Jean Keating’s “Cracking The Code # 7”

February 2005: © Protected by common law copyright ©

The courts are operating under Statute Law. A “Statute” is defined in black’s 4th edition revised as a kind of bond or obligation of record, being an abbreviation for “statute merchant” or “statute staple.”

Statute –merchant = is defined as a security for a debt acknowledged to be due, entered into before the chief magistrate of some trading town, pursuant to the statute 13 Edward I. De Mercatoribus, by which not only the body of the debtor might be imprisoned, and his goods seized in satisfaction of the debt, but also his lands might be delivered to the creditor till out of the rents and profits of them the debt be satisfied. This was also called a Pocket Judgment.

Statute Staple = A 1353 statute establishing procedure for settling disputes among merchants who traded in staple towns. The statute helped merchants receive swift judgment for debt. Cf. STATUTE MERCHANT. 2. A bond for commercial debt. A statute staple gave the lender a possessory right in the land of a debtor who failed to repay a loan. See STAPLE.

“A popular form of security after 1285 . . . was the . . . ‘statute staple’ – whereby the borrower could by means of a registered contract charge his land and goods without giving up possession; if he failed to pay, the lender became a tenant of the land until satisfied . . . the borrower under a statue or recognizance remained in possession of his land, and it later became a common practice under the common-law forms of mortgage likewise to allow the mortgagor to remain in possession as a tenant at will or at sufferance of the mortgage.”J.H. Baker, An introduction to English Legal History 354 (3d edition 1990).

Recognizance = A bond or obligation of record binding a person to some act as to appear in court and subject to forfeit money if obligation is not fulfilled. Fifa = Fifa, short for the Latin phrase fieri facias (“let it be made . . .”) was a court (execution) to the sheriff to levy on (Take) the property of a debtor in order to satisfy a judgment (see judgment and execution dockets, above). The sheriff might typically keep track of fifas in a Sheriff’s Fifa Docket Book. Usually written on a fill-in-the blank form, a fifa names the parties to the court judgment and the value of property to be taken to satisfy the judgment. On the back, the sheriff or his deputies annotate their actions in carrying out the order. The fifas were to be returned to the court which issued them and the actions annotated on the Judgment Docket. Theoretically, the docket books should contain everything that was noted on the fifas. In websters 1913 dictionary the word stand is defined as being also the word statute. I believe this is why the judge in every court always asks do you under – stand the charges being assessed against you. In the O.E. [Old English] it is understandan, to stand under or to be subjected to or under the control of or I am subjecting or agreeing to put my myself under the control of or putting myself under the statute or bond of record. I have been doing more research on our prison system via the internet and have found out some interesting things, regarding what is really going on in the courtroom. The court is looking for an acceptance and acceptor under 3-410 of the U.C.C. as the Principal has the primary obligation to pay or discharge any instrument presented for acceptance. Since they are presenting a Bill of Exchange [indictment] for acceptance. This is called an acceptance for honor, which involves a negotiable instrument especially a bill of exchange [indictment] that has been accepted for payment. The complaint, information, or indictment is a three party Draft, Commercial paper, or Bill of Exchange under Article 3 of the U.C.C. The Grand Jury Foreman is the Drawer or Maker of the Indictment by his signature, the Defendant/Debtor or Straw man is the Drawee and the State is the Payee and the live man is the Payor. What they are doing in the courtroom is all commercial, this is in conformity to 27 CFR 72.11, where it says all crimes are commercial. What the judge and prosecutor are doing in the courtroom is making a commercial presentment under section 3-501 (1) "Unless excused (section 3-511) presentment is necessary to charge secondary parties as follows":

(a) Presentment for acceptance is necessary to charge the drawer and endorsers of a draft where the draft so provides, or is payable elsewhere than at the residence or place of business of the Drawee, or its date of

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payment depends upon such presentment. The holder may at his option present for acceptance any other draft payable at a stated date;

(b) Presentment for payment is necessary to charge any endorser;

(c) in the case of any drawer, the acceptor of a draft payable at a bank or the maker of a note payable at a bank, presentment for payment is necessary, but failure to make presentment discharges such drawer, acceptor or maker only as stated in section 3-502 (1)(B).

If you don't accept the charge or presentment you are in dishonor for non acceptance under 3-505 of the U.C.C. (c) and 3-501 (2) (a), (b). Acceptance is the drawer's signed engagement to honor the draft as presented. It must be written on the draft, and may consist of his signature alone. It becomes operative when completed by delivery or notification 3-410 of the U.C.C.

You are the fiduciary trustee of the straw man which is a Cesti Que Trust; in this capacity you have the responsibility to discharge all his debts, by operation of law. “All moneys of the Federal Reserve Board shall be treated as trust funds for the purpose of section 906 (a)(2) (FOOTNOTE 1) of title 2. This section is effective for fiscal year 1986 and every fiscal year thereafter.” TITLE 12 BANKS AND BANKING CHAPTER 14 SECTION 1772 (e). Every account is a trust, this is why every deed, conveyance or transfer uses the words Grantor, Grantee, or Assignor, Assignee, or Transferor or Transferee. You are also the principal or asset holder on the private side of the accounting ledger; you are holding the exemption necessary to discharge the debt. When they monetize debt they have to have a principal, capital and interest is what circulates as principal and is called revenue or re-venue. Principal is where venue lies. Revenue is a Tax debt or Tax bills. All bills when presented represent revenue, interest, capitol, or accruals circulating from you as the principal, when it is returned back to you as capital or interest it is called income or in-coming. This method of accounting is called the "Accrual Accounting Method" and is represented by debits and credits. Debits are assets Credits are liabilities. The credits and liabilities have to be in balance, this is accomplished through double bookkeeping entries or reverse bookkeeping entry. These bookkeeping entries are the funds referred to in commercial banking. When you are in dishonor they cannot use your exemption to pass the debt or charge through your account to obtain a discharge, so they sell your dishonor, which has a commercial of $ 1,000,000 dollars for each count. When social security # is assigned or issued a blank bond is issued and when you are imprisoned the bond is filled out. This bond is called a Bid Bond, standard form 24 (REV. 10-98) prescribed by GSA-FAR (48CFR) 53.228(a). This is also called a prison bond. These are also referred to as contract surety bonds. The first, the bid bond, provides financial assurance that the bid has been submitted in good faith and that the contractor intends to enter into the contract at the price bid and provide the required performance and payment bonds. The second, the performance bond, protects the obligee from financial loss should the contractor fail to perform the contract in accordance with the terms and conditions of the contract documents. The Third kind of contract bond is the payment bond which guarantees that the contractor will pay certain subcontractor, labor and material bills associated with the project. The fourth bond and most important is the STANDARD FORM 28 (Rev. 6/2003) prescribed by GSA-FAR (48 CFR) 53.228 (e) OMB No. 9000-0001, if you read this form carefully it says under the sworn statement “I also depose and say that, concerning any stocks or bonds included in the assets listed below, that there are no restrictions on the resale of these securities pursuant to the registration provisions of Section 5 of the Securities Exchange Act of 1933. The word securities takes you back to section 8-102 (9) of Article 8 of the UCC, which defines securities as a financial asset (i) security (ii) obligation of a person, or a share, participation of a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or (iii) any property held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the person that the property is to be treated as a financial asset under this Article. As the context requires, the term means either the interest itself or the means by which a person’s claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement. The definition of “security” has three components. First, there is the subparagraph (i) test that the interest or obligation be fully transferable, in the sense that the issuer either maintains transfer books or the

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obligation or interest is represented by a certificate in bearer or registered form. Second, there is the subparagraph (ii) test that the interest or obligation be divisible, that is, one of a class or series, as distinguished from individual obligations of the sort governed by ordinary contract law or by Article 3. Third, there is the subparagraph (iii) functional test, which generally turns on whether the interest or obligation is, or is of a type, dealt in or traded on securities markets or securities exchanges. There is, however, an “opt in” provision in subparagraph (iii) which permits the issuer of any interest or obligation that is “a medium of investment” to specify that it is a security governed by Article 8.

The divisibility test of subparagraph (ii) applies to the security-that is, the underlying intangible interest-not the means by which that interest is evidenced. Thus, securities issued in book-entry only form meet the divisibility test because the underlying intangible interest is divisible via the mechanism of the indirect holding system. This is so even though the clearing corporation is the only eligible direct holder of the security. The third component, the functional test in subparagraph (iii), provides flexibility while ensuring that the Article 8 rules do not apply to interest or obligations in circumstances so unconnected with the securities markets that parties are unlikely to have thought of the possibility that Article 8 might apply. Subparagraph (iii)(A) covers interests or obligations that either are dealt in or traded on securities exchanges or securities markets, or are of a type dealt in or traded on securities exchanges or securities markets. The “is dealt in or traded on” phrase eliminates problems in the characterization of new forms of securitiesWhich are to be traded in the markets, even though no similar type has previously been dealt in or traded in the markets. Subparagraph (iii)(B) covers the broader category of media for investment, but it applies only if the terms of the interest or obligation specify that it is an Article 8 security. This opt-in provision allows for deliberate expansion of the scope of Article 8. Section 8-103 contains additional rules on the treatment of particular interests as securities or financial assets.

1. Part 5 rules apply to security entitlements, and Section 8-501 (b) provides that a person has a security entitlement when a financial asset has been credited to a “security account.” Thus, the term “securities account” specifies the type of arrangements between institutions and their customers that are covered by Part 5. A securities account is a consensual arrangement in which the intermediary undertakes to treat the customer as entitled to exerciseThe rights that comprise the financial asset. The consensual aspect is covered by the requirement that the account be established pursuant to agreement. The term agreement is used in the broad sense defined in section 1-201(3). There is no requirement that a formal or written agreement.

1-201(3) “Agreement”, as distinguished from “contract”, means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1-303.

1-303. Course of performance, Course of Dealing, and Usage of Trade.

(a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if;

(1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.

(b) A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

(c) A “usage of trade”is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in

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question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.

(d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties’ agreement, may give particular meaning to specific terms of the agreement,and may supplement or qualify the terms of the agreement. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance.

(e) Except as otherwise provided in subsection (f), the express terms of an agreement and any applicable course of performance, course of dealing, or usage of trade must be construed whenever reasonable as consistent with each other. If such a construction is unreasonable:

(1) express terms prevail over course of performance, course of dealing,and usage of trade;

(2) course of performance prevails over course of dealing and usage of trade;

And

(3) course of dealing prevails over usage of trade.

(f) Subject to Section 2-209 and Section 2A-208, a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance.

(g) Evidence of relevant usage of trade offered by one party is not admissible unless the party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party.

Code of Federal Regulations][Title 48, Volume 1][Revised as of October 1, 2003]From the U.S. Government Printing Office via GPO Access[CITE: 48CFR28.203-5]

[Page 541-542] TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM CHAPTER 1--FEDERAL ACQUISITION REGULATION PART 28_BONDS AND INSURANCE--Table of Contents Subpart 28.2_Sureties and Other Security for Bonds Sec. 28.203-5 Release of lien.

(a) After consultation with legal counsel, the contracting officer shall release the security interest on the individual surety's assets using the Optional Form 90, Release of Lien on Real Property, or Optional Form 91, Release of Personal Property from Escrow, or a similar release as soon as possible consistent with the conditions in subparagraphs (a) (1) and (2) of this subsection. A surety's assets pledged in support of a payment bond may be released to a subcontractor or supplier upon Government receipt of a Federal district court

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[[Page 542]]

judgment, or a sworn statement by the subcontractor or supplier that the claim is correct along with a notarized authorization of the release by the surety stating that it approves of such release. (1) Contracts subject to the Miller Act. The security interest shall be maintained for the later of (i) 1 year following final payment, (ii) until completion of any warranty period (applicable only to performance bonds), or (iii) pending resolution of all claims filed against the payment bond during the 1-year period following final payment. (2) Contracts subject to alternative payment protection (28.102-1(b)(1)). The security interest shall be maintained for the full contract performance period plus one year. (3) Other contracts not subject to the Miller Act. The security interest shall be maintained for 90 days following final payment or until completion of any warranty period (applicable only to performance bonds), whichever is later. (b) Upon written request, the contracting officer may release the security interest on the individual surety's assets in support of a bid guarantee based upon evidence that the offer supported by the individual surety will not result in contract award. (c) Upon written request by the individual surety, the contracting officer may release a portion of the security interest on the individual surety's assets based upon substantial performance of the contractor's obligations under its performance bond. Release of the security interest in support of a payment bond must comply with the subparagraphs (a) (1) through (3) of this subsection. In making this determination, the contracting officer will give consideration as to whether the unreleased portion of the lien is sufficient to cover the remaining contract obligations, including payments to subcontractors and other potential liabilities. The individual surety shall, as a condition of the partial release, furnish an affidavit agreeing that the release of such assets does not relieve the individual surety of its obligations under the bond(s).

[54 FR 48988, Nov. 28, 1989, as amended at 61 FR 31652, June 20, 1996]

[Code of Federal Regulations][Title 48, Volume 1][Revised as of October 1, 2004]From the U.S. Government Printing Office via GPO Access[CITE: 48CFR28.204-3]

[Page 553-554] TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM (This book contains chapter 1, parts 1 to 51)

CHAPTER 1--FEDERAL ACQUISITION REGULATION -------------------------------------------------------------------- PART 28_BONDS AND INSURANCE--Table of Contents Subpart 28.2_Sureties and Other Security for Bonds Sec. 28.204-3 Irrevocable letter of credit (ILC).

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(a) Any person required to furnish a bond has the option to furnish a bond secured by an ILC in an amount equal to the penal sum required to be secured (see 28.204). A separate ILC is required for each bond. (b) The ILC shall be irrevocable, require presentation of no document other than a written demand and the ILC (and letter of confirmation, if any), expire only as provided in paragraph (f) of this subsection, and be issued/confirmed by an acceptable federally insured financial institution as provided in paragraph (g) of this subsection. (c) To draw on the ILC, the contracting officer shall use the sight draft set forth in the clause at 52.228-14, and present it with the ILC (including letter of confirmation, if any) to the issuing financial institution or the

[[Page 554]]

confirming financial institution (if any). (d) If the contractor does not furnish an acceptable replacement ILC, or other acceptable substitute, at least 30 days before an ILC's scheduled expiration, the contracting officer shall immediately draw on the ILC. (e) If, after the period of performance of a contract where ILCs are used to support payment bonds, there are outstanding claims against the payment bond, the contracting officer shall draw on the ILC prior to the expiration date of the ILC to cover these claims. (f) The period for which financial security is required shall be as follows: (1) If used as a bid guarantee, the ILC should expire no earlier than 60 days after the close of the bid acceptance period. (2) If used as an alternative to corporate or individual sureties as security for a performance or payment bond, the offeror/contractor may submit an ILC with an initial expiration date estimated to cover the entire period for which financial security is required or an ILC with an initial expiration date that is a minimum period of one year from the date of issuance. The ILC shall provide that, unless the issuer provides the beneficiary written notice of non-renewal at least 60 days in advance of the current expiration date, the ILC is automatically extended without amendment for one year from the expiration date, or any future expiration date, until the period of required coverage is institution with a written statement waiving the right to payment. The period of required coverage shall be: (i) For contracts subject to the Miller Act, the later of-- (A) One year following the expected date of final payment; (B) For performance bonds only, until completion of any warranty period; or (C) For payment bonds only, until resolution of all claims filed against the payment bond during the one-year period following final payment. (ii) For contracts not subject to the Miller Act, the later of-- (A) 90 days following final payment; or (B) For performance bonds only, until completion of any warranty period. (g) Only federally insured financial institutions rated investment grade or higher shall issue or confirm the ILC. Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year, ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year. (1) The offeror/contractor shall provide the contracting officer a credit rating from a recognized commercial rating service as specified

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in Office of Federal Procurement Policy Pamphlet No. 7 (see 28.204-3(h)) that indicates the financial institution has the required rating(s) as of the date of issuance of the ILC. (2) If the contracting officer learns that a financial institution's rating has dropped below the required level, the contracting officer shall give the contractor 30 days to substitute an acceptable ILC or shall draw on the ILC using the sight draft in paragraph (g) of the clause at 52.228-14. (h)(1) Additional information on credit rating services and investment grade ratings is contained within Office of Federal Procurement Policy Pamphlet No. 7, Use of Irrevocable Letters of Credit. This pamphlet may be obtained by calling the Office of Management and Budget's publications office at (202) 395-7332. (2) A copy of the Uniform Customs and Practice (UCP) for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500, is available from: ICC Publishing, Inc., 156 Fifth Avenue, New York NY, 10010, Telephone: (212) 206-1150, Telefax: (212) 633-6025, E-mail: iccpub@interport.net

[61 FR 31653, June 20, 1996, as amended at 62 FR 44807, Aug. 22, 1997]

52.228-14 -- Irrevocable Letter of Credit.

As prescribed in 28.204-4, insert the following clause:

Irrevocable Letter of Credit (Dec 1999)

(a) “Irrevocable letter of credit” (ILC), as used in this clause, means a written commitment by a federally insured financial institution to pay all or part of a stated amount of money, until the expiration date of the letter, upon presentation by the Government (the beneficiary) of a written demand therefor. Neither the financial institution nor the offeror/Contractor can revoke or condition the letter of credit.

(b) If the offeror intends to use an ILC in lieu of a bid bond, or to secure other types of bonds such as performance and payment bonds, the letter of credit and letter of confirmation formats in paragraphs (e) and (f) of this clause shall be used.

(c) The letter of credit shall be irrevocable, shall require presentation of no document other than a written demand and the ILC (including confirming letter, if any), shall be issued/confirmed by an acceptable federally insured financial institution as provided in paragraph (d) of this clause, and --

(1) If used as a bid guarantee, the ILC shall expire no earlier than 60 days after the close of the bid acceptance period;

(2) If used as an alternative to corporate or individual sureties as security for a performance or payment bond, the offeror/Contractor may submit an ILC with an initial expiration date estimated to cover the entire period for which financial security is required or may submit an ILC with an initial expiration date that is a minimum period of one year from the date of issuance. The ILC shall provide that, unless the issuer provides the beneficiary written notice of non-renewal at least 60 days in advance of the current expiration date, the ILC is automatically extended without amendment for one year from the expiration date, or any future expiration date, until the period of required coverage is completed and the Contracting Officer provides the financial institution with a written statement waiving the right to payment. The period of required coverage shall be:

(i) For contracts subject to the Miller Act, the later of --

(A) One year following the expected date of final payment;

(B) For performance bonds only, until completion of any warranty period; or

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(C) For payment bonds only, until resolution of all claims filed against the payment bond during the one-year period following final payment.

(ii) For contracts not subject to the Miller Act, the later of --

(A) 90 days following final payment; or

(B) For performance bonds only, until completion of any warranty period.

(d) Only federally insured financial institutions rated investment grade or higher shall issue or confirm the ILC. The offeror/Contractor shall provide the Contracting Officer a credit rating that indicates the financial institution has the required rating(s) as of the date of issuance of the ILC. Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year, ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year.

(e) The following format shall be used by the issuing financial institution to create an ILC:_____________________________________________________[Issuing Financial Institution’s Letterhead or Name and Address]

Issue Date ______

Irrevocable Letter of Credit No. ________________

Account party’s name ________________________

Account party’s address ______________________

For Solicitation No. __________ (for reference only)

To: [U.S. Government agency][U.S. Government Agency’s Address]

1. We hereby establish this irrevocable and transferable Letter of Credit in your favor for one or more drawings up to United States $ ______. This Letter of Credit is payable at [issuing financial institution’s and, if any, confirming financial institution’s] office at [issuing financial institution’s address and, if any, confirming financial institution’s address] and expires with our close of business on ______, or any automatically extended expiration date.

