collections";
and "--Distribution of Available Principal Collections" in part A of this
prospectus.
INTEREST ON THE NOTES AND REDRAW NOTES
Interest on the notes and redraw notes is payable quarterly in arrears on
each payment date. The amount available to pay interest on the Class A notes and
redraw notes will be allocated ratably between the Class A notes and the redraw
notes. Interest will be paid on the Class B notes only after the payments of
interest on the Class A notes and the redraw notes are made. Interest on each
class of notes and the redraw notes is calculated for each interest period as
follows:
- at the note's or redraw note's interest rate;
- on the outstanding principal balance of that note or redraw note at the
beginning of that interest period; and
- on the basis of the actual number of days in that interest period and a
year of 360 days for the Class A notes or a year of 365 days for the
Class B notes and the redraw notes.
See "Description of the Class A Notes--Interest on the Notes" in part A of
this prospectus.
PRINCIPAL ON THE NOTES AND REDRAW NOTES
Principal on the notes and redraw notes will be payable on each payment
date. Principal collections on the mortgage loans available to pay principal on
the notes and redraw notes will first be applied to pay the
A-6
<PAGE>
following items in the following order of priority:
- to repay to the seller any redraws under the mortgage loans made by the
seller during or prior to the preceding collection period;
- to repay the redraw facility provider any principal outstanding under the
redraw facility until the balance of the redraw facility, as reduced by
losses allocated against the redraw facility, is reduced to zero;
- to be treated as part of interest and other income collections on the
mortgage loans if there is an insufficient amount of such collections in
the preceding collection period to make the required payments in the order
of priorities set forth at "Priority of Distribution of Interest and
Income Collections on a Payment Date" below; and
- to redraw noteholders with priority given to redraw notes with earlier
issue dates until the aggregate outstanding principal balance of the
redraw notes, as reduced by losses allocated against the redraw notes, is
reduced to zero.
After the application of principal collections on the mortgage loans in
respect of the priorities listed above, any remaining principal collections (up
to a specified maximum amount) will be allocated to pay principal on the
Class A notes until the outstanding principal balance of such class, as reduced
by losses allocated against such class, is reduced to zero. The specified
maximum amount of available principal collections to be applied to the Class A
notes will vary in accordance with certain stepdown conditions and performance
triggers determined by the rating agencies, with the result that, in some
circumstances, and to a limited extent, the Class B notes will receive principal
ratably with the Class A notes. The balance of available principal collections
on the mortgage loans remaining after an allocation of principal on the Class A
notes will be paid to the Class B noteholders in respect of principal on the
Class B notes until the outstanding principal balance of the Class B notes is
reduced to zero.
If the charge created by the master security trust deed and the deed of
charge is enforced after an event of default, the proceeds from the enforcement,
after payment of any amounts owing to the various trustees, any appointed
receiver and any cash collateral held on behalf of a support facility provider,
will be distributed ratably among the Class A notes and redraw notes prior to
any distributions to the Class B notes. See "Description of the Class A
Notes--Distribution of Available Principal Collections" and "--Redemption of the
Notes Upon an Event of Default."
ALLOCATION OF CASH FLOWS
On each payment date, the issuer trustee will pay interest and repay
principal to each noteholder and redraw noteholder to the extent of available
interest and income collections and available principal collections on the
mortgage loans on that payment date to be applied for these purposes. The charts
on the next four pages summarize the flow and priority of payments:
A-7
<PAGE>
DETERMINATION OF INTEREST AND INCOME COLLECTIONS
AVAILABLE FOR DISTRIBUTION ON A PAYMENT DATE
FINANCE CHARGE COLLECTIONS
Amounts of interest or income received by the servicer during the preceding
collection period in respect of the mortgage loans or any similar amounts deemed
by the servicer to be in the nature of income or interest, including amounts
received from borrowers, or from enforcement or repurchases of the mortgage
loans.
+
MORTGAGE INSURANCE INTEREST PROCEEDS
Amounts received pursuant to a mortgage insurance policy during the preceding
collection period which the trust manager determines are not in the nature of
principal.
+
OTHER INCOME
Interest received on authorized investments and any other miscellaneous income
received by the issuer trustee.
+
PRINCIPAL DRAW
Principal collections on the mortgage loans applied as income to cover a payment
shortfall resulting from a deficiency in available interest and income
collections in the related collection period.
+
SUPPORT FACILITIES AND OTHER AMOUNTS
Other amounts due to the issuer trustee under the basis swap and the fixed rate
swap on that payment date and any other amount which the trust manager
determines should be included in available interest and income collections.
+
LIQUIDITY FACILITY ADVANCE
Any advance to be made under the liquidity facility on the payment date.
=
TOTAL INTEREST AND INCOME COLLECTIONS AVAILABLE FOR DISTRIBUTION
A-8
<PAGE>
PRIORITY OF DISTRIBUTION OF INTEREST
AND INCOME COLLECTIONS ON A PAYMENT DATE
FIRST, pay ratably:
(i) any taxes relating to the trust;
(ii) the issuer trustee's and the security trustee's quarterly fee;
(iii) the servicer's quarterly servicing fee;
(iv) the trust manager's quarterly management fee;
(v) any expenses of enforcement of the mortgage loans; and
(vi) all other expenses of the trust except for those described above or below.
/
SECOND, pay ratably the quarterly commitment fees in connection with the redraw
facility and the liquidity facility and any net amount due by the issuer trustee
under the basis swap and the fixed rate swap on that payment date.
/
THIRD, repay to the liquidity facility provider outstanding draws under the
liquidity facility made on prior payment dates.
/
FOURTH, pay ratably to:
(i) the currency swap providers payments under the currency swaps relating to
interest due on the Class A notes (including any interest unpaid from prior
payment dates);
(ii) the redraw noteholders interest due on the redraw notes (including any
interest unpaid from prior payment dates);
(iii) the redraw facility provider interest due on the redraw facility
(including any interest unpaid from prior payment dates); and
(iv) the liquidity facility provider interest due on the liquidity facility
(including any interest unpaid from prior payment dates).
/
FIFTH, pay to Class B noteholders interest due on the Class B notes (including
any interest unpaid from prior payment dates).
/
SIXTH, allocate the remaining interest/income collections to principal
collections for distribution with respect to the amount of any unreimbursed
losses charged against the notes FIRST, to the Class A notes, the redraw notes
and the redraw facility, pro rata, and SECOND, to the Class B notes.
/
SEVENTH, allocate to principal collections any amount previously treated as
income to cover any payment shortfall in previous collection periods and which
remain unreimbursed on that payment date.
/
EIGHTH, distribute any remaining interest/income collections to the residual
income unitholder.
A-9
<PAGE>
DETERMINATION OF PRINCIPAL COLLECTIONS
FOR DISTRIBUTION ON A PAYMENT DATE
COLLECTIONS
The aggregate of collections received by the issuer trustee during the preceding
collection period with respect to the mortgage loans as described at "--Sources
and Applications of Cash Flow--Collections" above.
+
REDRAW NOTE AMOUNT
The proceeds of issue of any redraw notes on the payment date.
+
REDRAW FACILITY ADVANCE
Any advance to be made under the redraw facility on the payment date.
MINUS
FINANCE CHARGE COLLECTIONS FOR THE PRECEDING COLLECTION PERIOD
MINUS
MORTGAGE INSURANCE INTEREST PROCEEDS FOR THE PRECEDING COLLECTION PERIOD
=
AVAILABLE PRINCIPAL COLLECTIONS
A-10
<PAGE>
PRIORITY OF DISTRIBUTION OF PRINCIPAL COLLECTIONS
ON A PAYMENT DATE
REDRAWS
Repay to the seller any redraws under the mortgage loans made by the seller
during or prior to the preceding collection period and that have not previously
been repaid.
/
REDRAW FACILITY PRINCIPAL
Repay to the redraw facility provider the principal outstanding under the redraw
facility (as reduced by any unreimbursed losses).
/
PRINCIPAL DRAW
To be treated as income to cover any payment shortfall resulting from a
deficiency in interest and income collections on a payment date to be applied in
the order of priorities set forth at "--Priority of Distribution of Interest and
Income Collections on a Payment Date" above.
/
REDRAW NOTES
Repay to the redraw noteholders the outstanding principal balance of the redraw
notes (as reduced by any unreimbursed losses).
/
<TABLE>
<S> <C>
CLASS A NOTEHOLDERS
Pay an amount equal to or greater than the Class A notes'
percentage share of remaining principal collections on that
payment date ratably to the currency swap providers in
respect to a repayment to the Class A noteholders of the
outstanding principal balance (as reduced by any
unreimbursed losses) of the Class A notes.
CLASS B NOTEHOLDERS
Repay to the Class B noteholders the outstanding principal
balance (as reduced by any unreimbursed losses) of the Class
B notes.
CONCURRENTLY
</TABLE>
/
RESIDUAL CAPITAL UNITHOLDER
Distribute any remaining amounts to the residual capital unitholder.
A-11
<PAGE>
TRANSACTION FEES
The principal parties involved in the issuance and administration of the
notes will be entitled to certain fees for the performance of their duties. The
following table shows each party's fee rate or other basis of calculation of
their fee compensation:
<TABLE>
<CAPTION>
PARTY ANNUAL FEE RATE EXPLANATION
----- --------------- -------------------------------------
<S> <C> <C>
Issuer Trustee The trust will pay a single quarterly
Security Trustee * fee (based on a sliding scale) to the
Note Trustee issuer trustee in respect of these
duties to be allocated among these
three trustees.
Trust Manager........................ 0.10% The trust manager's fee is calculated
by multiplying the annual fee rate by
the total invested amount of the
notes as of the beginning of each
quarter and multiplying such product
by the number of days in the interest
period divided by 365.
Liquidity Facility Provider.......... 0.20% In addition to a quarterly commitment
fee based on the product of the
undrawn portion of the liquidity
facility limit and the annual fee
rate (and multiplying such product by
the number of days in the interest
period divided by 365), draws under
the liquidity facility must be repaid
by the trust with interest at the
Australian bank bill rate, plus a
specified margin.
Redraw Facility Provider............. 0.15% In addition to a quarterly commitment
fee based on the product of the
undrawn portion of the redraw
facility limit and the annual fee
rate (and multiplying such product by
the number of days in the interest
period divided by 365), draws under
the redraw facility must be repaid by
the trust with interest at the
Australian bank bill rate, plus a
specified margin.
Servicer............................. 0.40% The servicer's fee is calculated by
multiplying the annual fee rate
specified by the outstanding
principal balance of the mortgage
loans as of the beginning of the
quarter and multiplying such product
by the number of days in the interest
period divided by 365.
Mortgage Insurers.................... -- Up front premium fee to be paid by
National Australia Bank Limited; no
fees to be paid by the Trust.
</TABLE>
* The aggregate transaction fees expressed as an annual percentage of the
balance of the mortgage loans is not expected to exceed approximately 0.60%.
Except as described above, fees are payable quarterly from trust income PRIOR to
payment of noteholders.
A-12
<PAGE>
CREDIT ENHANCEMENTS
Payments of interest and principal on the Class A 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 notes in their
right to receive interest payments. Prior to the occurrence of an event of
default under the master security trust deed, the Class B notes will be
subordinated to the Class A notes in their right to receive principal payments
only in the circumstances and to the extent described at "Description of the
Class A Notes--Allocation of Principal to Class A Notes and Class B Notes" in
part A of this prospectus. However, following the occurrence of an event of
default under the master security trust deed and the enforcement of the deed of
charge, the Class B notes will be fully subordinated to the Class A notes in
their right to receive principal payments. See "Description of the Class A
Notes--Redemption of the Notes upon an Event of Default" in part A of this
prospectus.
The Class B notes will bear all losses on the mortgage loans before the
Class A notes. The support provided by the Class B notes is intended to enhance
the likelihood that the Class A notes will receive expected quarterly payments
of interest and principal.
The "initial support percentage" to be provided by the Class B notes is
calculated as the outstanding principal balance of the Class B notes on the
closing date as a percentage of the aggregate outstanding principal balance of
all notes to be issued on the closing date and will equal approximately 1.00%.
In certain circumstances, the issuer trustee may issue redraw notes as
described below at "--Redraws; Redraw Facility; Redraw Notes." If issued, redraw
notes will, prior to the occurrence of an event of default under the master
security trust deed and the enforcement of the deed of charge, rank equally with
the Class A notes and the redraw facility providers in their respective rights
to receive interest payments and will rank prior to the Class A notes in their
right to receive principal payments. Any losses in excess of the protection
offered by the Class B notes will be allocated to the Class A notes and redraw
notes ratably between the Class A notes and the redraw notes. Following the
occurrence of an event of default under the master security trust deed and the
enforcement of the deed of charge, redraw notes will rank equally with the
Class A notes in their right to receive both interest and principal payments.
MORTGAGE INSURANCE POLICIES
Each mortgage loan is insured under a mortgage insurance policy issued by GE
Mortgage Insurance Pty Ltd (f/k/a Housing Loans Insurance Corporation Pty
Limited), GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd or
Housing Loans Insurance Corporation. The seller will equitably assign its
interest in each mortgage insurance policy to the depositor, which will, in
turn, assign its interest in each mortgage insurance policy to the issuer
trustee. Generally, each mortgage insurance policy covers any loss realized upon
foreclosure of the related mortgaged property. The amount covered by each
mortgage insurance policy will, in general, equal the excess of the unpaid
principal balance of the mortgage loans (as increased by any negative
amortization), plus unpaid accrued interest and the expenses of enforcement of
such mortgage loan over the proceeds realized upon enforcement of the mortgage
loan. See "The Mortgage Insurance Policies" in part A of this prospectus.
SELLER DEPOSIT
If National Australia Bank Limited is assigned a short-term deposit credit
rating by Moody's Investors Service, Inc. of less than P1 or is assigned a
short-term deposit credit rating by Standard & Poor's Ratings Group of less than
A-1+, or is assigned a long-term deposit credit rating by Fitch, Inc. of less
than BBB or, in each case, a lesser rating as agreed between the trust manager,
the issuer trustee, the seller and the relevant rating agency, it must deposit
an amount in an account with respect to the set-off risk
A-13
<PAGE>
determined with reference to, and which may be less than, the balances of
certain deposit accounts held by borrowers with National Australia Bank Limited
where the borrowers' mortgage loans do not have a waiver of set-off. The amount
of the seller deposit may be reset on each determination date and adjusted on
the following payment date and will be reduced to zero if the seller regains the
required credit ratings. The issuer trustee may use the seller deposit to meet
liabilities of the seller in relation to amounts set-off against the amount due
on a mortgage loan which have not been met within 20 business days of notice
from the issuer trustee or the trust manager.
As an alternative to making the seller deposit, National Australia Bank
Limited may implement other arrangements agreed with the rating agencies so that
credit ratings of the notes by those rating agencies will not be adversely
affected. See "Description of the Class A Notes--Seller Deposit".
EXCESS AVAILABLE INCOME
Any interest and income collections on the mortgage loans remaining after
payments of interest on the notes and the redraw notes and the trust's expenses
on any payment date will be available to cover previously unreimbursed losses on
the mortgage loans. See "Description of the Class A Notes--Distribution of Total
Available Income" and "--Principal Charge-offs."
LIQUIDITY ENHANCEMENT
To cover possible liquidity shortfalls in the payments of interest on the
Class A notes and redraw notes, the issuer trustee will, in certain
circumstances, be able to borrow funds under a liquidity facility to be provided
by National Australia Bank Limited. See "Description of the Class A Notes--The
Liquidity Facility" in part A of this prospectus.
REDRAWS; REDRAW FACILITY; REDRAW NOTES
Unlike U.S. mortgages (but common among Australian mortgage loans), each
variable rate mortgage loan included in the pool permits the borrower, from time
to time, to draw down (I.E., reborrow) additional amounts. The maximum amount
permitted to be drawn down by a borrower is determined with reference to a
principal balance schedule (simply, the amortization schedule for the loan
calculated on the basis of an interest rate of 10%) and the actual amount
outstanding. At any time, a borrower may "redraw" the amount by which the
scheduled balance at the time of the proposed redraw exceeds the actual
outstanding loan balance. As such, the amount available to be redrawn is largely
a function of the amount previously prepaid by the borrower. Generally, the
greater the amount of prior prepayments, the larger the permitted redraw.
Although redraws will be disbursed directly by the seller to the borrowers,
they will constitute assets of the trust. Following disbursement, the trust will
be required to reimburse the seller for any redraws as follows:
FIRST, to the extent of availability, from principal collections on
hand;
SECOND, to the extent principal collections are insufficient, by drawing
on the redraw facility (which the trust will be required to repay to the
redraw facility provider from future principal collections); and
THIRD, to the extent the redraw facility has been exhausted, by issuance
of notes (referred to in this prospectus as "redraw notes"). Given the prior
sources of funding, it is not expected that a significant amount of redraw
notes will be issued by the trust.
Generally speaking, reimbursements of redraws to the seller (or the redraw
facility provider) will be required to be paid from trust cashflow BEFORE
amounts are paid on the Class A notes. As a result, the trust will have less
funds available to pay principal on the notes on a current basis, but will have
a corresponding greater amount of assets with which to make future payments.
Although the seller is not able to predict the level of redraws in the future,
the weighted average life of the Class A notes could be extended to the extent
redraws are experienced on the mortgage loans. See "The Seller's Residential
Loan
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Program--Redraw Mortgage Loans and the Redraw Facility" in part B of this
prospectus and "Description of the Class A Notes--Redraws" "--The Redraw
Facility" and "Issue of Redraw Notes" in part A of this prospectus.
HEDGING ARRANGEMENTS
To hedge its interest rate and currency exposures, the issuer trustee will
enter into the following hedging arrangements:
- a basis swap to hedge the basis risk between the interest rate on the
mortgage loans which accrue interest at a discretionary variable rate of
interest and the floating rate obligations of the trust, including the
issuer trustee's payment obligations under the currency swaps;
- a fixed rate swap to hedge the basis risk between the interest rate on the
mortgage loans which accrue interest at a fixed rate of interest and the
floating rate obligations of the trust, including the issuer trustee's
payment obligations under the currency swaps; and
- two currency swaps to hedge the currency risk and the basis risk between
the collections on the mortgage loans and the amounts received by the
issuer trustee under the basis swap and the fixed rate swap, which are
denominated in Australian dollars and, in the case of the basis swap and
fixed rate swap, calculated by reference to the Australian bank bill rate,
and the obligation of the trust to pay interest and principal on the
Class A notes, which are denominated in U.S. dollars and, in the case of
interest, calculated by reference to LIBOR.
See "Description of the Class A Notes--The Interest Rate Swaps" and "--The
Currency Swaps" in part A of this prospectus.
SERVICER OPTIONAL REPURCHASE OF DEFAULTED MORTGAGE LOANS
Subject to certain limitations contained in the supplemental deed, the
servicer shall have the right and the option, but not the obligation, to
purchase for its own account at the then current value of such mortgage loan
(taking into account applicable insurance proceeds and other available
resources) any mortgage loan which becomes 90 days or more delinquent in
payment. See "Servicing--Optional Repurchase of Defaulted Mortgage Loans" in
part A of this prospectus.
OPTIONAL REDEMPTION
CALL OPTION. The issuer trustee will, if the trust manager directs it to do
so, redeem all of the notes and redraw notes on any payment date falling on or
after the earlier of (i) the payment date falling in April 2008 and (ii) the
payment date when the current total outstanding principal balance of the
mortgage loans (calculated as at the end of the immediately preceding collection
period) is less than 10% of the total outstanding principal balance of the
mortgage loans on the closing date. The issuer trustee's offer to redeem the
notes and the redraw notes may be either at:
- the aggregate outstanding principal balance of the notes and the redraw
notes, plus accrued interest thereon (in which case exercise of the
redemption will be mandatory and not require any consent of the
noteholders or the redraw noteholders); or
- the aggregate outstanding principal balance of the notes and the redraw
notes, plus accrued interest thereon, as reduced by unreimbursed losses
allocated against the notes and the redraw notes (in which case exercise
of the redemption will require approval of 75% of the noteholders and the
redraw noteholders).
If the issuer trustee fails to exercise its option to redeem the notes on
the payment date falling in April 2008, then the percentage spread over LIBOR to
be applied in determining the interest rate on the Class A notes as from that
payment date will increase to %. However, if the issuer trustee, at the
direction of the trust manager, proposes to exercise its option to redeem the
notes and the redraw notes on a payment date occurring on or after April 2008 at
the lesser amount
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described above but is unable to do so because it cannot obtain the required
consent of 75% of the noteholders and redraw noteholders, then the percentage
spread over LIBOR to be applied in determining the interest rate on the Class A
notes as from that payment date will remain at, or revert to, the spread as at
the closing date. See "Description of the Class A Notes--Optional Redemption of
the Notes" in part A of this prospectus.
MATERIAL AUSTRALIAN TAX CONSEQUENCES
In the opinion of Mallesons Stephen Jaques, Australian tax counsel for the
trust manager, under present law, the Class A notes will not be subject to
Australian interest withholding tax if they are issued in accordance with
certain factual conditions and they are not held by "associates" (as that term
is defined in the Australian Income Tax Assessment Act of 1936) of the trust.
The issuer trustee will seek to issue the Class A notes in a manner which will
satisfy the conditions for an exemption from Australian interest withholding
tax. One of these conditions is that the issuer trustee must, at the time of
issue, not know or have reasonable grounds to suspect that a Class A note, or an
interest in a Class A note, was being, or would later be, acquired directly or
indirectly by "associates" of the trust (as defined in the Australian Income Tax
Assessment Act of 1936) other than in the capacity of a dealer, manager or
underwriter in relation to the offering and sale of the Class A notes.
"Associate" for these purposes is widely defined and means, generally speaking,
in relation to the trust, the beneficiaries of the trust, and any "associates"
of those beneficiaries. Thus the associates of the trust would generally include
associates of National Australia Bank Limited as the residual capital unitholder
and the residual income holder and the other beneficiaries of the trust, if any,
from time to time. Accordingly, such persons may not acquire the Class A notes
(other than in the capacity noted above). See "Material Australian Tax
Consequences" in part B of this prospectus.
If by virtue of a change in law:
- the issuer trustee will be required to withhold or deduct amounts from
payment of principal or interest to any class of noteholders or redraw
noteholders due to taxes, duties, assessments or governmental charges; or
- if the issuer trustee ceases to receive the total amount of interest
payable by borrowers on the mortgage loans due to taxes, duties,
assessments or other governmental charges
then, the trust manager may, at its sole discretion, but subject to certain
conditions, direct the issuer trustee to redeem all of the notes and redraw
notes.
If the issuer trustee redeems the notes and redraw notes, the noteholders
and the redraw noteholders will receive a payment equal to either:
- the aggregate outstanding principal balance of the notes and the redraw
notes, plus accrued interest thereon (in which case exercise of the
redemption will be mandatory and not require any consent of the
noteholders or the redraw noteholders); or
- the aggregate outstanding principal balance of the notes and the redraw
notes, plus accrued interest thereon, as reduced by unreimbursed losses
allocated against the notes and the redraw notes (in which case exercise
of the redemption will require approval of 75% of the noteholders and the
redraw noteholders).
However, if the withholding or deduction relates only to Class A notes, Class A
noteholders owning 75% of the voting rights represented thereby may direct the
issuer trustee not to redeem the notes and redraw notes. See "Description of the
Notes--Redemption of the Notes for Taxation or other Reasons" in part B of this
prospectus.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Brown & Wood LLP, special United States federal income tax
counsel for the trust manager, the Class A notes will be characterized as debt
for U.S. federal income tax purposes, subject to the qualifications set forth in
"Material United States Federal Income Tax Consequences" in part B of this
prospectus. Each Class A noteholder, by acceptance of a Class A note, agrees to
treat the Class A notes as indebtedness. In addition, in the opinion of Brown &
Wood LLP, the trust will not be subject to any entity level tax for United
States federal income tax purposes and the issuer trustee will not be treated as
engaged in the conduct of a United States trade or business (and, accordingly,
not subject to United States Federal income tax) solely as a result of any
activities that it conducts in its capacity as issuer trustee of the trust. See
"Material United States Federal Income Tax Consequences" in part B of this
prospectus.
LEGAL INVESTMENT
The Class A notes will NOT constitute "mortgage-related securities" for the
purposes of the U.S. Secondary Mortgage Market Enhancement Act of 1984. No
representation is made as to whether the Class A notes constitute legal
investments under any applicable statute, law, rule, regulation or order for any
entity whose investment activities are subject to investment laws and
regulations or to review by regulatory authorities. You are urged to consult
with your own legal advisors as to whether the Class A notes constitute legal
investments for you. See "Legal Investment Considerations" in parts A and B of
this prospectus.
ERISA CONSIDERATIONS
In general, subject to the restrictions described in "ERISA Considerations"
in part B of this prospectus, the Class A notes will be eligible for purchase by
retirement plans or other arrangements subject to the U.S. Employee Retirement
Income Security Act of 1974 or Section 4975 of the Internal Revenue Code of
1986. See "ERISA Considerations" in parts A and B of the prospectus.
BOOK-ENTRY REGISTRATION
The Class A notes will be initially issued in book-entry form only. Persons
acquiring beneficial ownership of interests in the Class A notes will hold their
interests through the Depository Trust Company in the United States or
Clearstream-Luxembourg or Euroclear outside of the United States. Transfers
within the Depository Trust Company, Clearstream-Luxembourg 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 Clearstream-Luxembourg or Euroclear, on the other
hand, will take place in the Depository Trust Company through the relevant
depositories of Clearstream-Luxembourg or Euroclear. See "Description of the
Class A Notes--Form of the Notes--Book Entry Registration" in part A of this
prospectus and "Global Clearance and Settlement Procedures" in Appendix B to
part B of this prospectus.
RATINGS OF THE CLASS A NOTES
It is a condition to the issuance of the Class A notes that they be rated
"AAA" by Standard & Poor's Ratings Group, a division of the McGraw-Hill
Companies, "Aaa" by Moody's Investors Service, Inc. and "AAA" by Fitch, Inc. The
security ratings of the Class A notes should be evaluated independently from
similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the rating agencies. See "Ratings of the Class A
Notes" in part A of this prospectus.
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RISK FACTORS
The Class A notes are complex securities secured by property located in a
foreign jurisdiction. You should consider the following information which
describes the principal risk factors of an investment in the Class A notes
described in this prospectus. You should also read the detailed information set
forth elsewhere in this prospectus.
GENERAL STRUCTURAL RISKS:
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THE CLASS A NOTES WILL BE PAID ONLY FROM THE
ASSETS OF THE TRUST AND YOU MAY EXPERIENCE
A LOSS IF THE ASSETS OF THE TRUST ARE
INSUFFICIENT TO REPAY THE CLASS A
NOTES. .................................... The Class A notes are debt obligations of the issuer
trustee only in its capacity as trustee of the trust
and do not represent an interest in or obligation of
the issuer trustee in its individual capacity or of
any other entity or party to this transaction.
The assets of the trust will be the sole source of
payments on the Class A notes. Therefore, if
collections on the mortgage loans, amounts available
under the support facilities and the other assets of
the trust are insufficient to pay the interest and
principal on your Class A notes when due, there will
be no other source from which to receive these
payments and you may not recover your entire
investment or obtain the yield on your investment you
expected to.
THE SERVICER MAY COMMINGLE COLLECTIONS ON THE
MORTGAGE LOANS WITH ITS ASSETS WHICH MAY
LEAD TO LOSSES ON YOUR CLASS A NOTES. ..... Before the servicer remits collections to the
collections account, the collections may be
commingled with the assets of the servicer. With some
exceptions, the servicer may remit collections to the
collections account on a quarterly basis. See
"Description of the Class A Notes--Collections;
Distributions on the Class A Notes" in part A of
this prospectus. If 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 mortgage loans, delays in
receiving the collections, or losses to you.
LOSSES AND DELINQUENT PAYMENTS ON THE
MORTGAGE LOANS MAY AFFECT THE RETURN ON
YOUR CLASS A NOTES. ....................... Unlike the case in most securitizations of U.S.
mortgage loans, if borrowers fail to make payments of
interest and principal under the mortgage loans when
due, the servicer has no obligation to make advances
to cover the delinquent payment. However, under the
liquidity facility provided for in this transaction,
the liquidity facility provider does cover shortfalls
in interest and income
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collections on the mortgage loans available to pay
interest on the Class A notes up to a specified
limit. Accordingly, if the credit enhancement
described in this prospectus is insufficient to
protect your Class A notes from the borrowers'
failure to pay, then the issuer trustee may not have
enough funds to make full payments of interest and
principal due on your Class A notes. Consequently,
the yield on your Class A notes could be lower than
you expect and you could suffer losses. A wide
variety of factors of a legal, economic, political or
other nature could affect the performance of
borrowers in making payments of principal and
interest under the mortgage loans. In particular, if
interest rates increase significantly, borrowers may
experience distress and an increase in default rates
on the mortgage loans may result. Under Australia's
Consumer Credit Code, among other remedies, a court
may order a mortgage loan to be varied on the grounds
of hardship. See "Legal Aspects of the Mortgage
Loans" in part B of this prospectus. Any such
variance may reduce the principal or interest payable
under a particular mortgage loan.
LOSSES IN EXCESS OF THE PROTECTION AFFORDED
BY THE SUBORDINATION OF CLASS B NOTES WILL
RESULT IN LOSSES ON YOUR CLASS A NOTES. ... The amount of credit enhancement provided through the
subordination of the Class B notes to the Class A
notes and redraw notes is limited and could be
depleted prior to the payment in full of the Class A
notes and redraw notes. If the principal amount of
the Class B notes is reduced to zero, you may suffer
losses on your Class A notes.
ENFORCEMENT OF THE MORTGAGE LOANS MAY CAUSE
DELAYS IN PAYMENT AND LOSSES. ............. The servicer could encounter substantial delays in
connection with the liquidation of a mortgage loan,
which may lead to shortfalls in payments to you to
the extent those shortfalls are not covered by a
mortgage insurance policy or by the subordination of
the Class B notes.
If the proceeds of the sale of a mortgaged property
(including any insurance proceeds and amounts in
liquidation of a borrower's personal assets), net of
preservation and liquidation expenses, are less than
the unpaid principal balance of the related mortgage
loan and any accrued interest, the issuer trustee may
not have enough funds to make full payments of
interest and principal due to you, unless the
difference is covered by the subordination of the
Class B notes.
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PRINCIPAL ON THE REDRAW NOTES WILL BE PAID
BEFORE PRINCIPAL ON YOUR CLASS A NOTES. ... If redraw notes are issued they will be entitled to
principal payments before your Class A notes with
respect to payments of principal prior to enforcement
of the charge under the master security trust deed
and the deed of charge, and you may not receive full
repayment of principal on your Class A notes.
THE MORTGAGE INSURANCE POLICIES MAY NOT BE
AVAILABLE TO COVER LOSSES ON THE MORTGAGE
LOANS. .................................... The mortgage insurance policies are subject to some
exclusions from coverage and rights of refusal or
reduction of claims, some of which are described in
"The Mortgage Insurance Policies" in part A of this
prospectus. Therefore, a borrower's payments that are
expected to be covered by the mortgage insurance
policies may not be covered because of these
exclusions, refusals or reductions. As a result, the
issuer trustee may not have enough money to make full
payments of principal and interest on your Class A
notes.
THE TERMINATION OF ANY OF THE SWAPS MAY
SUBJECT YOU TO LOSSES FROM INTEREST RATE OR
CURRENCY FLUCTUATIONS. .................... The issuer trustee will exchange the interest
payments from the fixed rate mortgage loans for
variable rate payments based upon the three-month
Australian bank bill rate. If the fixed rate swap is
terminated or the fixed rate swap provider fails to
perform its obligations, you will be exposed to the
risk that the floating rate of interest payable on
the Class A notes will be greater than the
discretionary fixed rate set by the seller (who is
also the fixed rate swap provider) on the fixed rate
mortgage loans, which may lead to losses to you.
The issuer trustee will exchange the interest
payments from the variable rate mortgage loans for
variable rate payments based upon the three-month
Australian bank bill rate. If the basis swap is
terminated or if the basis swap provider fails to
perform its obligations, the trust manager will
direct the seller, subject to applicable laws, to set
the interest rate on the variable rate mortgage loans
at a rate high enough to cover the payments owed by
the trust. However, if the rates on the variable rate
mortgage loans are set above the market interest rate
for similar variable rate mortgage loans, the
affected borrowers will have an incentive to
refinance their loans with another institution, which
may lead to higher rates of principal prepayment than
you initially expected, which will affect the yield
on your Class A notes.
If available interest and income collections
(including any principal draws or draws under the
liquidity facility) from
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the mortgage loans (calculated as described at
"Description of the Class A Notes--Determination of
Total Available Income" in part A of this prospectus)
for a collection period is less than the scheduled
payment due under the basis swap on the related
payment date, the basis swap provider is only
required to pay a reduced proportion of its scheduled
payment under the basis swap. In such event, the
trust may not have sufficient funds available to it
to make up the shortfall in payment under the
currency swaps and, in turn, the payments due on the
Class A notes.
The issuer trustee will receive payments from the
borrowers and the fixed rate swap and basis swap
providers on the mortgage loans in Australian dollars
calculated, in the case of the swap providers, by
reference to the Australian bank bill rate, and make
payments to Class A noteholders in U.S. dollars
calculated, in the case of interest, by reference to
LIBOR. Under the currency swap, the currency swap
providers will exchange Australian dollar obligations
for U.S. dollars, and in the case of interest,
amounts calculated by reference to the Australian
bank bill rate for amounts calculated by reference to
LIBOR. If a currency swap provider fails to perform
its obligations or if a currency swap is terminated,
the issuer trustee might have to exchange its
Australian dollars for U.S. dollars and its
Australian bank bill rate obligations for LIBOR
obligations at a rate that does not provide
sufficient U.S. dollars to make payments to Class A
noteholders in full.
TERMINATION PAYMENTS RELATING
TO A CURRENCY SWAP, THE BASIS SWAP AND THE
FIXED RATE SWAP MAY REDUCE PAYMENTS TO
YOU. ...................................... If the issuer trustee is required to make a
termination payment to a currency swap provider, the
basis swap provider or the fixed rate swap provider
upon the termination of a currency swap, the basis
swap or the fixed rate swap, respectively, the issuer
trustee will make the termination payment from the
assets of the trust and, prior to enforcement of the
security trust deed, in priority to payments on the
Class A notes. Thus, if the issuer trustee makes a
termination payment, there may not be sufficient
funds remaining to pay interest on your Class A
notes on the next payment date, and the principal on
your Class A notes may not be repaid in full.
PREPAYMENTS DURING A COLLECTION PERIOD MAY
RESULT IN YOU NOT RECEIVING YOUR FULL
INTEREST PAYMENTS. ........................ If a prepayment is received on a mortgage loan during
a collection period, interest on the mortgage loan
will cease to accrue on that portion of the mortgage
loan that has
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been prepaid, starting on the date of prepayment.
Unlike the case in most U.S. mortgage
securitizations, the servicer has no obligation to
make a compensating interest payment to cover the
reduction in interest payable with respect to the
mortgage loan in the related collection period as a
result of the prepayment. If available interest and
income collections (as increased by any principal
draws or draws under the liquidity facility) are
insufficient to cover such interest shortfall or the
basis swap or the fixed rate swap has been
terminated, the issuer trustee may not have
sufficient funds to pay you the full amount of
interest due on your Class A notes on the next
payment date.
IF THE TRUST MANAGER DIRECTS THE ISSUER
TRUSTEE TO EXERCISE ITS RIGHT TO CAUSE A
REDEMPTION OF THE NOTES, THE YIELD ON YOUR
CLASS A NOTES COULD BE LOWER THAN YOU
EXPECTED. ................................. The trust manager may cause the issuer trustee to
redeem the notes and any redraw notes on any payment
date falling on or after the earlier of (i) the
payment date falling in April 2008 and (ii) the
payment date when the aggregate outstanding principal
balance of the mortgage loans, expressed as a
percentage of the aggregate outstanding principal
balance thereof as of the closing date, is less than
10%. This could result in principal repayment earlier
than you expected and the yield on your Class A notes
could be lower than you expected. In order to
accomplish the redemption, the seller will repurchase
the mortgage loans then remaining in the mortgage
pool. Because the repurchase price paid by the seller
for non-performing mortgage loans will be limited to
the current value of such mortgage loans (taking into
account applicable insurance proceeds or other
available resources) as opposed to their outstanding
principal balance, plus accrued interest thereon, it
is possible that Class A noteholders could suffer a
loss of recovery of principal on their Class A notes
as a result of such repurchase.
YOU MAY NOT BE ABLE TO RESELL YOUR CLASS A
NOTES. .................................... The underwriters are not required to assist you in
reselling your Class A notes. A secondary market for
your Class A 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 Class A notes readily or at the price you
desire. The market value of your Class A notes is
likely to fluctuate with changes in interest rates in
general, changes in the interest rates of the
underlying mortgage loans, changes affecting the
Australian economy and various other
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factors, all of which could expose you to significant
losses.
THE PROCEEDS FROM ENFORCEMENT OF THE MASTER
SECURITY TRUST DEED AND DEED OF CHARGE MAY
BE INSUFFICIENT TO PAY AMOUNTS DUE TO
YOU. ...................................... If the security trustee enforces the security
interest over the assets of the trust after an event
of default under the master security trust deed and
deed of charge, 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 Class A notes and the other secured
obligations that rank ahead of or equally with the
Class A notes, or that the security trustee will be
able to realize the full value of the assets of the
trust. The issuer trustee, the trust manager, the
security trustee, the servicer, the note trustee, the
principal paying agent, the swap providers and other
support 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
(or, in the case of the liquidity facility provider
and the redraw facility provider, to the extent of
any outstanding cash advance deposit), before you.
Consequently, the proceeds from the sale of the
assets of the trust after an event of default under
the master security trust deed and deed of charge may
be insufficient to pay you principal and interest on
your Class A notes in full. See "Description of
Transaction Documents--The Master Security Trust
Deed" in part B of this prospectus.
YOU WILL NOT RECEIVE PHYSICAL CERTIFICATES
REPRESENTING YOUR CLASS A NOTES, WHICH CAN
CAUSE DELAYS IN RECEIVING DISTRIBUTIONS AND
HAMPER YOUR ABILITY TO PLEDGE OR RESELL
YOUR NOTES. ............................... Your ownership of the Class A notes will be
registered electronically through DTC, Euroclear and
Clearstream-Luxembourg. The lack of physical
certificates could:
- cause you to experience delays in receiving
payments on the Class A notes because the
principal paying agent on behalf of the issuer
trustee will be sending distributions on the
notes to DTC, and in turn Euroclear and
Clearstream-Luxembourg instead of directly to
you;
- limit or prevent you from using your Class A
notes as collateral; and
- hinder your ability to resell the Class A notes
or reduce the price that you receive for them.
See "Description of the Class A Notes--Form of Notes"
in part A of this prospectus.
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RATINGS OF YOUR CLASS A NOTES DO NOT ASSURE
THEIR PAYMENT AND WITHDRAWAL OR DOWNGRADING
OF ANY INITIAL RATINGS MAY AFFECT THE VALUE
OF YOUR CLASS A NOTES. .................... A rating is based on the adequacy of the value of the
trust assets and any credit enhancement for the
Class A notes, and reflects the rating agency's
assessment of how likely it is that holders of the
Class A notes will receive the payments to which they
are entitled. A rating does not constitute an
assessment of how likely it is that principal
prepayments on the mortgage loans will be made, the
degree to which the rate of prepayments might differ
from that originally anticipated, or the likelihood
that the notes will be redeemed early. A rating is
not a recommendation to purchase, hold or sell the
Class A notes because it does not address the market
price of the Class A notes or the suitability of the
Class A notes for any particular investor.
A rating may not remain in effect for any given
period of time and a rating agency could lower or
withdraw a rating entirely in the future. For
example, the rating agency could lower or withdraw
its rating due to:
- a decrease in the adequacy of the value of the
trust assets or any related credit enhancement;
- an adverse change in the financial or other
condition of National Australia Bank Limited as
servicer and as a support facility provider or
of any credit enhancement provider; or
- a change in the rating of the long-term debt of
National Australia Bank Limited as servicer and
as a support facility provider or of any credit
enhancement provider.
A reduction in any rating of the Class A notes would
probably reduce the market value of the Class A notes
and may affect your ability to sell them. See
"Ratings of the Class A Notes" in part A of this
prospectus.
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RISKS ASSOCIATED WITH INVESTMENT IN AUSTRALIAN MORTGAGE LOANS:
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YOU MAY FACE AN ADDITIONAL POSSIBILITY OF
LOSS BECAUSE THE ISSUER TRUSTEE DOES NOT
HOLD LEGAL TITLE TO THE MORTGAGE LOANS. ... The issuer trustee will initially hold only equitable
title to the mortgage loans as the borrowers will not
be notified of the equitable assignment of the
mortgage loans to the issuer trustee. This is
different than holding legal title which would
require that the issuer trustee not only have
possession of the mortgage title documents, but also
that notices of the assignment of the mortgages to
the issuer trustee be filed with the land title
offices in the appropriate Australian jurisdictions
and that notice of such assignment be given to the
borrowers. The issuer trustee will take certain steps
to protect its interest in, and title to, the
mortgage loans if and only if a "title perfection
event" occurs (and at that time will notify the
borrowers of the assignment). See "Assets of the
Trust--Transfer and Assignment of the Mortgage Loans"
in part A of this prospectus. This is similar to the
practice in many U.S. domestic securitizations where
the trustee is not initially required to record the
assignments of mortgage in the name of the
securitization trustee in the recording offices of
the various state and local jurisdictions, but rather
only is required to take such action upon the
occurrence of certain trigger events which indicate
the adverse financial condition of the
seller/servicer. Because the issuer trustee does not
hold legal title to the mortgage loans, you will be
subject to the following risks which may lead to a
failure to receive collections on the mortgage loans
or delays in receiving the collections on the
mortgage loans, and consequently lead you to suffer
losses:
- The issuer trustee's interest in a mortgage
loan may be impaired by the existence of a prior
higher or equal ranking security interest over
the related mortgaged property or a higher or
equal ranking security interest created by or
through the seller as legal holder of the
mortgage loan after the equitable assignment of
the mortgage loan to the issuer trustee, but
prior to the issuer trustee acquiring legal
title in the mortgage loan.
- Until a borrower has notice of the assignment
of its mortgage loan to the issuer trustee, that
borrower is not required to make payments under
its mortgage loan to anyone other than the
seller and any such payments made to the seller
will discharge the borrower's payment
obligations in relation to these amounts. If
the servicer (which is also the seller) does
not deliver collections to the
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issuer trustee, for whatever reason, neither
the issuer trustee nor you will have any
recourse against the related borrowers for such
collections.
- The issuer trustee may not be able to initiate
any legal proceedings against a borrower to
enforce a mortgage loan without the involvement
of the seller.
THE RATE AND TIMING OF PAYMENTS ON YOUR CLASS
A NOTES COULD VARY UNEXPECTEDLY AS THERE IS
NO WAY TO PREDICT THE ACTUAL RATE AND
TIMING OF PAYMENTS ON THE MORTGAGE
LOANS. .................................... The rate of principal and interest payments on pools
of mortgage 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 mortgage loans,
the availability of alternate financing and the
particular terms of the mortgage loans.
Australian mortgage loans have features and options
that are different from mortgage loans in the United
States and Europe, and thus will have different rates
and timing of payments from mortgage loans in the
United States and Europe. In particular, in the case
of the seller, the calculation of scheduled payments
on certain mortgage loans on the basis of a
"reference rate" may result in a more rapid
amortization of the loans. See "The Seller's
Residential Loan Program--Features and Options; Loan
Types" in part B of this prospectus. Moreover, it is
not unusual for Australian borrowers to make
voluntary prepayments of principal in significant
amounts. The reasons for voluntary prepayments
include the absence of prepayment penalties under
variable rate mortgage loans, Australia's strong home
ownership ethos, the lack of tax deductibility for
interest on mortgage loans used to purchase a primary
residence under Australia's tax laws, and the fact
that certain loans allow the borrower to redraw
prepaid funds. These factors could encourage
borrowers to make payments in excess of those
required to pay off the mortgage loan within the
contractual term, and to make lump sum prepayments
from time to time when they have funds that are not
required for another purpose. There is no guarantee
as to the actual rate of prepayment on the mortgage
loans, or that the actual rate of prepayment will
conform to any model described in this prospectus.
The rate and timing of principal and interest
payments on the mortgage loans will affect the rate
and timing of payments of principal and interest on
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your Class A notes. Unexpected prepayment rates could
have the following negative effects:
- If you bought your Class A notes for more than
their face amount, the yield on your Class A
notes will drop if principal payments occur at
a faster rate than you expect; or
- If you bought your Class A notes for less than
their face amount, the yield on your Class A
notes will be lower than expected if principal
payments occur at a slower rate than you
expect.
Other factors that would affect the rate and timing
of payments on the Class A notes would include
receipt by the issuer trustee of enforcement proceeds
due to a borrower default on a mortgage loan, the
receipt by the issuer trustee of insurance proceeds
under a mortgage insurance policy in respect of a
mortgage loan, a repurchase by the seller as a result
of a breach of its representations and warranties
made with respect to the mortgage loans, the exercise
by the servicer of its option to purchase mortgage
loans which become 90 days or more delinquent, an
optional redemption of the Class A notes or a
redemption of the Class A notes for taxation or other
reasons, or the receipt of the proceeds of
enforcement of the deed of charge and the master
security trust deed prior to the maturity date of the
Class A notes upon the occurrence of an event of
default.
THE DEDUCTION OR IMPOSITION OF A WITHHOLDING
TAX WILL REDUCE PAYMENTS TO YOU AND MAY
LEAD TO AN EARLY REDEMPTION OF THE CLASS A
NOTES. .................................... If an Australian withholding tax is deducted from
payments in relation to interest on the notes,
including related payments to the currency swap
providers, you will not be entitled to receive
grossed-up amounts to compensate for the withholding
tax. Thus, you will receive less interest than is
scheduled to be paid on each payment date and may
receive less principal at the maturity date of the
notes. The issuer trustee, at the direction of the
trust manager, may on any payment date redeem the
notes in whole but not in part if a withholding tax
is imposed, unless (if the withholding deduction
relates only to the Class A notes) Class A
noteholders owning 75% of the voting rights
represented thereby direct the issuer trustee not to
redeem the Class A notes. If the issuer trustee
exercises this option, you may not be able to
reinvest the amounts received upon redemption at an
interest rate comparable to that payable on the Class
A notes.
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A DECLINE IN AUSTRALIAN ECONOMIC CONDITIONS
MAY LEAD TO LOSSES ON YOUR CLASS A
NOTES. .................................... The Australian economy has been experiencing a
prolonged period of expansion with relatively low
interest rates and steadily increasing property
values, although interest rates have started to
increase slightly recently. If the Australian economy
were to experience a downturn, a continued increase
in interest rates, a fall in property values or any
combination of these factors, delinquencies or losses
on the mortgage loans may increase, which may cause
losses on your Class A notes. To the extent such
losses are covered by a mortgage insurance policy
described herein, proceeds of such policy will be
treated as a prepayment of principal and will be
distributed to the Class A noteholders earlier than
otherwise would be the case.
AUSTRALIAN CONSUMER PROTECTION LAWS MAY
AFFECT THE TIMING OR AMOUNT OF INTEREST OR
PRINCIPAL PAYMENTS TO YOU. ................ Some borrowers may make a claim to a court or
tribunal requesting changes in the terms and
conditions of their mortgage loans or compensation or
penalties from the seller for breaches of any
legislation relating to consumer credit. Australian
governmental agencies may also bring actions for
penalties under legislation relating to consumer
credit. Any order under legislation relating to
consumer credit, and any changes which allow the
borrower to pay less principal or interest under the
mortgage loan, may delay or decrease the amount of
collections available to make payment to you.
In addition, if the issuer trustee obtains legal
title to the mortgage loans, the issuer trustee will
be subject to the penalties and compensation
provisions of Australia's Consumer Credit Code
instead of the seller. To the extent that the issuer
trustee is unable to claim damages from the seller or
the servicer where the issuer trustee suffers a loss
in connection with a breach of the Australian
Consumer Credit Code, the assets of the trust,
subject to limited exceptions, will be used to
indemnify the issuer trustee prior to payments to
you. This may delay or decrease the amount of
collections available to make payments to you. See
"Consumer Credit Code" in part B of this prospectus.
AUSTRALIAN TAX REFORM PROPOSALS COULD RESULT
IN TAX LIABILITY ON THE TRUST WHICH MAY
LEAD TO LOSSES ON YOUR CLASS A NOTES. ..... The Australian Federal Government proposes to reform
business taxation as part of its current tax reform
program. There are several proposed measures,
including, generally, the taxation of trusts in the
same
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manner as companies (I.E., as separate taxable
entities). Although these new rules have not been
adopted in their final form, on the basis of draft
proposals released by the Australian Federal
Government, the new rules should not apply to a
securitization vehicle such as the trust. In
addition, the transaction documents contain
appropriate mechanisms which permit the trust to be
amended in order to avoid an entity-level tax, to the
extent possible, and maintain its current
"look-through" status. If contrary to expectation,
these new tax proposals do apply to the trust, then
to the extent that the trust incurs a tax liability,
the issuer trustee may have less funds available to
meet its obligations, and you may suffer losses. See
"Material Australian Tax Consequences" in part B of
this prospectus.
BECAUSE THE ISSUER TRUSTEE IS AN AUSTRALIAN
ENTITY, THERE REMAINS UNCERTAINTY AS TO THE
ENFORCEABILITY OF JUDGMENTS OBTAINED BY
CLASS A NOTEHOLDERS IN U.S. COURTS BY
AUSTRALIAN COURTS. ........................ Perpetual Trustee Company Limited is an Australian
public company and in its capacity as issuer trustee
of the trust, it has agreed to submit to the
jurisdiction of the New York State and federal courts
for purposes of any suit, action or proceeding
arising out of the offering of the Class A notes
under the underwriting agreement. Generally, a final
and conclusive judgment obtained by noteholders in
U.S. courts would be recognized and enforceable
against the issuer trustee in the relevant Australian
court without reexamination of the merits of the
case. However, because of the foreign location of the
issuer trustee and its directors, officers and
employees (and their respective assets), it may be
difficult for noteholders to effect service of
process over these persons or to enforce against them
judgments obtained in United States courts based upon
the civil liability provisions of the U.S. federal
securities laws. See "Enforcement of Foreign
Judgments in Australia" in part B of the prospectus.
RISKS ASSOCIATED WITH SELLER'S MORTGAGE LOAN PORTFOLIO:
PAYMENT HOLIDAYS MAY RESULT IN YOU NOT
RECEIVING YOUR FULL INTEREST PAYMENTS. .... On certain mortgage loans, if a borrower prepays
principal on his or her loan, the servicer may permit
the borrower to skip subsequent payments, including
interest payments, until the outstanding principal
balance of the mortgage loan equals the scheduled
balance. If a significant number of borrowers take
advantage of this
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practice at the same time, the issuer trustee may not
have sufficient funds to pay you the full amount of
interest on the Class A notes on the next quarterly
payment date.
BECAUSE SCHEDULED PAYMENTS ARE
CALCULATED ANNUALLY, SUCH PAYMENTS MAY BE
LARGER OR
SMALLER THAN PAYMENTS CALCULATED ON A
CONVENTIONAL, LEVEL
PAYMENT BASIS. ............................ The scheduled payment payable by the borrower on
either a monthly, bi-weekly or weekly basis under
certain mortgage loans is determined once a year in
accordance with a "reference rate" rather than on the
basis of the borrower's interest rate, outstanding
principal balance and loan term. In fact, the
reference rate is generally designed to accelerate
the payment of a loan. Thus, notwithstanding the
remaining term to maturity of the mortgage loans, the
loans may be paid off more rapidly than if scheduled
payments were calculated on a conventional level
payment basis giving effect to the loan's interest
rate, balance and term.
Conversely, since a borrower's scheduled payments
change annually, an increase in a borrower's interest
rate on a variable rate mortgage loan during the year
could result in interest accruing on the mortgage
loan in excess of the required scheduled payment
under the mortgage loan. In such a case, the mortgage
loan will be subject to "negative amortization" and
the excess of such interest accrual over the required
scheduled payment would be added to the principal
balance of the loan. Extended periods of negative
amortization could result in shortfalls in
collections on the mortgage loans to pay interest on
the Class A notes.
BECAUSE INTEREST ACCRUES ON THE LOANS ON A
SIMPLE INTEREST BASIS, INTEREST PAYABLE MAY
BE REDUCED IF BORROWERS PAY INSTALLMENTS
BEFORE SCHEDULED DUE DATES. ............... Interest accrues on the mortgage loans on a daily
simple interest basis, I.E., the amount of interest
payable each weekly, bi-weekly or monthly period is
based on each daily balance for the period elapsed
since interest was last charged to the borrower.
Thus, if a borrower pays a fixed installment before
its scheduled due date, the portion of the payment
allocable to interest for the period since the
preceding payment was made may be less than would
have been the case had the payment been made as
scheduled.
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THE SELLER'S ABILITY TO SET THE INTEREST RATE
ON VARIABLE RATE MORTGAGE LOANS MAY LEAD TO
INCREASED DELINQUENCIES OR PREPAYMENTS AND
AFFECT THE YIELD ON YOUR CLASS A NOTES. ... The interest rates on the variable rate mortgage
loans are not tied to an objective interest rate
index, but rather are set at the sole discretion of
the seller. If the seller increases interest rates on
these loans, borrowers may be unable to make their
required payments and, accordingly, may become
delinquent or may default on their mortgage loans.
Further, the seller's willingness to increase
interest rates on the mortgage loans may be
influenced by the seller's obligations as basis swap
provider to make payments under the basis swap. 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 which could affect the
yield on your Class A notes.
A BORROWER'S ABILITY TO OFFSET MAY AFFECT THE
RETURN ON YOUR CLASS A NOTES. ............. In the event of the insolvency of the seller,
borrowers may be able to offset their deposits with
the seller against their liability under their
mortgage loans. If this occurs, the assets of the
trust (including the seller's deposit of funds for
this risk, if any) might be insufficient to pay your
principal and interest in full.
THE CONCENTRATION OF MORTGAGE LOANS IN
SPECIFIC GEOGRAPHIC AREAS MAY INCREASE THE
POSSIBILITY OF LOSS ON YOUR CLASS A
NOTES. .................................... The trust contains a high concentration of mortgage
loans secured by properties located within the states
and territories of New South Wales, Victoria and
Queensland within Australia. See the geographic
distribution table in Appendix A-1 for a geographic
profile of the mortgage loans. 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 mortgage 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 mortgage loans.
These events may in turn have a disproportionate
impact on funds available to the trust, which could
cause you to suffer losses.
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FOR THE REMAINING SECTIONS OF PART A OF THIS PROSPECTUS, YOU CAN FIND
DEFINITIONS OF CERTAIN CAPITALIZED TERMS USED THEREIN UNDER THE CAPTION
"GLOSSARY" AT THE END OF THIS PROSPECTUS.
THE TRUST
GENERAL
The HomeSide Mortgage Securities Trust 2001-1 (the "Trust"), formed on or
about January 3, 2001, is a common law trust established by the Trust Manager
under the laws of the Australian Capital Territory. The Trust may only act
through the Issuer Trustee. Accordingly references to actions or obligations of
the Issuer Trustee refer to such actions or obligations of the Trust.
The detailed terms of the Trust are set out in the Master Trust Deed and the
Supplemental Deed. The Trust is separate and distinct from any other trust to be
established under the Master Trust Deed; the assets of the Trust will not be
available to meet the liabilities of any other such trust; and the assets of any
other trust will not be available to meet the liabilities of the Trust.
The Supplemental Deed, which supplements the general framework under the
Master Trust Deed with respect to the Trust, accomplishes the following:
- specifies the details of the Notes, other than those terms and conditions
for the Class A Notes which are contained in the Note Trust Deed, the
Agency Agreement and the "Terms and Conditions" annexed to the Class A
Notes (see Appendix A-II to part A of this prospectus);
- establishes the cash flow allocation of the mortgage loans with respect to
payment of the Notes;
- confirms the appointment of National Australia Bank Limited ("National"),
trading as HomeSide, as Servicer of the mortgage loans;
- specifies a number of ancillary matters associated with operation of the
Trust and the mortgage loans such as the arrangements regarding the
operation of the Collections Account, the fees payable to the Issuer
Trustee, the Trust Manager and the Servicer, the termination of the Trust
and the limitation of the Issuer Trustee's liability.
ASSETS OF THE TRUST
The assets of the Trust will include the following:
- the pool of mortgage loans, including all:
- principal payments paid or payable on the mortgage loans at any time
after the Cut-off Date; and
- interest payments paid or payable on the mortgage loans at any time
after the Cut-off Date (other than the Accrued Interest Adjustment
which is paid on the first Payment Date to the Seller);
- rights under the mortgage insurance policies issued by GE Mortgage
Insurance Pty Ltd (f/k/a Housing Loans Insurance Corporation Pty Ltd), GE
Capital Mortgage Insurance Corporation (Australia) Pty Ltd and Housing
Loans Insurance Corporation, and, where available, the individual property
insurance policies covering the mortgaged properties relating to the
mortgage loans;
- rights under the mortgages relating to the mortgage loans;
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- rights under any additional collateral securities appearing on the
Seller's records as securing the mortgage loans;
- amounts on deposit in certain accounts established in connection with the
creation of the Trust and the issuance of the Notes, including the
Collections Account, and any Authorized Investments in which these amounts
are invested; and
- the Issuer Trustee's rights under the Transaction Documents, including the
Support Facilities.
THE MORTGAGE LOANS
The mortgage loans are secured by registered first ranking mortgages on
properties located in Australia. The mortgage loans are from the Seller's
residential loan program and have been originated by the Seller in the ordinary
course of its business as described at "The Seller's Residential Loan Program"
in part B of this prospectus. The mortgage loans are either fixed rate (but only
for a limited period, generally no longer than 10 years, with the rate at the
end of such period, either converting to a new fixed rate for another limited
period or converting to a variable rate) or variable rate loans. The mortgaged
properties consist of one- to four-family residential owner-occupied properties
and one- to four-family residential non-owner occupied properties, excluding
mobile homes.
TRANSFER AND ASSIGNMENT OF THE MORTGAGE LOANS
On the Closing Date, the Seller will equitably assign to the Depositor the
mortgage loans, the mortgages securing those mortgage loans, any additional
collateral security and any insurance policies, as described above, on the
mortgaged properties relating to those mortgage loans. The Depositor will, in
turn, equitably assign such assets and rights to the Issuer Trustee. After the
latter equitable assignment, the Issuer Trustee will be entitled to receive
collections on the mortgage loans. If a Title Perfection Event occurs, unless
each rating agency confirms that a failure to perfect the Issuer Trustee's title
to the mortgage loans will not result in a reduction, qualification or
withdrawal of the credit ratings assigned by them to the Class A Notes, the
Class B Notes and the Redraw Notes (if any), the Issuer Trustee must use the
irrevocable power of attorney granted by the Seller in favor of the Depositor
and the Issuer Trustee to take the actions necessary to protect the Issuer
Trustee's interest in, and legal title to, the mortgage loans. The Trust
Manager, the Depositor, the Servicer and the Seller have agreed to assist the
Issuer Trustee in taking any necessary actions to obtain legal title to the
mortgage loans after the occurrence of a Title Perfection Event, including the
lodgment of transfers of the mortgages securing the mortgage loans with the
appropriate land titles office in each applicable Australian state and
territory.
The Issuer Trustee will grant a first ranking fixed and floating charge over
the mortgage loans and other assets of the Trust, under the Master Security
Trust Deed and Deed of Charge, in favor of the Security Trustee for the ultimate
benefit of the Noteholders and the other Secured Creditors of the Trust. The
Servicer will service the mortgage loans pursuant to the Servicing Agreement and
will receive compensation for these services. See "Description of the
Transaction Documents--The Master Security Trust Deed" in part B of this
prospectus and "Servicing" in part A of this prospectus.
REPRESENTATIONS, WARRANTIES AND ELIGIBILITY CRITERIA
The Seller will make various representations and warranties to the Depositor
with respect to the mortgage loans, including those set forth in "The
Seller--Representations, Warranties and Eligibility Criteria--The Seller's
Representations" at part B of this prospectus. The Depositor will, in turn,
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assign such rights and remedies to the Issuer Trustee as described in such
section. If the Seller breaches any of the representations or warranties, the
Seller will be obligated:
- to remedy the breach; or
- in some limited circumstances to repurchase the relevant mortgage loan or
any property acquired in respect of that mortgage loan; or
- in some circumstances to pay damages for any direct loss sustained by the
Depositor up to a maximum of the outstanding principal balance of the
affected mortgage loans.
DESCRIPTION OF THE POOL OF MORTGAGE LOANS
GENERAL
The pool will consist of approximately 24,696 mortgage loans that have an
aggregate outstanding principal balance as of the Cut-off Date, of approximately
A$1,993,298,573.57. As of the Cut-off Date, no mortgage loans were more than
30 days delinquent. Lender's mortgage insurance policies with respect to the
mortgage loans will cover any loss realized on the disposal of the related
mortgaged property subject to such mortgage loan. See "Description of the
Notes--The Mortgage Insurance Policies." The mortgage loans were originated in
accordance with the underwriting standards described at "The Seller's
Residential Loan Program-Underwriting Process" in part B of this prospectus.
A mortgage over the related mortgaged property will secure the mortgage
loans. Each mortgage is a registered first ranking mortgage and each mortgage
will have priority over all other mortgages granted by the relevant borrower and
over all unsecured creditors of the borrower.
