Mutual Reliance Review System -- previous orderprovided that issuer of asset-backed securities exempt fromthe requirement to prepare, file and deliver interim and annualfinancial statements and annual information circulars or, whereapplicable, annual reports in lieu of an information circularsubject to conditions, including the requirement to prepare,file and deliver monthly and annual reports regarding performanceof pools of securities assets -- previous order revoked andreplaced.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 77, 78, 79, 80(b)(iii), 81(2), and 144.
National Instruments Cited
National Instrument 14-101 Definitions.
National Instrument 44-101 Short Form ProspectusDistributions.
National Instrument 54-101 Communication withBeneficial Owners of Securities of a Reporting Issuer.
IN THE MATTER OF
THE SECURITIES LEGISLATIONOF
ONTARIO, BRITISH COLUMBIA,ALBERTA,
NEWFOUNDLAND AND LABRADOR,
NOVA SCOTIA AND SASKATCHEWAN
IN THE MATTER OF
THE MUTUAL RELIANCE REVIEWSYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
MERRILL LYNCH FINANCIAL ASSETSINC.
AND MERRILL LYNCH CANADA INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof Ontario, British Columbia, Alberta, Newfoundland and Labrador,Nova Scotia and Saskatchewan (the "Jurisdictions")issued on November 30, 2000 a decision, as varied by an MRRSDecision Document dated September 17, 2001 and an MRRS DecisionDocument dated January 7, 2003 (the "Original Decision"),pursuant to the securities legislation of the Jurisdictions(the "Legislation"), that provisions of the Legislationconcerning the preparation, filing and delivery of interim andannual financial statements and the annual filing of a formby a reporting issuer shall not apply to Merrill Lynch MortgageLoans Inc., subsequently renamed Merrill Lynch Financial AssetsInc. (the "Issuer"), and Merrill Lynch Canada Inc.("ML Canada", and collectively with the Issuer, the"Filer") in connection with the Issuer and its offeringsof Certificates (as defined herein) and Future Certificates(as defined herein);
AND WHEREAS the Filer wishes to amendthe Original Decision in order to:
(i) conform the relief to the relief thathas been granted to similar issuers subsequent to the OriginalDecision;
(ii) allow for the protection of confidentialinformation;
(iii) reduce the annual filing burden of theFiler; and
(iv) provide clearer guidance to investorsas to alternate sources of information.
AND WHEREAS in order to so amend theOriginal Decision, the Filer has applied to revoke the OriginalDecision and to replace it as set out below;
AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System")the Ontario Securities Commission is the principal regulatorfor this Application;
AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions;
AND WHEREAS the Filer has representedto the Decision Makers as follows:
1. The Issuer was incorporated under the lawsof Canada on March 13, 1995 under the name Bulls OfferingCorporation. By articles of amendment dated December 3, 1998,the name of the Issuer was changed to Merrill Lynch MortgageLoans Inc. By articles of amendment dated March 15, 2001,the name of the Issuer was changed to Merrill Lynch FinancialAssets Inc. The issuer is a wholly-owned subsidiary of MerrillLynch & Co., Canada Ltd. ("ML & Co.")
2. The head offices of the Issuer and ML Canadaare both located in Toronto, Ontario.
3. The Issuer has issued and has outstandingapproximately $3,064,000,000 of asset-backed securities in13 issues as follows:
(i) $182,083,237 initial certificate balanceof pass-through certificates (the "C-1 Certificates")evidencing undivided co-ownership interests in a pool of32 commercial mortgage loans issued December 21, 1998 ofwhich $163,874,000 initial certificate balance were subsequentlyqualified by a short form prospectus dated May 31, 1999.
(ii) $214,079,251 initial certificate balanceof pass-through certificates (the "C-2 Certificates")evidencing undivided co-ownership interests in a pool of43 commercial mortgage loans of which $193,741,000 initialcertificate balance were offered pursuant to a short formprospectus dated September 16, 1999.
(iii) $220,000,000 initial certificate balanceof pass-through certificates (the "1STT Certificates")evidencing an undivided co-ownership interest in first mortgagebonds (the "1STT First Mortgage Bonds") issuedby 1st Street Tower Trust was offered pursuantto a short form prospectus dated October 1, 1999.