2. We hereby undertake to honor your or the transferee’s sight draft(s) drawn on the issuing or, if any, the confirming financial institution, for all or any part of this credit if presented with this Letter of Credit and confirmation, if any, at the office specified in paragraph 1 of this Letter of Credit on or before the expiration date or any automatically extended expiration date.

3. [This paragraph is omitted if used as a bid guarantee, and subsequent paragraphs are renumbered.] It is a condition of this Letter of Credit that it is deemed to be automatically extended without amendment for one year from the expiration date hereof, or any future expiration date, unless at least 60 days prior to any expiration date, we notify you or the transferee by registered mail, or other receipted means of delivery, that we elect not to consider this Letter of Credit renewed for any such additional period. At the time we notify you, we also agree to notify the account party (and confirming financial institution, if any) by the same means of delivery.

4. This Letter of Credit is transferable. Transfers and assignments of proceeds are to be effected without charge to either the beneficiary or the transferee/assignee of proceeds. Such transfer or assignment shall be only at the written direction of the Government (the beneficiary) in a form satisfactory to the issuing financial institution and the confirming financial institution, if any.

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5. This Letter of Credit is subject to the Uniform Customs and Practice (UCP) for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500, and to the extent not inconsistent therewith, to the laws of _____________________ [state of confirming financial institution, if any, otherwise state of issuing financial institution].

6. If this credit expires during an interruption of business of this financial institution as described in Article 17 of the UCP, the financial institution specifically agrees to effect payment if this credit is drawn against within 30 days after the resumption of our business.

Sincerely,

_______________________[Issuing financial institution]

(f) The following format shall be used by the financial institution to confirm an ILC:___________________________________________________________________[Confirming Financial Institution’s Letterhead or Name and Address]

(Date) _____________

Our Letter of Credit Advice Number _____________

Beneficiary: ___________ [U.S. Government agency]

Issuing Financial Institution: __________________

Issuing Financial Institution’s LC No.: ___________

Gentlemen:

1. We hereby confirm the above indicated Letter of Credit, the original of which is attached, issued by __________ [name of issuing financial institution] for drawings of up to United States dollars ___________/U.S. $_______ and expiring with our close of business on _____________ [the expiration date], or any automatically extended expiration date.

2. Draft(s) drawn under the Letter of Credit and this Confirmation are payable at our office located at ___________________.

3. We hereby undertake to honor sight draft(s) drawn under and presented with the Letter of Credit and this Confirmation at our offices as specified herein.

4. [This paragraph is omitted if used as a bid guarantee, and subsequent paragraphs are renumbered.] It is a condition of this confirmation that it be deemed automatically extended without amendment for one year from the expiration date hereof, or any automatically extended expiration date, unless:

(a) At least 60 days prior to any such expiration date, we shall notify the Contracting Officer, or the transferee and the issuing financial institution, by registered mail or other receipted means of delivery, that we elect not to consider this confirmation extended for any such additional period; or

(b) The issuing financial institution shall have exercised its right to notify you or the transferee, the account party, and ourselves, of its election not to extend the expiration date of the Letter of Credit.

5. This confirmation is subject to the Uniform Customs and Practice (UCP) for Documentary Credits, 1993 Revision, International Chamber of Commerce Publication No. 500, and to the extent not inconsistent therewith, to the laws of ________ [state of confirming financial institution].

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6. If this confirmation expires during an interruption of business of this financial institution as described in Article 17 of the UCP, we specifically agree to effect payment if this credit is drawn against within 30 days after the resumption of our business.

Sincerely,

___________________________[Confirming financial institution]

(g) The following format shall be used by the Contracting Officer for a sight draft to draw on the Letter of Credit:

Sight Draft

________________________[City, State]

(Date) ______________

[Name and address of financial institution]

Pay to the order of ______________ [Beneficiary Agency] ___________ the sum of United States $____________. This draft is drawn under Irrevocable Letter of Credit No. ______________.

___________________[Beneficiary Agency]

____________________[By]

On April 9, 2002 (12:18 pm) Lehman Brothers Banking Cartel in New York City agreed to provide prison industry leader CCA (Corrections Corporation of America) with a new $ 695,000,000 senior secured credit facility, to be combined with a $150 million notes offering. The war on terrorism has created a buzz in the private prison industry. Less than three weeks after September 11th, a New York Post story on the for-profit private prison industry stated, "America's new wall of homeland security is creating a big demand for cells to hold suspects and illegal aliens who might be rounded up." In order to prosper, prison operators need to maintain a steady flow of prisoners and prison dollars. One of the Industries tools for accomplishing this is the American Legislative Exchange Council, a powerful right wing lobby group that helps corporations draft and enacts "model" legislation-- for a price. Industry leaders CCA and Wackenhut have paid tens (if not hundreds) of thousands of dollars in exchange for a privileged position on ALEC's Criminal Justice Task Force (which CCA chairs). ALEC, in turn, not only promotes privatization, but also brags of having helped enact "Truth in Sentencing" and "Three Strikes" laws in 25 states. In addition to investing heavily in groups like ALEC and the Reason Foundation, the industry spends millions on campaign contributions. From 1995 to 2000, CCA, Wackenhut, and Cornell spent $520,000 in Federal elections, and in 1998, the industry spent $540,000 on state elections, where a little money goes a long way.Corporations work on the Fiscal Accounting Cycle because they operate using commercial debt, we as owner principal’s work on the General Calendar Accounting Year or Cycle. New York City has a $ 6.6 billion dollar deficit, this deficit represents unredeemed debt on the credit side of the accrual accounting system and cannot be executed to the debit side of accrual accounting ledger, except through the principal's exemption. New York has therefore put its bond underwriting business up for bid. This means that New York will issue $ 6.6 billion in bonds and pay underwriters over $30, million in fees in the next fiscal year alone. Lehman Brothers Bank will underwrite New York's $ 6.6 billion dollar deficit. An underwriter is an Insurer or one who buys stock from the issuer with an intent to resell it to the public or an entity or person, especially an investment banker, who guarantees the sale of newly issued securities by purchasing all or part of the shares for resale to the public. The term underwriter derives its meaning from former British Insurance Practices. When insuring their cargo shippers would seek out investors to insure their property. The insurers would

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add their signatures and would write their names under those of the shipper; hence the term 'underwriter'. Both in terms of the insurance industry and securities markets, the concept of underwriting have expanded significantly since its inception. West Mutual Shippers Association out of Luxemburg is underwriting Social Security Administration a surety ship contract or Bond. Now you know how they are financing the commodities and securities market and why New York City is called the Great Whore of Babylon in the Book of Revelations Chapter 18 verses 10-24.

The Corrections Corporation of America owns most of your prison systems and sells its stock and shares on the New York Stock Exchange, the major stock holder is the Paine Webber Group. They have a Dunn & Bradstreet rating and are headquartered in Nashville, Tennessee at 10 Burton Hills Blvd and can be reached at 1-800-624-2931. Their Ticker Symbol for their stock is CXW_pb on the NYSE and CXW under business services on the NYSE. In Berlin Germany there ticker symbol is CXW.BE and CXW.DE in Frankfurt, Germany. CCA later merged into PRISON REALTY TRUST, a Real Estate Investment Trust that is exempt from corporate taxes if it meets certain conditions. This was a $4 Billion Transaction; companies acquire U.S. Corrections Corporation. One important condition is that it distribute 95% of its income to shareholders, a provision making REITs attractive to investors. Prison Realty Trust failed to meet those conditions of cash flow problems; it posted a $62,000,000 loss for 1999 and was in default on the terms of its credit facility. Wall Street was unimpressed at the company’s earlier scheme to issue junk bonds. Investors are angry that PZN lost its REIT status and the related dividend; they are filing class actions suits against Prison Realty Trust for false claims on Securities and Exchange Commission documents. Specifically, they are concerned about the non-disclosure of payments by PZN to CCA. Meanwhile Prison Realty just paid a dividend on their preferred stock (belonging to executives and institutional partners), which sent the common stock to new lows as shareholders realized they are not likely to see dividends soon. In April of 2000, company audits expressed doubt about the company’s solvency. Shares hit a new 52 week low of 2.12 each, down from the 52 week high of $22.37. In his book the Perpetual Prisoner Machine [see resources], Joel Dyer notes that outside one CCA facility, there is a placard with the words “Yesterday’s closing stock price.” Imagine the legitimacy and confidence that are lost by people driving by seeing the stock price plummet, or even seeing “Yesterday’s Closing Stock Price: $2.12”. Together, CCA and its spin off Prison Realty Trust, lost $265 million: “It’s a slim chance, but bankruptcy is a possibility,” says an analyst for First Union Securities. Localities that have contracts with the companies are concerned about whether guards will get paid, and how morale or turnover will effect daily operations, including prison security. The private prison was offered a $200,000,000 restricting plan from its current shareholder Pacific Life Insurance Co. The Private prison’s largest shareholder, Dreman Value Management, was pleased at the offer: “We always maintained that the (prison) business was great, but this has been a financial engineering disaster.”

Shareholder lawsuits still must be settled on satisfactory terms for the deal to be finalized, but the other requirement was met when Lehman Brothers refinanced PZN’s $ 1 billion credit line. At the close of business 26 April, the price closed below $3 a share again after briefly hitting $3.50 the previous week. Prices through the first half of may have generally been below $3 a share. On June 7, the stock hit a new low of $2.00 and talks started on financial restructuring to remedy default on credit line. During the next week, stock rose $1 a share on news that their $1 billion credit line is restructured and they receive a $780,000,000 federal contract.

Instrumental in pulling off this contract was former Federal Bureau of Prisons head J. Michael Quinlan, who is now on the Board of PZN. The Federal Contract, with guaranteed 95% occupancy rate, provided financial resources to reject a restructuring offer from Pacific Life Insurance, but a Legg-Mason stock analyst declared PZN an UNDERPERFORM. Quinlan is now one of the top executives in the company.

Because the stock has lost 75% of its value, two of the executives are leaving, but not without a $1.3 million severance. Of course, there’s also been millions in attorney fees, class action lawsuits from shareholders about the merger and management fees for restructuring. Share prices bottomed out at $0.18 –yes, 18 cents; that really inspires confidence in the justice system. They instituted a 10 for 1 split, which does not change the underlying financials of the company, but prevented them from being removed from the New York Stock Exchange.

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On February 23, 2000 Pacific Life Insurance Company submitted to the board of directors of Prison Realty Trust a shareholder based proposal to invest in and restructure Prison Realty Trust (NYSE:PZN). The shareholder proposal would involve additional value, less dilution and potentially higher returns for existing shareholders of Prison Realty Trust, than the agreement Prison Realty Trust currently has with Fortress Investment Group LLC, the Blackstone Group and Bank of America. Fortress Investment Group is a global alternative investment and asset management firm founded in 1998 with approximately $11 billion in equity capitol. They are located at 1251 Avenue of the Americas 16th floor New York, NY 10020 1-212-798-6100. Fortress just recently completed the acquisition of Germany’s fourth largest residential housing company, GAGFAH, from the German Federal Government’s social security and pension agency, Bundesversicherungsanstalt Fuer Angestellte (or BfA). The transaction, which is valued at approximately 3.5 billion euros (U.S. $4.3 billion), includes the assumption of 1.4 billion euros of existing financing, a $1.4 billion acquisition loan, and 700 million euros of private equity capitol.

Fortress on November 15, 2004 merged with Stelmar Shipping Ltd. Stelmar is an international provider of petroleum products and crude oil transportation services and is Headquartered in Athens, Greece, Stelmar operates one of the world’s largest and most modern Handymax and Panamax tanker fleets with an average age of approximately six years. Stelmar’s 40 vessel fleet consists of 24 Handymax, 13 Panamax and three Aframax tankers.

The Blackstone group is a private investment banking firm and describes itself as a leading global investment and advisory firm. The Blackstone Group was founded in 1985 by a group of four, including Peter G. Peterson and Stephen A. Schwarzman.

The Blackstone Group has ties to American International Group Inc. (AIG) and Kissinger Associates, Inc./Henry Kissinger. According to the Blackstone website, AIG acquired a 7 % non-voting interest in the company in 1998 for $150 million”and committed to invest $1.2 billion in future Blackstone sponsored funds.”

Blackstone has developed strategic alliances with some of the largest and most sophisticated international financial institutions. In addition to AIG, they include Kissinger Associates, Roland Berger & Partner, GmbH, and Scandinaviska Enskilda Banken,” the website states [1] (http://www.blackstone.com/company/bst_group.html).

The company’s Blackstone Alternative Asset Management unit handles $1 billion in hedge funds for pension giant CalPERS.

John Kerry Forbes 2004 campaign ‘advisor’ Roger C. Altman was Vice Chairman of the Blackstone Group from 1987 through 1992 “where he led the firm’s merger advisory business.”

In December 2001, the Blackstone Group was appointed as Enron’s principal financial advisor with regard to financial restructuring.

The Blackstone Group is also handling the restructuring of Global Crossing. The Blackstone Group is located at 345 Park Avenue New York, NY 10154 USA Phone; +1 212 583 5000 Fax: +1 212 583 5712. London location is the Blackstone Group International Limited, Stirling Square, 5-7 Carlton Gardens, 4th Floor London, SW1Y 5AD U.K. Phone: +44 20 7451 4000 Fax: +44 20 7451 4038.

In October 2004, Kissinger Associates and APCO Worldwide announced that they had formed “a strategic alliance”. APCO Worldwide is located at 1615 L St. N.W., # 900, Washington, D.C. phone # 1-202-778-1000. APCO worldwide was started by Margery Kraus in 1984 and she is active on the board of Group Menatep (chair, Advisory Board), the largest Russian holding company; Teuza Fund, a Fairchild technology venture (Israel). Group MENATEP is an international diversified holding company and long-term Russian strategic and portfolio investor in international financial and capital markets.

Kissinger Associates is located at 350 Park Avenue, New York. Other groups associated with Kissinger are Kissinger McLarty Associates, Military-industrial complex and oil industry. Henry Kissinger’s real name is

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Henry Stern, who started and trained the terrorist group the Stern Gang in Israel, which is now called the Mossad. He trains global terrorist groups for the FBI, CIA, and the military, which are the groups running are government at every facet of its existence.

Pacific Life, a long term investor, beneficially owns approximately 4.5 million shares of Prison Realty Trust. The shareholder proposal by Pacific Life provides for additional value in the form of Series C Preferred Stock (approximately $2.20 per share) to be distributed to existing shareholders, and potentially higher future returns, along with generating between $45 to $123 million in additional cash flow to Prison Realty Trust. Pacific Life was founded in 1868 and provides life and health insurance products, individual annuities and group employee benefits, and offers to individuals, businesses and pension plans a variety of investment products and services. The pacific life family of companies manages $300 billion in assets, making it one of the largest financial institutions in America, and currently counts 65 of the 100 largest U.S. companies as clients. Pacific Life Insurance Company is a member of the fortune 500 group.

The Prison Realty Trust [PZN], which is a real estate investment trust [REIT] and is the world’s largest private sector owner and developer. A REIT is a company that buys, develops, manages and sells real estate assets, REIT’s allows participates to invest in a professionally managed portfolio of real estate properties, REIT’s qualify as pass through entities, companies who are able distribute the majority of income cash flows to investors without taxation at the corporate level (providing that certain conditions are met). As pass through entities, whose main function is to pass profits on to investors, a REIT’s business activities are generally restricted to generation of property rental income. Another major advantage of REIT investment is its liquidity (ease of liquidation of assets into cash), as compared to traditional private real estate ownership which are not very easy to liquidate. One reason for the liquid nature of REIT investments is that its shares are primarily traded on major exchanges, making it easier to buy and sell REIT assets/shares than to buy and sell properties in private markets. The origins of the real estate investment trust, or REIT (pronounced “reet”) date back to the 1880s. At that time, investors could avoid double taxation because trusts were not taxed at the corporate level if income was distributed to beneficiaries. This tax advantage, however, was reversed in the 1930s, and all passive investments were taxed first at the corporate level and later taxed as a part of individual incomes. Unlike stock and bond investment companies, REIT’s were unable to secure legislation to overturn the 1930 decision until 30 years later. Following WWII, the demand for real estate funds skyrocketed and President Eisenhower signed the 1960 real estate investment trust tax provision which reestablished the special tax considerations qualifying REIT’s as pass through entities (thus eliminating the double taxation). This law has remained relatively intact with minor improvements since its inception.

REIT investment increased throughout the 1980s with the elimination of certain real estate tax shelters. Investments in real estate provided investors with income and appreciation. The Tax Reform Act of 1986 allowed REIT’s to manage their properties directly, and in 1993 REIT investment barriers to pension funds were eliminated. This trend of reforms continued to increase the interest in and value of REIT investment.

Today, there are over 300 publicly traded REIT’s operating in the United States their assets total over $300 billion. Approximately two-thirds of these trade on the national stock exchanges.

REIT’s fall into three broad categories:

Equity REIT’s: (96.1%)Equity REITS invest and own properties (thus responsible for the equity or value of their real estate assets). Their revenues come principally from their property rents.

Mortgage REITs: (1.6%)Mortgage REITs deal in investment and ownership of property mortgages. These REITs loan money for mortgages to owners of real estate, or invest in (purchase) existing mortgages or mortgage backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.

Hybrid REITs: (2.3%)

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Hybrid REITs combine the investment strategies of Equity REITs and Mortgage REITs by investing in both properties and mortgages.

Individual REITs are able to distinguish themselves by specialization. REITs may focus their investments geographically (by region, state, or metropolitan area), or in property types (such as retail properties, industrial facilities, office buildings, apartments or healthcare facilities). Certain REITs choose a broader focus, investing in a variety of types of property and mortgage assets across a wider spectrum of locations.

The current REIT industry’s investment choices can be broken down by property:

Retail 20% Residential 21.0% Industrial/Office 33.1% Specialty 2.3 % Health Care 3.8% Self Storage 3.6% Diversified 8.5% Mortgage Backed 1.5% Lodging/Resort 6.1%

Federal Prison Industries, also known by its trade name UNICOR, founded in 1934, is operated by the Department of Justice (DOJ) and is wholly owned government corporation which employs 25 percent of the Federal Bureau of Prisons’ sentenced inmate population. Unicor is a supplier to the military during the current war in Iraq.