The mortgaged properties that secure the mortgage loans are located in the
following states and territories of Australia:
- New South Wales;
- Victoria;
- Western Australia;
- Queensland;
- South Australia;
- Tasmania;
- the Northern Territory; and
- the Australian Capital Territory.
DETAILS OF THE POOL OF MORTGAGE LOANS
The information in Appendix A-I to part A of this prospectus, attached
hereto, sets forth in tabular format various details relating to the mortgage
loans to be included in the Trust. The information is provided by the Seller as
of the close of business on the Statistical Cut-off Date. All amounts have been
rounded to the nearest Australian dollar. The sum in any column may not equal
the total indicated due to rounding.
The statistical information in Appendix A-I may not reflect the actual pool
of mortgage loans as of the Closing Date because the Seller may substitute loans
proposed for equitable assignment to the Trust with other eligible mortgage
loans or add additional eligible mortgage loans. The Seller may do this if, for
example, the loans originally selected are repaid early.
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The Seller will not add, remove or substitute any mortgage loans prior to
the Closing Date if this would result in a change of more than 5% in any of the
characteristics of the pool of mortgage loans described in the "Summary" under
the heading "The Mortgage Loans." Moreover, additions or removals of mortgage
loans in the mortgage loan pool will not occur after the Closing Date other than
through removals as a result of repurchase by the Seller of mortgage loans
affected by a breach of the Seller's representations or warranties as described
under "The Seller--Breach of Representations and Warranties" in part B of this
prospectus or the exercise by the Servicer of its option to repurchase mortgage
loans which are 90 days or more delinquent as described at "Servicing--Optional
Repurchase of Defaulted Mortgage Loans" in part A of this prospectus.
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 Trust Manager to the Issuer Trustee to issue the
Class A Notes under the terms of the Master Trust Deed, the Supplemental Deed,
and the Note Trust Deed. The following summary is subject to, and qualified in
its entirety by reference to, the terms and conditions of the Class A Notes set
forth at Appendix A-II to part A of this prospectus attached hereto, the terms
and conditions of the Note Trust Deed and the provisions of the other
Transaction Documents. The following summary, together with the description of
the Notes in part B of this prospectus, nevertheless, describes all material
terms of the Class A Notes and the related Transaction Documents. Investors
should also review the other sections of this prospectus for important
additional information regarding the terms and conditions of the Class A Notes
and the Transaction Documents.
GOVERNING LAW
The Notes will be governed by the laws of the Australian Capital Territory.
The Noteholders are bound by, and deemed to have notice of, all the provisions
of the Transaction Documents. The Note Trust Deed has been duly qualified under
the Trust Indenture Act of 1939 of the United States.
FORM OF CLASS A NOTES
The Class A Notes are offered in minimum denominations equivalent to at
least US$100,000 initial principal balance each and multiples of US$10,000 in
excess of that amount. The Issuer Trustee will issue the Class A Notes in
book-entry form only as described below.
BOOK-ENTRY REGISTRATION: The Class A Notes will be issued only in permanent
book-entry format. While the Class A Notes are in book-entry format, all
references to actions by the Class A Noteholders will refer to actions taken by
the DTC, upon instructions from its participating organizations and all
references in part A of 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, Cede & Co., as the registered Noteholder,
for distribution to owners of the Class A Notes in accordance with DTC's
procedures and the terms and conditions of the Class A Notes. Unless the events
described in "DEFINITIVE NOTES" below occur, the Issuer Trustee will not issue
the Class A Notes in fully registered, certificated form as definitive notes.
Class A Noteholders may hold their interests in the Class A Notes through
DTC, in the United States, Clearstream-Luxembourg (previously named Cedelbank)
or Euroclear, 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 be the registered holder of the Class A Notes.
Clearstream-Luxembourg and Euroclear will hold omnibus positions on behalf of
their respective participants through customers' securities accounts in
Clearstream-Luxembourg's and Euroclear's
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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.
Unless the Issuer Trustee issues definitive notes, Class A Noteholders will
receive all distributions of principal and interest on the book-entry notes
through DTC participants. Under a book-entry format, Class A Noteholders will
receive payments after the related Payment Date. This payment delay will occur
because although the Issuer Trustee will (through the paying agents) forward
payments on the book-entry notes to Cede & Co. as nominee for DTC, on each
Payment Date, DTC will forward those payments to DTC participants, which will be
required to forward them to indirect DTC participants or Class A Noteholders. It
is anticipated that the Noteholder as this term is used in the Master Trust Deed
and the Note Trust Deed for each class of book-entry notes will be Cede & Co.,
as nominee of DTC. As a result, the Issuer Trustee will not recognize book-entry
Class A Noteholders as Noteholders under the Master Trust Deed or the Note Trust
Deed, but rather as beneficial owners of an interest in a global book-entry note
(I.E., the "Class A Note Owners"). Class A Note Owners will be permitted to
exercise the rights of Class A Noteholders under the Master Trust Deed and the
Note Trust Deed only indirectly through DTC participants, who in turn will
exercise their rights through DTC.
For further information regarding purchases, transfers and assignments of
Class A Notes (including cross-market transfers) through the DTC book-entry
system, the procedures for payment of principal and interest on the Class A
Notes through DTC, and the operations of DTC, Clearstream-Luxembourg and
Euroclear see "Description of Notes--Form of the Notes--Book Entry Registration"
in part B of this prospectus.
DEFINITIVE NOTES: The Issuer Trustee will reissue the Class A Notes in
fully registered certificated form as definitive notes to Class A Noteholders or
their nominees, rather than in book-entry form to DTC or its nominees, only if
the events described in part B of this prospectus under "Description of the
Notes--Definitive Notes" occurs.
COLLECTIONS; DISTRIBUTIONS ON THE CLASS A NOTES
Collections in respect of interest and principal on the mortgage loans will
be received during each quarterly Collection Period. Collections include any of
the following amounts received after the Cut-off Date:
- payments of interest, principal and other amounts under the mortgage
loans, excluding any mortgage insurance premiums and related charges, fees
or expenses payable to the servicer, including prepayment fees;
- proceeds from the enforcement of the mortgage loans and mortgages and
other securities relating to those mortgage loans;
- amounts received under mortgage insurance policies; and
- amounts received from the Seller for breaches of representations and
warranties in connection with the mortgage loans or from an optional
purchase by the Servicer of 90-day or more defaulted mortgage loans.
The Servicer will receive collections on the mortgage loans from borrowers.
The Servicer must deposit any collections into the Collections Account within 2
Business Days following its receipt. However, if the Servicer is the Seller and
the Servicer has short term credit ratings of A-1+ from Standard & Poor's, P-1
from Moody's and F1 from Fitch (or, in the case of Standard & Poor's only, a
long-term credit rating of AAA), it may retain collections until 10:00 a.m.
(Melbourne time) on the Payment Date following the end of the relevant
Collection Period.
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If the Servicer is not the Seller but the Servicer has short term credit
ratings of no lower than A-1 from Standard & Poor's, P-1 from Moody's and F1
from Fitch, it may retain collections until 10:00 a.m. (Melbourne time) on the
Business Day which is the earlier of 30 days from receipt and 2 Business Days
before the Payment Date following the end of the relevant Collection Period.
However, while the sum of all collections held by the Servicer and the value of
any short-term Authorized Investments which are with, or issued by, a bank or
financial institution which has a short-term credit rating of A-1 from
Standard & Poor's exceeds 20% of the aggregate of the Stated Amounts of the
Notes and Redraw Notes, the Servicer will only be entitled to retain any
additional collections received for 2 Business Days following receipt.
After the applicable period referred to above, the Servicer must then
deposit the collections into the Collections Account. The Collections Account
must be established by the Servicer and the Issuer Trustee at an Eligible Bank
or (subject to the terms of the second preceding paragraph) with the Servicer.
The Issuer Trustee will make its payments on a quarterly basis on each
Payment Date, including payments to Noteholders and Redraw Noteholders, from
collections received during the preceding Collection Period and from amounts
received under Support Facilities on or prior to the Payment Date. Certain
amounts received by the Issuer Trustee are not distributed on a Payment Date.
These amounts include cash collateral lodged with the Issuer Trustee by a
Support Facility provider or the Seller and interest on that cash collateral.
A-37
<PAGE>
KEY DATES AND PERIODS
The following are the relevant dates and periods for the allocation of
cashflows and their payments.
<TABLE>
<S> <C>
BUSINESS DAY........................... means a day (excluding a Saturday, Sunday and any public
holiday) on which banks are open for business in
Melbourne, Australia, New York City, New York, Sydney,
Australia or any other relevant city identified in the
Supplemental Deed.
QUARTER................................ means the three-month period in each year commencing on
January 1, April 1, July 1 and October 1.
INTEREST PERIOD........................ means the period commencing on and including a Payment
Date and ending on but excluding the next Payment Date.
However, the first and last Interest Periods are as
follows:
- FIRST: the period from and including the Closing Date
to but excluding the first Payment Date;
- LAST: the period from and including the Payment Date
immediately preceding the date upon which the Notes
are redeemed to and including the date upon which the
Notes are redeemed (excluding the final maturity
date).
COLLECTION PERIOD...................... means, with respect to a Payment Date, the period from
(and including) the first day of the Quarter immediately
preceding the related Determination Date up to (and
including) the last day of the Quarter immediately
preceding the related Determination Date. However, the
first Collection Period commences on (and includes) the
day after the Cut-off Date and ends on March 31, 2001.
DETERMINATION DATE..................... The day which is five Business Days prior to a Payment
Date.
PAYMENT DATE........................... The 20th day of each January, April, July and October, or,
if the 20th day is not a Business Day, then the next
Business Day. The first Payment Date is April 20, 2001.
</TABLE>
EXAMPLE CALENDAR:
<TABLE>
<S> <C>
INTEREST PERIOD................... April 20, 2001 to July 19, 2001
COLLECTION PERIOD................. April 1, 2001 to June 30, 2001
DETERMINATION DATE................ July 13, 2001
PAYMENT DATE...................... July 20, 2001
</TABLE>
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<PAGE>
DETERMINATION OF TOTAL AVAILABLE INCOME
Payments of interest on the Notes and Redraw Notes are made from Total
Available Income.
TOTAL AVAILABLE INCOME for a Determination Date and the following Payment
Date means the aggregate of:
- the FINANCE CHARGE COLLECTIONS which are the following amounts received by
the Servicer on behalf of the Issuer Trustee during the preceding
Collection Period:
- any interest or other amounts in the nature of interest or income
received in respect of a mortgage loan (or any similar amount deemed by
the Servicer to be in the nature of income or interest), including
without limitation:
(i) amounts recovered from the enforcement of a mortgage loan;
(ii) amounts paid by the Seller upon repurchase of a mortgage loan
in connection with a breach of a Seller representation or
warranty or by the Servicer upon purchase of a defaulted
mortgage loan;
(iii) amounts paid as interest by the borrower on a Redraw of a
mortgage loan;
(iv) any other amounts received from the Seller or Servicer in
respect of a breach of a representation or warranty contained
in the Transaction Documents in respect of a mortgage loan or
under an obligation to indemnify or reimburse the Issuer
Trustee; and
- any recoveries received in respect of a mortgage loan that were
previously a loss resulting in a Principal Charge-off;
- MORTGAGE INSURANCE INTEREST PROCEEDS which are amounts received by the
Issuer Trustee during the preceding Collection Period under a mortgage
insurance policy which the Trust Manager determines are not in the nature
of principal;
- OTHER INCOME which means interest received on Authorized Investments
during the preceding Collection Period and other miscellaneous income
received by the Issuer Trustee;
- PRINCIPAL DRAW which means Available Principal Collections applied as
income on the Payment Date to satisfy an Income Shortfall resulting from a
deficiency in Total Available Income (as determined before such Principal
Draw);
- SUPPORT FACILITIES AND OTHER AMOUNTS which means any net payments due to
be received by the Issuer Trustee on the related Payment Date under the
fixed rate swap and the basis swap (see "The Interest Rate Swaps" below)
and any other amount that the Trust Manager determines should be included
in available interest and income collections; and
- LIQUIDITY FACILITY ADVANCE which means any advance to be made to cover an
Income Shortfall (as determined prior to such advance) under the Liquidity
Facility on the related Payment Date as described under "--Liquidity
Facility Advance" below.
Based upon the margins payable by the Basis Swap Provider and Fixed Rate
Swap Provider, on the basis swap and the fixed rate swap, respectively, and
assuming that payments are made when due under the mortgage loans, it is
expected that there will be sufficient Total Available Income to cover all the
known obligations of the Trust on each Payment Date, including interest on the
Class A Notes.
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<PAGE>
LIQUIDITY FACILITY ADVANCE
If the Trust Manager determines on any Determination Date that there will
still exist an Income Shortfall (as defined below) on the succeeding Payment
Date after an application of a Principal Draw (if sufficient Available Principal
Collections are available for such purpose) (see "--Distribution of Available
Principal Collections" below), the Trust Manager must direct the Issuer Trustee
to make a drawing under the Liquidity Facility on such Payment Date in an amount
equal to the lesser of the amount of the Income Shortfall and the amount then
available to be drawn under the Liquidity Facility.
An "Income Shortfall" is the amount by which the payments to be made from
the Total Available Income on a Payment Date, other than reimbursement of
Principal Charge-offs, Carryover Principal Charge-offs, or payments to the
Residual Income Unitholder, or reimbursement of Principal Draws Outstanding
exceed the aggregate of the Finance Charge Collections, the Mortgage Insurance
Interest Proceeds, net amounts received under the fixed rate swap and basis
swap, Other Income, other amounts that the Trust Manager determines should be
included in income and interest collections and the amount of any Principal Draw
to satisfy such Income Shortfall in relation to that Payment Date.
DISTRIBUTION OF TOTAL AVAILABLE INCOME
On each Payment Date, the Total Available Income for that Payment Date is
allocated in the following order of priority:
- FIRST, solely with respect to the first Payment Date, to the payment of
the Accrued Interest Adjustment to the Seller, otherwise;
PARI PASSU and ratably and in respect of the related Collection Period:
(i) any taxes relating to the Trust;
(ii) the Issuer Trustee's and the Security Trustee's quarterly fee;
(iii) the Servicer's quarterly fee;
(iv) the Trust Manager's quarterly management fee;
(v) any expenses of enforcement of the mortgage loans; and
(vi) payment of all costs, charges and expenses incurred by the Issuer
Trustee or the Trust Manager in administering the Trust, other than
as detailed above or below or which are payable from Available
Principal Collections;
- SECOND, PARI PASSU and rateably, any fees payable by the Issuer Trustee
under the Redraw Facility and the Liquidity Facility on that Payment Date
and any net amount payable by the Issuer Trustee under the Basis Swap and
the Fixed Rate Swap on that Payment Date;
- THIRD, to repayment or reimbursement to the Liquidity Facility Provider of
any amount drawn on the Liquidity Facility before the related Payment
Date;
- FOURTH, PARI PASSU and rateably:
(i) payment to the Currency Swap Providers on that Payment Date of the
A$ Class A Interest Amount for the Interest Period ending on (but
excluding) that Payment Date (and any A$ Class A Interest Amount
remaining unpaid from prior Payment Dates) in return for which the
Currency Swap Providers will pay the Paying Agents for distribution
to the Class A Noteholders as described under "The Currency Swaps--
Interest Payments" below;
A-40
<PAGE>
(ii) payment of interest in relation to any Redraw Notes for the
Interest Period ending on (but excluding) that Payment Date (and
any interest remaining unpaid from prior Payment Dates);
(iii) payment of any interest due under the Redraw Facility for the
Interest Period ending on (but excluding) that Payment Date (and
any interest remaining unpaid from prior Payment Dates); and
(iv) payment of any interest due under the Liquidity Facility for the
Interest Period ending on (but excluding) that Payment Date (and
any interest remaining unpaid from prior Payment Dates);
- FIFTH, payment of interest in relation to the Class B Notes for the
Interest Period ending on (but excluding) that Payment Date (and any
interest remaining unpaid from prior Payment Dates);
To the extent there is remaining Total Available Income:
- SIXTH, PARI PASSU and ratably, to reimburse any Principal Charge-offs in
respect of the preceding Collection Period allocated to the Class A Notes,
the Redraw Notes and the Redraw Facility as an allocation to Available
Principal Collections on that Payment Date;
- SEVENTH, PARI PASSU and ratably, to reimburse any carryover charge-offs in
relation to the Class A Notes, the Redraw Notes and the Redraw Facility as
an allocation to Available Principal Collections on that Payment Date;
- EIGHTH, to reimburse any Principal Charge-Offs in respect of the preceding
Collection Period and subsequently to reimburse any carryover charge-offs,
in each case allocated to the Class B Notes as an allocation to Available
Principal Collections on that Payment Date;
- NINTH, to reimburse any Principal Draws which have not been repaid as at
that Payment Date; and
- TENTH, to the Residual Income Unitholder.
The Issuer Trustee will only make a payment under a priority above to the
extent that any Total Available Income (as increased by any Principal Draw and
Liquidity Facility Advance) remains from which to make the payment after amounts
with priority to that payment have been distributed.
INTEREST ON THE NOTES
CALCULATION OF INTEREST PAYABLE ON THE NOTES
The period that any Notes or Redraw Notes accrue interest is divided into
Interest Periods. The first Interest Period in respect of the Notes commences on
and includes the Closing Date and ends on but excludes the first Payment Date.
Each subsequent Interest Period commences on and includes a Payment Date and
ends on but excludes the following Payment Date. The Class A Notes accrue
interest from and including the Closing Date to but excluding the day upon which
the final Interest Period ends. The final Interest Period for the Class A Notes
will end on, but exclude, the earlier of: the date upon which the Stated Amount
of the Class A Notes is reduced to zero; the date upon which the Class A Notes
are redeemed or repaid in full, unless upon presentation payment is improperly
withheld in which case interest will continue to accrue until the earlier of the
day on which the Class A Noteholder receives all sums due in respect of the
Class A Note and the seventh day after notice is given to the Class A Noteholder
that, where this is required, upon presentation of the Class A Note such payment
will be made, provided that payment is in fact made; the date upon which the
Class A Notes are deemed to be redeemed; the final maturity date for the
Class A Notes;
A-41
<PAGE>
and the date on which the Class A Noteholder renounces all of its rights to any
payments under or in respect of that Class A Note.
Up to, but excluding, the Payment Date falling in April 2008, the interest
rate for the Class A Notes for each Interest Period will be equal to LIBOR for
that Interest Period plus %. If the Issuer Trustee has not redeemed or
attempted to redeem all of the Class A Notes by the Payment Date falling in
April 2008, then subject to the following, the interest rate for each Interest
Period commencing on or after that date will be equal to LIBOR for that Interest
Period plus %.
If the Issuer Trustee, at the direction of the Trust Manager, proposes to
exercise the option to redeem the Notes and Redraw Notes on a Payment Date on or
after April 2008 at their Stated Amount rather than their Invested Amount, as
described in "Optional Redemption of the Notes" below, but is unable to do so
because, following a meeting of Noteholders and Redraw Noteholders convened
under the provisions of the Master Trust Deed by the Trust Manager for this
purpose, 75% by voting interest of the Noteholders and Redraw Noteholders have
not approved the redemption of the Notes and Redraw Notes at their Stated
Amounts, then the interest rate for the Class A Notes for each Interest Period
commencing on or after that Payment Date will be equal to LIBOR for that
Interest Period plus %.
The interest rate of the Class B Notes for an Interest Period will be equal
to the Bank Bill Rate for that Interest Period plus %, which spread will not
increase irrespective of whether or not the Issuer Trustee has exercised its
optional redemption rights with respect to the Class A Notes as described above.
If Redraw Notes are issued the interest rate applicable to them will be
equal to the Bank Bill Rate plus a specified margin determined at the time of
their issue. The interest rate for the Redraw Notes, if any, for each Interest
Period is calculated by the Trust Manager.
With respect to any Payment Date, interest on a Note or any Redraw Note will
be calculated as the product of:
- the Invested Amount of that Note or Redraw Note as of the first day of
that Interest Period, after giving effect to any payments of principal
made with respect to such Note or Redraw Note on such day;
- the interest rate for such Note or Redraw Note for that Interest Period;
and
- 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 and any Redraw Notes.
Interest will accrue on any unpaid interest in relation to a Note or Redraw
Note at the interest rate that applies from time to time to that Note or Redraw
Note until that unpaid interest is paid.
CALCULATION OF LIBOR
On the second business day in London and New York before the beginning of
each Interest Period, The Bank of New York (New York Branch) as calculation
agent will determine LIBOR for the next Interest Period.
DETERMINATION OF AVAILABLE PRINCIPAL COLLECTIONS
Payments of principal, including repayment of principal on the Notes and
Redraw Notes, are made from Available Principal Collections.
A-42
<PAGE>
AVAILABLE PRINCIPAL COLLECTIONS for a Determination Date and the following
Payment Date means the aggregate of:
- COLLECTIONS for the preceding Collection Period as described at
"--Collections; Distributions on the Class A Notes" above; PLUS
- the proceeds of issuance of any Redraw Notes on that Payment Date; PLUS
- any amount to be drawn under the Redraw Facility on that Payment Date;
MINUS
- FINANCE CHARGE COLLECTIONS for the immediately preceding Collection Period
as determined at "--Determination of Total Available Income"; MINUS
- MORTGAGE INSURANCE INTEREST PROCEEDS received during the preceding
Collection Period as determined at "--Determination of Total Available
Income."
DISTRIBUTION OF AVAILABLE PRINCIPAL COLLECTIONS
On each Payment Date, Available Principal Collections for that Payment Date
is allocated in the following order of priority:
- FIRST, repayment to the Seller of any Redraws under the mortgage loans
made during or prior to the Collection Period then ended and which are
then outstanding;
- SECOND, repayment to the Redraw Facility Provider of the Redraw Principal
Outstanding (as at the immediately preceding Determination Date) without
double counting and excluding amounts to be drawn under the Redraw
Facility on that Payment Date;
- THIRD, as a Principal Draw (if any) to be treated as part of Total
Available Income to cover any Income Shortfall resulting from a deficiency
in Total Available Income on a Payment Date to be applied in the order of
priorities set forth at "--Distribution of Total Available Income" above;
- FOURTH, equally among the Redraw Noteholders in order of issue of Redraw
Notes until their Stated Amounts (as at the immediately preceding
Determination Date) without double counting are reduced to zero on the
basis that a Redraw Note receives no principal repayment until the Stated
Amount of all earlier issued Redraw Notes has been reduced to zero;
- FIFTH, concurrently:
(i) to the Currency Swap Providers in respect of principal payments on
the Class A Notes, the Class A Note Percentage of Available
Principal Collections and the Stepdown Percentage of Available
Principal Collections that would otherwise be paid to the holders
of the Class B Notes; and
(ii) pro rata to the holders of the Class B Notes in the manner
described below under the heading "--Allocation of Principal to
Class A Notes and Class B Notes"; and
- SIXTH, to the Residual Capital Unitholder.
The Issuer Trustee will only make a payment under the bullet points above to
the extent that any Available Principal Collections remain from which to make
the payment after amounts with priority to that payment have been distributed.
ALLOCATION OF PRINCIPAL TO CLASS A NOTES AND CLASS B NOTES
That part of the Available Principal Collections which is available on a
Payment Date for repayment of the Class A Notes and the Class B Notes is
calculated as follows.
A-43
<PAGE>
The amount of Available Principal Collections to be allocated to A$ Class A
Principal (as defined below) pursuant to fifth priority above under
"--Distribution of Available Principal Collections" is determined on the basis
of the CLASS A NOTE PERCENTAGE ("CANP") calculated as follows on a Determination
Date:
<TABLE>
<S> <C> <C>
CANP = ASA(A)
----------
ASA + RPO
where: ASA (A) = Aggregate Stated Amount of the Class A
Notes on the immediately preceding
Determination Date.
ASA = Aggregate Stated Amount of all Notes on the
immediately preceding Determination Date.
RPO = Redraw Principal Outstanding on the
immediately preceding Determination Date.
</TABLE>
provided that, in respect of the first Determination Date, such amounts will be
calculated by reference to the Initial Invested Amount of the relevant classes
of Notes and RPO will equal zero.
For purposes of the above allocation equation,
- AGGREGATE STATED AMOUNT means the aggregate of the A$ Equivalent of the
Stated Amount of the relevant Notes (I.E., Class A Notes or all Notes
outstanding, as the case requires) at the date of determination.
- A$ EQUIVALENT means, in relation to an amount which is calculated,
determined or expressed in US $ or which includes a component determined
or expressed in US $, that US $ amount or US $ component (as the case may
be) multiplied by the A$ Exchange Rate.
- REDRAW PRINCIPAL OUTSTANDING means, at any Determination Date, an amount
equal to (a) the aggregate amount of drawings made under the Redraw
Facility prior to and on the next Payment Date, MINUS (b) the aggregate
amount of any repayments and/or reimbursements previously made to the
Redraw Facility Provider on account of Redraw Principal or to be made on
the next Payment Date (including any reimbursement of amounts previously
charged off against the Redraw Principal Outstanding), MINUS (c) the
aggregate amounts to be charged off against Redraw Principal Outstanding
on the next Payment Date, MINUS (d) the aggregate amounts of any amounts
previously charged off against the Redraw Principal Outstanding and which
remain unreimbursed.
A$ CLASS A PRINCIPAL means in relation to a Payment Date, the aggregate of:
(a) the amount allocated on that Payment Date from Available Principal
Collections to A$ Class A Principal pursuant to the above formula under the
fifth priority above, as described under "--Distribution of Available Principal
Collections," and (b) the amount allocated on that Payment Date to A$ Class A
Principal from Excess Available Income as described under "--Principal
Charge-offs--Reimbursement of Principal Charge-offs" below.
The amount of Available Principal Collections to be allocated to Class B
Principal (as defined below) on a Payment Date pursuant to the fifth priority
above under "--Distribution of Available
A-44
<PAGE>
Principal Collections" is determined on the basis of the CLASS B PERCENTAGE of
Class B Principal on a Determination Date where:
<TABLE>
<S> <C> <C>
Aggregate
Stated Amount
of the Class B Notes
on the immediately preceding Determination Date
---------------------------------------------
ASA + RPO
Class B Percentage =
where: "ASA" and "RPO" are defined the same as in the
case of the Class A Note Percentage formula
above.
</TABLE>
CLASS B PRINCIPAL means in relation to a Payment Date, the aggregate of:
(a) the amount allocated on that Payment Date from Available Principal
Collections to Class B Principal pursuant to the above formula under the fifth
priority above as described under "--Distribution of Available Principal
Collections" and (b) the amount allocated on that Payment Date to Class B
Principal from Excess Available Income as described under "--Principal
Charge-offs--Reimbursement of Principal Charge-offs" below.
The effect of the above allocation formulas is that Class A Noteholders
receive their proportional share of Available Principal Collections (based upon
the Stated Amount of the Class A Notes) and also receive the Stepdown Percentage
(which may vary between 0% and 100%) of the Class B Noteholders' proportional
share of Available Principal Collections. The remaining part of the Available
Principal Collections is applied towards repayment of the Invested Amount of the
Class B Notes.
The amount to be applied towards repayment of the Stated Amount of the
Class A Notes (converted to Australian dollars at the A$ Exchange Rate) on the
Payment Date is applied in payment to the Currency Swap Providers in respect of
repayment of the Stated Amount of the Class A Notes until the Stated Amount of
the Class A Notes is reduced to zero.
The balance of the Available Principal Collections is applied on that
Payment Date equally amongst the Class B Notes in reduction of the Stated Amount
of the Class B Notes until the Stated Amount of the Class B Notes is reduced to
zero.
REDRAWS
The Seller may make Redraws to borrowers under the mortgage loans. The
Seller is entitled to be reimbursed by the Issuer Trustee for Redraws. See "The
Seller's Residential Loan Program--Redraw Mortgage Loans and Further Advances"
in part B of this Prospectus. The Seller will be reimbursed from the Available
Principal Collections including proceeds of advances under the Redraw Facility
and proceeds from the issue of Redraw Notes.
THE REDRAW FACILITY
If the Trust Manager determines that there is a Redraw Shortfall on a
Determination Date, the Trust Manager may direct the Issuer Trustee in writing
to make a drawing under the Redraw Facility on a Payment Date equal to the
lesser of the Redraw Shortfall and the amount then available to be drawn under
the Redraw Facility.
A "Redraw Shortfall" on a Determination Date means, the amount if any by
which Available Principal Collections for the Collection Period just ended
(determined prior to taking into account any amounts drawn under the Redraw
Facility on the next Payment Date and the proceeds of the
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<PAGE>
issuance of any Redraw Notes on the next Payment Date for the immediately
preceding Collection Period), are insufficient to meet in full the Redraws made
by the Seller during the preceding Collection Period.
ISSUE OF REDRAW NOTES
If prior to a Determination Date the Trust Manager considers that the
aggregate of the Available Principal Collections (determined prior to taking
into account the proceeds of any Redraw Notes on the next Payment Date) and the
amount of Principal Charge-Offs and Carryover Principal Charge-offs to be
reimbursed on the next Payment Date and the Redraw Facility Advance that will be
available to be made with respect to the following Payment Date are likely to be
insufficient to pay in full the Trust Manager's estimate of the Redraws to be
repaid to the Seller on that Payment Date and to repay the Redraw Principal
Outstanding (without taking into account any charge-offs or reimbursement of
charge-offs made on the next Payment Date in respect of the Redraw Facility),
the Trust Manager may direct the Issuer Trustee to issue Redraw Notes. If the
Issuer Trustee receives a notice from the Trust Manager to issue Redraw Notes,
together with written confirmation from the rating agencies that such proposed
issue of Redraw Notes will not result in a reduction, qualification or
withdrawal of any rating assigned by a rating agency to a Note or a Redraw Note,
then the Issuer Trustee will cause the issuance of Redraw Notes up to the amount
specified in such notice.
The Redraw Notes will be denominated in Australian dollars, bear a variable
rate of interest and be issued only in Australia through a private placement and
not under this prospectus.
Prior to the enforcement of the Charge under the Deed of Charge, the Redraw
Notes will rank equally and rateably with the Class A Notes and the Redraw
Facility Provider in their respective rights to receive interest payments and
will rank ahead of the Class A Notes in their rights to receive principal
payments. Any losses in excess of the protection offered by the Class B Notes
will be allocated to the Class A Notes, the Redraw Notes and the Redraw Facility
rateably between the Class A Notes, the Redraw Notes and the Redraw Facility.
Following the enforcement of the Charge under the Deed of Charge, the Redraw
Notes will rank equally with the Class A Notes in their rights to receive
interest and principal payments.
PRINCIPAL CHARGE-OFFS
If the Trust Manager determines on a Determination Date that a principal
loss should be accounted for in respect of a mortgage loan, after taking into
account net proceeds of enforcement of that mortgage loan and its securities,
any relevant payments under a mortgage insurance policy or damages from the
Servicer or the Seller, that principal loss will be allocated in the following
order:
- FIRST, equally among the Class B Notes until the Stated Amount of the
Class B Notes is reduced to zero; and
- SECONDLY, ratably among the following according to their percentage
proportions (calculated, in the case of the Class A Notes or Redraw Notes
at their Stated Amount converted, in the case of the Class A Notes, to
Australian dollars at the A$ Exchange Rate):
- the Class A Notes;
- the Redraw Notes; and
- the principal outstanding of the Redraw Facility,
A-46
<PAGE>
until the Stated Amount of the Class A Notes, the Redraw Notes and the
principal outstanding of the Redraw Facility is reduced to zero.
To the extent allocated and not reimbursed on the following Payment Date
from Excess Available Income (as described under "--Principal
Charge-offs--Reimbursement of Principal Charge-offs"), the principal loss will
reduce the Stated Amount of the Notes and Redraw Notes and will reduce the
principal outstanding of the Redraw Facility as from the following Payment Date.
The principal loss allocated is an Australian dollar amount. Where this is
allocated to a Class A Note, the Stated Amount of the Class A Note is reduced by
an equivalent US dollar amount converted at the US$ Exchange Rate. That
reduction of the Stated Amount of a Note or Redraw Note or the principal
outstanding of the Redraw Facility is referred to as a "Principal Charge-off."
REIMBURSEMENTS OF PRINCIPAL CHARGE-OFFS
Principal Charge-offs may be reimbursed on a subsequent Payment Date where
there is Total Available Income remaining after payment of, among other items,
(i) all fees and expenses of the Trust, (ii) interest payable on the Notes and
the Redraw Notes and (iii) any interest due under the Redraw Facility or
Liquidity Facility on that Payment Date (such net amount is referred to as
"Excess Available Income"). Reimbursement of Principal Charge-offs to be made
from Excess Available Income will be allocated in the following order:
- FIRST, ratably among the following according to their allocations of
Principal Charge-offs in respect of the immediately preceding Collection
Period converted, in the case of the Class A Notes, to Australian dollars
at the A$ Exchange Rate:
- the Class A Notes;
- the principal outstanding of the Redraw Facility, and
- the Redraw Notes;
- SECOND, ratably among the following according to their carryover principal
charge-offs (I.E., the amount of Principal Charge-offs in excess of Excess
Available Income in prior Collection Periods) converted, in the case of
the Class A Notes, to Australian dollars at the A$ Exchange Rate:
- the Class A Notes,
- the principal outstanding of the Redraw Facility; and
- the Redraw Notes;
- THIRD, equally among the Class B Notes, according to their Principal
Charge-offs; and
- FOURTH, equally among the Class B Notes, according to their carryover
Principal Charge-Offs.
A reimbursement of a Principal Charge-off or carryover charge-off on a Note
or Redraw Note will increase the Stated Amount of that Note or Redraw Note and a
reimbursement of a Principal Charge-off on the Redraw Facility will increase the
principal outstanding of the Redraw Facility but the actual funds allocated in
respect of the reimbursement will be distributed as described in" Distribution
of the Available Principal Collections" above.
The amounts allocated for reimbursement of Principal Charge-offs and
carryover charge-offs are Australian dollar amounts. Where such an amount is
allocated to a Class A Note, the Stated Amount of the Class A Note is increased
by an equivalent U.S. dollar amount converted at the US$ Exchange Rate.
A-47
<PAGE>
THE INTEREST RATE SWAPS
PURPOSE OF THE INTEREST RATE SWAPS
Collections in respect of interest on the variable rate mortgage loans will
be calculated based on the relevant variable rates. Collections in respect of
interest on the fixed rate mortgage loans will be calculated based on the
relevant fixed rates. However, the payment obligations of the Issuer Trustee on
the Class B Notes and under the currency swaps are calculated by reference to
the Bank Bill Rate. To hedge these interest rate exposures, the Issuer Trustee
will enter into the basis swap with the Basis Swap Provider and the fixed rate
swap with the Fixed Rate Swap Provider. The basis swap and the fixed rate swap
will be governed by a standard form ISDA Master Agreement, as amended by a
supplementary schedule and confirmed by written confirmations in relation to
each swap. The initial Basis Swap Provider and Fixed Rate Swap Provider will be
the National.
BASIS SWAP
On each Payment Date the Issuer Trustee will pay to the Basis Swap Provider
an amount calculated by reference to the aggregate principal amount outstanding
of the variable rate mortgage loans on the first day of the related Collection
Period and the weighted average interest rate of the variable rate mortgage
loans calculated on the first day of each month during the relevant Collection
Period.
In return the Basis Swap Provider will pay to the Issuer Trustee on each
Payment Date an amount calculated by reference to the aggregate principal amount
outstanding of the variable rate mortgage loans as at the first day of the
related Collection Period for the previous Payment Date and the Bank Bill Rate
plus a margin.
If the interest rate on the Class A Notes is increased following the Payment
Date in April 2008, (see "--Interest on the Notes"), there will be a
corresponding increase in the margin over the Bank Bill Rate payable by the
Basis Swap Provider under the basis swap.
FIXED RATE SWAP
On each Payment Date the Issuer Trustee will pay to the Fixed Rate Swap
Provider an amount calculated by reference to the aggregate principal amount
outstanding of the fixed rate mortgage loans on the first day of the related
Collection Period and the weighted average interest rate of the fixed rate
mortgage loans calculated on the first day of each month during the relevant
Collection Period.
In return the Fixed Rate Swap Provider will pay to the Issuer Trustee on
each Payment Date an amount calculated by reference to the aggregate principal
amount outstanding of the fixed rate mortgage loans as at the first day of the
related Collection Period for the previous Payment Date and the Bank Bill Rate
plus a margin.
In addition, if a borrower prepays a mortgage loan subject to a fixed rate
of interest, or otherwise terminates a fixed rate period under a mortgage loan,
the Servicer may be entitled to receive from the borrower a break cost. The
break cost currently payable by the borrower to the Servicer is calculated as
the difference between the Seller's cost of funds at the start of the relevant
fixed rate period and its cost of funds at the date of prepayment or
termination, over the remainder of the fixed rate period. This is discounted
back to a net present value at the Seller's cost of funds at that date. If the
break period is not a whole year an interpolated rate is used. Under the
Seller's current policies and procedures, partial prepayments may be made by a
borrower without incurring break costs. Break costs may also be waived in other
circumstances. No break benefit is payable by the Servicer to the borrower if
the Servicer benefits as a result of the prepayment or termination of a fixed
rate loan.
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While the fixed rate swap is operating, the break costs for all mortgage
loans for a Collection Period will be paid by the Servicer to the Fixed Rate
Swap Provider on each Payment Date, but only to the extent that the Servicer
charges and actually receives from a borrower an amount of break costs.
The method for calculation of break costs and break benefits may change from
time to time according to the business judgment of the Servicer.
If the interest rate on the Class A Notes is increased following the Payment
Date in April 2008, (see "--Interest on the Notes"), there will be a
corresponding increase in the margin over the Bank Bill Rate payable by the
Fixed Swap Provider under the fixed swap.
TERMINATION BY THE BASIS SWAP AND FIXED RATE SWAP PROVIDER
The Basis Swap Provider and the Fixed Rate Swap Provider will each have the
right to terminate the basis swap and the fixed rate swap, respectively, in the
following circumstances:
- if certain bankruptcy related events occur in respect of the Issuer
Trustee;
- if the Issuer Trustee fails to make a payment under either swap within
10 business days after notice of failure is given to the Issuer Trustee
(other than any early repayment costs); or
- if due to a change in law it becomes illegal for either party to make or
receive payments, perform its obligations under any credit support
document or comply with any other material provision of the basis swap or
the fixed rate swap. However, only a swap affected by the illegality may
be terminated and each party affected by the illegality must make efforts
to transfer its rights and obligations to avoid this illegality.
TERMINATION BY THE ISSUER TRUSTEE
The Issuer Trustee will have the right to terminate the basis swap or the
fixed rate swap in the following circumstances:
- if certain bankruptcy related events occur in respect of the applicable
swap provider;
- if the applicable swap provider fails to make a payment within
10 business days after notice of failure is given to the swap provider; or
- if due to a change in law it becomes illegal for either party to make or
receive payments, perform its obligations under any credit support
document or comply with any other material provision of the basis swap or
the fixed rate swap. However, only a swap affected by the illegality may
be terminated and each party affected by the illegality must make certain
efforts to transfer its rights and obligations to avoid this illegality.
FIXED RATE SWAP PROVIDER DOWNGRADE
If, as a result of the withdrawal or downgrade of its credit rating by any
rating agency, on any Determination Date the Fixed Rate Swap Provider does not
have:
- either a short term credit rating of at least A-1 by Standard & Poor's;
- a short-term credit rating of at least P-1 by Moody's or a long-term
credit rating of at least A-2 by Moody's; and
- a short-term rating of at least F1+ by Fitch,
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the Fixed Rate Swap Provider must:
- within 5 days (where it ceases to have a long-term credit rating of at
least A-2 by Moody's or a short-term credit rating of at least F1+ by
Fitch) and otherwise within 30 days:
- obtain a replacement counterparty acceptable to the Trust Manager, the
Issuer Trustee, and the rating agencies to enter into a swap with the
Issuer Trustee on substantially the same terms as the fixed rate swap;
- lodge cash collateral in an amount acceptable to the relevant rating
agencies or, in certain circumstances, determined under the fixed rate
swap; or
- enter into other arrangements satisfactory to the Issuer Trustee and
the Trust Manager which each rating agency confirms will not result in
a reduction, qualification or withdrawal of any credit rating assigned
by it to the Notes or Redraw Notes; and
- where it ceases to have either a short-term credit rating of at least A-1
from Standard & Poor's:
- immediately seek to enter into, and enter into by no later than
30 days after the Fixed Rate Swap Provider ceases to have the relevant
rating from Standard & Poor's, an agreement novating its rights and
obligations under the fixed rate swap agreement in respect of the fixed
rate swap to a replacement counterparty which holds the relevant
ratings and, if a transfer has not occurred within 30 days, lodge cash
collateral in an amount determined in accordance with the fixed rate
swap; or
- if the Fixed Rate Swap Provider is unable to effect a transfer in
accordance with the above bullet point within 60 days or if the Fixed
Rate Swap Provider so elects, enter into such other arrangements in
respect of the fixed rate swap which are satisfactory to the Trust
Manager and which each rating agency confirms will not result in a
reduction, qualification or withdrawal of any credit rating assigned by
it to the Notes or Redraw Notes.
The Fixed Rate Swap Provider may satisfy its obligations following a
withdrawal or downgrade of a credit rating in any of the above manners as it
elects from time to time. If a Fixed Swap Provider lodges cash collateral with
the Issuer Trustee, any interest or income on that cash collateral will be paid
to the Fixed Swap Provider.
BASIS SWAP PROVIDER DOWNGRADE
If, as a result of the withdrawal or downgrade of its credit rating by any
rating agency, on any Determination Date the Basis Swap Provider does not have:
- either a short-term credit rating of at least A-1 by Standard & Poor's;
- a short-term credit rating of at least P-1 by Moody's; and
- a short-term rating of at least F1+ by Fitch,
the Basis Swap Provider must:
- prepay the amount that is expected to be due, as determined by the Trust
Manager, from the Basis Swap Provider to the Issuer Trustee on the next
Payment Date; or
- enter into other arrangements satisfactory to the Issuer Trustee and the
Trust Manager which each rating agency confirms will not result in a
reduction, qualification or withdrawal of any credit rating assigned by it
to the Notes or Redraw Notes.
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The Basis Swap Provider may satisfy its obligations following a withdrawal
or downgrade of a credit rating in either of the above manners as it elects from
time to time. If a Basis Swap Provider lodges cash collateral with the Issuer
Trustee, any interest or income on that cash collateral will be paid to the
Basis Swap Provider.
TERMINATION PAYMENTS
Upon termination of the fixed rate swap, a termination payment will be due
from the Issuer Trustee to the Fixed Rate Swap Provider or from the Fixed Rate
Swap Provider to the Issuer Trustee.
The termination payment in respect of the fixed rate swap will be
determined, if possible, on the basis of quotations from leading dealers in the
relevant market 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 fixed rate
swap.
No termination payment will be payable in respect of the termination of the
basis swap (other than amounts which have fallen due but which are unpaid).
If the basis swap terminates then, unless and until the Issuer Trustee has
entered into a replacement basis swap or other arrangements which the rating
agencies have confirmed will not result in a reduction, qualification or
withdrawal of the credit ratings assigned to the Notes or Redraw Notes, the
Servicer must adjust the rates of interest on the mortgage loans as described at
"--Servicer Administration of Interest Rates."
SERVICER ADMINISTRATION OF INTEREST RATES
If the basis swap has terminated while any Notes or Redraw Notes are
outstanding, the Servicer must ensure that the weighted average of the variable
rates charged on the mortgage loans is sufficient, subject to applicable laws,
including the Australian Consumer Credit Code, assuming that all relevant
parties comply with their obligations under the mortgage loans and the
Transaction Documents, to ensure that Issuer Trustee has sufficient funds to
comply with its obligations under the Transaction Documents as they fall due.
THE CURRENCY SWAPS
PURPOSE OF THE CURRENCY SWAPS
Collections on the mortgage loans and receipts under the basis swap and the
fixed rate swap will be denominated in Australian dollars. However, the payment
obligations of the Issuer Trustee on the Class A Notes are denominated in United
States dollars. In addition, receipts by the Issuer Trustee under the basis swap
and the fixed rate swap are calculated by reference to the Bank Bill Rate but
the interest obligations of the Issuer Trustee with respect to the Class A Notes
are calculated by reference to LIBOR. To hedge this currency and interest rate
exposure, the Issuer Trustee will enter into a swap transaction with each of the
two Currency Swap Providers. The currency swaps will be governed by a standard
form ISDA Master Agreement, as amended by a supplementary schedule and be
subject to an agreement to enter into a credit support annex and will be
confirmed by a written confirmation.
PRINCIPAL PAYMENTS
On the Issue Date, the Issuer Trustee will pay the Currency Swap Providers
the U.S. dollar proceeds of issue of the Class A Notes. In return, the Currency
Swap Providers will pay to the Issuer Trustee the Australian dollar equivalent
of the proceeds of issue of the Class A Notes converted at the US$ Exchange
Rate.
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On each Payment Date, the Issuer Trustee will pay to the Currency Swap
Providers the Australian dollar amount available to be applied towards repayment
of the Stated Amount of the Class A Notes. In return, the Currency Swap
Providers will pay to the Principal Paying Agent on behalf of the Issuer Trustee
the U.S. dollar equivalent of that amount converted at the A$ Exchange Rate for
distribution to the Class A Noteholders in accordance with the Agency Agreement
in reduction of the Stated Amount of the Class A Notes.
INTEREST PAYMENTS
On each Payment Date, the Issuer Trustee will pay to the Currency Swap
Providers the A$ Class A Interest Amount, equal to the product of:
(x) the Total Invested Amount of the Class A Notes on the first day of the
related Interest Period (after taking into account any reductions in the
Invested Amount of the Class A Notes on that date);
(y) the Bank Bill Rate plus a margin (which may increase in April 2008); and
(z) the number of days in the related Interest Period divided by 365.
In return, the Currency Swap Providers will pay to the Principal Paying
Agent on behalf of the Issuer Trustee an amount equal to the aggregate interest
due in respect of the Class A Notes on that Payment Date for distribution to
Class A Noteholders in accordance with the Agency Agreement.
If the Issuer Trustee does not have sufficient funds to pay the full amount
owing to the Currency Swap Providers in respect of the above payment, the
Currency Swap Providers are not required to make the corresponding payments to
the Principal Paying Agent and, after the applicable grace period, the Currency
Swap Providers may terminate the currency swap. The manner of determining
whether the Issuer Trustee will have sufficient funds to pay the Currency Swap
Providers that amount on a Payment Date is described in "--Distribution of Total
Available Income" above. A failure of the Issuer Trustee to pay an amount owing
under a currency swap, if not remedied within the applicable grace period, will
be an event of default under the Master Security Trust Deed and the Deed of
Charge.
TERMINATION BY A CURRENCY SWAP PROVIDER
Each Currency Swap Provider will have the right to terminate the relevant
currency swap in the following circumstances:
- if the Issuer Trustee fails to make a payment under the currency swap
within 10 business days after notice of failure is given to the Issuer
Trustee;
- certain bankruptcy related events occur in relation to the Issuer Trustee;
- if the Issuer Trustee merges with, or otherwise transfers all or
substantially all of its assets to, another entity and the new entity does
not assume all of the obligations of the Issuer Trustee under the currency
swap;
- if due to a change in or a change in interpretation of law it becomes
illegal other than as a result of the introduction of certain exchange
controls by an Australian governmental body for the Currency Swap Provider
to make or receive payments, perform its obligations under any credit
support document or comply with any other material provision of the
currency swap. However, the Currency Swap Provider must make efforts to
transfer its rights and obligations to another office or an affiliate to
avoid the illegality, provided that each rating agency has confirmed that
this will not result in there being a reduction, qualification or
withdrawal of any credit rating assigned to the Class A Notes;
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- if due to any action taken by a taxation authority or a change in tax law
the Currency Swap Provider is required to gross-up payments on account of
a non-resident withholding tax liability or receive payments from which
amounts have been withheld or deducted on account of tax. However, the
Currency Swap Provider will only have the right to terminate the currency
swap if the Note Trustee is satisfied that all amounts owing to Class A
Noteholders will be paid in full on the date on which the Class A Notes
are to be redeemed. In addition, following the occurrence of such an
event, the Currency Swap Provider must make efforts to transfer the
currency swap to another office or affiliate provided that each rating
agency has confirmed that this will not result in there being a reduction,
qualification or withdrawal of any credit rating assigned by it to the
Class A Notes;
- if an event of default occurs under the Master Security Trust Deed and the
Deed of Charge and the Security Trustee has declared the Class A Notes
immediately due and payable; and
- there is an early redemption of the Class A Notes for reasons of taxation
under the terms and conditions of the Class A Notes.
TERMINATION BY THE ISSUER TRUSTEE
The Issuer Trustee will have the right to terminate a currency swap in the
following circumstances:
- if a Currency Swap Provider fails to make a payment under the currency
swap within 10 business days after notice of failure is given to the
Currency Swap Provider;
- if certain bankruptcy related events occur in relation to the Currency
Swap Provider;
- if a Currency Swap Provider merges with, or otherwise transfers all or
substantially all of its assets to, another entity and the new entity does
not assume all of the obligations of such Currency Swap Provider under the
currency swap;
- if due to a change in or a change in interpretation of law it becomes
illegal other than as a result of the introduction of certain exchange
controls by an Australian governmental body for the Issuer Trustee to make
or receive payments, perform its obligations under any credit support
document or comply with any other material provision of the currency swap.
However, the Issuer Trustee and the Currency Swap Provider must make
efforts to transfer its rights and obligations to another office or
affiliate to avoid the illegality, provided that each rating agency has
confirmed that this will not result in there being a reduction,
qualification or withdrawal of any credit rating assigned to the Class A
Notes;
- if due to any action taken by a taxation authority or a change in tax law
the Issuer Trustee is required to receive payments from which amounts have
been withheld or deducted on account of tax and no entitlement to a
corresponding gross-up arises other than as a result of its failure to
perform certain tax covenants or, in certain circumstances, a breach of
its tax representations; however, the Issuer Trustee must make efforts to
transfer its rights and obligations to avoid this event so a replacement
counterparty approved by the Currency Swap Provider and the Note Trustee
and in respect of which each rating agency confirms the substitution will
not cause a reduction or withdrawal in the rating of the rating of the
Class A Notes;
- if an event of default occurs under the Master Security Trust Deed and the
Deed of Charge and the Security Trustee has declared the Class A Notes
immediately due and payable; and
- there is an early redemption of the Class A Notes for reasons of taxation
under the terms and conditions of the Class A Notes.
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The Issuer Trustee may only terminate a currency swap with the prior written
consent of the Note Trustee and at the direction of the Trust Manager.
REPLACEMENT OF CURRENCY SWAPS
If the currency swaps are terminated with respect to a Currency Swap
Provider, the Issuer Trustee may (at the direction of the Trust Manager) enter
into one or more currency swaps which replaces the terminated currency swap
(other than by way of transfer to avoid termination of the swap) but only on the
condition that the termination amount calculated to be due under Section 6(e) of
the ISDA Master Agreement for the related currency swap (the "Total Settlement
Amount") payable (if any) by the Issuer Trustee to the Currency Swap Provider
upon termination of the original currency swap will be paid in full when due in
accordance with the currency swap. If the condition in the previous sentence is
satisfied, the Issuer Trustee may enter into the replacement currency swap and
if it does so it must direct the premium payable by the provider of the
replacement currency swap to be paid directly to the applicable Currency Swap
Provider in satisfaction of and to the extent of the Issuer Trustee's obligation
to pay the termination payment to such Currency Swap Provider. If such premium
paid by the Currency Swap Provider with respect to a replacement currency swap
is less than the Total Settlement Amount due to the Currency Swap Provider, the
balance may be satisfied by the Issuer Trustee as a Trust expense.
DOWNGRADE OF CURRENCY SWAP PROVIDERS
Each Currency Swap Provider, severally, will give a commitment for as long
as any outstanding Class A Notes are rated AAA/Aaa/AAA by Standard & Poor's,
Moody's and Fitch, respectively, to (a) provide collateral; and/or (as
determined with the relevant rating agencies) (b) if applicable, take other
measures acceptable to the relevant rating agencies, in respect of the Currency
Swap to which it is a party in the event that the rating that would be given to
senior debt jointly issued by the two Currency Swap Providers is ever downgraded
below a short-term rating of A-1+ by Standard & Poors; a short-term rating of
P-1 or long-term rating of A2 by Moody's and a long term rating of AA- by Fitch.
If a Currency Swap Provider replaces a defaulting Currency Swap Provider with
itself (as described below under "--Cross Support"), the commitment described
above will continue to apply to the remaining Currency Swap Provider, except the
debt ratings shall apply in respect of the senior debt of that Currency Swap
Provider (rather than to the joint debt). Each Currency Swap Provider agrees to
enter into a credit support annex for the purpose of providing collateral.
CROSS SUPPORT
Each Currency Swap Provider has agreed to pay on demand of the Issuer
Trustee to or at the direction of the Issuer Trustee any amounts that the other
Currency Swap Provider is required to pay pursuant to the relevant currency swap
but has failed to pay. So long as a Currency Swap Provider pays such amounts,
the Issuer Trustee shall not be entitled to terminate the relevant currency swap
with respect to such default. In any case, a Currency Swap Provider may, in
certain circumstances, elect to replace the defaulting other Currency Swap
Provider with itself or another suitably rated party approved by the Issuer
Trustee, the Trust Manager and the Note Trustee.
CURRENCY SWAP PROVIDERS
The Currency Swap Providers will be the National and Deutsche Bank AG (New
York Branch). The obligations of the Currency Swap Providers under their
currency swaps are joint and several obligations. See the description under the
caption "National Australia Bank Limited" in part B of this prospectus for
further information concerning the business and financial operations of the
National. See the description under the immediately following caption "Deutche
Bank AG, Acting through its
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New York Branch" for further information concerning the business and financial
operations of Deutsche Bank AG (New York Branch).
DEUTSCHE BANK AG, ACTING THROUGH ITS NEW YORK BRANCH
Deutsche Bank AG New York Branch (the "Branch"), a branch of Deutsche Bank
Aktiengesellschaft ("Deutsche Bank AG"), was established in 1978 and is licensed
by the New York Superintendent of Banks. Its office is currently located at 31
West 52nd Street, New York, NY 10019. The Branch is examined by the New York
State Banking Department and is subject to the banking laws and regulations
applicable to a foreign bank that operates a New York branch. The Branch is also
examined by the Federal Reserve Bank of New York.
Pursuant to the law on the Regional Scope of Credit Institutions, Deutsche
Bank, the predecessor to Deutsche Bank AG founded in 1870, was split into three
regional banks in 1952. The present day Deutsche Bank AG originated from the
merger of Norddeutsche Bank Aktiengesellschaft, Hamburg, Deutsche Bank
Aktiengesellschaft West, Dusseldorf and Suddeutsche Bank Aktiengesellschaft,
Munich. The merger and the name were entered in the Commercial Register of the
District Court, Frankfurt am Main, on 2 May 1957. Deutsche Bank AG is a banking
company with limited liability incorporated under the laws of Germany under
registration number HRB 30 000. Deutsche Bank AG has its registered office at
Taunusanlage 12, D-60325 Frankfurt am Main.
Deutsche Bank AG is the parent company of a group consisting of banks,
capital market companies, fund management companies, mortgage banks and a
property finance company, installment financing and leasing companies, insurance
companies, research and consultancy companies and other domestic and foreign
companies (the "Deutsche Bank Group"). Deutsche Bank Group has over 2,300
branches and offices engaged in banking business and other financial business
worldwide.
The objectives of Deutsche Bank AG, as laid down in its Articles of
Association, are the transaction of banking business of every kind, the
provision of financial and other services and the promotion of international
economic relations. Deutsche Bank AG may realize these objectives itself or
through subsidiaries and affiliated companies. To the extent permitted by law,
Deutsche Bank AG is entitled to transact all business and to take all steps
which appear likely to promote its objectives, in particular to acquire and
dispose of real estate, to establish branches at home and abroad, to acquire,
administer and dispose of interests in other enterprises, and to conclude
enterprise agreements.
As of September 30, 2000, the subscribed share capital of Deutsche Bank AG
amounted to E1,572,716,851.20 consisting of 614,342,520 shares of no par value.
The shares are fully paid up and in registered form. The shares are listed for
trading and official quotation on all the German Stock Exchanges. They are also
listed on the Stock Exchanges in Amsterdam, Antwerp, Brussels, London,
Luxembourg, Paris, Tokyo, Vienna and the Swiss Stock Exchange.
The long-term senior debt of Deutsche Bank AG has been assigned a rating of
AA by S&P, Aa3 (outlook: positive) by Moody's and AA by Fitch. The short-term
senior debt of Deutsche Bank AG has been assigned a rating of A-1+ by S&P, P-1
by Moody's and F1+ by Fitch. A credit rating may be subject to revision,
suspension or withdrawal at any time by the rating organization.
As of September 30, 2000, based on International Accounting Standards,
Deutsche Bank Group had total assets of E996.0 billion, total loans and advances
to customers of E418.3 billion, amounts owed to other depositors of
E397.7 billion, liabilities evidenced by paper of E173.4 billion and capital and
reserves of E27.0 billion. International Accounting Standards may not conform to
generally accepted accounting principles applied by United States banks.
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Deutsche Bank AG will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person a copy
of the most recent Annual Report of Deutsche Bank AG, which contains the
consolidated statements of Deutsche Bank AG and the most recent Interim Report
of Deutsche Bank showing unaudited figures. The Interim Reports of Deutsche Bank
which are made available are for purposes of information only. Written requests
should be directed to: Deutsche Bank AG New York Branch, 31 West 52nd Street,
New York, NY 10019, Attention: Management.
No court or arbitration proceedings which could have a significant effect on
the financial condition of Deutsche Bank AG, or had such an effect in the last
two years, have been pending, and the Deutsche Bank AG is not aware, to the best
of its knowledge, of any such proceedings now pending or threatened.
Since June of 1998, several purported class and individual actions have been
filed with various U.S. Courts against Deutsche Bank AG and other banks with
regard to events that occurred during the period between 1933 and 1945. The
plaintiffs seek the release of accounting records, the creation of an endowment
(trust), restitution, disgorgement of profits, and compensatory and punitive
damages in an amount to be determined at trial. Deutsche Bank AG believes that
the actions filed are not permissible class actions, that the claims are without
merit, and that they will not have a material adverse effect on the financial
condition of Deutsche Bank AG presented in this offering circular.
PARTIAL REDEMPTION OF THE CLASS A NOTES ON PAYMENT DATES
On each Payment Date until the Stated Amount of the Class A Notes is reduced
to zero the Issuer Trustee must:
- pay to the Currency Swap Providers, in accordance with the directions of
the Trust Manager, the Australian dollar amount allocated to repayment on
that Payment Date of principal on the Class A Notes as described in
"--Allocation of Principal to Class A Notes and Class B Notes" above;
- direct the Currency Swap Providers to pay on that Payment Date the U.S.
dollar equivalent of that Australian dollar amount, converted at the US$
Exchange Rate, to The Bank of New York (New York Branch) as Principal
Paying Agent; and
- pay that amount received from the Currency Swap Providers ratably to the
Class A Noteholders towards repayment of the Stated Amounts of the
Class A Notes in accordance with the agency agreement and the terms and
conditions of the Class A Notes.
WITHHOLDING OR TAX DEDUCTIONS
All payments in respect of the Class A Notes will be made without
withholding or deduction for, or on account of, any present or future taxes,
duties or charges of whatever nature unless the Issuer Trustee or any paying
agent is required by applicable law to make such a withholding or deduction. In
that event the Issuer Trustee or the paying agent, as the case may be, shall
account to the relevant authorities for the amount so required to be withheld or
deducted. Neither the Issuer Trustee nor any paying agent nor the Note Trustee
will be obligated to make any additional payments to holders of the Class A
Notes with respect to that withholding or deduction. Immediately after becoming
aware that such a withholding or deduction is or will be required, the Issuer
Trustee will notify the Note Trustee, the Principal Paying Agent and the
Class A Noteholders.
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REDEMPTION OF THE NOTES FOR TAXATION OR OTHER REASONS
If the Trust Manager satisfies the Issuer Trustee and the Note Trustee,
immediately before giving the notice to the Class A Noteholders as described in
this section, that because of a change of law in Australia or any other
jurisdiction to which the Issuer Trustee becomes subject from that in effect at
the Closing Date either:
- on the next Payment Date the Issuer Trustee would be required to deduct or
withhold from any payment of principal or interest in respect of any class
of Notes or Redraw Notes any amount for or on account of any present or
future taxes, duties, assessments or governmental charges of whatever
nature imposed, levied, collected, withheld or assessed by a government or
authority of Australia or such other jurisdiction; or
- the total amount payable in respect of interest in relation to the
mortgage loans for a Collection Period ceases to be receivable, whether or
not actually received, by the Issuer Trustee during such Collection Period
by reason of any present or future taxes, duties, assessments or
governmental charges of whatever nature imposed, levied, collected,
withheld or assessed by a government or authority of Australia or such
other jurisdiction,
and in each case such obligation cannot be avoided by the Issuer Trustee taking
reasonable measures available to it, then the Issuer Trustee must, when so
directed by the Trust Manager, at the Trust Manager's option, redeem all, but
not some, of the Notes and Redraw Notes on any subsequent Payment Date at their
then Invested Amounts, subject to the following, together with accrued but
unpaid interest to but excluding the date of redemption. The Issuer Trustee may
redeem the Notes and Redraw Notes at their Stated Amounts, instead of at their
Invested Amounts, together with accrued but unpaid interest to but excluding the
date of redemption, if so approved by an Extraordinary Resolution of Noteholders
and Redraw Noteholders together.