(iv) $257,591,683 initial certificate balanceof pass-through certificates (the "C-3 Certificates")evidencing undivided co-ownership interests in a pool of53 commercial mortgage loans of which $227,324,000 initialcertificate balance were offered pursuant to a short formprospectus dated May 19, 2000.
(v) $115,500,000 initial certificate balanceof pass-through certificates ("BMCC Certificates")evidencing an undivided co-ownership interest in first mortgagebonds issued by BMCC Corporate Centre were offered pursuantto a short form prospectus dated September 28, 2000.
(vi) $287,619,638 initial certificate balanceof pass-through certificates (the "C-4 Certificates")evidencing undivided co-ownership interests in a pool of63 commercial mortgage loans of which $255,981,000 initialcertificate balance were offered pursuant to a short formprospectus dated November 21, 2000.
(vii) $200,192,047 initial certificate balanceof pass-through certificates (the "LBC Certificates")evidencing undivided co-ownership interests in a pool of229 mortgage loans of which $187,680,000 initial certificatebalance were offered pursuant to a short form prospectusdated January 24, 2001.
(viii) $248,729,008 initial certificatebalance of pass-through certificates (the "C-5 Certificates")evidencing undivided co-ownership interests in a pool of55 commercial mortgage loans of which $221,990,000 initialcertificate balance were offered pursuant to a short formprospectus dated May 15, 2001.
(ix) $265,495,510 initial certificate balanceof pass-through certificates (the "C-6 Certificates")evidencing undivided co-ownership interests in a pool of40 commercial mortgage loans of which $236,954,000 initialcertificate balance were offered pursuant to a short formprospectus dated November 27, 2001.
(x) $100,000,000 initial certificate balanceof pass-through certificates (the "BC2P Certificates")evidencing undivided co-ownership interests in two commercialmortgage were loans offered for sale pursuant to a shortform prospectus dated February 5, 2002.
(xi) $280,741,039 initial certificate balanceof pass-through certificates (the "C-7 Certificates")evidencing undivided co-ownership interests in a pool of49 commercial mortgage loans of which $256,100,000 initialcertificate balance were offered pursuant to a short formprospectus dated May 8, 2002.
(xii) $223,879,000 initial certificate balanceof co-ownership certificates (the "AmeriCredit Certificates")evidencing undivided co-ownership interests in a pool ofautomobile loans and certain related assets together withpayments and other proceeds and property received thereonwere offered for sale by ML Canada pursuant to a short formprospectus dated May 10, 2002.
(xiii) $468,331,177 initial certificatebalance of pass-through certificates (the "C-8 Certificates")evidencing undivided co-ownership interests in a pool of70 commercial mortgage loans of which $423,830,000 initialcertificate balance were offered pursuant to a short formprospectus dated November 20, 2002.
(the C-1 Certificates, C-2 Certificates, C-3Certificates, C-4 Certificates, C-5 Certificates, C-6 Certificates,1STT Certificates, BMCC Certificates, LBC Certificates, BC2PCertificates, AmeriCredit Certificates, C-7 Certificates andC-8 Certificates being referred to collectively as the "Certificates"and the transactions pursuant to which the Certificates wereissued as the "Transactions").
(certificates similar to the Certificates,distributed by the Issuer from time to time, that are servicedby the cash flows of discrete pools of mortgages, receivablesor other financial assets, either fixed or revolving thatby their terms convert into cash within a finite time periodand rights or other assets designed to assure the servicingor timely distribution of proceeds to securityholders ("SecuritizedAssets") are referred to herein as the Future Certificatesand the transactions to which the Future Certificates aredistributed are referred to herein as the "Future Transactions").
4. The Issuer is a special purpose corporation,the only securityholders of which, excluding ML & Co.,which owns all of its issued and outstanding voting securities,are or will be the holders of the Certificates and the holdersof Future Certificates issued from time to time (collectively,the "Certificateholders").
5. The Issuer currently has and in the futurewill have no assets or liabilities other than limited rightsand obligations under certain of the material contracts relatedto the Transactions or Future Transactions, and does not presentlycarry on and will not carry on in the future any activitiesexcept in relation to the structuring and issue of asset-backedsecurities including the Transactions and Future Transactions.Certificateholders have and will have recourse only to theSecuritized Assets and will not have recourse to the Issuer.