The government has also created the Prison Industrial Complex, which is composed of the following Agencies:

Biometric Consortium Border Research and Technology Center (BRTC)Bureau of Alcohol, Tobacco, and Firearms (BATF)Corrections Program Office (CPO)Counter drug Technology Assessment Center (CTAC)Drug Enforcement Administration (DEA)Federal Bureau of Prisons (FBP)Federal Prison Industries (operated by DOJ); also known as UNICORImmigration and Naturalization ServiceNational Institute of Corrections (NIC)National Institute of Justice (NIJ)National Law Enforcement and Corrections Technology Center (NLECTC)National Technical Information Service (NTIS)Office of Correctional Education (OVAE)Office of Drug Control Policy (ODCP)Office of Law Enforcement Standards (OLES)Office of Law Enforcement Technology Commercialization (OLETC)Office of National Drug Control Policy (ONDCP)Office of Science and Technology (OS&T)Space and Naval Warfare Systems Center, San Diego (Navy SSC San Diego)Southwest Border High Intensity Drug Trafficking Area (HIDTA)UNICORU.S. Customs ServiceU.S. Department of Defense (DOD)/Biometric Management Office (BMO)U.S. Department of Homeland Security/Border and Transportation Security Directorate (BTS)U.S. Department of Justice (DOJ)U.S. Parole Commission

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Non-Governmental Entities

Alternative Monitoring ServicesAmerican Correctional AssociationAmerican Legislative Exchange Council (ALEC)“Bed brokers”BI Inc. (Biometric Systems)The [Biometric Foundation]Bobby Ross GroupCapital Correction ResourcesCornell Correctionscorrectionalnews.comcorrections.comCorrections Corporation of America (CCA)Corrections Yellow PagesDominion ManagementDove Development CorporationEarl Warren Legal InstituteFederal Extradition Agency (private)General Security ServiceGovernment owned/contractor operatedIridian Technologies, Inc. (formerly IriScan, Inc.)Juvenile and Jail Facility Management ServicesJustice Policy Institute (JPI)Justice Technology Information Network (JTIN)Law Enforcement and Corrections Technology Advisory Council (LECTAC)Mace Security Inc.Management and Training CorporationManhattan InstituteMarriott Management ServicesMisuse of laborN-Group SecuritiesNational Criminal Justice CommissionNational Institute of Corrections (NIC)Open Society Institute/Center on Crime, Communities and CulturePremier Detention ServicesPrintrak (Motorola)Prison IndustriesThe Prison Litigation Reform Act (1996)Prison Realty Trust (merged with Corrections Corporation of America)Prison telephone service (AT&T the Authority; BellSouth MAX, MCI Maximum Security, North American In telecom)R&S Prisoner Transport“Rent-a-call (see “bed brokers”)Scientific Applications and Research Associates (SARA)The Sentencing ProjectSENTRI/Secured Electronic Network for Travelers’ Rapid InspectionSerco Group, Inc.Stun Tech Inc.TRansCor AmericaUrban Development CorporationU.S. Corrections Corporation purchased by Corrections Corporation of AmericaWackenhut Corporation/Wackenhut Corrections

Other Related Disinfopedia Resources

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BiometricsDefense contractorsEugenicsFederal contractorsGlobal detention systemGlobal economyGlobalizationMilitary-industrial complexSurveillance-industrial complexPopulation controlPrison laborSustainable developmentTimeline to global governance

External links

Wikipedia: carceral stateWikipedia: retribution justiceWikipedia: prison-industrial complex

Disinfopedia is an encyclopedia of people, issues and groups shaping the public agenda. It is a project of the Center for Media & Democracy; email bob AT Disinfopedia.

American Legislative Exchange Council is owned by Paul Weyrich of the Free Congress Foundation and receives financial support from all of your major corporations. They are the moving force and promoter of the National Council of State Legislatures who privatize criminal statutes for financial gain and profit. They are promoting public policy in regard to prize and capture law under the War Powers Acts. The Reason Foundation is run by David Nott, the president and is a think tank promoting privatization of penal institutions for financial gain they are located at 3415 S. Sepulveda Blvd. Suite 400 Los Angeles California 90034 1-310-391-2245. The Wackenhut Corporation is a U.S. based division of Group 4 Falck A/S, the world’s second largest provider of Security Services and is based in Copenhagen, Denmark and is the premier U.S. provider of contract services to the business, commercial, and government markets. The types and techniques of Privatization are:

1. Contracting Out [also called Outsourcing]2. Management Contracts3. Public-Private Competition [also called managed competition or market testing]4. Franchise5. Internal Markets6. Vouchers7. Commercialization [also referred to as service shedding]8. Self Help [also referred to as transfer to non-profit organization]9. Volunteers10. Corporatization11. Asset Sale or Long-Term Lease12. Private Infrastructure Development and Operation

Cornell Corrections Inc. [NYSE:CRN] is chaired by DAVID M. CORNELL and their Company’s concept began December 7, 1990, it was a rough business plan, yet the Dillon Read Venture Capitol became there first investor on February 21, 1991 [They are also called Trinity Venture Capital and Shane Reihill is the Chairman and founder. They built correctional facilities in Plymouth, Massachusetts, the other in Central Falls, Rhode Island. They have grown 33-fold in revenues and offenders under contract since that time. They have diversified and are now dependent upon development and have diversified into the three sectors of the business- secure institutional, they go up to maximum security; juvenile; and pre-release. They are the only company really in the business of aggressively growing in each of these three sectors. There

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institutional revenues are around 42 percent, juvenile revenues approximate 40 percent and prerelease revenues are around 18 percent. These factors represent the outsourcing phase of the prison system. This company is currently operating in five different time zones and is headquartered at 1700 W. LOOP SOUTH, SUITE 1500 HOUSTON, TEXAS [77027] [1-713-235-9366]. Dillion Read Venture Capital a New York based corporation merged with SG Warburg in 1997 creating Warburg Dillion Read. London based UBS Warburg is the investment banking division of the Swiss giant UBS, one of the largest banks in the world. It has some 40,000 employees spread across 40 countries. This bank was started by the Paul Warburg family which owns and controls the World Bank and started the Federal Reserve System. UBS Warburg is located at 141 West Jackson Boulevard Chicago, Illinois 60604. Privatization is the transfer of assets or service delivery from the government sector. Prisons are nothing but warehouses for the storage of goods and chattel under commercial law. The Warden is a Bailee or Warehouseman [before the term admiral was used He was called Custos Maris “Warden of the Sea”] [In some ancient records He was called Capitanus Maritimarum or “Captain or Tenant in Chief of the Maritime”] who receives personal property from another as Bailment. The Bailer is one who provides bail as a surety for a criminal defendant’s release. Also spelled Bailor. Bailment is the delivery of personal property by one person [the Bailor] to another [the Bailee] who holds the property for a certain purpose under an expressed or implied-in-fact contract. Goods are tangible or movable property other than money; especially articles of trade or items of merchandize. The sale of goods is governed by Article 2 of the U.C.C. “Goods means all things, including specially manufactured goods, that are movable at the time of identification to contract for sale and future goods. The term includes the unborn young of animals, growing crops, and other identified things to be severed from real property . . . . The term does not include money in which the price is to be paid, the subject matter of foreign exchange transactions documents, letters of credit, letter-of-credit rights, instruments, investment property, accounts, chattel paper, deposit accounts, or general intangibles.” U.C.C. 2-102(a) (24). Go to the Paine Webber group on any search engine or go to www.transnationale.org/pays/USAs.htm you will see the 20 largest companies, Aerospace, Food Chains, Credit Card Companies, Banks, Insurance, Media, Auto, Biotechnology, Chemical, Consulting, Construction, Cosmetics, Waste Management, Defense, Retail, Conglomerate, Water, Electricity, Appliance, Electronics, Packaging, Energy, School, Equipment, Finance, Holding, Hotels, Real Estate, Computer, Recreational, Materials, Medical, Mining, Fashion, Motorbike, Paper, Private Person, Pharmaceutical, Post: USPS [United States Postal Service, CNF Inc], Printing & Publishing, Advertising, Restaurants, Healthcare, Services, Metal, Tobacco, Telecommunications, Textile Apparel, Tourism, Transportation, and Staffing. This group is the United States of America and is the largest stock holder in the world in Corrections Corporation of America that owns and controls the entire world prison system, through you and is funded by your commercial dishonor. Notice that the Postal Service is involved in this. Now you know why the United States of America is the Plaintiff in every Federal Tax Case, they own and run the prison system. Transnational Corporations Observatory, non-profit organization created by Re’gis Castellani in October 1999 in Marttiques [France], maintains a global profile on 10,000 Corporations.Everything is being run under the Law Merchant under U.C.C. 1-103. Section 1775.04 of Title 17 Corporations: Partnerships of the Ohio Revised Code says “Rules of Law and Equity, including the Law Merchant, to govern.” UCC 1-103 is quoted in the Administrative Manual of the Internal Revenue Service, put out by CCH and says that the law of the Merchant governs all sections in the Internal Revenue Code. Based on the above information it looks like GSA and GAO are heavily involved in the accounting aspect of the Prison System, which explains why they are supplying all the Bond forms respecting the Bid, Performance, Payment and Affidavit of Individual Surety. When your dishonor is sold within the United States it has a six digit accounting # and is called a Cardinal number, when it is sold at the International Level it goes Ordinance or Military and uses a nine digit accounting number. This is where AutoTRIS and CUSIP come in. AutoTRIS is the Automated Forensic Traces Investigation System and was designed in the Russian Federal Center of Forensic Science using a graphical toolkit that was developed at Automation Designs & Solutions, Inc. for other software products. AutoTRIS is copyrighted and licensed to AD&S in the USA and other countries of America. This program is used as a Jail Management System for Inmate Tracking. This system also has a Law Enforcement Module and a Court Management Module for courtroom accounting. Every metropolitan Police Department and Federal Police have this system installed in their Vehicles and is referred to as the Criminal Justice Tracking System. Xignite, Inc. designs the software that is used in AutoTRIS and is located at 1291 East Hillsdale Boulevard, Suite 211 – Foster City, California 94404- United States of America- 650-655-3700 or call toll free 1-866-XML-SOAP. CUSIP is the trademark for the system that uniquely identifies securities and other instruments of general interest. The Name CUSIP is derived from the ABA Committee on Uniform Security Identification Procedures. The CUSIP Agency is

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the organization within the ABA [American Bankers Association] which is charged with the responsibility of developing, enhancing, and maintaining the system and policies necessary for uniform securities identification. CUSIP is the Trademark of Standard and Poor’s, which operates under a license agreement with the ABA. And is located at 55 Water Street, 47th floor New York, NY 10041. Interestedly this is the same address of the DTC Depository Trust Cooperation and The Depository Trust Company which is the holding and settlement company for all credit card trust accounts and is the holder of all bonds and certificated securities for all investors and which is the clearinghouse for all goods, commodities, and securities. It is also called or referred to as the EMCC, MSCC, NSCC, DTCC, GSCC, FICC, GCN [the Global Clearing Network] and DCC&S [Defined Contribution Clearance & Settlement]. These are the clearinghouses for all shares and stocks sold through the CCA and the Paine Webber Group, A/K/A the United States of American. I finally understand where the United States of America is located and who they are and why in the Bluebook put out by the ABA [American Bar Association] they are referred to as a foreign country. CUSIP also identifies the issuers of securities and other financial instruments within a standard nine-character framework, and disseminating this information to the financial marketplace. I have a form from CUSIP called a PRIVATE PLACEMENT EQUITY which identifies Mutual Funds, Preferred Stock, Warrant and Rights. How much do you want to bet that CUSIP and DTC is the clearinghouse for all Arrest Warrants? Which are commercial checks under Article 3 of the U.C.C.? I also have a form called a PRIVATE PLACEMENT DEBT, which identifies for purchase Serial Bonds, Term Bonds, Currency, and Sinking Funds. All Bonds are identified by using a CUSIP nine digit number. I have a 26 Page list with Bonds, Treasury Bills, Notes, Freddie Mac, Ginnie Mae, Sally Mae, and Fannie Mae. They are also offering TBAs which are futures contracts on mortgaged-backed pools. Working with the MBSCC, the CUSIP Service Bureau developed specialized numbering scheme TBA [The Bond Market Association] mortgaged-backed securities [Mortgage Backed Securities is ownership position in a group, or pool, of mortgage loans. It is Bonds in which interest and principal received from this pool of mortgage loans are passed through to the Bondholders]. TBA and CUSIPs incorporate within the number itself, a security’s mortgage type [Ginnie Mae, Fannie Mae, Sally Mae, and Freddie Mac], coupon, maturity, and settlement month. For financial instruments actively traded on an International basis, which are either underwritten debt issues or domiciled equities outside the United States and Canada, the financial instruments will be identified by a CINS [CUSIP International Numbering System] number. The CINS number was developed in 1988 by Standard & Poor’s and Telekurs [USA] in response to the North American Securities industries need for 9 character identifier for International Financial Instruments. CINS numbers appear in the International Securities Identification Directory [ISID Plus Services] which is co-produced by Standard & Poor’s and Telkurs [USA].To show how massive this system is ISID plus contains over 500,000 global financial instruments and cross references all major national numbering systems... ISID Plus has been designed to minimize the impact on back-office systems and operations, while facilitating cross-border communications among global custodians, depositories, banks, securities organizations, and exchanges. CINS numbers employ the same issuer [6 characters] Issue [2 characters & check digit] concept espoused by the CUSIP Numbering System. The first position of a CINS code is always represented by an alpha character, signifying the Issuer’s country code [domicile] or Geographic region. The National Association of Insurance Commissioners [NAIC] in October 1988 mandated the use by issuers of a uniform private placement number [PPN] to identify investments in their annual statements filed with the State Regulatory Authorities. Standard & Poor’s CUSIP Service was selected by the NAIC to create, assign, and administer the PPN system primarily for the Insurance Industry. At the International level there is EPIM [the European Pre-issuance Messaging], which is a central messaging hub linking the parties involved in the Issuance of European Commercial Paper [ECP], including banks, dealers, issuing and paying agents, securities depositories and numbering agencies. EPIM was launched as a cooperative effort by Euroclear, Clearstream International, and DTCC. Omega LLC, a joint venture company owned equally by the Depository Trust & Clearing Corporation [DTCC] and Thomson Financial, is the leading of complete global trade management services. A unique partnership between the securities Industries leading utility and the commercial sector, Omega is industry-backed and market-oriented. Through its integrated suite of Intelligent Trade Management Solutions SM. I have the Articles of Incorporation of THE ASSOCIATION of NATIONAL NUMBERING AGENCIES or [ANNA SC] the registered office is located and established at 6, avenue de Schiphol-1140 Brussels – Belgium. The object of ANNA is to maintain and promote the standards of International Standard ISO 6166, as amended from time to time [hereafter “the Standard”]. I bet that this standard # 6166 is the number of a man and His number is 666 and is talked about in Revelations 13; 18 and whose

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purpose under Article 3 is to carry out any commercial, financial, or civil transactions directly or indirectly related to the objects of ANNA. Under Article 5 ANNA has unlimited Capital through BIS [Bank for International Settlements], CCA, ALEC, WACKENHUT, CORNELL CORRECTIONS, REASON FOUNDATION, DILLION READ VENTURE CAPITOL, SG WARBURG, UBS WARBURG, WARBURG DILLON READ and the PAINE WEBBER GROUP. Under Article 29 ANNA has a list of all public finds, shares, stocks, bonds, and other securities composing ANNA’S Portfolio. I think ANNA is owned by the Order of Jesuits out of Rome Italy, which is run by Count Hans Kolvenbach, the head General, Pontiff and Gregorian Counsel for the Order of Jesuits and he is called the “Black Pope” and who owns and controls all Prisons, Penal Institutions, and Banks. ANNA also assigns the ISIN [International Securities Identification Number]. The First Character: Category [Equities, Debt Instruments, Rights, Options, Futures, Others]. The Second Character: Group within category e.g. equities into shares, preferred shares etc. The Third to Sixth Character: attributes for further description and grouping. The Bank for International Settlements is at the apex of all of the world’s central banks, since they control and dictate monetary policy worldwide. In the late 1990’s they set up a new structure called the Financial Stability Forum. Which brought together the G 7 Central Bank ministers, G 7 Finance Ministers, their respective Securities and Exchange Commissions, the Comptroller of the Currency and FDIC, along with the IMF and World Bank. This represents a further integration of the economies, policies and movement of monies and investments. Further more, in addition to the Central Banks, there is the Group of Eight which is comprised of the heads of state from the United States, Canada, Germany, Japan, Italy, France, Great Britain, and Russia. They have been meeting since 1975 when there were only five countries. Russia is the most recent country to join. They participate fully in every area with the exception of finance where they only participate in financial terrorism. For 22 years, the G7 finance ministers met alone. Then in 1998 they were joined by the central bank ministers. They are private corporations established in every country to manage and control that country’s monetary system; this makes the Treasury Secretary of the United States a puppet of the Federal Reserve, a private corporation. The U.S. has changed the control of our banking system by repealing the Glass-Stegall Act in 1999 that allowed banks to buy brokerage firms and insurance companies. That set the tone for other countries to follow suit. Furthermore, with the establishment of the World Trade Organization Financial Services Agreement which demands that all countries allow foreign banks, brokerage firms and insurance companies to enter their market, they chipped away at national financial sovereignty. Since the central banks hold the currency of other countries, all that has to be done in order to destroy a country is to sell their currency at same time. Therefore as a result of the global volatility which I believe was a result of the central bank’s selling the aforementioned countries currencies; the Financial Stability Forum was set up as a further layer and deeper integration of the global economies. Also contributing to the new financial architecture is the rise of multi-national and transnational corporations, mergers and acquisitions, country privatization of its assets such as railroads, agriculture, banks, airlines, telephone companies, etc. Furthermore, the rise of public-private partnerships which is a merger between government and business, also known as fascism, has contributed to a changed financial landscape. In addition, there is the move towards a global stock exchange, the establishment of a World’s Customs Organization and “open skies” between countries. Why is privatizing prisons so appealing to federal, state, and local governments? As the Nation put it: The selling point was simple: Private companies could build and run prisons cheaper that the governments. Unfettered American Capitalism would produce a better fetter, saving cash-strapped states millions of dollars each year” while simultaneously generating huge profits. The Nation explains this miracle would be accomplished. “Private prisons receive a guaranteed [per diem] fee for each prisoner, regardless of the actual costs. Each dime they don’t spend on food or medical care [for prisoners] or on wages and training for the guards is a dime they can pocket.” Most guards in public prisons belong to the LEOU, which is part of the American Federation of State, County, and Municipal Employees AFSCME. I have a pointed question for you, why aren’t we as principals on the Private side of the accounting cycle using our Exemption Priority to discharge all this Public Debt under the Uniform Exemption Act section 3 “Exempt” means protected, and “exemption” means protection, from subjection to a judicial lien, process, or proceeding to collect a debt. The answer is we are all double minded and do not know who we are in a commercial setting. Every individual in Prison is in there, because of a Commercial Dishonor. “A person who has doubts is thinking about two different things at the same time and can’t make up his mind about anything” or as the King James Version says “A double minded man is unstable in all his ways.” James 1:8. Let us regain and claim our honor and status as the Principal with primary responsibility on obligations for

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discharge on the public and payment on the private. Through our Exemption as Principal, we can use these Standard form 24 Bid Bonds [ see title 48 section 28.101], Performance Bonds [see title 48 sections 28.102-1 and 28.106-3 (b)] Standard Form 25, and Payment Bonds Standard Form 25A, [see title 48 sections 28.102-1 and 28.106-3 (b)] form 28 Affidavit of Individual Surety [see title 48 sections 28.102-1 and 28.106-3 (b)], issued by GSA under the Comptroller General, to discharge any debts. Bid Bonds are usually purchased by Brokerage Houses, and Insurance Companies. Optional form 90, Release of Lien on Real Property [see title 48 section 28.203-5] And Optional Form 91, Release of Personal Property from Escrow [see title 48 section 28.203-5]. These bonds can be used to release the liens imposed by the bid, performance, and payment bonds and Affidavit of Individual Surety.

An Irrevocable Letter of Credit under title 48 section 52.228-14 can be used in lieu of a bid bond.

(a) “Irrevocable letter of credit” (ILC), as used in this clause, means a written commitment by a federally insured financial institution to pay all or part of a stated amount of money, until the expiration date of the letter, upon presentation by the Government (the beneficiary) of a written demand therefor. Neither the financial institution nor the offeror/Contractor can revoke or condition the letter of credit.

(b) If the offeror intends to use an ILC in lieu of a bid bond, or to secure other types of bonds such as performance and payment bonds, the letter of credit and letter of confirmation formats in paragraphs (e) and (f) of this clause shall be used.

Under section (g) of the clause at 52.228-14 the contractor can draw on the ILC using the sight draft draw up in section (g).

By legal definition all of your Federal and State “Statutes” are Bonds or Obligations of Record and are represented in the courtroom by the Recognizance Bond, which is a Bond of Record or Obligation for the payment of debt. A condensed version of what is going on is that the CCA as a corporation, creates or issues stock certificates based on prison population, goods or chattel as they are called in commercial law. The underwriter is the one who buys the stock from the Issuer the CCA with intent to resell it to the public or an entity or person, which is usually an investment banker. The investment banker purchases all or part of the shares of the stock for resale to the public in the form of newly issued investment securities based on the shares of the stock. Brokerage Houses and Insurance Companies Bid on the Investment Securities with a Bid Bond issued by the GSA. The Bid Bond is then indemnified by a surety company through Performance and Payment Bonds. The Bid, Performance, and Payment Bonds are then underwritten by an Affidavit of Individual Surety through the Banks as Investment Securities for resale to the public. The Institutional Holders who own most of the Shares are:

1. FMR [Fidelity Management & Research Corporation 3, 084,024 shares at a value of $109,791,254 dollars.

2... Legg Mason Inc. 1,235,563 shares valued at $43,986,042 dollars.