However, the Trust Manager will not direct the Issuer Trustee to, and the
Issuer Trustee will not, redeem the Notes or Redraw Notes unless it is in a
position on the relevant Payment Date to repay the then Invested Amounts or
Stated Amounts, as required, of the Notes and the Redraw Notes together with all
accrued but unpaid interest to but excluding the date of redemption and to
discharge all its liabilities in respect of amounts which are required under the
Master Security Trust Deed and the Supplemental Deed to be paid in priority to
or equally with the Notes or Redraw Notes if the charge under the Master
Security Trust Deed and Deed of Charge were enforced.
Class A Noteholders must be given notice of a redemption not more than 60
nor less than 45 days prior to the date of redemption.
If a tax, duty or other amount described above applies only to the Class A
Notes and the Issuer Trustee gives notice that it proposes to redeem all of the
Notes and the Redraw Notes, or an Extraordinary Resolution of the holders of the
Class A Notes may elect, in accordance with the terms of the Class A Note Trust
Deed, that they do not require the Issuer Trustee to redeem the Class A Notes.
Upon being notified of such an election at least 21 days before the Payment Date
upon which redemption was to occur the Issuer Trustee must not redeem the Notes
or Redraw Notes.
REDEMPTION OF THE NOTES UPON AN EVENT OF DEFAULT
If an event of default occurs under the Deed of Charge the Security Trustee
must, upon becoming aware of the event of default and subject to certain
conditions, in accordance with an Extraordinary Resolution of Voting Secured
Creditors and the provisions of the Master Security Trust Deed, enforce the
security interest created by the Master Security Trust Deed and the Deed of
Charge. That enforcement can include the sale of some or all of the mortgage
loans, but will exclude any collateral lodged by a Support Facility Provider
(except to the extent required to be
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applied by the relevant Support Facility). 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 Supplemental Deed and summarized as follows.
- FIRST, ratably to pay amounts owing or payable under the Master Security
Trust Deed to indemnify the Security Trustee against all loss and
liability incurred by the Security Trustee or any receiver in acting under
the Master Security Trust Deed, except the receiver's remuneration;
- SECOND, to pay ratably any fees and any liabilities, losses, costs,
claims, expenses, actions, damages, demands, charges, stamp duties and
other taxes due to the Issuer Trustee, the Trust Manager, the Servicer,
the Security Trustee, the Note Trustee or any agent and the receiver's
remuneration;
- THIRD, to pay ratably other outgoings and liabilities that the receiver,
the Issuer Trustee, the Trust Manager, the Security Trustee or the Note
Trustee have incurred in acting under the Master Trust Deed, the
Supplemental Deed, the Master Security Trust Deed, and, in the case of the
Note Trustee, under the Note Trust Deed;
- FOURTH, to pay any security interests over the assets of the Trust of
which the Security Trustee is aware having priority to the Deed of Charge,
in the order of their priority;
- FIFTH, to pay ratably:
- the Seller any unpaid Accrued Interest Adjustment;
- the Fixed Rate Swap Provider and the Basis Swap Provider amounts in
respect of collateral or prepayments owing under the fixed rate swap or
basis swap;
- SIXTH, to pay ratably:
- the Class A Noteholders and Redraw Noteholders all other Secured Moneys
owing in relation to the Class A Notes and Redraw Notes. For this
purpose, the Secured Moneys owing in respect of the Class A Notes and
Redraw Notes will be converted from US dollars to Australian dollars at
the A$ Exchange Rate. This will be applied:
- FIRST, ratably towards all unpaid interest on the Class A Notes and
Redraw Notes; and
- SECOND, ratably to reduce the Stated Amount of the Class A Notes
and Redraw Notes;
- any other Secured Moneys owing to the Liquidity Facility Provider;
- any Secured Moneys owing to the Redraw Facility Provider provided that
for this purpose the Secured Moneys owing in respect of the Redraw
Facility Provider will be the Redraw Principal Outstanding;
- ratably all other Secured Moneys owing to each swap provider (other
than each Currency Swap Provider); and
- SEVENTH, to pay ratably to the Class A Noteholders, the Redraw Noteholders
and the Redraw Facility Provider all unreimbursed Principal Charge-offs
and Carryover Principal Charge-offs constituting remaining Secured Moneys
owing in respect of the Class A Notes, the Redraw Notes and the Redraw
Facility. For this purpose, the Secured Moneys in respect of the Class A
Notes will be converted from US dollars to Australian dollars at the A$
Exchange Rate;
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- EIGHTH, if there are still Secured Moneys owing in respect of the Class A
Notes and the Redraw Notes, after the application of the preceding
paragraphs, to pay the remaining Secured Moneys owing in relation to the
Class A Notes and the Redraw Notes;
- NINTH, equally to the Class B Noteholders;
- TENTH, to pay ratably to each Secured Creditor any monetary liabilities
owing to that Secured Creditor under any transaction document and not
satisfied under the preceding paragraphs;
- ELEVENTH, to pay subsequent security interests over the assets of the
Trust of which the Security Trustee is aware, in the order of their
priority; and
- TWELFTH, to pay any surplus to the Issuer Trustee to be distributed in
accordance with the terms of the Master Trust Deed and the Supplemental
Deed. The surplus will not carry interest as against the Security Trustee.
Payments to Class A Noteholders will be effected in US$ obtained by the
Security Trustee either from a US$ termination payment received from a Currency
Swap Provider or by converting the A$ available for such payments, based on the
priority set out above, at the A$ Exchange Rate.
Upon enforcement of the security created by the Master Security Trust Deed
and the Deed of Charge, the net proceeds may be insufficient to pay all amounts
due on redemption to the Noteholders and Redraw Noteholders. Any claims of the
Noteholders and Redraw Noteholders remaining after realization of the security
and application of the proceeds shall be extinguished.
OPTIONAL REDEMPTION OF THE NOTES
The Issuer Trustee must, when directed by the Trust Manager, at the Trust
Manager's option, redeem all of the Notes and the Redraw Notes at their then
Invested Amounts, subject to the following, together with accrued but unpaid
interest to, but excluding, the date of redemption, on any Payment Date falling
on or after the earlier of:
- the Payment Date on which the total principal outstanding on the mortgage
loans (calculated as at the end of the immediately preceding Collection
Period) is less than 10% of the total principal outstanding on the
mortgage loans on the Closing Date; and
- the Payment Date falling in April 2008.
If the Issuer Trustee fails to exercise its option to redeem the Notes and
the Redraw Notes on the Payment Date occurring on or after April 2008, the
spread over LIBOR to be applied in determining the interest rate on the Class A
Notes will increase to %.
The Issuer Trustee may redeem the Notes and Redraw Notes at their Stated
Amounts instead of at their Invested Amounts, together with accrued but unpaid
interest to but excluding the date of redemption, if so approved by an
Extraordinary Resolution of Noteholders and Redraw Noteholders together.
However, the Issuer Trustee will not redeem the Notes or Redraw Notes unless it
is in a position on the relevant Payment Date to repay the then Invested Amounts
or the Stated Amounts, as required, of the Notes and the Redraw Notes together
with all accrued but unpaid interest to but excluding the date of redemption and
to discharge all its liabilities in respect of amounts which are required under
the Master Security Trust Deed to be paid in priority to or equally with the
Notes or Redraw Notes if the charge under the Master Security Trust Deed were
enforced. If the Issuer Trustee, at the direction of the Trust Manager, proposes
to exercise its option to redeem the Notes and Redraw Notes on a Payment Date
during or after April 2008 at their Stated Amounts rather than their Invested
Amounts, as described above, but is unable to do so because, following a meeting
of Noteholders and Redraw Noteholders convened under the provisions of the
Master Security Trust Deed by the Trust Manager for this purpose, the
Noteholders and Redraw Noteholders have not
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approved by a vote of at least 75% (aggregate Invested Amount) of Noteholders
and Redraw Noteholders the redemption of the Notes and Redraw Notes at their
Stated Amounts, then the spread over LIBOR to be applied in determining the
interest rate on the Class A Notes for each Interest Period commencing on or
after that Payment Date will remain at, or revert to, the margin applying at the
Closing Date.
Class A Noteholders must be given notice of a redemption not more than 60
nor less than 45 days prior to the date of redemption.
In order to effect an optional redemption as described above, the Issuer
Trustee will, if the Trust Manager directs it to do so, give notice to the
Seller of an offer to re-convey the mortgage loans to the Seller for an amount
equal to the then current fair market value of such loan taking into account
applicable insurance proceeds covering such loan and other available resources.
If the clean-up offer amount would be insufficient to redeem the Notes and any
Redraw Notes at their then Invested Amount, the Issuer Trustee must first obtain
the consent of the Note Trustee and the holders of all of the Class B Notes and
the Redraw Notes in favor of making a clean-up offer at the then aggregate
Stated Amount of all Notes. The proceeds of the clean-up offer will be applied
to the optional redemption of the Notes as described above.
FINAL MATURITY DATE
Unless previously redeemed, the Issuer Trustee must redeem the Notes and
Redraw Notes by paying the Stated Amount, together with all accrued and unpaid
interest, in relation to each Note and Redraw Note on or by the Payment Date
falling in January 2027.
REDEMPTION UPON FINAL PAYMENT
Upon final distribution being made in respect of any Notes or Redraw Notes,
those Notes or Redraw Notes will be deemed to be redeemed and discharged in full
and any obligation to pay any accrued but unpaid interest, the Stated Amount or
the Invested Amount in relation to the Notes or Redraw Notes will be
extinguished in full.
NO PAYMENTS OF PRINCIPAL IN EXCESS OF STATED AMOUNT
No amount of principal will be repaid in respect of a Note or Redraw Note in
excess of its Stated Amount or, in the case of an optional redemption or
redemption for taxation reasons, its Invested Amount.
THE LIQUIDITY FACILITY
ADVANCES AND FACILITY LIMIT
Under the Liquidity Facility Agreement, the Liquidity Facility Provider
agrees to make advances to the Issuer Trustee for the purpose of meeting
shortfalls between Total Available Income (as enhanced by Principal Draws) on a
Payment Date and the required payments to be made from Total Available Income,
other than reimbursements of Principal Charge-offs, Carryover Principal
Charge-offs or payments to the Residual Income Unitholder, on that Payment Date.
See "--Distributions of Total Available Income" above.
The Liquidity Facility Provider agrees to make advances to the Issuer
Trustee up to the Liquidity Limit. The Liquidity Limit is calculated on each
Determination Date as equal to the lesser of:
- 1% of the Total Invested Amount of all Notes on that Determination Date;
- the Performing Mortgage Loans Amount or the last day of the previous
Collection Period; and
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- the amount agreed by the Liquidity Facility Provider, the Trust Manager
and the rating agencies.
The "Performing Mortgage Loans Amount" means the aggregate of (i) the amount
outstanding under mortgage loans for which no payment due from the borrower has
been in arrears for a period of more than 90 consecutive days and (ii) the
amount outstanding under mortgage loans for which a payment due from the
borrower has been in arrears for a period of more than 90 consecutive days but
in respect of which a valid claim is available under a mortgage insurance
policy.
CONDITIONS PRECEDENT TO DRAWING
The Liquidity Facility Provider is only obliged to make an advance if, among
other conditions:
- no event of default under the Liquidity Facility exists or will result
from the provision of the advance;
- the representations and warranties by the Issuer Trustee and the Trust
Manager in any transaction document are true and correct as of the date of
the drawdown notice and the drawdown;
- other than statutory priorities, the Liquidity Facility Provider has not
received notice of any security interest ranking in priority to or equal
with its security interest under the Master Security Trust Deed, the Deed
of Charge and the Supplemental Deed (other than the security interests
created under those transaction documents); and
- the Notes have not been redeemed or repaid in full.
INTEREST AND FEES UNDER THE LIQUIDITY FACILITY
Interest accrues daily on the principal outstanding under the Liquidity
Facility at the Bank Bill Rate plus a margin, calculated on the number of days
elapsed and a 365 day year. Interest is payable quarterly in arrears on each
Payment Date to the extent that funds are available for this purpose in
accordance with the priorities described at "--Distribution of Total Available
Income." Unpaid interest will be capitalized and will accrue interest from the
date not paid.
A commitment fee with respect to the unutilized portion of the Liquidity
Limit accrues daily, calculated on the number of days elapsed and a 365 day
year. The commitment fee is payable quarterly in arrears on each Payment Date to
the extent that funds are available for this purpose in accordance with the
priorities described at "--Distribution of Total Available Income."
The interest rate and the commitment fee under the Liquidity Facility may be
varied by agreement between the Liquidity Facility Provider, the Issuer Trustee
and the Trust Manager. However, the rating agencies must be notified of any
proposed variation and the interest rate and the commitment fee will not be
varied if this would result in the reduction, qualification or withdrawal of any
credit rating of a Note or Redraw note.
REPAYMENT OF LIQUIDITY ADVANCES
Advances under the Liquidity Facility are repayable on the Payment Dates
following the date of the advance to the extent that there are funds available
for this purpose in accordance with the priorities described at "--Distribution
of Total Available Income." All moneys due under the Liquidity Facility are
repayable on the termination of the Liquidity Facility.
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DOWNGRADE OF LIQUIDITY FACILITY PROVIDER
If the Liquidity Facility Provider does not have short term credit ratings
of at least A-1+ by Standard & Poor's, P-1 Moody's and F-1+ by Fitch, it must
within 30 Business Days, or longer if agreed by the rating agencies, either
(a) use its reasonable endeavors to procure another appropriately rated person
to assume its obligations under the Liquidity Facility or (b) take such other
steps as are required by the rating agencies to maintain the current rating
assigned to the Notes and Redraw Notes.
EVENTS OF DEFAULT UNDER THE LIQUIDITY FACILITY AGREEMENT
The following are events of default under the Liquidity Facility:
- the Issuer Trustee fails to pay to the Liquidity Facility Provider
(i) any amount owing to it under the Liquidity Facility Agreement where
funds are available for this purpose under the Supplemental Deed, or
(ii) interest due under the Liquidity Facility where funds are available
for that purpose under the Supplemental Deed and in each case within 5
Business Days of the due date for payment;
- the Issuer Trustee alters the priority of payments under the Transaction
Documents without the consent of the Liquidity Facility Provider or
breaches any of its undertakings under the Transaction Documents which
affect its ability to perform its obligations thereunder and such breach
has a material adverse effect on the obligations of the Liquidity Facility
Provider under the Liquidity Facility;
- an event of default occurs in respect of the Supplemental Deed and the
Master Security Trust Deed and any enforcement action is taken under the
Master Security Trust Deed; and
- an Insolvency Event occurs in respect of the Issuer Trustee and it is not
replaced by another entity to act as Issuer Trustee within 30 days.
CONSEQUENCES OF AN EVENT OF DEFAULT
At any time after an event of default under the Liquidity Facility
Agreement, the Liquidity Facility Provider may do all or any of the following:
- declare all moneys actually or contingently owing under the Liquidity
Facility Agreement immediately due and payable; and
- terminate the Liquidity Facility.
TERMINATION
The Liquidity Facility will terminate upon the earlier to occur of:
- the date on which the Liquidity Facility Provider declares the Liquidity
Facility terminated following an event of default under the Liquidity
Facility or where it becomes unlawful or impossible to maintain or give
effect to its obligations under the Liquidity Facility;
- the date one month after all Notes and Redraw Notes are redeemed;
- the Payment Date upon which the Trust Manager, having given not less than
5 Business Days prior notice to the Liquidity Facility Provider, appoints
a replacement Liquidity Facility Provider, provided that each rating
agency has confirmed that such replacement will not result in a reduction,
qualification or withdrawal of any credit rating assigned by it to the
Notes or Redraw Notes and, provided further, that the Issuer Trustee has
paid or repaid the
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initial Liquidity Facility Provider so replaced any outstanding drawings
and other amounts due to the Liquidity Facility Provider together with
accrued and unpaid interest; and
- the date on which the Liquidity Limit is reduced to zero by agreement
between the Liquidity Facility Provider, the Trust Manager and the rating
agencies.
INCREASED COSTS
If, by reason of any change in law or its interpretation or administration
or because of compliance with any request from any fiscal, monetary, or other
governmental agency, the Liquidity Facility Provider incurs new or increased
costs, obtains reduced payments or returns or becomes liable to make any payment
based on the amount of advances outstanding under the Liquidity Facility
Agreement, the Issuer Trustee must pay the Liquidity Facility Provider an amount
sufficient to indemnify it against that cost, increased cost, reduction or
liability.
THE REDRAW FACILITY
ADVANCES AND FACILITY LIMIT
Under the Redraw Facility Agreement, the Redraw Facility Provider agrees to
make advances to the Issuer Trustee on a Payment Date for the purpose of
reimbursing Redraws made by the Seller to the extent that Available Principal
Collections (determined prior to the application of (i) any advance on the
Redraw Facility for such Payment Date and (ii) the proceeds of the issuance of
any Redraw Notes on such Payment Date) are insufficient to fund such Redraws on
a Payment Date.
The Redraw Facility Provider agrees to make advances to the Issuer Trustee
up to the Redraw Limit. The Redraw Limit is equal to the lesser of:
- A$20 million; and
- the Performing Mortgage Loans Amount (as defined at "--The Liquidity
Facility--Advances and Facility Limit" above) at that time.
- the amount agreed by the Redraw Facility Provider and the Trust Manager,
less in each case the aggregate of any Principal Charge-off and Carryover
Principal Charge-offs which have been allocated to the Redraw Facility and which
have not been reimbursed.
CONDITIONS PRECEDENT TO DRAWING
The Redraw Facility Provider is only obliged to make an advance if, among
other conditions:
- no event of default under the Redraw Facility exists or will result from
the provision of the advance;
- the representations and warranties by the Issuer Trustee and the Trust
Manager in any transaction document are true and correct as of the date of
the drawdown notice and the drawdown;
- other than statutory priorities, the Redraw Facility Provider has not
received notice of any security interest ranking in priority to or equal
with its security under the Master Security Trust Deed; and
- the Notes have not been redeemed or repaid in full.
INTEREST AND FEES UNDER THE REDRAW FACILITY
Interest accrues daily on the principal outstanding under the Redraw
Facility at the Bank Bill Rate plus a margin, calculated on the number of days
elapsed and a 365 day year. Interest is payable quarterly in arrears on each
Payment Date to the extent that funds are available for this purpose in
accordance with the Supplemental Deed. Unpaid interest will be capitalized and
will accrue interest from the date not paid.
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A commitment fee with respect to the unutilized portion of the Redraw Limit
accrues daily, calculated on the number of days elapsed and a 365 day year. The
commitment fee is payable quarterly in arrears on each Payment Date to the
extent that funds are available for this purpose in accordance with the
priorities set forth at "--Distribution of Total Available Income."
The interest rate and the commitment fee under the Redraw Facility may be
varied by agreement between the Redraw Facility Provider, the Issuer Trustee and
the Trust Manager. However, the rating agencies must be notified of any proposed
variation and the interest rate and the commitment fee will not be varied if
this would result in the reduction, qualification or withdrawal of any credit
rating of a Note or Redraw Note.
REPAYMENT OF REDRAW ADVANCES
Advances under the Redraw Facility are repayable on the Payment Dates
following the date of the advance to the extent that there are funds available
for this purpose in accordance with the priorities set forth at "--Distribution
of Available Principal Collections."
However, in certain circumstances, the principal outstanding under the
Redraw Facility will be reduced by way of Redraw charge-offs or increased by a
reimbursement of Redraw charges-offs, as described at "--Principal Charge-offs"
above. The amount of principal to be repaid under the Redraw Facility on a
Payment Date is the outstanding principal as reduced by any Redraw charge-offs
or increased by any Redraw charge-off reimbursements.
EVENTS OF DEFAULT UNDER THE REDRAW FACILITY AGREEMENT
The following are events of default under the Redraw Facility:
- the Issuer Trustee fails to pay to the Redraw Facility Provider (i) any
amount owing under the Redraw Facility Agreement where funds are available
for this purpose under the Supplemental Deed or (ii) the interest due
under the Redraw Facility where funds are available for that purpose under
the Supplemental Deed, and in each case within 5 Business Days of the due
date for payment;
- the Issuer Trustee alters the priority of payments under the Transaction
Documents or amends or revokes the provisions of the Master Trust Deed
without the consent of the Redraw Facility Provider and such alteration,
amendment or revocation has a material adverse effect on the Redraw
Facility Provider; and
- an event of default occurs under the Master Security Trust Deed or
Supplemental Deed and any enforcement action is taken under the Master
Security Trust Deed;
- an Insolvency Event occurs in respect of the Issuer Trustee in its
individual capacity and it is not replaced by another entity to act as
issuer trustee within 30 days.
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:
- declare all moneys actually or contingently owing under the Redraw
Facility Agreement immediately due and payable; and
- terminate the Redraw Facility.
TERMINATION
The Redraw Facility will terminate upon the earlier to occur of the
following:
- the Scheduled Termination Date (I.E., the date which is 364 days from the
date of the Redraw Facility Agreement; the Trust may request the Redraw
Facility Provider to extend that date for additional periods of
364 days);
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- the date on which the Redraw Facility Provider determines that its
obligations under the Redraw Facility Agreement constitute an illegality
under applicable laws and regulations, code of practice or official
directive;
- the date on which the Redraw Limit is reduced to zero; and
- the date upon which the Redraw Facility Provider terminates the agreement
as a consequence of an event of default; and
- the Payment Date upon which the Trust Manager, having given no less than 5
Business Days prior notice to the Redraw Facility Provider, appoints a
replacement Redraw Facility Provider, provided that each rating agency has
confirmed that such replacement will not result in a reduction,
qualification or withdrawal of any credit rating assigned by it to the
Notes or the Redraw Notes and, provided further, that the Issuer Trustee
has paid or repaid the Redraw Facility Provider so replaced all
outstanding drawings and other amounts due the Redraw Facility Provider,
together with accrued and unpaid interest.
INCREASED COSTS
If by reason of any change in law or its interpretation or administration or
because of compliance with any request from any fiscal, monetary or other
governmental agency, the Redraw Facility Provider incurs new or increased costs,
obtains reduced payments or returns or becomes liable for any payment based on
the amount of advances outstanding under the Redraw Facility Agreement, the
Issuer Trustee must pay the Redraw Facility Provider an amount sufficient to
indemnify it against that cost, increased cost, reduction or liability.
SELLER DEPOSIT
If the Seller has a short-term deposit credit rating by Moody's of less than
P-1 or such other rating as is agreed between the Issuer Trustee, the Seller,
the Trust Manager and Moody's or has a short-term deposit credit rating assigned
by Standard & Poor's of less than A-1+ or has a long-term deposit credit rating
assigned by Fitch, Inc. of less than BBB or such other rating as is agreed
between the Issuer Trustee, the Seller, the Trust Manager and Standard & Poor's
or Fitch, as the case may be, it must in respect of set-off risk in relation to
the Trust:
- deposit or maintain in an account, which may be the Collections Account
provided it is held with an entity with a short term credit rating of A-1+
by Standard & Poor's, on each Payment Date, after giving effect to the
payments to be made on that Payment Date, an amount being the higher of:
(a) the amount specified by Standard & Poor's from time to time or
(b) the amount determined in accordance with the Supplemental Deed or
otherwise agreed by Moody's or Fitch. This deposit may be utilized by the
Issuer Trustee to meet any liabilities of the Seller to the Issuer Trustee
in relation to the exercise of set-off rights in relation to the mortgage
loans, which the Seller has not met within 20 Business Days of notice from
the Issuer Trustee or the Trust Manager; or
- enter into such other arrangement from time to time agreed between the
Seller and the relevant rating agency so as to ensure that rating agency
does not reduce, qualify or withdraw any credit rating assigned by it to
the Notes or Redraw Notes.
The Seller's deposit will be calculated by reference to the balances of
accounts held by borrowers with the Seller where the terms of that borrower's
mortgage loan do not include a provision by which a borrower agrees to make all
payments without set-off or counterclaim, unless prohibited by law. If all the
mortgage loans include such a provision, the Seller will not be required to make
any deposit and any existing deposit by the Seller may be repaid.
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THE MORTGAGE INSURANCE POLICIES
GENERAL
Each mortgage loan is insured under a mortgage insurance policy issued by GE
Mortgage Insurance Pty Ltd (formerly Housing Loans Insurance Corporation Pty
Limited), GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd or
Housing Loans Insurance Corporation. The Seller will equitably assign its
interest in each mortgage insurance policy to the Issuer Trustee on the Closing
Date.
COVERAGE
Each mortgage insurance policy covers any loss realized on the disposal of
the related mortgaged property subject to such mortgage loan. Generally, the
amount covered by each mortgage insurance policy will be the outstanding amount
owed by the borrower with respect to the mortgage loan, including unpaid
principal (as increased by any negative amortization), 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 mortgaged property, including sale proceeds, compensation for
compulsory acquisition of the related mortgaged property and any rents or
profits received by the Issuer Trustee.
The insurance under the mortgage insurance policy terminates on the earliest
of the following:
- Repayment in full of the mortgage loan; or
- The date of the payment of a claim for loss under the mortgage insurance
policy.
Under each mortgage insurance policy, the mortgage insurer insures the
Issuer Trustee against loss if a default occurs in relation to the insured
mortgage loan and if one of the events entitling a claim to be made occurs.
No claim can be made for a loss unless:
- the Issuer Trustee, with the approval of the applicable mortgage insurer,
has sold the mortgaged property;
- the Issuer Trustee, with the approval of the applicable mortgage insurer,
has become the absolute owner of the mortgaged property by foreclosure;
- the relevant mortgagor has sold the mortgaged property with the express
consent of the Issuer Trustee given with the prior written approval of the
mortgage insurer;
- the mortgaged property has been compulsorily acquired or sold by any
government, semi-governmental or local government authority for public
purposes; or
- the mortgage insurer has agreed to pay a claim.
The loss in respect of a mortgage loan insured under a mortgage insurance
policy is calculated by:
- adding together:
- the outstanding principal balance of the mortgage loan, after taking
into account all amounts received by the Issuer Trustee as compensation
for the compulsory acquisition of the mortgaged property or any rents,
profits or proceeds from the mortgaged property and all amounts
received by the Issuer Trustee under any insurance policy in relation
to loss arising from destruction of or damage to the mortgaged property
and not applied in restoration or repair at the earliest of:
- the date of completion of the sale or compulsory acquisition of the
mortgaged property;
- the date upon which the Issuer Trustee became the absolute owner of
the mortgaged property by foreclosure;
- the date upon which a claim is paid by the mortgage insurer; and
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- interest paid in respect of the mortgage loan up to and including the
earliest of the dates referred to in the previous 3 bullet points at
the non-default rate specified in the mortgage loan;
- amounts recoverable by the Issuer Trustee under the terms of the
mortgage in respect of:
- amounts properly paid or incurred by the Issuer Trustee in respect
of the mortgaged property for premiums on general insurance
policies, levies and other charges payable to a body corporate
under the Australian strata title system, rates, taxes and other
statutory charges up to a limit in respect of land tax as specified
by the mortgage insurer;
- reasonable and necessary legal and other fees and disbursements not
exceeding A$2,000 (or such other amount agreed by the applicable
mortgage insurer) paid or incurred by the Issuer Trustee in
enforcing or protecting its rights under the mortgage;
- amounts not exceeding A$1,000 paid or incurred by the Issuer
Trustee for repair, maintenance and protection of the mortgaged
property or such greater amounts incurred with the prior approval
of the mortgage insurer; and
- costs related to the sale of the mortgaged property by the Issuer
Trustee;
- to the extent not otherwise included above, and the mortgage insurer
determines that they should be included, unpaid fines, penalties,
additional interest and other similar amounts which are properly
incurred by the Issuer Trustee under the mortgage or in respect of the
mortgage loan; and
- subtracting from the above the aggregate of:
- all amounts received by the Issuer Trustee under any related collateral
security;
- where the Issuer Trustee has sold the mortgaged property, the sale
price less any amount required to discharge any prior mortgage;
- where the Issuer Trustee or a prior mortgagee has taken foreclosure
action, the value of the Issuer Trustee's interest in the mortgaged
property as agreed between the mortgage insurer and the Issuer Trustee;
and
- any amount by which a claim may be reduced.
REQUIREMENT AND RESTRICTIONS; REDUCTION OF CLAIMS
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 policy or refuse or reduce the amount of a claim with respect to a
mortgage loan, including:
- The failure to pay any premium when due or within the relevant grace
period;
- The failure to file a claim within time;
- The failure of the Servicer to be approved by the mortgage insurer;
- The failure of the mortgage loan contract to require that the related
mortgaged property be insured under a general insurance policy;
- An incorrect statement or breach of the duty of disclosure by the insured
in relation to the policy;
- The existence of an encumbrance or other interest which affects or has
priority over the related mortgage;
- The failure to register the related mortgage or to stamp the mortgage
loan, related mortgage or collateral security;
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- The Issuer Trustee failing to comply with its reporting obligations;
- The mortgage loan or related mortgage being materially altered or modified
without the mortgage insurer's consent; and
- The occurrence of other circumstances reducing the insured's rights under
any insured mortgage loan.
By the Closing Date, both the equitable assignment of the mortgage insurance
policies to the Issuer Trustee and the Servicer will have been approved by the
various mortgage insurers.
DESCRIPTION OF THE MORTGAGE INSURERS
GE MORTGAGE INSURANCE PTY LTD AND GE CAPITAL MORTGAGE INSURANCE CORPORATION
(AUSTRALIA) PTY LTD
PREDECESSOR COMPANIES. Housing Loans Insurance Corporation was an
Australian Commonwealth Government statutory authority under the Housing Loans
Insurance Act 1965 of Australia. In December 1997, the Commonwealth Government:
- transferred the liabilities of the Housing Loans Insurance Corporation, in
relation to contracts of insurance entered into by the Corporation on and
before December 12, 1997 to the Commonwealth Government;
- appointed a new corporation, Housing Loans Insurance Corporation Limited
(ACN 071 466 334), which changed its name to Housing Loans Insurance
Corporation Pty Ltd, to manage these contracts of insurance on behalf of
the Commonwealth of Australia; and
- sold the business of Housing Loans Insurance Corporation to GE Capital
Australia Limited (ABN 60 008 562 534) an indirect wholly owned subsidiary
of the General Electric Company.
Housing Loans Insurance Corporation Pty Ltd changed its name to GE Mortgage
Insurance Pty Ltd in February 2000.
FINANCIAL INFORMATION. GE Mortgage Insurance Pty Ltd currently has a claims
paying ability rating of AAA by Standard & Poor's and Fitch and Aa1 by Moody's.
As at December 31, 1999, GE Mortgage Insurance Pty Ltd had total assets of
A$213,130,000, shareholder's equity of A$86,662,000 and statutory reserves
(claims equalisation reserve) of A$3,846,000.
GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd (ABN 52 081
488 440) commenced operations in March 1998. It is a wholly owned subsidiary of
GE Capital Australia Limited, whose ultimate parent is the General Electric
Company.
GE Capital Mortgage Insurance Corporation (Australia) Pty Ltd has been given
a AA claims paying rating by Standard & Poor's and Fitch and Aa2 by Moody's.
As of December 31, 1999 GE Capital Mortgage Insurance Corporation
(Australia) Pty Ltd had total assets of A$135,098,000, shareholder's equity of
A$105,124,000 and statutory reserves (claims equalization reserve) of A$561,000.
GE Mortgage Insurance Pty Ltd's, and GE Capital Mortgage Insurance
Corporation (Australia) Pty Ltd's ultimate parent, General Electric Company, is
a diversified industrial and financial services company with operations in over
100 countries. General Electric Company is rated AAA by Standard & Poor's and
Fitch and Aaa by Moody's. General Electric Company operates lenders' mortgage
insurance businesses in the United States, United Kingdom, Canada, New Zealand
and Australia.
The business address of GE Mortgage Insurance Pty Ltd, and GE Capital
Mortgage Insurance Corporation (Australia) Pty Ltd's is Level 23, 259 George
Street, Sydney, NSW, Australia.
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DESCRIPTION OF THE TRUSTEES
THE ISSUER TRUSTEE
GENERAL
Perpetual Trustee Company Limited is appointed as Issuer Trustee of the
Trust on the terms set out in the Master Trust Deed and the Supplemental Deed.
The Issuer Trustee was incorporated on September 28, 1886 as Perpetual Trustee
Company (Limited) under the Companies Statute of New South Wales as a public
company. The name of the Issuer Trustee was changed to Perpetual Trustee Company
Limited on December 14, 1971 and the Issuer Trustee now operates as a limited
liability public company under the Corporations Law of Australia. The Issuer
Trustee is registered in New South Wales and its registered office is at Level
7, 39 Hunter Street, Sydney.
The Issuer Trustee has 4,000,000 ordinary shares issued with a paid amount
of A$1.00 per share. The shares are held by Perpetual Trustees Australia
Limited. The Issuer Trustee has not agreed to issue any additional shares. As a
result of changes to the Corporations Law, the Issuer Trustee no longer has
authorized share capital.
The principal activities of the Issuer Trustee are the provision of trustee
and other commercial services. The Issuer Trustee is an authorized trustee
corporation, and holds a securities dealers license, under the Corporations Law.
Perpetual Trustees Australia Limited and its subsidiaries provide a range of
services including custodial and administrative arrangements to the funds
management, superannuation, property, infrastructure and capital markets.
Perpetual Trustees Australia Limited and its subsidiaries are leading trustee
companies in Australia with in excess of A$100 billion under administration.
The directors of the Issuer Trustee are as follows:
<TABLE>
<CAPTION>
NAME BUSINESS ADDRESS PRINCIPAL ACTIVITIES
---- ---------------- --------------------
<S> <C> <C>
Michael Stefanovski..................... 39 Hunter Director
Street,
Sydney NSW 2000
Phillip Vernon.......................... 39 Hunter Director
Street,
Sydney NSW 2000
Gai McGrath............................. 39 Hunter Director
Street,
Sydney NSW 2000
</TABLE>
THE SECURITY TRUSTEE
GENERAL
P.T. Limited of Level 7, 39 Hunter Street, Sydney Australia is appointed as
the Security Trustee for the Trust on the terms set out in the Master Security
Trust Deed and the Deed of Charge.
The Security Trustee will act as security trustee on behalf of the secured
creditors as described in "Description of Transaction Documents--The Master
Security Trust Deed" in part B of the prospectus. Under the Master Security
Trust Deed, if there is a conflict between the duties owed by the Security
Trustee to any Secured Creditors or class of Secured Creditors, the Security
Trustee must act in accordance with the requirements of the Master Security
Trust Deed.
A-69
<PAGE>
THE NOTE TRUSTEE
GENERAL
The Bank of New York (New York Branch) is appointed as the Note Trustee for
the Trust on the terms set out in the Note Trust Deed. The Bank of New York is a
banking corporation duly organized and existing under the laws of New York. The
Corporate Trust Office of the Note Trustee responsible for the administration of
the Note Trustee's obligation in relation to the Trust is located at 101 Barclay
Street 21W, New York, New York 10286. See "The Note Trustee" in part B of this
prospectus for a summary of certain of the Note Trustee's rights and obligations
under the Transaction Documents.
SERVICING
THE SERVICER
The National, trading as HomeSide, will service the mortgage loans. The
executive offices of the Servicer are located at 120 Spencer Street, Melbourne,
Australia.
SERVICING OF MORTGAGE LOANS
GENERAL
The day-to-day servicing will be performed by the Servicer in Melbourne,
Australia. Servicing procedures include responding to customer inquiries,
managing and servicing the features and facilities available under the mortgage
loans and the management of delinquent mortgage loans. The servicing functions
performed by HomeSide are supported by the activities of HomeSide
Lending, Inc.'s processing centers and by the Seller.
The Servicer is contractually obligated to administer the mortgage loans:
- in accordance with all applicable laws;
- according to the Servicing Agreement;
- with the same degree of diligence and care expected of an appropriately
qualified and prudent servicer of similar mortgage loans; and
- subject to the preceding bullet points, according to the Servicer's
procedures and policies for servicing the Seller's loans, which are under
regular review and may change from time to time as a result of business
changes, or legislative and regulatory changes.
See "Description of Transaction Documents--The Servicing Agreement--Removal
and Resignation of the Servicer" in part B of this prospectus for a description
of certain "Servicer Termination Events" whereby the Issuer Trustee can cause
the resignation or removal of the Servicer for cause.
COLLECTION AND ENFORCEMENT PROCEDURES
The Servicer will make reasonable efforts to collect all payments called for
under the mortgage loans and any applicable mortgage insurance policy. It will
also follow collection procedures that are consistent with the Servicing
Agreement.
A mortgage loan is considered delinquent for collection purposes whenever
the minimum installment amount is not paid when due. Collection procedures for a
delinquent loan generally include mailing a letter of delinquency when a loan is
past due fifteen days, followed by a second such notice when a loan is 35 days
past due. Additionally, the Servicer will attempt to contact the borrower by
telephone. A formal default notice is typically issued when a loan is 65 days
past due.
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<PAGE>
Action taken by the Servicer will depend on prevailing conditions and other
factors, including the borrower's ability to pay, the loan-to-value ratio, the
requirements of any applicable mortgage insurance, the amount of any previous
prepayments and whether the borrower may be able to claim financial hardship
under consumer credit legislation. In certain cases, negotiation between the
Servicer and borrower may result in a revised payment arrangement (E.G., an
extension of existing payment terms). Absent exceptional circumstances, the
Servicer will consider the commencement of asset realization measures when a
loan is past due 101 days.
After a default by a borrower, the Servicer (on behalf of the Issuer
Trustee) can exercise a power of sale of the mortgaged property. To exercise
this power, the Servicer (on behalf of the Issuer Trustee) must comply with the
statutory restrictions of the relevant State or Territory as to notice
requirements. The length of time between the decision to exercise the power of
sale and final completion of the sale will be dependent on factors outside the
control of the Servicer. For example, whether or not the borrower contests the
sale and the market conditions at the time are both factors outside the control
of the Servicer.
The collection and enforcement procedures may change from time to time as a
result of business changes, or legislative and regulatory changes.
OPTIONAL REPURCHASE OF DEFAULTED MORTGAGE LOANS
Subject to certain limitations contained in the Supplemental Deed, the
Servicer will have the right and option, but not the obligation, to purchase for
its own account any mortgage loan which becomes delinquent for 90 days or more
(a "defaulted mortgage loan"). The purchase price for a defaulted mortgage loan
will equal its then current fair market value, after taking into account
applicable insurance proceeds and other available resources. As described at
"The Mortgage Insurance Policies" in part A of this prospectus, the coverage
provided by mortgage insurance with respect to a defaulted mortgage loan will
equal the outstanding amount owed by the borrower, including unpaid principal
(as increased by any negative amortization), accrued interest at any non-default
rate, net of all amounts recovered on foreclosure of the related mortgaged
property. Accordingly, the only time the purchase price of a defaulted mortgage
loan would be less than the unpaid principal balance of the mortgage loan would
be in the case where the Servicer has been advised by the relevant mortgage
insurer that a claim under the mortgage insurance policy will be reduced or
denied, in whole or in part, due to failure of the mortgage loan to meet a
requirement of such policy, cancellation or lapse of such policy, or some other
restriction causing a partial or full reduction in the claim. The Servicer is
prohibited from exercising the option unless the purchase price for the
defaulted mortgage loan equals the outstanding amount owed by the borrower,
including accrued interest.
DELINQUENCY, FORECLOSURE AND LOSS STATISTICS
The following tables set forth certain information concerning the
delinquency foreclosure and loss experience on residential mortgage loans
serviced directly by the Servicer. These mortgage loans are residential mortgage
loans originated or acquired by the National. The Servicer does not currently
service mortgage loans not originated or acquired by the National. The servicing
portfolio does not include mortgage loans that were serviced or sub-serviced by
others.
During 2000, mortgage loan servicing was transferred from the National
Australia Bank Limited to HomeSide, a division of the National. At such time,
the Servicer changed the methodology used to calculate delinquencies from "days
irregular" to "days past due". Under the former methodology, "days irregular"
was the number of days that a mortgage loan's actual balance exceeded the
scheduled balance by greater than A$20. Under the new methodology, "days past
due" is the number of days that the actual balance exceeds the scheduled balance
by any amount. "Days
A-71
<PAGE>
irregular" continued to accumulate each day until the actual balance was brought
within A$20 of the scheduled balance. "Days past due" is reset each time a
Scheduled Payment is made and reset to zero when the actual balance is brought
below the scheduled balance. This change in methodology has increased the number
of loans classed as delinquent, particularly the number in the 31-60 and
61-90 day categories. U.S. investors should note that such methodologies used by
the National and HomeSide for purposes of determining delinquencies compare the
actual principal balance against the scheduled principal balance of the mortgage
loan in order to determine the delinquent amount, rather than determining such
amount based upon whether the borrower has in fact missed a Scheduled Payment.
Thus, in the case where a borrower has made prior prepayments of principal in
excess of the then scheduled balance but subsequently missed a Scheduled
Payment, such missed Scheduled Payment would not be reflected in the following
table:
A-72
<PAGE>
PORTFOLIO DELINQUENCY AND FORECLOSURE EXPERIENCE
<TABLE>
<CAPTION>
BY DOLLAR PERCENT BY PERCENT BY BY DOLLAR
BY NO. OF AMOUNT NO. OF DOLLAR BY NO. OF AMOUNT
LOANS (A$ 000'S) LOANS AMOUNT LOANS (A$ 000'S)
--------- ----------- ---------- ---------- --------- -----------
AS OF SEPTEMBER 1996 AS OF SEPTEMBER 1997
<S> <C> <C> <C> <C> <C> <C>
PERIOD OF DELINQUENCY:
31- 60 days.............................. 998 93,936 0.27% 0.35% 1,125 108,189
61- 90 days.............................. 88 9,247 0.02% 0.03% 209 20,940
91-120 days.............................. 25 2,314 0.01% 0.01% 74 7,303
121-150 days.............................. 8 485 0.00% 0.00% 30 3,051
151-180 days.............................. 3 27 0.00% 0.00% 19 2,166
> 180 days............................. 6 310 0.00% 0.00% 22 2,046
TOTAL > 30 DAYS............................. 1,128 106,319 0.30% 0.39% 1,479 143,694
FORECLOSURES................................ 686 69,506 0.18% 0.26% 1,019 99,711
TOTAL DELINQUENT............................ 1,814 175,825 0.48% 0.65% 2,498 243,405
TOTAL PORTFOLIO............................. 372,488 26,644,288 393,099 29,983,828
<CAPTION>
PERCENT BY PERCENT BY BY DOLLAR PERCENT BY PERCENT BY
NO. OF DOLLAR BY NO. OF AMOUNT NO. OF DOLLAR
LOANS AMOUNT LOANS (A$ 000'S) LOANS AMOUNT
---------- ---------- --------- ----------- ---------- ----------
AS OF SEPTEMBER 1997 AS OF SEPTEMBER 1998
<S> <C> <C> <C> <C> <C> <C>
PERIOD OF DELINQUENCY:
31- 60 days.............................. 0.29% 0.36% 1,196 113,157 0.31% 0.36%
61- 90 days.............................. 0.05% 0.07% 284 25,387 0.07% 0.08%
91-120 days.............................. 0.02% 0.02% 112 8,934 0.03% 0.03%
121-150 days.............................. 0.01% 0.01% 62 5,277 0.02% 0.02%
151-180 days.............................. 0.00% 0.01% 32 2,440 0.01% 0.01%
> 180 days............................. 0.01% 0.01% 73 5,475 0.02% 0.02%
TOTAL > 30 DAYS............................. 0.38% 0.48% 1,759 160,670 0.46% 0.52%
FORECLOSURES................................ 0.26% 0.33% 1,675 171,352 0.43% 0.55%
TOTAL DELINQUENT............................ 0.64% 0.81% 3,434 332,022 0.89% 1.07%
TOTAL PORTFOLIO............................. 390,401 31,268,628
</TABLE>
<TABLE>
<CAPTION>
BY DOLLAR PERCENT BY PERCENT BY BY DOLLAR
BY NO. OF AMOUNT NO. OF DOLLAR BY NO. OF AMOUNT
LOANS (A$ 000'S) LOANS AMOUNT LOANS (A$ 000'S)
--------- ----------- ---------- ---------- --------- -----------
AS OF SEPTEMBER 1999 AS OF SEPTEMBER 2000
<S> <C> <C> <C> <C> <C> <C>
PERIOD OF DELINQUENCY:
31- 60 days.............................. 1,552 131,140 0.41% 0.41% 1,927 186,436
61- 90 days.............................. 341 26,689 0.09% 0.08% 526 50,493
91-120 days.............................. 173 13,464 0.05% 0.04% 238 21,994
121-150 days.............................. 66 4,786 0.02% 0.01% 141 14,581
151-180 days.............................. 52 3,557 0.01% 0.01% 84 9,006
> 180 days............................. 128 7,048 0.03% 0.02% 131 11,680
TOTAL > 30 DAYS............................. 2,312 186,685 0.61% 0.57% 3,047 294,190
FORECLOSURES................................ 1,557 159,870 0.41% 0.49% 1,274 132,719
TOTAL DELINQUENT............................ 3,869 346,554 1.02% 1.06% 4,321 426,909
TOTAL PORTFOLIO............................. 375,794 32,343,212 369,971 35,076,697
<CAPTION>
PERCENT BY PERCENT BY BY DOLLAR PERCENT BY PERCENT BY
NO. OF DOLLAR BY NO. OF AMOUNT NO. OF DOLLAR
LOANS AMOUNT LOANS (A$ 000'S) LOANS AMOUNT
---------- ---------- --------- ----------- ---------- ----------
AS OF SEPTEMBER 2000 AS OF OCTOBER 2000
<S> <C> <C> <C> <C> <C> <C>
PERIOD OF DELINQUENCY:
31- 60 days.............................. 0.52% 0.53% 2,149 210,915 0.58% 0.60%
61- 90 days.............................. 0.14% 0.14% 553 54,200 0.15% 0.15%
91-120 days.............................. 0.06% 0.06% 220 21,191 0.06% 0.06%
121-150 days.............................. 0.04% 0.04% 97 9,481 0.03% 0.03%
151-180 days.............................. 0.02% 0.03% 92 10,577 0.02% 0.03%
> 180 days............................. 0.04% 0.03% 128 12,998 0.03% 0.04%
TOTAL > 30 DAYS............................. 0.82% 0.83% 3,239 319,362 0.87% 0.91%
FORECLOSURES................................ 0.34% 0.38% 1,293 133,718 0.35% 0.38%
TOTAL DELINQUENT............................ 1.16% 1.21% 4,532 453,080 1.22% 1.29%
TOTAL PORTFOLIO............................. 370,727 35,427,851
</TABLE>
A-73
<PAGE>
PORTFOLIO LOSS EXPERIENCE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6)
----------------------------- ---------------- --------------------- ---------------- --------------------- --------------
WRITE-OFFS AS A RECOVERIES AS A
PERCENTAGE OF TOTAL PERCENTAGE OF TOTAL
AT FISCAL TOTAL WRITE-OFFS OUTSTANDING PORTFOLIO TOTAL RECOVERIES OUTSTANDING PORTFOLIO NET WRITE-OFFS
YEAR ENDED: A$(000) BALANCE A$(000) BALANCE (3) MINUS (5)
----------- ---------------- --------------------- ---------------- --------------------- --------------
<S> <C> <C> <C> <C> <C>
September 30, 1995........... 3,433 0.01463 583 0.00248 0.01214
September 30, 1996........... 4,139 0.01507 416 0.00152 0.01356
September 30, 1997........... 8,396 0.02512 609 0.00182 0.02330
September 30, 1998........... 11,109 0.02942 695 0.00184 0.02758
September 30, 1999........... 10,366 0.02470 1,224 0.00292 0.02178
September 30, 2000........... 7,199 0.01478 1,369 0.00281 0.01197
<CAPTION>
(1) (7)
----------------------------- -------------------------
AT FISCAL TOTAL OUTSTANDING
YEAR ENDED: PORTFOLIO BALANCE A$(000)
----------- -------------------------
<S> <C>
September 30, 1995........... 23,472,496
September 30, 1996........... 27,457,050
September 30, 1997........... 33,420,417
September 30, 1998........... 37,763,323
September 30, 1999........... 41,968,417
September 30, 2000........... 48,720,457
</TABLE>
A-74
<PAGE>
The Servicer is not currently aware of specific trends that have affected
its recent delinquency and loss experience, nor is the Servicer aware of any
trends that are likely to affect the future performance of its servicing
portfolio.
The delinquency and foreclosure experience set forth above is historical and
is based on the servicing of mortgage loans that may not be representative of
the mortgage loans in the Trust. Consequently, there can be no assurance that
the delinquency and foreclosure experience of the mortgage loans in the Trust
will be consistent with the data set forth above. The servicing portfolio, for
example, includes mortgage loans having a wide variety of payment
characteristics (E.G., fixed-rate mortgage loans and adjustable rate mortgage
loans) and mortgage loans secured by mortgaged properties in geographic
locations that may not be representative of the geographic locations of the
mortgage loans in the Trust.
Between 1997 and 1998, there was a progressive move by the National to
centralize its state consumer lending and collections areas. This resulted in
greater consistency and control in the calculation and reporting of
delinquencies. During 2000, mortgage loan servicing was transferred from the
National to HomeSide, further enhancing this consistency and control.
PREPAYMENT AND YIELD CONSIDERATIONS
GENERAL
The principal repayments, aggregate amount of distributions on the Notes,
and the yield to maturity of the Notes will relate to (i) the rate and timing of
payments of principal repayments on the mortgage loans, and (ii) the price at
which the Notes are purchased. The rate of principal payments on the mortgage
loans will in turn be affected by the amortization schedules of the mortgage
loans, including prepayments resulting from refinancing, liquidations of the
mortgage loans due to defaults by borrowers, casualties, condemnations and
repurchases by the Seller. The mortgage loans may be prepaid by the borrowers at
any time. However, borrowers under fixed rate mortgage loans may be required to
pay a fee in order to prepay their mortgage loans.
PREPAYMENTS
The rate of principal payments on the Class A Notes is directly related to
the rate of principal payments on the mortgage loans, which may be in the form
of Scheduled Payments or principal prepayments. Prepayments, liquidations and
repurchases of the mortgage loans, including repurchases of mortgage loans due
to a breach of representation or warranty of the Seller, purchases of 90 days or
more delinquent mortgage loans by the Servicer or an optional repurchase by the
Seller of the remaining mortgage loans in connection with the termination of the
Trust, will result in early distributions of principal amounts on the Notes.
Since the rate of payment of principal of the mortgage loans cannot be
predicted and will depend upon future events and a variety of factors, we cannot
assure you as to this rate of payment or the rate of principal prepayments.
In particular the following factors may have bearing on the rate of
principal payment of the Class A Notes:
- the amount of Redraws under the mortgage loans by borrowers, advances
under the Redraw Facility or the amount of issuances of Redraw Notes, all
of which are senior to payment of principal on the Class A Notes;
- the fact that the Seller's calculations of Scheduled Payments on variable
rate mortgage loans on the basis of a reference rate (see "The Seller's
Residential Loan Program--Features and
A-75
<PAGE>
Options; Loan Types" in part B of this prospectus) may result in more
rapid amortization of principal payments on such mortgage loans;
- the method of allocation of Available Principal Collections between the
Class A Notes and Class B Notes (as described at "Description of the
Class A Notes--Allocation of Principal to Class A Notes and Class B
Notes") which results in more rapid amortization of the Class A Notes
depending on the Stepdown Percentage;
- the effects of currency translations on allocations of collections; and
- the fact that the fixed interest rate on fixed rate mortgage loans
converts to a variable rate, thus increasing the likelihood of prepayments
on such loans subsequent to such conversion.
The extent to which the yield to maturity of any Note may vary from the
anticipated yield will depend upon the following factors:
- the degree to which a Note is purchased at a discount or premium; and
- the degree to which the timing of payments on the Note is sensitive to
prepayments, liquidations and repurchases of the mortgage loans.
A wide variety of factors, including economic conditions, the availability
of alternative financing and homeowner mobility may also affect the Trust's
prepayment experience for the mortgage loans. In particular, under Australian
law, unlike the law of the United States, interest on loans used to purchase a
principal place of residence is not ordinarily deductible for taxation purposes.
RATE OF PAYMENTS
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, weighted by
the principal payment.
Usually, greater than anticipated principal prepayments would reduce the
aggregate outstanding principal balance of the mortgage loans more quickly than
expected. As a consequence, aggregate interest payments on the mortgage loans
would be substantially less than expected. Therefore, a higher rate of principal
prepayments could result in a lower-than-expected yield to maturity on each
related class of Notes purchased at a premium. Conversely, lower than
anticipated principal prepayments would reduce the return to investors on any
related classes of Notes purchased at a discount, in that principal payments on
the mortgage loans would occur later than anticipated. 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 in the rate of principal payments. The amount and timing
of delinquencies and defaults on the mortgage loans and the recoveries, if any,
on defaulted mortgage loans and foreclosed properties will also affect the
weighted average life of the Notes.
PREPAYMENT RATE MODEL AND MODELING ASSUMPTIONS
Prepayments on mortgage loans are commonly measured relative to a prepayment
standard or model. The prepayment model used in this prospectus is a "constant
prepayment rate" model or "CPR." CPR represents an assumed constant rate of
prepayment each month, expressed as a per annum percentage of the outstanding
principal balance of the pool of mortgage loans for that month. CPR does not
purport to be a historical description of prepayment experience or a prediction
of the anticipated rate of prepayment of any pool of mortgage loans, including
the mortgage loans for this series. None of the Seller, the Trust Manager nor
the Issuer Trustee believes that any existing statistics of which it is aware
provide a reliable basis for holders of the Notes to predict the amount or the
timing of receipt of prepayments on the mortgage loans.
A-76
<PAGE>
Since the following tables were prepared on the basis of the modeling
assumptions described in the next paragraph, there are discrepancies between
characteristics of the actual mortgage loans in the pool for this series and the
characteristics of the mortgage loans assumed in preparing the tables. Any
discrepancy may have an effect upon the percentages of the outstanding principal
balances and weighted average lives of the Notes set forth in the tables. In
addition, since the actual mortgage loans in the Trust have characteristics that
differ from those assumed in preparing the tables set forth below, the
distributions of principal on the Notes may be made earlier or later than as
indicated in the tables.
For the purpose of the tables below, we have used the following modeling
assumptions:
- the Closing Date for the Notes is January 20, 2001;
- payments on the Notes are made on the 20th day of each Quarter commencing
in April 2001, regardless of the day on which the Payment Date actually
occurs;
- payments on the Notes are made in accordance with the priorities described
in this prospectus;
- the Scheduled Payments of principal and interest on the mortgage loans
will be delivered on the first day of each month commencing in January
2001 with no defaults;
- all prepayments are prepayments in full received on the last day of each
month and include 30 days' interest on the outstanding principal balance
of the mortgage loan;
- Available Principal Collections are distributed according to the order of
distribution described in this prospectus;
- no optional termination is exercised, except for the line titled "Weighted
Average Life-To Call (Years)" in the table;
- the Determination Date is the 20th day of each January, April, July and
October; and
- the amount of Redraws and the Redraw Limit of the Redraw Facility is zero
in each case.
We do not expect that these modeling assumptions will be predictive of the
mortgage loan pool's actual performance for this series. It is not likely that
the mortgage loans will pay at any assumed CPR to maturity or that all mortgage
loans will prepay at the same rate. In addition, the diverse remaining terms to
maturity of the mortgage loans, which include recently originated mortgage
loans, could produce slower or faster distributions of principal than as
indicated in the tables at the assumed CPRs specified. This could be true even
if the weighted average remaining term to maturity of the mortgage loans is the
same as the weighted average remaining term to maturity of the assumptions
described above. We urge investors to make their investment decisions on a basis
that includes their determination as to anticipated prepayment rates under a
variety of the assumptions discussed in this prospectus as well as other
relevant assumptions.
A-77
<PAGE>
PERCENT OF INITIAL PRINCIPAL OUTSTANDING AT THE FOLLOWING PERCENTAGES OF
CONSTANT PREPAYMENT RATE
<TABLE>
<CAPTION>
DATE 0% 10% 15% 20% 25% 28% 30% 35% 45%
---- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Initial Percent................ 100% 100% 100% 100% 100% 100% 100% 100% 100%
January 20, 2002............... 98 88 83 78 73 70 68 63 53
January 20, 2003............... 95 77 69 61 53 49 46 40 28
January 20, 2004............... 93 67 56 47 39 34 31 25 15
January 20, 2005............... 90 58 46 36 28 24 21 16 8
January 20, 2006............... 86 51 38 28 20 17 14 10 4
January 20, 2007............... 83 44 31 22 15 11 10 6 2
January 20, 2008............... 79 38 25 17 10 8 6 4 1
January 20, 2009............... 76 32 20 13 8 5 4 2 1
January 20, 2010............... 72 28 17 10 5 4 3 1 0
January 20, 2011............... 68 24 13 7 4 3 2 1 0
January 20, 2012............... 64 20 11 5 3 2 1 1 0
January 20, 2013............... 60 17 8 4 2 1 1 0 0
January 20, 2014............... 55 14 7 3 1 1 1 0 0
January 20, 2015............... 51 12 5 2 1 1 0 0 0
January 20, 2016............... 47 10 4 2 1 0 0 0 0
January 20, 2017............... 42 8 3 1 0 0 0 0 0
January 20, 2018............... 36 6 2 1 0 0 0 0 0
January 20, 2019............... 31 5 2 1 0 0 0 0 0
January 20, 2020............... 26 3 1 0 0 0 0 0 0
January 20, 2021............... 20 2 1 0 0 0 0 0 0
January 20, 2022............... 14 2 0 0 0 0 0 0 0
January 20, 2023............... 8 1 0 0 0 0 0 0 0
January 20, 2024............... 1 0 0 0 0 0 0 0 0
January 20, 2025............... 0 0 0 0 0 0 0 0 0
Weighted Average Life--to
Maturity (yrs)............... 13.572 6.662 5.047 3.977 3.233 2.890 2.692 2.283 1.711
Weighted Average Life--to
Call (yrs)................... 6.569 4.703 4.005 3.426 2.945 2.631 2.444 2.089 1.552
</TABLE>
A-78
<PAGE>
ADDITIONAL INFORMATION
The Trust Manager intends to file with the SEC additional yield tables and
other computational materials, if any, for the Notes by means of a
post-effective amendment to the registration statement of which this prospectus
forms a part. The underwriters may prepare these tables and materials at the
request of some prospective investors, based on assumptions provided by, and
satisfying the special requirements of, these prospective investors. These
tables and materials are preliminary in nature, and the information contained in
them is subject to, and superseded by, the information in this prospectus.
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 mortgage loans is not subject to state or federal regulatory
authority in the United States. Accordingly, some U.S. institutions with legal
authority to invest in comparably rated securities based on such mortgage loans
may not be legally authorized to invest in the Class A Notes. No representation
is made as to whether the Class A Notes constitute legal investments under any
applicable statute, law, rule, regulation or order for any entity whose
investment activities are subject to investment laws and regulations or to
review by any regulatory authorities. You are urged to consult with your counsel
concerning the status of the Class A Notes as legal investments for you.
ERISA CONSIDERATIONS
Subject to the conditions discussed under "ERISA Considerations" in part B
of this prospectus, the Class A Notes are eligible for purchase by employee
benefit plans. See "ERISA Considerations" in part B of this prospectus.
A-79
<PAGE>
PLAN OF DISTRIBUTION
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
among the National, the Issuer Trustee, the Trust Manager and Deutsche Bank
Securities Inc., as representative of the underwriters, the Issuer Trustee has
agreed to sell to the underwriters, and each of the underwriters have severally
agreed to purchase, the principal amount of the Notes set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES (US$)
----------- -------------------------------------------
<S> <C>
Deutsche Bank Securities Inc................................ $
J.P. Morgan Securities Inc.................................. $
National Australia Bank Limited (London Branch)............. $
Banc of America Securities LLC.............................. $
Lehman Brothers, Inc........................................ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...................................... $
Salomon Smith Barney Inc.................................... $
-------------------------------------------
Total..................................................... $
===========================================
</TABLE>
The underwriting agreement provides that the underwriters are obligated,
subject to certain conditions in the underwriting agreement, to purchase all of
the Class A Notes if any are purchased. In the event of default by an
underwriter, the underwriting agreement provides that, in specific
circumstances, the underwriting agreement may be terminated.
The underwriters propose to initially offer the Class A Notes at the public
offering price on the cover page of this prospectus and to selling group members
at the public offering price less a concession not in excess of the amount 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 amount set forth in the following table to other
broker/dealers. After the initial public offering, the public offering price and
concessions and discounts to broker/dealers may be changed by the representative
of the underwriters.
<TABLE>
<CAPTION>
SELLING REALLOWANCE
CONCESSIONS DISCOUNT
----------- -----------
<S> <C> <C>
% %
</TABLE>
The National estimates that the out-of-pocket expenses for this offering
will be approximately US$ million.
The representative, on behalf of the underwriters, may engage in
transactions that stabilize, maintain or otherwise affect the price 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 Securities Exchange Act of 1934, as amended.
- 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;
A-80
<PAGE>
- 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 a 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.
No representations is made as to the magnitude or direction of any effect
that the transactions described above may have on the price of the Class A
Notes.
Pursuant to the underwriting agreement, the National and the Trust Manager
have agreed to indemnify the underwriters against certain liabilities, including
civil liabilities under the Securities Act, or contribute to certain payments
which the underwriters may be responsible for.