6. ML Canada administers the ongoing operationsand pays the operating expenses of the Issuer pursuant toan amended and restated administration agreement made as ofJanuary 11, 2002 (the "Administration Agreement").No consideration is payable by the Issuer in connection withML Canada's services under the Administration Agreement.
7. The directors and officers of the Issuerare directors and/or officers of ML & Co. and have notbeen and will not be compensated by the Issuer for servingin such positions with the Issuer.
8. No director or officer of the Issuer orany associate thereof is indebted to the Issuer, nor has anydirector, officer, or any other insider, or any associateor affiliate thereof, entered into a material contract withthe Issuer, other than as previously disclosed in documentsfiled with the Decision Makers.
9. No insider of the Issuer or associate oraffiliate of any insider has a direct or indirect interestin any transaction that has materially affected or which wouldmaterially affect the Issuer, other than as previously disclosedin documents filed with the Decision Makers.
10. The current auditors of the Issuer areDeloitte & Touche LLP.
11. Certificates sold to the public pursuantto a short form prospectus have been, and will continue tobe, sold on the basis of an Approved Rating by an ApprovedRating Organization (as such terms are defined in NationalInstrument 44-101 Short Form Prospectus Distributions,or in any successor instrument thereto) which will from timeto time independently review such rating based on the performanceof the Securitized Assets.
12. The information contained in the interimand annual financial statements of the Issuer is not and willnot be relevant to the Certificateholders since such Certificateholdersonly have, or will have, an interest in the related SecuritizedAssets and do not have any interest in or any claim on theassets of the Issuer.
13. Each pooling and servicing agreement orsimilar agreement (each, a "Securitization Agreement")which governs or will govern, as the case may be, the rightsof the Certificateholders and their entitlement to the relatedSecuritized Assets provides for or will provide for, as thecase may be, the fulfilment of certain administrative or servicingfunctions relating to the asset-backed securities, such asmaintaining a register of holders of asset-backed securitiesand the making of periodic reports to Certificateholders bya custodian and one or more servicers or other agents appointedpursuant to such Securitization Agreement. The names of eachsuch servicer and agent are or will be disclosed in the applicableprospectus.
14. The Issuer or its duly appointed representativeor agent provides or will provide, on an internet websiteidentified or to be identified in the relevant prospectusfor the Certificates and Future Certificates to which allCertificateholders will be afforded access (the "ReportingWebsite") and otherwise as provided for in the relevantprospectus, no later than the 20th day of each month (or suchsubsequent business day as is provided in the SecuritizationAgreement if the 20th day of the month is not a business day)the financial and other information prescribed therein tobe delivered or made available to Certificateholders on amonthly basis, signed by the Issuer or on its behalf by itsduly appointed representative, and will also file or causeto be filed reasonably contemporaneously therewith the monthlyreports commonly known as distribution date statements ortheir equivalent on the System for Electronic Document Analysisand Retrieval ("SEDAR").
15. Notwithstanding paragraph 14, the Issuermay amend the contents of distribution date statements postedon the Reporting Website and filed on SEDAR in order to notdisclose the names or other personal information of individualobligors of Securitized Assets or, in the case of Canadianmortgage-backed securities, the name or address of any mortgagedproperty, as may be required by confidentiality agreementsor other obligations of confidentiality binding the Issuer.
16. There will be no annual meetings of Certificateholders.Each Securitization Agreement provides or will provide thatthe holders of a certain percentage of the applicable asset-backedsecurities will have the right to direct the custodian ofthe relevant Securitized Assets to take certain actions undersuch Securitization Agreement.
17. On not less than an annual basis, theIssuer will request intermediaries to deliver a notice toCertificateholders pursuant to the procedures stipulated byNational Instrument 54-101 Communication with BeneficialOwners of Securities of a Reporting Issuer, or any successorinstrument thereto, advising Certificateholders that the monthlydistribution date statements and the annual information prescribedin paragraph 19 hereof are available on SEDAR and on the ReportingWebsite, the Reporting Website address, and that Certificateholdersmay request paper copies of such reports be provided to themby ordinary mail.
18. Within 60 days of the end of each fiscalquarter of the Issuer, or such lesser period as may be requiredunder applicable laws, the Issuer or its duly appointed representativeor agent will post on the Reporting Website and file on SEDAR,and mail to Certificateholders who so request, interim managementdiscussion and analysis with respect to the applicable SecuritizedAssets included in the Issuer's Annual Information Form filedwith the Decision Makers (as supplemented by any short formprospectus filed by the Issuer during the intervening period).