3. Barclays Bank Pic 1, 041,671 shares valued at $37,083,487.

There are seventeen more corporations owning various amounts of shares at varying dollar values. These can be viewed by going to http://finance.yahoo.com/q/mh?s=CXW.

The Top Insider & Rule 144 Holders are:

1. Russell, Joseph V. 64,450 shares as of 2-May-03

2. Ferguson, John D. 40,340 shares as of 2-May-03

3. Quinlan, J. Michael 28,575 shares as of 10-Sep-02

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4. Turner, Jimmy 13,817 shares as of 23-May-03

5. Horne, John R. 5,751 shares as of 29-Jun-04

As you can see by the above information, this system permeates every fabric of our society. This treatise represents about 700 hours of brainstorming. Currently global terrorism is being funded by the prison system and the State’s Retirement Fund go to www.DivestTerror.Org this is a 115 page treatise on the Terrorism Investments of the 50 States. Go to a search engine and type in U.S Courts. Go to court links and click, which shows a map of the circuit courts, click on 7th circuit, a list of the 7th and 8th circuit courts will appear, click on Illinois Northern District Court, then click on Clerk’s Office, then go to administrative services, then to Financial Department, you will see Criminal Justice Act, Post Judgment Interest Rates, and list of sureties, click on sureties it will take you to FMS.TREAS.GOV, there on left side you will see sureties listing, admitted reinsurers and forms, click on forms and you will see Reinsurance Agreement for a Miller Act Performance Bond SF 273, and a SF274 Payment Bond and a Reinsurance Agreement in Favor of the United States SF 275 and a list of Admitted Reinsurers, Pools and Associations , and Lloyds’ Syndicates, you will also see a list of the Department of the Treasury’s Listing of Approved Sureties [Department Circular 570]. U.S. District Courts are buying up the State Court default judgments, when you refuse to pay or dishonor the debt. Contractors and Insurance Companies are bidding on the default judgments with a Bid Bond, then a Reinsurance Company comes in and purchases a Performance Bond as a surety for the Bid Bond. The Performance Bond is then under written by a Payment Bond, The Payment Bond is then under written by an Affidavit of Individual Surety, this is usually done by an investment company or investment banker. When these Bonds are pooled they become mortgage backed securities or surety bonds. They are then put on the bond market through TBA [The Bond Association]. These bonds are also sold as investment securities through brokerage houses or insurance companies. Securicor is one of your biggest international securities companies and is located in South Africa and have acquired Gray Security Services. Securicor was formed from the merger between Securicor pic and Group 4 Falk, which was completed in July 2004. Securicor operates in 50 different countries. Reinsurance is defined as insurance of all or part of one insurer’s risk by a second insurer, who accepts the risk in exchange for a percentage of the original premium; this is all admiralty maritime at its finest. Also termed reassurance. The term ‘reinsurance’ has been used by courts, attorneys, and text writers with so little discrimination that such confusion has arisen as to what that term actually connotes. Thus it has so often been used in connection with transferred risks, assumed risks, consolidations and mergers, excess insurance, and in other connections that it now lacks a clear-cut field of operation. Reinsurance, to an insurance lawyer means one thing only – the ceding by one insurance company to another of all or a portion of its risks for a stipulated portion of the premium, in which the liability of the reinsurer is solely to the reinsured, which is the ceding company , and in which contract the ceding company retains all contact with the original insured, and handles all matters prior to and subsequent to loss. 13 a John Allen Appleman & Jean Appleman, Insurance Law and Practice section 7681, at 479-80 [1976]. The laying off of risk by means of reinsurance traditionally serves three basic purposes. First, reinsurance can increase the capacity of the insurer to accept risk. The insurer may be enabled to take on larger individual risks, or a larger number of smaller risks, or a combination of both . . . . . . . Secondly, reinsurance can promote financial stability by ameliorating [improving] the adverse consequences of an unexpected accumulation of losses or of a single catastrophic losses, because these will, at least in part, be absorbed by reinsurers. Thirdly, reinsurance can strengthen the solvency of an insurer from the point of view of any regulations under which the insurer must operate which provide for a minimum ‘solvency margin,’ generally expressed as a ratio of net premium income over capital and free reserves. P.T. O’Neill & J.W. Woloniecki, the Law of Reinsurance in England and Bermuda 4 [1998]. All of the performance and payment bonds are regulated and controlled by FAR [Federal Acquisition Regulations] which is under [48 CFR] 28.202-1 and 53.228(h). These bonds are being used in cases where it is desired to cover the excess of a Direct Writing Company’s underwriting limitation by reinsurance instead of co-insurers on Miller act performance bonds running to the United States. These FAR regulations come in two volumes, volume 1 is approximately 1,326 pages volume 2 is 823 pages long. These should be consulted and read before these bonds are used.

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The Miller Act is found in Title 40 U.S.C.A. sections 270 a – 270d-1 and is federal law requiring the posting of performance and payment bonds before an award is made for a contract for construction, alteration, or repair of a public work or building. The surety company issuing these bonds must be listed as a qualified surety on the Treasury List, which the U.S. Department of the Treasury issues each year. I believe that the prisons are repository institutions or facilities for securities [prisoners] as collateral for the public and national debt. The prisoners represent asset or repository money for the Bid, Performance and Payment Bonds. The prisons are referred to as credit facilities, institutions or repositories. They function essentially the same way that a Depository Bank does under 17 CFR section 450. The Prisons are acting in the capacity of a fiduciary or custodian over Government Securities or otherwise for the account of a customer, and that are not government securities brokers or dealers, as defined in sections 3 (a)(44) of the Securities Exchange Act of 1934 (15U.S.C. 78 c (a) (43)—(44). The regulations in subchapter B are promulgated by the Assistant Secretary (Domestic Finance) pursuant to a delegation of Authority from the Secretary of The Treasury. The office responsible for the regulations is the Office of the Commissioner, Bureau of the Public Debt. Sureties and Surety Bonds are covered in Title 31 sections 9301-9309. The Bid, Performance, Payment Bonds and Affidavit of Individual Surety fall in the category of surety bonds under these provisions. Under section 9303 Government Obligations may be substituted for Surety Bonds. Government Obligations are defined as public debt obligations of the United States Government and an obligation whose principal and interest is unconditionally guaranteed by the Government. The bid, performance, payment bonds and Affidavit of Individual Surety in addition to being sold on the commodities and securities exchange as pooled mortgaged backed securities and cleared for settlement through the FICC [Fixed Income Clearing Corporation], who is the holder until the Bonds are sold, are also being pledged as collateral for funds and a line of credit at the discount window or the open-market trading desk of Freddie Mac, Fannie Mae, Sally Mae, Ginnie Mae, or your local Federal Reserve Bank. All discount Window advances must be secured by collateral acceptable to the Reserve Bank. The following types of assets are most commonly pledged to secure discount window advances.

1. Obligations of the United States Treasury

2. Obligations of U.S. government agencies and government sponsored enterprises

3. Obligations of states or political subdivisions of the U.S.

4. Collaterized Mortgage Obligations

5. Asset backed securities

6. Corporate bonds

7. Money market instruments

8. Residential real estate loans

9. Commercial, industrial, or agricultural loans

10. Commercial real estate loans

11. Consumer loans

12. Check with your local Reserve Bank if you have any questions About other types of collateral

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++The Federal Reserve System Discount Window Collateral Margins Table includes valuation margins for the most commonly pledged asset types. Assets accepted as collateral are assigned a lend able value [market or

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face value multiplied by the margin] deemed appropriate by the Federal Reserve Bank. [see the attached schedules]

The Treasury Department issues certificates of authority to insurance companies who submit a financial statement to the Department of the Treasury. The reinsurance company’s limitation on liability is determined and predicated on 10% of the Policy Holders surplus retained by earnings from capitol surplus. The published underwriting limitation is on a per bond basis but does not limit the amount of a bond that a company may write. Companies are allowed to write bonds with a penal sum over their underwriting limitation as long as they protect the excess amount with reinsurance, coinsurance or other methods as specified in Treasury Circular 297, Revised September 1, 1978 [31 CFR 223.10-11.] Treasury refers to a bond of this type as an Excess Risk. When Excess Risks on bonds in favor of the United States are protected by reinsurance, such reinsurance is to be effected by use of a Federal reinsurance form to be filed with the bond or within 45 days thereafter. In protecting such excess risks, the underwriting limitation in force on the day in which the bond was provided will govern absolutely. If you read De Lovio v. Boit [ Federal Case No. 3,776], you will find out that all insurance is of Admiralty Maritime Law and The Huntress [Federal Case No. 6,914, [2 Ware (Dav. 82) 89 says that all Revenue is of admiralty maritime law. Under King Charles 11, revenue causes had been heard and tried in the colonies by the vice admiralty. Read pgs. 988 & 989 of the Huntress. Charles Townshend who passed The Townshend Act in 1767 and who was the Lord High Admiral on the British Board of Trade caused the American Revolution due to the high Tariffs, Duties, Imposts and Excises imposed on the Colonists on imports from London, England. By talking with a broker named Jim McFadden for AG Edwards I found out that the Bond Register and paying agent for the County of Cuyahoga is Frank Lamb a Trustee for Huntington National Bank at 917 Euclid Avenue Cleveland, Ohio 44115 telephone # 1-216-515-6662. I also found out that Lisa Jennings of J.P. Morgan Bank in Cleveland, Ohio is the transfer agent for bonds her telephone # 1-216-274-1606 and Holly Pattison of National City Bank is also a transfer agent. Her Telephone # 1-216-222-2552. I spent 30 minutes on the phone with Robert Duke, who is the director of underwriting for the Surety Association of America under circular 570 for the Department of the Treasury whose telephone # is 1-202-463-0600. His address is 1101 Connecticut Avenue, N.W. Suite 800 Washington, D.C. 20036. I went through circular 570 of the Department of Treasury and called several of the admitted reinsurance companies through their underwriting department and found out they knew absolutely nothing about reinsurance relative to bid, performance and payment bonds. This fact leads me to believe that in addition to being a Repository Bank with prisoners being the assets, collateral, or securities for the bid, performance and payment bonds, the prisoners are the actual reinsurance or surety and their sentence represents the valued and marketable risk involved with the materials, supplies and cost factors involved with the guaranteed performance, and payment relative to the bonds. This is termed assumed risk in insurance and represents a present peril, hazard, or danger of loss, due to their dishonor and default judgment in court. That is why there is a penal sum or clause attached to each bond for non performance and payment of the bonds.Since everybody on the public or debt side is bankrupt or insolvent how can they assume a liability or risk? They can’t that is why they have to look to the exempt priority private asset side of the accounting ledger to assume reinsurance or risk. You can’t pay a debt or assume a risk with a debt instrument. This can only be done with Asset Collateral through goods [prisoners] under mercantile civil and commercial law. When a corporation wants to build or perform construction, he receives bids from a contractor, if the contractor is awarded the bid, the corporation who is the owner and obligee, then requires that the contractor submit a bid bond, the contractor then becomes the principal obligor. He is then required to get a reinsurance company to act as surety on the bid bond, and then a performance bond is issued to guarantee cost of material and supplies. The reinsurance company who is acting as surety for the bid bond also acts as the underwriter through a payment bond. An Affidavit of Individual Surety is used as a surety for the bid, performance, and payment bonds. The bid bond is a three party obligation with the obligee as the owner of the bid, performance and payment bonds. The Surety Association of America is a voluntary, nonprofit, unincorporated association of companies engaged in the business of suretyship. SAA represents more than 500 companies that collectively underwrite the vast majority surety and fidelity bonds in the United States, as well as a number of foreign affiliates. SAA is licensed as a rating or advisory organization and has been designated as a statistical agent by all the states except Texas for the reporting of fidelity and surety experience. The National Association of

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Surety Bond Producers is the international organization of professional surety bond producers and brokers. NASBP represents more than 5,000 personnel who specialize in surety bonding; provide performance and payment bonds for the construction industry; and issue other types of surety bonds, such as license and permit bonds, for guaranteeing performance. NASBP’s mission is to strengthen professionalism, expertise, and innovation in surety and to advocate its use worldwide.

SURETY INFORMATION OFFICE National Association of 5225 Wisconsin Avenue NW, Surety Bond producers SuiteSuite 600, Washington, D.C. 20015 600 5225 Wisconsin Ave. NW,(202) 686-7463 Fax (202) 686-3656 Washington, D.C. 20015www.sio.org sio@sio.org

I also believe that the Bid Bonds are being used to purchase commercial items [commercial paper] such as court judgments this is done through GSA SF form 1449 contract form and is a rated order under DPAS [Defense Priorities and Allocations System] see 15CFR 700 this is under the National Security Industrial Base Regulations. This is all under the Executive Branch under the President and Military.

WORD DEFINITIONS RELATIVE TO BONDS

1. HOLDER = The owner of a security. SEE BONDHOLDER.

2. TRANSFER AGENT = The person or entity that performs the transfer function for an issue of registered municipal securities. This person or entity may be the issuer, an official of the issuer or a third party engaged by the issuer to act as its agent. The trustee under a trust indenture often also acts as transfer agent. Compare: REGISTRAR. See: REGISTERED BOND; TRANSFER; TRUSTEE.

3. REGISTRAR = The person or entity responsible for maintaining records on behalf of the issuer that identify the owners of a registered bond issue. The trustee under a trust indenture often also acts as registrar. Compare: TRANSFER AGENT. See: BOND REGISTER; TRUSTEE.

4. BOND REGISTER = A record, kept by a transfer agent or registrar on behalf of the issuer, that lists the names and addresses of the holders of the registered bonds. See: BONDHOLDER; REGISTERED BOND; REGISTRAR; TRANSFER AGENT.

5. ISSUER = A state, political subdivision, municipality, or governmental agency or authority that raises funds through the sale of municipal securities.

6. UNDERWRITER = A Broker – dealer that purchases a new issue of municipal securities from the issuer for resale in a primary offering. The underwriter may acquire the securities either by negotiation with the issuer or by award on the basis of competitive bidding. Compare: PLACEMENT AGENT. See: COMPETITIVE SALE; NEGOTIATED SALE; PRIMARY DISTRIBUTOR; PRIMARY OFFERING; SUNDICATE.

7. SETTLEMENT = Delivery of and payment for a security. Compare: CLEARANCE. See: DELIVERY DATE; GOOD DELIVERY.

8. CLEARANCE = The process of delivering securities from a seller to a buyer, either directly or through their agents. Compare: SETTLEMENT.

9. BOND PROCEEDS = The money paid to the issuer by the purchaser or underwriter of a new issue of municipal securities. These moneys are used to finance the project or other purpose for which the securities were issued and to pay certain costs of issuance as may provided in the bond contract or bond purchase agreement. See: NET PROCEEDS.

10. BOND PURCHASE AGREEMENT [BPA] – The contract between the underwriter and the issuer setting forth the final terms, prices and conditions upon which the underwriter purchases a new issue of

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municipal securities in a negotiated sale. A conduit borrower also is frequently a party to the bond purchase agreement in a conduit financing. The bond purchase agreement is sometimes referred to as the “purchase agreement” or, less commonly, the “underwriting agreement.” See: NEGOTIATED SALE; UNDERWRITING AGREEMENT; WRITTEN AWARD.

11. CONDUIT BORROWER = A borrower of bond proceeds in a conduit financing. See: CONDUIT FINANCING; OBLIGOR.

12. CONDUIT FINANCING = The issuance of municipal securities by a governmental unit (referred to as the “conduit issuer” to finance a project to be used primarily by a third party, usually a for – profit entity engaged in private enterprise or a 501 (c) (3) organization (referred to as the “conduit borrower”). The security for this type of issue is customarily the credit of the conduit borrower or pledged revenues from the project financed, rather than the credit of the conduit issuer. Such securities do not constitute general obligations of the conduit issuer because the conduit borrower is liable for generating the pledged revenues. Industrial development bonds, multifamily housing revenue bonds and qualified 501 (c) (3) bonds are common type’s conduit financings. See: HOUSING REVENUE BOND- Multi-family housing revenue bonds; INDUSTRIAL DEVELOPMENT; PRIVATE ACTIVITY BOND.

13. AWARD = The official acceptance by the issuer of a bid or offer to purchase a new issue of municipal securities by an underwriter. The date of the award is generally considered the “sale date” of an issue. See: BID; BOND PURCHASE AGREEMENT; WRITTEN AWARD. Compare: VERBAL AWARD.

14. BENEFICIAL OWNER = The person to whom the benefits of ownership of given securities accrue, even though the securities might be held by, or in the name of, another person or held in an account over which another person has investment discretion. For example, a securities firm might hold securities in “street name” in its vaults or at a securities depository, with the beneficial owners of the securities only designated on the firm’s records. Compare: BONDHOLDER.

15. DEPOSITORY = A registered clearing agency that provides immobilization, safekeeping and book-entry clearance and settlement services to its participants. Compare: CLEARING CORPORATION. See: REGISTERED CLEARING AGENCY.

16. BOOK-ENTRY ONLY (BEO) or BOOK-ENTRY SECURITY- A security that is not available top purchasers in physical form. Such a security may be held either as a computer entry on the records of a central holder (as is the case with certain U.S. Government securities) or in the form of a single, global certificate. Ownership interests of, and transfers of ownership by, investors are reflected solely by appropriate books and record entries. Most municipal securities issued in recent years have been in book-entry only form. Compare: CERTIFICATED SECURITY; IMMOBLIZED SECURITY. See: GLOBAL CERTIFICATE.

17. GLOBAL CERTIFICATE = A single certificate sometimes referred to as a “jumbo certificate,” representing an entire maturity of an issue of securities. Such certificates are often used in book-entry systems. The issuer issues a global certificate that is then lodged in the facilities of a depository or other book-entry agent and kept safely by the agent until maturity. The securities are available to beneficial owners only in book-entry form, and no certificates can be obtained. Compare: IMMOBLIZED SECURITY. See: BOOK-ENTRY ONLY.

18. IMMOBILIZED SECURITY = A physical security that is held in a central depository for the account of its beneficial owner but that may be withdrawn from the depository in physical form. Immobilized securities may be transferred when sold by entries on the records of the depository or by withdrawal of actual certificates. Compare: BOOK-ENTRY ONLY; GLOBAL CERTIFICATE.

19. 501 (c) (3) ORGANIZATION = An organization recognized by the Internal Revenue Service as a not-for-profit organization. A 501 (c) (3) organization can borrow funds to finance projects on a tax-exempt basis through a conduit issuer. Examples include not-for-profit colleges and universities, hospitals, museums

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and retirement communities. See: CONDUIT BORROWER; PRIVATE ACTIVITY – Qualified 501 (c) (3) bonds.

20. MUNICIPAL SECURITIES = a general term referring to securities issued by local governmental subdivisions such as cities, towns, villages, counties, or special districts, as well as securities issued by states political subdivisions or agencies of states. A prime feature of these securities is that interest or other investment earnings on them usually are excluded from gross income of the holder for federal income tax purposes. Issuers of municipal securities are exempt from most federal securities laws. Compare: TAXABLE MUNICIPAL SECURITY.

21. REGISTERED CLEARING AGENCY = An organization, registered with the Securities and Exchange Commission pursuant to section 17 A of the Securities Exchange Act of 1934, that provides specialized systems for the confirmation, comparison, clearance and settlement of securities transactions. See: NATIONAL SECURITIES CLEARING CORPORATION.

22. NATIONAL SECURITIES CLEARING CORPORATION (NSCC) – A clearing corporation. See: CLEARING CORPORATION; DEPOSITORY TRUST AND CLEARING CORPORATION.