In the ordinary course of their respective businesses, 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 the National and its
affiliates.
Deutsche Bank Securities Inc. is an affiliate of Deutsche Bank AG, one of
the Currency Swap Providers. National Australian Bank Limited (London Branch) is
the London, U.K. branch of the National.
OFFERING RESTRICTIONS
AUSTRALIA
No offering circular, prospectus or other disclosure document in relation to
any Class A Notes has been lodged with the Australian Securities and Investments
Commission or the Australian Stock Exchange Limited. Each underwriter has
severally represented and agreed that it:
- has not (directly or indirectly) offered for subscription or purchase or
issued invitations to subscribe for or buy nor has it sold the Class A
Notes;
- will not directly or indirectly offer for subscription or purchase or
issue invitations to subscribe for or buy nor will it sell any Class A
Notes;
- has not distributed and will not distribute any draft, preliminary or
definitive offering memorandum, advertisements or other offering material
relating to any Class A Notes;
in the Commonwealth of Australia, its territories or possessions, unless:
(x) the minimum aggregate consideration payable by each offeree is at
least A$500,000 (disregarding moneys lent by the Trust or its
associates) or the offer or invitation otherwise does not require
disclosure to investors in accordance with Part 6D.2 of the
Corporations Law, and
(y) such action complies with all applicable laws and regulations.
Each underwriter further agrees that it will not sell Notes to, or invite or
induce offers for the Notes from:
(i) any associate of a National Party acting as an underwriter of the
Class A Notes; or
A-81
<PAGE>
(ii) any other associate from time to time specified in writing to the
Underwriter by a National Party.
Each underwriter agrees to offer the Class A Notes for sale to, or to write
offers to purchase the Class A Notes from:
(i) at least 10 persons each of whom they reasonably believe to be a
"qualified institutional buyer" (as defined in Rule 144A of the
Securities Act) and not an associate of any other; or
(ii) to at least 100 persons each of whom they reasonably believe either
has acquired similar securities in the past or is likely to be
interested in acquiring the Class A Notes.
UNITED KINGDOM
Each underwriter has severally represented and agreed that it:
- has not offered or sold and, prior to the date six months after the date
of issue of the Class A Notes will not offer or sell, any of the Class A
Notes to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses
or otherwise in circumstances which have not resulted and will not result
in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995 (as amended);
- has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to the Class A Notes in, from, or otherwise involving the United
Kingdom; and
- 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 issue of the
Class A Notes, 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.
OTHER JURISDICTIONS
The distribution of this prospectus and the offering and sale of the
Class A Notes in certain other foreign jurisdictions may be restricted by law.
The Class A 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. Each
underwriter has agreed to comply with all applicable securities laws and
regulations in each jurisdiction in which it purchases, offers, sells or
delivers Class A Notes or possesses or distributes this prospectus or any
offering material.
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:
- the Government of Iraq or its agencies or its nationals;
A-82
<PAGE>
- the authorities of the Federal Republic of Yugoslavia (Serbia and
Montenegro) or its agencies, who are not residents of Australia;
- the Government of Libya or any public authority or controlled entity of
the Government of Libya, including any commercial, industrial or public
utility undertaking owned or controlled by the Government of Libya or by a
public authority of Libya;
- the Taliban (also known as the Islamic Emirate of Afghanistan) or any
undertaking owned or controlled, directly or indirectly, by the Taliban;
or
- the National Union for Total Independence of Angola as an organization,
senior officials of UNITA or adult members of the immediate families of
senior officials of UNITA.
ANNOUNCEMENT
By distributing or arranging for the distribution of this prospectus to the
underwriters and the persons to whom this prospectus is distributed, the Trust
Manager announces to the underwriters and each such person that:
- 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;
- in connection with the issue, DTC will confer rights in the Class A Notes
to the Class A Noteholders and will record the existence of those rights;
and
- upon the issuance of the Class A Notes in this manner, these rights will
be created.
RATINGS OF THE CLASS A NOTES
It is a condition to the issuance of the Class A Notes that they be rated
"AAA" by Standard & Poor's and Fitch and "Aaa" by Moody's.
Investors should evaluate the security ratings of the Notes independently
from similar ratings on other types of securities. A securities rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the rating agencies. The Class A Notes are
pass-through debt securities. The rating does not address the expected schedule
of principal repayments other than to say that principal will be returned no
later than the final maturity date.
The Trust Manager has not requested a rating on the Class A Notes by any
rating agency other than Standard & Poor's, Fitch and Moody's. We cannot assure
you as to whether any other rating agency will rate the Class A Notes, or, if it
does, what rating would be assigned. A rating on the Class A Notes by another
rating agency, if assigned at all, may be lower than the rating assigned to the
Class A Notes by Standard & Poor's, Fitch and Moody's.
LEGAL MATTERS
Brown & Wood LLP, Washington DC, will pass upon some legal matters with
respect to the Notes, including the material U.S. federal income tax matters,
for the Trust Manager and the Issuer Trustee. Mallesons Stephen Jaques, Sydney,
Australia, will pass upon some legal matters, including the material Australian
tax matters, with respect to the Notes for the Trust Manager. Henry Davis York,
Sydney, Australia, will pass upon some legal matters, including matters of
Australian corporate law, with respect to the Issuer Trustee and the Security
Trustee. Stroock & Stroock & Lavan LLP will pass upon some legal matters with
respect to the Notes for the underwriters.
A-83
<PAGE>
LISTING AND GENERAL INFORMATION
LISTING
Application will be made to list the Class A Notes on the Luxembourg Stock
Exchange. In connection with the listing application, legal notice relating to
the issuance of the Class A Notes will be deposited prior to listing with the
Registrar of the District Court in Luxembourg (GREFFIER EN CHEF DU TRIBUNAL
D'ARRONDISSEMENT DE ET A LUXEMBOURG,) where copies thereof are available for
inspection and may be obtained upon request, free of change. Copies of the above
documents together with this prospectus and copies of the Transaction Documents
will be made available for inspection at the main office of Kredietbank S.A.
Luxembourg (the "Listing Agent") in Luxembourg. In addition, copies of the
quarterly reports provided by the Trust Manager to the Class A noteholders (see
"Reports to Noteholders" in part B of this prospectus), as well as any quarterly
Form 8-Ks and annual Form 10-Ks prepared by the Trust Manager for the Trust and
filed with the SEC under the Exchange Act, will also be on file for inspection
at the main office of the Listing Agent in Luxembourg. The Trust Manager will
also report to the Luxembourg Stock Exchange through the Listing Agent on each
quarterly Payment Date the aggregate Invested Amount of Notes then outstanding.
Kredietbank S.A. in Luxembourg will act as intermediary between the Luxembourg
Stock Exchange and the Issuer Trustee and the holders of the Class A Notes.
Once the Class A Notes have been so listed, trading of the Class A Notes may
be effected on the Luxembourg Stock Exchange. The Class A Notes have been
accepted for clearance through the facilities of DTC, Clearstream-Luxembourg and
Euroclear. The International Securities Identification Number for the Class A
Notes is , the Common Code for the Class A Notes is and the CUSIP
number for the Class A Notes is .
The transactions contemplated in this prospectus were authorized by
resolutions adopted by the Issuer Trustee on January 3, 2001.
In the event the Class A Notes are listed on the Luxembourg Stock Exchange
and definitive Notes are issued and the rules of the Luxembourg Stock Exchange
require a Luxembourg transfer agent, the Luxembourg paying agent, Kredietbank
S.A. Luxembourgeoise, will be appointed as a transfer agent.
AUTHORIZATION
The Trust Manager 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 the Trust Manager and the Issuer Trustee.
A-84
<PAGE>
APPENDIX A-I
MORTGAGE LOAN POOL CHARACTERISTICS
The information contained in this Appendix A-I forms an integral part of
this prospectus and sets forth statistical information regarding the mortgage
loan pool determined as of the Statistical Cut-off Date.
MORTGAGE LOAN POOL CHARACTERISTICS
YEAR OF ORIGINATION
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
YEAR OF ORIGINATION ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
------------------- -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
1997................. 5,806 897,159,444.86 390,285,095.78 53.32 67,220.99 19.58
1998................. 6,550 1,067,776,037.10 499,730,268.05 56.90 76,294.70 25.07
1999................. 8,076 1,328,482,151.87 685,824,153.58 61.84 84,921.27 34.41
2000................. 4,264 745,045,539.00 417,459,056.16 65.42 97,903.16 20.94
------ ---------------- ---------------- ----- --------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========= ======
</TABLE>
A-I-1
<PAGE>
POOL PROFILE BY GEOGRAPHIC DISTRIBUTION
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
REGION ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
------ -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
ACT Inner City....... 293 51,904,996.00 24,159,496.54 58.43 82,455.62 1.21
ACT Metro............ 172 28,312,586.00 14,311,890.62 61.02 83,208.67 0.72
ACT Non-Metro........ 142 21,667,500.00 10,684,671.42 58.23 75,244.16 0.54
NSW Inner City....... 16 4,628,900.00 2,442,390.29 58.39 152,649.39 0.12
NSW Metro............ 3,849 966,450,576.00 407,694,393.65 54.48 105,922.16 20.45
NSW Non-Metro........ 2,656 399,446,230.00 197,603,994.11 58.95 74,399.09 9.91
NT Inner City........ 146 24,146,405.00 13,424,633.25 63.45 91,949.54 0.67
NT Non-Metro......... 43 7,150,270.00 4,079,728.00 64.01 94,877.40 0.20
QLD Inner City....... 12 2,273,847.00 1,335,125.14 64.31 111,260.43 0.07
QLD Metro............ 2,467 364,826,881.86 186,359,331.48 60.57 75,540.87 9.35
QLD Non-Metro........ 2,906 398,336,735.87 207,922,510.98 61.33 71,549.38 10.43
SA Inner City........ 6 676,000.00 394,849.06 66.18 65,808.18 0.02
SA Metro............. 1,080 144,276,655.10 75,387,569.51 61.87 69,803.31 3.78
SA Non-Metro......... 451 46,296,879.00 26,534,778.94 64.01 58,835.43 1.33
TAS Inner City....... 13 1,469,250.00 845,156.04 62.36 65,012.00 0.04
TAS Metro............ 194 24,471,400.00 14,098,029.38 64.18 72,670.25 0.71
TAS Non-Metro........ 122 13,988,550.00 7,564,432.65 62.07 62,003.55 0.38
Vic Inner City....... 45 9,065,439.00 5,300,041.91 64.53 117,778.71 0.27
Vic Metro............ 5,301 860,971,559.00 436,311,323.71 60.38 82,307.36 21.89
Vic Non-Metro........ 1,827 211,407,214.00 112,875,514.30 61.71 61,781.89 5.66
WA Inner City........ 29 5,224,000.00 3,100,218.89 65.80 106,904.10 0.16
WA Metro............. 2,333 367,828,057.00 197,262,323.63 63.26 84,553.07 9.90
WA Non-Metro......... 593 83,643,242.00 43,606,170.07 61.23 73,534.86 2.19
------ ---------------- ---------------- ----- ---------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========== ======
</TABLE>
A-I-2
<PAGE>
POOL PROFILE BY BALANCE OUTSTANDING
<TABLE>
<CAPTION>
WEIGHTED % BY
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN LOAN
CURRENT LOAN BALANCE (A$) ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
------------------------- -------- ---------------- ---------------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
0.00-24,999.99......... 1,119 149,869,968.00 24,690,510.71 23.58 22,064.80 1.24
25,000.00-49,999.99.... 5,645 740,306,445.00 214,345,926.12 38.40 37,970.93 10.75
50,000.00-74,999.99.... 6,384 872,389,864.87 399,417,935.90 54.22 62,565.47 20.04
75,000.00-99,999.99.... 4,800 756,618,945.00 416,615,476.12 61.86 86,794.89 20.90
100,000.00-124,999.99.. 3,353 612,521,617.00 374,172,046.31 66.76 111,593.21 18.77
125,000.00-149,999.99.. 1,697 367,615,234.86 230,902,431.87 67.70 136,065.07 11.58
150,000.00-174,999.99.. 744 191,289,698.00 119,899,586.00 67.49 161,155.36 6.02
175,000.00-199,999.99.. 407 121,595,905.00 75,814,734.31 66.70 186,276.99 3.80
200,000.00-224,999.99.. 219 77,760,619.10 46,402,362.29 65.03 211,882.93 2.33
225,000.00-249,999.99.. 124 46,616,872.00 29,442,873.36 67.19 237,442.53 1.48
250,000.00-274,999.99.. 69 29,280,754.00 17,997,959.54 65.08 260,839.99 0.90
275,000.00-299,999.99.. 60 30,171,250.00 17,303,908.35 62.77 288,398.47 0.87
300,000.00-324,999.99.. 32 16,636,000.00 9,990,839.71 63.59 312,213.74 0.50
325,000.00-349,999.99.. 18 10,276,500.00 6,096,626.16 63.09 338,701.45 0.31
350,000.00-374,999.99.. 7 3,593,000.00 2,508,830.43 71.61 358,404.35 0.13
375,000.00-399,999.99.. 6 3,405,000.00 2,312,152.13 70.07 385,358.69 0.12
400,000.00-424,999.99.. 3 2,000,000.00 1,243,241.40 63.17 414,413.80 0.06
425,000.00-449,999.99.. 4 3,240,000.00 1,748,802.80 55.64 437,200.70 0.09
450,000.00-474,999.99.. 3 1,878,000.00 1,398,565.88 74.74 466,188.63 0.07
475,000.00-499,999.99.. 2 1,397,500.00 993,764.18 71.46 496,882.09 0.05
------ ---------------- ---------------- ----- ---------- ------
Total:................. 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========== ======
</TABLE>
A-I-3
<PAGE>
POOL PROFILE BY LOAN TO VALUE RATIO (LTV)
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
CURRENT LTV (%) ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
--------------------- -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
0.00-9.99............ 281 104,675,580.00 7,869,467.41 7.95 28,005.22 0.39
10.00-19.99.......... 1,668 400,735,567.00 61,612,159.81 15.91 36,937.75 3.09
20.00-29.99.......... 2,487 488,896,419.00 122,316,095.07 25.35 49,182.19 6.14
30.00-39.99.......... 2,857 506,488,167.97 177,315,497.72 35.24 62,063.53 8.90
40.00-49.99.......... 2,958 498,091,401.00 223,686,081.95 45.09 75,620.72 11.22
50.00-59.99.......... 3,312 519,730,799.00 285,720,269.69 55.13 86,268.20 14.33
60.00-69.99.......... 3,887 561,304,435.00 365,248,917.37 65.20 93,966.79 18.32
70.00-79.99.......... 5,030 688,061,725.00 516,813,767.58 75.21 102,746.28 25.93
80.00-89.99.......... 1,937 235,998,388.86 200,865,331.19 85.19 103,699.19 10.08
90.00-99.99.......... 279 34,480,690.00 31,850,985.78 92.39 114,161.24 1.60
------ ---------------- ---------------- ----- ---------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========== ======
</TABLE>
A-I-4
<PAGE>
POOL PROFILE BY YEAR OF MATURITY
<TABLE>
<CAPTION>
NO. OF TOTAL SECURITY TOTAL LOAN WEIGHTED AVERAGE AVERAGE LOAN % BY LOAN
YEAR OF MATURITY ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
---------------- -------- ---------------- ---------------- ---------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
2001................. 2 574,000.00 150,461.02 63.56 75,230.51 0.01
2002................. 10 2,307,000.00 614,785.69 38.69 61,478.57 0.03
2003................. 33 5,961,500.00 1,062,037.98 29.95 32,182.97 0.05
2004................. 85 14,194,250.00 2,925,252.61 32.51 34,414.74 0.15
2005................. 99 16,057,650.00 3,453,708.96 29.73 34,885.95 0.17
2006................. 115 18,310,425.00 4,097,343.83 31.42 35,629.08 0.21
2007................. 302 44,362,999.00 11,451,357.81 34.14 37,918.40 0.57
2008................. 340 52,718,400.00 14,129,207.04 36.44 41,556.49 0.71
2009................. 414 64,950,443.00 19,164,194.86 38.75 46,290.33 0.96
2010................. 327 48,437,339.00 17,811,363.96 46.07 54,469.00 0.89
2011................. 226 34,431,100.00 12,881,308.98 47.11 56,996.94 0.65
2012................. 564 88,168,773.00 32,479,849.30 46.02 57,588.39 1.63
2013................. 519 81,817,548.00 32,494,177.13 48.95 62,609.20 1.63
2014................. 520 81,520,461.87 33,363,392.94 50.58 64,160.37 1.67
2015................. 389 62,980,592.00 26,157,507.95 51.50 67,242.95 1.31
2016................. 282 43,046,867.00 19,623,678.51 54.96 69,587.51 0.98
2017................. 598 94,447,072.00 39,722,910.91 51.37 66,426.27 1.99
2018................. 617 101,316,641.00 43,386,424.76 52.87 70,318.35 2.18
2019................. 792 127,175,622.00 58,054,779.03 55.56 73,301.49 2.91
2020................. 491 80,970,042.00 39,494,161.51 56.99 80,436.17 1.98
2021................. 331 54,824,560.00 27,305,120.46 58.32 82,492.81 1.37
2022................. 4,301 672,439,614.86 316,500,650.96 56.29 73,587.69 15.88
2023................. 4,577 749,607,333.10 379,705,716.92 59.57 82,959.52 19.05
2024................. 5,632 937,603,228.00 523,921,050.29 64.70 93,025.75 26.28
2025................. 3,130 560,239,712.00 333,348,130.16 67.71 106,501.00 16.72
------ ---------------- ---------------- ----- ---------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========== ======
</TABLE>
A-I-5
<PAGE>
POOL PROFILE BY LOAN PURPOSE
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
LOAN PURPOSE ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
------------ -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Purchase Existing
Dwelling........... 8,370 1,333,464,165.00 718,256,685.26 63.79 85,813.22 36.03
Refinance............ 9,308 1,500,675,330.87 716,231,902.27 57.51 76,947.99 35.93
Investment........... 3,868 695,795,745.96 347,169,567.07 58.79 89,754.28 17.42
Home Improvement..... 2,642 427,060,110.00 166,943,302.54 52.16 63,188.23 8.38
Purchase New
Dwelling........... 508 81,467,821.00 44,697,116.43 63.73 87,986.45 2.24
------ ---------------- ---------------- ----- --------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========= ======
</TABLE>
POOL PROFILE BY AMORTIZATION
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
PAYMENT TYPE ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
------------ -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Monthly.............. 16,654 2,810,615,723.97 1,376,403,430.88 59.55 82,647.02 69.05
Fortnightly.......... 7,639 1,148,147,488.86 565,975,831.75 59.36 74,090.30 28.39
Weekly............... 403 79,699,960.00 50,919,310.94 66.92 126,350.65 2.55
------ ---------------- ---------------- ----- ---------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========== ======
</TABLE>
MORTGAGE INSURER DISTRIBUTION
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE LOAN % BY LOAN
MORTGAGE INSURER ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
---------------- -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
*.................... 21,339 3,625,690,649.97 1,664,608,199.10 55.35 78,007.79 83.51
GE Mortgage Insurance
Pty Ltd............ 2,036 249,545,861.00 199,618,327.43 81.63 98,044.37 10.01
GE Capital Mortgage
Insurance Cor-
poration
(Australia) Pty
Ltd................ 713 91,622,998.00 76,408,248.25 85.55 107,164.44 3.83
Housing Loans
Insurance
Corporation........ 608 71,603,663.86 52,663,798.79 75.93 86,618.09 2.64
------ ---------------- ---------------- ----- ---------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========== ======
</TABLE>
------------------------
* Mortgage Loans covered by GE Capital Mortgage Corporation (Australia) Pty
Ltd pool insurance.
A-I-6
<PAGE>
POOL PROFILE BY PRODUCT
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
LOAN TYPE ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
--------- -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Fixed Rate........... 8,772 1,510,708,153.97 829,635,319.57 63.62 94,577.67 41.62
Adjustable Rate...... 15,924 2,527,755,018.86 1,163,663,254.00 56.88 73,076.06 58.38
------ ---------------- ---------------- ----- --------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========= ======
</TABLE>
DISTRIBUTION BY CURRENT INTEREST RATES
<TABLE>
<CAPTION>
WEIGHTED
NO. OF TOTAL SECURITY TOTAL LOAN AVERAGE AVERAGE LOAN % BY LOAN
CURRENT RATE (%) ACCOUNTS VALUATIONS (A$) BALANCE (A$) LTV (%) BALANCE (A$) BALANCE
---------------- -------- ---------------- ---------------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
5.000-5.999.......... 650 118,705,934.00 65,537,911.99 65.23 100,827.56 3.29
6.000-6.999.......... 3,695 631,658,986.10 342,529,987.87 63.42 92,700.94 17.18
7.000-7.999.......... 3,963 687,870,576.87 384,735,848.69 63.81 97,081.97 19.30
8.000-8.999.......... 16,388 2,600,227,675.86 1,200,494,825.02 56.99 73,254.50 60.23
------ ---------------- ---------------- ----- --------- ------
Total:............... 24,696 4,038,463,172.83 1,993,298,573.57 59.69 80,713.42 100.00
====== ================ ================ ===== ========= ======
</TABLE>
A-I-7
<PAGE>
APPENDIX A-II
TERMS AND CONDITIONS OF THE CLASS A NOTES
The information contained in this Appendix A-II forms an integral part of
this prospectus.
The following, subject to amendments, are the terms and conditions of the
Class A Notes, substantially as they will actually appear on the reverse of any
Class A Notes. THE MATERIAL TERMS AND CONDITIONS OF THE CLASS A NOTES HAVE ALSO
BEEN DESCRIBED UNDER "DESCRIPTION OF THE CLASS A NOTES" IN PART A OF THIS
PROSPECTUS. Class A Notes will initially be issued in book entry form. Class A
Notes in definitive form will only be issued in limited circumstances. While the
Class A Notes remain in book entry form, the same terms and conditions govern
them, except to the extent that they are appropriate only to the Class A Notes
in definitive form. A SUMMARY OF THE PROVISIONS APPLICABLE TO THE CLASS A NOTES
WHILE IN BOOK ENTRY FORM, INCLUDING THE CIRCUMSTANCES IN WHICH CLASS A NOTES IN
DEFINITIVE FORM WILL BE ISSUED, IS SET OUT IN "DESCRIPTION OF THE CLASS A NOTES"
IN PART A OF THIS PROSPECTUS.
SECTIONS IN ITALICS ARE INCLUDED BY WAY OF EXPLANATION ONLY AND DO NOT
CONSTITUTE PART OF THE TERMS AND CONDITIONS OF THE CLASS A NOTES.
1 GENERAL
The issue of the US$ Class A Mortgage Backed Floating Rate Notes due
2026 ("CLASS A NOTES") the A$ Class B Mortgage Backed Floating Rate
Notes due 2026 ("CLASS B NOTES") and certain Redraw Notes from time to time
("Redraw Notes") (together the "NOTES") by Perpetual Trustee Company Limited,
ABN 42 000 001 007, ("PERPETUAL") in its capacity as trustee of the HomeSide
Mortgage Securities Trust 2001-1 ("TRUST") (Perpetual in such capacity, the
"ISSUER TRUSTEE") was authorised by a resolution of the board of directors of
Perpetual passed on .
The Class A Notes:
(a) are constituted by a Class A Note Trust Deed ("NOTE TRUST DEED") dated
on or about January 24, 2001 made between the Issuer Trustee, HomeSide
Global MBS Manager, Inc. ("GLOBAL TRUST MANAGER") and The Bank of New
York, New York Branch ("NOTE TRUSTEE") as trustee for the several persons
who are for the time being the owners of the Class A Notes (each a
"CLASS A NOTEHOLDER" and together the "CLASS A NOTEHOLDERS"); and
(b) are issued subject to, and with the direct or indirect benefit of,
amongst other things:
(i) a Master Trust Deed ("MASTER TRUST DEED") dated January 3, 2001 made
between the Global Trust Manager and Perpetual, as amended from time
to time;
(ii) a Supplemental Deed ("SUPPLEMENTAL DEED") dated on or about
January 24, 2001 made between National Australia Bank Limited,
ABN 12 004 044 937 (generally the "BANK" and in its respective
capacities under the Supplemental Deed the "SELLER" and the initial
"SERVICER"), the Global Trust Manager and the Issuer Trustee;
(iii) a Master Security Trust Deed ("MASTER SECURITY TRUST DEED") dated
on or about January 3, 2001 made between the Issuer Trustee, the
Global Trust Manager, the Note Trustee and P.T. Limited,
ABN 67 004 454 666 (the "SECURITY TRUSTEE") and a Deed of Charge
("DEED OF CHARGE") dated on or about January 3, 2001 between the same
parties;
(iv) the Note Trust Deed;
A-II-1
<PAGE>
(v) these terms and conditions ("CLASS A NOTE CONDITIONS"); and
(vi) the Agency Agreement (as defined below).
Certain provisions of these Class A Note Conditions (including the
definitions herein) are summaries of the Transaction Documents (as defined in
CONDITION 3) and are subject to the detailed provisions of the Transaction
Documents, a copy of each of which may be inspected as indicated in CONDITION 3.
Payments of interest and principal, and the calculation of certain amounts
and rates, under these Class A Note Conditions in respect of the Class A Notes
will be made pursuant to an Agency Agreement ("AGENCY AGREEMENT") dated on or
about January 24, 2001 made between the Issuer Trustee, the Note Trustee, the
Global Trust Manager, The Bank of New York, New York Branch, as the initial
Principal Paying Agent ("PRINCIPAL PAYING AGENT" and "CALCULATION AGENT")
(together with any other paying agent appointed from time to time under the
Agency Agreement, "PAYING AGENTS") and as the initial Class A note registrar
("CLASS A NOTE REGISTRAR") and The Bank of New York, London Branch and
Kredietbank S.A. Luxembourgeoise as an initial paying agents.
The Issuer Trustee has entered into two ISDA Master Agreements (each a
"CURRENCY SWAP AGREEMENT") with National Australia Bank Limited and Deutsche
Bank AG New York Branch (each a "CURRENCY SWAP PROVIDER") and the Global Trust
Manager, each together with a schedule and a confirmation relating thereto in
respect of the Class A Notes (each such confirmation documenting a "CURRENCY
SWAP").
The Class A Notes will on issue be listed on the Luxembourg Stock Exchange.
"US$" means the lawful currency for the time being of the United States of
America and "A$" means the lawful currency for the time being of the
Commonwealth of Australia.
2 INTERPRETATION AND CALCULATIONS
2.1 INTERPRETATION AND CALCULATIONS
In these Class A Note Conditions, unless the context otherwise requires:
(a) a reference to a party includes that party's executors, administrators,
successors, substitutes and assigns, including any person replacing that
party by way of novation;
(b) a reference to any regulation or to any section or provision thereof
includes any statutory modification or re-enactment or any statutory
provision substituted therefor and all ordinances, by-laws, regulations
and other statutory instruments issued thereunder;
(c) a reference to any document or agreement is a reference to such document
or agreement as amended, varied, supplemented or replaced from time to
time;
(d) words importing the singular include the plural (and vice versa);
(e) words denoting a given gender include all other genders; and
(f) headings are for convenience only and do not affect the interpretation
of these Class A Note Conditions.
2.2 CALCULATIONS
Except as expressly provided otherwise in these Class A Note Conditions, all
calculations in a given currency under these Class A Note Conditions will be
rounded down to the nearest cent in that currency and all other calculations and
percentages determined hereunder will be rounded down to the nearest 4 decimal
places.
A-II-2
<PAGE>
3 CLASS A NOTEHOLDERS BOUND
The Class A Noteholders are bound by, and are deemed to have notice of, all
the provisions of the Transaction Documents. A copy of each Transaction Document
is available for inspection, upon reasonable prior notice, during normal
business hours on New York Business Days at the registered office for the time
being of the Note Trustee (which is, at the date of these Class A Note
Conditions, 101 Barclay Street, 21W, New York, New York, 10286).
"TRANSACTION DOCUMENTS" means the Master Trust Deed insofar as it relates to
the Trust, the Definitions Schedule (insofar as it applies to the Trust), the
Supplemental Deed, each Currency Swap Agreement, each Support Facility, the
Master Security Trust Deed insofar as it applies to the Trust, the Deed of
Charge, the Dealer Agreement, the Underwriting Agreement, the Note Trust Deed,
each Note, the Servicing Agreement insofar as it applies to the Trust, the
Agency Agreement, the Delegation Deed, the Initial Sale Agreement, any Initial
Offer to Sell, any Secondary Sale Agreement, the Secondary Offer to Sell and any
other document which is agreed by the Global Trust Manager and the Issuer
Trustee to be a Transaction Document in relation to the Trust.
"DEALER AGREEMENT", "Support Facility", "Servicing Agreement", "UNDERWRITING
AGREEMENT", "DELEGATION DEED", "INITIAL SALE AGREEMENT", "INITIAL OFFER TO
SELL", "SECONDARY SALE AGREEMENT" and "SECONDARY OFFER TO SELL" have the same
respective meanings as in the Supplemental Deed or the Definitions Schedule, as
the case may be. Further details of these documents are contained in "The
Mortgage Insurance Policies--The Pool Insurance Policy"; "Description of the
Class A Notes--The Interest Rate Swap--Basis Swap"; "--The Interest Rate
Swap--Fixed Rate Swap"; "--The Liquidity Facility"; "--The Redraw Facility";
"Plan of Distribution--Underwriting" each of part A of this prospectus.
4 FORM, DENOMINATION AND TITLE OF AND TO, AND THE ISSUE OF DEFINITIVE, CLASS A
NOTES
4.1 FORM AND DENOMINATION
The Class A Notes will be issued in registered form, without interest
coupons, in minimum denominations of US$ 100,000 and integral multiples of
$US10,000 in excess thereof. The initial principal amount of each Class A Note
("INITIAL INVESTED AMOUNT" in relation to that Class A Note) will be stated on
its face.
4.2 TITLE
Title to the Class A Notes will only be shown on, and will only pass by
registration in, the register ("CLASS A NOTE REGISTER") maintained by the
Class A Note Registrar in accordance with the Agency Agreement. Class A Notes
may be transferred, or may be exchanged for other Class A Notes in any
authorised denominations and a like Invested Amount (as defined in CONDITION
6.4), upon the surrender of the Class A Notes to be transferred or exchanged,
duly endorsed with or accompanied by a written instrument of transfer and
exchange duly executed (with such execution guaranteed by an eligible guarantor
institution meeting the requirements of the Class A Note Registrar) and the
provision of such other documents as the Class A Note Registrar may reasonably
require, to a specified office of the Class A Note Registrar (as set out at the
end of these Note Conditions or otherwise notified to Class A Noteholders)
subject to and in accordance with the Agency Agreement. No service charge may be
made for any transfer or exchange, but the Class A Note Registrar may require
payment by the Class A Noteholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Class A Notes. The Class A Note Registrar need not register
transfers or exchanges of Class A Notes for a period of 30 days preceding the
due date for any payment with respect to the Class A Notes or for a period, not
exceeding 30 days, specified by the Note Trustee prior to any meeting, which
includes Class A Noteholders, under the Note Trust Deed or the Master Security
A-II-3
<PAGE>
Trust Deed. The Issuer Trustee, the Note Trustee, the Global Trust Manager and
each Paying Agent may accept the correctness of the Class A Note Register and
any information provided to it by the Class A Note Registrar and is not required
to enquire into its authenticity. None of the Issuer Trustee, the Note Trustee,
the Global Trust Manager, any Paying Agent or the Class A Note Registrar is
liable for any mistake in the Class A Note Register or in any purported copy
except to the extent that the mistake is attributable to its own fraud,
negligence or (in the case of the Issuer, Trustee or the Note Trustee) breach of
trust or (in the case of the other parties) material breach of obligation.
5 STATUS, SECURITY AND RELATIONSHIP BETWEEN THE CLASS A NOTES, THE CLASS B
NOTES AND THE REDRAW NOTES
5.1 STATUS OF THE SECURITIES
The Class A Notes are direct, secured (as described in CONDITION 5.2)
limited recourse (as described in CONDITION 5.3) obligations of the Issuer
Trustee.
Any Redraw Notes are direct, secured, limited recourse obligations of the
Issuer Trustee.
The Class B Notes are direct, secured, limited recourse, subordinated
obligations of the Issuer Trustee.
5.2 SECURITY
The obligations of the Issuer Trustee under the Class A Notes are (amongst
the other payment obligations of the Issuer Trustee comprising the Secured
Moneys (as defined below)) secured, pursuant to the Master Security Trust Deed
and the Deed of Charge, in favour of the Security Trustee as Trustee for the
Secured Creditors (as defined below), by a fixed and floating charge ("CHARGE")
over all of the assets and property, real and personal (including choses in
action and other rights), tangible and intangible, present or future, of the
Trust ("SECURED PROPERTY"). The Secured Property includes an equitable interest
in certain housing loans, and related mortgages, acquired by the Issuer Trustee
from HomeSide Mortgage Securities Inc. ("DEPOSITOR"). The Charge is a first
ranking security in the Secured Property.
FURTHER DETAILS REGARDING THE SECURED PROPERTY ARE CONTAINED IN "DESCRIPTION
OF THE POOL OF MORTGAGE LOANS--DETAILS OF THE POOL OF MORTGAGE LOANS" IN PART A
OF THIS PROSPECTUS.
"SECURED CREDITORS" and "SECURED MONEYS" have the same respective meanings
as in the Supplemental Deed.
5.3 LIMITED RECOURSE
The liability of the Issuer Trustee to make interest and principal payments
on the Class A Notes is limited, except in certain circumstances described in
CONDITION 12, to the assets of the Trust available for this purpose in
accordance with, and subject to the order of priority of payments in, the
Supplemental Deed.
The net proceeds of realisation of the assets and property of the Trust
(including following enforcement of the Charge) may be insufficient to pay all
amounts due to the Class A Noteholders and any other amounts ranking in priority
to or equally with amounts due to the Class A Noteholders. Except in the limited
circumstances described in CONDITION 12, the assets of Perpetual held in its
personal capacity will not be available for payment of any shortfall arising and
all claims in respect of such shortfall will be extinguished. The assets of
Perpetual held in its capacity as Trustee of any other Trust (including any
other Trust established pursuant to the Master
A-II-4
<PAGE>
Trust Deed) will not in any circumstances be available to pay any amounts due to
Class A Noteholders.
None of the Bank, the Global Trust Manager, the Depositor, the Fixed Rate
Swap Provider, the Basis Swap Provider, the Note Trustee, the Security Trustee,
any Agent, or any Currency Swap Provider amongst others, have any obligation to
any Class A Noteholder for payment of any amount owed by the Issuer Trustee in
respect of the Class A Notes.
5.4 NO PREFERENCE WITHIN THE CLASS A NOTES
The Class A Notes rank equally and ratably and without any preference or
priority among themselves.
5.5 ISSUE OF REDRAW NOTES
Under the Supplemental Deed, the Issuer Trustee is entitled to issue debt
securities ("REDRAW NOTES") from time to time at the direction of the Global
Trust Manager. If prior to a Determination Date, the Global Trust Manager
considers that the aggregate of:
(a) the Principal Collections (disregarding any proposed issue of Redraw
Notes) and the amount of the Principal Charge-Offs and Carryover
Principal Charge-Offs to be reimbursed on the immediately following
Payment Date; and
(b) the Redraw Drawing (as hereinafter defined) (if any) to be made on the
next Payment Date (as defined in CONDITION 6.2), as estimated by the
Global Trust Manager are likely to be insufficient to meet in full the
aggregate of:
(c) the Redraws provided by the Seller during the preceding Collection
Periods and due to be repaid or reimbursed to the Seller; and
(d) the Redraw Principal Outstanding then due and payable on that Payment
Date (without taking into account Redraw Charge-Offs to be made on the
immediately following Payment Date.
the Global Trust Manager may direct the Issuer Trustee to issue Redraw Notes for
a principal amount specified in the direction. The maximum Invested Amount (as
hereinafter defined) of the Redraw Notes outstanding on any Payment Date (after
taking into account any expected repayment of principal on the Redraw Notes on
that Payment Date) must not exceed the amount specified by the Global Trust
Manager and which is subject of a confirmation from each Current Rating Agency
that such issue will not result in the downgrade, withdrawal or removal of the
then rating assigned to the Class A Notes.
"COLLECTION PERIOD", "DETERMINATION DATE", "AVAILABLE PRINCIPAL
COLLECTIONS", "REDRAWS", "REDRAW DRAWING", "PAYMENT DATE", "REDRAW PRINCIPAL
OUTSTANDING", "REDRAW CHARGE-OFFS" and "CARRYOVER PRINCIPAL CHARGE-OFFS" in
relation to the Redraw Notes have the same respective meanings as in the
Supplemental Deed. FOR A DESCRIPTION OF THESE, SEE "DESCRIPTION OF THE CLASS A
NOTES--KEY DATES AND PERIODS"; "--DETERMINATION OF AVAILABLE PRINCIPAL
COLLECTIONS"; "--DISTRIBUTION OF AVAILABLE PRINCIPAL COLLECTIONS"; "--REDRAWS,"
AND "SUMMARY--DISTRIBUTION OF AVAILABLE PRINCIPAL COLLECTIONS ON A PAYMENT DATE"
EACH IN PART A OF THIS PROSPECTUS.
Prior to the occurrence of an Event of Default, under the Supplemental Deed
and the Master Security Trust Deed:
(i) the payment of interest on the Redraw Notes will rank equally and
ratably with the payment of the relevant A$ Amount by the Issuer Trustee
to the Currency Swap Providers
A-II-5
<PAGE>
which in turn will be applied to meet the payment of interest on the
Class A Notes as explained in CONDITION 6.9); and
(ii) the repayment of principal on the Redraw Notes will rank ahead of the
payment of the relevant A$ Amount by the Issuer Trustee to the Currency
Swap Providers which in turn will be applied to meet the repayment of
principal on the Class A Notes as explained in CONDITION 7.2).
Following the occurrence of an Event of Default, under the Master Security
Trust Deed and the Supplemental Deed, the payment of amounts owing in relation
to the Redraw Notes will rank ratably with the payment of amounts owing in
relation to the Class A Notes (the amounts owing in respect of the Class A Notes
will, for the purposes of determining distributions to, and allocations between,
the Noteholders and other Secured Creditors, be converted into A$ in accordance
with the Master Security Trust Deed and the Supplemental Deed).
"EVENT OF DEFAULT" has the meaning given to it in the Deed of Charge. FOR A
DESCRIPTION OF THIS EXPRESSION, SEE "DESCRIPTION OF THE TRANSACTION
DOCUMENTS--THE MASTER SECURITY TRUST DEED--EVENTS OF DEFAULT" IN PART B OF THIS
PROSPECTUS.
5.6 SUBORDINATION OF CLASS B NOTES
Prior to the occurrence of an Event of Default, the payment of interest in
relation to the Class B Notes is subordinated to, amongst other things, the
payment of interest on the Class A Notes in accordance with the Supplemental
Deed; and the repayment of the principal on the Class B Notes is, to a certain
extent, subordinated to, amongst other things, the repayment of the principal on
the Class A Notes in accordance with the calculations to be made of the amounts
to be paid by the Issuer Trustee under the Supplemental Deed (in the case of the
Class A Notes, the subordination of the Class B Notes is in respect of the
relevant A$ amounts payable by the Issuer Trustee to the Currency Swap Providers
which in turn will be applied to meet the payment of interest and the repayment
of principal on the Class A Notes as explained, respectively, in CONDITIONS 6.9
and 7.2). FOR A DESCRIPTION OF THE ORDER OF APPLICATION OF AVAILABLE PROCEEDS
UNDER THE TRUST, THE CONSEQUENT SUBORDINATION OF THE PAYMENT OF INTEREST AND
REPAYMENT OF PRINCIPAL ON THE CLASS B NOTES, SEE "DESCRIPTION OF THE CLASS A
NOTES--INTEREST ON THE NOTES"; "--ALLOCATION OF PRINCIPAL TO CLASS A NOTES AND
CLASS B NOTES" IN PART A OF THIS PROSPECTUS.
Following the occurrence of an Event of Default, in the distribution of the
net proceeds (if any) arising from the enforcement of the Charge, any payment in
relation to the Class B Notes will be subordinated to, amongst other things,
payment of all amounts due in relation to the Class A Notes (the amounts owing
in respect of the Class A Notes will, for the purposes of determining
distributions to, and allocations between, the Noteholders and other Secured
Creditors, be converted into A$ in accordance with the Master Security Trust
Deed). FOR A DESCRIPTION OF THE ORDER OF APPLICATION OF THE PROCEEDS OF THE
ENFORCEMENT OF THE CHARGE UNDER THE MASTER SECURITY TRUST DEED, SEE "DESCRIPTION
OF THE CLASS A NOTES--REDEMPTION OF NOTES UPON AN EVENT OF DEFAULT" IN PART A OF
THIS PROSPECTUS.
5.7 THE SECURITIES RANK EQUALLY EXCEPT AS PROVIDED IN THE TRANSACTION DOCUMENTS
The Class A Notes, the Class B Notes and the Redraw Notes enjoy the same
rights, entitlements, benefits and restrictions except as expressly provided in
the Transaction Documents.
A-II-6
<PAGE>
6 INTEREST
6.1 PERIOD OF ACCRUAL
Each Class A Note accrues interest from (and including) ("CLOSING DATE") and
ceases to accrue interest on (but excluding) the earliest of:
(a) the date on which the Stated Amount (as hereinafter defined) of the
Class A Note is reduced to zero and all accrued but previously unpaid
interest is paid in full (including but not limited to the circumstances
described in CONDITION 7.3 and 7.4);
(b) the date on which the Class A Note is redeemed or repaid in full in
accordance with CONDITION 7 (other than CONDITION 7.6) unless, upon
presentation, payment is improperly withheld or refused in which case the
Class A Note will continue to bear interest in accordance with this
CONDITION 6 (both before and after judgment) until (but excluding)
whichever is the earlier of:
(i) the day on which all sums due in respect of the Class A Note up to
that day are received by or on behalf of the Class A Noteholder; and
(ii) the seventh day after notice is given to the Class A Noteholder
(either in accordance with CONDITION 11.1 or individually) that,
where required by CONDITION 8.2, upon presentation thereof being duly
made, such payment will be made, provided that upon such presentation
payment is in fact made;
(c) the date on which the Class A Note is deemed to be redeemed in
accordance with CONDITION 7.6.
(d) the date on which the Class A Noteholder renounces all of its rights to
any amounts payable under or in respect that Class A Note; and
(e) the Final Maturity Date (as defined in CONDITION 7.1).
"STATED AMOUNT" in relation to:
(a) a Class A Note on any Determination Date means the Initial Invested
Amount of that Class A Note less the sum of:
(i) the aggregate of all amounts previously paid in relation to that
Class A Note on account of principal pursuant to CONDITION 7.2(C);
and
(ii) the amount to be paid in relation to that Class A Note on account of
principal on the next Payment Date pursuant to CONDITION 7.2(C);
(iii) the Principal Charge-off to be made on the next Payment Date in
relation to that Class A Note; and
(iv) the aggregate of all Carryover Principal Charge-offs in relation to
that Class A Note; and
plus any amount towards reimbursement of any Principal Charge-Offs or
Carryover Principal Charge-Offs on any prior Payment Date and on the
next Payment Date; and
(b) a Class B Note or a Redraw Note on any Determination Date has the
meaning given to it in the Supplemental Deed.
6.2 INTEREST PERIODS
The period that a Class A Note accrues interest in accordance with CONDITION
6.1 is divided into periods (each an "INTEREST PERIOD"). The first Interest
Period for a Class A Note commences
A-II-7
<PAGE>
on (and includes) the Closing Date and ends on (but does not include) the first
Payment Date thereafter. Each succeeding Interest Period for a Class A Note
commences on (and includes) a Payment Date and ends on (but does not include)
the next Payment Date. The final Interest Period for a Class A Note ends on (but
does not include) the date on which interest ceases to accrue on the Class A
Note pursuant to CONDITION 6.1.
"BUSINESS DAY" means any day (other than a Saturday, a Sunday or a public
holiday) on which banks are open for business in Melbourne, Sydney and New York
City.
"PAYMENT DATE" means the 20th day of each of January, April, July and
October in each year (or, if such a day is not a Business Day, the next Business
Day). The first Payment Date is 20 April 2001 (or, if that day is not a Business
Day, the next Business Day).
6.3 INTEREST RATE FOR THE CLASS A NOTES
The rate of interest ("Interest Rate") payable from time to time in respect
of a Class A Note and an Interest Period is the aggregate of USD-LIBOR-BBA (as
hereinafter defined) for that Interest Period and the Margin (as hereinafter
defined) in relation to the Class A Note.
"USD-LIBOR-BBA" for an Interest Period will be calculated by the Calculation
Agent in accordance with paragraph (a) (or, if applicable, paragraph (b)) below
(subject, in the case of the first Interest Period, to paragraph (c) below):
(a) on the second Banking Day before the beginning of the Interest Period (a
"RATE SET DATE") the Calculation Agent will determine the rate
"USD-LIBOR-BBA" as the applicable Floating Rate Option under the
Definitions of the International Swaps and Derivatives Association, Inc.
("ISDA") (the "ISDA Definitions") being the rate applicable to any
Interest Period for three-month deposits in US dollars in the London
inter-bank market which appears on the Rate Page (as hereinafter defined)
as of 11.00am, London time, on the Rate Set Date;
(b) if such rate does not appear on the Rate Page at that time, the
USD-LIBOR-BBA for that Interest Period will be determined as if the
Issuer Trustee and the Calculation Agent had specified
"USD-LIBOR-Reference Banks" as the applicable Floating Rate Option under
the ISDA Definitions. For this purpose "USD-LIBOR--Reference Banks" means
that the rate for an Interest Period will be determined on the basis of
the rates at which deposits in US dollars are offered by the Reference
Banks (being four major banks in the London interbank market determined
by the Calculation Agent) at approximately 11.00am, London time, on the
Rate Set Date to prime banks in the London interbank market for a period
of three months commencing on the first day of the Interest Period and in
a Representative amount (as defined in the ISDA Definitions). The
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 USD-LIBOR-BBA for that Interest Period will
be the arithmetic mean of the rates quoted by not less than two major
banks in New York City, selected by the Calculation Agent and the
Currency Swap Providers, at approximately 11.00am, New York City time, on
that Rate Set Date for loans in US dollars to leading European banks for
a period of three months commencing on the first day of the Interest
Period and in a representative amount. If no such rates are available in
New York City, then the USD-LIBOR--BBA for such Interest Period will be
the most recently determined rate in accordance with paragraph (a); and
(c) the USD-LIBOR-BBA for the first Interest Period will be the rate
determined by linear interpolation calculated in accordance with
paragraph (a) or, if applicable, paragraph (b) above with reference to
the duration of the first Interest Period.
"BANKING DAY" means any day on which banks are open for business in London
and New York City, other than a Saturday, a Sunday or a public holiday in London
or New York City.
A-II-8
<PAGE>
"RATE PAGE" means Telerate Page 3750 or, if Telerate Page 3750 ceased to
quote the relevant rate, such other page, section or part of Telerate as quotes
the relevant rate and is selected by the Calculation Agent or, if there is no
such page, section or part of such other page, section or part of a different
screen information service as quotes the relevant rate selected by the
Calculation Agent and approved by the Note Trustee.
"MARGIN" in relation to a Class A Note means, subject to the following:
(a) for the period from, and including, the Closing Date to, but excluding,
the Call Option Date (as defined in CONDITION 7.3), % per annum; and
(b) for the period from, and including, the Call Option Date to, but
excluding, the date on which that Class A Note ceases to accrue interest
in accordance with CONDITION 6.1, % per annum.
If on or after the Call Option Date the Issuer Trustee, at the direction of
the Global Trust Manager, proposes to exercise its option to redeem the Notes at
their Stated Amount in accordance with CONDITION 7.3 on a Payment Date but is
unable to do so because, following a meeting of Noteholders convened under the
Master Trust Deed by the Global Trust Manager for this purpose, the Noteholders
have not approved by an Extraordinary Resolution (as defined in CONDITION 9.1)
the redemption of the Class A Notes at their Stated Amount, then the Issue
Margin in relation to each Class A Note from, and including, that Payment Date
to, but excluding, the date on which that Class A Note ceases to accrue interest
in accordance with CONDITION 6.1, will remain at, or revert to, the Margin
applying at the Closing Date.
There is no maximum or minimum Interest Rate for the Class A Notes.
6.4 CALCULATION OF INTEREST ON THE CLASS A NOTES
Interest on each Class A Note for an Interest Period (the "INTEREST AMOUNT")
is calculated by applying the Interest Rate for that Class A Note for that
Interest Period to the Invested Amount of that Class A Note on the first day of
the Interest Period, by then multiplying such product by the actual number of
days in the Interest Period divided by 360 and rounding the resultant figure
down to the nearest cent.
If any Interest Amount is not paid on the date when it is due and payable,
then such unpaid Interest Amount will accrue interest in accordance with these
Class A Note Conditions until paid in full.
"INVESTED AMOUNT" in relation to a Class A Note means, on any Determination
Date, the Initial Invested Amount of that Class A Note less the aggregate of all
amounts previously paid, and to be paid on the next Payment Date, in relation to
that Class A Note on account of principal pursuant to CONDITION 7.2(C).
6.5 DETERMINATION OF INTEREST RATE AND INTEREST AMOUNT
The Calculation Agent will, as soon as practicable after 11.00 a.m. (London
time or, if applicable, New York City time) on each Rate Set Date, determine the
Interest Rate in relation to the Class A Notes, and calculate the Interest
Amount, for the immediately succeeding Interest Period in accordance with,
respectively, CONDITIONS 6.3 and 6.4. The determination of the Interest Rate,
and the calculation of the Interest Amount, by the Calculation Agent in
accordance with, respectively, CONDITIONS 6.3 and 6.4 will (in the absence of
manifest error, wilful default or bad faith) be final and binding upon all
parties.
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6.6 NOTIFICATION AND PUBLICATION OF INTEREST RATE AND INTEREST AMOUNT
The Calculation Agent will cause the Interest Rate, the Interest Amount and
the Principal Amount for each Interest Period, and the date of the next Payment
Date, to be notified to the Issuer Trustee, the Global Trust Manager, the Note
Trustee, the Currency Swap Providers, the Paying Agents and the Luxembourg Stock
Exchange (for so long as the Class A Notes are listed on the Luxembourg Stock
Exchange, on or as soon as practical after the Calculation Agent has determined
the Interest Rate and calculated the Interest Amount or on such earlier date as
the Luxembourg Stock Exchange may require (for so long as the Class A Notes are
listed on the Luxembourg Stock Exchange) and will cause the same to be published
in accordance with CONDITION 11.2 as soon as practical after that notification.
The Interest Amount and the Payment Date may subsequently be amended (or
appropriate alternative arrangements made by way of adjustment) without notice
in the event of an extension or shortening of the Interest Period. If following
the occurrence of an Event of Default (as defined in CONDITION 9.1), the
Security Trustee declares in accordance with the Master Security Trust Deed that
the Class A Notes are immediately due and payable, the Interest Rate in respect
of the Class A Notes will nevertheless continue to be calculated by the
Calculation Agent in accordance with this Condition 6.6, but no publication of
the Interest Rate so calculated needs to be made unless the Note Trustee
otherwise requires.
FOR A DESCRIPTION OF THE EXPRESSION "EVENT OF DEFAULT SEE "DESCRIPTION OF
TRANSACTION DOCUMENTS--THE MASTER SECURITY TRUST DEED--EVENTS OF DEFAULT" IN
PART B OF THIS PROSPECTUS.
6.7 DETERMINATION OR CALCULATION BY THE NOTE TRUSTEE
If the Calculation Agent at any time for any reason does not determine the
Interest Rate in respect of the Class A Notes, or calculate the Interest Amount,
in accordance with this CONDITION 6, the Note Trustee will do so and each such
determination or calculation by the Note Trustee will be as if made by the
Calculation Agent. In doing so, the Note Trustee will apply the foregoing
provisions of this CONDITION 6, with any necessary consequential amendments, to
the extent that it can and in all other respects it will do so in such a manner
as it considers to be fair and reasonable in all the circumstances.
6.8 CALCULATION AGENT
The Issuer Trustee will procure that, for so long as any of the Class A
Notes remain outstanding, there will at all times be a Calculation Agent. The
Global Trust Manager may, with the prior written approval of the Note Trustee
and the Issuer Trustee, terminate the appointment of the Calculation Agent at
any time by giving not less than 45 days' notice in writing to, amongst others,
the Calculation Agent. Notice of that termination will be given by the Issuer
Trustee to the Class A Noteholders in accordance with CONDITION 11.1. If any
person is unable or unwilling to continue to act as the Calculation Agent, or if
the appointment of the Calculation Agent is terminated, the Issuer Trustee, at
the direction of the Global Trust Manager, will appoint a successor Calculation
Agent to act as such in its place, provided that neither the resignation nor
removal of the Calculation Agent will take effect until a successor approved by
the Note Trustee has been appointed and notice of the appointment of the
successor has been given by the Issuer Trustee to the Class A Noteholders in
accordance with CONDITION 11.1. The initial Calculation Agent and its specified
office are set out at the end of these Class A Note Conditions.
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6.9 PAYMENT OF THE INTEREST AMOUNT
The Interest Amount for each Interest Period in relation to a Class A Note
is payable in arrears in US$ on the Payment Date which is the last day of the
Interest Period. On each Payment Date prior to the occurrence of an Event of
Default, the Issuer Trustee must:
(a) to the extent that there are funds available for this purpose in
accordance with the Supplemental Deed pay, in accordance with the
directions of the Global Trust Manager, the A$ Class A Interest Amount in
relation to that Payment Date to the Currency Swap Providers in
accordance with each Currency Swap;
(b) to the extent of the payment received under paragraph (a) above, direct
each the Currency Swap Provider to pay the interest due on the Class A
Notes on each Payment Date to the Paying Agents in accordance with the
Agency Agreement and each Currency Swap; and
(c) pay the interest due on the Class A Notes received by it from the
Currency Swap Providers on a Payment Date ratably amongst the Class A
Notes based on their Invested Amounts towards the Interest Amount in
relation to each Class A Note in relation to the Interest Period ending
on that Payment Date in relation to each Class A Note in accordance with,
and subject to, these Class A Note Conditions and the Agency Agreement.
"A$ CLASS A INTEREST AMOUNT" has the same meaning as in the Supplemental
Deed. THE METHOD FOR CALCULATING THIS, THE ORDER OF APPLICATION OF AVAILABLE
FUNDS FOR PAYMENT OF INTEREST DUE ON THE CLASS A NOTES ON A PAYMENT DATE AND
OTHER PAYMENTS RANKING IN PRIORITY TO, OR EQUALLY WITH, PAYMENT OF THOSE AMOUNTS
ON A PAYMENT DATE UNDER THE SUPPLEMENTAL DEED ARE EXPLAINED IN "DESCRIPTION OF
THE CLASS A NOTES--DISTRIBUTION OF TOTAL AVAILABLE INCOME" IN PART A OF THIS
PROSPECTUS.
7 REDEMPTION
7.1 FINAL REDEMPTION OF THE CLASS A NOTES
Unless previously redeemed (or deemed to be redeemed) in full, the Issuer
Trustee will redeem the Class A Notes at their then Stated Amount, together with
all then accrued but unpaid interest, on the Payment Date occurring in January
2027 ("FINAL MATURITY DATE").
7.2 PART REDEMPTION OF CLASS A NOTES
Subject to CONDITIONS 7.3, 7.4 and 7.6, on each Payment Date prior to the
occurrence of an Event of Default, until the Stated Amount of the Class A Notes
is reduced to zero, the Issuer Trustee must:
(a) pay, in accordance with the directions of the Global Trust Manager, the
A$ Class A Principal (if any) in relation to that Payment Date to the
Currency Swap Providers in accordance with each Currency Swap;
(b) direct each Currency Swap Provider to pay on each Payment Date to the
Principal Paying Agent in accordance with the Agency Agreement the US$
equivalent of the amount of the A$ Class A Principal (such US$ Equivalent
of the A$ Class A Principal Amount being the "CLASS A PRINCIPAL AMOUNT")
received by the Currency Swap Providers from the Issuer Trustee on that
Payment Date; and
(c) pay the Class A Principal Amount received from the Currency Swap
Providers equally amongst the Class A Notes towards the repayment of the
Stated Amount of the Class A Notes in accordance with, and subject to,
these Class A Note Conditions and the Agency Agreement. Such a payment of
the Stated Amount on a Class A Note will constitute a
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redemption of the Class A Note in part to the extent of such repayment
and, upon such repayment, the obligations of the Issuer Trustee with
respect to the Class A Note will be discharged to the extent of such
repayment.
"A$ CLASS A PRINCIPAL AMOUNT" has the same respective meanings as in the
Supplemental Deed. THE METHOD FOR CALCULATING THIS AND THE OTHER PAYMENTS
RANKING IN PRIORITY TO OR EQUALLY WITH THE PAYMENT OF THE A$ CLASS A PRINCIPAL
AMOUNT ON A PAYMENT DATE UNDER THE SUPPLEMENTAL DEED ARE DESCRIBED IN OF THIS
PROSPECTUS.
7.3 CALL OPTION
The Issuer Trustee will, subject to the other provisions of this CONDITION
7, when directed by the Global Trust Manager (at the Global Trust Manager's
option), redeem all, but not some only, of the Notes at their then Invested
Amount, subject to the following, together with all accrued but unpaid interest
in respect of the Notes to (but excluding) the date of redemption, on any
Payment Date falling on or after the earlier of
(a) the Payment Date falling in April 2008 ("CALL OPTION DATE"), and
(b) the Payment Date on which the aggregate Outstanding Principal Balance of
all Housing Loans comprising the Purchased Mortgage Loans on that Payment
Date expressed as a percentage of the aggregate Outstanding Principal
Balance of all Housing Loans comprising the Purchased Mortgage Loans at
the opening of business on the Closing Date falls below 10%.
Notwithstanding the foregoing, the Issuer Trustee may redeem the Notes at
their Stated Amount on a Call Option Date, instead of at their Invested Amount,
together with accrued but unpaid interest in respect of the Notes to (but
excluding) the date of redemption, if so approved by an Extraordinary Resolution
(as defined in CONDITION 9.1) of the Noteholders together.
However, the Issuer Trustee will not redeem the Notes unless it is in a
position on the relevant Payment Date to repay the then Invested Amounts or the
Stated Amounts, as required, of the Notes and the Redraw Notes together will all
accrued but unpaid interest to but excluding the date of redemption and to
discharge all its liabilities in respect of amounts which are required under the
Master Security Trust Deed to be paid in priority to or equally with the Notes
or Redraw Notes if the charge under the Master Security Trust Deed were
enforced.
The Issuer Trustee will give not more than 60 nor less than 45 days' notice
(which will be irrevocable) of the Payment Date on which a proposed redemption
under this CONDITION 7.3 will occur to the Seller, the Note Trustee, the
Principal Paying Agent, the Agent Bank and to the Class A Noteholders in
accordance with CONDITION 11.1.
"OUTSTANDING PRINCIPAL BALANCE" and "PURCHASED MORTGAGE LOANS" and "HOUSING
LOANS"have the same respective meanings given to them in the Supplemental Deed.
7.4 REDEMPTION FOR TAXATION OR OTHER REASONS
If the Global Trust Manager satisfies the Issuer Trustee and the Note
Trustee immediately prior to giving the notice referred to below that by virtue
of a change in law of the Commonwealth of Australia or any of its political
subdivisions or any of its authorities or any other jurisdiction to which the
Issuer Trustee becomes subject (or the application or official interpretation
thereof) (a "RELEVANT JURISDICTION") from that in effect on the Closing Date,
either:
(a) on the next Payment Date the Issuer Trustee will be required to deduct
or withhold from any payment of principal or interest in respect of the
Notes, including corresponding payments under any currency swap any
amount for or on account of any present or future
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taxes, duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by a Relevant
Jurisdiction; or
(b) On the next Payment Date the total amount payable in respect of interest
in relation to any of the Mortgage Loans for a Collection Period ceases
to be receivable (whether or not actually received) by the Issuer Trustee
during such Collection Period by reason of any present or future taxes,
duties, assessments or governmental charges of whatever nature imposed,
levied, collected, withheld or assessed by a Relevant Jurisdiction,
and, in each case, such obligation cannot be avoided by the Issuer Trustee
taking reasonable measures available to it, the Issuer Trustee must, when so
directed by the Global Trust Manager (at the Global Trust Manager's option),
redeem all, but not some only, of the Notes on any subsequent Payment Date at
their then Invested Amount, subject to the following, together with accrued but
unpaid interest in respect of the Notes to (but excluding) the date of
redemption. Notwithstanding the foregoing, the Issuer Trustee may redeem the
Notes at their Stated Amount, instead of at their Invested Amount, together with
accrued unpaid interest in respect of the Notes to (but excluding) the date of
redemption, if so approved by an Extraordinary Resolution (as defined in
CONDITION 9.1) of the Class A Noteholders and any Noteholders of the Redraw
Notes together.
The Global Trust Manager will not direct the Issuer Trustee to, and the
Issuer Trustee will not, so redeem the Notes unless the Issuer Trustee is in a
position on such Payment Date to repay in respect of the Notes their then
Invested Amount or Stated Amount, as required, together with all accrued but
unpaid interest to (but excluding) the date of redemption and to discharge all
its liabilities in respect of amounts which are required under the Master
Security Trust Deed and the Supplemental Deed to be paid in priority to or
equally with the Notes and any Redraw Notes of all classes if the Charge was
enforced.