19. Within 140 days of the end of each calendaryear, the Issuer or its duly appointed representative or agentwill post on the Reporting Website or mail to Certificateholderswho so request in accordance with the procedures set forthabove and also file or cause to be filed reasonably contemporaneouslytherewith on SEDAR:
(a) annual management's discussion and analysiswith respect to each applicable Securitized Assets poolincluded in the Issuer's Annual Information Form for suchyear filed with the Decision Makers;
(b) an annual statement of compliance signedby a senior officer of each applicable servicer or otherparty acting in a similar capacity on behalf of the Issuerfor the applicable pool of Securitized Assets, certifyingthat the servicer or such other party acting in a similarcapacity has fulfilled all its obligations under the relatedSecuritization Agreement during the year or, if there hasbeen a default in the fulfilment of any obligation, specifyingeach such default and the status thereof; and
(c) for each Securitized Assets pool, anannual accountant's report in form and content acceptableto the Decision Makers prepared by a firm of independentpublic or chartered accountants acceptable to the DecisionMakers respecting compliance by each applicable serviceror other party acting in a similar capacity on behalf ofthe Issuer with the Uniform Single Attestation Program forMortgage Bankers published by the Mortgage Bankers Associationof America or such other servicing standard as may be acceptableto the Decision Makers.
20. The Issuer's annual information form willdescribe each of the Transactions and Future Transactionsthat the Issuer has outstanding at the date stated thereinand will state that the monthly information contained in thedistribution date statements or equivalent for each such Transactionor Future Transaction are available on SEDAR, that those reportsand certain additional information are available on the ReportingWebsite, the website address, and that the Certificateholdersmay request paper copies of all such reports and informationbe provided to them by ordinary mail. The Issuer's annualinformation form will omit annual information on the underlyingpools of financial assets and payments in respect of principaland interest or capital and yield which, but for this DecisionDocument, would be required to be stated.
21. The Issuer will issue press releases andfile material change reports in accordance with the requirementsof the Legislation in respect of material changes in its affairs,in respect of changes in the status (including defaults inpayments due to Certificateholders) of the Securitized Assetsunderlying the Certificates, which may be reasonably consideredto be material to Certificateholders of any Transaction orFuture Transaction, and in respect of a downgrade in the ratingof any of the Certificates by an approved rating organization,as defined under National Instrument 44-101 Short FormProspectus Distributions or under any successor instrumentthereto.
22. Fees payable in connection with the filingof annual financial statements, or in connection with theIssuer's participation as a reporting issuer in any Jurisdiction,will be paid at the time that the annual information specifiedin paragraph 19 is filed on SEDAR.
23. The provision of additional informationto Certificateholders on a monthly and annual basis as describedin paragraphs 14, 17, 18, 19 and 20 hereof will meet the objectivesof allowing the Certificateholders to monitor and make informeddecisions about their investment.
AND WHEREAS pursuant to the System thisDecision Document evidences the decision of each Decision Maker(collectively, the "Decision");
AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;
THE DECISION of the Decision Maker underthe Legislation is that the Original Decision is revoked;
AND IT IS FURTHER THE DECISION of theDecision Makers under the Legislation that the Issuer is exemptedfrom the requirements in the Legislation concerning the preparation,filing and delivery of annual reports, where applicable, interimand annual financial statements, the annual filing, where applicable,in lieu of an information circular by a reporting issuer, andthe content of the Issuer's annual information form, providedthat:
(a) the only securities that the Issuer distributesto the public are Certificates and Future Certificates;
(b) the Issuer complies with paragraphs 5,7, 8, 13, 14, 17, 18, 19, 20, 21 and 22 hereof; and
(c) the exemption from the requirements ofthe Legislation concerning the preparation, filing and deliveryof annual reports, where applicable, interim and annual financialstatements, the annual filing, where applicable, in lieu ofan information circular by a reporting issuer, and the contentof Issuer's annual information form shall terminate 60 daysafter the occurrence of a material change in any of the representationsof the Issuer contained in paragraphs 4 through 10, inclusive,unless the Issuer satisfies the Decision Makers that the exemptionshould continue.
May 16, 2003.
"Harold P. Hands"
"Robert W. Korthals"