23. CLEARING CORPORATION = A registered clearing agency that provides specialized comparison, clearance and settlement services for its members. A clearing corporation typically offers services such as automated comparison systems and transaction netting systems. Compare: DEPOSITORY. See: NATIONAL SECURITIES CLEARING CORPORATION; REGISTERED CLEARING AGENCY.

24. DEPOSITORY TRUST AND CLEARING CORPORATION (DTCC) = The entity formed by the merger of Depository Trust and National Securities Clearing Corporation. DTCC facilitates the clearance and settlement of securities transactions.

25. AUTHORITY = A unit or agency of government, or a separately established not-for-profit entity formed on behalf of a governmental entity, established to perform specialized functions. In some cases, authorities have the power to issue debt that is secured by the lease rental payments made by a governmental unit using the facilities constructed with bond proceeds. In other cases, authorities issue private activity bonds for the purpose of making the proceeds available to qualified private entities for use as permitted under the federal tax laws. Examples of such conduit authorities include health facilities authorities, Industrial development authorities and housing finance authorities. An authority may function independently of other governmental units, or it may depend upon other units for its creation, funding or administrative oversight. Authorities, other than conduit authorities, usually are financed by service charges, fees or tolls, although they also may have taxing powers. Conduit authorities generally are financed by fees payable by conduit borrowers, either paid directly by the borrower or under the bond contract. See: CONDUIT ISSUER.

26. CONDUIT ISSUER = An issuer of municipal securities in a conduit financing. See: AUTHORITY; CONDUIT FINANCING.

27. PRIVATE ACTIVITY BOND (PAB) = A municipal security the proceeds of which are used by one or more private entities. A municipal security is considered a private security bond if it meets either of two sets of conditions set out in section 141 of the Internal Revenue Code. A municipal security is a private activity bond if, with certain exceptions, more than 10% of the proceeds of the issue are used for any private business use (the “private business use text”) and the payment of the principal of or interest on more than 10 % of the proceeds of such issue is secured by or payable from property used for a private business use (the “private security or payment test”). A municipal security also is a private activity bond if, with certain exception, the amount of proceeds of the issue used to make loans to non-governmental borrowers exceeds the lesser of 5 % of the proceeds or $ 5 million (the “private loan financing test”). Interest on private activity bonds is not excluded from gross income for federal income tax purposes unless the bonds fall within certain defined categories (“qualified bonds” or “qualified private activity bonds”), as described below. Most categories of qualified private activity bonds are subject to the alternative minimum tax. The following categories of private activity bonds are qualified bonds under federal tax laws:

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28. Exempt facility bonds – Private activity bonds issued to finance various types of facilities owned or used by private entities, including airports, docks, and certain other transportation-related facilities; water, sewer, and certain other local utility facilities; solid and hazardous waste disposal facilities; certain residential rental projects (including multifamily housing revenue bonds); and certain other types of facilities. Enterprise zone bonds are also considered exempt facility bonds. See: ENTERPRISE ZONE BOND; HOUSING REVENUE BOND- Multiple-family housing revenue bonds.

29. Qualified 501 (c) (3) bonds = Private activity bonds issued to finance a facility owned and utilized by a 501 (c) (3) organization. Qualified 501 (c) (3) bonds are not subject to the federal alternative minimum tax.

30. Qualified mortgage bonds = Private activity bonds issued too fund mortgages to finance owner-occupied residential property. Qualified mortgage bonds are often referred to as single family mortgage revenue bonds. See: HOUSING REVENUE BOND – Single family mortgage revenue bonds.

31. Qualified redevelopment bonds = Private activity bonds issued to finance certain acquisition, clearance, rehabilitation and relocation activities for redevelopment purposes by a governmental entity in designated blighted areas. Qualified redevelopment bonds are payable from general taxes or from tax increment revenues. See: TAX INCREMENT BOND.

32. Qualified small issue bonds = Private Activity bonds issued to finance manufacturing facilities. Qualified small issue bonds may be issued on a tax- exempt basis in an amount up to $1 million, taking into account certain prior issues, or an amount up to $10 million, taking into account certain capital expenditures incurred during the three years prior and the three years following the issuance of such bonds.

33. Qualified student loan bonds = Private activity bonds issued to finance student loans for attendance at higher education institutions.

34. Qualified veterans’ mortgage bonds = Private activity bonds that are general obligations of a state issued to fund mortgage loans to finance owner – occupied residential property for veterans. The ability of states to issue new and refunding qualified veterans’ mortgage bonds on a tax – exempt basis is limited.

INTERNATIONAL BILL OF EXCHANGE

In the Open Market Trading Desk in the Investing Trading Glossary A bill of exchange is defined as a “General Term for a document demanding payment.” This says it all if you have wisdom and understanding, sometimes the obvious escapes everybody. The word Bill is an alteration of the Latin word Bulla in its mediaeval sense. In classical Latin bulla was ” a bubble, a boss, a stud, an amulet for the neck”; whence in mediaeval Latin “a seal” especially the seal appended to a charter etc.; thence, transferred sense, “a document furnished with a seal,” e.g. a charter, a papal bull, and, by extension, any official or formal document, “a bill, schedule, memorandum, note, paper,” It was in these later senses that bulla became in England billa, bille. Being a word of common use, bulla was probably pronounced with u, passing into English y, i; though no direct evidence of this has been found. So the Oxford English Dictionary. This explanation is not convincing, nor would it be even if ‘bill’ and ‘bull’ had originally conveyed the same or similar meanings. At least up to the end of the fourteenth century the two words almost always carried meanings that were respectively inconsistent with each other. A ‘bull’ was a sealed document setting forth something or other in an authoritative manner. A ‘bill’ on the other hand, so far as one can gather from the evidence of contemporary literature, seems to have carried the meaning of a humble petition for remedy of a stated grievance. The word occurs several times in this sense, and, as far as I can find, in this sense only, in Gower, and William Langland.

Under Title 18 sections 513 (A) the term security as defined in the Electronic Fund transfer Act under 916 (c) has been amended and moved to Title 15 section 78 (c) subsection 10, where it says that any currency, note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited is not included in this definition of a security.

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Acceptance 4. Black’s Law Dictionary 8th edition a negotiable instrument, especially a bill of exchange, that has been accepted for payment. There are three elements of an acceptance 1. Honor 2. Value 3. Consideration. An acceptance for honor is an undertaking not by a party to the instrument, but by a third party, for the purpose of protecting the honor or credit of one of the parties, by which the third party agrees to pay the debt when it becomes due if the original Drawee does not. This type of acceptance inures to the benefit of all successors to the party for whose benefit it is made. Also termed acceptance supra protest; acceptance for honor supra protest. [Cases: Bills and Notes key 71. C.J.S. Bills and Notes; Letters of Credit section 37]. “’Acceptance for honor supra protest’ is an exception to the rule that only the Drawee can accept a bill. A bill which has been dishonored by non-acceptance and is not overdue may, with the consent of the holder, be accepted in this way for the honor of either the drawer or an indorser (i.e., to prevent the bill being sent back upon the drawer or indorser as unpaid) by a friend placing his own name upon it as acceptor of the whole, or part only, of the amount of the bill; after a protest has been drawn up declaratory of its dishonour by the Drawee. Similarly, where a bill has been dishonoured by non-payment and protested any person may intervene and pay it supra protest for the honor of any person liable thereon; the effect being to discharge all parties subsequent to the party for whose honour it is paid.” 2 Stephen’s Commentaries on the Laws of England 202-03 (L. Crispin Warmington ed., 21st ed. 1950).

3-303 Value and Consideration

(a) An Instrument is issued or transferred for value if:

(1) The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed;

(2) The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding.

(3) The instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due;

(4) The instrument is issued or transferred in exchange for a negotiable instrument; or

(5) The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.

(b) “Consideration” means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subsection (a), the instrument is also issued for consideration.

The definition of “negotiable instrument” defines the scope of Article 3 since Section 3-102 states: “This Article applies to negotiable instruments.” The definition in Section 3-104 (a) incorporates other definitions in Article 3. An instrument is either a “promise,” defined in Section 3-103(a) (12), or “order,” defined in Section 3-103 (a) (8). A promise is a written undertaking to pay money signed by the person undertaking to pay. An order is a written instruction to pay money signed by the person giving the instruction. Thus the term “negotiable instrument” is limited to a signed writing that orders or promises payment of money. Money is defined in section 1-201(24) and is not limited to United States dollars. It also includes a medium of exchange established by a foreign government or monetary units of account established by an intergovernmental organization or by agreement between two or more nations. [UNICTRAL CONVENTION ON INTERNATIONAL BILLS OF EXCHANGE OR INTERNATIONAL PROMISSORY NOTES] December 8, 1988]. In Clearfield Trust Co. v. United States, 318 U.S. 363 (1943), the court held that if the United States is a party to an instrument, its rights and duties are governed by federal common law in the absence of a specific federal statute or regulation In United States v. Kim bell Foods, Inc., 440 U.S. 715 (1979), the court

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stated a three prong test to ascertain whether the federal common law rule should follow the state rule. In most instances courts under the Kimbell test have shown a willingness to adopt the U.C.C. rules in formulating federal common law on the subject. In Kimbell the Court adopted the priorities rules of Article 9. In 1989 the United Nations Commission on International Trade Law [UNICTRAL] completed a convention on International Bills of Exchange and International Promissory Notes. If the United States becomes a party to this convention, the convention will preempt state law with respect to international bills of exchange and notes governed by the Convention. Thus, an international bill of exchange or promissory note that meets the definition of instrument in section 3-104 will not be governed by Article 3 if it is governed by the Convention. That Convention applies only to bills and notes that indicate on their face that they involve cross-border transactions. It does not apply at all to checks. Convention Articles 1(3), 2(1), 2(2). Moreover, because it applies only if the bill or note specifically calls for application of the Convention, Convention Article 1 there is little chance that the Convention will apply accidentally to a transaction that the parties intended to be governed by this Article.

3-104. Negotiable Instrument.

(a) Except as provided in subsections (c) and (d), “negotiable Instrument” means an unconditional promise or order to pay a Fixed amount of money, with or without interest or other Charges Described in the promise or order, if it:

(1) Is payable to bearer or to order at the time it is issued or first Comes into possession of a holder;

(2) Is payable on demand or at a definite time; and (3) Does not state any other undertaking or instruction by the Person promising or ordering payment to do any act in addition (1) An undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to The holder to confess judgment or realize on or dispose of collateral or (iii) a waiver of the benefit of any law intended for The advantage or protection of an obligor.

(b) “Instrument means a negotiable instrument.

(c) An order that meets all of the requirements of subsection (a), except paragraph (1), and otherwise falls within the definition of a “check” in subsection (f) is a negotiable instrument and a check.

(d) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, it contains a conspicuous statement, however expressed, to the effect that the promise or order is not negotiable or is not and instrument governed by this Article.

(e) An instrument is a “note” if it is a promise and is a “draft” if it is An order. If the instrument falls within the definition of both “note And “draft,” a person entitled to enforce the instrument may treat It as either. (f) “Check” means (i) a draft, other than a documentary draft, payable on demand and drawn on a bank or (ii) a cashier’s check or teller’s check. An instrument may be a check even though it is described on its face by another term, such as “money order.”

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(g) “Cashier’s check” (i) means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.

(h) “Teller’s check” means a draft drawn by a bank (i) on another bank, or through a bank.

(i) “Traveler’s check” means an instrument that (i) is payable on demand, (ii) is drawn on or payable at or through a bank, (iii) is designated by the term “traveler’s check” or by a substantially similar term, and (iv) requires as a condition to payment, a countersignature by a person whose specimen signature appears on the instrument.

(j) acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. A certificate of deposit is a note of the bank.

Instruments are divided into two general categories: drafts and notes. A draft is an instrument that is an order. A note is an instrument that is a promise. Section 3-104(e). The term “bill of exchange” is not used in Article 3. It is generally understood to be a synonym for the term “draft.” Subsections (f) through (j) define particular instruments that fall within the categories of draft or note. The term “draft,” defined in subsection (e), includes a “check” which is defined in subsection (f). “Check” includes a share draft drawn on a credit union payable through a bank because the definition of bank (Section 4-105) includes credit unions. However, a draft drawn on an insurance company payable through a bank is not a check because it is not drawn on a bank. “Money orders” are sold both by banks and non-banks. They vary in form and their form determines how they are treated in Article 3. The most common form of money order of money order sold by banks is that of ordinary check drawn by the purchaser except that the amount is machine impressed. That kind of money order is a check under Article 3 and is subject to a stop order by the purchaser-drawer as in the case of ordinary checks. The seller bank is the drawee and has no obligation to a holder to pay the money order. If a money order falls within the definition of a tellers check, the rules applicable to teller’s checks apply. Postal money orders are subject to federal law. “Teller’s check” is separately defined in subsection (h). A teller’s check is always drawn by a bank and is usually drawn on another bank. In some cases a teller’s check is drawn on a nonblank but is made payable at or through a bank. Article 3 treats both types of teller’s checks identically, and both are included in the definition of “check.” A cashier’s check, defined in subsection (g), is also included in the definition of “check.” Traveler’s checks are issued both by banks and nonbanks and may be in the form of a note or draft. Subsection (i) states the essential characteristics of a travelers check. The requirement that the instrument be “drawn on or payable at or through a bank” may be satisfied without words on the instrument that identify a bank as drawee or paying agent so long as the instrument bears an appropriate routing number that identifies a bank as paying agent. The definitions in Regulation CC section 229.2 of the terms “checks,” ”cashier’s check,” Teller’s check,” and Travelers check” are different from the definitions of those terms in Article 3. Certificates of deposit are treated in former Article 3 as a separate type of instrument. In revised Article 3, Section 3-104 (j) treats them as notes. There are some differences between the requirements of Article 3 and the requirements included in Article 3 of the Convention on International Bills of Exchange and International Promissory Notes. Most obviously the Convention does not include the limitation on extraneous undertakings set forth in Section 3-104 (a)(3), and does not permit documents payable to bearer that would be permissible under Section 3-104 (a)(1) and Section 3-109. See Convention Article 3. In most respects, however, the requirements of 3-104 and Article 3 of the Convention are quite similar.

Bankers Acceptance: Title 12 Section 372 (a) Institutions; drafts and bills of exchange; types any member bank and any Federal or State branch or agency of a foreign bank subject to reserve requirements under section 3105 of this title (hereinafter in this section referred to as “institutions”), may accept drafts or bills of exchange drawn upon it having not more than six months’ sight to run, exclusive of days of grace –

(i) which grows out of transactions involving the importation or exportation of goods;

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(ii) which grow out of transactions involving the domestic shipment of goods; or

(iii) which are secured at the time of acceptance by a warehouse receipt or other document conveying or securing title covering readily marketable staples.

(b) Ratio limit of bills to unimpaired capital stock and surplus Except as provided in subsection (c) of this section, no institution shall except such bills, or be obligated for a participation share in such bills, in an amount equal at any time in the aggregate to more than 150 per centum of its paid up and unimpaired capital stock and surplus or, in the case of a United States Branch or agency of a foreign bank, its dollar equivalent as determined by the board under subsection (h) of this section. (c) Authorization for special ratio limit; foreign banks The Board, under such conditions as it may prescribe, may authorize, by regulation or order, any institution to accept such bills, in an amount not exceeding ay any time in the aggregate 200 per centum of its paid up and unimpaired capital stock and surplus or, in the case of a United States Branch or agency of a foreign bank, its dollar equivalent as determined by the Board under subsection (h) of this section.

(d) Ratio limit for domestic transactions Notwithstanding subsections (b) and (c) of this section, with respect to any institution, the aggregate acceptances, including obligations for a participation share in such acceptances, growing out of domestic transactions shall not exceed 50 per centum of the aggregate of all acceptances, including obligations for a participation share in such acceptances, authorized for such institution under this section.

(e) Ratio limit for single entity; foreign banks security no institution shall accept such bills, or be obligated for a participation share in such bills, whether in a foreign or domestic transaction, for any one person, partnership, corporation, association or other entity in an amount equal at any time in the aggregate to more than 10 per centum of it’s paid up and unimpaired capital stock and surplus, or, in the case of a United States branch or agency of a foreign bank, its dollar equivalent as determined by the board under subsection (h) of this section, unless the institution is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance.

(f) Exception for participation agreements With respect to an institution which issues an acceptance, the limitations contained in this section shall not apply to that portion of an acceptance which is issued by such institution and which is covered by a participation agreement sold to another institution

(q) Definitions by board In order to carry out the purposes of this section, the board may Define any of the terms used in this section, and, with respect to Institutions which do not have capital or capital stock, the board shall define an equivalent measure to which the limitations contained in this section shall apply.

(h) Dollar equivalent of foreign bank paid-up capital stock and surplus Any limitation or restriction in this section based on paid up and unimpaired capital stock and surplus of an institution shall be deemed to refer, with respect to a United States branch or agency of a foreign bank, to the dollar equivalent of the paid-up capital stock and surplus of the foreign bank, as determined by the

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board, and if the foreign bank has more than United States Branch or agency, the business transacted by all such branches and agencies shall be aggregated in determining compliance with the limitation or restriction.

Bills of Exchange have not been discontinued or done away with they are called drafts, in a recent conversation with Walker Todd exchief and legal counsel for the Federal Reserve, he divulged to me that Reserve requirements were waived under Title 12 section 3105. Prior to this on time deposit accounts [ these are accounts where the funds cannot be withdrawn for a fixed period of time and then only after notice] were given an exemption as a reserve requirement and this exemption was used or tendered through a Bill of Exchange, and was one of the instruments for loaning money. Guess what replaced the reserve requirements under time deposits? Your exemption as the Principal on the private side. All monetized debt has to have a Principal from which Capital and Interest circulates, this capital and interest is called accruals under GAAP. This is where the accrual method of accounting is derived from, under this method of accounting the debits and credits have to be in balance, this is accomplished through reverse bookkeeping entries or matching principles. This can only be accomplished in the courtroom when you do an acceptance for honor of the charges or charging instruments, indictment, complaint, information, or summons, then the debt, liability, or deficit, which is represented by the charging instrument can be zeroed out by transferring the credits or liabilities over to the debit or asset side of the accounting ledger by the clerk of the court. That’s right bunkies, the clerk of the court is a public accountant and the docket sheet is an accounting ledger for intermediate accounting entries and practices. They have to pass the credits or liabilities through your account to effectuate post settlement and closure of your account, through reverse bookkeeping entries. Why? Because the Public side is where the bankruptcy or insolvency is through contract and agreement under The Hague Conventions and the Public Policy of [HJR 192 codified at Title 31 section 5118 2 (d). The Social Security # on the front of your Social Security Card is assigned to the debtor or straw man, the red number on the back of the card is your exempt priority prepaid account number and is assigned to one of the 12 Federal Reserve Banks, designated by the letter in front of the number. There are 12 letters and 8 numbers after the letter. These letters designate which Federal Reserve district or bank is handling your account, the 8 digit # is your account number, all charge backs should be to this bank and not the Secretary of the Treasury, who in reality is the Secretary of the Treasury of Puerto Rico. The office of the Secretary of The Treasury of the United States was abolished in 1920, by the Act of May 29, 1920 [ Chp. 214, 41 Stat. 654; also see 31 3301 Historical Notes and is the source for 12 USC 121. After this the real Secretary of the Internal Revenue Code is Manual Diaz Faldana and John Snow is the Secretary of the Federal Reserve /IMF. However on November 14, 2004 Congress reestablished the Department of The Treasury and the office of the Secretary of the Treasury, under Chapter XII. Section 1 “Act of Congress Establishing The Treasury Department”. This would also make John Snow the Secretary of The Treasury. I have the legislative documentation of this. The International Monetary Fund has replaced the office of the Secretary of the Treasury of the United States, which was or is being chaired by Nicholas Brady. The letters below designate which district or bank is handling your account as the fiduciary trustee in bankruptcy. The 8 numbers on the front of Federal Reserve Notes have two identical series of numbers, and two letters, one is a prefix and the other is a suffix letter, located in the upper right and lower left sections of the note. If you study this in detail you will find out that your red number on the back of the SS card corresponds to these serial numbers on the front of Federal Reserve Notes, they both have 8 numbers or digits. I do not think that this is a coincidence.