The Issuer Trustee will give not more than 60 nor less than 45 days' notice
(which will be irrevocable) of the Payment Date on which a proposed redemption
under this CONDITION 7.4 will occur to the Note Trustee, the Seller, the
Principal Paying Agent, the Class A Note Registrar, the Calculation Agent, the
Agent Bank and the Class A Noteholders in accordance with CONDITION 11.1.
If an event referred to in paragraph (a) of this CONDITION 7.4 occurs in
respect of only the Class A Notes (and not any other Notes) and as a result
thereof the Issuer Trustee gives notice in accordance with this CONDITION 7.4
that it proposes to redeem all of the Notes on the Payment Date referred to in
that notice, the Class A Noteholders may by an Extraordinary Resolution (as
defined in CONDITION 10.3) in accordance with the Note Trust Deed elect that
they do not require the Issuer Trustee to redeem the Class A Notes. If the
Class A Noteholders make such an election they (or the Note Trustee on their
behalf) must notify the Issuer Trustee and the Global Trust Manager not less
than 21 days before the proposed Payment Date for the redemption of the Class A
Notes. Upon receipt of such a notice, the Issuer Trustee must not so redeem the
Class A Notes.
7.5 CERTIFICATION
For the purpose of any redemption made under CONDITION 7.3 or 7.4, the
Issuer Trustee and the Note Trustee may rely on any certificate of an Authorised
Person (as defined in the Master Trust Deed) of the Global Trust Manager that
the Issuer Trustee will be in a position to repay in respect of the Class A
Notes their then Invested Amount or Stated Amount, as applicable, together with
all accrued but unpaid interest to (but excluding) the date of redemption and to
discharge all its liabilities in respect of amounts required under the Master
Security Trust Deed to be paid in priority to or equally with the Notes if the
Charge were enforced.
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7.6 REDEMPTION ON FINAL PAYMENT
Upon a final distribution being made in respect of the Class A Notes under
these Class A Note Conditions or clause 14.18 of the Supplemental Deed, the
Class A Notes will thereupon be deemed to be redeemed and discharged in full and
any obligation to pay any accrued but then unpaid Class A Interest Amount or any
then unpaid Invested Amount, Stated Amount or other amounts in relation to the
Class A Notes will be extinguished in full.
FOR A DESCRIPTION OF THE CIRCUMSTANCES IN WHICH A FINAL DISTRIBUTION WILL BE
MADE IN RESPECT OF THE CLASS A NOTES SEE "DESCRIPTION OF THE CLASS A
NOTES--REDEMPTION OF THE NOTES FOR TAXATION OR OTHER REASONS"; "--REDEMPTION OF
THE NOTES UPON AN EVENT OF DEFAULT"; "--OPTIONAL REDEMPTION OF THE NOTES";
"--REDEMPTION UPON FINAL PAYMENT" IN PART A OF THIS PROSPECTUS.
7.7 CANCELLATION
All Class A Notes redeemed in full (or deemed to be redeemed in full)
pursuant to the above Class A Note Conditions will be cancelled and may not be
resold or reissued.
7.8 NO PAYMENT IN EXCESS OF STATED AMOUNT
Subject to CONDITIONS 7.3 and 7.4, no amount of principal will be paid in
respect of a Class A Note in excess of the Stated Amount of the Class A Note.
7.9 CALCULATION OF CLASS A PRINCIPAL AMOUNTS, STATED AMOUNTS AND OTHER AMOUNTS
(a) No later than two Business Days prior to each Payment Date, the Global
Trust Manager will determine:
(i) the amount of any Class A Principal Amount payable in respect of
each Class A Note on the Payment Date;
(ii) the Stated Amount and Invested Amount of each Class A Note as at
the first day of the Interest Period commencing on the Payment Date
(after deduction of any Class A Principal Amounts due to be paid in
respect of such Class A Notes on that Payment Date and after making
any other Adjustment to the Stated Amount or the Invested Amount
(as the case may be) of the Class A Note in accordance with these
Class A Note Conditions on or with effect from that Payment Date;
(iii) the Class A Note Factor (as defined below) as at that Payment
Date; and
(iv) the amount of interest to be made on the Payment Date applicable to
each Class A Note.
(b) The Global Trust Manager will notify the Issuer Trustee, the Note
Trustee, the Principal Paying Agent, the Calculation Agent, the Class A
Note Registrar and the Luxembourg Stock Exchange (for so long as the
Class A Notes are listed on the Luxembourg Stock Exchange) as soon as
practical (and in any event by not later than two Business Days prior to
the Payment Date or on such earlier date as the Luxembourg Stock Exchange
may require (for so long as the Class A Notes are listed on the
Luxembourg Stock Exchange)) of each determination of an amount or
percentage referred to in CONDITION 7.9(A) and will cause details of each
of those determinations to be published in accordance with CONDITION 11.2
as soon as practical after that notification. If no Class A Principal
Amount is due to be paid on the Class A Notes on any Payment Date the
Global Trust Manager will cause a notice to be given in accordance with
CONDITION 11.2 as soon as practicable (and in any event by no later than
the relevant Payment Date).
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(c) If the Global Trust Manager does not at any time for any reason make one
or more of the determinations referred to in CONDITION 7.9(A), the
Calculation Agent (or, failing the Calculation Agent, the Note Trustee)
must make such determinations in accordance with this Condition 7.9 (but
based on the information in its possession) and each such determination
will be deemed to have been made by the Global Trust Manager.
8 PAYMENTS
8.1 METHOD OF PAYMENT
Any installment on account of interest or principal payable on any Class A
Note which is punctually paid or duly provided for by or on behalf of or at the
direction of the Issuer Trustee to the Paying Agents on the applicable Payment
Date shall be paid to the person in whose name such Class A Note is registered
on the relevant Record Date (as defined below), by wire transfer in immediately
available funds to the account designated by such person or, if such person so
requests in writing, by cheque mailed first-class, postage prepaid, to such
person's address as it appears on the Class A Note Register on such Record Date.
"RECORD DATE" in relation to a Payment Date or any other date for any
payment to be made in respect of a Class A Note means the day which is the date
which is two business days before a Payment Date.
8.2 SURRENDER ON FINAL PAYMENT
Prior to a final distribution being made in respect of the Class A Notes
under clause 14 of the Supplemental Deed, the Note Trustee must notify the
Class A Noteholders on the relevant Record Date of the date upon which the Note
Trustee expects that final distribution to be made and specify if that such
final distribution will be payable only upon surrender of the relevant Class A
Note to a Paying Agent at its specified office. No such final distribution will
be made other than upon the surrender of the relevant Class A Notes and none of
the Issuer Trustee, the Note Trustee, the Security Trustee or any Paying Agent
will be liable to pay any additional amount to any Class A Noteholder as a
result of any delay in payment due to a Class A Note not having been surrendered
in accordance with this CONDITION 8.2.
FOR A DESCRIPTION OF THE CIRCUMSTANCES IN WHICH A FINAL DISTRIBUTION WILL BE
MADE IN RESPECT OF THE CLASS A NOTES SEE "DESCRIPTION OF THE CLASS A
NOTES--REDEMPTION OF THE NOTES FOR TAXATION OR OTHER REASONS"; "--REDEMPTION OF
THE NOTES UPON AN EVENT OF DEFAULT"; "--OPTIONAL REDEMPTION OF THE NOTES";
"--REDEMPTION UPON FINAL PAYMENT" EACH IN PART A OF THIS PROSPECTUS.
8.3 PAYING AGENTS
The initial Paying Agents and their respective specified offices are set out
at the end of these Class A Note Conditions.
The Issuer Trustee, at the direction of the Global Trust Manager, may with
the prior written approval of the Note Trustee, terminate the appointment of the
Paying Agents in accordance with the Agency Agreement and appoint additional or
other Paying Agents, provided that:
(a) it will at all times maintain a Paying Agent in Luxembourg; and
(b) notice of any termination or appointment of a Paying Agent or of any
change in the office through which any Paying Agent will act will be
given to the Class A Noteholders in accordance with CONDITION 11.1.
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8.4 TAXATION
All payments in respect of the Class A Notes will be made without
withholding or deduction for, or on account of, any present or future taxes,
duties or charges of whatsoever nature unless the Issuer Trustee or any Paying
Agent is required by any applicable law to make such a withholding or deduction.
In that event the Issuer Trustee or that Paying Agent (as the case may be) will,
after making such withholding or deduction, account to the relevant authorities
for the amount so required to be withheld or deducted. Neither the Issuer
Trustee nor any Paying Agent nor the Note Trustee will be obliged to make any
additional payments in respect of the relevant Class A Notes in relation to the
withholding or deduction. Immediately after becoming aware that such a
withholding or deduction is or will be required, the Issuer Trustee will notify
the Note Trustee, the Principal Paying Agent and the Class A Noteholders in
accordance with CONDITION 11.1, thereof.
8.5 PRESCRIPTION
A Class A Note will become void in its entirety unless surrendered for
payment within a period of 10 years from the Relevant Date in respect of any
payment of principal or interest thereon the effect of which will be to reduce
the Stated Amount of, and all accrued but unpaid interest on, that Class A Note
to zero. After the date on which a Class A Note becomes void in its entirety, no
claim can be made in respect of it.
"RELEVANT DATE" in respect of a Class A Note means the date on which a
payment in respect thereof first becomes due or (if the full amount of the
moneys payable in respect of the Class A Notes due on or before that date has
not been duly received by the Principal Paying Agent or the Note Trustee on or
prior to such date) the date on which, the full amount of such moneys having
been so received notice to that effect is duly given to the Class A Noteholders
in accordance with CONDITION 11.1.
8.6 NOTIFY LATE PAYMENTS
In the event of the unconditional payment to the Principal Paying Agent or
the Note Trustee of any sum due in respect of the Class A Notes or any of them
being made after the due date for payment thereof, the Issuer Trustee will
forthwith give or procure to be given notice to the Class A Noteholders in
accordance with CONDITION 11.1 that such payment has been made.
8.7 ROUNDING OF PAYMENTS
All payments in respect of the Class A Notes will be rounded down to the
nearest cent.
9 ENFORCEMENT FOLLOWING OCCURRENCE OF AN EVENT OF DEFAULT
9.1 ENFORCEMENT
The Master Security Trust Deed provides that at any time after the Security
Trustee becomes actually aware of the occurrence of an Event of Default, the
Security Trustee will (subject to CONDITION 10.4 and subject to being
appropriately indemnified), if so directed by an Extraordinary Resolution of the
Voting Secured Creditors, declare the Notes immediately due and payable (in
which case, subject to CONDITION 12, the Stated Amount of, and all accrued but
unpaid interest in relation to, the Class A Notes will become immediately due
and payable) and enforce the Charge.
Subject to being indemnified in accordance with the Master Security Trust
Deed and to the provisions of CONDITION 9.2, the Security Trustee will take all
action necessary to give effect to any direction in accordance with the
foregoing and will comply with all such directions.
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"VOTING SECURED CREDITORS" have the same respective meanings as in the
Definitions Schedule. FOR A DESCRIPTION OF THIS EXPRESSION, SEE "GLOSSARY" IN
PART B OF THIS PROSPECTUS.
9.2 SECURITY TRUSTEE MAY ENFORCE CHARGE WITHOUT DIRECTION
After the Security Trustee becomes actually aware of the occurrence of an
Event of Default, the Security Trustee must not enforce the Deed of Charge in
accordance with the Master Security Trust Deed without an Extraordinary
Resolution of the Voting Secured Creditors unless, in the opinion of the
Security Trustee, the delay required to obtain the consent of the Voting Secured
Creditors would be prejudicial to the interests of those Voting Secured
Creditors as a class.
9.3 PRIORITY OF PAYMENTS FROM PROCEEDS FROM THE ENFORCEMENT OF THE CHARGE
Following the enforcement of the Charge, all moneys received in connection
with the Master Security Trust Deed and the Charge by the Security Trustee or by
any receiver appointed in relation to the Secured Property pursuant to the
provisions of the Master Security Trust Deed and the Deed of Charge are to be
applied, subject to the Master Security Trust Deed, in accordance with the order
of priority contained in the Supplemental Deed. FOR A DESCRIPTION OF THE ORDER
OF PRIORITY CONTAINED IN THE SUPPLEMENTAL DEED AND THE PAYMENT OF AMOUNTS THAT
RANK IN PRIORITY TO OR EQUALLY WITH THE CLASS A NOTES, SEE THE "DESCRIPTION OF
THE CLASS A NOTES--REDEMPTION OF THE NOTES UPON AN EVENT OF DEFAULT" IN PART A
OF THIS PROSPECTUS.
9.4 SECURITY TRUSTEE AND NOTE TRUSTEE NOT LIABLE FOR LOSS ON ENFORCEMENT
Except in the case of fraud, negligence or breach of Trust (in the case of
the Security Trustee) and, subject to the mandatory provisions of the Trust
Indenture Act, fraud, negligence (except as specifically provided in the Trust
Indenture Act), fraud, negligence or breach of Trust (in the case of the Note
Trustee), neither the Note Trustee or the Security Trustee is liable for any
decline in the value, nor any loss realised upon any sale or other disposition
made under the Master Security Trust Deed or the Deed of Charge, of any Secured
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 any person in
respect of the Issuer Trustee or any third party in respect of the Issuer
Trustee or the Class A Notes or relating in any way to the Secured Property.
Without limitation, neither the Note Trustee nor the Security Trustee will be
liable for any such decline or loss directly or indirectly arising from its
acting, or failing to act, as a consequence of an opinion reached by it which,
in the case of the Note Trustee, is based in good faith on advice received by it
in accordance with the applicable requirements of the Note Trust Deed (and the
Trust Indenture Act) or the Master Security Trust Deed, as the case may be. In
respect of the Security Trustee only, the Security Trustee is not liable for any
omission, delay or mistake or any loss or irregularity in or about the exercise,
attempted exercise, non-exercise or purported exercise of any of its powers
under the Master Security Trust Deed or the Deed of Charge except to the extent
caused or contributed to by any fraud, negligence or breach of trust on the part
of the Security Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act 1939 of the United
States of America as in force at the date of the Note Trust Deed.
9.5 DIRECTIONS FROM CLASS A NOTEHOLDERS TO NOTE TRUSTEE FOLLOWING EVENT OF
DEFAULT
If an Event of Default has occurred and is known to the Note Trustee, the
Note Trustee must:
(a) notify each Class A Noteholder of the Event of Default within 90 days
(or such shorter period as may be required by the rules of the Luxembourg
Stock Exchange, for so long as the Class A Notes are listed on the
Luxembourg Stock Exchange, or the rules of any other stock exchange on
which the Class A Notes are listed) after becoming aware of the Event
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of Default, provided that, except in the case of a default in payment of
principal or interest on any Class A Note, the Note Trustee may withhold
such notice if and so long as the board of directors, the executive
committee or a Trust committee of its directors and/or its authorised
officers under the Note Trust Deed in good faith determine that
withholding the notice is in the interest of the Class A Noteholders;
(b) if a meeting of Voting Secured Creditors is to be held under the Master
Security Trust Deed, determine whether it proposes to seek directions
from the Class A Noteholders as to how to vote at that meeting and, if
so, whether it proposes to instruct the Security Trustee to delay the
holding of that meeting while it obtains such directions from the
Class A Noteholders; and
(c) vote at any meeting of Voting Secured Creditors held under the Master
Security Trust Deed.
In acting in accordance with the directions of the Class A Noteholders, the
Note Trustee must exercise its votes for or against any proposal to be put to a
meeting of Voting Secured Creditors under the Master Security Trust Deed in the
same proportion as that of the aggregate Invested Amounts of the Class A Notes
held by Class A Noteholders who have directed the Note Trustee to vote for or
against such a proposal.
If any of the Class A Notes remain 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 at a meeting of Voting Secured
Creditors under the Master Security Trust Deed to, or otherwise direct the
Security Trustee, to dispose of the Secured Property unless:
(a) a sufficient amount would be realised to discharge in full all amounts
owing to the Class A Noteholders in respect of the Class A Notes and any
other amounts owing by the Issuer Trustee to any other person ranking in
priority to or with the Class A Notes; or
(b) 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
Master Security Trust Deed) will not (or that there is a significant risk
that it will not) be sufficient, having regard to any other relevant
actual, contingent or prospective liabilities of the Issuer Trustee, to
discharge in full in due course all the amounts referred to in
paragraph (a).
The Note Trustee need not do anything to find out if an Event of Default has
occurred. Until it has actual knowledge or express notice to the contrary, the
Note Trustee may assume that no such event has occurred and that the Issuer
Trustee and each other party to the Transaction Documents is performing all its
obligations under the Note Trust Deed and the Class A Notes.
9.6 ONLY SECURITY TRUSTEE MAY ENFORCE CHARGE
Only the Security Trustee may enforce the Charge and neither the Note
Trustee nor any Class A Noteholder (nor any other Secured Creditor) is entitled
to proceed directly against the Issuer Trustee to enforce the performance of any
of the provisions of the Master Security Trust Deed, the Note Trust Deed, the
Class A Notes or any other applicable Transaction Document, except as provided
for in the Master Security Trust Deed, the Note Trust Deed, the Master Trust
Deed and the Supplemental Deed. The Security Trustee is not required to act in
relation to the enforcement of the Charge unless its liability is limited in a
manner reasonably satisfactory to it or, if required by the Security Trustee (in
its absolute discretion), it is adequately indemnified from the Secured Property
or the Security Trustee receives from the Voting Secured Creditors an indemnity
A-II-18
<PAGE>
in a form reasonably satisfactory to the Security Trustee (which may be by way
of an Extraordinary Resolution of the Voting Secured Creditors) and is put in
funds to the extent necessary.
9.7 EXERCISE OF CLASS A NOTEHOLDER RIGHTS BY NOTE TRUSTEE
The rights, remedies and discretions of the Class A Noteholders under the
Note Trust Deed and the Master Security Trust Deed including all rights to vote
or to give an instruction or consent, can only be exercised by the Note Trustee
on behalf of the Class A Noteholders in accordance with the Note Trust Deed and
the Master Security Trust Deed. The Security Trustee may rely on any
instructions or directions given to it by the Note Trustee as being given on
behalf of the Class A Noteholders from time to time and need not inquire whether
any such instructions or directions are in accordance with the Note Trust Deed,
whether the Note Trustee or the Class A Noteholders from time to time have
complied with any requirements under the Note Trust Deed or as to the
reasonableness or otherwise of the Note Trustee.
10 MEETINGS OF VOTING SECURED CREDITORS, DIRECTIONS OF CLASS A NOTEHOLDERS,
MODIFICATIONS, CONSENTS, WAIVERS AND INDEMNITIES
10.1 MEETINGS OF VOTING SECURED CREDITORS
The Master Security Trust Deed contains provisions for convening meetings of
the Voting Secured Creditors to, among other things, enable the Voting Secured
Creditors to direct or consent to the Security Trustee taking or not taking
certain actions under the Master Security Trust Deed; for example to enable the
Voting Secured Creditors, following the occurrence of an Event of Default, to
direct the Security Trustee to declare the Class A Notes immediately due and
payable and/or to enforce the Charge.
10.2 DIRECTIONS OF CLASS A NOTEHOLDERS
Under the Note Trust Deed the Note Trustee may seek directions from the
Class A Noteholders from time to time, including following the occurrence of an
Event of Default. The Note Trustee shall not be responsible for having acted in
good faith on a resolution purporting to have been passed at a meeting of
Class A Noteholders in respect of which minutes have been made and signed even
if it is later found that there was a defect in the constitution of the meeting
or the passing of the resolution or that the resolution was not valid or binding
on the Class A Noteholders.
If the Note Trustee is entitled under the Master Trustee Deed or the Master
Security Trust Deed to vote at any meeting on behalf of Class A Noteholders, the
Note Trustee must vote in accordance with the directions of the Class A
Noteholders and otherwise in its absolute discretion. In acting in accordance
with the directions of Class A Noteholders, the Note Trustee must exercise its
votes for or against any proposal to be put to a meeting in the same proportion
as that of the aggregate Invested Amounts of the Class A Notes held by Class A
Noteholders who have directed the Note Trustee to vote for or against that
proposal.
10.3 AMENDMENTS TO NOTE TRUST DEED AND CLASS A NOTES
Pursuant, and subject, to the Note Trust Deed and subject to any approval
required by law, the Note Trustee, the Global Trust Manager and the Issuer
Trustee may together agree, without the consent or sanction of any Class A
Noteholder, by way of supplemental deed to alter, add to or revoke (each a
"MODIFICATION") any provision of the Note Trust Deed or the Class A Notes
A-II-19
<PAGE>
(including these Class A Note Conditions) so long as such modification is not a
Payment Modification (as defined below) and such modification in the opinion of
the Note Trustee:
(a) is necessary or expedient to comply with the provisions of any statute
or regulation or with the requirements of any governmental agency;
(b) is made to correct a manifest error or ambiguity, or is to correct
inconsistency between the provisions of any Transaction Document and the
description of the provisions thereof in the related prospectus, or is of
a formal, technical or administrative nature only;
(c) is appropriate or expedient as a consequence of an amendment to any
statute or regulation or altered requirements of any governmental agency
or any decision of any court (including, without limitation, a
modification which is in the opinion of the Note Trustee 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 or any decision of any court, 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 the Trust or the Trust
constituted under the Note Trust Deed); or
(d) and the Issuer Trustee is otherwise desirable for any reason and:
(i) is not in the opinion of the Note Trustee likely, upon coming into
effect, to be materially prejudicial to the interests of Class A
Noteholders; or
(ii) if it is in the opinion of the Note Trustee likely, upon coming into
effect, to be materially prejudicial to the interests of the Class A
Noteholders, the consent of an Extraordinary Resolution of the
Class A Noteholders to the alteration, addition or resolution has
been obtained. For the purpose of determining whether there has been
an Extraordinary Resolution of the Class A Noteholders consenting to
an alteration, addition or revocation, Class A Notes which are
beneficially owned by the Issuer Trustee or the Global Trust Manager
or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Issuer Trustee or
the Global Trust Manager, shall be disregarded.
The Global Trust Manager must give the Current Rating Agencies (as defined
in the Supplemental Deed) 5 Business Days' prior notice of any such
modification. The Note Trustee will be entitled to assume that any proposed
modification, other than a Payment Modification, will not be materially
prejudicial to the interest of Class A Noteholders if each of the Designated
Rating Agencies confirms in writing that if the modification is effected this
will not lead to a reduction, qualification or withdrawal of the then rating
given to the Class A Notes by that Current Rating Agency.
Pursuant to the Note Trust Deed, the Note Trustee may concur with the Issuer
Trustee and the Global Trust Manager in making or effecting any Payment
Modification if and only if the consent has first been obtained of each Class A
Noteholder to such Payment Modification.
Any Supplemental Deed that effects any such modifications must conform to
the requirements of the Trust Indenture Act and copies of any such Supplemental
Deed must be distributed by the Issuer Trustee to the Class A Noteholders in
accordance with CONDITION 11.1 as soon as reasonably practicable after the
modifications have been made.
A-II-20
<PAGE>
"PAYMENT MODIFICATION" means any alteration, addition or revocation of any
provision of the Transaction Documents or the Class A Notes (including the
Class A Note Conditions) which modifies:
(a) the amount, timing, place, currency or manner of payment of principal or
interest in respect of the Class A Notes including, without limitation,
any modification to the Stated Amount, Invested Amount, Interest Rate or
Final Maturity Date in respect of the Class A Notes or to CONDITIONS 6.9
and 7.2, or which would impair the rights of Class A Noteholders to
institute suit for enforcement of such payment on or after the due date
for such payment;
(b) the definition of the term "Extraordinary Resolution," clause 21.4 of
the Note Trust Deed or the circumstances in which the consent or
direction of a Special Majority of Class A Noteholders is required;
(c) clause 14.18 of the Supplemental Deed; or
(d) the requirements for altering, adding to or revoking any provision of
the Note Trust Deed or the Class A Notes (including the Class A Note
Conditions).
"EXTRAORDINARY RESOLUTION" has the meaning given in the Definitions
Schedule.
10.4 WAIVERS, ETC.
The Security Trustee may, in accordance with the Master Security Trust Deed
and without the consent or sanction of the Voting Secured Creditors (but not in
contravention of an Extraordinary Resolution of the Voting Secured Creditors),
waive or ignore any breach or proposed breach or determine that any event that
would otherwise be an Event of Default will not be treated as such if such
action, in its opinion, will not be predjudicial to the interests of the Secured
Creditors.
The Note Trustee may, without the consent of the Class A Noteholders and
without prejudice to its rights in respect of any subsequent breach, from time
to time and at any time, if in its opinion the interests of the Class A
Noteholders will not be materially prejudiced thereby, waive or authorize, on
such terms as seem expedient to it, any breach or proposed breach by the Issuer
Trustee of the Note Trust Deed or these Class A Note Conditions provided that
the Note Trustee shall not do so in contravention of an express direction given
by an Extraordinary Resolution or a request made pursuant to Condition 10.1. No
such direction or request will affect a previous waiver, authorization or
determination. Any such waiver, authorization or determination shall be binding
on the Class A Noteholders and, if the Note Trustee so requires, will be
notified to the Class A Noteholders as soon as practicable.
10.5 INDEMNIFICATION AND EXONERATION OF THE NOTE TRUSTEE AND THE SECURITY
TRUSTEE
The Note Trust Deed and the Master Security Trust Deed contain provisions
for the indemnification of the Note Trustee and the Security Trustee
(respectively) and for their relief from responsibility, including provisions
relieving them from taking proceedings to realise the security and to obtain
repayment of the Class A Notes unless indemnified to their satisfaction. Each of
the Note Trustee and the Security Trustee is entitled, subject in the case of
the Note Trustee to the mandatory provisions of the Trust Indenture Act, to
enter into business transactions with the Issuer Trustee and/or any other party
to the Transaction Documents without accounting for any profit resulting from
such transactions.
Subject to the mandatory provisions of the Trust Indenture Act, the Note
Trustee shall not be responsible for any loss, expense or liability occasioned
to the Secured Property or any other property or in respect of all or any of the
moneys which may stand to the credit of the Collections
A-II-21
<PAGE>
Account (as defined in the Supplemental Deed) from time to time however caused
(including, without limitation, where caused by an act or omission of the
Security Trustee) unless that loss is occasioned by the fraud, negligence or
breach of Trust of the Note Trustee. The Security Trustee is not, nor is any
receiver appointed in relation to the Secured Property pursuant to the
provisions of the Master Security Trust Deed, liable or otherwise accountable
for any omission, delay or mistake or any loss or irregularity in or about the
exercise, attempted exercise, non-exercise or purported exercise of any of the
powers of the Security Trustee or of the receiver under the Master Security
Trust Deed except for fraud, negligence or breach of Trust.
Except in the case of fraud, negligence (except as specifically provided in
the Trust Indenture Act), or breach of Trust, and subject to the mandatory
provisions of the Trust Indenture Act, the Note Trustee may act on the opinion
or advice of, or information obtained from, any expert (including any lawyer,
valuer, banker, broker, accountant, credit rating agency or lead manager) and
shall not be responsible to anyone for any loss occasioned by so acting to the
extent it complies with any applicable requirements of the Note Trust Deed or
the Trust Indenture Act.
Any such opinion, advice or information may be sent or obtained by letter,
telex or facsimile transmission and the Note Trustee will not be liable to any
Class A Noteholder, amongst others, for acting in good faith on any opinion,
advice or information purporting to be conveyed by such means even if it
contains some error which is not a manifest error or is not authentic.
11 NOTICES
11.1 GENERAL
Subject to CONDITION 11.2 all notices, other than notices given in
accordance with the following paragraph and CONDITION 11.3, to Class A
Noteholders will be deemed given if in writing and mailed, first-class, postage
prepaid to each Class A Noteholder, at his or her address as it appears on the
Class A Note Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Class A Noteholders is given by mail, neither the failure to mail such
notice nor any defect in any notice so mailed to any particular Class A
Noteholder will affect the sufficiency of such notice with respect to other
Class A Noteholders, and any notice that is mailed in the manner herein provided
will conclusively be presumed to have been duly given.
A notice may be waived in writing by the relevant Class A Noteholder, either
before or after the event, and such waiver will be the equivalent of such
notice. Waivers of notice by Class A Noteholders will be filed with the Note
Trustee but such filing will not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
Any such notice will be deemed to have been given on the date such notice is
deposited in the mail.
In case, by reason of the suspension of regular mail services as a result of
a strike, work stoppage or similar activity, it is impractical to mail notice of
any event to Class A Noteholders when such notice is required to be given, then
any manner of giving such notice as the Issuer Trustee directs the Note Trustee
will be deemed to be a sufficient giving of such notice.
In addition to the above, notices to the Class A Noteholders shall be valid
if published in a leading daily newspaper in the City of New York, in London,
and, so long as the Notes are listed on the Luxembourg Stock Exchange in
Luxembourg. It is expected that publication will be made in the City of New York
in THE WALL STREET JOURNAL, in London in the FINANCIAL TIMES, and in Luxembourg
in the LUXEMBOURGER WORT. Any such notice shall be deemed to have been given on
the date of such publication or, if published more than once, on the date of the
first such publication.
A-II-22
<PAGE>
11.2 BOOK-ENTRY NOTES
Unless and until the Class A Notes have been issued in definitive form,
whenever a notice or other communication to the Class A Noteholders is required
under the Note Trust Deed or any other Transaction Document all such notices and
communications must be given to The Depositary Trust Company and are not
required to be given to the beneficial owners of the Class A Notes.
11.3 CLASS A NOTE INFORMATION
Any notice specifying a Payment Date, an Interest Rate in relation to the
Class A Notes, a Class A, a Class A Principal Amount (or the absence of a
Class A Principal Amount), an Invested Amount, a Stated Amount, a Class A Note
Factor in relation to the Class A Notes, or any other matter permitted to be
given in accordance with this CONDITION 11.3, will be deemed to have been duly
given if the information contained in the notice appears on the relevant page of
the Reuters Screen or the Electronic information system made available to its
subscribers by Bloomberg, L.P. or another similar electronic reporting service
approved by the Note Trustee in writing and notified to Class A Noteholders
pursuant to CONDITION 11.1 (the "RELEVANT SCREEN"). Any such notice will be
deemed to have been given on the first date on which such information appeared
on the Relevant Screen. If it is impossible or impracticable to give notice in
accordance with this paragraph then notice of the matters referred to in this
Condition will be given in accordance with CONDITION 11.1.
12 LIMITATION OF LIABILITY OF THE ISSUER TRUSTEE
(a) The Issuer Trustee enters into the Transaction Documents to which it is
a party, and issues the Class A Notes, only in its capacity as Trustee of
the Trust and in no other capacity. A liability arising under or in
connection with the Class A Notes, the Transaction Documents or the Trust
is limited to and can be enforced against the Issuer Trustee only to the
extent to which it can be satisfied out of the assets of the Trust out of
which the Issuer Trustee is actually indemnified for the liability. This
limitation of the Issuer Trustee's liability applies despite any other
provision of the Transaction Documents (other than paragraph (c) below)
and extends to all liabilities and obligations of the Issuer Trustee in
any way connected with any representation, warranty, conduct, omission,
agreement or transaction related to the Transaction Documents, the
Class A Notes or the Trust.
(b) No person (other than the Issuer Trustee) may sue the Issuer Trustee in
any capacity other than as Trustee of the Trust including seeking the
appointment of a receiver (except in relation to the assets of the
Trust), a liquidator, an administrator or any similar person to the
Issuer Trustee or prove in any liquidation, administration or
arrangements of or affecting the Issuer Trustee (except in relation to
the assets of the Trust).
(c) The provisions of this CONDITION 12 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 in relation to the Trust or by
operation of law there is a reduction in the extent of the Issuer
Trustee's indemnification out of the assets of the Trust as a result of
the Issuer Trustee's fraud, negligence or breach of Trust.
(d) The Relevant Parties (as defined in the Definitions Schedule) are
responsible under the Transaction Documents for performing a variety of
obligations relating to the Trust. No act or omission of the Issuer
Trustee (including any related failure to satisfy its obligations or
breach of a representation or warranty under the Transaction Documents or
the Class A Notes) will be considered fraud, negligence or breach of
trust of the Issuer Trustee for the purpose of paragraph (c) to the
extent to which the act or omission was caused or contributed to by any
failure by a Relevant Party or any other person who provides
A-II-23
<PAGE>
services in respect of the Trust to fulfil its obligations relating to
the Trust or by any other act or omission of a Relevant Party or any
other such person regardless of whether or not the act or omission is
purported to be done on behalf of the Issuer Trustee.
(e) No attorney, agent, receiver or receiver and manager appointed in
accordance with a Transaction Document has authority to act on behalf of
the Issuer Trustee in a way which exposes the Issuer Trustee to any
liability in excess of that contemplated by this CONDITION 12, and no act
or omission of any such person will be considered fraud, negligence or
breach of trust of the Issuer Trustee for the purpose of paragraph (c).
(f) The Issuer Trustee is not obliged to do anything or refrain from doing
anything under or in connection with these Class A Note Conditions or any
other Transaction Document (including incur a liability) unless the
Issuer Trustee's liability is limited in the same manner as set out in
this CONDITION 12.
13 GOVERNING LAW
The Notes and the Transaction Documents (other than the Underwriting
Agreement) are governed by, and will be construed in accordance with, the laws
of the Australian Capital Territory of the Commonwealth of Australia. Each of
the Issuer Trustee and the Global Trust Manager has in the Note Trust Deed
irrevocably agreed for the benefit of the Note Trustee and the Class A
Noteholders that the courts of the Australian Capital Territory are to have
non-exclusive jurisdiction to settle any disputes which may arise out of or in
connection with the Note Trust Deed and the Class A Notes.
AGENTS
<TABLE>
<S> <C>
PRINCIPAL PAYING AGENT AND
CALCULATION AGENT: The Bank of New York, New York Branch
101 Barclay Street, 21W
New York, New York 10286
CLASS A NOTE REGISTRAR: The Bank of New York, New York Branch
101 Barclay Street, 21W
New York, New York 10286
or
c/o The Bank of New York, London Branch
48th Floor
One Canada Square
London E14 5AL
The Bank of New York, New York Branch
101 Barclay Street, 21W
New York, New York 10286
PAYING AGENT: The Bank of New York, London Branch
48th Floor
One Canada Square
London E14 5AL
LUXEMBOURG PAYING AGENT: Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
L-2955 Luxembourg
</TABLE>
A-II-24
<PAGE>
PART B: GENERAL INFORMATION REGARDING THE HOMESIDE SECURITIZATION PROGRAM
AND THE SERIES OF NOTES THAT MAY BE ISSUED THEREUNDER
HOMESIDE MORTGAGE SECURITIES, INC.
DEPOSITOR
HOMESIDE GLOBAL MBS MANAGER, INC.
TRUST MANAGER
MORTGAGED BACKED NOTES
ISSUABLE IN SERIES BY SEPARATE TRUSTS
------------------------
<TABLE>
<S> <C>
EACH SERIES OF NOTES: EACH TRUST:
- will consist of one or more classes of - will own a pool of mortgage loans secured
mortgage backed notes secured by the by mortgages on residential properties
assets of a trust; located in Australia; and
- will receive principal and interest only - may have rights to various forms of credit
from payments collected on the assets of enhancement described in part A or part B
the related trust; and of this prospectus.
- will not be insured or guaranteed by any
government agency or instrumentality and
will be obligations of the entity acting
as issuer trustee only in its capacity as
trustee of the related trust.
</TABLE>
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
FOR PART B
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Important Notice About Information Presented in this
Prospectus................................................ B-1
HomeSide Securitization Program............................. B-2
National Australia Bank Limited............................. B-2
The Depositor............................................... B-3
The Trust Manager........................................... B-3
The Issuer Trustee.......................................... B-3
The Servicer................................................ B-3
The Trusts.................................................. B-3
Establishing the Trusts................................... B-3
The Assets of the Trusts.................................... B-4
Assets of the Trusts...................................... B-4
The Mortgage Assets....................................... B-4
The Seller.................................................. B-5
Transfer and Assignment of the Mortgage Loans............. B-5
Representations, Warranties and Eligibility Criteria...... B-5
The Seller's Representations.............................. B-5
Breach of Representations and Warranties.................. B-6
The Seller's Residential Loan Program....................... B-7
Australian Residential Mortgage Loans Generally........... B-7
The Mortgage Loans........................................ B-7
Origination............................................... B-8
Underwriting Process...................................... B-9
Features and Options; Loan Types.......................... B-13
Redraw Mortgage Loans..................................... B-14
Description of the Notes.................................... B-14
General................................................... B-14
Distributions............................................. B-14
Distributions of Interest................................. B-15
Distributions of Principal................................ B-15
Form of the Notes......................................... B-15
Definitive Notes............................................ B-20
Withholding or Tax Deductions............................. B-20
Redemption of the Notes for Taxation or Other Reasons..... B-20
Repayment of the Notes upon an Event of Default under the
Master Security Trust Deed.............................. B-21
Optional Repurchase of the Mortgage loans................. B-21
Termination of the Trust.................................. B-21
Prescription.............................................. B-22
Voting and Consent of Noteholders......................... B-22
Reports to Noteholders.................................... B-22
Liquidity Facility........................................ B-24
</TABLE>
B-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Redraw Facility........................................... B-24
Credit Enhancement.......................................... B-24
Prepayment and Yield Considerations......................... B-24
General................................................... B-24
Prepayments............................................... B-24
Rate of Payment........................................... B-25
Powers, Duties and Liabilities under the Transaction
Documents................................................. B-25
The Issuer Trustee........................................ B-25
The Trust Manager......................................... B-27
The Note Trustee.......................................... B-29
The Security Trustee...................................... B-30
Description of Transaction Documents........................ B-31
Trust Accounts............................................ B-31
Pre-funding Account....................................... B-32
Accumulation of Principal; Additional Notes............... B-32
Interest Rate Swaps....................................... B-32
Currency Swaps............................................ B-33
The Master Security Trust Deed............................ B-33
The Servicing Agreement................................... B-38
Modifications and Amendments.............................. B-42
Use of Proceeds............................................. B-43
Legal Aspects of the Mortgage Loans......................... B-43
General................................................... B-43
Australia................................................. B-44
Types of Security......................................... B-44
Taking Security over Land................................. B-45
Enforcement of Registered Mortgages......................... B-46
Enforcement generally..................................... B-46
Penalties and prohibited fees............................. B-47
Bankruptcy................................................ B-48
Environmental considerations.............................. B-48
Tax treatment of interest on Australian mortgage loans.... B-49
The Seller as Mortgagee................................... B-49
Insolvency Considerations................................. B-49
Australian Consumer Credit Code............................. B-49
Material United States Federal Income Tax Consequences...... B-51
Overview.................................................. B-51
General................................................... B-52
Interest Income on the Notes.............................. B-52
Sale of Notes............................................. B-52
Market Discount........................................... B-53
</TABLE>
B-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Premium................................................... B-54
Backup Withholding Taxes.................................. B-54
Tax Consequences to Foreign Noteholders................... B-54
Foreign Tax Credit........................................ B-55
Material Australian Tax Consequences........................ B-55
Australian Taxation....................................... B-55
Other Taxes............................................... B-58
Tax Reform Proposals...................................... B-59
ERISA Considerations........................................ B-59
Enforcement of Foreign Judgments in Australia............... B-61
Legal Investment Considerations............................. B-61
Where You Can Find More Information......................... B-62
Ratings of the Notes........................................ B-62
Plan of Distribution........................................ B-62
Legal Matters............................................... B-63
Glossary.................................................. B-G-1
Appendix B: Global Clearance and Settlement Procedures.... B-I-1
</TABLE>
B-iii
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS PROSPECTUS
We describe the notes in two separate parts: (1) part A, which describes the
specific terms of your series of notes and (2) part B, which provides general
information regarding the Homeside Securitization Program, some of which, in
limited instances, may not apply to the trust which has issued your series of
notes described in part A.
Neither part A nor part B contains all of the information included in the
registration statement. The registration statement also includes copies of the
various agreements referred to in this prospectus. You may obtain copies of
these documents for review. See "Where You Can Find More Information" in part B
of this prospectus.
Part A of this prospectus includes, among other things, the following
information regarding your series of notes:
- the principal amount, interest rate, authorized denominations and maturity
date of each class of notes of that series offered under this prospectus;
- the method for calculating the amount of interest and principal to be paid
to each class of notes offered under this prospectus, and the timing and
order of priority of such interest and principal payments for each class
of notes of that series;
- information concerning the pool of mortgage loans and other assets of the
trust;
- information regarding the risk factors relating to the notes of that
series offered under this prospectus; and
- the particulars of the plan of distribution for each class of notes of
that series offered under this prospectus.
We include cross-references in this prospectus to captions where further
related discussions appear. The preceding Table of Contents and the Table of
Contents included in part A of this prospectus provide the pages on which these
captions are located. YOU CAN FIND DEFINITIONS OF THE CAPITALIZED TERMS USED IN
THIS PART B OF THE PROSPECTUS UNDER THE CAPTION "GLOSSARY" AT THE END OF THIS
PROSPECTUS.
------------------------
B-1
<PAGE>
HOMESIDE SECURITIZATION PROGRAM
The HomeSide Securitization Program (the "Program") was established by
HomeSide Global MBS Manager, Inc. (the "Trust Manager") to execute
securitizations from time to time of:
- registered first ranking mortgage loans secured by one- to four-family
owner-occupied and non-owner occupied residential properties located in
the Commonwealth of Australia and originated by the National Australia
Bank Limited (the indirect parent of the Trust Manager and the Depositor
referred to below); and
- first lien mortgage loans secured by one- to four-family owner-occupied
and non-owner occupied residential properties located in the United States
and originated or acquired by HomeSide Lending, Inc. (an affiliate of the
Depositor and the Trust Manager).
Each securitization will involve the creation of a separate trust by the
Trust Manager and the deposit therewith of the related mortgage loans by
HomeSide Mortgage Securities, Inc. (the "Depositor"). Each trust will be
separate and distinct from any other trust under the Program, and the assets of
each trust will not be available to meet the liabilities of any other trust.
THIS PROSPECTUS DESCRIBES SECURITIZATIONS SOLELY IN RESPECT OF THE
AUSTRALIAN MORTGAGE LOANS.
NATIONAL AUSTRALIA BANK LIMITED
Together with its subsidiaries, National Australia Bank Limited
(collectively, "the National") is an international financial services group
providing a comprehensive and integrated range of financial products and
services across four continents and 15 countries. Globally, as at September 30,
2000, the National had:
- total balance sheet assets of A$344 billion;
- total deposits and other borrowings of A$185,097 million;
- total regulatory capital of A$22,145 million;
- over A$60 billion in assets under management and administration;
- A$285 billion in assets under custody and administration; and
- more than 12 million customers.
The National is the largest financial services institution listed on the
Australian Stock Exchange and was the 22nd largest financial services company in
the world by profitability (Fortune 500, July 2000).
The National's operating profit after tax and before abnormals for the
twelve months ended September 30, 2000 was A$3,377 million.
From an operation based almost entirely in Australia in 1986, the National
now has 46.0% of its assets outside Australia, which generated 48.5% of the
National's operating revenue and 47.3% of the National's operating profit after
tax and before abnormal items for the year ended September 30, 2000.
On June 30, 2000 the National completed the acquisition of MLC, an
Australian funds management and insurance group, for A$4.6 billion in cash. The
National is now the largest manager of retail funds in Australia and has
substantial insurance activities.
This diversification in income streams has led to an increase in the
National's other operating income and reduced the reliance on net interest
income. As a result, 50.6% of the National's operating income for the year ended
September 30, 2000, was derived from non-interest sources.
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As of September 30, 2000, the National has a long term credit rating of AA
from each of Standard & Poor's Rating Group ("S&P") and Fitch, Inc ("Fitch") and
Aa3 from Moody's Investor Service, Inc. ("Moody's") and a short term credit
rating of A1+ from S&P, F1+ from Fitch and P-1 from Moody's.
The National currently files periodic reports with the SEC pursuant to the
Exchange Act. The 2000 Annual Report of the National on Form 20-F was filed with
the SEC on November 14, 2000. The National will provide without charge to each
person to whom this prospectus is delivered, on the request of any such person,
a copy of the Form 20-F referred to above. Written requests should be directed
to: National Australia Bank Limited, Level 24, 500 Bourke Street, Melbourne,
Victoria, 3000.
The Australian banking activities of the National come under the regulatory
supervision of the Australian Prudential Regulation Authority.
All the mortgage loans will have been originated by the National.
THE DEPOSITOR
HomeSide Mortgage Securities, Inc. ("HomeSide Mortgage" or the "Depositor")
was incorporated in July 1989 in the state of Delaware. HomeSide Mortgage is a
wholly owned indirect subsidiary of the National.
THE TRUST MANAGER
The Trust Manager was incorporated in June 2000 in the State of Delaware and
is a wholly owned indirect subsidiary of the National. The Trust Manager has the
power to appoint a third party (including an affiliate of the Trust Manager) to
perform certain of the functions imposed on the Trust Manager under the Master
Trust Deed and the relevant supplemental deed. The Trust Manager will remain
liable for the performance of all of the management obligations notwithstanding
any such appointment.
THE ISSUER TRUSTEE
Part A of this prospectus identifies the entity that will serve as issuer
trustee. The issuer trustee with respect to each series will act as trustee of
the related trust and, in such capacity, as issuer of the notes for such series
under the terms set out in the transaction documents for that series.
THE SERVICER
The National, through its division HomeSide (in this capacity, we refer to
the National as the "Servicer") will act as Servicer of the mortgage loans. The
Servicer will be responsible for the servicing and administration of the
mortgage loans as described in parts A and B of this prospectus. The Servicer or
any successor servicer may contract with sub-servicers or third parties, to
perform all or a portion of the servicing functions on behalf of the Servicer.
See "Servicing--Servicing of Mortgage Loans" in part A of this prospectus and
"Description of Transaction Documents--The "Servicing Agreement" in part B of
this prospectus.
THE TRUSTS
ESTABLISHING THE TRUSTS
Each trust established under the Program will be a common law trust. The
general terms of each trust established under the Program will be as set out in
the Master Trust Deed and the specific terms will be provided by a supplemental
deed relating to that trust. Part A of this
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prospectus includes a detailed description of the supplemental deed pursuant to
which the notes of a particular series will be issued.
Each supplemental deed relating to a trust will, among other things:
- specify the terms of the notes; and
- establish the cash flow allocation.
THE ASSETS OF THE TRUSTS
ASSETS OF THE TRUSTS
The assets of the trust are described in detail in part A of this
prospectus. Generally, under the Program, the assets of a trust may include any
or all of the following:
- a pool of mortgage loans, mortgages and relevant collateral securities
including:
- principal payments paid or payable on the mortgage loans at any time
after the applicable cut-off date;
- interest and fee payments paid or payable on the mortgage loans from
the applicable cut-off date;
- rights under any lenders' mortgage insurance policies relating to the
mortgage loans;
- amounts on deposit in the accounts established in connection with the
creation of the trust and the issuance of the related series of notes,
including the related collections account, and any Authorized
Investments in which these amounts are invested;
- the issuer trustee's rights under the transaction documents for that
trust; and
- rights under any form of applicable credit enhancement.
The actual mortgage loans to be included in the trust are described in detail in
part A of this prospectus and Appendix A-I thereto.
The notes will be obligations of the issuer trustee only in its capacity as
trustee of the related trust and in no other capacity. The assets of the trust
described in part A will serve as collateral only for that series of notes and
any other obligations of the issuer trustee owed to secured creditors of that
trust. Holders of a series of notes may only proceed against the collateral
securing that series of notes in the case of a default on that series of notes
and may not proceed against any other assets of the National, HomeSide Mortgage
or any of their affiliates or the assets of any other trust.
THE MORTGAGE ASSETS
The National will originate the mortgage loans in the ordinary course of its
business. Each mortgage loan will be one of the types of products described in
"The Seller's Residential Loan Program" in part B of this prospectus or another
type of product described in part A of this prospectus. Each mortgage loan may
have some or all of the features and options described in the "The Seller's
Residential Loan Program" in part B of this prospectus. Part A of this
prospectus describes any additional features and options of the mortgage loans.
Part A of this prospectus provides specific information with respect to the
mortgage loans that are assets of the related trust as of the cut-off date
including, among other things, and to the extent relevant:
- the aggregate outstanding principal balance of the mortgage loans included
in the assets of the related trust;
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- the range and average outstanding principal balance of the mortgage loans;
- the range and weighted average interest rate on the mortgage loans, and,
in the case of variable rate loans, the range and weighted average of the
current interest rates, if any;
- the percentage by outstanding principal balance as of the cut-off date of
mortgage loans that accrue interest at variable or fixed interest rates;
- the weighted average original and remaining term-to-stated maturity of the
mortgage loans;
- the year of origination of the mortgage loans;
- the range and weighted average of loan-to-value ratios for the mortgage
loans; and
- the geographic distribution of any mortgaged properties securing the
mortgage loans.
THE SELLER
The mortgage loans included in the assets of a trust under the Program will
have been originated by the National (in this capacity, we refer to the National
as the "Seller").
TRANSFER AND ASSIGNMENT OF THE MORTGAGE LOANS
On the closing date for a trust, the Seller will equitably assign the
mortgage loans and related rights to the Depositor who will in turn equitably
assign such loans and rights to the issuer trustee for the applicable trust.
After the latter equitable assignment, the issuer trustee will be entitled to
receive collections on the mortgage loans. If a Title Perfection Event occurs,
the issuer trustee must use the irrevocable power of attorney granted by the
Seller to take the actions necessary to protect the issuer trustee's interest
in, and title to the mortgage loans. The Trust Manager, the Depositor, the
Servicer and the Seller will agree to assist the issuer trustee in taking any of
those actions.
REPRESENTATIONS, WARRANTIES AND ELIGIBILITY CRITERIA
The Seller will make representations and warranties to the Depositor with
respect to the mortgage loans equitably assigned by it. The Depositor will in
turn assign such rights and remedies to the issuer trustee. All material
representations and warranties of the Seller are described in this prospectus.
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 as being correct, unless an officer involved in the administration of
the trust has actual notice to the contrary.
THE SELLER'S REPRESENTATIONS
The Seller will represent and warrant to the Depositor (and the Depositor
will assign the benefit of those representations and warranties to the issuer
trustee), among other things, that:
As of the closing date of the applicable trust:
- it is the sole legal and beneficial owner of each mortgage loan, free and
clear of any security interest;
- at the time each mortgage loan and mortgage document was entered into, it
complied in all material respects with all applicable laws; and
- each mortgage loan satisfies the following "eligibility criteria":
- it is due from a Qualifying Debtor, I.E., a borrower who is not dead,
bankrupt, insane or the subject of an Insolvency Event;
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- it is repayable in Australian dollars;
- the term of the related mortgage loan does not exceed 30 years;
- it is freely capable of being dealt with by the Seller as contemplated
by any Initial Sale Agreement and any Initial Offer to Sell;
- each related mortgage loan is secured by a mortgage over land which is
either:
- a first ranking mortgage; or
- a second ranking mortgage where:
- there are two mortgages over the land securing the mortgage
loan and the Seller is the first mortgagee; and
- the first ranking mortgage is also being acquired by the
Depositor;
- the land subject to a mortgage has erected on it a residential dwelling
which is not under construction;
- each mortgage loan is, or will be by the applicable Closing Date,
insured under a policy of lender's mortgage insurance;
- no mortgage loan is 31 days or more delinquent as of the relevant
cut-off date;
- no mortgage loan was made to an employee of the Seller or its
affiliates with a concessional rate of interest;
- each mortgage loan is fully drawn at the cut-off date;
- it has a total principal amount outstanding of no more than A$500,000
as at the cut-off date;
- it is scheduled to mature at least 1 year prior to the final maturity
date of the notes; and
- 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; and
- it is lawfully entitled to assign the mortgage loan according to the terms
of the Initial Offer to Sell.
BREACH OF REPRESENTATIONS AND WARRANTIES
If the Seller, the Depositor or the issuer trustee becomes aware during the
120 day period after the closing date that a representation or warranty made by
the Seller relating to any mortgage loan or mortgage is materially incorrect, it
must notify the other parties and the rating agencies within 5 business days of
becoming aware. If the Seller gives or receives this notice no later than 5
business days prior to the 120th day after the closing date for the related
trust and if the breach is not waived or remedied to the satisfaction of the
issuer trustee within that period of 5 business days or any longer period that
the issuer trustee permits, then without any action being required by either
party, the Seller shall repurchase the affected mortgage loan and mortgage from
the Depositor (and the Depositor must repurchase the affected mortgage loan and
mortgage from the Issuer Trustee) for an amount generally equal to its unpaid
principal balance at the date of repurchase plus any unpaid accrued interest
thereon.
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THE SELLER'S RESIDENTIAL LOAN PROGRAM
AUSTRALIAN RESIDENTIAL MORTGAGE LOANS GENERALLY
Australia has a highly competitive market for residential mortgage loans
with a diversity of lenders. The largest lenders are banks, with smaller market
shares held by mortgage managers, building societies and other lenders.
Many lenders offer a diversity of product types. Most common are loans with
a variable interest rate set either at the discretion of the lender or by
reference to a market benchmark. Fixed interest rate loans are also available.
These are not amortizing loans that have a fixed interest rate for the life of
the loan. Some fixed rate loans amortize over a 25- or 30-year life, but have a
fixed rate that is set for a shorter period (generally not more than 10 years)
and then may either reset for a further equivalent period each time the fixed
rate period expires or reset to a variable interest rate. Fixed rate interest
only loans are also offered, generally with a term of not more than 10 years.
Many variable rate loans offer the borrower a variety of features, including
the ability to redraw prepaid funds, and the ability to switch to and from a
fixed interest rate from time to time. In many instances the interest rate is
fixed at an introductory or "honeymoon" rate for an initial period (often
1 year) and then reverts to the current variable rate.
Under most loans, the lender has full recourse to the borrower, and has a
claim against the borrower as an unsecured creditor if the proceeds of sale of
the property do not cover the full amount owing in respect of the loan. Lenders
make extensive use of mortgage insurance for loans with high loan to value
ratios.
THE MORTGAGE LOANS
The Seller's residential loan products have a wide variety of payment
characteristics and are within the broad classification of one- to four-family
mortgage loans. The loans will have various maturities, interest rates, and
amortization schedules, among other characteristics, and will be described in
detail in part A of this prospectus.
All the mortgage loans that are securitized under the Program will be
secured by registered first ranking mortgages on one- to four- owner-occupied or
non-owner occupied residential properties located in the Commonwealth of
Australia. The mortgaged properties may consist of detached individual units,
condominiums, townhouses, row houses, duplexes and other attached dwelling
units. If specified in part A of this prospectus, the mortgage loans may be
secured by mortgages creating a lien on a borrower's leasehold interest in real
property. See "Legal Aspects of the Mortgage Loans" in this part B of this
prospectus.
Mortgage loans originated by the Seller may bear interest at (1) a rate per
annum that is subject to periodic adjustment, as frequently as daily, as
announced by the Seller from time to time; (2) a fixed rate per annum for a
specified interval (generally 2, 3, 4, 5 or ten years) which then resets to new
fixed rates for successive intervals; or (3) an initial fixed rate per annum
which, after a specified period, may convert to a rate described in (1) above.
As described below, the scheduled payment due on certain mortgage loans is
calculated at origination for the first year of the loan and is generally
subject to annual adjustment thereafter. As a result, since the rate at which
interest accrues may vary more frequently than adjustments to the scheduled
payment, the amount of interest accrued on a loan may exceed the required
scheduled payment. The resulting shortfall will be added to the outstanding
principal balance of the loan, thus causing the loan to experience negative
amortization. There is no limit to the extent to which a loan can negatively
amortize; however, the annual adjustments to the scheduled payments of the
mortgage loan will have the effect of reducing the interest shortfall caused by
negative amortization.
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As a result of negative amortization, the final payment of any mortgage loan may
be significantly larger than its previous scheduled payments.
Scheduled payments may be calculated on a level debt service basis to fully
amortize the loan over its term or may be calculated on the basis of an
amortization schedule that is longer (or shorter) than the loan term. To the
extent an amortization schedule for a loan exceeds the loan's actual term, the
borrower may be required to make a "balloon" payment at maturity (which may be
significantly larger than a borrower's scheduled payments). Under the payment
terms of certain loans ("interest-only loans") no principal is due until the
maturity of the loan.
Proceeds of the mortgage loans may be used by borrowers to acquire the
related mortgaged property or may be used to refinance existing mortgage loans.
Certain mortgage loans may have been the subject of refinancing for the purpose
of removing equity. See "--Features and Options; Loan Types" below. Prepayments
of principal may be subject to a prepayment fee (which may be fixed or which may
decline over time). Certain loans may have due on sale clauses. Others may be
assumable by persons meeting the Seller's then applicable criteria.
In certain significant respects, the mortgage loans differ from mortgage
loans offered by other lenders in other jurisdictions. Some of the principal
differences are:
- VARIABLE RATE LOANS: The Seller's variable rate loans are not tied to an
objective index (E.G., LIBOR), but rather are determined from time to time
by the Seller in its own judgment. See "Risk Factors" in part A of this
prospectus.
- REDRAWS: As described below under "--Redraw Mortgage Loans and the Redraw
Facility," borrowers under certain mortgage loans are able to "Redraw" (or
request additional advances) on their mortgage loans.
- FIXED MORTGAGE RATES: The Seller does not originate "fixed rate" principal
and interest loans in the traditional sense (I.E., mortgage loans that are
issued with a single, specified rate for the term of the loan). Instead,
as described above, the Seller originates loans that bear a fixed rate of
interest for a specified period, but which may then reset for successive
periods. Therefore, the interest rate for a "fixed" rate loan may decline
or increase over time.
- SCHEDULED PAYMENTS: Required weekly, bi-weekly or monthly scheduled
payments of principal and/or interest (collectively, "Scheduled Payments")
on certain mortgage loans are not calculated on a level payment basis
giving effect to the loan's interest rate and term, but rather are
calculated on the basis of a "Reference Rate" described below under
"--Features and Options; Loan Types." In certain cases, the Scheduled
Payments are subject to increase on an annual basis in connection with the
borrower's yearly mortgage review.
ORIGINATION
The Seller originates Australian residential mortgage loans in two ways:
- through its retail network; and
- through approved mortgage brokers.
The following discussion summarizes the underwriting standards applicable to
the mortgage loans and describes certain key features and characteristics of the
loans. These standards, features and characteristics are under regular review
and may change from time to time as a result of business, legislative or
regulatory changes.
Where circumstances warrant, giving overall consideration of the strength of
the application, a mortgage loan may be made with high level approval where
certain elements are outside the Seller's normal underwriting criteria.
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UNDERWRITING PROCESS
MORTGAGE LOANS ORIGINATED THROUGH THE NATIONAL'S RETAIL NETWORK IN AUSTRALIA
Mortgage loans produced through the National's retail network are considered
for origination on the basis of a rate internally calculated by the National
designed to determine an applicant's capacity to repay a loan. The rate is set
at a value that best estimates an average interest rate applicable to mortgage
loans in the foreseeable future. Such rate, however, bears no relationship to
the actual interest rate charged on the mortgage loan. Regardless of the
determined rate, applicants must demonstrate the capacity to repay the mortgage
loan and satisfy all other commitments including general living expenses.
Scheduled Payments are calculated on the basis of the current interest rate. As
a general rule, but which is subject to change from time to time, Scheduled
Payments cannot exceed 25% of the applicant's gross monthly income, although
higher payments may be allowed for higher quality and low risk applicants.
Reliance is not placed on irregular income (such as over-time) to meet fixed
commitments.
Mortgage loan proceeds may only be applied for owner occupied, investment or
personal purposes, and for the purchase, construction or renovation of a
residential or investment property. Construction loans are not securitized until
construction is completed. Personal debts may be consolidated into a mortgage
loan provided that a first registered mortgage is held over the borrower's
principal residence. Providing a sound history (minimum 1 year) is held with
another financial institution, the National will consider refinancing debts.
The minimum loan amount available is ten thousand dollars (A$10,000). There
is no maximum amount (subject to security and capacity to repay). For mortgage
loans, the National lends to a maximum of 95% of the market value of the
property. Lender's mortgage insurance is mandatory for all loans where the
loan-to-value ratio exceeds 80%. The insurance provides 100% coverage against
loss on the entire loan. The minimum term for a mortgage loan is 1 year. The
maximum term is 25 years.
The National determines the market value of the property provided as
security by reference to the current realizable value of the property on a sale
basis (where both the buyer and Seller would be willing and legitimate
participants). A margin is deducted as a contingency against realization under
adverse conditions.
An external appraisal is not considered mandatory:
- when the value of the property is confirmed by sighting a contract of sale
no more than 5 years old;
- where the property is in the State of New South Wales and the total
borrowings do not exceed four hundred thousand dollars (A$400,000), or
- if the property is not in the State of New South Wales and the total
borrowings do not exceed three hundred thousand dollars (A$300,000).
Appraisals by certain staff of the National are completed when a customer
does not have 20% equity in the property, or if the property has not been valued
in the past 5 years.
If any doubt exists as to the market value of a property a physical
inspection is to be completed by the National. For Building in the Course of
Erection ("BICOE") loans, a final internal inspection is mandatory.
MORTGAGE LOANS ORIGINATED THROUGH APPROVED BROKERS
The National, trading as HomeSide Lending ("HomeSide Lending"), also
originates mortgage loans through approved mortgage brokers. In underwriting the
mortgage loans, HomeSide Lending
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utilizes an internally calculated rate in the same manner as the National
described above. Again, the rate is set at a value that best estimates an
average interest rate applicable to mortgage loans in the foreseeable future and
bears no relationship to the actual interest rate charged on the mortgage loan.
As a general rule, but subject to change from time to time, the Scheduled
Payments (annualized) may not exceed 25% of the applicant's gross monthly
income, although higher payments may be allowed for higher quality and low risk
applicants. Reliance is not placed on irregular income (such as over-time or
higher duties) to meet fixed commitments.
Mortgage loan proceeds may only be applied for owner occupied or investment
purposes. A mortgage loan may be approved for the purchase, construction or
renovation of a residential or investment property. Personal debts may be
consolidated into a mortgage loan provided that a first registered mortgage is
held over the borrower's principal residence. Providing a sound history (minimum
6 months) is held with another financial institution, HomeSide Lending is
willing to look at refinancing debts. Any Redraw provided in respect of such a
mortgage loan may, however, be used for business or other purposes.
For mortgage loans, HomeSide Lending lends to a maximum of 95% of the market
value of the property. Lender's mortgage insurance is obtained for all loans
where the loan to valuation exceeds 80%. The insurance provides 100% coverage
against loss on the entire loan. The minimum term for a mortgage loan is
1 year. The maximum term for a mortgage loan is 25 years.
HomeSide Lending takes a first registered mortgage over suitable residential
property as security for its mortgage loans.
HomeSide Lending determines the market value of property provided as
security by reference to the current realizable value of the property on a sale
basis (where both the buyer and Seller would be willing and legitimate
participants). A margin is deducted as a contingency against realization under
adverse conditions.
An external appraisal is not considered mandatory:
- when the value of the property is confirmed by sighting a contract of sale
nor more than 5 years old;
- where the property is in the State of New South Wales and the total
borrowings do not exceed four hundred thousand dollars (A$400,000), or
- if the property is not in the State of New South Wales and the total
borrowings do not exceed three hundred thousand dollars (A$300,000).
External appraisals are completed when a customer does not have 20% equity
in the property, if the property has not been valued in the past 5 years, or if
doubt exists as to the market value of a property.
In addition, if any doubt exists as to the market value of a property a
physical inspection is to be completed by HomeSide Lending.
CREDIT AND LENDING PROCEDURES
The following is a summary description of the credit and lending procedures
adopted by the National and HomeSide Lending.
A bank officer is the intermediary for a National home loan customer at all
times until the loan is underwritten. The bank officer initially reviews with
the customer his or her borrowing needs and credit situation and recommends the
most appropriate loan product. A program called "NABCalc" is used which
calculates the customer's repayment schedule and indicates how much the customer
can borrow. An application form is then completed and the information is input
into a decision tool
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called "AutoLOC." HomeSide Lending utilizes the same credit and lending
processes adopted by the National, including the use of the decision tool
AutoLOC, for those loans originated through the brokers.
The decision tool AutoLOC assists in the application process by retrieving
existing National customers' data and account performance from relevant source
systems, then obtaining credit bureau data from the relevant credit reference
agency.
The AutoLOC decision process then utilizes the above and applies business
rules, via logic trees, to each of the application's characteristics. Example
business rules include a minimum required application score and the application
of current business/lending policy. Each application characteristic is allocated
a score. These scores are then totalled to arrive at an overall application
score.
The AutoLOC process will then return one of three results: Accept, Decline
or Refer. If a decline or refer result is obtained, these applications may be
referred to a specialist employee who is afforded sufficient review authority to
review and, where appropriate, override the AutoLOC decision.
All National home loan applications are subject to underwriting criteria
guidelines that are used in assessing home loans. The criteria are intended as a
guide and are used in determining the suitability of loan applicants. HomeSide
Lending utilizes the same lending and assessment processes as the National.
Criteria guidelines include:
- applicant be a minimum of 18 years of age;
- legal capacity of the applicant of entering into the loan contract;
- employment/eligible income sources;
- satisfactory credit checks;
- satisfactory savings history/loan repayment history;
- sound asset/liability position; and
- capacity to repay the loan.
It is a requirement that an applicant's income be verified by three
consecutive pay slips, recent tax returns or the most recent financial
statements for self-employed applicants.
All bank officers involved in assessing/approving mortgage loans have ready
access to the National's lending manuals. Any significant change or review of
underwriting policy is updated immediately and communicated to such officers via
a credit bulletin. Other changes or amendments are forwarded on a periodic
basis.
If lender's mortgage insurance is required, the bank officer makes all
arrangements for lender's mortgage insurance.
If the loan is declined, the bank officer has the opportunity to have the
application reviewed a second time by credit controllers. Credit controllers are
experienced lending officers who have been given authority to review and approve
applications that may be outside bank policy. If the loan is still declined, the
National formally advises the customer in writing.
If the loan is approved (by either AutoLOC or the credit controllers), the
application is then transferred for further processing to one of the National's
centralized lending services center. The lending services center is responsible
for preparing the appropriate loan documentation, checking that the security is
in order, administering settlement, and drawing down of the loans. Once an
application is received at the lending services center. A title search is
ordered and valuation requested if necessary.
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Loan documentation is then prepared and a copy is forwarded to the customer
and a copy to the appropriate bank officers. The contracts are prepared using a
system called "Docprep" which allows the customer's personal data to be entered
but prohibits the bank officer from further modifying the contract from terms
previously approved by the lending services centre.
The bank officers supervise the loan signing and closing procedures for
which customers are encouraged to seek independent legal advice prior to
closing. Once all documentation is signed, it is returned to the lending
services center for preparations of the file for settlement.
For HomeSide Lending, the regionalized production team is responsible for
preparing the appropriate documents, checking that the security is in order,
drawing down of the loans, continued loan maintenance and account control. A
valuation is requested if necessary. The loan documentation is then prepared and
a copy is forwarded to the customer for signing. Once the loan documentation is
signed and returned, the regionalized production team instructs an external law
firm to conduct a title search (if the production team has not already done so)
and to prepare the mortgage documentation.
After settlement has been effected the loan is drawn down and fees charged.
All the loan documentation is then filed in a central file room and the title is
sent away for stamping and registration. Once returned from the titles office,
it too is filed centrally.
Home loans may be approved up to 95% of the loan-to-valuation ratio. Lenders
mortgage insurance is mandatory for home loans where the loan-to-valuation ratio
exceeds 80%. Where the loan-to-valuation ratio exceeds 80% it is mandatory that
a physical internal inspection or a valuation of the security be held. An "open"
policy has been negotiated with the National's preferred insurer, GE Capital
Mortgage Insurance Corporation (Australia) Pty Ltd ("GEMICO"), a subsidiary of
GE Capital, which provides the National with the ability to write lenders
mortgage insurance to 90% or less without prior approval. The "open' policy
agreement, held with GEMICO, is subject to the following conditions:
- the home loan must be approved by the National's credit scoring system,
AutoLOC;
- the loan-to-value ratio must be 90% or less;
- loan amount is less than or equal to A$500,000 for all areas; and
- the security must be a registered mortgage held over a suitable
residential property (less than 10 hectares) located in:
- a town where the National is represented;
- a town with a population of at least 7,500; or
- a metropolitan area of a capital city.
Although GEMICO is the National's preferred insurer, the National will
accept the following insurers should a customer insist on using them:
- PMI Mortgage Insurers;
- Royal & Sun Alliance Insurance Australia Limited; or
- CGU Lenders Mortgage Insurance.
Applications with loan-to-value ratios in excess of 90% are forwarded to
GEMICO for approval on a case by case basis.
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FEATURES AND OPTIONS; LOAN TYPES
Depending on the loan type, Scheduled Payments can consist of either
principal and interest or interest only. Interest on the mortgage loans is
calculated on a daily "simple" interest basis, and is payable in advance or in
arrears. Scheduled Payments on the mortgage loans are made in arrears on a
weekly, bi-weekly or monthly basis. Interest may be paid up to annually in
advance on interest-only mortgage loans.
For variable rate loans, prepayments may be made at any time without any
prepayment penalty.
For fixed rate loans, a prepayment penalty is generally charged to the
borrower where the full amount of the fixed rate loan is prepaid but may be
charged to the borrower in other circumstances.
Unlike conventional Australian mortgage loans (such as HomeSide Lending's
loans), Scheduled Payments for many of the National's variable rate mortgage
loans are calculated on the basis of a Reference Rate. The Reference Rate is not
the per annum interest rate applicable to the loan, but is a rate designed to
produce Scheduled Payments that reflect the borrower's preference and capacity
to pay the loan. On each anniversary of the loan, Scheduled Payments are
generally increased by the difference between the prevailing loan interest rate
and the Reference Rate, provided the loan rate is higher than the Reference
Rate. For example, if on the first anniversary of a mortgage loan, its interest
rate is 10% per annum and the Reference Rate is 8% per annum, then Scheduled
Payments would increase by two percent. Thus, if the initial Scheduled Payment
is A$800 per month, then the payment would increase to A$816 per month. If the
loan interest rate is equal to or below the Reference Rate, Scheduled Payments
do not change. Such Reference Rate is agreed to by the National and the borrower
at the time the mortgage loan is entered into and is set at a rate between a
minimum (currently 5%) and the prevailing interest rate.
While interest on the mortgage loan is calculated daily at the prevailing
interest rate, the actual Scheduled Payments do not change with changes to
interest rates. The only change in required Scheduled Payments is as a result of
the annual loan review, which may include a Reference Rate adjustment, or as a
result of a Redraw by the borrower or an agreed loan variation. See "--Redraw
Mortgage Loans and the Redraw Facility" below.
With respect to certain mortgage loans, the security pledged to secure the
mortgage loan may be changed at the customer's request (without the need to
write a new loan or contract). In all cases, the replacement security must be an
approved residential home. Any change in security is at the discretion of the
National or HomeSide Lending.
Certain mortgage loans originated by the National and HomeSide Lending
provide the borrower with the right to convert the variable rate at which
interest accrues to a fixed rate, and visa versa. In certain cases, exercise of
such right is conditional on the payment of a fee. In other cases, the right is
subject to the National's or HomeSide Lending's approval.
Loan Trimmer and 100% Offset are product features that enable deposit
accounts to be linked to certain National and HomeSide Lending mortgage loan
accounts.
Loan Trimmer provides customers with the means to offset interest normally
earned on deposits against the interest payable on certain mortgage loans. No
interest is earned on the deposits. Instead, the interest rate that would have
otherwise applied to the deposit account is used to reduce the interest rate
charged on the mortgage loan.
100% Offset provides customers with the means to offset the balance of
deposit accounts against the balance of certain home loans for interest
calculation purposes. Interest is only charged
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on the amount by which the outstanding principal balance exceeds the balance of
the linked deposit account.
REDRAW MORTGAGE LOANS
Certain variable rate mortgage loans ("Redraw Mortgage Loans") provide the
borrower with the ability to draw additional amounts ("Redraws") under the loan
provided certain criteria are met. In the case of mortgage loans originated by
HomeSide Lending, the aggregate amount that may be advanced (or "Redrawn") at
any time is limited to the difference between the current outstanding principal
balance and the scheduled balance at that time (which, in general terms, will be
equal to the amount of principal prepayments previously made by the borrower).
With respect to mortgage loans originated by the National, the aggregate amount
that may be Redrawn at any time, is limited to the amount by which a "notional
balance" specified for such date exceeds the outstanding principal balance.
Generally, the notional balance for any date is calculated on the basis of a
principal balance schedule that amortizes the loan as if a 10% interest rate
applied over the loan term.
Under each Redraw Mortgage Loan, the Seller has reserved the discretion to
cancel its obligation to provide Redraws. If the right is cancelled, the
borrower is still entitled to request a Redraw, but the Seller is not obligated
to approve the request.
To the extent described in part A of this prospectus, the Seller may be
reimbursed by the applicable trust for any Redraws made by the Seller to the
applicable borrower. If so specified in part A of this prospectus, the trust may
finance any such reimbursement by issuing additional notes, bonds or other
indebtedness or by other means.
DESCRIPTION OF THE NOTES
The specific terms of a series of notes of a trust are described in detail
in part A of this prospectus. This summary describes the general provisions
which may be applicable to notes issued under the Program. The summary is
subject to, and qualified in its entirety by reference to, the terms and
conditions of the notes and the provisions of the transaction documents for the
related trust.
GENERAL
The issuer trustee will issue the notes of a trust on the applicable closing
date pursuant to a direction from the Trust Manager to the issuer trustee to
issue the notes and the terms of the transaction documents. The laws of the
Australian Capital Territory will govern the notes. Two or more classes of notes
may be issued in respect of a trust which differ as to the timing, sequential
order, priority of payment, interest rate or amount of distributions of
principal or interest or both or the jurisdiction in which these classes of
notes may be offered. Not all classes of notes issued in respect of a trust may
be offered under this prospectus, but rather may be offered through one or more
non-registered offerings outside the United States or private placements.
DISTRIBUTIONS
Distributions on the notes of a trust will be made on each payment date as
specified in part A of this prospectus. Payment dates on notes issued under the
Program may be monthly, quarterly or at another interval. The timing and
priority of payment, interest rate and amount of or method of determining
payments of interest and principal on each class of notes of a trust is
described in part A of this prospectus. The rights of holders of any class of
notes to receive payments of principal and interest may be senior, subordinate
or equal to the rights of holders of any other class or classes of notes of such
trust, as described in part A of this prospectus.
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DISTRIBUTIONS OF INTEREST
Each class of notes of a trust, other than any classes of principal-only
notes, will accrue interest from the date and at the interest rate described in
part A of this prospectus. Each class of notes of a trust may have a different
interest rate, which in each case may be fixed, variable or adjustable, or any
combination of the foregoing.
DISTRIBUTIONS OF PRINCIPAL
Distributions of principal will be made, and losses on the mortgage loans
will be allocated, on each payment date to the holders of the class or classes
of notes of that trust until the outstanding principal balance of those notes
have been reduced to zero. Distributions of principal with respect to one or
more classes of notes may be made at a rate that is faster, and, in some cases
substantially faster, than the rate at which payments or other collections of
principal are received on the mortgage loans and applied to other classes of
notes in the related trust. Distributions of principal with respect to one or
more classes of notes may not commence until the occurrence of certain events,
including the retirement of one or more other classes of notes of the same
trust, or may be made at a rate that is slower, and, in some cases substantially
slower, than the rate at which payments or other collections of principal are
received on the mortgage loans in the related trust. Distributions of principal
with respect to one or more classes of notes may be made, subject to available
funds, based on a specified principal payment schedule.
FORM OF THE NOTES
Each class of notes of a trust offered under this prospectus will be issued
in minimum denominations specified in part A of this prospectus. All classes of
notes offered under this prospectus will be issued only in book-entry format
through the facilities of The Depository Trust Company, known as DTC.
Accordingly, investors will not have the right to receive physical certificates
evidencing their ownership except in certain limited circumstances. Instead, the
issuer trustee will issue the notes in the form of global certificates, which
will be held by DTC or its nominee or a similar institution. Financial
institutions that are direct or indirect participants in DTC will record
beneficial ownership of a certificate by individual investors in the authorized
denominations.
BOOK-ENTRY REGISTRATION
In the case of book-entry notes, all references to actions by the
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 noteholders will refer to
distributions, notices, reports and statements to DTC or its nominee, as the
registered noteholder, for distribution to owners of the notes in accordance
with DTC's procedures.
Investors may hold their interests in the notes through DTC, in the United
States, Clearstream Luxembourg or Euroclear, in Europe, if they are participants
in those systems, or indirectly through organizations that are participants in
those systems. In the case of Australian dollar notes, interests in notes may
also be held through Austraclear in Australia (by virtue of Austraclear's
participation in Clearstream-Luxembourg and Euroclear) by a member of
Austraclear or through an organization that is a member of Austraclear.
References to Austraclear in this section will only apply if part A of this
prospectus specifies that noteholders may hold their interests through
Austraclear. Cede & Co., as nominee for DTC, will be the registered owner of all
the book-entry notes. Clearstream-Luxembourg and Euroclear will hold omnibus
positions on behalf of their respective participants (including, where
applicable, Austraclear), through customers' securities accounts in Clearstream-
Luxembourg's and Euroclear's names on the books of their respective
depositaries. The
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depositaries in turn will hold the positions in customers' securities accounts
in the depositaries' name on the books of DTC. Citibank, N.A. will act as
depositary for Clearstream-Luxembourg, and Morgan Guaranty Trust Company of New
York will act as depositary for Euroclear.
DTC has advised the Trust Manager that it is:
- a limited-purpose trust company organized under the New York Banking Law;
- a "banking organization" within the meaning of the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered 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 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 Clearstream-Luxembourg
system and participants on the Euroclear system and between participants in
Austraclear will occur in accordance with the relevant rules and operating
procedures. SEE APPENDIX B (GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES) OF
PART B OF THIS PROSPECTUS FOR THE RULES GOVERNING CROSS-MARKET TRANSFERS BETWEEN
PERSONS HOLDING BOOK-ENTRY NOTES DIRECTLY OR INDIRECTLY THROUGH DTC, ON THE ONE
HAND, AND DIRECTLY OR INDIRECTLY THROUGH CLEARSTREAM-LUXEMBOURG PARTICIPANTS OR
EUROCLEAR PARTICIPANTS (INCLUDING, WHERE APPLICABLE, AUSTRACLEAR), ON THE OTHER
HAND.
Purchases of notes held through the DTC system must be made by or through
DTC participants, which will receive a credit for the notes on DTC's records.
The ownership interest of each actual beneficial owner of a note (a "Note
Owner") is in turn to be recorded on the DTC participants' and indirect
participants' records. Note Owners will not receive written confirmation from
DTC of their purchase. However, Note Owners 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 Note Owner entered into the transaction. Transfers of
ownership interests in the notes are to be accomplished by entries made on the
books of DTC participants acting on behalf of the Note Owners. Note Owners will
not receive notes representing their ownership interest in notes unless
definitive instruments are issued in the circumstances set out below. Transfers
of ownership to persons or entities that do not participate in the book-entry
system may be limited due to the lack of physical certificates. In addition,
issuance of the notes in book-entry form may reduce the liquidity of the notes
in the secondary market because some potential investors may be unwilling to
purchase notes for which they cannot obtain physical certificates.
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 Note Owners of the notes; DTC's records reflect only the identity of the
DTC participants to whose accounts the notes are credited, which may or may not
be the actual
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beneficial owners of the 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 Note Owners 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 notes are
credited on the record date, identified in a listing attached to the proxy.
Principal and interest payments on the notes will be made to DTC. DTC's
practice is to credit its participants' accounts on the applicable payment 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 payment 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 Note Owners. These payments will be the responsibility of the
DTC participant and not of DTC, the issuer trustee, the note trustee or the
paying agents. Payment of principal and interest to DTC is the responsibility of
the issuer trustee, disbursement of the payments to DTC participants is the
responsibility of DTC, and disbursement of the payments to Note Owners is the
responsibility of DTC participants and indirect participants.
Reports on each trust will be provided to Cede & Co., as nominee of DTC, and
may be made available by Cede & Co. to the Note Owners upon request, in
accordance with the rules, regulations and procedures creating and affecting DTC
and its participants.
DTC will take any action permitted to be taken by Note Owners at the
direction of one or more financial intermediaries to whose DTC accounts the
book-entry notes are credited. Clearstream-Luxembourg and Euroclear will follow
their rules and procedures in taking any action permitted to be taken by the
holders of the book-entry notes on behalf of its participants. Austraclear will
follow its rules and procedures in giving instructions to Clearstream-Luxembourg
and Euroclear (as a participant in those systems) in relation to the taking of
any such action. The ability of Clearstream-Luxembourg and Euroclear to take
action on behalf of Note Owners will also depend upon the ability of their
depositaries to effect the actions on their behalf through DTC. DTC may take
actions, at the direction of its participants that may conflict with actions
taken by or on behalf of other Note Owners.
DTC may discontinue providing its services as securities depository for the
notes at any time by giving reasonable notice to the paying agents. Under these
circumstances, if a successor securities depository is not obtained, definitive
notes are required to be printed and delivered.
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.
Clearstream-Luxembourg is incorporated under the laws of Luxembourg as a
professional depository. Clearstream-Luxembourg holds securities for its
participating organizations and facilitates the clearance and settlement of
securities transactions between Clearstream-Luxembourg participants through
electronic book-entry changes in accounts of Clearstream-Luxembourg
participants, thereby eliminating the need for physical movement of notes.
Transactions may be settled in Clearstream-Luxembourg in any of 32 currencies,
including U.S. dollars.
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Clearstream-Luxembourg participants are financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, and clearing corporations. Indirect access to Clearstream-Luxembourg
is also available to others, including banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Clearstream-Luxembourg 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.
Austraclear began operations in 1984. Austraclear Limited is an unlisted
public company owned by financial institutions and other market participants and
operates the national central securities depositary to the Australian money
market and registry for semi-government and private sector debt securities
lodged in Austraclear. Through its proprietary Financial Transactions Recording
and Clearance System software, Austraclear electronically clears and settles
most debt securities in the Australian money market and capital market,
excluding those issued by the Australian Commonwealth Government.
The rights and obligations of Austraclear and members of the Austraclear
system are created by contract, as evidenced through the Austraclear Regulations
and Operating Manual, User Guides and instructions and directions contained
within the Austraclear system.
A wide range of eligible debt instruments may be "lodged" in Austraclear
and, if they are in bearer form, immobilized in Austraclear's branch offices in
Sydney and Melbourne, if they are in registered or book-entry form, registered
in the name of Austraclear Limited on the register maintained by the issuer of
those debt instruments. Through the Austraclear system, ownership of these debt
instruments is transferred electronically via book-entry changes without the
need for physical delivery. Real-time settlement of cash transactions is
facilitated by a real-time gross settlement system, operated by Australia's
central bank, the Reserve Bank of Australia, and developed in conjunction with
Austraclear.
Austraclear relies upon both parties to a transaction entering details into
computer terminals that Austraclear then matches before effecting settlement. As
well as facilitating securities
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settlements Austraclear also provides members with the ability to make
high-value funds transfers independent of the need for a corresponding
securities transfer.
As transactions currently processed through Austraclear are ordinarily made
on a real time gross settlement basis, all high-value and time critical
inter-bank payments, including the cash settlement of transactions in debt
securities, will, in the ordinary course, be settled individually on a real time
gross basis through institutions' exchange settlement accounts with the Reserve
Bank of Australia. In such cases a payment will be settled only if the paying
institution has an adequate balance in the exchange settlement account it
maintains with the Reserve Bank of Australia. Once that payment is made, it is
irrevocable in the sense that it is protected from recall by the remitter or
dishonor by the paying institution. This allows for true delivery versus payment
to take place; that is, securities and cash transfers occur simultaneously,
counterparties to the transactions will own either securities or cash and
finality is immediate. If the real-time gross settlement system operated by the
Reserve Bank of Australia is not available for any reason, payments will be
settled on a multilateral not deferred basis in accordance with the Austraclear
Regulations and Operating Manual and the Payment Systems and Netting Act 1998 of
Australia.
Austraclear has recently become a participant in the Euroclear system and
Clearstream-Luxembourg, and consequential changes to the Austraclear Regulations
and Operating Manual have been made. The amendments will provide for members of
the Austraclear system to lodge, take or "uplift" and record transactions in
respect of entitlements to certain Australian dollar bonds, notes, certificates
of deposit and commercial paper issued in the Euromarkets ("Eurosecurities").
Members of Austraclear will acquire a "Euroentitlement," or equitable interest,
in the rights which Austraclear acquires to the relevant Eurosecurities. A
Euroentitlement will be created when a Eurosecurity is lodged in Austraclear by
the member arranging for the transfer of the Eurosecurity to Austraclear's
account with Euroclear or Clearstream-Luxembourg, as applicable. It will not be
possible for members to subscribe for a Eurosecurity through Austraclear. Once a
Euro security is lodged with Austraclear the member can deal with the resulting
Euroentitlement in much the same way as other securities lodged in Austraclear.
Austraclear will establish a separate account in Australia through which it
will receive and disburse payments to members who hold Euroentitlements.
Payments received by Austraclear in respect of Eurosecurities relating to
Euroentitlements will be paid by Austraclear to the relevant member for value on
the same day that payment is made available to Clearstream-Luxembourg and
Euroclear. Euroentitlements will be able to be uplifted from the Austraclear
System by Austraclear transferring the related Eurosecurity to the account of
another participant in Euroclear or Clearstream-Luxembourg, as applicable.
At present the provisions do not provide for a two-way link. The provisions
will only apply to securities issued in the Euromarkets. Accordingly, the new
arrangements will not apply to debt instruments, issued in the Australian
domestic markets.
Distributions on the notes held through Clearstream-Luxembourg or Euroclear
or Austraclear will be credited to the cash accounts of Clearstream-Luxembourg
participants or Euroclear participants (including, where applicable,
Austraclear) 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.
Clearstream-Luxembourg or Euroclear, as the case may be, will take any other
action permitted to be taken by a noteholder on behalf of a
Clearstream-Luxembourg participant or Euroclear participant (including, where
applicable, Austraclear) only in accordance with its rules and procedures, and
depending on its depositary's ability to effect these actions on its behalf
through DTC. Austraclear will follow its rules and procedures in giving
instructions to Clearstream-Luxembourg and Euroclear (as a participant in those
systems) in relation to the taking of any such action.
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Although DTC, Clearstream-Luxembourg, Euroclear and Austraclear have agreed
to the foregoing procedures in order to facilitate transfers of notes among
participants of DTC, Clearstream-Luxembourg, Euroclear and Austraclear, they are
under no obligation to perform or continue to perform these procedures and these
procedures may be discontinued at any time.
None of the issuer trustee, the Trust Manager, the Servicer nor the note
trustee will have any responsibility for any aspect of the records relating to
or payments made on account of ownership interests of the book-entry notes held
by Cede & Co., as nominee of DTC, or for maintaining, supervising or reviewing
any records relating to ownership interest.
DEFINITIVE NOTES
If one of the following events occurs:
- DTC or any replacement clearing agency, advises the note trustee properly
in writing that DTC or such replacement clearing agency is no longer
willing or able to discharge its responsibilities as depository for the
notes, and the Trust Manager is not able to locate a qualified successor;
- the Trust Manager, at its option, advises the issuer trustee, the note
trustee, the paying agent, if any, and DTC or any replacement clearing
agency in writing that a class of definitive notes are to be issued in
replacement of a class of book-entry notes; or
- an event of default under the master security trust deed and the deed of
charge in respect of that trust has occurred and is continuing and the
beneficial owners of notes with an aggregate invested amount of greater
than 50% of the aggregate invested amount of all of that class of notes,
advise the issuer trustee, through DTC or any replacement clearing agency,
that the continuation of a book-entry system is no longer in the best
interests of the beneficial owners of that class of notes,
then the issuer trustee, at the direction of the Trust Manager, must within
30 days of such event instruct DTC (or its replacement) to notify all of its
participants of the occurrence of the event and of the availability of
definitive notes. DTC will then surrender the book-entry notes and provide the
relevant registration instructions to the issuer trustee. The issuer trustee
will then issue and execute and the note trustee will authenticate and deliver
definitive notes of the same aggregate invested amount as those book-entry
notes. Any notes issued in definitive form will be serially numbered. Thereafter
the issuer trustee will recognize the holders of the definitive notes as
noteholders.
WITHHOLDING OR TAX DEDUCTIONS
All payments on the notes will be made without withholding or tax deduction
for, or on account of, any present or future taxes, duties or charges of
whatever nature unless the issuer trustee or any paying agent is required by
applicable law to make a payment on the notes subject to any withholding or
deduction for, or on account of, any present or future taxes, duties or charges
of whatsoever nature. If the issuer trustee or the paying agent, as the case may
be, shall make a payment after making a withholding or deduction, 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 obligated to
make any additional payments to holders of the notes with respect to that
withholding or deduction.
REDEMPTION OF THE NOTES FOR TAXATION OR OTHER REASONS
If the Trust Manager satisfies the issuer trustee and the note trustee,
immediately prior to giving the notice to the noteholders as described in this
section, that because of a change in law in
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Australia or any other jurisdiction to which the issuer trustee becomes subject
from that in effect on the Closing Date either:
- on the next payment date the issuer trustee would be required to deduct or
withhold from any payment of principal or interest in respect of the
notes, including corresponding payments under any 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
- on the next payment date the total amount of interest payable in relation
to the mortgage loans for a collection period ceases to be receivable,
whether or not actually received by the issuer trustee during that
collection period by reason of any present or future taxes, duties,
assessments or governmental charges of whatever nature imposed, levied,
collected, withheld or assessed by the Commonwealth of Australia or any of
its political sub-divisions or any of its authorities,
then, on terms described in part A of this prospectus, the issuer trustee may
provide for the redemption of specified notes if, in each case, such obligation
cannot be avoided by the issuer trustee taking reasonable measures.
REPAYMENT OF THE NOTES UPON AN EVENT OF DEFAULT UNDER THE MASTER SECURITY TRUST
DEED
If an event of default occurs under the master security trust deed and the
deed of charge in respect of a trust while the notes for that trust are
outstanding, the security trustee may enforce the security created over the
assets of that trust. The security trustee must enforce the security, if it is
directed to do so by the voting secured creditors. See "Description of
Transaction Documents--The Master Security Trust Deed" in part B of this
prospectus. The enforcement of the security can include the sale of some or all
of the mortgage loans. No assurance can be given that the security trustee will
be able to sell the mortgage loans for their unpaid balance. Accordingly, the
security trustee may not be able to realize the full value of the mortgage loans
and this may have an impact on the issuer trustee's ability to repay all amounts
outstanding in relation to the notes for that trust. The proceeds from the
enforcement of the security will be distributed toward the redemption of the
notes in the manner and priority set forth in part A of this prospectus.
OPTIONAL REPURCHASE OF THE MORTGAGE LOANS
The Seller may repurchase all of the mortgage loans held in a trust. The
Seller may only exercise this option on or after a date specified in part A of
this prospectus or on or after the payment date after which the aggregate
outstanding principal balance amount of the mortgage loans in the trust is less
than the percentage specified in part A of this prospectus of the aggregate
outstanding principal balance of the mortgage loans for that trust as of the
closing date.
TERMINATION OF THE TRUST
Each trust will continue until, and shall terminate on the earliest of:
- the date which is 80 years after its date of constitution;
- the date on which the trust is terminated under the Master Trust Deed or
the supplemental deed for the Trust or at law; and
- following the occurrence of an event of default in respect of the trust,
the date on which the security trustee has notified the issuer trustee
that it has enforced the deed of charge in
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respect of the trust and distributed all amounts which it is required to
distribute under the master security trust deed.
PRESCRIPTION
A note will be void in its entirety if not surrendered for payment within
ten years of the date on which the final payment on the note is due. The effect
of voiding a note is to reduce the principal balance and any unpaid interest of
that note to zero. After the date on which a note becomes void in its entirety,
no claim may be made on it.
VOTING AND CONSENT OF NOTEHOLDERS
The Master Trust Deed and the note trust deed for each trust will contain
provisions for each relevant 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 that class of noteholders under the
Master Trust Deed or the related note trust deed, as the case may be.
Notwithstanding the foregoing, the consent by an Extraordinary Resolution of any
class of notes offered under this prospectus shall be required to accomplish the
following:
- direct the note trustee to direct the security trustee to enforce the deed
of charge in accordance with the master security trust deed;
- override any waiver by the note trustee of a breach of any provisions of
the transaction documents or an event of default under the master security
trust deed; or
- alter, add, or modify the terms and conditions of a class of notes or the
provisions of any of the transaction documents if the alteration, addition
or modification is, in the opinion of the note trustee, materially
prejudicial or likely to be materially prejudicial to a class of
noteholders, other than to correct a manifest error or ambiguity in such
terms and conditions or any of the transaction documents relating to such
class of notes, or to correct inconsistency between the provisions
contained in any such documents and the description of the provisions
thereof in the related prospectus, or to comply with the law, and shall
include any modification which would have the effect of changing the
maturity date of a class of notes.
Any action taken by an Extraordinary Resolution of a class of noteholders
shall be binding on all noteholders of such class, both present and future.
Under applicable Australian laws and the applicable charter documents of the
issuer trustee, there are no limitations imposed on the rights of Australian
non-residents or other foreign owners to hold the notes or exercise their vote
with respect to the notes or otherwise affecting the remittance of interest to
non-resident holders of notes other than the possible, but unlikely, occurrence
of currency exchange controls.
REPORTS TO NOTEHOLDERS
For each trust, on each determination date, the Trust Manager will, in
respect of the collection period ending before that determination date, deliver
to the paying agents, the note trustee and the issuer trustee, a noteholder's
report generally setting forth, to the extent applicable for the series, among
other things:
- the invested amount and the stated amount of each class of notes;
- the interest rates on the notes for the related interest period;
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- the interest payments and principal distributions on each class of notes;
- the total available income;
- the aggregate outstanding principal balance of the mortgage loans;
- the delinquency and loss statistics with respect to the mortgage loans;
- the redraw shortfall, if any;
- the amount of any shortfall in total available interest and income
collections;
- the amount of any liquidity facility advances, if any, for that payment
date, together with all liquidity facility advances in relation to the
preceding determination date;
- the amount of principal collections that are available for distribution on
a payment date;
- the redraw note amount, if any;
- the amount of any principal draw, if any;
- the charge-offs for each class of notes and the redraw facility principal;
and
- any other items of information applicable to a particular series of notes.
Unless and until definitive notes are issued, Note 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, the Trust Manager will prepare
and send to the principal paying agent, for forwarding to DTC, periodic and
annual unaudited reports containing information concerning each trust and series
of notes offered under this prospectus. DTC and its participants will make such
reports available to Note Owners in accordance with the rules, regulations and
procedures creating and affecting DTC. Upon the issuance of definitive notes,
these reports will be sent directly to each noteholder. These reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles.
The Trust Manager will file with the SEC the periodic reports as are
required under the Exchange Act, and the rules and regulations of the SEC under
the Exchange Act. However, in accordance with the Exchange Act and the rules and
regulations of the SEC under the Exchange Act, the Trust Manager expects that
the obligation to file these reports will be terminated after a period of time.
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LIQUIDITY FACILITY
To the extent described in part A of this prospectus, the Trust Manager may
obtain for the notes of any series liquidity facilities to prevent interruptions
of cashflow to the trust. The terms of any such facility, and the providers
thereof, will be described in part A of this prospectus.
REDRAW FACILITY
To the extent described in part A of this prospectus, the Trust Manager may
obtain for the notes of any series redraw facilities to permit the reimbursement
by the issuer trustee to the Seller of amounts redrawn by borrowers. The terms
of any such facility, and the providers thereof, will be described in part A of
this prospectus.
CREDIT ENHANCEMENT
Under each series of notes issued under the Program, credit enhancement
generally will be provided for one or more classes of notes in the related
trusts. PART A OF THIS PROSPECTUS DESCRIBES IN DETAIL THE CREDIT ENHANCEMENT
APPLICABLE TO THE SERIES OF NOTES OFFERED BY PART A OF THIS PROSPECTUS. Credit
enhancement is intended to enhance the likelihood of full payment of principal
and interest due and to decrease the likelihood that noteholders will experience
losses. Unless otherwise specified, the credit enhancement for a class of notes
will not provide protection against all risks of loss and will not guarantee
repayment of the entire principal balance and accrued interest. If losses occur
which exceed the amount covered by any credit enhancement or which are not
covered by any credit enhancement, noteholders will bear their allocated share
of losses, as described in part A of this prospectus.
PREPAYMENT AND YIELD CONSIDERATIONS
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 mortgage loans. The rate of principal payments
on the mortgage loans will in turn be affected by the amortization schedules of
the mortgage loans and by the rate of principal prepayments, including for this
purpose prepayments resulting from refinancing, liquidations of the mortgage
loans due to defaults by the borrower, casualties, condemnations and repurchases
by the Seller. Subject to the payment of applicable fees, the mortgage loans may
be prepaid by the borrowers at any time.
PREPAYMENTS
Prepayments, liquidations and repurchases of the mortgage loans, including
the optional repurchase of the remaining mortgage loans in connection with the
termination of a trust, will result in early distributions of principal amounts
on the notes.
Since the rate of payment of principal of the mortgage loans cannot be
predicted and will depend on future events and a variety of factors, we cannot
assure you as to the 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:
- the degree to which a note is purchased at a discount or premium; and
- the degree to which the timing of payments on the note is sensitive to
prepayments, liquidations and repurchases of the mortgage loans.
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A wide variety of factors, including economic, demographic, geographic,
legal, tax, social and other factors may affect the trust's prepayment
experience with respect to the mortgage loans. For example, under Australian
law, unlike the law of the United States, interest on loans used to purchase a
principal place of residence is not ordinarily deductible for taxation purposes.
There is, however, no assurance that the prepayment of the mortgage loans
included in the related trust will conform to any level of any prepayment
standard or model specified in part A of this prospectus.
RATE OF PAYMENT
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 the amount 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 yield due to principal prepayments
occurring at a rate that is faster or slower than the rate anticipated will not
be entirely offset by a subsequent similar reduction or increase, as applicable,
in the rate of principal payments. The amount and timing of delinquencies and
defaults on the mortgage loans and the recoveries, if any, on defaulted mortgage
loans and foreclosed properties will also affect the weighted average life of
the notes.
POWERS, DUTIES AND LIABILITIES UNDER THE TRANSACTION DOCUMENTS
THE ISSUER TRUSTEE
Part A of this prospectus identifies the entity who will act as issuer
trustee for the relevant trust and, in such capacity, as issuer of the notes of
that trust on the terms set out in the Master Trust Deed and the supplemental
deed.
POWERS
The transaction documents confer on the issuer trustee certain rights,
powers and discretions over and in respect of the trust assets. In most cases,
the issuer trustee is only empowered to act where directed to do so by the Trust
Manager who in turn cannot give a direction that could reasonably be expected to
adversely effect the rating of notes. The Trust Manager is normally required to
give the issuer trustee formal directions, and the issuer trustee is not
required to take any action unless it has received such a direction. For
example, the issuer trustee's ability to invest in Authorized Investments, to
issue notes and enter into support facilities may only be exercised upon a
receipt of a formal direction from the Trust Manager.
The Master Trust Deed expressly permits the issuer trustee to appoint the
Servicer to retain custody of the mortgage documents in accordance with the
servicing agreement, and for the issuer trustee to lodge documents with the
Servicer.
DUTIES
The issuer trustee must act honestly and in good faith and exercise such
diligence and prudence as a prudent person of business would exercise in
performing its express functions and exercising its discretions under the Master
Trust Deed. It must keep each trust separate from the others and do everything
necessary to ensure it can comply with its obligations under the transaction
documents.
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In particular the issuer trustee has the duty to maintain a register of
Authorized Investments and other assets of each trust and to keep or ensure that
the Trust Manager keeps accounting records which correctly record and explain
all amounts paid and received by the issuer trustee on behalf of each trust.
The issuer trustee is required to act continuously as trustee of the trust
until the trust is terminated as provided by the Master Trust Deed or the issuer
trustee has retired or been removed from office.
The Master Trust Deed creates a mechanism for the establishment of trusts
from time to time for the purposes of the issuance of a separate series of notes
for each trust. The beneficial interest in the assets of a trust is divided into
residual capital units and residual income units. Certain restrictions are
imposed on the Unit Holders. For example, a Unit Holder is not entitled to
interfere with any powers of the Trust Manager or the issuer trustee under the
Master Trust Deed. The rights, claim and interest of the Unit Holders rank after
and are subject to the interests of the secured creditors, of the relevant
trust.
Under the Master Trust Deed:
- the issuer trustee has no duty, and is under no obligation, to investigate
whether a Trust Manager's default, a servicer termination event or a Title
Perfection Event has occurred in relation to any trust other than where it
has actual notice; and
- 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 or representation of or by the Seller,
Servicer or Trust Manager or any calculation by the Trust 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 actual notice or awareness of
the officers or employees of the issuer trustee who have day-to-day
responsibility for the administration of a trust.
ANNUAL COMPLIANCE STATEMENT
The Trust 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 for each series.
ISSUER TRUSTEE FEES AND EXPENSES
The issuer trustee will receive a fee and be reimbursed for all expenses
incurred in connection with the performance of its obligations in respect of the
trust out of the assets of the trust for that series, but not general overhead
costs and expenses.
REMOVAL OR RETIREMENT OF THE ISSUER TRUSTEE
The issuer trustee is required to retire as trustee of a trust after a
direction from the Trust Manager in writing following an "issuer trustee
default" in relation to that trust.
The issuer trustee will bear the reasonable costs of its removal if it is
removed because of its default. The issuer trustee will indemnify the Trust
Manager and each trust for these costs. These costs are not payable out of the
assets of any trust.
The Trust Manager is entitled to appoint a replacement trustee by deed on
removal or retirement of the issuer trustee if that appointment will not in the
reasonable opinion of the Trust
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Manager materially prejudice the interests of noteholders. Until the appointment
is completed the Trust 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.
The issuer trustee may retire on giving to the Trust Manager, not less than
three months' notice in writing, or such other period as the Trust Manager and
the issuer trustee may agree, of its intention to do so.
Upon retirement, the Trust Manager must appoint a successor trustee who may
be the Trust Manager, and whose appointment will not materially prejudice the
interests of noteholders. If a successor trustee has not been appointed by the
end of the 60 days' notice period, then the issuer trustee may appoint a
successor trustee.
LIMITATION OF THE ISSUER TRUSTEE'S LIABILITY AND INDEMNIFICATION
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 for any loss howsoever caused in respect of any trust or to the secured
creditors of the relevant trust or the Unit Holders or any other person, except
to the extent caused by the fraud, negligence, or breach of trust on the issuer
trustee's part.
The issuer trustee acts as trustee and issues the notes of a trust only in
its capacity as trustee of that trust and in no other capacity. A liability
arising under or in connection with the transaction documents or the applicable
trust can be enforced against the issuer trustee only to the extent to which it
can be satisfied out of the assets of the applicable trust out of which the
issuer trustee is actually 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 transaction documents. The limitation will not apply to any obligation or
liability of the issuer trustee to the extent that it is not satisfied because
under the Master Trust Deed or a supplemental deed or by operation of law there
is a reduction in the extent of the issuer trustee's indemnification out of the
assets of the applicable trust as a result of the issuer trustee's fraud,
negligence or breach of trust.
The Master Trust Deed also contains other provisions which regulate the
issuer trustee's liability to noteholders and other creditors.
Among other things, the issuer trustee has no duty to supervise or
investigate the actions of the Trust Manager, the Servicer or any other person,
or any of their successors or assigns, in relation to their respective duties or
obligations under the transaction documents, or any other person's failure to
carry out an agreement with the issuer trustee with respect to a trust.
The issuer trustee will be indemnified out of the assets of the applicable
trust against all losses and liabilities incurred by the issuer trustee in
properly performing any of its duties or exercising any of its powers under the
transaction documents in relation to that trust except to the extent a loss or
liability arises from the issuer trustee's fraud, negligence or breach of trust.
THE TRUST MANAGER
POWERS
The Trust Manager will have full and complete powers of management of the
trusts. The issuer trustee has no duty to supervise the Trust Manager in the
performance of its functions and duties, or the exercise of its discretions.
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The Trust Manager has the absolute discretion to recommend Authorized
Investments to the issuer trustee and direct the issuer trustee in relation to
those Authorized Investments.
The Trust Manager has the power to appoint a third party (including an
affiliate of the Trust Manager) to perform certain of the functions imposed on
the Trust Manager under the Master Trust Deed and the relevant supplemental
deed. The Trust Manager will remain liable for the performance of its
obligations notwithstanding any such appointment.
TRUST MANAGER'S FEES
The Trust Manager will receive a fee out of the assets of the trust for
acting as Trust Manager under the transaction documents.
REMOVAL OR RETIREMENT OF THE TRUST MANAGER
The Trust Manager shall retire as Trust Manager if the issuer trustee so
directs in writing following a "trust manager's default." The Trust Manager
shall bear the reasonable costs of its removal after a trust manager's default.
The Trust Manager has agreed to indemnify the issuer trustee and each trust for
those costs.
The Trust Manager may resign on giving to the issuer trustee, not less than
3 months' notice in writing, or such other period as the Trust Manager and the
issuer trustee may agree, of its intention to do so.
On retirement or removal of the Trust Manager, the Trust Manager may appoint
another Trust Manager subject to the approval of the issuer trustee and any
approval required by law, provided the appointment will not, in the reasonable
opinion of the issuer trustee, materially prejudice the interests of the
noteholders. If the Trust Manager does not propose a replacement at least
30 days before the Trust Manager proposes to retire or the issuer trustee does
not approve of the replacement proposed by the Trust Manager, the issuer trustee
may appoint a new manager as at the date of the proposed retirement. Until the
appointment of any replacement manager is complete, the issuer trustee must act
as the Trust Manager until a successor is appointed.
LIMITATION OF TRUST MANAGER'S LIABILITY AND INDEMNIFICATION
The principal limitations on the Trust Manager's liability are set out in
full in the Master Trust Deed. These include the following limitations:
- the Trust Manager will be indemnified out of each trust in respect of any
liability, cost or expense properly incurred by it in its capacity as
Trust Manager of that trust, other than general overhead costs and
expenses;
- subject to the Master Trust Deed, if the Trust Manager relies in good
faith on a written opinion or advice of service providers to the relevant
Trust such as attorneys, brokers, accountants, financial advisers and
other experts it will not be liable for any malfeasance on the part of
that person except where that person is not independent of the Trust
Manager;
- in the absence of fraud, negligence or material breach of obligation on
its part, the Trust Manager will not be liable personally in the event of
a failure to pay moneys on the due date of payment for any loss however
caused in relation to a trust to the secured creditors of the relevant
trust or the Unit Holders or any other person; and
- the Trust Manager will not be personally liable to indemnify the issuer
trustee or make any payments to any other person in relation to the trusts
except that there will be no limit on the Trust Manager's liability for
any fraud, negligence or material breach of obligation by it in its
capacity as the Trust Manager of the trusts.
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THE NOTE TRUSTEE
Part A of this prospectus identifies the entity that will serve as note
trustee for the applicable series of notes offered under this prospectus. The
note trustee has the duties and obligations of an indenture trustee under the
Trust Indenture Act of 1939 to protect and enforce the rights of noteholders
with respect to the notes and the underlying security. The note trustee and
every other person properly appointed by it or to whom any of its functions are
delegated under the note trust deed will be entitled to indemnification from the
assets of the applicable trust against any loss, liability, expense, cost,
damage, or demand incurred by, or made against, the note trustee arising out of,
or in relation to, or in connection with, its appointment or the exercise of its
functions, provided that the indemnification will not extend to any liability
arising from any fraud, negligence or breach of trust by the note trustee.
The note trustee will at all times be a corporation or association,
organized and doing business under the laws of the United States of America, any
individual State or the District of Columbia, authorized under those laws to
exercise corporate trust powers, having a combined capital of at least
U.S.$50,000,000, as set forth in its most recent published annual report of
condition, and subject to supervision or examination by Federal or State
authority. The note trustee may also, if permitted by the SEC, be organized
under the laws of a jurisdiction other than the United States, provided that it
is authorized under such laws to exercise corporate trust powers and is subject
to examination by authority of such jurisdictions substantially equivalent to
the supervision or examination applicable to a trustee in the United States.
The note trustee may resign after giving at least three months written
notice to the issuer trustee, the Trust Manager, the security trustee and each
applicable rating agency, which written notice will expire no less than 30 days
before any due date for payment of any notes. The issuer trustee may also remove
the note trustee immediately by written notice to the note trustee and each
rating agency if, among other things:
- the note trustee becomes insolvent;
- the note trustee ceases its business;
- more than 50% of the issued share capital of the Note Trustee or the
effective control of the Note Trustee alters from the position at the date
of execution of the Note Trust Deed unless approved by the Trust Manager.
- the note trustee fails to comply with any of its obligations under any
transaction document with respect to the applicable trust and the issuer
trustee determines that this failure has had, or if continued, will have,
an "adverse effect," and if capable of remedy, the note trustee does not
remedy this failure within 14 days after the earlier of the following:
- the note trustee becoming aware of this failure; and
- receipt by the note trustee of written notice with respect to this
failure from either the issuer trustee or the Trust Manager; or
- the note trustee fails to satisfy any obligation imposed on it under
the Trust Indenture Act of 1939 of the United States, as amended, with
respect to a trust or the note trust deed.
If there is an event of default under the notes, the note trustee may be
required to resign by virtue of its obligations under the Trust Indenture Act of
1939. In addition, an Extraordinary Resolution of a class of 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
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confirmation by the rating agencies that such appointment will not cause a
downgrading, qualification or withdrawal of the then current ratings of the
notes.
THE SECURITY TRUSTEE
GENERAL
The security trustee is appointed to act as trustee on behalf of the Secured
Creditors and holds the benefit of the deed of charge over the assets of a trust
for each applicable Secured Creditor on the terms and conditions of the master
security trust deed and the deed of charge.
DUTIES AND LIABILITIES OF THE SECURITY TRUSTEE
The master security trust deed contains a range of provisions regulating the
scope of the security trustee's duties and liabilities. These include the
following:
- The security trustee is not responsible for the adequacy or enforceability
of the master security trust deed or other transaction documents.
- The security trustee is not required to exercise its powers under the
master security trust deed without being directed to do so by an
extraordinary resolution of the Voting Secured Creditors, but may act,
with prior written notice to the Voting Secured Creditors, in the best
interests of the secured creditors of the trust.
- The security trustee may rely on documents provided by the issuer trustee
or Trust Manager and the advice of consultants and advisors.
- The security trustee is not required to monitor whether an event of
default under the master security trust deed has occurred or compliance by
the issuer trustee or Trust Manager with the transaction documents.
- The security trustee is not required to act unless its liability is
limited in a manner satisfactory to it.
- Unless required by a transaction document, the security trustee need not
give Secured Creditors information concerning the issuer trustee which
comes into the possession of the security trustee.
- The security trustee has no duties or responsibilities except those
expressly set out in the master security trust deed or the deed of charge.
- The security trustee in its capacity as a Secured Creditor can exercise
its rights and powers as such as if it were not acting as the security
trustee. It and its affiliates may engage in any kind of business with the
issuer trustee, the Trust Manager, other Secured Creditors 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 Secured Creditors.
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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 master security trust deed or a deed
of charge without being directed to do so by extraordinary resolution of the
Voting Secured Creditors in accordance with the master security trust deed. The
security trustee is not obligated to act unless it obtains an indemnity 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 Secured Creditors,
or is required by an extraordinary resolution of the Voting Secured Creditors to
take any action under the master security trust deed, and advises the Voting
Secured Creditors that it will not act in relation to the enforcement of the
master security trust deed and the relevant deed of charge unless it is
personally indemnified by the Voting Secured Creditors 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 master security trust deed and
the relevant deed of charge and is put in funds to the extent to which it may
become liable, including costs and expenses, and the Voting Secured Creditors
refuse to grant the requested indemnity, or put the security trustee in funds,
then the security trustee is not obliged to act in relation to that enforcement
under the master security trust deed and the relevant deed of charge.
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 master
security trust deed, of any secured property or any other property charged to
the security trustee by any person in respect of or relating to the obligations
of any person in respect of the issuer trustee or the secured money or relating
in any way to the secured property or for any such decline in value directly or
indirectly arising from its acting, or failing to act, as a consequence of an
opinion reached by it, or for any omission, delay or mistake or any loss or
irregularity in connection with any of its powers under the Master Security
Trust Deed or a deed of charge, except for the fraud, negligence or breach of
trust of the security trustee.
The security trustee is not liable for any loss, costs, damages or expenses
arising from its acts or omissions, or those of the issuer trustee or Trust
Manager, or its reliance upon the issuer trustee or Trust Manager, to any
Secured Creditor or other person except to the extent the security trustee is
actually indemnified out of the secured property, or out of funds held for that
purpose, or for any other act or omission on its part. The only exception is
where and to the extent the relevant matter is due to the fraud, negligence or
breach of trust of the security trustee.
DESCRIPTION OF TRANSACTION DOCUMENTS
THE FOLLOWING SUMMARY DESCRIBES THE ADDITIONAL MATERIAL TERMS OF THE
TRANSACTION DOCUMENTS. THE SUMMARY IS SUBJECT TO THE PROVISIONS OF THE
TRANSACTION DOCUMENTS. WITHIN FIFTEEN DAYS AFTER THE CLOSING DATE FOR EACH
SERIES OF NOTES, THE TRUST MANAGER WILL FILE WITH THE SEC COPIES OF EACH OF THE
MATERIAL TRANSACTION DOCUMENTS ON A CURRENT REPORT ON FORM 8-K REPORT.
TRUST ACCOUNTS
For each trust, the issuer trustee will establish and maintain pursuant to
the Master Trust Deed and any related supplemental deed a relevant collections
account with a bank meeting the requirements specified in part A to this
prospectus. The issuer trustee will open each collections account 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 applicable trust.
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The Trust Manager shall have the discretion and duty to recommend to the
issuer trustee, in writing, the manner in which any moneys forming part of a
trust shall be invested in Authorized Investments and what purchases, sales,
transfers, exchanges, collections, realizations or alterations of trust assets
shall be effected and when and how the same should be effected. Each investment
of moneys on deposit in a trust's accounts shall be in Authorized Investments
that will mature not later than the business day before the applicable payment
date.
PRE-FUNDING ACCOUNT
With respect to a series of notes under the Program, the issuer trustee may,
on behalf of a trust, establish a pre-funding account relating to that issue of
notes pursuant to the Master Trust Deed. A pre-funding arrangement will be
applicable to the notes described in part A only if specified in such part. The
issuer trustee may deposit all or a portion of the proceeds received by the
issuer trustee in connection with the issue of one or more classes of notes of
the related trust in the pre-funding account. The amount that may be initially
deposited into a pre-funding account may be up to 35% of the aggregate principal
amount of the notes issued in relation to that trust. The amounts on deposit in
any pre-funding account may be invested only in investments deemed acceptable by
the rating agencies as consistent with the applicable ratings on the notes. The
amounts on deposit in the pre-funding account will be used by the issuer trustee
to purchase additional mortgage loans that could not be delivered by the Seller
following the closing date for the related notes. Unless otherwise specified in
part A of this prospectus, the specified period for the acquisition by the
issuer trustee of additional mortgage loans will not exceed three months from
the closing date for that issue of notes. Any funds in the pre-funding account
that are not used to purchase additional mortgage loans by the end of the
specified period will be applied as a mandatory prepayment of the related class
or classes of notes as specified in part A of this prospectus. Any additional
mortgage loans purchased by the issuer trustee will conform to the eligibility
criteria. The underwriting standards for additional mortgage loans that will be
acquired with amounts from the pre-funding account will comply with the
standards set forth under "The Seller's Residential Mortgage Loan
Program-Underwriting Process" in part B of this prospectus.
ACCUMULATION OF PRINCIPAL; ADDITIONAL NOTES
With respect to a series of notes under the Program, for a specified period
(the "Accumulation Period"), all or a portion of principal collections in
respect of that series or notes (and, if specified, other amounts) may be
deposited in an account or fund (a "Funding Account") pursuant to the Master
Trust Deed. Amounts on deposit in the Funding Account will be applied to make
principal distributions on one or more classes of notes of the related series
when due or when otherwise specified. If a series includes more than one class
of notes, each class may have a different Accumulation Period, a separate
Funding Account and different allocation of amounts included therein.
Additionally, if specified, the trust for a series of notes will be permitted
from time to time following the applicable closing date to issue and sell
additional notes. The proceeds from any issuance and sale will be applied to the
repayment of one or more classes of notes on specified payment dates. Such
arrangement will be applicable to a series of notes described in part A of this
prospectus only if so specified in that part.
INTEREST RATE SWAPS
With respect to a series of notes under the Program, the issuer trustee may
enter into one or more variable rate basis swaps and fixed rate basis swaps with
one or more interest rate swap providers. The actual swap agreements may vary
for each series of notes depending upon the types of mortgage loan products
included in the related trust. Such swap agreements will be
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applicable to a series of notes described in part A of this prospectus only if
so specified in that part.
CURRENCY SWAPS
With respect to a series of notes under the Program, the issuer trustee will
enter into one or more currency swaps with one or more currency swap providers.
Collections on the mortgage loans will be denominated in Australian dollars and
amounts received under any variable rate basis swap and any fixed rate basis
swaps are likely to be denominated in Australian dollars. However, in most
instances, the payment obligations of the issuer trustee on the notes will be
denominated in United States dollars and calculated on a different basis (for
example, by reference to LIBOR). In these cases, to hedge its currency and basis
exposure, the issuer trustee may enter into one or more swap agreements with the
currency swap providers. The actual swap agreements may vary for each trust.
Such an agreement will be applicable to a series of notes described in part A of
this prospectus only if so specified in that part.
THE MASTER SECURITY TRUST DEED
GENERAL
Part A of this prospectus identifies the entity that will serve as security
trustee for the relevant trust. The issuer trustee will grant a first ranking
fixed and floating charge, registered with the Australian Securities and
Investments Commission, over all of the assets of that trust in favor of the
security trustee. Such charge will secure the issuer trustee's obligations to
the noteholders, the Trust Manager, the security trustee, the Servicer, the
Seller, the note trustee, any paying agent any swap provider, and any provider
of a support facility. These secured parties are collectively known as the
"Secured Creditors."
NATURE OF THE CHARGE
The security created by the master security trust deed and deed of charge in
relation to a trust is a "fixed and floating charge." It operates as a fixed
charge over certain assets and a floating charge over other assets. In
particular, it operates as a fixed charge over interests in real property (other
than the mortgage loans), book debts, etc. It operates as a floating charge over
the issuer trustee's interest in the mortgage loans, the proceeds of any book
debts and all of the property secured under the charge not specifically referred
to as being subject to the fixed charge. A floating charge over assets should be
distinguished from a fixed charge over assets.
A person may not deal with its assets over which it has granted a fixed
charge without the consent of the person to whom the charge is granted (in this
case, the security trustee). Fixed charges are usually given over real property,
marketable securities and other assets which may not be disposed of or otherwise
dealt with by such person.
A floating charge does not attach to specific assets but instead "floats"
over a class of assets which may change from time to time. The person 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 such person's business. The issuer
trustee has agreed not to dispose of or create interests in the assets of any
trust subject to a floating charge except as permitted by the transaction
documents and the Trust 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 mortgage loan, as permitted by the transaction documents,
the person acquiring the property will take it free of the floating charge. The
floating charge granted over the trust assets will "crystallize," which means it
becomes a fixed charge, upon the occurrence of specific events set out in the
master security trust deed and the deed of charge, including notice
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to the issuer trustee by the security trustee, or following an event of default
under the master security trust deed. On crystallization of a floating charge,
the issuer trustee may not deal with the assets of the trust without the consent
of the security trustee.
If a floating charge has crystallized, the security trustee may at any time
release any asset from a fixed charge by notice to the issuer trustee and
relevant rating agency. Following that release, the asset will again be subject
to the floating charge.
EVENTS OF DEFAULT
Each of the following is an event of default under the master security trust
deed and deed of charge for a series of notes:
- the issuer trustee fails to pay or repay any amount due under any senior
class of notes or any junior class of notes (after all senior classes of
notes have been repaid or redeemed in full) or any transaction document
within ten business days of the date for payment or repayment of such
amount.
- the issuer trustee is (for any reason) not fully entitled to exercise its
right of indemnity against the assets of the trust and the circumstances
are not rectified to the reasonable satisfaction of the security trustee
within 14 days of notice;
- the issuer trustee fails to perform or observe any other provisions, other
than the obligations already referred to in this events of default
section, of a transaction document where such failure will have a Material
Adverse Effect and that default is not remedied within 30 days after
written notice from the security trustee requiring the failure to be
remedied;
- an Insolvency Event occurs relating to the issuer trustee, in its capacity
as trustee of the trust and the issuer trustee is not replaced (by either
the Trust Manager or a replacement trustee) in accordance with the Master
Trust Deed within 30 days of such Insolvency Event;
- the charge created by the master security trust deed and deed of charge is
not or ceases to be a first ranking charge over the assets of the trust,
or is or becomes wholly or partly void, voidable or unenforceable;
- all or any part of any transaction document, is terminated other than an
interest rate swap, a redraw facility or a currency swap, in respect of a
termination because of an action of a taxing authority or a change in tax
law, 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 an interest rate
swap, or a redraw facility or a currency swap, in respect of a termination
because of an action of a taxing authority or a change in tax law;
- without the prior consent of the security trustee, that consent being
subject, in accordance with the terms of the master security trust deed,
to the prior written consent of the Secured Creditors:
- 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;
- the trust is held or is conceded by the issuer trustee not to have been
constituted or to have been imperfectly constituted; or
- the issuer trustee ceases to be authorized to hold the property of the
trust in its name and perform its obligations under the transaction
documents.
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Where the security trustee becomes aware of the occurrence of an event of
default, it must:
- notify the issuer trustee, the Secured Creditors and the rating
agencies that to the extent the property secured by the charge was
subject to a floating charge, the charge has taken effect as a fixed
charge;
- notify the Secured Creditors as to the nature of the event of default,
and advise of any steps being taken to remedy the event of default; and
- do such things as are necessary to convene a meeting of Voting Secured
Creditors at which it shall seek directions from the Voting Secured
Creditors by way of extraordinary resolution of such Voting Secured
Creditors regarding the action it should take as a result of that event
of default.
MEETINGS OF VOTING SECURED CREDITORS
The master security trust deed contains provisions for convening meetings of
the Voting Secured Creditors to enable the Voting Secured Creditors to direct or
consent to the security trustee taking or not taking certain actions under the
master security trust deed, including directing the master security trustee to
enforce the master security trust deed and the deed of charge in respect of the
trust.