A: Boston B: New York C: Philadelphia D: Cleveland

E: Richmond F: Atlanta G: Chicago H: St. Louis

I: Minneapolis J: Kansas City K: Dallas L: San Francisco

The whole problem and nothing else is that the public and national debt or deficit is not being redeemed on the public side through your exemption on the private side. This is the reason you have run away inflation and wars in the public realms. The reason wars are fought is to kill or execute people to cancel the debt. You will find out that under Title 12 section 1811 and section 3104 [insurance of deposits] every demand deposit account including checking, savings and credit card accounts are insured under the FDIA [Federal Depository Insurance Act] through the FDIC [Federal Depository Insurance Corporation] Title 12 section 1811 (a).

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When they execute the debtor to eliminate the debt, they also collect the insurance money; you are actually worth more dead [debt] than alive. Why do you think the police are so quick to shoot people? This executes or eliminates both the debtor and the debt, in one swift action or execution. This is all Karmic and involves the laws of Karma, which in physics involves the Laws of Cause and Effect. This is also the occult or hidden meaning of the scriptures in regard to salvation and redemption. Any body who tries to run from the police is called an absconding debtor in admiralty maritime law and may be shot or captured under the law of Prize. Read the case of J. MANRO v. Joseph ALMEIDA 23 U.S. 473, 10 Wheat 473, 6 Led. 473, this is one of the best cases I have ever read on the Admiralty and Civil Law and how it is being applied in the courts. Another excellent case is RAMSAY v. ALLEGRE U.S. MD. 25 U.S. 611, 12 Wheat 611, 6 L.ED. 746, which says they must have your consent before they prosecute you, another excellent case is LINDO v. RODNEY, 2 DOUGLAS. 613, this is an extremely difficult case to find and research. This case is quoted in LE CAUX v. EDEN Volume 99 English Reports Pg. 375 or at 2 DOUGLAS 595, this case was decided the 7th day of February, 1781, by Lord Mansfield possibly one of the greatest jurist of admiralty whoever sat on the Kings Bench. “An action will not lie at common law for false imprisonment, where the imprisonment was merely in consequence of taking a ship as prize, although the ship has been acquitted. Lord Mansfield said “that the action a new attempt, which, if it succeeded, would destroy the British Navy. If an action at law should lie, by the owners, and every man on board a ship taken as prize, against the captor, and every man on board his ship, no man would dare to take a ship.” Pg. 595 or pg. 375 of English Reports. “Besides, the argument of policy, such as it is, does not apply in the present instance; because this defendant is captain of a letter of marque, who acts voluntarily for his own private profit, and that of his owners; not, as officers in the Navy, under public compulsive authority. As to the other ground, that if there is a remedy, it must not be sought in a Court of Common Law, but in the Court of Admiralty, The inconvenience will be just as great before the judicature, for the same multiplicity of suits may arise there.” The current Suits in Admiralty Act passed in 1920 gives injured parties the right to sue the government in Admiralty. Title 46 appendix sections 741-752 and the Public Vessels Act enacted in 1925 to allow claims against the United States for damages caused by one of its vessels. Title 46 U.S.C.A. appendix sections 781-790. I have found that most people do not know the difference between Federal Common Law and English Common Law. All the English Common Law was grounded in substance and ownership of property through Allodial Title. The people did not have title to anything under the current system, the only rights they have are remedies as defined in 1-201 of the U.C.C. Federal Common Law is that decisional body of law [rules of decision] [commercial] that came out of the Eire v. Tompkins 304 U.S 64, 58 S. CT. 817 (1938) decision. I have read over 250 Law Review articles and only one tells you what happened in 1938. The Name of the Journal is the American Bar Association Journal Volume 24. January, 1938, the name of the article is “What Happened to Federal Jurisprudence” by Albert Schweppe of the Seattle Bar Association. The best article bar none is the SUPREME COURT AND THE POST- ERIE FEDERAL COMMON LAW by John P. Ludington, LLB 31 L. ED. 2d pg. 1006. What happened in 1938 is that they changed the Rules of Decisions under section 34 of the Judiciary Act of 1789, from the English Common Law to the Federal Common law. Prior to this the English Common Law was called the general federal common law. In INTERPOOL LTD v. CHAR YIGH MARINE (PANAMA) S.A. 890 F. 2d pg. 1453 (1989). It states that in maritime commercial transactions, the uniform commercial code is taken as indicative of federal common law of admiralty. This says it all. Another excellent case is THE CARTONA 297 Federal Reporter 1st series pg. 827. This case says you have to have a interest or a lien before you can intervene with a claim in Admiralty under rule 24 of the F.R.C.P. In the United States everything started with the Civil War and the Insurrection and Rebellion Acts of August 6, 1861 and July 17, 1862, which are still current law today under title 50 sections 212, & 213, we have been under a military, provisional, occupational government since 1861. This is why the United States has been divided into Internal Revenue Districts under title 26 section 7621 by the president of the United States and is what the zip code designates.

 The attached treatise and other attachments pretty well explains the IRS. Read this in conjunction with the Insurrection & Rebellion Acts of August 6, 1861 & July 17, 1862 and the first Income Tax Act  approved August 5, 1861 and was repealed by section 89 of the July 1, 1862 Internal Revenue Act  and reestablished by section 90 of this Act and which imposed an income tax on the annual rents, dividends, stocks, securities, gains, profits, salaries,  from any profession, trade, employment, or vocation carried on in the United States or elsewhere,  or from any other source whatever on the income of every person residing in

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the United States or any citizen of the United States. We are still under the War Powers Acts of 1840 and 1861. The Income Tax is passed on the Admiralty side of the court or military and is collected  from the Prize side of War. Section 1 of the July 1, 1862 Internal Revenue Act, established the office of the Commissioner of Internal Revenue, under the direction of the Secretary of The Treasury, under sections 2 & 3 of this act the president divided the States and Territories into collection districts and further under section 3 the assessor is authorized to divide his district into convenient assessment districts. I believe that this Act was the  predecessor for title 26 section 7621, where the President divided the districts up into Internal Revenue Districts. I believe also that the Act of March 25, 1862 chapter 50 37th Congress, "An Act to facilitate Judicial Proceedings in Adjudications upon captured Property, and for the better Administration of the Law of Prize" was the predecessor for the Act of June 30, 1864 c. 174 sections 29, 32, 33 of the R.S. sections 4613, 4614, 4652 and which established the law of Prize and the Prize Commissioners under title 10 sections 7651-7681 of the Military Code of Justice.             I believe that the venue and jurisdiction of the District of Columbia was extended out into the states through section 7621 of title 26. The IRS's return address is a Federal Regional address with a Zip Code, which means they are in a District [Internal Revenue District] within a  Federal Regional Area, designated by a Zip Code, created by executive order 11649 and the Act of Congress creating the Zip Code approved September 2, 1960, Public Law 86-682; 74b Stat. 578.

What Franklin Delano Roosevelt did in June of 1933, is he sold more gold contracts that the treasury had gold, this created a marine peril or peril of the sea, because of the run on the treasury, do to the foreign gold contracts. To avert the loss of gold, due to the run on the Treasury, Roosevelt outlawed gold and gold contracts to avert the apparent peril or loss of gold in the Treasury. In admiralty any time cargo [gold] is sacrificed to avert the peril of the sinking or loss of the ship, everybody who is a passenger on the ship or vessel [the United States] has to pay for the loss or sacrifice through the doctrine of Contribution. They had to insure or indemnify their losses through a maritime insurance policy, they accomplished this through FICA [Federal Insurance Contribution Act], which is the insurance policy under Social Security. Everybody who has a SS number is a Co-debtor or Co-surety for the loss of the gold or money under the public policy of H.J.R. 192 and title 31 section 5118 (2) (d). The origins of indemnity and contribution can be traced to the concepts of contract and restitution. The word Contribution comes from the word tribulation, which is mentioned throughout scripture. There are four kinds of indemnity and two kinds of contribution. The four kinds of indemnity are express agreement, (contract), implied agreement (contract), restitution indemnity, and statutory indemnity. Contribution is either pro rata or according to the degree of fault. This is why you have degrees of a Felony 1st, 2nd, 3rd, 4th and 5th and Misdemeanors. The SS-5 application is an express agreement or contract, that makes you a joint Tortfeasor under the doctrine of Contribution, before you ever go to court on any charges. When you refuse to pay the debt which you contracted to pay under the SS-5 application, another Joint-Tortfeasor [a corporation like Wal Mart] pays your debt, and as a co-surety Wal Mart now subrogates itself to the creditor under the doctrine of suretyship, which is the court and is entitled to reimbursement from the creditor. This is how all of your corporations are financing their operations, through the court and prison system. How many times have you heard a court order a defendant [debtor] to pay Restitution to the court? Indemnity is an extreme form of Contribution. An excellent treatise on this can be found in volume 55 pg. 1165 of the TULANE LAW REVIEW. There is also an excellent treatise on Suretyship principles in the New Article 3 Clarifications and Substantive Changes by Neil B. Cohen in Volume 42:2:595 of the Alabama Law Review. Every State has passed or adopted the Joint-Tort-Feasors Act under the doctrine of Contribution. This is basically all insurance, which is of admiralty maritime law. This is called general average contribution in admiralty maritime law. An excellent case on Contribution is DAWSON v. CONTRACTORS TRANSPORT CORP. 467 F. 2D 727 (1972). CIA ATLANTICA PACIFICA, S.A. v. HUMBLE OIL & REFINING CO. 274 F. SUPP. 884 (1967) is an excellent case on general average contributions. Grant Gilmore the co-author of the Law of Admiralty wrote Article 9 of the U.C.C. on secured transactions. This should tell you something. Another thing that most people are not aware of is that everybody is a merchant at law under Article 2-104 (1), because they use commercial paper in their every day transactions and hold themselves by occupation as having knowledge or skill peculiar to the practices or goods involved in the transaction or to which the knowledge or skill may be attributed. This is one of the reasons the court never tells or disclose to you what is going on in the courtroom by way of a commercial

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transaction and that you are the goods or chattel involved in the transaction, which is why it is all commercial and why most people end up in prison or jail. This is why in title 26 section 6305” says upon receiving a certification from the Secretary of Health and Human Services, under section 452 (b) of the Social Security Act with respect to any individual, the Secretary shall assess and collect the amount certified by the Secretary of Health and Human Services, in the same manner, with the same powers, and (except as provided in this section) subject to the same limitations as if such amount were a tax imposed by subtitle C.” The inference here is that the Secretary is collecting an insurance premium as though it were a tax, why? Because there is no money everything is insurance and you can’t pay a tax with a debt instrument. We as Principals own, hold, and control both sides of the accounting ledger; the private, debit or asset side and the public, credit or debt side. An offender is defined or called a debtor in admiralty maritime law read the case of CONTINENTAL ILLINOIS NATIONAL BANK & TRUST CO. v. CHICAGO, ROCK ISLAND & PACIFIC RY. CO. 294 U.S. 648. Page 668 of this case a debtor is referred to has an offender. All of your state criminal statutes have this term in their statutes or codes. In Ohio it is in title 29 section 2951.07. “If the offender [debtor] under community control ABSCONDS or otherwise leaves the jurisdiction of the court without permission from the probation officer, the probation agency, or the court to do so, or if the offender [debtor] is confined in any institution for the commission of any offense, the period of community control ceases to run until the time that the offender [debtor] is brought before the court for its further action.” An absconding debtor is defined in Black’s Law Dictionary 8th edition as a “A debtor who flees from creditors to avoid having to pay a debt. Absconding from a debt was formerly considered an act of bankruptcy.” The word Abscond means “To depart secretly or suddenly, especially to avoid arrest, prosecution, or service of process. 2. To leave a place usually hurriedly, with another’s money or property. Under Title 26 section 163 all prepaid interest is tax deductible. When you don’t use your exemption in exchange for the debt or deficit they execute on you to eliminate the debt, in the prisons or credit facilities as they are really called, this is called the death or debt penalty. Isn’t murder a Capital Offense and isn’t Capital interest or accruals from you as the Principal? An exemption is intellectual property under international law, if you don’t use it, it becomes abandoned property and the corporations use it on a 1096 or 1098 tax return as prepaid interest to get your deduction and pass the tax on to you. A tax is nothing but a return of capital and interest back to the principal that is why a return is called a tax return. This is what you are paying every time you make a purchase at the retail level on a retail contract under the truth in lending. If you look at any 1099 OID [original issue discount] or 1099 INT [interest] or 1099 PTR [patron] which are issued by banks to corporations, these documents will list you as the Principal as the recipient or Fiduciary Creditor and the Corporation as the payor Fiduciary Debtor. They are supposed to return your Capital and Interest back to you as the Creditor and Prinicpal, this is what makes it a prepaid account and tax deductible, this way they can use your exemption to pay the tax and release the merchandise to you in exchange. All merchandise is prepaid before it leaves the factory, what merchants are collecting at the retail level is the tax, capital, interest, accrual or revenue on you as the principal, because you have abandoned your exemption as the Principal. They cannot execute on a contract under the common law, because there is no money that is why they have to do an exchange using your exemption for the debt to discharge, redeem or effectuate post settlement and closure of your account. This is why the banks never close your account after you have withdrawn all your money. When you are refused access to a credit card by alleged bad credit they [the bank] are making a claim on your account by using your exemption. They are assuming ownership of your name as the principal; if they do settlement and closure and release the account they are giving you your deduction for the prepaid account as the principal. The bottom line to all this is that you only have what you lay claim to. Remember that rights are defined under 1-201 (34) of the UCC as remedies. The Jewish Passover is just an exchange of the future to the past or the past to the future. In other words your treasury Bill is exchanged for a Treasury Bond making the Bill a future event or Futures Contract. This comes from a Federal Reserve Report which says that 15 % of 100 = 85, 15 % of 85 = 72.25 etc. total 100, 85, and 72.25 and so on you get 666. Gold held in reserve is 15 % based on $100 deposit = 666, 20 % = 500 this is commodities and 10 % = 1000 and Franklin Delano Roosevelt sold more Gold Contracts than the Treasury had Gold and was the reason for the passage of the Federal Reserve Act and why they had to take gold and silver out of circulation to cover up the fraud. This is why they passed HJR

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192 [Title 31 section 5118 2 (d)] and goes into the 33 % that provides funds for funding the public municipalities.

THE PRACTICE AND JURISDICTION OF THE COURT OF ADMIRALTYIN THREE PARTS by John E. Hall, Esquire Date: 1809

This practice was used by Proctors in the Vice Admiralty Courts in the Colonies prior to the American Revolution and was delivered to the clerk of the Maryland district court, Phillip Moore on the 4th day of October, 1809. The first edition was printed in 1679, a third edition was published in the year 1722 and a new edition in 1791 of which this is a exact and faithful copy of which Lord Hardwicke considered of “unquestionable character”. This practice is quoted in Waring v. Clarke 5 Howard, [46 U.S.] 454.

This practice was written for private viewing only and not public as evidenced by its substance.

First Part Historical Examination of Admiralty

Second Part Translation of the Praxis [practice] Supremae Curiae Admiralitalis [The High Court of Admiralty], by Francis Clerke, who was registrar of the Court of Arches during the reign of Queen Elizabeth:

Arches Court = In English Ecclesiastical Law a Court of Appeal belonging to the Archbishop of Canterbury, the judge of which is called the “The Dean of Arches” because his court was anciently held in the church of Saint Mary Le-Bow. [Sancta Maria de – Arcubus]. So named from the steeple, which is raised upon pillars built arch wise 3 BL Commentary 64. The court was formerly held in the hall belonging to the College of Civilians, commonly called “Doctor’s Commons.” It is now held in Westminster Hall. It’s proper jurisdiction is only over the thirteen peculiar parishes belonging to the Archbishop in London, but the office of the Dean of the Arches, having been for a long time united with that of the Archbishop’s principal official, The judge of the Arches, in right of such added office, it receives and determines appeals from the sentences of all inferior Ecclesiastical Courts within the province.

Civilian = One who is called or versed in the Civil Law, a doctor, professor, or student of the Civil Law. Also a private citizen, as distinguished from such as belong to the Army and Navy or [in England] the church.

Register = An officer authorized by law to keep a record called a “Register” or Registry” as the Register for the Probate of Wills.

CURIA = In old European Law. A court. The palace, household, or retinue of a sovereign. A judicial tribunal or court held in the Sovereign’s palace. A court of justice The civil power, as distinguished from the Ecclesiastical. A manor; a nobleman’s house; the hall of a manor. A piece of ground attached to a house; a yard or courtyard. Spelman. A Lord’s court held his manor. The tenants who did suit and service at the lord’s court. A manse, Cowell.

In Roman Law

A division of the Roman people, said to have been made by Romulus. They were divided into three tribes, and each tribe into ten curiae, making thirty curiae in all. Spelman. The place or building in which each curia assembled to offer sacred rites. The place of meeting of the Roman senate; the senate house. The senate house of a province; the place where the decuriones assembled. Cod. 10, 31, 2.

DECURIO = Latin. A decurion In the provincial administration of the Roman Empire, the decurions were the chief men or official personages of the large towns. Taken as a body, the decurions of a city were charged with the entire control and administration of its internal affairs; having powers both magisterial and legislative. See 1 Spence, Eq. Jur. 54.

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Some of the courts were called admiralty, others were called consular courts. The judges were called consuls and the code which they operated by was called the consulate of the sea. These consuls were civil judges. The district courts today possess the authority and jurisdiction of the High Court of Admiralty. The Lords commissioners of the Admiralty, who possess the same jurisdiction as the Lord High Admiral. The Lord High Admiral grants the office of Registrar of the Admiralty for life. In this country the clerks of the District Courts of the United States are appointed by the Courts respectfully in which they Act, and hold their offices at will. The term Registrar is almost synonymous with Register does this ring a bell. The Civil Law distinguishes between a Letter and a Warrant of Attorney. The former is called a procuration, proxy, procuracy, or procuratory with the Proxy or Procuratory ad lites, in Ecclesiastical causes. This is the same manner in which papers are filed and authenticated in the Ecclesiastical Courts. Constitutor by roman law is a person who by agreement becomes responsible for the payment of another’s debt, now you know why under Article 6 Section 2, the supremacy clause of the constitution, Jay’s Treaty a commercial treaty entered into on November 19, 1794 is the supreme law of the land under the U.S. Constitution, which was a debt contract to preserve the debt owed to the crown under this treaty and which we still are paying for today. Bonds were referred to as Fidejussory Security. Fidejussores were the guarantors for payment of the Defendant [Debtor] debts. A defendant needs at least two Fidejussores, who should be bound to the plaintiff, in the sum for which the action was instituted. A Letter Rogatory was called a patent writ [open writ one not sealed or closed] close writ [a royal writ sealed because the contents were not deemed appropriate for public inspection. The Plaintiff is also obliged to find Fidejussores to these effects, viz. for the prosecution of the suit; for the payment of the defendant’s costs if the plaintiff fail in his cause, and for the production of the plaintiff personally as often as he may be called. As all civil and maritime cause is summary, the mode of proceeding and the final sentencing are the same as in Ecclesiastical cases. The commercial Courts or Tribunals on the continent of Europe were formerly called Consuls. In France, Judges and Consuls; In Spain Priors and Consuls; In Italy, Maritime Consuls. Hence the most ancient work, which is extant, on maritime and commercial law is called, the Consulate of the sea. Commercial agents who are sent from one country to another are called Consuls, because they formerly had a consular jurisdiction, or cognizance of all commercial and maritime causes between subjects of their own nations. To these commercial and maritime Courts, therefore, commissions sub mutuoe or letters rogatory were, in our authour’s time, usually directed; and at this day it seems that they might with propriety be directed to the Court or Judge, of the place to which they are sent, exercising admiralty and maritime jurisdiction. “Before making the seizure, a full proof of the debt is to be made to the Judge according to his discretion.” “If he be declared in contumacy [contempt] Scacc. n. 5. the judges of our day, according to custom, decree a sequestration [removal of property from debtor] at the instance of the creditor alone, without the existence of any suspicion. Scacc. n. 11. If nothing is proved to the Judge and nothing is sworn by the creditor, the attachment is granted upon the simple assertion of the creditor. Default mentioned above, “commonly signifies an offence in omitting that which we ought to do, yet here it is taken as a non appearance in Court at a day assigned” If you don’t make an appearance and pay the debt, you are in “contumacy [contempt] and in pain of their contumacy[contempt] be decreed to have incurred the first default.” A loan is a maritime contract, a juratory caution in maritime law is a court’s permission for an indigent to disregard filing fees an court costs. A suit upon juratory caution is the equivalent of a suit in forma pauperis. The right was first recognized in United States admiralty courts in Bradford v. Bradford, 3 F. Case 1129 (1878). Four defaults are to be pronounced against the defendant, if he does not appear within the term assigned to him by the Judge, before the Judge shall decree the plaintiff to be put in possession of the goods of the defendant, which is contrary to the ancient usage of the Court of Admiralty. “ It often happens, and especially in time of war or commotion, that your goods or vessel are taken by enemies or pirates, and afterwards brought to this kingdom; or are possessed or detained by others in some other manner; or the factor or agent of your correspondents in parts beyond seas, may consign certain goods to your use or benefit, and they are detained unjustly possessed by some person. In such cases you may obtain a Warrant to arrest the goods after this matter as your proper goods: and also a citation as well against those in particular thus occupying or detaining, as against all others in general, who have or pretend to have any interest in them, to answer you in a certain cause of a civil and maritime nature. Which Warrant being executed and returned as above, in Tit. 33, if no one appears, the proceedings are to be in all things as above, Tit. 31, and after the fourth default, the goods are to be adjudged to you; not for a debt as in

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the former case, but the decree is to be that in pain of the contumacy [contempt] of those who have not appeared, the goods belong to you, and being your property, you are to be put in possession of them.” The purpose of attachment of debtor’s goods was to compel an appearance to obtain quasi in personam jurisdiction over the Res. The fact is that until the 44th year of Elizabeth, the prize jurisdiction was not vested in the High Court of Admiralty, but in a board of Commissioners, called “The Commissioners for causes of depredations [plundering or pillaging].” At the time this work was authored the Admiralty Court was merely a Civil Court of Instance. There were arguments brought on various grounds such as infra praesidia [within the defenses] this is the international doctrine that someone who captures goods will be considered the owner of the goods if they are brought completely within the Captor’s power. This term is a corruption of the Roman-law term intra praesidia, which referred to goods or persons taken by an enemy during war. Under the principle of postliminium, the captured person’s rights or goods were restored too prewar status when the captured person returned. The oath to hold bail was an oath of calumny [oath to support plaintiff or defendant’s good faith and belief that there was a bone fide claim].

Instruments are for the most part two-fold either publick or private

Publick Instruments are:

1. Instrument drawn under the hand of a Notary Public, or other publick person, either in or out of Court.

2. That which is sealed with some publick or authentick seal, (though written by a private) as of a Prince, City, University or College.

3. All writings whatsoever (though private) which are exemplified by the authority of the Judge or Magistrate.

4. All such writings as are taken out of public registries, & c. or those made at publick acts; [that is to say, matters of record.]

5. Those writings which are subscribed by the person and witnesses. And this is publick as to its effects.

Private Instruments are such as are made without any solemnity; and they are either:

1. Accounts

2. Private Inventories or Registers.

3. Private letters betwixt one friend and another, one tradesman and another.

An appeal of an interlocutory decree may be done either viva voce [orally or by word of mouth] before the Judge or apud acta [recorded in writing and to appeals taken orally in front of the judge] when he delivers the sentence or interlocutory decree, or before a notary and witnesses within the 15 days which are allowed by the statutes of the kingdom for bringing appeals. Consetio’s Practice of the Ecclesiastical Courts, London, 1708. This essay, although it relates to the practice of the Ecclesiastical Court, is equally applicable to the Admiralty Courts. In respect of the subject matter of the libel, there are only two sorts in use [pg. 123], one of which is conventional or civil, [a conveniendo, from convening] the other criminal, [a crimine seu querimonia].

If you read Title 18 section 7 says that Citizens of the United States are Commercial Vessels. Section 7 talks about Special maritime and territorial jurisdiction of the United States defined:

The term “special maritime and territorial jurisdiction of the United States”, as used in this title, includes:(1) The high seas, any other waters within the admiralty and maritime jurisdiction of the United States

and out of the jurisdiction of Any particular State, and any Vessel belonging in whole or part to the

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United States or any citizen thereof, or to any corporation created by or under the laws of the United States, or of any States, Territory, District, or possession thereof.

(2) Any vessel registered, licensed, or enrolled under the laws of the United States, and being on a voyage upon the waters of any of the Great Lakes, or any of the waters connecting them, or upon the Saint Lawrence River where the same constitutes the International Boundary Line.

I have talked to Lee Brobst and he has informed me that he has researched and checked out the fact that all the buildings, that house the birth certificates have a stake outside the building that has a high water mark on the stake. If you understand Admiralty Maritime Law you know that the High Water Mark defines the jurisdiction of the Law of Admiralty. This is referred to in case law as the ebb and flow of the tide. Ebb is the incoming or high tide and the flow is the outgoing or low tide. The tidewater limitation has been abandoned in The Genesee Chief v. Fitzhugh, 53 U.S. (12 Howard) 443 (1851). This is because admiralty maritime law has been brought inland through the law of trusts and is so stated in Ruling Case Law on the Laws of Trusts.

“This power is as extensive upon land as upon water. The Constitution makes no distinction in that respect. And if the admiralty jurisdiction, in matters of contract and tort which the courts of the United States may lawfully exercise on he high seas, can be extended to the lakes under the power to regulate commerce, it can with the same propriety and upon the same construction, be extended to contracts and torts on land when the commerce is between different States. And it may embrace also the vehicles and persons engaged in carrying it on. It would be in the power of Congress to confer admiralty jurisdiction upon its courts, over the cars engaged in transporting passengers or merchandise from one State to another, and over the persons engaged in conducting them, and deny to the parties the trial by jury. Now the judicial power in cases of admiralty and maritime jurisdiction, has never been supposed to extend to contracts made on land and to be executed on land. But if the power of regulating commerce can be made the foundation of jurisdiction in its courts, and a new and extended admiralty jurisdiction beyond its heretofore known and admitted limits, may be created on water under that authority, the same reason would justify the same exercise of power on land.” – PROPELLER GENESSEE CHIEF v. FITZHUGH, 53 U.S. (12 HOW.) 443 (1851).

If you have a nexus or activity that bears a relationship to a traditional maritime activity, such as insurance, trusts, commercial paper, or commerce you have passed or qualified under the nexus and situs requirements. Read EXECUTIVE JET AVIATION, INC. v. CITY OF CLEVELAND, 409 U.S. 249, 268, 93 S.CT. 493, 504, 34 L.ED. 2d 454 (1972), HAASINGER V. TIDELAND ELEC. MEMBERSHIP CORP. 781 F. 2d 1022 (4TH Cir. 1986), BLANCHARD v. AMERICAN COMMERCIAL BARGE LINES CO., 343 F. SUPP. 920 (M.D. LA. 1972), AFF’D 468 F. 2d 950 (1972); MAYER BOAT WORKS, INC. v. BRIGHT MARINE BASIN, INC., 265 F. SUPP. 352 (E.D. N.Y. 1966).

This has recently been changed to be the Situs or Locality test. This is one of the reasons all checks and drafts have a water mark on them, allegedly for security purposes.

All citizens of the United States are debtors. This why under 26 CFR 1.6012.1 (a). It says that all citizens and residents of the United States have to make returns of income to the Secretary and why a citizen or resident of the United States, under the 4th section of the 14th amendment of the Constitution of the United States cannot challenge the validity of the public And national debt and why under the Bankruptcy Code of Title 11 Who may be a debtor section 109 (a) “Notwithstanding any other provision of this section, only a person that resides or has a domicile, a place of business, or property in the United States, or a municipality, may be debtor under this title.”

TITLE 46 SECTIONS 31301- 31343

Under CHAPTER 313 --- COMMERICAL INSTRUMENTS AND MARITIME LIENS

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SECTION 31306. DECLARATION OF CITIZENSHIP

(a) Except as provided by the Secretary of Transportation, when an instrument [birth certificate] transferring an interest in a vessel is presented to the Secretary for filing or recording, the transferee shall file with the instrument a declaration, in the form the Secretary may prescribe by regulation, stating information about citizenship and other information the Secretary may require to show the transaction involved does not violate section 9 or 37 of the Shipping Act, 1916 (46 U.S.C. 808, 835).

SUBCHAPTER 11 – COMMERCIAL INSTRUMENTS

SECTION 31321. Filing, recording, and discharge

(a)(1) A bill of sale, conveyance, mortgage, assignment, or related instrument, whenever made, that includes any part of a documented vessel [birth certificate] or a vessel for which an application for documentation [birth certificate application] is filed, must be filed with the Secretary of Transportation to be valid, to the extent the vessel is involved, against any person except.

Clearing under maritime law is the departure of a ship or vessel from port [hospital], after complying with customs, health laws and other local regulations. [see clearance].

The hospital where you are born is the port or harbor of entry. Clearance is the right of a ship or vessel to leave port or harbor [hospital]. The birth certificate is issued by the port collector [Department of Health and Human Resources] evidencing the ship or vessel’s right to leave port or harbor [hospital].

This is one of the reasons the Secretary of Transportation is the trustee or receiver in bankruptcy and admiralty under 46 USCS Appx section 1247.

In 1966 the Federal Rules of Civil Procedure were merged with the Admiralty maritime rules. This is spelled out in 34 F.R.D. Federal Rules Decisions page 325. Alfred W. Knauth a charter member of the rules committee stated this “The near approach of the common law-equity procedure to the relatively simple and untechnical state of the traditional Admiralty Practice has produced a new series of traps and pit-falls consisting of the remaining differences, frequently subtle in their nature, to trap the unwary . . . 2 Benedict on Admiralty iii-iv (6th edition (Knauth) 1940).

“Admiralty practice,” said Mr. Justice Jackson, “Is a unique system of substantive law and procedure, with which members of this court are singularly deficient in experience.” To the extent that admiralty procedure differs from civil procedure, it is a mystery to most trial and Appellate judges, and to the non-specialist lawyer who finds himself – sometimes to his surprise – involved in a case cognizable only on the admiralty “side” of the court. BLACK DIAMOND S.S. CORP v. STEWART & SONS, 336 U.S. 386, 403, 69 S.CT. 622, 93 L.ED. 754 (1949).

Federal courts are authorized, in one civil action, to exercise several types of subject matter jurisdiction historically exercised by separate courts, including courts of law, equity, and admiralty, and as a result, single federal court has at least three separate departments – law, equity, and admiralty – each of which has its own traditional procedures. VODUSEK v. BAYLINER MARINE CORP. 71 F. 3d 148 (4TH Cir. 1995).

CREDIT CARD TRUST ACCOUNT

NOW ACCOUNT = Negotiable order of withdrawal account, a bank account with which the customer is permitted to write drafts against money held on deposit.

A debit card is directly tied to Depository Trust Company [DTC] a Custodial Clearing Facility owned by the major banks and security firms and monitored by various banking regulatory agencies and the Securities and Exchange Commission. The DTC and NSCC are a integrated

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holding company members that have DTC settling accounts and a DTC credit card billing facility to allow them to have their NSCC monthly bills automatically billed to a credit card. The DTC will act as securities depository for the securities. The securities will be issued as fully-registered securities registered in the name of Cede & Co., which is DTC’s partnership nominee, or any other name as may be requested by an authorized representative of DTC. Generally, one fully registered global security will be issued for each issue securities, each in the aggregate principal amount of the issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500,000 million, one certificate will be issued with respect to each $500,000 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of the issue. DTC, the world’s largest depository, 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 section 8-102 (5), and a “clearing agency” registered under Section 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over two million issues of United States and non-United States equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that its participants deposit with DTC. DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between direct participants. This eliminates the need for physical movement of certificates representing certificates. Direct participants include both United States and non-United States securities brokers and dealers, banks trust companies, clearing corporations, and certain other organizations. DTC is a wholly owned subsidiary of the Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of direct participants of DTC and members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, also subsidiaries of DTCC, as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both United States and non-United States securities brokers and dealers, banks trust companies, and clearing corporations that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly. The DTC rules applicable to its participants are on file with the SEC. More information about the DTC can be found at www.dtcc.com.

Purchases of the securities under the DTC system must be made by or through direct participants, which will receive a credit for the securities on DTC’s records. The beneficial interest of each actual purchaser of security is in turn to be recorded on the direct and indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchase. A beneficial owner, however, is expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the transaction. Transfers of beneficial interests in the securities are to be accomplished by entries made on the books of direct and indirect participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their beneficial interests in the securities, except if the use of the book-entry system for the securities is discontinued.

CC Master Credit Card Trust 11 10-K. For 12/31/97

Chevy Chase Bank, F.S.B. (the “Bank”) is the transferor and servicer under the Pooling and Servicing Agreement dated as of June 1, 1995 (As amended and supplemented, the “Agreement”) by and between the Bank and the Bankers Trust Company, as the trustee, providing for the issuance from time to time of one or more Series of Asset Backed Certificates and is the originator of the Chevy Chase Master Credit Card Trust 11 (the “Registrant” or the “Trust”). The Certificates listed on page 1 hereof will be referred to collectively herein as the “Certificates”. The Certificates do not represent obligations of or interests in the Bank. The Bank has made application for an exemption from certain requirements. Pursuant to a letter from the Security and Exchange Commission, Division of Corporation Finance, Office of Chief Council, dated July 31, 1989 granting the Bank’s application, the Bank is not required to respond to various items of form 10-K. Such items are designated herein as “Not Applicable”.

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Each of the Certificates, representing investors’ interest in the Trust, are represented by a single certificate registered in the name of Cede & Co., the nominee of the Depository Trust Company. To the best knowledge of the Registrant, there is no established public trading market for the Certificates.

Each of the Certificates, representing investor’s interests in the Trust, are represented by a single certificate registered in the name of Cede & Co., the nominee of the Depository Trust Company (“DTC”), an investor holding an interest in the Trust is not entitled to receive a Certificate representing such interest except in certain limited circumstances. Accordingly, Cede & Co is the sole holder of record of the Certificates, which it held behalf of approximately 50 brokers, dealers, banks and other direct participants in the DTC system at December 31, 1997. Such direct participants may hold Certificates for their own accounts or for the accounts of their customers. The following table sets forth, with respect to each of the Certificates, the identity of each direct DTC participant that holds positions in such Certificates in excess of 5% of the outstanding Principal amount thereof at December 31, 1997.

First USA Bank, National Association (the “Bank”), a direct wholly owned subsidiary of BANK ONE CORPORATION (“BANK ONE), is the Transferor, with respect to the CC Master Credit Card Trust II (formerly Chevy Chase Master Credit Card Trust II) (the “Trust”) under the Pooling and Servicing Agreement dated as of June 1, 1995, among the Bank, as Transferor and Servicer, and Bankers Trust Company, as Trustee (the “Trustee”), as supplemented and amended (the “Pooling and Servicing Agreement”).

The Certificates listed on page 1 hereof will be referred to collectively herein as the “Certificates”. The Certificates do not represent obligations of or interests in the Bank.

The Bank will respond only to certain items of form 10-K. In doing so, the Bank will be relying on a letter dated July 31, 1989 from the Securities and Exchange Commission, Division of Corporate Finance, Office of Chief Counsel to Chevy Chase Bank, F.S.B., the then Servicer of the Trust, granting the Servicer of the Trust relief from the requirement to respond to various items of form 10-K. The items to which the Bank is not required to respond are designated herein as “Not Applicable”.

The final payments with respect to class A Floating Rate Asset Backed Certificates, Series 1996-A and class B Floating Rate Asset Backed Certificates, Series 1996-A were made on September 15, 2001 and November 15, 2001, respectively. Information with respect to such Certificates is only included in Item 14 (a) (i) which contains the Summary of Annual Distributions on the Certificate holders for the year ended December 31, 2001.

There are no material pending legal proceedings with respect to the Trust, involving the Trust, the Trustee or the Registrant. The Bank is a defendant in various lawsuits, including lawsuits seeking class action certification in both state and federal courts. These lawsuits challenge certain policies and practices of Bank’s credit card business. A few of these lawsuits have been conditionally certified as class actions. The Bank has defended itself against claims in the past and intends to continue to do so in the future. While it is impossible to predict the outcome of any of these lawsuits, the Bank believes that any liability which might result from these lawsuits will not have a material adverse effect on the Trust.

Each of the Certificates, representing investors’ interests in the Trust, are represented by a single certificate registered in the name of Cede & Co., the nominee for the Depository Trust Company (“DTC).

To the best knowledge of the Registrant, there is no established public trading market for the Certificates.

PRISM = Parallel Risk Management System = monitoring & risk management system for the futures options market segment at NSCCL.

NSCCL = Is wholly owned subsidiary of NSE.

SGL = Subsidiary General Ledger.

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U.C.C. = Law of agreement.

Docket of apparent authority.

This information came off of the 10-K form of Chase Credit Card Master Trust for 12/31/99 [formerly know as “Chemical Master Credit Card Trust 1] (issuer) Chase Manhattan Bank USA, National Association (depositor) (Exact name of registrant as specified in its charter) Securities are registered pursuant to Section 12 (b) of the Act. The Chase Master Credit Card Trust I (the predecessor of Chase Credit Card Master Trust (the “Trust”) was formed pursuant to a Pooling and Servicing agreement, as amended (the “Agreement”) between The Chase Manhattan Bank (formerly known as Chemical Bank), as seller and servicer, and an unrelated trustee (the “Trustee”). The trust files reports pursuant to section 13, 15 (d) and 16 of the Securities Exchange Act of 1934, as amended (the Exchange Act”), submitted to the Office of Chief Counsel on behalf of the originators of the Trust. Accordingly, responses to certain items have been omitted from or modified in this Annual Report on Form 10-K.

The Chase Credit Card Master Trust is the Issuer of Asset Backed Certificates, Seriesn1995-2, Series 1995-3, Series 1995-4, Series !996-1, Series 1996-2, Series 1996-3, Series 1996-4, Series 1997-1, Series 1997-2, Series 1997-3, Series 1997-4, Series 1997-5, Series 1998-2, Series 1998 -3, Series 1998-5, Series -6 Series 1999-1, Series 1999-2 and Series 1999-3.

Under Item 12 [Security Ownership of Certain Beneficial Owners and Management] of the 10-k shows the records of the DTC system that hold positions in Certificates representing interests in the Trust equal to more than 5 % of the total principal amount of one or more classes of Certificates outstanding on that date as follows. There are more than a hundred banks and companies listed as beneficiaries of the trust and Certificates.

Most important Articles of UCC in order of importance is the following:

1. Article 2 Sales2. Article 2A Leases3. Article 1 [General Provisions]4. Article 8 Investment Securities5. Article 5 Letters of Credit6. Article 4 Bank Deposits and Collections7. Article 4A Funds Transfers 8. Article 3 Negotiable Instruments9. Article 9 Secured Transactions10. Article 7 Documents of Title11. Article 6 Bulk Sales

In order for there to be a secured interest there must be a sale, contract, or agreement under Article 2 section 2-106 (1). This means that a bill of sale must exist at the retail level.