VOTING PROCEDURES
Every question submitted to a meeting of Voting Secured Creditors shall be
decided in the first instance by a show of hands. If a show of hands results in
a tie, 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 a
Voting Secured Creditor or as a representative. A representative is, in the case
of any noteholder, a person or body corporate appointed as a proxy for that
noteholder. 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 any person attending as a proxy shall represent each noteholder
who has directed the proxy to vote on its behalf under the note trust deed. On a
poll, every person who is present shall have a number of votes calculated by
dividing the outstanding principal balance of notes held by that person on the
relevant day by A$10.
A resolution of all the Voting Secured Creditors, 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 the
required majority of the Voting Secured Creditors.
ENFORCEMENT OF THE CHARGE
Upon the occurrence of an event of default or certain other events,
including failure to pay certain taxes, the charge (to the extent it is not a
fixed charge or has not already taken effect as a fixed charge) takes effect as
a fixed charge immediately.
The security trustee may then, upon receiving instructions from a meeting of
Voting Secured Creditors, take action which may include:
- declaring secured money immediately due and payable;
- appointing a receiver
- selling secured property, if the security trustee has agreed to do so; or
- such other steps as the Voting Secured Creditors may specify and the
security trustee agrees to.
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The security trustee may, and if directed by no less than 90% of Voting
Secured Creditors must, at any time after the charge has taken effect as a fixed
charge, give notice to the issuer trustee that it no longer requires the charge
to operate as a fixed charge over specified property.
No Secured Creditor is entitled to enforce the charge under the master
security trust deed and deed of charge, or appoint a receiver or otherwise
exercise any power conferred by any applicable law on charges, otherwise than in
accordance with the master security trust deed and the deed of charge unless the
security trustee fails to act as obliged.
THE NOTE TRUSTEE AS VOTING SECURED CREDITOR
The note trustee may, 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 master
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 noteholders
representing at least 75% of the aggregate outstanding principal balance of the
notes offered under this prospectus. Any modification to a transaction document,
waiver, authorization or determination by the note trustee shall be binding on
the noteholders and, unless the note trustee agrees otherwise, the Trust Manager
on behalf of the issuer trustee shall notify the noteholders for the affected
series of the modification, waiver, authorization or determination as soon as
practicable thereafter.
If an event of default under the master security trust deed occurs and is
continuing, the note trustee shall deliver to each noteholder notice of the
event of default within 90 days of the date of occurrence of the 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 the notice if and so
long as it determines in good faith that withholding the notice is in the
interests of the relevant class of noteholders.
The rights, remedies and discretion of the noteholders under the master
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 noteholders except in
the circumstances specified in the master security trust deed. The security
trustee may rely on any instructions or directions given to it by the note
trustee as being given on behalf of the noteholders without inquiry about
compliance with the note trust deed.
The note trustee shall not be bound to vote under the master security trust
deed, or otherwise direct the security trustee under the master security trust
deed or to take any proceedings, actions or steps under, or any other
proceedings pursuant to or in connection with the master security trust deed,
the note trust deed or any notes unless directed or requested to do so in
writing by the noteholders representing at least 75% of the aggregate
outstanding principal balance of the 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 notes remain outstanding and are due and payable otherwise
than by reason of a default in payment of any amount due on the notes, the note
trustee must not vote under the master security trust deed to, or otherwise
direct the security trustee to, dispose of the secured property unless either:
- a sufficient amount would be realized to discharge in full all amounts
owing to the noteholders, and any other amounts payable by the issuer
trustee ranking in priority to or equal with the notes; or
- 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
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cash flow receivable by the issuer trustee or the security trustee under
the master 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
preceding paragraph.
PRIORITIES UNDER THE MASTER SECURITY TRUST DEED
Part A of this prospectus describes the order of priority in which the
proceeds from the enforcement of the master security trust deed and the relevant
deed of charge are to be applied.
Upon enforcement of the charge created under a deed of charge and regulated
by the master security trust deed, the net proceeds thereof may be insufficient
to pay all amounts due on redemption to the Secured Creditors. Any claims of the
Secured Creditors remaining after realization of the security and application of
the proceeds as aforesaid shall, except in limited circumstances, be
extinguished.
SECURITY TRUSTEE'S 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.
RETIREMENT AND REMOVAL OF THE SECURITY TRUSTEE
The security trustee may retire by giving not more than 90 days and not less
than 30 days notice in writing to the issuer trustee and the Trust Manager, or
such lesser time as may be agreed with those parties. If the security trustee
does not propose a replacement in the notice given or by one month prior to the
date of its proposed retirement, the Trust Manager is entitled to appoint a new
security trustee.
The security trustee covenants to retire as security trustee, and the Trust
Manager may remove the security trustee if:
- an Insolvency Event occurs in relation to the security trustee in its
personal capacity;
- the security trustee ceases to carry on business as professional trustee
company;
- there is a change of ownership of the security trustee of more than 50% or
a change in effective management (without consent of the Trust Manager)
such that the security trustee is no longer able to fulfill its duties and
obligations;
- the security trustee fails to remedy within 14 days after written notice
by the Trust Manager any material breach of duty on the part of the
security trustee; or
- the Voting Secured Creditors pass an Extraordinary Resolution requiring
the removal of the security trustee, pursuant to the terms of the master
security trust deed.
Upon retirement or removal of the security trustee (other than by
resignation), the Trust Manager is entitled to and must use its best endeavors
to appoint some other person whose appointment the rating agencies confirm will
not have an adverse effect on the ratings of the notes.
AMENDMENT
The issuer trustee, the Trust Manager, the note trustee and the security
trustee may, following written notice to the applicable rating agencies amend
the master 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. Certain amendments that may
be prejudicial to Secured Creditors may only be effected with the consent of the
relevant Secured Creditors.
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THE SERVICING AGREEMENT
SERVICING OF THE MORTGAGE LOANS
The Servicer is required to administer the mortgage loans in the following
manner:
- in accordance with all applicable laws;
- in accordance with the servicing agreement;
- with the same degree of diligence and care expected of an appropriately
qualified and prudent servicer of similar financial products and custodian
of documents; and
- subject to the foregoing bullet points, according to the Servicer's
procedures and policies for servicing the Seller's mortgage loans from
time to time.
The Servicer's actions in servicing the mortgage loans according to the
relevant procedures and policies 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 mortgage loans and the acts or
omissions of any delegate.
POWERS
The Servicer has the express power, among other things:
- to waive any fees and break costs which may be collected in the ordinary
course of servicing the mortgage loans or to arrange the rescheduling of
interest due and unpaid following a default under any mortgage loans;
- to waive any right in respect of the mortgage loans and related mortgages
in the ordinary course of servicing the mortgage loans and related
mortgages, including according to its normal collection procedures; and
- to extend the maturity date of a mortgage loan beyond 30 years from the
date of origination when required to do so by law or a government agency
regardless of whether the extension may have an adverse effect.
UNDERTAKINGS BY THE SERVICER
The Servicer will undertake, among other things, the following:
- if directed by the issuer trustee following a Title Perfection Event, to
promptly take action to protect the issuer trustee's interest in, and
title to, the mortgage loans and related mortgages in the mortgage pool;
- to make reasonable efforts to collect all moneys due under those mortgage
loans and related mortgages and pay them into the collections account not
later than the time required to do so;
- if a material default occurs relating to a mortgage loan, to take action
according to its normal enforcement procedures to enforce the relevant
mortgage loan and the related mortgage to the extent it determines to be
appropriate;
- to comply with the terms of any mortgage insurance policies, not do or
omit to do anything, without the consent of the issuer trustee, which
could be reasonably expected to prejudicially affect or limit its rights
or the rights of the issuer trustee under or relating to a mortgage
insurance policy, and promptly make a claim under any mortgage insurance
policy when it is entitled to do so or is required to do so under the
transaction documents in respect of a default and notify the Trust Manager
when each claim of this type is made;
- not to 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 prior to or equal with the security trustee's interest in the related
mortgage loan and mortgage or allow the creation or
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existence of any other security interest in the mortgaged property, unless
priority arrangements are entered into with the third party under which
the third party acknowledges that the mortgage 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 mortgage
loan plus any additional amount the Servicer determines according to the
Servicer's procedures manual or its ordinary course of business;
- not, except as required by law, to release a borrower or otherwise vary or
discharge any mortgage loan or mortgage where it would have an adverse
effect;
- to 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 mortgage loans and
mortgages and to perform or comply with its obligations under the
servicing agreement;
- to notify the issuer trustee, the rating agencies and the Trust Manager of
any event which it reasonably believes is likely to have an adverse effect
promptly after becoming aware of the event and notify the Trust Manager of
anything else which the Trust Manager reasonably requires regarding any
proposed modification to any mortgage loan or related mortgage; and
- to provide such documents, records and information reasonably requested by
the issuer trustee or the Trust Manager, and upon reasonable notice and at
reasonable times to permit the issuer trustee to inspect the data and
records in relation to the trust and the mortgage loan agreements,
mortgages, certificates of title and other documents related to the
mortgage loans.
PERFORMANCE OF SERVICES
In performing any services under the servicing agreement in respect of a
trust the Servicer shall consider whether its performance of these services does
or does not have an adverse effect. The Servicer may ask the issuer trustee or
the Trust Manager if any action or inaction on its part is reasonably likely to,
or will, have an adverse effect, and may rely upon any statement by the issuer
trustee or the Trust Manager to that effect. The Servicer shall not be liable
for a breach of the servicing agreement, or be liable under any indemnity, in
relation to any action or inaction on its part, where it has been notified by
the issuer trustee or the Trust Manager that the action or inaction is not
reasonably likely to, or will not have, an adverse effect.
SERVICING COMPENSATION AND EXPENSES
The Servicer will receive a fee from the assets of the trust for servicing
the mortgage loans. The Servicer must pay from that fee all reasonable expenses
incurred in connection with servicing the mortgage loans including expenses
related to collection of the serviced mortgage loans of a relevant Trust, but
excluding (i) any, expenses relating to the enforcement and recovery of a
mortgage loan or its related mortgaged property, provided that where the consent
of an insurer is required in order for an expense to be reimbursed by that
insurer, that consent must be obtained, and (ii) any expenses reasonably and
properly incurred by the Servicer in connection with enforcement and recovery of
defaulted mortgage loans of a relevant Trust, including expenses relating to any
court proceedings, arbitration or other dispute (all of which are reimburseable
out of assets of the relevant Trust).
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OPTIONAL REPURCHASE OF DEFAULTED MORTGAGE LOANS
If so specified in part A of this prospectus, subject to certain limitations
contained in the servicing agreement, the Servicer will have the right and
option, but not the obligation, to purchase for its own account any mortgage
loan which becomes 90 days or more delinquent for a purchase price equal to the
then current value of such mortgage loan (taking into account applicable
insurance proceeds and other available resources). The Servicer is prohibited
from exercising such option unless the purchase price for such defaulted loan
equals the outstanding amount owed by the borrower, including accrued interest.
REMOVAL AND RESIGNATION OF THE SERVICER
The issuer trustee may only terminate the Servicer's appointment if the
issuer trustee determines that any of the following "Servicer Termination
Events" occurs:
- the Servicer suffers an Insolvency Event;
- the Servicer fails to remit or pay any amount due by it within 10 business
days of receipt of a notice to do so from the issuer trustee or Trust
Manager, except where that amount is subject to a good faith dispute
between the Servicer, the issuer trustee or the Trust Manager;
- the Servicer fails to comply with any of its other obligations under any
transaction document and such action has had, or, if continued will have,
an adverse effect, as determined by the issuer trustee, and that failure
is not remedied within 30 days after the Servicer becomes aware of that
failure by receipt of notice;
- any representation, warranty or certification made by the Servicer is
incorrect when made and is not waived by the issuer trustee or remedied to
the issuer trustee's reasonable satisfaction within 90 days after notice
from the issuer trustee, and the issuer trustee determines that breach
would have an adverse effect; or
- it becomes unlawful for the Servicer to perform the services under the
servicing agreement.
If a Servicer Termination Event occurs, the issuer trustee must, upon notice
to the Trust Manager, the Seller, the Servicer and the applicable rating
agencies, terminate the rights and obligations of the Servicer in respect of a
trust immediately and appoint an eligible successor Servicer. An eligible
successor Servicer is a Servicer whose appointment will not materially prejudice
the interests of noteholders. The issuer trustee shall act as the servicer and
receive a fee for its services until an eligible successor servicer is appointed
and agrees to act as the Servicer.
With the exception of some limitations, the Servicer will indemnify the
issuer trustee against any losses, liabilities, costs and expenses resulting
from a Servicer Termination Event or a failure by the Servicer to perform its
duties under the servicing agreement.
The Servicer may voluntarily resign after giving three months notice, or
such lesser period as agreed, to the applicable rating agencies, the Seller, the
Trust Manager and the issuer trustee.
REPLACEMENT OF THE SERVICER
The Trust Manager and the issuer trustee shall use reasonable efforts to
find a suitably qualified person to act as Servicer whose appointment will not
materially prejudice the interest of the noteholders. Until an eligible
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
has not agreed to act as servicer by the expiration of the three month notice
period, the issuer trustee itself will act as the servicer and be entitled to a
servicing fee.
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DOCUMENT CUSTODY
The Servicer will be responsible for custody of the relevant documents for
each mortgaged property, on behalf of the issuer trustee. The Servicer must hold
these documents as custodian at the direction of the issuer trustee according to
its standard safekeeping practices, and according to the procedures contained in
the servicing agreement.
The procedures contained in the servicing agreement include the following:
- keeping the relevant documents for the mortgage loans in the mortgage pool
separate from other documents held by the Servicer;
- maintaining a record of the physical movement of the relevant documents;
and
- ensuring that the Servicer is capable of locating security packets
containing the relevant documents.
The Servicer will be audited by an independent auditor on an annual basis,
and again within two months of that annual audit if any audit gives an adverse
finding, in relation to its custodial procedures, identification of documents,
security and tracking systems.
The issuer trustee may terminate the Servicer's appointment as custodian if
the following occurs:
- the Servicer has not complied with the requirements of the servicing
agreement to the satisfaction of its auditor and a further audit also
results in an adverse finding by the auditor;
- the long-term rating of the Servicer is downgraded below the rating levels
specified in the Servicing Agreement;
- the Servicer is in default under a servicing agreement between it and any
other person, and by reason of the default that other person removes any
documents in the Servicer's custody under the servicing agreement where
that person would otherwise not have been entitled to do so; or
- a Servicer Termination Event (as described above under "--Removal and
Resignation of the Servicer") has occurred and continues to exist.
If any of the events listed in the preceding section occurs, then, subject
to certain exceptions, the Servicer must deliver the relevant documents and all
other documents and records relating to the mortgage loans to the issuer trustee
or a third party at the direction of the issuer trustee. If the Servicer has not
done so within ten business days of the date of termination of the servicing
agreement or such longer period as the issuer trustee in its reasonable
discretion permits, the issuer trustee must commence legal action to recover the
documents or enter the premises where the relevant documents are kept, take
possession of and remove the relevant documents. The issuer trustee may, to the
extent that it has information available to it to do so, lodge caveats regarding
or take all such other action it considers necessary to protect its interests in
the mortgage loans and related mortgages for which it does not hold the relevant
documents. A caveat is a notice which is put on the relevant land title register
to provide notice of a party's interest in the property.
AMENDMENT
The Servicer, the issuer trustee and the Trust Manager may agree to amend
the servicing agreement in writing after giving prior notice of the proposed
amendment to the applicable rating agencies if such amendment, among other
things:
- is necessary or expedient to comply with or be consistent with the current
provision of any statute, ordinance, regulation, by-law, or other
statutory authority, or is necessary to conform
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to any change or amendment of any statute, regulation or other requirement
of a government agency;
- is made to correct a manifest error or is of a formal, technical or
administrative nature only; or
- is considered by the issuer trustee not to be materially prejudicial to
the interests of noteholders, or any individual noteholder or group of
noteholders.
TERMINATION OF SERVICING AGREEMENT
The servicing agreement will terminate in respect of a trust on the earlier
of
- the date on which the servicing agreement is terminated in respect of that
trust by the issuer trustee if a Servicer Termination Event occurs;
- the date which is one month after the notes in relation to the related
trust have been redeemed in full under the transaction documents and the
issuer trustee ceases to have any obligation to any creditor in respect of
that trust;
- the date on which the issuer trustee replaces the Servicer with an
eligible successor Servicer in respect of that trust; and
- the date on which the Servicer is replaced after resigning or being
removed in respect of that trust.
MODIFICATIONS AND AMENDMENTS
The issuer trustee and the Trust Manager, with respect to the Master Trust
Deed and the supplemental deed, or the issuer trustee, the Trust Manager and the
note trustee, with respect to the note trust deed may by way of supplemental
deed alter, add to or modify the Master Trust Deed, the supplemental deed or the
note trust deed (as the case may be) without the consent of the noteholders or
the beneficiary of the related trust, including:
- to correct a manifest error or ambiguity, or if the amendment is of a
formal, technical or administrative nature only;
- in the event of an inconsistency between the provisions of any of the
above named transaction documents and the description of the provisions in
the related prospectus, to correct such inconsistency;
- if the amendment is necessary to comply with the provisions of any law or
regulation or with the requirements of any Australian governmental agency;
- if the amendment is appropriate or expedient as a consequence of an
amendment to any law or regulation or altered requirements of the
government of any jurisdiction, any department, commission, office of any
government or any corporation owned or controlled by any government,
including, without limitation, an alteration, addition or modification
which is appropriate or expedient as a consequence of the enactment of a
statute or regulation or an amendment to any statute or regulation or
ruling by the Australian Commissioner or Deputy Commissioner of Taxation
or any governmental announcement or statement, in any case which has or
may have the effect of altering the manner or basis of taxation of trusts
generally or of trusts similar to any of the trusts established pursuant
to the Program; or
- if the amendment, in the opinion of the issuer trustee (in respect of the
Master Trust Deed or the supplemental deed) or the note trustee (in
respect of the Master Trust Deed), is desirable to enable the provisions
of the Master Trust Deed or the supplemental deed or the note trust deed
(as the case may be) to be more conveniently, advantageously, profitably
or economically administered or is otherwise desirable for any reason.
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However, any alteration, addition or modification described in the preceding
paragraph, where in the reasonable opinion of the note trustee or the issuer
trustee, as the case may be, a proposed alteration, addition or modification to
the Master Trust Deed or the supplemental deed (in the case of the issuer
trustee) or the note trust deed (in the case of the note trustee) (as the case
may be) is prejudicial or likely to be prejudicial to the interests of the
noteholders or a class of noteholders or the Unit Holders (as the case may be),
the alteration, addition or modification may only be effected by the issuer
trustee or note trustee, as applicable, with the prior consent of the holders of
75% of the aggregate principal amount of the relevant class or classes of notes
or with the prior written consent of the Unit Holders, as the case may be. The
opinion of the issuer trustee or the note trustee as to whether a proposed
alteration, addition or modification is prejudicial or likely to be prejudicial
to the noteholders (or a class thereof) may be supported by either an Opinion of
Counsel or by the written confirmation of the applicable rating agencies that
such proposed amendment would not result in a downgrade or withdrawal of the
rating then assigned to the notes (or the relevant class thereof).
USE OF PROCEEDS
The issuer trustee will apply all or substantially all of the net proceeds
from the sale of each series of notes under the Program for one or more of the
following purposes:
- to purchase the assets of the trust;
- to repay indebtedness which has been incurred to obtain funds to acquire
the assets of the trust; and
- to pay costs of structuring and issuing the notes, including the costs of
obtaining any credit enhancement.
LEGAL ASPECTS OF THE MORTGAGE LOANS
The following discussion is a summary of the material legal aspects of the
Australian mortgage loans and mortgages. It is not an exhaustive analysis of the
relevant law. Some of the legal aspects are governed by the laws of the
applicable State or Territory. Laws may differ 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, although it reflects the material aspects of the laws of New South
Wales (except where it expressly provides otherwise), without referring to any
specific legislation of that state. In the event that the laws of a particular
jurisdiction having a high concentration of mortgaged properties are material to
prospective investors in the notes, the applicable laws of that jurisdiction, to
the extent material to investors and not addressed under this "Legal Aspects of
the Mortgage Loans", will be summarized in part A of this prospectus.
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. Generally, each mortgage 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. All mortgage loans securitized under the Program will be secured by a
first ranking registered mortgage. Each mortgagor is prohibited under the
mortgage documents from creating another mortgage or other security interest
over the relevant mortgaged property without the consent of the lender.
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AUSTRALIA
TYPES OF SECURITY
All mortgage loans in respect of which the borrower is a resident of a State
or Territory of Australia must be secured by a mortgage over one of the
following types of interest in land.
TORRENS TITLE
Torrens title is the most common form by which title to land is held in
Australia. Torrens title is normally freehold title. Interests are created by
registration in a register maintained by the land titles office of the relevant
state or territory. A certificate of title will generally be issued to the
proprietor of the land. Entry in the register (held with the land titles office)
of a mortgage creates (except in the case of fraud) an indefeasible interest in
the land.
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 mortgages, registered easements and other dealings to
which it is subject. The certificate is conclusive evidence, except in limited
circumstances, such as fraud, of the matters stated in it.
STRATA TITLE
Strata title is a system of a title (under Torrens title) under which land
is divided into a number of units (similar to condominiums in the United States)
and is governed by the laws of the state or territory in which the property is
situated. The proprietor has title to a unit of that land and may freely deal
with that unit. Certain parts of the property, such as the land on which the
building is erected, the stairwells, entrance lobbies, are referred to 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, including the regulations governing the
apartment block, for the benefit of the proprietors.
Only Torrens title land can be the subject of strata title in this way, and
so the provisions referred to in this section in relation to Torrens title apply
to the title in 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 of the land are subject to the terms of that lease. A Crown lease
is any right, power or privilege over, or in connection with land, granted by
the Commonwealth, a State or a Territory or an authority of the Commonwealth, a
State or a Territory. The lease is granted under a statutory law of the
Commonwealth, State or Territory for a certain purpose.
Any lease of this type:
(i) 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
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(ii) where it involves residential property, is subject to a nominal rent of
5 cents (Australian) per annum on demand.
Urban leasehold land is held under Torrens title. The borrower's leasehold
interest in the land is entered in a central register and the borrower may deal
with its leasehold interest, including granting a mortgage over the property,
without consent from the government.
In all cases where mortgaged property consists of a leasehold interest, the
unexpired term of the lease must exceed the term of the mortgage loan secured by
that mortgaged property.
Some leasehold property may become subject to native title claims. Native
title was only recognized by Australian courts in 1992. 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. To give
statutory recognition to indigenous Australians' common law rights and to
resolve a number of land management issues, the Commonwealth legislated the
Native Title Act in 1993 of Australia, and amended it in 1998. The amended
Native Title Act contains a schedule of tenures that extinguish native title,
which includes residential leases. Although there are a number of test cases
before the courts, the current view is that a lease entered into on or before 23
December 1996 which confers the right of exclusive possession over the property,
which is typically the case with residential leases, will extinguish native
title over the relevant property. Whether a lease confers exclusive possession
will depend on a construction of the lease and the legislation under which the
lease was granted.
OLD SYSTEM TITLE
Old System Title is another form of freehold title. Here, interests are
created by deeds between parties, or by will. Proof of title involves searching
back for a number of years to establish an unbroken "chain" of title.
COMPANY TITLE
Company title is an exclusive right conferred by a home unit company on a
shareholder to occupy a particular part of a building which the company owns.
The shareholder has a contractual right against the home unit company but does
not acquire ownership of that part of the building which he or she occupies
pursuant to the ownership of the shares.
TAKING SECURITY OVER LAND
The law relating to the granting of securities over real property in
Australia is complicated by the fact that each State and Territory has separate
governing legislation. The following is a summary of the material issues
involved in taking security over land in Australia.
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 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; in short, 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.
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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. 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 and the Northern Territory, 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 discharged.
ENFORCEMENT OF REGISTERED MORTGAGES
ENFORCEMENT GENERALLY
The law relating to the enforcement of registered mortgages over real
properties in Australia is complicated by the fact that each State or Territory
has separate governing legislation. The following is a summary of the material
issues involved in enforcing registered mortgages in Australia.
Subject to the discussion in this section, if a borrower defaults under a
mortgage loan, the loan documents provide that all moneys under the mortgage
loan become due and payable either, in limited circumstances, immediately, or
otherwise after a default notice has been given and the default has not been
remedied within a prescribed period of time (generally at least 30 days). The
lender then has a number of remedies, including the right to sue to recover all
outstanding principal, interest and fees under the borrower's personal covenant
to repay the amounts set out in the loan documents.
In addition, the lender may enforce a registered mortgage in a number of
ways. They include:
- SELLING THE PROPERTY. This power of sale is usually expressly contained in
the mortgage documents, and is also implied in 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. The mortgagee is under certain duties in
the conduct of the sale. The sale 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;
- LEASING THE PROPERTY. The lender may, in limited circumstances, lease the
property to third parties;
- ENTERING 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. The mortgagee may apply rent or profits received from the
possession of the property in satisfaction of the amount owing in respect
of the mortgage loan and the related mortgage or it may sell the property.
Upon taking possession, the mortgagee has a number of duties including the
duty to account, to realize assets conscientiously, to get in rents and
other income, to improve the property and make repairs, and to maintain
the security for the benefit of the guarantor (if any);
- FORECLOSING ON THE PROPERTY. Under foreclosure procedures, the mortgagor's
right, title and interest in the property is extinguished (including any
right to redeem the mortgage) so that the mortgagee becomes the absolute
owner of the property. This remedy is, because of procedural constraints,
rarely used except where the value of the loan outstanding is higher
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than the value of the property likely to be realized by the sale. In such
a case the mortgagee may then consider it worthwhile to take title to the
property in satisfaction of the debt and wait for the market to improve to
recoup the outstanding loan. However, 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;
- APPOINTING A RECEIVER TO DEAL WITH THE PROPERTY OR WITH INCOME FROM THE
PROPERTY OR EXERCISE OTHER RIGHTS DELEGATED TO THE RECEIVER BY THE
MORTGAGEE. A receiver will generally manage and administer the property in
the interests of the mortgagee in order to preserve the mortgagee's
security and set off the income from the property against payments due
under the mortgage loan and the related mortgage. 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; or
- OBTAINING AN ORDER FOR JUDICIAL SALE UNDER AN APPLICATION TO THE RELEVANT
COURT. This remedy is rarely used, as most mortgage documents now contain
express provisions allowing the mortgagee to sell the property, or the
mortgagee has the power to do so under the relevant Torrens title
legislation. It is likely to only be used where the mortgage document does
not itself confer the requisite power to sell the property, such as where
an equitable mortgage over land is created by the deposit of title deeds.
A mortgagee's ability to call in all amounts under a mortgage loan or
enforce a mortgage which is subject to the Australian Consumer Credit Code is
limited by various demand and notice procedures which must 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 a borrower's obligation to pay interest
on a default or delinquent payment if the interest rate charged on default is
seen to be a "penalty." Some jurisdictions prescribe a maximum recoverable
interest rate. However, most do not specify what is a penalty; in those
circumstances, whether a rate is a penalty will be determined by such factors as
prevailing market interest rates. The Australian Consumer Credit Code does not
impose a limit on the rate of default interest. However, legislation in New
South Wales, Queensland, South Australia, Western Australia, the Australian
Capital Territory and the Northern Territory prevents a lender from recovering
interest under a consumer loan at a rate that exceeds 48% per annum while in
Victoria, a mortgage is void if the interest rate under the relevant loan
exceeds 30% and the loan contract itself is unenforceable if the interest rate
exceeds 48% per annum. In addition, throughout Australia, if a rate is too high,
the borrower may be entitled to have the loan agreement reopened on the ground
that it is unjust. Under the Corporations Law of the relevant Australian
jurisdiction, the liquidator of a company may avoid a loan under which an
extortionate interest rate is levied.
The Australian Consumer Credit Code requires that any fee or charge to be
levied in connection with the mortgage loan must be authorized, and sometimes
specified in the contract, otherwise it cannot be levied. The regulations under
the Australian Consumer Credit Code may also prohibit certain fees and charges.
The Australian Consumer Credit Code also requires that establishment fees,
termination fees and prepayment fees be reasonable, or 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 prove, or file a claim, 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 a trustee
in bankruptcy. These include where:
(a) the disposition was made to defraud creditors; or
(b) the disposition was made by an insolvent debtor within 6 months of the
petition for bankruptcy and 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:
(a) when the company was insolvent, or an act was done to give effect to the
transaction when the company was insolvent, or the company became
insolvent because of the transaction or the doing of an act to give
effect to the transaction; and
(b) within a prescribed period before the winding up of the company.
The liquidator may also avoid a loan under which an extortionate interest
rate is levied.
ENVIRONMENTAL CONSIDERATIONS
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,
including 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 does 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 pre-existing mortgages.
To the extent that the issuer trustee or a receiver appointed on the issuer
trustee's behalf incurs any of these liabilities, it will be entitled to be
indemnified out of the assets of the trust.
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TAX TREATMENT OF INTEREST ON AUSTRALIAN MORTGAGE 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 non-owner occupied residential properties that generate taxable
income are generally allowable as tax deductions.
THE SELLER AS MORTGAGEE
The Seller is, and until a Title Perfection Event occurs intends to remain,
the registered mortgagee of all the mortgages. The borrowers and guarantors will
not be aware of the equitable assignment of the mortgage loans and mortgages to
the Depositor and the issuer trustee.
Prior to any Title Perfection Event, the Servicer will undertake any
necessary enforcement action with respect to defaulted mortgage loans and
mortgages. Following a Title Perfection Event, the issuer trustee is entitled,
under an irrevocable power of attorney granted to the Depositor by the Seller
and assigned to the issuer trustee, to be registered as mortgagee of the
mortgages. Until that registration is achieved, the issuer trustee or the Trust
Manager is entitled, but not obligated, to lodge caveats on the register to
publicly notify its interest in the mortgages.
INSOLVENCY CONSIDERATIONS
Each equitable assignment of the mortgage loans is designed to mitigate
insolvency risk. For example, the equitable assignment of the mortgage loans by
the Seller to the Depositor, and by the Depositor to the issuer trustee, should
ensure that the mortgage loans are not assets available to the liquidator or
creditors of the Seller in the event of the Seller's insolvency. Similarly, the
assets in the trust should not be available to 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 an Insolvency Event occurs with respect to the issuer trustee, the master
security trust deed and the deed of charge may be enforced by the security
trustee at the direction of the Voting Secured Creditors. The security created
by the master security trust deed and the deed of charge in respect of a trust
will stand outside any liquidation of the issuer trustee of the relevant trust,
and the assets the subject of that deed of charge will not be available to the
liquidator or any creditor of the issuer trustee of the relevant trust, other
than a creditor which has the benefit of the master security trust deed and the
deed of charge in respect of a trust, until the secured obligations have been
satisfied. The proceeds of enforcement of the master security trust deed and the
deed of charge in respect of a trust are to be applied by the security trustee
as set out in the supplemental deed for the relevant trust. If the proceeds from
enforcement of the master security trust deed and the deed of charge are not
sufficient to redeem the notes in full, some or all of the noteholders will
incur a loss.
AUSTRALIAN CONSUMER CREDIT CODE
The Australian Consumer Credit Code is the substantially identical governing
legislation of each State or Territory in Australia. The following is a summary
of certain of the material provisions of the Australian Consumer Credit Code
that may affect the mortgage loans and the issuer trustee. The majority of the
mortgage loans located in Australia are regulated by the Australian Consumer
Credit Code. Mortgage loans which are unregulated by the Australian Consumer
Credit Code are unregulated by Australian statute. Under the Australian Consumer
Credit Code, a borrower has the right to apply to a court to do the following,
among other things:
(a) vary the terms of a mortgage loan on the grounds of hardship or because
it is an unjust contract (guarantees and mortgages can also be varied on
grounds that they are unjust);
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(b) reduce or cancel any interest rate payable on a mortgage loan if the
interest rate is changed in a way which is unconscionable;
(c) have certain provisions of a mortgage loan which are in breach of the
Australian Consumer Credit Code declared unenforceable;
(d) obtain an order for a civil penalty against the lender in relation to a
breach of certain key requirements of the Australian Consumer Credit
Code, the amount of which may be set off against any amount payable by
the borrower under the applicable mortgage loan; or
(e) obtain additional restitution or compensation from the lender for
breaches of the Australian Consumer Credit Code in relation to a mortgage
loan or mortgage (guarantors may also obtain restitution or compensation
for breaches of the Australian Consumer Credit Code in relation to
mortgages or guarantees).
The issuer trustee of a trust will become liable for compliance with the
Australian Consumer Credit Code if it acquires legal title to the mortgage
loans. It will take this legal title subject to any breaches of the Australian
Consumer Credit Code by the relevant lender. In particular, once the issuer
trustee of a trust acquires legal title it may become liable to orders of the
type referred to in (d) and (e) above in relation to breaches of the Australian
Consumer Credit Code. Criminal fines may be imposed on the Seller in respect of
breaches of the Australian Consumer Credit Code by it while it held legal title
to the mortgage loans. In addition, a mortgagee's ability to enforce a mortgage
which is subject to the Australian Consumer Credit Code is limited by various
demand and notice procedures which must be followed. Any order under the
Australian Consumer Credit Code may affect the timing or amount of interest or
principal payments or repayments under the relevant mortgage loan, which might
in turn affect the timing or amount of interest or principal payments or
repayments to the noteholders under the notes in respect of a trust. 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.
The Seller will indemnify the Depositor and the issuer trustee against any
loss that the Depositor or the issuer trustee may incur as a result of a failure
by the relevant Seller to comply with the Australian Consumer Credit Code in
respect of a mortgage loan or related mortgage. The Depositor will assign the
benefit of that indemnity to the issuer trustee.
The Seller will give certain representations and warranties that the
mortgage loans and related mortgagees which it assigns to the Depositor comply
in all material respects with the Australian Consumer Credit Code in force at
the time documents were executed. The Depositor will assign all of its rights in
respect to those representations and warranties to the issuer trustee. The
Servicer of the relevant trust will undertake to comply with the Australian
Consumer Credit Code in connection with servicing the mortgage loans and related
mortgages where failure to do so would result in an event which will materially
and adversely affect the amount of any payment to be made to any noteholder of a
trust, or will materially and adversely affect the timing of such payment. In
some circumstances, the issuer trustee of a trust may have the right to claim
damages from the Seller or the Servicer, as the case may be, where that issuer
trustee suffers a loss in connection with a breach of the Australian Consumer
Credit Code which is caused by a breach of a relevant representation or
undertaking.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
OVERVIEW
The following is a summary of the material United States Federal income tax
consequences of the purchase, ownership and disposition of the notes of any
series or class by investors who are subject to United States Federal income tax
on a net basis. This summary is based upon current provisions of the Internal
Revenue Code of 1986 of the United States (the "Code"), as amended, 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 Internal
Revenue Service (the "IRS"). The parts of this summary which relate to matters
of law or legal conclusions represent the opinion of Brown & Wood LLP, special
United States Federal income tax counsel for the Trust Manager 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.
Brown & Wood LLP has prepared or reviewed the statements under the heading
"Material United States Federal Income Tax Consequences" and is of the opinion
that these statements discuss all material United States Federal income tax
consequences to investors of the purchase, ownership and disposition of the
notes. However, the following discussion does not discuss, and Brown & Wood LLP
is unable to opine as to, 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:
- banks and thrifts,
- insurance companies,
- regulated investment companies,
- dealers in securities,
- 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,
- foreign investors,
- trusts and estates, and
- 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 who will hold
the notes as "capital assets" within the meaning of Section 1221 of the Code and
does not address the United States Federal income tax consequences with respect
to notes purchased in the secondary market.
It is suggested that prospective investors consult their own tax advisors
about the United States Federal, State, local, foreign and any other tax
consequences specific 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 not be indemnified for any
United States Federal income taxes that may be imposed upon it, and any
imposition of such taxes on the trust could result in a reduction in the amounts
available for distributions to the holders of notes.
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We will agree, and if you purchase notes of any class or series, you will
agree by your purchase of the notes, to treat the notes as debt for United
States Federal, State and local income and franchise tax purposes. Each
noteholder, by the acceptance of a note, will agree to treat the notes as
indebtedness for Federal income tax purposes.
GENERAL
SUMMARY OF OPINIONS WITH RESPECT TO THE CLASS A NOTES. In the opinion of
Brown & Wood LLP, special United States federal income tax counsel for the Trust
Manager, the Class A Notes will be characterized as debt for U.S. federal income
tax purposes. In addition, in the opinion of Brown & Wood LLP, (i) the Trust
will not be subject to an entity-level tax for U.S. federal income tax purposes
and (ii) the issuer trustee will not be treated as engaged in the conduct of a
United States trade or business (and, accordingly, not subject to United States
Federal income tax) solely as a result of any activities that it conducts as
issuer trustee of the Trust. This opinion is based upon the applicable
provisions of the Code, U.S. Treasury Regulations promulgated and proposed
thereunder, current positions of the IRS contained in published revenue rulings
and revenue procedures and existing judicial decisions, all of which are subject
to change, which change may have retroactive effects. Moreover, this opinion is
subject to the accuracy of certain factual representations made to Brown & Wood
LLP by the Seller. Each Class A Noteholder, by acceptance of a Class A note,
agrees to treat the Class A Notes as indebtedness.
ORIGINAL ISSUE DISCOUNT, INDEXED SECURITIES, ETC. The discussion below
assumes that all payments on the notes are denominated in U.S. dollars and that
the notes are not indexed securities or strip notes. Additionally, the
discussion assumes that the interest formula for the notes meets the
requirements for "qualified stated interest" under Treasury regulations, called
the "OID Regulations," relating to original issue discount, or "OID." This
discussion assumes that any original issue discount on the notes is a DE MINIMIS
amount, within the meaning of the OID Regulations. Under the OID Regulations,
the offered notes will have original issue discount to the extent the principal
amount of the notes exceeds their issue price. Further, if the notes have any
original issue discount, it will be DE MINIMIS if it is less than 1/4% of the
principal amount of the offered notes multiplied by the number of full years
included in their term.
INTEREST INCOME ON THE NOTES
Based on the above assumption, except as discussed below, the notes will not
be considered issued with OID. If you buy notes, you will be required to report
as ordinary interest income the stated interest on the notes when received or
accrued in accordance with your method of tax accounting. Under the OID
Regulations, if you hold a note issued with a DE MINIMIS amount of OID, you must
include this OID in income, on a pro rata basis, as principal payments are made
on the note. If you purchase a note for more or less than its principal amount,
you will generally be subject, respectively, to the premium amortization or
market discount rules of the Code, discussed below.
SALE OF NOTES
If you sell a note, you will recognize gain or loss in an amount 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 OID 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
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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. In the case of an individual taxpayer, any capital
gain on the sale of a note will be taxed at a maximum rate of 39.6% if the note
is held for 12 months or less and at a maximum rate of 20% if the note is held
for more than 12 months.
MARKET DISCOUNT
You will be considered to have acquired a note at a "market discount" to the
extent the issue price of the note exceeds the amount you paid for 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 addition, if you dispose of a note by gift, and in certain other
circumstances, you may be required to recognize market discount income computed
as if the note had been sold for its fair market value.
In the case of a partial principal payment on a note subject to the market
discount rules, Section 1276 of the Code requires that 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.
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, you should follow the explanatory Conference Committee Report to the Tax
Reform Act of 1986 of the United States for your accrual of market discount.
This Conference Committee Report indicates that holders of these obligations may
elect to accrue market discount either on the basis of a constant interest rate
or as follows:
- for those obligations that have OID, market discount shall be deemed to
accrue in proportion to the accrual of OID for any interest period; and
- for those obligations which do not have OID, the amount of market discount
that is deemed to accrue is the amount of market discount that bears the
same ratio to the total amount of remaining market discount that the
amount of stated interest paid in the interest period bears to the total
amount of stated interest remaining to be paid on the obligation at the
beginning of the interest 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 OID
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.
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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 the
amount you pay for the note exceeds the sum of all amounts payable on the note
after the purchase date other than payments of qualified stated interest and 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, which indicates a Congressional intent
that amortization be in accordance with the rules that will apply to the accrual
of market discount on these obligations should be followed.
BACKUP WITHHOLDING TAXES
Backup withholding taxes will be imposed on payments to you at the rate of
31% on interest paid, and OID accrued, if any, on the notes if, upon issuance,
you fail to supply the Trust Manager or its broker with a certified statement,
under penalties of perjury, containing your name, address, correct taxpayer
identification 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
non-resident 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 Trust Manager and to you stating the amount of interest paid,
OID 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.
The Treasury Department issued new regulations, which modify the backup
withholding and information reporting rules described in this section, on
October 6, 1997 and subsequently amended such regulations on May 15, 2000. 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.
TAX CONSEQUENCES TO FOREIGN NOTEHOLDERS
If interest paid (or accrued) to a noteholder who is a nonresident alien,
foreign corporation or other non-United States person, a "foreign person," is
not effectively connected with the conduct of a trade or business within the
United States by the foreign person, the interest should generally not be
subject to U.S. Federal income tax or withholding tax as such interest should
not be treated as U.S. source income. In the event such interest is treated as
U.S. source income, the interest generally will be considered "portfolio
interest," and generally will not be subject to the United States Federal income
tax and withholding tax, as long as the foreign person (1) is not actually or
constructively a "10 percent shareholder" of the trust if a "controlled foreign
corporation" with respect to which the trust is a "related person" within the
meaning of the Code, and (2) provides an appropriate statement, signed under
penalties of perjury, certifying that the beneficial owner of the note is a
foreign person and providing the foreign person's name and address. If the
information provided in this statement changes, the foreign person must so
inform the issuer trustee within 30 days of such change. If applicable
certification requirements were not satisfied, then interest received by a
noteholder will be subject to United States Federal income and withholding tax
at a rate of 30 percent unless reduced or eliminated pursuant to an applicable
tax treaty. The
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IRS has amended the transition period relating to new regulations governing
backup withholding and information reporting requirements. Withholding
certificates or statements that are valid on December 31, 1999, may be treated
as valid until the earlier of their expiration or December 31, 2000. Certain
existing certificates or statements, including these to be provided on IRS
Form W-8, 1001 and 4224, will cease to be effective after December 31, 2000.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a note by a foreign person will be exempt from the United
States Federal income and withholding tax, provided that (1) the gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person, and (2) in the case of a foreign individual, the
foreign person is not present in the United States for 183 days or more in the
taxable year.
If the interest, gain or income on a note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person, the holder (although exempt from the withholding
tax previously discussed if an appropriate statement is furnished) generally
will be subject to United States Federal income tax on the interest, gain or
income at regular United States Federal income tax rates. In addition, if the
foreign person is a foreign corporation, it may be subject to a branch profits
tax equal to 30 percent of its "effectively connected earnings and profits"
within the meaning of the Code for the taxable year, as adjusted for certain
items, unless it qualifies for a lower rate under an applicable tax treaty.
FOREIGN TAX CREDIT
For foreign tax credit purposes, stated interest, if any on the notes will
constitute income from foreign sources and likely will constitute "passive
income" or, in the case of certain holders which are financial institutions,
"financial services" income. Based on Australian law as of the date of this
prospectus, it is expected that notes will not be subject to Australian
withholding tax. See "Material Australian Tax Consequences--Interest Withholding
Tax." In the event that the notes are subject to withholding tax, the amount of
income payable to you will include the amount of all Australian taxes withheld
by the issuer, if any, in respect thereof. If interest payable with respect to
the notes is subject to withholding tax at a rate at least equal to 5 percent,
such interest will be treated as "high tax withholding interest" for federal
income tax purposes for foreign tax credit limitation purposes. Thus, in the
event of such withholding, you would be required to report income in amount
greater than the cash you receive in respect of payments on the notes. However,
you may, subject to certain limitations, be eligible to claim as a credit or
deduction for purposes of computing your U.S. federal income tax liability the
Australian taxes withheld notwithstanding that the issuer pay such taxes. The
rules relating to foreign tax credits and the timing thereof are extremely
complex and you should consult with your own tax advisors with regard to the
applicability of the foreign tax credit limitations to your particular
situation.
MATERIAL AUSTRALIAN TAX CONSEQUENCES
AUSTRALIAN TAXATION
The following is a summary of the material Australian tax consequences of
the purchase, ownership and disposition of the notes to holders who are not
residents of Australia for Australian tax purposes and who purchase securities
upon original issuance at the stated offering price and hold the notes as
capital assets and of the taxation of the Trust. The statements of law or legal
conclusions in this summary represent the opinion of Mallesons Stephen Jaques,
Australian tax counsel to the Trust Manager, on the basis of Australian law as
in effect on the date of this prospectus, which is subject to change, possibly
with retroactive effect.
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Each prospective investor may wish to consult his or her own tax advisors
concerning the tax consequences, in their particular circumstances, of the
purchase, ownership and disposition of the notes.
INTEREST WITHHOLDING TAX
Interest paid by a resident of Australia, such as the issuer trustee, to a
non-resident of Australia, who does not derive such interest in the course of
carrying on business in Australia at or through a permanent establishment in
Australia is ordinarily subject to interest withholding tax at the rate of 10%
of the gross amount of the interest. An exemption from this withholding tax is
available under section 128F of the Tax Act in respect of interest payable on
securities where the securities satisfy a public offer test (as to which see
below). Any of the notes which, at the time of issue, the issuer trustee knew or
had reasonable grounds to suspect were being or would later be acquired directly
or indirectly by an associate of the issuer trustee, other than as a dealer,
manager or underwriter, would not qualify for this exemption, nor would interest
qualify for this exemption if paid to a person who, at the time of payment, the
issuer trustee knows or has reasonable grounds to suspect is an associate of the
trust.
There are five principal methods of satisfying the public offer test, the
purpose of which is to ensure that lenders or investors in capital markets are
aware that the securities are being offered for issue or subscription. In
summary, the five methods are offers to 10 or more unrelated financiers or
securities dealers; offers to 100 or more investors; offers of securities which
are listed on certain stock exchanges; offers that result from information
available publicly on automated quotation systems or other means used to
disseminate market information; and offers to dealers, managers or underwriters
who in turn offer the securities for sale within 30 days by one of the preceding
methods. In addition, the issue of a global bond or note and the offer of
interests in the global bond or note by one of these methods can generally
satisfy the public offer test.
The issuer trustee proposes that issues of the notes would be made in a
manner which would satisfy the public offer test (or the requirements for
exemption in respect of a global bond or note) and would otherwise satisfy the
conditions for an exemption from withholding tax under section 128F of the Tax
Act.
In the opinion of Mallesons Stephen Jaques, if the Class A Notes issued by
the Trust (or any other notes issued by a trust in accordance with the Master
Trust Deed) are issued in accordance with certain factual conditions and are not
held by "associates" (as that term is defined in the Income Tax Assessment Act
of 1936) of the Trust, then payments of principal, interest and any premium made
to a holder of the notes who is not a resident of Australia and who does not
carry on business in Australia through a permanent establishment in Australia,
will not be subject to Australian income or withholding taxes. Interest paid on
notes held by Australian residents (and non-Australian residents who hold the
notes in the course of carrying on business in Australia) will be subject to
ordinary Australian income tax. In addition, holders of notes who are Australian
residents or non-Australian residents who hold the notes in the course of
carrying on business in Australia may be required to provide tax file numbers,
Australian Business Numbers or proof of some exemption from the need to so
provide in order to avoid withholding from payments made by the issuer trustee.
If, for any reason, the interest paid by the issuer trustee is not exempt
from interest withholding tax, the treaty titled "Convention for the Avoidance
of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on
Income" between the United States and Australia may apply. This treaty provides
that interest which has its source in Australia, and to which a United States
resident, as defined in the treaty and who is entitled to the benefit of the
treaty, is beneficially entitled, may be taxed in Australia, but that any tax
charged shall not exceed 10% of the gross amount of
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interest. However, this provision will not apply where the indebtedness giving
rise to the interest entitlement is effectively connected with:
- the United States resident beneficial owner's permanent establishment, at
or through which it carries on business in Australia; or
- the United States resident beneficial owner's fixed base, situated in
Australia, from which it performs independent personal services.
SALE OR RETIREMENT
In the opinion of Mallesons Stephen Jaques, a holder of the notes who is not
a resident of Australia and who does not carry on business through a permanent
establishment in Australia will not be subject to Australian income or capital
gains tax on any gains or profits made on the sale or retirement of the
securities, provided such gains or profits do not have an Australian source. A
gain arising on the sale of the notes by a non-Australian resident holder, where
the sale and all negotiations for and documentation of the sale are conducted
and executed outside Australia, would not usually be regarded as having an
Australian source.
AMOUNTS OF DISCOUNT, PREMIUM, ETC.
If applicable, part A of this prospectus will contain a discussion of any
special Australian tax consequences not discussed herein applicable to the notes
being offered thereby, such as the special rules applicable to the sale to an
Australian resident of securities which were issued at a discount to the amount
payable upon redemption or which require the payment of a premium on redemption.
GOODS AND SERVICES TAX
From July 1, 2000, a goods and services tax ("GST") applies in Australia. If
an entity makes any taxable supplies after July 1, 2000 it will have to remit
goods and services tax to the Australian Taxation Office equal to 10% of those
supplies.
In the case of supplies by the issuer trustee, if the supply is:
- "GST free," the issuer trustee does not pay a goods and services tax on
the supply and can obtain input tax credits for goods and services taxes
paid on things acquired to make the supply;
- "taxable," the issuer trustee pays goods and services tax on the supply
and can obtain input tax credits for goods and services tax paid on things
acquired to make the supply; or
- "input taxed," ("GST Exempt")which includes financial supplies, the issuer
trustee does not pay a goods and services tax on the supply, but is not
entitled to input tax credits for goods and services tax paid on things
acquired to make the supply. In some circumstances a "reduced input tax
credits" may be available.
In the opinion of Mallesons Stephen Jaques, the issue of notes and the
payment of interest or principal on the notes will constitute financial supplies
and will accordingly be input taxed.
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. Under the
supplementary terms notice, certain fees paid by the issuer trustee, namely the
Trust Manager's fee, the issuer
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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:
- the issuer trustee, the Trust Manager and the recipient of the relevant
fee agree, which agreement shall not be unreasonably withheld; and
- the increase will not result in the downgrading or withdrawal of the
rating of any notes.
The issuer trustee may not be entitled to a full input tax credit where fees
payable by the issuer trustee are treated as the consideration for a taxable
supply or are increased by reference to the relevant supplier's goods and
services tax liability. The issuer trustee may not be entitled to a full input
tax credit for that increase and the trust expenses will increase, resulting in
a decrease in funds available to the trust to pay interest on the notes.
The goods and services tax may increase the cost of repairing or replacing
damaged properties offered as security for mortgage loans. However, it is a
condition of the Seller's mortgage documentation that the borrower must maintain
full replacement value property insurance at all times during the loan term.
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 mortgage
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 mortgage 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
mortgage 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:
- the property is no longer being used as a residence;
- the property is used as commercial residential premises such as a hostel
or boarding house;
- the borrower is the first vendor of the property-the borrower built the
property; or
- or 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 in certain limited circumstances have to account for goods and
services tax in respect of any claim payment received. Generally, if certain
compliance procedures have been followed, 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 mortgage 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
In the opinion of Mallesons Stephen Jaques, under current Australian law,
there are no gift, estate or other inheritance taxes or duties. No stamp, issue,
registration or similar taxes are payable in Australia in connection with the
issue of notes.
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In the opinion of Mallesons Stephen Jaques, Australian stamp duty will not
be payable on a transfer of, or an agreement to transfer, the notes if the
transfer or agreement is executed outside Australia.
In the opinion of Mallesons Stephen Jaques, Australian tax counsel to the
Global Trust Manager, under present tax laws, the issuer trustee should not be
liable for income tax in respect of a trust for any year. If the trust has
surplus income for any year, then, provided that such surplus income is
allocated to the holder of the residual income unit of such trust, under present
tax laws the residual income unitholder of such trust (and not the issuer
trustee or the trust) should be taxed on that surplus income. It is intended
that by the operation of the relevant trust deed, the residual income unitholder
will be entitled to any surplus income of the relevant trust.
However, you should note that the liability of the issuer trustee for any
income tax in respect of a trust will depend on certain factual matters such as
the operations of the trust, the manner in which the trust is administered and
the assessable income and permitted deductions of the trust. The tax neutrality
of each trust would be considered upon its establishment and confirmed for the
specific assets to be acquired by the trust and having regard to the manner in
which the trust financed that acquisition.
Any liability of the issuer trustee on its corporate income (and not the
income of the trust) will not be satisfied from the assets of the trust.
RECENT TAX REFORMS
The Australian government has recently re-written the legislative provisions
in the tax law which provide for the mechanisms by which tax is collected. The
re-written system of collection is now known as Pay As You Go ("PAYG"). PAYG has
elements which are essentially a mere re-write of the old system and elements
which introduce an entirely new way by which individuals and entities (such as
companies and trusts) are required to withhold and/or remit either their own tax
or tax withheld by them but for the account of others, to the taxing
authorities.
In the opinion of Mallesons Stephen Jaques, it is unlikely that PAYG will,
at a practical level, result in the issuer trustee having less funds available
to meet its obligations, including its obligations to noteholders assuming that
the parties involved comply with any reporting, payment and disclosure
obligations that may be imposed under PAYG.
TAX REFORM PROPOSALS
In the opinion of Mallesons Stephen Jaques, under present tax laws, the
issuer trustee is not liable to income tax in respect of the income of the
relevant trust. The Australian government has proposed to amend the law from
July 1, 2001 to tax trusts as companies. Draft legislation in respect of the
proposal has been made available by the Australian Federal Government. On the
basis of the draft legislation, it appears likely that the new rules would not
apply to the relevant trust and the Master Trust Deed contains mechanisms which
allow, to the extent possible, the relevant trust to be amended to maintain its
current "look through" status. However, if contrary to expectations, the new
rules would apply to a securitization vehicle like the relevant trust, the
issuer trustee may have less funds available to meet its obligations, including
its obligations to noteholders.
ERISA CONSIDERATIONS
Subject to the considerations discussed in this section (except as specified
in part B), the notes are eligible for purchase by employee benefit plans.
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Section 406 of the Employee Retirement Income Security Act of the United
States ("ERISA") and Section 4975 of the Code prohibit a pension, profit-sharing
or other employee benefit plan, as well as an individual retirement account or
Keogh plan, 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
(unless clearly 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, unless otherwise indicated in part A of this
prospectus, it appears that, at the time of their initial issuance, the notes
should be treated as debt without substantial equity features for purposes of
the regulation. The debt characterization of the notes could change after their
initial issuance if the trust incurs 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 Trust 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:
- Prohibited Transaction Class Exemption 96-23, regarding transactions
effected by 64 in-house asset manager";
- Prohibited Transaction Class Exemption 90-1, regarding investments by
insurance company pooled separate accounts;
- Prohibited Transaction Class Exemption 95-60, regarding transactions
effected by "insurance company general accounts";
- Prohibited Transaction Class Exemption 91-38, regarding investments by
bank collective investment funds; and
- Prohibited Transaction Class Exemption 84-14, regarding transactions
effected by 6 "qualified professional asset manager."
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, but may be subject to State or
other Federal law requirements which may impose restrictions similar to those
under ERISA and the Code discussed above.
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ENFORCEMENT OF FOREIGN JUDGMENTS IN AUSTRALIA
The issuer trustee is an Australian public company registered with limited
liability under the Corporations Law. Any final and conclusive judgment of any
New York State or United States Federal Court sitting in the Borough of
Manhattan in the City of New York having jurisdiction recognized by the relevant
Australian jurisdiction in respect of an obligation of the issuer trustee 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 the issuer
trustee 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:
- the proceedings in New York State or United States Federal Court, as
applicable, involved a denial of the principles of natural justice;
- the judgment is contrary to the public policy of the relevant Australian
jurisdiction;
- the judgment was obtained by fraud or duress or was based on a clear
mistake of fact;
- the judgment is a penal or revenue judgment; or
- there has been a prior judgment in another court between the same parties
concerning the same issues as are dealt with in the judgment of the New
York State or United States Federal Court, as applicable.
A judgment by a court may be given in some cases only in Australian dollars.
The issuer trustee 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 proceeding arising out of this
offering under the underwriting agreement. The issuer trustee has appointed CT
Corporation, 818 West 7th Street, 2nd Floor, Los Angeles, California 90017, as
its agent upon whom process may be served in any such action.
All of the directors and executive officers of the issuer trustee, 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 Class A notes to effect
service of process within the United States upon such persons or to enforce
against them judgments obtained in United States courts predicated upon the
civil liability provisions of federal securities laws of the United States.
Mallesons Stephen Jaques, Australian counsel to the Trust Manager, has advised
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.
LEGAL INVESTMENT CONSIDERATIONS
The notes will not constitute "mortgage related securities" for purposes of
the Secondary Mortgage Market Enhancement Act of 1984 of the United States,
because the originator of the mortgage 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 mortgage
loans may not be legally authorized to invest in the 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.
B-61
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
HomeSide Global MBS Manager, Inc. will file reports and other information
with the SEC about the trust issuing your notes. Our SEC filings are available
to the public over the Internet at the SEC's web site at http://www.sec.gov. You
may also read and copy any document we file at the SEC's public reference rooms
in Washington, D.C., New York, New York, and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on their public reference rooms.
You may request a copy of HomeSide Global MBS Manager, Inc.'s filings at no cost
by writing or telephoning at the following address:
HomeSide Global MBS Manager, Inc.
7301 Baymeadows Way
Jacksonville, Florida 32256
Attention: Legal Department
RATINGS OF THE NOTES
Any class of notes of a series offered by this prospectus will be:
- rated by at least one nationally recognized statistical rating agency or
organization that initially rates the series at the request of the Trust
Manager, and
- identified in the prospectus in one of the rating agency's four highest
rating categories which are referred to as investment grade.
The security ratings of the notes should be evaluated independently from
similar ratings on other types of securities. The rating does not address the
expected schedule of principal repayments. A rating is not a recommendation to
buy, sell or hold securities and may be subject to revision or withdrawal at any
time by the assigning rating agency. Each rating should be evaluated
independently of similar ratings on different securities.
PLAN OF DISTRIBUTION
Part A of this prospectus will set forth the precise terms of the offering
of each series of notes offered under this prospectus including:
- the name or names of any underwriters, dealers or agents;
- the proceeds to the issuer trustee from the sale; and
- any underwriting discounts and other items constituting underwriters'
compensation (or the method by which prices of the Notes are determined);
and any discounts and commissions allowed or paid to dealers and agents.
Any initial public offering prices and any discounts or concessions allowed or
reallowed or paid to underwriters, dealers and agents may be changed from time
to time.
If any notes of any series are sold through underwriters, part A will
describe the nature of the obligation of the underwriters to purchase the notes.
The notes may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
underwriting firms acting alone. The underwriter or underwriters will be named
in part A of this prospectus. The obligation of the underwriters to purchase any
notes of the related series will be subject to various conditions precedent, and
the underwriters will be obligated to purchase all of the notes if any are
purchased.
Underwriters, dealers and agents who participate in the distribution of a
series of notes may be entitled under agreements which may be entered into by
the issuer trustee to indemnification by the
B-62
<PAGE>
issuer trustee and certain other parties against specific liabilities, including
liabilities under the Securities Act of 1933 of the United States, as amended,
or to contribution for payments which the underwriters or agents may be required
to make under the terms of the agreements.
LEGAL MATTERS
Brown & Wood LLP, Washington DC, has passed upon some legal matters
regarding the notes, including the material U.S. Federal income tax matters, for
HomeSide Mortgage and HomeSide Global MBS Manager, Inc.; Mallesons Stephen
Jaques, Sydney, Australia, has passed upon some legal matters regarding the
notes, including the material Australian tax matters, for HomeSide Mortgage and
HomeSide Global MBS Manager, Inc.
B-63
<PAGE>
GLOSSARY
The information contained in this Glossary forms an integral part of this
prospectus.
"ACCRUED INTEREST ADJUSTMENT" means, with respect to a mortgage loan, the
amount of interest accrued and unpaid on that mortgage loan as at the close of
business on the Cut-off Date.
"ADVERSE EFFECT" means, an event which will materially and adversely affect
the amount of any payment to be made to any Noteholder, or will materially and
adversely affect the timing of such payment.
"AGENCY AGREEMENT" means in respect of the Trust, the agreement (if any)
with the words "Agency Agreement" and the name of the trust in its title dated
on or about the date of the Supplemental Deed (I.E., January 24, 2001) between
the Issuer Trustee, the Trust Manager, the Note Trustee in respect of the Trust,
the Paying Agent(s) in respect of the Trust, the related note registrar, agent
bank and the calculation agent.
"AGENT" has the meaning given to that term in the Agency Agreement for that
trust.
"AGGREGATE STATED AMOUNT" means, on any Determination Date, the aggregate of
the A$ Equivalent of the Stated Amount of the relevant Notes at that time.
"ARREARS RATIO" means, on a Determination Date, the percentage of the
outstanding principal balance of all purchased mortgage loans in relation to
which default in payment of any amount due has occurred and has continued for a
period of 60 days or more as at the last day of the immediately preceding
Collection Period to the total outstanding principal balance of all purchased
mortgage loans as at the last day of the immediately preceding Collection
Period.
"AUSTRACLEAR" means the system operated by Austraclear limited (ABN 94 002
060 773) for holding certain Australian dollar securities and the electronic
recording and settling of transactions in those securities between members of
that system in accordance with the Regulations and Operating Manual Established
by Austraclear Limited (as amended or replaced from time to time) to govern the
use of that system and includes as required a reference to Austraclear limited
as operator of that system.
"AUSTRALIAN CONSUMER CREDIT CODE" means as applicable, the Consumer Credit
Code set out in the Appendix to the Consumer Credit (Queensland) Act 1995 as in
force or applied as a law of any jurisdiction in Australia, the provisions of
the Consumer Credit Code set out in the Appendix to the Consumer Credit (Western
Australia) Act 1996 or the provisions of the Consumer Credit Code set out in the
Appendix to the Consumer Credit (Tasmania) Act 1996.
"AUTHORIZED INVESTMENTS" consist of the following:
(a) cash on hand or at an approved bank;
(b) bonds, debentures, stock or treasury bills, notes or other securities
issued or guaranteed by any government of an Australian jurisdiction,
which has the Required Credit Rating, or any corporation, which has the
Required Credit Rating;
(c) 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, which has the Required Credit
Rating;
(d) notes or other securities of any government of an Australian
jurisdiction, which has the Required Credit Rating;
B-G-1
<PAGE>
(e)
(i) deposits with, or certificates of deposit, whether negotiable,
convertible or otherwise, of, a bank; or
(ii) bills of exchange or other negotiable securities issued by a bank
which has either (i) the highest short term rating available to be given
by the rating agencies; or (ii) if the investment has a maturity of
30 days or less and does not exceed 20% of the total outstanding
principal amount of all notes for that series on the date of investment,
a short term rating of A-1+ by S&P or F1+ by Fitch or P-1 by Moody's;
(f) any other assets which are specified in the Supplemental Deed as an
Authorized Investment for the Trust.
"AVAILABLE PRINCIPAL COLLECTIONS" has the meaning ascribed to it under the
heading "Description of the Class A Notes--Determination of Available Principal
Collections" in part A of this prospectus.
"AVERAGE ARREARS RATIO" means, on any Determination Date, the amount
(expressed as a percentage) calculated as follows:
<TABLE>
<S> <C> <C> <C>
AAR = SAR
---12
where: AAR = the Average Arrears Ratio; and;
SAR = the sum of the Arrears Ratios for the 4 Collection Periods
immediately preceding that Determination Date,
</TABLE>
provided that if on that Determination Date there has not yet been 4
Determination Dates the Average Arrears Ratio in relation to that
Determination Date means the amount (expressed as a percentage)
calculated as follows:
<TABLE>
<S> <C> <C> <C>
AAR = SAR
---N
where: AAR = the Average Arrears Ratio; and
SAR = the sum of the Arrears Ratios for all the Determination
Dates preceding or ending on the Determination Date; and
N = the number of Determination Dates preceding or ending on
the Determination Date.
</TABLE>
"A$ CLASS A INTEREST AMOUNT" has the meaning ascribed to it under the
heading "Description of the Class A Notes--The Currency Swaps"; "--Interest
Payments" in part A of this prospectus.
"A$ CLASS A PRINCIPAL" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Allocation of Principal to Class A Notes and
Class B Notes" in part A of this prospectus.
"A$ EQUIVALENT" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Allocation of Principal to Class A Notes and
Class B Notes" in part A of this prospectus.
"A$ EXCHANGE RATE" means the "A$ Exchange Rate" specified in the
confirmation of the related currency swap.
B-G-2
<PAGE>
"BANK BILL RATE" means, in respect of any Interest Period, the rate
expressed as a percentage per annum:
(a) calculated by taking the rate appearing on the Reuters screen BBSW page
at or about 10.15 am (Melbourne time) on the first day of that Interest
Period for each bank so quoting (being no fewer than five) as being the
mean buying and selling rate for a bill (which for the purpose of this
definition means a bill of exchange of the type specified for the purpose
of quoting on the Reuters screen BBSW page) having a tenor of 90 days
after eliminating the highest and the lowest mean rates and taking the
average of the remaining mean rates (rounded up, if necessary, to the
nearest four decimal places);
(b) if fewer than five banks quote on the Reuters screen BBSW page, the rate
calculated as above by taking the rates otherwise quoted by five banks
otherwise authorised to quote rates on the Reuters screen BBSW page at or
about 10.15 am (Melbourne time) for a bill of exchange having a tenor of
90 days; or
(c) if a rate cannot be determined in accordance with the procedures in
(a) or (b), the rate specified in good faith by the Trust Manager at or
around that time on that day, having regard, to the extent possible, to
comparable indices then available as to the rate otherwise bid and
offered for bills of exchange of 90 days,
provided that, in respect of the first Interest Period if the Interest Period is
less than 90 days, the Bank Bill Rate for that Interest Period will be the Bank
Bill Rate for 90 days and if the first Interest Period is greater than 90 days,
the Bank Bill Rate for that Interest Period will be a linear interpolated rate
for the relevant period.
"BASIS SWAP PROVIDER" means National Australia Bank Limited (ABN 12 004 044
937).
"BUSINESS DAY" means, any day, other than a Saturday, Sunday or public
holiday, on which banks are open for business in Melbourne, Sydney, New York or
any other city identified as a relevant city in the Supplemental Deed.
"CALCULATION AGENT" means The Bank of New York (New York Branch).
"CARRYOVER PRINCIPAL CHARGE-OFFS" means the amount by which a Principal
Charge-off exceeds the amount of Excess Available Income for that Collection
Period.
"CHARGE" means, in respect of a Trust, the charge granted under the Deed of
Charge for that Trust.
"CLASS A NOTEHOLDER" means a holder of a Class A Note.
"CLASS A NOTES" means the $US Class A Mortgage Backed Floating Rate
Notes due .
"CLASS A NOTE OWNER" means the beneficial owner of an interest in a Class A
Note.
B-G-3
<PAGE>
"CLASS B AVAILABLE SUPPORT" in relation to a Determination Date means the
amount (expressed as a percentage) calculated as follows:
<TABLE>
<S> <C> <C> <C>
CBAS = ASA (B)
----------
ASA + RFL
where: ASA (B) = the Aggregate Stated Amount for the Class B Notes on
the immediately preceding Determination Date; and
ASA = the aggregate of the A$ Equivalent of the Stated
Amounts of all Notes on the immediately preceding
Determination Date.
RFL = the Redraw Limit on the immediately preceding
Determination Date.
</TABLE>
Provided that, in respect of the first Determination Date, such amounts will be
calculated by reference to the Initial Invested Amount of the relevant classes
of Notes and the RFL will be the Redraw Limit on the Closing Date.
"CLASS B PRINCIPAL" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Allocation of Principal to Class A Notes and
Class B Notes" in part A of this prospectus.
"CLASS B NOTEHOLDER" means a holder of a Class B Note.
"CLASS B NOTES" means the A$ Class B Mortgage Backed Floating Rate
Notes due .
"CLASS B REQUIRED SUPPORT" in relation to a Determination Date means the
amount (expressed as a percentage) calculated as follows:
<TABLE>
<S> <C> <C> <C>
CBRS = IIA
---
AIIA
where: CBRS= the Class B Required Support;
IIA = the aggregate Initial Invested Amount for the Class B
Notes; and
AIIA = the aggregate of the A$ Equivalent of Initial Invested
Amounts of the Class A Notes and the Class B Notes, on
that Determination Date.
</TABLE>
"CLEARSTREAM-LUXEMBOURG" means the Clearstream Banking, societe anonyme, a
limited liability company organized under the laws of Luxembourg.
"CLOSING DATE" means on or about January 25, 2001.
"COLLECTIONS" has the meaning ascribed to it under the heading "Description
of the Class A Notes--Collections; Distributions on the Class A Notes" in
part A of this prospectus.
"COLLECTION PERIOD" means, with respect to a Payment Date, the period from
and including the first day of the Quarter immediately preceding the related
Determination Date up to and including the last day of the Quarter immediately
preceding the related Determination Date. However, the first Collection Period
commences on (and includes) the day after the Cut-off Date and ends on
March 31, 2001.
B-G-4
<PAGE>
"COLLECTIONS ACCOUNT" means the account opened and maintained by the Issuer
Trustee in accordance with the Master Trust Deed which bears a designation
clearly indicating that the funds deposited therein are held for the benefit of
the Trust.
"CORPORATIONS LAW" means the Corporations Law of Australia under the
Corporations Act (1989).
"CURRENCY SWAP PROVIDERS" means National Australia Bank Limited (ABN 12 004
044 937) and Deutsche Bank AG (New York Branch).
"CUT-OFF DATE" means the close of business on January 2, 2001.
"DEED OF CHARGE" means the deed with the words "Deed of Charge" and the name
of the trust in its title, dated January 3, 2001, entered into between the
Issuer Trustee, the Trust Manager, the Security Trustee and the Note Trustee for
the Trust.
"DEFINITIONS SCHEDULE" means the HomeSide Mortgage Securities Trust
Definitions Schedule, dated January 3, 2001, among the Issuer Trustee, the Trust
Manager, the Security Trustee, the Note Trustee, the Note Registrar, the
Principal Paying Agent, the Paying Agent, the Collection Agent, the Seller, the
Depositor and the Servicer.
"DEPOSITOR" means HomeSide Mortgage Securities, Inc.
"DERIVATIVE CONTRACT" means any interest rate swap, currency swap, forward
rate agreement, cap, collar, floor or other rate or price protection transaction
or agreement, any option with respect to any such transaction or agreement, or
any combination of such transactions and agreements or similar arrangements
entered into by the Issuer Trustee in connection with:
(a) Notes issued in respect of the Trust; or
(b) any asset of the Trust.
"DETERMINATION DATE" means the date which is five Business Days prior to the
Payment Date in each of January, April, July and October. The first
Determination Date is April 12, 2001.
"DTC" means the Depository Trust Company.
"ELIGIBLE BANK" means a bank that has a rating equivalent to or higher than
the rating assigned to the Class A Notes issued in respect of the Trust (or a
bank which has a rating which is otherwise acceptable to each of the applicable
rating agencies).
"ELIGIBILITY CRITERIA" has the meaning ascribed to it under the heading "The
Seller--The Seller's Representations" in part B of this prospectus.
"EUROCLEAR" means Euroclear Clearance System Societe Cooperative, a Belgian
cooperative corporation.
"EVENT OF DEFAULT" means the occurrence of any of the following events in
respect of the Trust if:
(a) the Issuer Trustee fails to pay or repay any amount due under:
(i) the Class A Notes (for such times as the Class A Notes are
outstanding);
(ii) the Class B Notes or the Redraw Notes (after all of the Class A
Notes have been repaid or redeemed in full); or
(iii) any Transaction Document,
within 10 Business Days of the due date for payment or repayment of such
amount;
B-G-5
<PAGE>
(b) the Issuer Trustee is (for any reason) not entitled fully to exercise
its right of indemnity against the assets of the Trust to satisfy any
liability to a Secured Creditor and the circumstances are not rectified
to the reasonable satisfaction of the Security Trustee within 14 days of
the Security Trustee requiring the Issuer Trustee in writing to rectify
them;
(c) the Issuer Trustee fails to perform or observe any other provision of a
Transaction Document (other than the obligations referred to in this
definition), where such failure will have a Material Adverse Effect and
the failure is not remedied within 30 days after written notice from the
Security Trustee requiring the Issuer Trustee to rectify them;
(d) an Insolvency Event occurs in respect of the Issuer Trustee (in its
capacity as trustee of the Trust) and the Issuer Trustee is not replaced
(by either the Trust Manager or a replacement trustee) in accordance with
the Master Trust Deed within 30 days of such Insolvency Event;
(e) the Charge:
(i) is or becomes wholly or partly void, voidable or unenforceable; or
(ii) loses the priority which it has at or after the date of this deed;
(f) all or any part of any Transaction Document (other than an interest
rate basis swap, a redraw facility or a currency swap, in respect of a
termination because of an action of a taxing authority or change in tax
law), is terminated or is or becomes void, illegal, invalid,
unenforceable or of limited force and effect, or any party becomes
entitled to terminate, rescind or avoid all or part of any Transaction
Document (other than an interest rate basis swap, or a redraw facility or
a currency swap, in respect of a termination because of an action of a
taxing authority or a change in tax law); or
(g) except with the prior consent of the Security Trustee, that consent only
to be given upon the instructions of the consent of the Secured
Creditors:
(i) the Trust is wound up, or the Issuer Trustee is required to wind up
the Trust under the terms of this deed, or applicable law, or the
winding up of the Trust commences; or
(ii) the Trust is held or conceded by the Issuer Trustee not to have
been constituted or to have been imperfectly constituted; or
(iii) the Issuer Trustee ceases to be authorised to hold the property of
the Trust in its name and perform its obligations under the
Transaction Documents.
"EXCESS AVAILABLE INCOME" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Principal Charge-offs; Reimbursement of the
Principal Charge-offs" in part A of this prospectus.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934, as
amended.
"EXTRAORDINARY RESOLUTION" means:
(a) in relation to Voting Secured Creditors or a class of Voting Secured
Creditors, a resolution passed at a meeting of the Voting Secured
Creditors or the class of the Voting Secured Creditors held in accordance
with the provisions of the Master Security Trust Deed by:
(i) a majority of not less than 75% of the votes of such Voting Secured
Creditors or class of Voting Secured Creditors capable of being
cast on it; or
(ii) a written resolution signed by all of such Voting Secured Creditors
or class of Voting Secured Creditors; and
B-G-6
<PAGE>
(b) in relation to Noteholders of the Trust, a resolution passed at a
meeting of the Noteholders held in accordance with the provisions of the
Master Trust Deed and the Note Trust Deed by:
(i) a majority of not less than 75% of the votes of such Noteholders
capable of being cast on it; or
(ii) a written resolution signed by all of such Noteholders..
"FITCH" means Fitch, Inc.
"FIXED RATE SWAP PROVIDER" means National Australia Bank Limited (ABN 12 004
044 937).
"FINANCE CHARGE COLLECTIONS" has the meaning ascribed to it under the
heading "Description of the Class A Notes--Determination of Total Available
Income" in part A of this prospectus.
"GST" means the Australian Goods and Services Tax.
"INCOME SHORTFALL" means the amount by which the payments to be made from
the Total Available Income on a Payment Date, other than reimbursement of
Principal Charge-offs, Carryover Principal Charge-offs or payments to the
Residual Income Unitholder or the reimbursement of Principal Draws Outstanding
exceed the aggregate of the Finance Charge Collections, the Mortgage Insurance
Interest Proceeds, net amounts received under the fixed rate swap and basis
swap, Other Income and the amount of any Principal Draw to satisfy such Income
Shortfall in relation to that Payment Date.
"INITIAL INVESTED AMOUNT" means the initial principal amount of a Class A
Note that is stated on the face of such Class A Note. Unless otherwise
specified, Initial Invested Amount refers to a Class A Note.
"INITIAL OFFER TO SELL" means an offer of that title by the Seller in favor
of the Depositor in respect of mortgage loans, dated on or about the date of the
Initial Sale Agreement to which it relates and which is only capable of
acceptance by the payment of a purchase price.
"INITIAL SALE AGREEMENT" means the agreement so entitled between the Seller
and the Depositor, dated January 24, 2001.
"INSOLVENCY EVENT" means:
(a) in relation to the Issuer Trustee, in its individual capacity and as
trustee of the Trust, the Trust Manager, the Servicer, the Seller, the
Security Trustee, the Note Trustee, an Agent, a borrower which is a body
corporate or a mortgage insurer, the happening of any of the following
events:
(i) an administrator of the relevant corporation is appointed;
(ii) except for the purpose of a solvent reconstruction or amalgamation,
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 the winding up, dissolution or administration of the relevant
corporation;
(iii) the relevant corporation enters into an arrangement, compromise or
composition with or assignment for the benefit of its creditors or
a class of them, except in the case of the Issuer Trustee where
this occurs in relation to another trust of which it is the
trustee;
B-G-7
<PAGE>
(iv) 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;
(v) 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;
(vi) 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
(vii) anything analogous to any of the events specified above or having a
substantially similar effect occurs in relation to the relevant
corporation; and
(b) in respect of a borrower which is not a body corporate, upon the
happening of any of the following events:
(i) the death, mental incapacity or bankruptcy of the mortgagor
(including without limitation the occurrence of an "act of
bankruptcy" (as defined in section 40 of the Bankruptcy Act 1966
(Cwth) with respect to the mortgagor) or the appointment of a
receiver, trustee or other official in respect of all or any part
of the assets of the mortgagor;
(ii) such borrower has a security granted by them enforced against them;
(iii) the borrower is otherwise unable to pay its debts when they fall
due; or
(iv) anything analogous to or having a substantially similar effect to
the events referred to above happens under the law of any
applicable jurisdiction.
"INTEREST PERIOD" means the period commencing on and including a Payment
Date and ending on but excluding the next Payment Date. However, the first and
last Interest Periods are as follows:
FIRST: the period from and including the Closing Date to but excluding
the first Payment Date.
LAST: the period from and including the Payment Date immediately
preceding the date upon which the Notes are redeemed to but excluding the
date upon which the Notes are redeemed.
"INVESTED AMOUNT" means on any Determination Date:
(a) in relation to a Class A Note means the Initial Invested Amount of that
Class A Note less the aggregate of all amounts previously paid in
relation to that Class A Note and the aggregate of the amount to be paid
in relation to that Class A Note on the next Payment Date on account of
principal pursuant to Condition 7.2(c) of the Terms and Conditions of the
Class A Notes located at Appendix A-II of this prospectus; and
(b) in relation to a Class B Note or Redraw Note means A$100,000 less the
aggregate of all amounts previously paid in relation to that Class B Note
or Redraw Note on account of principal, less the amount to be paid in
relation to the Class B Note or Redraw Note on the next Payment Date on
account of principal.
B-G-8
<PAGE>
"IRS" means the United States Internal Revenue Service.
"ISSUE DATE" means in respect of a Note, the date of issue of the Note.
"ISSUER TRUSTEE" means Perpetual Trustee Company Limited
(ABN 42 000 001 007).
"ISSUER TRUSTEE DEFAULT" means:
(a) an Insolvency Event has occurred and is continuing in relation to the
Issuer Trustee;
(b) any action is taken or any event occurs in relation to the Issuer
Trustee in its personal capacity which causes the rating of any notes for
the related series to be downgraded or withdrawn;
(c) the Issuer Trustee, or any employee, delegate, agent or officer of the
Issuer Trustee, breaches any obligation or duty imposed on the Issuer
Trustee under any Transaction Document in relation to the Trust where the
Trust Manager reasonably believes it may have an Adverse Effect and the
Issuer Trustee fails or neglects after 30 days' notice from the Trust
Manager to remedy that breach;
(d) the Issuer Trustee merges or consolidates with another entity without
obtaining the consent of the Trust Manager and ensuring that the
resulting merged or consolidated entity assumes the Issuer Trustee's
obligations under the Transaction Documents; or
(e) there is a change in effective control of the Issuer Trustee from that
existing on the date of the Master Trust Deed unless approved by the
Trust Manager.
"LIQUIDITY FACILITY" means the facility provided in respect of them Trust by
the Liquidity Facility Provider under the Liquidity Facility Agreement for the
Trust.
"LIQUIDITY FACILITY ADVANCE" any advance under the Liquidity Facility in
accordance with the description of the Liquidity Facility Advance under the
heading "Description of the Class A Notes--Liquidity Facility Advance" in
part A of this prospectus.
"LIQUIDITY FACILITY AGREEMENT" means the agreement, dated January 24, 2001,
with those words and the name of the Trust in its title and entered into between
the Issuer Trustee, the Trust Manager and the Liquidity Facility Provider.
"LIQUIDITY FACILITY PROVIDER" means National Australia Bank Limited
(ABN 12 004 044 937)
"LIQUIDITY LIMIT" has the meaning ascribed to it under the heading
"Description of the Class A Notes--The Liquidity Facility Advance; Advances and
Facility Limit" in part A of this prospectus.
"MASTER SECURITY TRUST DEED" means the deed with the words "HomeSide
Mortgage Securities Trusts Master Security Trust Deed" and the name of the Trust
in its title, dated January 3, 2001 between the Issuer Trustee, the Trust
Manager, the Note Trustee and the Security Trustee.
"MASTER TRUST DEED" means the deed with the words "HomeSide Mortgage
Securities Trusts Master Trust Deed", dated January 3, 2001 between the Trust
Manager and the Issuer Trustee.
"MATERIAL ADVERSE EFFECT" means:
(a) in respect of a party, a material adverse effect on the ability of the
relevant party to meet its obligations under any Transaction Document; or
(b) an event which will materially and adversely effect the enforceability
or recoverability of more than 5% (by number) of the mortgage loans.
"MOODY'S" means Moody's Investor Service, Inc.
B-G-9
<PAGE>
"MORTGAGE INSURANCE INTEREST PROCEEDS" has the meaning ascribed to it under
the heading "Description of the Class A Notes--Determination of Total Available
Income" in part A of this prospectus.
"MORTGAGE TITLE DOCUMENTS" means with respect to any mortgage loan:
(a) the certificate or other indicia of title (if any) in respect of the
land the subject of the mortgage in relation to the mortgage loan;
(b) the original or duplicate mortgage documents in relation to the mortgage
loan;
(c) the original or duplicate of the collateral securities documents in
relation to the mortgage loan;
(d) any policy of lender's mortgage insurance and property insurance (or
certificate of currency for the policy of lender's mortgage insurance and
property insurance) held by the Seller in respect of the mortgage or the
collateral securities in relation to the mortgage loan;
(e) any valuation report obtained in connection with the mortgage or the
collateral securities in relation to the mortgage loan;
(f) any agreement of priority or its equivalent in writing entered into in
connection with the mortgage or the collateral securities in relation to
the mortgage loan;
(g) the loan agreement (if other than a mortgage) relating to the mortgage
loan; and
(h) all other documents required to evidence:
(i) in respect of an Initial Sale Agreement, the Seller's or the
Depositor's interest in the above land, the above mortgage loan, the
above mortgage, or the above collateral securities; or
(ii) in respect of a Secondary Sale Agreement, the Seller's or the Issuer
Trustee's interest in the above land, the above mortgage loan, the
above mortgage, or the above collateral securities,
and, for the avoidance of doubt, "Mortgage Title Documents" includes any
amendment or replacement of such documents and any such document which is
entered into, and under which rights arise, after any sale of the relevant
mortgage loan by the Seller to the Depositor (in the case of an Initial Sale
Agreement) and by the Depositor to the Issuer Trustee (in the case of a
Secondary Sale Agreement).
"NATIONAL" means National Australia Bank Limited (ABN 12 004 044 937) and,
where the context applies, its subsidiaries.
"NATIONAL PARTIES" means the National together with the Global Trust
Manager.
"NOTEHOLDER" means a holder of a Class A Note or a Class B Note.
"NOTE OWNER" means the beneficial owner of any Note in book-entry form.
"NOTE REGISTRAR" means The Bank of New York (New York Branch).
"NOTES" means the Class A Notes and the Class B Notes.
"NOTE TRUST DEED" means the deed with the words "Note Trust Deed" and the
name of the Trust in its title dated on or about the date of the Supplemental
Deed (I.E., January 24, 2001) for the Trust between the Issuer Trustee, the
Trust Manager and the Note Trustee.
"NOTE TRUSTEE" means The Bank of New York (New York Branch).
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"OPINION OF COUNSEL" means a written opinion of counsel, who may be the
in-house counsel or outside counsel for the Depositor, Trust Manager, Seller or
Servicer reasonably acceptable to the Issuer Trustee; provided, however, that
with respect to the interpretation of Australian income tax or federal income
tax issues, such counsel must (i) in fact be financially independent of the
Depositor, Trust Manager, Seller, or Servicer, or any affiliate thereof and
(ii) not be connected with the Depositor, Trust Manager, Seller or Servicer or
any affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"OTHER AMOUNTS UNDER SUPPORT FACILITIES" has the meaning ascribed to it
under the heading "Description of the Class A Notes--Determination of Total
Available Income" in part A of this prospectus.
"OTHER INCOME" has the meaning ascribed to it under the heading "Description
of the Class A Notes--Determination of Total Available Income" in part A of this
prospectus.
"PAYING AGENT" means The Bank of New York (London Branch).
"PAYING AGENTS" means the Principal Paying Agent and the Paying Agent.
"PAYMENT DATE" means the 20th day of each January, April, July and October,
or, if the 20th day is not a Business Day, then the next Business Day. The first
Payment Date is April 20, 2001.
"PERFORMING MORTGAGE LOANS AMOUNT" has the meaning ascribed to it under the
heading "Description of the Class A Notes--The Liquidity Facility; Advances and
Facility Limit" in part A of this prospectus.
"PRINCIPAL CHARGE-OFF" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Principal Charge-offs" in part A of this
prospectus.
"PRINCIPAL DRAW" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Determination of Total Available Income" in
part A of this prospectus.
"PRINCIPAL PAYING AGENT" means The Bank of New York (New York Branch).
"QUARTER" has the meaning ascribed to it under the heading "Description of
the Class A Notes--Key Dates and Periods" in part A of this prospectus.
"REDRAW FACILITY" means the facility provided in respect of the Trust by the
Redraw Facility Provider under the Redraw Facility Agreement.
"REDRAW FACILITY AGREEMENT" means the agreement with those words and the
name of the Trust in its title, dated January 24, 2001, and entered into between
the Issuer Trustee, the Trust Manager and the Redraw Facility Provider.
"REDRAW FACILITY PROVIDER" means National Australia Bank Limited
(ABN 12 004 044 937).
"REDRAW LIMIT" has the meaning ascribed to it under the heading "Description
of the Class A Notes--The Redraw Facility"; "--Advances and Facility Limit" in
part A of this prospectus.
"REDRAW NOTEHOLDER" means the holder of a Redraw Note.
"REDRAW NOTES" means a note issued on the terms and conditions contained in
Section 8 of the Supplemental Deed.
"REDRAW PRINCIPAL OUTSTANDING" has the meaning ascribed to it under the
heading "Description of the Class A Notes--Allocation of Principal to Class A
Notes and Class B Notes" in part A of this prospectus.
"REDRAWS" means the Seller's re-advance to a borrower of repayments of
principal made by that borrower on its mortgage loan in an amount not to exceed
the limits specified under the
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headings "The Seller's Residential Loan Program--Redraw Mortgage Loans and the
Redraw Facility".
"REDRAW SHORTFALL" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Redraws"; "--The Redraw Facility" in part A
of this prospectus.
"REFERENCE RATE" has the meaning ascribed to it under the heading "The
Seller's Residential Loan Program--Features and Options; Loan Types" in part B
of this prospectus.
"REQUIRED CREDIT RATING" means, in respect of Authorized Investments with a
maturity of at least 12 months, "AAA" (or equivalent) by each of the applicable
rating agencies.
"RESIDUAL CAPITAL UNITHOLDER" means the residual capital beneficiary of the
Trust.
"RESIDUAL INCOME UNITHOLDER" means the residual income beneficiary of the
Trust.
"SCHEDULED PAYMENTS" means the required weekly, bi-weekly or monthly payment
of principal and/or interest specified under the mortgage loan documents.
"SCHEDULED TERMINATION DATE" has the meaning ascribed to it under the
heading "The Redraw Facility--Termination".
"SEC" means United States Securities and Exchange Commission.
"SECONDARY OFFER TO SELL" means any offer of that title by the Depositor in
favor of the Issuer Trustee in respect of mortgage loans, dated on or about the
date of the Secondary Sale Agreement to which it relates and which is only
capable of acceptance by the payment of a purchase price.
"SECONDARY SALE AGREEMENT" means any agreement so entitled between the
Depositor and the Issuer Trustee in respect of the Trust and dated January 24,
2001.
"SECURED CREDITORS" means any secured party specified as such under the Deed
of Charge for the Trust including, but not limited to, the Noteholders, the
Trust Manager, the Security Trustee, the Servicer, the Note Trustee, any Paying
Agent, any provider of a swap, and any provider of a Support Facility.
"SECURED MONEYS" means, in respect of the Trust, the aggregate of all money
owing to the Security Trustee or to a creditor under any of the Transaction
Document as specified in the Deed of Charge for the Trust.
"SECURED PROPERTY" means any property of the Trust specified for the Trust
as secured property under the Deed of Charge for the Trust.
"SECURITIES ACT" means the United States Securities Act of 1933.
"SECURITY TRUSTEE" means P.T. Limited (ABN 67 004 454 666).
"SELLER" means National Australia Bank Limited (ABN 12 004 044 937).
"SERVICER" means National Australia Bank Limited (ABN 12 004 044 937),
trading as HomeSide.
"SERVICER TERMINATION EVENT" has the meaning ascribed to it under the
heading "Description of the Transaction Documents--The Servicing Agreement";
"--Removal and Resignation of the Servicer" in part B of this prospectus.
"SERVICING AGREEMENT" means the agreement entitled "HomeSide Mortgage
Securities Trusts Servicing Agreement", in respect of the Trust, between the
Trust Manager, the Issuer Trustee and the Servicer, dated January 3, 2001.
"S&P" means Standard & Poor's Ratings Group.
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"STATED AMOUNT" for a Note or a Redraw Note means on a Determination Date:
(a) the Invested Amount of that Note or Redraw Note on that Determination
Date; less
(b) the Principal Charge-off to be made in respect of that Note or Redraw
Note on the next Payment Date, less
(c) the aggregate of all then unreimbursed Principal Charge-offs on that
Note or Redraw Note; plus
(d) the amount to be applied towards reimbursing any Principal Charge-offs
or Carryover Principal Charge-offs on the next Payment Date.
"STATISTICAL CUT-OFF DATE" means the close of business on December 15, 2000.
"STEPDOWN CONDITIONS" are satisfied on a Determination Date if:
1. the following applies:
(a) the Class B Available Support on that Determination Date is equal to
or greater than two times the Class B Required Support on that
Determination Date;
(b) the aggregate Stated Amount of the Class B Notes on that
Determination Date is equal to or greater than 0.25% of the A$
Equivalent of the aggregate Initial Invested Amount of all the
Class B Notes;
(c) either:
(i) the Average Arrears Ratio on that Determination Date does not
exceed 2% and the aggregate of all unreimbursed Principal
Charge-offs as at on the previous Determination Date does not
exceed 30% of the aggregate of the Initial Invested Amounts of
the Class B Notes; or
(ii) the Average Arrears Ratio on that Determination Date does not
exceed 4% and the aggregate of all unreimbursed Principal
Charge-offs as at the previous Determination Date does not exceed
10% of the aggregate of the Initial Invested Amounts of the
Class B Notes; and
(d) the events referred to in Condition 7.3(a) or (b) of the Terms and
Conditions of the Class A Notes located at Appendix A-II of this
prospectus has not occurred on or prior to the Determination Date and
is not expected to occur on or prior to the next Payment Date
thereafter, or
2. the following applies:
(a) that Determination Date falls on or after April 20, 2006;
(b) the Average Arrears Ratio on that Determination Date does not exceed
2%;
(c) the aggregate A$ Equivalent of the Stated Amount of all outstanding
Notes as at the previous Determination Date is greater than 10% of
the A$ Equivalent of the aggregate Initial Invested Amount of all
Notes (excluding any Redraw Notes);
(d) the aggregate Stated Amount for the Class B Notes as at the previous
Determination Date is equal to or greater than 0.25% of the A$
Equivalent of the aggregate Initial Invested Amount of all the
Class B Notes (excluding any Redraw Notes); and
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(e) the aggregate of all unreimbursed Principal Charge-offs as at the
previous Determination Date does not exceed:
(i) if the Determination Date falls on or after April 20, 2006 but
prior to April 20, 2007, 30% of the aggregate of the Initial
Invested Amounts of the Class B Notes;
(ii) if the Determination Date falls on or after April 20, 2007 but
prior to April 20, 2008, 35% of the aggregate of the Initial
Invested Amounts of the Class B Notes;
(iii) if the Determination Date falls on or after April 20, 2008 but
prior to April 20, 2009, 40% of the aggregate of the Initial
Invested Amounts of the Class B Notes;
(iv) if the Determination Date falls on or after April 20, 2009 but
prior to April 20, 2010, 45% of the aggregate of the Initial
Invested Amounts of the Class B Notes;
3. if the Determination Date falls on or after April 20, 2010, 50% of the
aggregate of the Initial Invested Amounts of the Class B Notes.
"STEP DOWN PERCENTAGE" on a Determination Date is determined as follows:
1. If the Stepdown Conditions are not satisfied on that Determination Date,
the Stepdown Percentage is 100%.
2. If the Stepdown Conditions are satisfied on that Determination Date, the
Stepdown Percentage is 100% unless the following apply:
(a) if the Payment Date in respect of that Determination Date falls prior
to April 20, 2004 the Stepdown Percentage is 50%;
(b) if:
(i) the Payment Date in respect of that Determination Date falls on
or after April 20, 2004 but prior to April 20, 2011; and
(ii) the Class B Available Support on that Determination Date is
equal to or greater than two times the Class B Required Support
on that Determination Date;
the Stepdown Percentage is 0%;
(c) if:
(i) paragraph (b) above does not apply;
(ii) the Payment Date in respect of that Determination Date falls on
or after April 20, 2006 but prior to April 20, 2011; and
(iii) the Class B Available Support on that Determination Date is
equal to or greater than the Class B Required Support on that
Determination Date;
then:
(i) if the Payment Date in respect of that Determination Date falls
on or after April 20, 2006 but prior to the April 20, 2007, the
Stepdown Percentage is 70%;
(ii) if the Payment Date in respect of that Determination Date falls
on or after April 20, 2007 but prior to the April 20, 2008, the
Stepdown Percentage is 60%;
(iii) if the Payment Date in respect of that Determination Date falls
on or after April 20, 2008 but prior to April 20, 2009, the
Stepdown Percentage is 40%;
(iv) if the Payment Date in respect of that Determination Date falls
on or after April 20, 2009 but prior to April 20, 2010, the
Stepdown Percentage is 20%; or
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(v) if the Payment Date in respect of that Determination Date falls
on or after April 20, 2010 but prior to April 20, 2011, the
Stepdown Percentage is 0%; or
(d) if the Payment Date immediately following that Determination Date
falls on or after April 20, 2011, the Stepdown Percentage is 0%.
"SUPPLEMENTAL DEED" means the deed, dated January 24, 2001, executed or
proposed to be executed (as the case may be) by the Issuer Trustee, the Trust
Manager and others which, amongst other things, specifies provisions which are
to apply in respect of the Trust in addition to those contained in the Master
Trust Deed or, replacing or deleting provisions of the Master Trust Deed in
respect of the Trust.
"SUPPORT FACILITY" means, in respect of the Trust:
(a) any security, support, right or benefit in support of or in substitution
for an asset, or the income or benefit arising from them, or for the
financial management or credit enhancement of the assets and liabilities
of the Trust;
(b) any Redraw Facility;
(c) any Liquidity Facility;
(d) any other facility specified as a "support facility" in the Supplemental
Deed for the Trust; and
(e) any mortgage insurance policy.
"SUPPORT FACILITY PROVIDER" means a person who provides a Support Facility.
"TAX ACT" means the Income Tax Assessment Act of 1936 or the Income Tax
Assessment Act of 1997, as amended.
"TITLE PERFECTION EVENT" means, in respect of a trust, any of the following:
(a) the Seller ceases to have a long term credit rating of at least BBB in
the case of S&P or which ceases to be acceptable to the other rating
agencies rating the related series of Notes;
(b) an Insolvency Event occurs in relation to the Seller;
(c) the Seller or the Servicer fails to pay the collections in respect of
the trust related to a series of Notes to the Issuer Trustee within three
Business Days of the due date for payment;
(d) if the Seller in respect of that trust is also the Servicer in respect
of that trust, a Servicer Termination Event occurs in respect of that
trust;
(e) if the Seller is a counterparty under a basis swap agreement and/or a
fixed swap agreement which is a Derivative Contract in respect of the
trust, the Seller fails to make any payment due under that Derivative
Contract and such failure:
(i) has or will have, as reasonably determined by the Issuer Trustee, a
Material Adverse Effect; and
(ii) is not remedied by the Seller within 20 Business Days (or such
longer period as the Issuer Trustee may agree to) of notice thereof
being delivered to the Seller by the Trust Manager or the Issuer
Trustee;
(f) a representation, warranty or statement by or on behalf of the Seller
in a Transaction Document of that trust or a document provided under or
in connection with such
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<PAGE>
Transaction Document is not true or is misleading when repeated and such
false or misleading representation, warranty or statement:
(i) has or will have, as reasonably determined by the Issuer Trustee, a
Material Adverse Effect; and
(ii) is not remedied by the Seller within 20 Business Days (or such
longer period as the Issuer Trustee may agree to) of notice thereof
being delivered to the Seller by the Trust Manager or the Issuer
Trustee;
(g) where the Seller has custody of the Mortgage Title Documents in
accordance with the Servicing Agreement, the Seller fails to comply with
its obligations under clause 4.8 of the Servicing Agreement; or
(h) any other event specified in the relevant Supplemental Deed, Initial
Sale Agreement or Secondary Sale Agreement.
"TOTAL AVAILABLE INCOME" has the meaning ascribed to it under the heading
"Description of the Class A Notes--Determination of Total Available Income" in
part A of this prospectus.
"TOTAL INVESTED AMOUNT" means the aggregate A$ Equivalent of the Invested
Amount of the relevant Notes (i.e., Class A Notes or all Notes outstanding, as
the case requires) at the date of determination.
"TRANSACTION DOCUMENTS" means, in relation to the Trust:
(a) the Master Trust Deed;
(b) the Supplemental Deed;
(c) the Master Security Trust Deed;
(d) the Deed of Charge;
(e) the Definitions Schedule;
(f) the Servicing Agreement;
(g) the Note Trust Deed;
(h) the Agency Agreement;
(i) the Initial Sale Agreement and any Initial Offer to Sell;
(j) the Secondary Sale Agreement and any Secondary Offer to Sell;
(k) any Derivative Contract;
(l) any document in connection with, or evidencing, a Support Facility;
(m) such other documents as are specified as Transaction Documents in the
Supplemental Deed.
"TRUST" means HomeSide Mortgage Securities Trust 2001-1. The trust was
created by the Trust Manager pursuant to the Master Trust Deed and the
Supplemental Deed. The term "trust" within this Glossary or part B of this
prospectus refers to any trust constituted under the Master Trust Deed, a notice
of creation of trust or a supplemental deed with respect to a particular series
of notes issued thereunder.
"TRUST MANAGER" means HomeSide Global MBS Manager, Inc.
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"TRUST MANAGER DEFAULT" means:
(a) the Trust Manager fails to make any payment required by it within the
time period specified in a Transaction Document, and that failure is not
remedied within 10 business days of receipt from the issuer trustee of
notice of that failure;
(b) an Insolvency Event has occurred and is continuing in relation to the
Trust Manager;
(c) the Trust Manager breaches any obligation or duty imposed on the Trust
Manager under the Master Trust Deed, any other Transaction Document or
any other deed, agreement or arrangement entered into by the Trust
Manager under the Master Trust Deed in relation to the Trust, the Issuer
Trustee reasonably believes that such breach has an adverse effect and
the breach is not remedied within 30 days' notice being given by the
Issuer Trustee to the Trust Manager, except in the case of reliance by
the Trust Manager on the information provided by, or action taken by, the
Servicer, or if the Trust Manager has not received information from the
Servicer which the Trust Manager requires to comply with the obligation
or duty; or
(d) a representation, warranty or statement by or on behalf of the Trust
Manager in a Transaction Document or a document provided under or in
connection with a Transaction Document is not true in a material respect
or is misleading when repeated and is not remedied to the Issuer
Trustee's reasonable satisfaction within 90 days after notice from the
Issuer Trustee where, as determined by the Issuer Trustee, it has an
adverse effect.
"US$ EXCHANGE RATE" means the "US$ Exchange Rate" specified in the
confirmation of the related currency swap.
"VOTING SECURED CREDITOR" means, in respect of the Trust:
(a) for so long as the Secured Moneys of the Noteholders are 75% or more of
the then total Secured Moneys:
(i) if any Class A Note or Redraw Note then remains outstanding, the
Note Trustee (or, if the Note Trustee has become bound to notify, or
seek directions from, the related Class A Noteholders and Redraw
Noteholders or to take steps and/or to proceed under the relevant
Note Trust Deed and fails to do so as and when required by that Note
Trust Deed and such failure is continuing, the related Noteholders);
or
(ii) if no Class A Note or Redraw Note then remains outstanding, the
Class B Noteholders; and
(b) otherwise:
(i) if any Class A Note or Redraw Note then remains outstanding, the
Note Trustee (or, if the Note Trustee has become bound to notify, or
seek directions from, the related Class A Noteholders and Redraw
Noteholders or to take steps and/or to proceed under the relevant
Note Trust Deed and fails to do so as and when required by that Note
Trust Deed and such failure is continuing, the related Noteholders);
and
(ii) each other then Secured Creditor (other than the Note Trustee and
the Class A and the Redraw Noteholders).
* * *
B-G-17
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APPENDIX B
The information contained in this Appendix B forms an integral part of this
prospectus.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
In most circumstances, the notes offered by this prospectus will be issued
only as global notes which are registered and held by a Depository. Note Owners
of the global notes may hold their interest in the global notes through any of
DTC, Clearstream-Luxembourg or Euroclear or, if specified in part A of this
prospectus, in the case of Australian dollar notes, Austraclear. The global
notes will be tradable as home market instruments in the European, U.S., Asian
and Australian domestic markets. For so long as the Class A Notes are held in
global form, all payments of principal and interest, and all transfers of the
Class A Notes will take place in accordance with the procedures of the relevant
clearing system. Initial settlement and all secondary trades will settle in
same-day funds.
Secondary market trading between investors holding interests in global notes
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary market trading between investors holding interests in global notes
through Clearstream-Luxembourg and Euroclear will be conducted in the ordinary
way under their normal rules and operating procedures and under conventional
eurobond practice, which is seven calendar day settlement.
Secondary market trading between investors holding interests in global notes
through Austraclear will be conducted in accordance with the Austraclear
Regulations and Operating Manual in the same manner as domestic Australian
dollar debt instruments.
Secondary cross-market trading between Clearstream-Luxembourg or Euroclear
participants (including, where applicable, Austraclear as a participant in those
systems) and DTC participants holding interests in global notes will be effected
on a delivery-against-payment basis through the respective depositaries of
Clearstream-Luxembourg and Euroclear and the DTC participants.
INITIAL SETTLEMENT
All global notes will be held in book-entry form by DTC in the name of
Cede & Co., as nominee of DTC. Note Owners' interests in the global notes will
be represented through financial institutions acting on their behalf as direct
and indirect participants in DTC. As a result, Clearstream-Luxembourg and
Euroclear will hold positions on behalf of their participants (including, where
applicable, Austraclear) through their respective depositaries, which in turn
will hold their positions in accounts as DTC participants.
Note Owners electing to hold their interests in the global notes through DTC
will follow the DTC's settlement practices applicable to U.S. corporate debt
obligations. Note Owner securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Note Owners electing to hold their interests in the global notes through
Clearstream-Luxembourg or Euroclear or Austraclear accounts will follow the
settlement procedures applicable to conventional eurobonds, except that there
will be no temporary global security and no "lockup" or restricted period.
Interests in the global notes will be credited to the securities custody
accounts on the settlement date against payment in same-day funds.
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SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC
participants will be settled using the DTC's procedures applicable to U.S.
corporate debt obligations in same-day funds.
TRADING BETWEEN CLEARSTREAM-LUXEMBOURG EUROCLEAR PARTICIPANTS AND/OR
AUSTRACLEAR. Secondary market trading between Clearstream-Luxembourg
participants or Euroclear participants or Austraclear participants will be
settled using the procedures applicable to conventional eurobonds in same-day
funds.
TRADING BETWEEN DTC SELLER AND CLEARSTREAM-LUXEMBOURG, EUROCLEAR OR
AUSTRACLEAR PURCHASER. When interests in the global notes are to be transferred
from the account of a DTC participant to the account of a Clearstream-Luxembourg
participant or a Euroclear participant, the purchaser will send instructions to
Clearstream-Luxembourg or Euroclear through a Clearstream-Luxembourg participant
or Euroclear participant (including, where applicable, Austraclear) at least one
business day before settlement. Clearstream-Luxembourg or Euroclear will
instruct their respective depositary, as the case may be, to receive the
interests in the global notes against payment. Payment will include interest
accrued on the interests in the global notes from and including the last coupon
payment date to and excluding the settlement date. Payment will then be made by
the respective depositary to the DTC participant's account against delivery of
the global notes. After settlement has been completed, the global notes will be
credited to the respective clearing system and by the clearing system, under its
usual procedures, to the Clearstream-Luxembourg participant's or Euroclear
participant's (including, where applicable, the account of Austraclear and the
account of a member of Austraclear). The global notes credit will appear the
next day accounting to European time or Australian time (as the case may be),
and the cash debit will be back-valued to, and interest on the global notes will
accrue from, the value date. The value date would be the day before the day that
settlement occurred in New York. If the trade fails and settlement is not
completed on the intended value date, the Clearstream-Luxembourg or Euroclear
cash debit will be valued instead on the actual settlement date.
Austraclear will follow its rules and procedures in giving instructions to
Clearstream-Luxembourg and Euroclear (as a participant in those systems) and
members of Austraclear will need to give instructions to Austraclear in good
time to enable it to do so.
Clearstream-Luxembourg participants and Euroclear participants (including,
where applicable, Austraclear) will need to make available to the respective
clearing systems the funds necessary to process same-day funds settlement. The
most direct means of doing so is to preposition funds for settlement, either
from cash on hand or existing lines of credit, as they would for any settlement
occurring within Clearstream-Luxembourg or Euroclear. Under this approach, they
may take on credit exposure to Clearstream-Luxembourg or Euroclear until the
global notes are credited to their accounts one day later. Austraclear members
will need to make available to Austraclear the funds necessary for it to comply
with its obligations as a participant in Clearstream-Luxembourg or Euroclear in
accordance with the Austraclear Regulations and Operating Manual.
As an alternative, if Clearstream-Luxembourg or Euroclear has extended a
line of credit to them, Clearstream-Luxembourg participants or Euroclear
participants, can elect not to pre-position funds and allow that credit line to
be drawn upon the finance settlement. Under this procedure,
Clearstream-Luxembourg participants or Euroclear participants purchasing
interests in the global notes would incur overdraft charges for one day,
assuming they cleared the overdraft when the interests in the global notes were
credited to their accounts. However, interest on the global notes
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would accrue from the value date. Therefore, in many cases the investment income
on the interests in the global notes earned during that one-day period may
substantially reduce or offset the amount of the overdraft charges, although
this result will depend on each Clearstream-Luxembourg participant's or
Euroclear participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
participants can employ their usual procedures for sending interests in the
global notes to the respective depositary for the benefit of
Clearstream-Luxembourg participants or Euroclear participants (including, where
applicable, Austraclear). The sale proceeds will be available to the DTC Seller
on the settlement date. Thus, to the DTC participant a cross-market transaction
will settle no differently than a trade between two DTC participants.
TRADING BETWEEN CLEARSTREAM-LUXEMBOURG, EUROCLEAR OR AUSTRACLEAR SELLER AND
DTC PURCHASER. Due to time zone differences in their favor,
Clearstream-Luxembourg participants and Euroclear participants (including, where
applicable, Austraclear) may employ their customary procedures for transactions
in which interests in global notes are to be transferred by the respective
clearing system, through the respective depositary, to a DTC participant. The
seller will send instructions to Clearstream-Luxembourg or Euroclear through a
Clearstream-Luxembourg participant or Euroclear participant (including, where
applicable, Austraclear) at least one business day before settlement. In these
cases, Clearstream-Luxembourg or Euroclear will instruct the respective
depositary, as appropriate, to deliver the bonds to the DTC participant's
account against payment. Payment will include interest accrued on the interests
in the global notes from and including the last coupon payment date to and
excluding the settlement date. The payment will then be reflected in the account
of the Clearstream-Luxembourg participant or Euroclear participant (including,
where applicable, the account of Austraclear and the account of the member of
Austraclear) the following day, and receipt of the cash proceeds in the
Clearstream-Luxembourg participant's or Euroclear participant's account
(including, where applicable, the account of Austraclear and the account of the
member of Austraclear) would be back-valued to the value date. The value date
would be the day before the day that settlement occurred in New York. Should the
Clearstream-Luxembourg participant or Euroclear participant have a line of
credit with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft charges incurred over that one-day period. If the
trade fails and settlement is not completed on the intended value date, receipt
of the cash proceeds in the Clearstream-Luxembourg participant's or Euroclear
participant's or account (including, where applicable, the account of
Austraclear and the account of the member of Austraclear) would instead be
valued on the actual settlement date. Finally, day traders that use
Clearstream-Luxembourg or Euroclear and that purchase interests in global notes
from DTC participants for delivery to Clearstream-Luxembourg participants or
Euroclear participants (including, where applicable, Austraclear) should note
that these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
- borrowing through Clearstream-Luxembourg or Euroclear for one day, until
the purchase side of the day trade is reflected in their
Clearstream-Luxembourg or Euroclear accounts, under the clearing system's
customary procedures;
- borrowing the interests in the global notes in the U.S. from a DTC
participant no later than one day prior to settlement, which would give
the interests in the global notes sufficient time to be reflected in their
Clearstream-Luxembourg or Euroclear account in order to settle the sale
side of the trade; or
- staggering the value dates for the buy and sell sides of the trade so that
the value date for the purchase from the DTC participant is at least one
day before the value date for the sale to the Clearstream-Luxembourg
participant or Euroclear participant (including, where applicable,
Austraclear).
B-I-3
<PAGE>
PRINCIPAL OFFICE OF HOMESIDE MORTGAGE SECURITIES TRUST 2001-1
7301 Baymeadow Way
Jacksonville, Florida 32256
Attention: HomeSide Global MBS Manager, Inc.
SELLER AND SERVICER
National Australia Bank Limited (ABN 12 004 044 937)
Level 24, 500 Bourke Street
Melbourne, Victoria, 3000,
Australia
ISSUER TRUSTEE
Perpetual Trustee Company Limited (ABN 42 000 001 007)
Level 3, 39 Hunter Street
Sydney, 2000
Australia
NOTE TRUSTEE, PRINCIPAL PAYING AGENT AND NOTE REGISTRAR
The Bank of New York (New York Branch)
101 Barclay Street
Floor 21W
New York, New York 10286
SECURITY TRUSTEE
PT Limited (ABN 67 004 454 666)
Level 7, 1 Castlereagh Street
Sydney, New South Wales, 2000
Australia
LUXEMBOURG LISTING AGENT AND PAYING AGENT
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
L-2955, Luxembourg
LEGAL ADVISERS
<TABLE>
<S> <C>
TO: HOMESIDE MORTGAGE SECURITIES TRUST TO: HOMESIDE MORTGAGE SECURITIES TRUST
2001-1 AS TO UNITED STATES LAW 2001-1 AS TO AUSTRALIAN LAW
Brown & Wood LLP Mallesons Stephen Jaques
1666 K Street, N.W. Level 60
Washington, D.C. 20006-1208 Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
Australia
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
HOMESIDE MORTGAGE SECURITIES TRUST 2001-1
US $ Mortgage Backed Floating Rate Notes, Series 2001-1, Class A
NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937)
Seller and Servicer
PERPETUAL TRUSTEE COMPANY LIMITED (ABN 42 000 001 007)
Issuer Trustee
HOMESIDE GLOBAL MBS MANAGER, INC.,
Trust Manager
[LOGO]
---------------------
PROSPECTUS
---------------------
<TABLE>
<S> <C> <C>
DEUTSCHE BANC ALEX. BROWN J.P. MORGAN & CO. NATIONAL AUSTRALIA BANK LIMITED
(CO-LEAD MANAGER AND (CO-LEAD MANAGER) (LONDON BRANCH)(CO-LEAD
GLOBAL BOOK RUNNER) MANAGER)
</TABLE>
BANC OF AMERICA SECURITIES LLC LEHMAN BROTHERS MERRILL LYNCH &
CO. SALOMON SMITH BARNEY
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 notes in any state or jurisdiction where the offer is
not permitted.
Dealers will deliver a prospectus when acting as underwriters of the notes and
with respect to their unsold allotments and subscriptions. In addition, all
dealers selling the notes will deliver a
prospectus until , .
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. All such expenses except for the
registration and filing fees are estimated:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $250.00
Printing and Engraving Fees*................................ *
Legal Fees and Expenses*.................................... *
Trustee's Fees and Expenses*................................ *
Rating Agency Fees*......................................... *
Accounting Fees and Expenses*............................... *
Miscellaneous*.............................................. *
-------
Total..................................................... $250.00
</TABLE>
------------------------
* To be filed by amendment.
ITEM 32. SALES TO SPECIAL PARTIES.
None.
ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 34. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") empowers a Delaware corporation to indemnify any person who are, or are
threatened to be made, parties to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person was an officer or director of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
II-R-1
<PAGE>
Paragraph Eight of HomeSide Mortgage Securities, Inc.'s Certificate of
Incorporation provides that such corporation must indemnify all persons whom it
may indemnify pursuant to Section 145 of the Delaware General Corporation Law to
the full extent provided therein.
Article VII of HomeSide Mortgage Securities, Inc.'s By-Laws provides that
such corporation shall indemnify to the full extent permitted by law and hold
harmless each person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and whether or not by or in the
right of such corporation, by reason of the fact that he is or was a director or
officer of such corporation, or his testator or interstate is or was a director
of officer of such corporation or by reason of the fact that he is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, of any type or kind, domestic or foreign, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred as a result of such action, suit or proceeding.
Article IX of HomeSide Global MBS Manager, Inc.'s By-Laws provides that such
corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative as investigative (other than
an action by or in the right of such corporation) by reason of the fact that he
is or was a director of officer of such corporation or served, at the written
request of such corporation, as a director or officer of another corporation,
against expenses, judgments, for and amounts paid in settlement activity and
reasonably incurred as a result of such action, suit or proceeding.
Article 21 of the constitution of the National Australia Bank Limited
contains an indemnity from the National Australia Bank Limited in favour of
officers of the National Australia Bank Limited and each of its related bodies
corporate. Section 7 of the form of underwriting agreement filed as Exhibit 1.1
to this Registration Statement provides for indemnification of directors of and
those officers of each Registrant who sign the Registration Statement and
controlling persons of the Trust Manager by the underwriters, and for
indemnification of each underwriter and its controlling persons and National
Australia Bank Limited against certain liabilities.
ITEM 35. TREATMENT OF PROCEEDS FROM STOCK BEING REGISTERED.
Not applicable.
ITEM 36. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b)
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the HomeSide Mortgage
Securities, Inc.
3.2 By-laws of HomeSide Mortgage Securities, Inc.
3.3 Certificate of Incorporation of HomeSide Global MBS
Manager, Inc.
3.4 By-laws of HomeSide Global MSB Manager, Inc.
4.1 Form of Master Trust Deed.
4.2 Form of Supplemental Deed.*
4.3 Form of Note.*
4.4 Form of Master Security Trust Deed.
</TABLE>
II-R-2
<PAGE>
<TABLE>
<C> <S>
4.5 Form of Deed of Charge.
4.6 Form of Note Trust Deed.*
4.7 Form of Master Definition Schedule
4.8 Form of Agency Agreement.*
4.9 Form of Initial Sale Agreement.*
4.10 Form of Secondary Sale Agreement.*
5.1 Opinion of Brown & Wood LLP as to legality of the offered
notes.
8.1 Opinion of Brown & Wood LLP as to certain tax matters
(included in Exhibit 5.1 hereof).
8.2 Opinion of Mallesons Stephen Jaques as to certain Australian
corporate and tax matters.
10.1 Form of Servicing Agreement.*
10.2 Form of Liquidity Facility Agreement.*
10.3 Form of Redraw Facility Agreement.*
10.4 Form of Fixed Rate and Basis Swap.*
10.5 Form of Currency Swaps.*
10.6 Form of Deed of Delegation.*
23.1 Consent of Brown & Wood LLP (included in Exhibit 5.1
hereof).
23.2 Consent of Mallesons Stephen Jaques in connection with its
opinion addressing certain Australian corporate and tax
matters (included in Exhibit 8.2 hereof).
23.3 Consent of Mallesons Stephen Jaques in connection with its
opinion as to the enforceability of U.S. judgments under
Australian law (included in Exhibit 99.1).
24.1 Powers of Attorney (included on signature pages of the
Registration Statement).
25.1 Statement of Eligibility of Trustee.*
99.1 Opinion of Mallesons Stephen Jaques as to enforceability of
U.S. judgments under Australian law.
</TABLE>
------------------------
* To be filed by amendment.
ITEM 37. UNDERTAKINGS
(a) Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
Registrant pursuant to the foregoing provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by such Registrant of expenses incurred
or paid by a director, officer or controlling person of such 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, each Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-R-3
<PAGE>
(b) Undertakings pursuant to Rule 430A.
Each Registrant hereby undertakes:
1. For the purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of the
Registration Statement in reliance upon Rule 430A and contained in the form of
prospectus filed by each Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the Registration
Statement as of the time it was declared effective; and
2. For the purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
II-R-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-11 with the permission of the staff of
the Securities and Exchange Commission and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida on the 4th day of
January, 2001.
<TABLE>
<S> <C> <C>
HOMESIDE MORTGAGE SECURITIES, INC.
By:
-----------------------------------------
Joe K. Pickett
CHAIRMAN OF THE BOARD
CHIEF EXECUTIVE OFFICER AND DIRECTOR
</TABLE>
II-R-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-11 with the permission of the staff of
the Securities and Exchange Commission and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Jacksonville, State of Florida on the 4th day of
January, 2001.
<TABLE>
<S> <C> <C>
HOMESIDE GLOBAL MBS MANAGER, INC.
By:
-----------------------------------------
Joe K. Pickett
CHAIRMAN OF THE BOARD
CHIEF EXECUTIVE OFFICER AND DIRECTOR
</TABLE>
II-R-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Robert J. Jacobs or Hugh R. Harris, or
any of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons acting in the
following capacities for HomeSide Mortgage Securities, Inc. and on the dates
indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
Chairman of the Board, Chief
/s/ JOE K. PICKETT* Executive Officer and
------------------------------------------- Director (Principal January 4, 2001
Joe K. Pickett Executive Officer)
/s/ HUGH R. HARRIS*
------------------------------------------- President, Chief Operating January 4, 2001
Hugh R. Harris Officer and Director
Vice President, Chief
Financial Officer and
/s/ W. BLAKE WILSON* Director (Principal
------------------------------------------- Accounting Officer and January 4, 2001
W. Blake Wilson Principal Financial
Officer)
/s/ ROBERT J. JACOBS*
------------------------------------------- Vice President, Secretary January 4, 2001
Robert J. Jacobs and Director
</TABLE>
II-R-7
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Robert J. Jacobs or Hugh R. Harris, or
any of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons acting in the
following capacities for HomeSide Global MBS Manager, Inc. and on the dates
indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
Chairman of the Board, Chief
/s/ JOE K. PICKETT* Executive Officer and
------------------------------------------- Director (Principal January 4, 2001
Joe K. Pickett Executive Officer)
/s/ HUGH R. HARRIS*
------------------------------------------- President, Chief Operating January 4, 2001
Hugh R. Harris Officer and Director
Vice President, Chief
Financial Officer and
/s/ W. BLAKE WILSON* Director (Principal
------------------------------------------- Accounting Officer and January 4, 2001
W. Blake Wilson Principal Financial
Officer)
/s/ ROBERT J. JACOBS*
------------------------------------------- Vice President, Secretary January 4, 2001
Robert J. Jacobs and Director
</TABLE>
II-R-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NO. DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<C> <S> <C>
1.1 Form of Underwriting Agreement.*
3.1 Certificate of Incorporation of the HomeSide Mortgage
Securities, Inc.
3.2 By-laws of HomeSide Mortgage Securities, Inc.
3.3 Certificate of Incorporation of HomeSide Global MBS Manager,
Inc.
3.4 By-laws of HomeSide Global MBS Manager, Inc.
4.1 Form of Master Trust Deed.
4.2 Form of Supplemental Deed.*
4.3 Form of Note.*
4.4 Form of Master Security Trust Deed.
4.5 Form of Deed of Charge.
4.6 Form of Note Trust Deed.*
4.7 Form of Master Definition Schedule.
4.8 Form of Agency Agreement.*
4.9 Form of Initial Sale Agreement.*
4.10 Form of Secondary Sale Agreement.*
5.1 Opinion of Brown & Wood LLP as to legality of the offered
notes.
8.1 Opinion of Brown & Wood LLP as to certain tax matters
(included in Exhibit 5.1 hereof).
8.2 Opinion of Mallesons Stephen Jaques as to certain Australian
corporate and tax matters.
10.1 Form of Servicing Agreement.*
10.2 Form of Liquidity Facility Agreement.*
10.3 Form of Redraw Facility Agreement.*
10.4 Form of Fixed and Basis Swap.*
10.5 Form of Currency Swaps.*
10.6 Form of Deed of Delegation.*
23.1 Consent of Brown & Wood llp (included in Exhibit 5.1
hereof).
23.2 Consent of Mallesons Stephen Jaques in connection with its
opinion addressing certain Australian corporate and tax
matters (included in Exhibit 8.2 hereof).
23.3 Consent of Mallesons Stephen Jaques in connection with its
opinion as to the enforceability of U.S. judgments under
Australian law (included in Exhibit 99.1)
24.1 Powers of Attorney (included on signature pages of the
Registration Statement).
25.1 Statement of Eligibility of Trustee.(*)
99.1 Opinion of Mallesons Stephen Jaques as to enforceability of
U.S. judgments under Australian law.
</TABLE>
------------------------
* To be filed by amendment.