When a baby is born a birth certificate is issued and registered with the Bureau of Vital Statistics and is then registered with the Department of Commerce, after it is registered it becomes a Certificated Security and is sent to the DTC [Depository Trust Corporation], where it is deposited in a Trust Company and a Indenture trustee is appointed over the account. The trustee keeps an accounting of all of the bookkeeping entries and the paid out interest to direct participants as investors. This same procedure is followed in the Banking Industry on checking, saving accounts, or credit card accounts. The Birth Certificate now becomes a certificated security, financial asset, or possessory pledge under Article 8 “Investment Securities” to perfect a security interest in the property. Along with the revision of Article 8, significant changes have been made in the rules concerning security interests in securities. The revision returns to the pre-1978 structure in which the rules on securities interest in investment securities are set out in Article 9, rather than Article 8. The changes in Article 9 are, in part, conforming changes to adapt Article 9 to the new concept of a security entitlement. The Article 9 changes, however go beyond that to establish a

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simplified structure for the creation and perfection of security interests in investment securities, whether held directly or indirectly. The Revised Article 9 rules continue the long established principle that a security interest in security represented by a certificate can be perfected by possessory pledge. The Revised rules, however, do not require that all security interests in investment securities be implemented by procedures based on the conceptual structure of the common law pledge. Under the revised Article 9 rules, a security interest in securities can be created pursuant to Section 9-203 in the same fashion as a security interest in any other form of property, that is, by agreement between the debtor and secured party. There is no requirement of a “Transfer,” “delivery,” or any similar action, physical or metaphysical, for the creation of an effective security interest. A security interest in securities is, of course, a form of property interest, but the only requirements for creation of this form of property interest are those set out in Section 9-203.

9-102 (65) “Promissory note” means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgement by a bank that the bank has received for deposit a sum of money or funds.

The perfection methods for security interests in investment securities are set out in Sections 9-309, 9-313, and 9-314. The basic rule is that a security interest may be perfected by “control.” The concept of control, defined in Section 8-106, plays an important role in both Article 8 And Article 9. In general, obtaining control means taking the necessary steps to place the lender in a position where it can have the collateral sold off without the further cooperation of the debtor. Thus, for certificated securities, a lender obtains control by taking possession of the certificate with any necessary indorsement. For securities held through a securities intermediary, the lender can obtain control in two ways. First, the lender obtains control if it becomes the entitlement holder; that is, has the securities positions transferred to an account in its own name. Second, the lender obtains control if the securities intermediary agrees to act on instructions from the secured party to dispose of the positions, even though the debtor remains the entitlement holder. Such an arrangement suffices to give the lender control even though the debtor retains the right to trade and exercise other ordinary rights of an entitlement holder.

Except where the debtor is itself a securities firm, filing of an ordinary Article 9 financing statement is also a permissible alternative method of perfection. However, filing with respect to investment property does not assure the lender the same protections as for other forms of collateral, since the priority rules provide that a secured party who obtains control has priority over a secured party who does not obtain control.

The details of the new rules on security interests, as applied both to the retail level and arrangements for secured financing of securities dealers, are explained in the Official Comments to Sections 9-309, 9-312, 9-313, and 9-314,

9-309 Security Interest Perfected Upon Attachment.

9-309 (6) a security interest arising under Section 2-401, 2-505, 2-711(3), or 2A508(5), until the debtor obtains possession of the collateral;

2-401 (1) Title to goods cannot pass under a contract for sale prior to their identification to the contract [Section 2-501].

PERFORMANCE

2-501. Insurable Interest in Goods; Manner of Identification of Goods.

(1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even if the goods so identified are nonconforming and the buyer has an option to return or reject them. Such identification may be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs:

(a) when the contract is made if it is for the sale of goods already existing and identified;

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(b) If the contract is for the sale of future goods other than those described in paragraph (c), when goods are shipped, marked, or otherwise designated by the seller as goods to which the contract refers;

(c) when the crops are planted or otherwise become growing crops or the young to be born within 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting which ever is longer.

(2) The seller retains an insurable interest in goods so long as title to or any security in the goods remains in the seller. If the identification is by the seller alone, the seller may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified.

(3) Nothing in this section impair any insurable interest recognized under any other statute or rule of law.

9-309 (9) a security interest arising in the delivery of a financial asset under Section 9-206(c);

9-312 Perfection of Security Interest in Chattel Paper, Deposit Accounts, Documents, Goods covered by Documents, Instruments, Investment Property, Letter of Credit Rights, and Money; Perfection by Permissive Filing; Temporary Perfection Without Filing or Transfer of Possession.

(a) [Perfection by filing permitted.]

(b) [Control or Possession of certain Collateral.]

(3) a security interest in money may be perfected only by the secured party’s taking possession under Section 9-313.

9-313. When possession by or Delivery to Secured Party Perfects Security Interest Without Filing.

(a) [Perfection by possession or delivery] Except as otherwise provided in subsection (b), a secured party may perfect a security interest in tangible negotiable documents, goods, instruments, money, or tangible chattel paper by taking possession of the collateral. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under section 8-301.

9-314. Perfection by Control.

(a) [Perfection by Control.] A security interest in investment property, deposit accounts, letter-of –credit rights, electronic chattel paper, or electronic documents may be perfected by control of the collateral under Section 7-106, 9-104, 9-105, 9-106, or 9-107.

9-106. Control of Investment Property

(a) [Control under Section 8-106] A person has control of a certificated security, uncertificated security, or security entitlement as provided in Section 8-106.

(b) [Control of Commodity contract.] A secured party has control of a commodity contract. if:

(1) the secured party is the commodity intermediary with which the commodity contract is carried; or

(2) the commodity customer, secured party, and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer.

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(b) [Effect of control of securities account or commodity account] A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account.

9-107 Control of Letter-of-Credit Right.

A secured party has control of a letter of credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under Section 5-114(c) or otherwise applicable law or practice.

This account is a “Securities account” which under Article 8 section 8-501 (a) means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.”

(c) Except as otherwise provided in subsections (d) and (e), a person acquires a security entitlement if a securities intermediary:

(1) indicates by book entry that a financial asset has been credited to the person’s securities account;

(2) receives a financial asset from the person or acquires a financial asset for the person and, in either case, accepts it for credit to the person’s securities account; or

(3) becomes obligated under other law, regulation, or rule to credit a financial asset to the person’s securities account.

(c) If a condition of subsection (b) has been met, a person has a security entitlement even though he securities intermediary does not itself hold the the financial asset.

(d) If a securities intermediary holds a financial asset for another person, and the financial asset is registered in the name of, payable to the order of, or specially indorsed to the other person, and has not been indorsed to the securities intermediary or in blank, the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset.

(e) Issuance of a security is not establishment of a security entitlement.

A “Financial asset,” is defined in 8-102 (9) as a:

(i) a security;

(ii) an obligation of a person or share, participation, or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which is issued or dealt in as a medium for investment; or

(iii) any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this Article.

As context requires, the term means either the interest itself or the means by which a person’s claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement.

3-105 Issue of Instrument

(a) “Issue” means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.

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(b) An unissued instrument, or an unissued incomplete instrument that is completed, is binding on the maker or drawer, but nonissueance is a defense. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer, but failure of the condition or special purpose to be fulfilled is a defense.

(c) “Issuer” applies to issued and unissued instruments and means a maker or drawer of an instrument.

Issuer = One who agrees, by contract to assume the risk of anothers loss and to compensate for that loss. Also termed underwriter; insurance underwriter carrier, assurer [for life insurance].

Must have right in order to have interest, to make something public.

3-106 (d) Unconditional Promise or Order.

“If a promise or order at the time it is issued or first comes into possession of a holder contains a statement, required by applicable statutory or administrative law, to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee, the promise or order is not thereby made conditional for the purposes of section 3-104 (a); but if the promise or order is an instrument, there cannot be a holder in due course of the instrument.”

Article 4-102. Applicability

(a) To the extent that items within this Article are also within Article 3 and 8, they subject to those Articles. If there is conflict, this article governs Article 3, but Article 8 governs this Article.

(a) The liability of a bank for action or nonaction with respect to an item handled by it for purposes of presentment, payment, or collection is governed by the law of the place where the bank is located. In the case of action or non-action by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

Article 4 A-104. Funds transfer – Definitions

In this Article:

(a) “Funds transfer” means the series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order issued by the originator’s bank or intermediary bank intended to carry out the originator’s payment order. A funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order.

(b) “Intermediary bank” means a receiving bank other than the originator’s bank or the beneficiary’s bank.

(c) “Originator” means the sender of the first payment order in a funds transfer.

(d) “Originator bank” means (i) the receiving bank to which the payment order of the originator is issued if the originator is not a bank, or (ii) the originator if the originator is a bank.

Official Comment

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1. The rules of Article 3 governing negotiable instruments, their transfer, and the contracts of the parties thereto apply to the items collected through banking channels where no specific provision is found in this Article In the case of conflict, this Article governs. See section 3-102 (b).

Bonds and like instruments constituting investment securities under Article 8 may also be handled by banks for collection purposes. Various sections of Article 8 prescribe rules of transfer some of which (see sections 8-108 and 8-304) may conflict with provisions of this Article (Sections 4-205, 4-207, and 4-208). In the case of conflict, Article 8 governs. Amendments approved by the Permanent Editorial Board for Uniform Commercial Code November 4, 1995. Section 4-210 deals specifically with overlapping problems and possible conflicts between this Article and Article 9. However , similar reconciling provisions are not necessary in the case of Articles 5 and 7. Sections 4- 301 and 4-302 are consistent with section 5-112. In the case of Article 7 documents of title frequently accompany items but they are not themselves items. See section 4-104(a)(9).

In addition, applicable federal law may supercede provisions of this Article. One federal law that does so is the Expedited Funds Availability Act, 12 U.S.C. section 4001 et seq., and its implementing Regulation CC, 12 CFR Pt. 229. In some instances this law is alluded to in the statute, e.g., Section 4-215(e) and (f). In other instances, although not referred to in this Article, the provisions of the EFFA and the Regulation CC control with respect to checks. For example, except between the depository bank and its customer, all settlements are final and not provisional (Regulation CC, Section 229.36(d), and the midnight deadline may be extended (Regulation CC, Section 229.30(c). The comments to this Article suggest in most instances the relevant Regulation CC provisions.

2. Subsection (b) is designed to state a workable rule for the solution of otherwise vexatious problems of the conflicts of laws:

a. The routine and mechanical nature of bank collections makes it imperative that one law govern the activities of one office of a bank. The requirements found in some cases that to hold an indorser notice must be given in accordance with the law of the place of indorsement, since that method of notice became an implied part term of the indorser’s contract, is more theoretical than practical.

b. Adoption of what is in essence a tort theory of the conflict of laws is consistent with the general theory of this Article that the basic duty of a collecting bank is one of good faith and the exercise of ordinary care. Justification lies in the fact that, in using an ambulatory instrument, the drawer, payee, and indorsers must know that action wil be taken with respect to it in other jurisdictions. This is especially pertinent with respect to the law of the place of payment.

b. The phrase “action or non-action with respect to nay item handled by it for purposes presentment, payment or collection” is intended to make the conflicts rule of subsection (b) apply from the inception of the collection process of an item through all phases of deposit, forwarding, presentment, payment and remittance or credit of proceeds. Specifically the subsection applies to the initial act of a depository bank in receiving an item and to the incidents of such receipt. The conflicts of rule of Weissman v. Banque De Bruxelles, 254 N.Y. 488, 173 N.E. 835 (1930), is rejected. The subsection applies to questions of possible vicarious liability of a bank for action or non-action of sub-agents (see Section 4-202(c)), and tests these by the law of the state of the location of the bank which uses the subagent. The conflicts rule of St. Nicholas Bank of New York v. State Nat. Bank, 128 N.Y. 26, 27 N.E. 849, 13 L.R.A. 241 (1891), is rejected. The subsection applies to action or non-action of a payor bank in connection with handling an item (see Sections 4-215(a), 4-301, 4-302, 4-303) as well as action or non-action of a collecting bank (4-201 through 4-216); to action or non-action of a bank which suspends payment or is affected by another bank suspending payment (4-216); to action or nonaction of a bank with respect to an item under the rule of part 4 of Article 4.

In a case in which subsection (b) makes this Article applicable, Section 4-103 (a) leaves open the possibility of an agreement with respect to applicable law. This freedom of agreement follows the general policy of Section 1-105.

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Tennessee Valley Authority = Part of executive branch of Government. A government owned corporation, created in 1933, that conducts a unified program of resource development to advance economic growth in the Tennessee Valley region. The authorities activities include flood control, navigation development, electric power production, fertilizer development, recreation improvement, and forest and wildlife development. Though its power program is financially self supporting, the Authority’s other programs are financed primarily by congressional appropriations. Under section 4 (h) of the TVC its officers can condemn real estate in condemnation proceedings under the right of eminent domain.

U.C.C. 1-201 (37) “Signed” includes using any symbol executed or adopted with present intention to adopt or accept a writing.

Silence is acquiescence.

8-102 (4) “Certificated Security” means a security that is represented by a certificate.

8-102 (7) “Entitlement Holder” means a person identified in the records of a Securities intermediary as the person having a Security Entitlement against the Securities Intermediary. If a person acquires a Security Entitlement by virtue of section 8-105 (b) (2) or (3), That person is the Entitlement Holder

8-102 (8) “Entitlement Order” means a notification communicated to a Securities Intermediary directing transfer or redemption or redemption of a financial asset to which the entitlement has a security entitlement.

Bank must be debtor to have secured interest.

Article 8 105. Notice of Adverse Claim

(a) A person has notice of an adverse claim if:

(1) the person has notice of the adverse claim;

(2) the person is a aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim.

(3) The person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation so required would establish the existence of the adverse claim.

(b) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim.

(b) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than:

(1) one year after a date set for presentment or surrender for redemption or exchange; or

(2) six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date.

(d) A purchaser of a certificated security has notice of an adverse claim if the security certificate:

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(1) whether in bearer or registered form, has been indorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or

(2) is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement.

(e) Filing of a financing statement under Article 9 is not notice of a adverse claim to a financial asset.

Article 9-109 (5) “an assignment of accounts, chattel paper, payment intangibles, or promissory notes which is for the purpose of collection only.

Article 9 109 (d) this article does not apply to: Article 9-109 (7) “An assignment of a single account, payment intangible, or promissory note to an assignee in full or partial satisfaction of a preexisting indebtness.

9-203 Attachment and Enforceability of Security Interest; Proceeds; Supporting Obligations; Formal Requisites.

(a) [Attachment] A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressely postpones the time of attachment.

(b) [Enforceability] Except as otherwise provided in subsections (c) through (i), a security interest is enforceable against the debtor and third parties with respect to the collateral only if:

(1) value has been given;

(2) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party;

(3) one of the following conditions is met:

(A) the debtor has authenticated a security agreement that provides a description of the collateral and, if the security interest covers timber to be cut, a description of the land concerned.

(B) the collateral is not a certificated security and is in the possession of the secured party under Section 9-313 pursuant to the debtor’s security agreement.

(C) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under section 8-301 pursuant to the debtor’s security agreement; or

(D) the collateral is deposit accounts, electronic chattel paper, investment property, letter-of-credit rights, or electronic documents, and the secured has control under section 7-106, 9- 104, 9-105, 9-106, or 9-107 pursuant to the debtor’s security agreement.

12 CFR 201.3 (d)

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“Emergency credit for others. In unusual and exigent circumstances, a Federal Reserve Bank may, after consultation with the Board of Governors, advance credit to individuals, partnerships, and corporations that are not depository institutions if, in the judgment of the Federal Reserve Bank credit is not available from other sources and failure to obtain such credit would adversely effect the economy.

Title grants and agreements the rate applicable to such credit will be above the highest rate in effect for advances to depository institutions. Where the collateral used to secure such credit consists of assets other than obligations of, or fully guaranteed as to principal and interest by, the United States or an agency thereof, an affirmative vote of 5 or more members of the Board of Governors is required before credit may be extended.

Article 9-311. Perfection of Security Interests in property subject to certain Statutes, Regulations, and Treaties.

(a) [Security interest subject to other law.] Except as otherwise provided in subsection (d), the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to:(1) a statute, regulation or treaty of the United States whose requirements for a security interest’s obtaining priority over the rights of a lien creditor with respect to the property preempt Section 9-310(a):

THE DEPOSITORY TRUST COMPANYRESPONSE TO THE DISCLOSURE FRAMEWORK FOR SECURITIES SETTLEMENTSYSTEMSJUNE 2002- 2 -Table of ContentsDisclosure FrameworkIntroduction ................................................................................3I. Basic Information...............................................................4II. Rules and Procedures of the SSS......................................14III. Relationships with Participants.........................................16IV. Relationships with other SSSs and CommercialIntermediaries ..................................................................21V. Securities Transfers, Funds Transfers andLinkages Between Transfers.............................................24VI. Default Procedures ..........................................................30VII. Securities Overdrafts, Securities Lending and Back-to-BackTransactions ....................................................................33VIII. Risk Control Measures .....................................................38IX. Operational Risks.............................................................47EXHIBITS1. Diagrams of the Organizational and Ownership Structuresof DTC.................................................................................532. Schedule of the Times of Significant Processing Events .........54- 3 -IntroductionThe following document consists of the response made by The DepositoryTrust Company (“DTC”) to the questionnaire entitled Disclosure Framework ForSecurities Settlement Systems (the “Disclosure Framework”). The DisclosureFramework was developed under the auspices of the Committee on Payment andSettlement Systems and the International Organization of Securities Commissions.Consistent with the purpose of the Disclosure Framework, DTC’s responseprovides only a general overview of how DTC deals with certain risk managementissues. Therefore, this document should not be relied upon by DTC Participants orothers as a complete discussion of these matters.Requests for further information may be directed to:Ms. Diane Brennan

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Director-Risk ManagementPhone: (212) 855-3320Fax: (212) 855-3274- 4 -I. BASIC INFORMATIONA. What is the name of the SSS?The Depository Trust Company (“DTC”).B. Where and in which time zone is the SSS located?DTC’s principal offices are located in New York, New York (EasternTime), with operating facilities in multiple locations.C. What functions does the SSS perform?1. Does the SSS serve as a securities depository and/or provide securitiessettlement services?Yes. DTC serves as a custodian of the securities deposited by itsParticipants and provides securities settlement services.(a) What types of instrument are eligible for deposit at the SSS (e.g.,debt, equities, warrants, etc.)The following types of instruments are eligible for deposit atDTC:DEBT (in addition to Government and Municipal Debt)Asset Backed SecuritiesAuction Rate NotesBank NotesCertificates of Deposit (Retail & Institutional CDs)Collateral Mortgage Obligations (CMOs)Commercial Paper (CP)Consumer Price Index-Linked Bonds (CPI Bonds)Convertible DebtCorporate BondsDeposit NotesDiscount NotesInsured Custodial ReceiptsMedium Term Notes (MTNs)Notes/Tender Rate Notes- 5 -Variable Rate Demand Obligations (VRDOs)Zero Coupon BondsEQUITYAmerican Depositary Receipts (ADRs)Auction Rate Preferred SecuritiesClosed End FundsCommon StockLimited PartnershipsPreferred StockRights to Purchase SecuritiesUnit Investment Trusts (UITs)UnitsWarrantsGOVERNMENT SECURITIESBrady BondsNon-U.S. Government DebtU.S. Treasury, Federal Agency and Government Sponsored EnterprisesIssuesMUNICIPAL SECURITIESAuction Rate NotesInsured Custodian Receipts

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Municipal BondsMunicipal NotesVariable Rate Demand Obligations (VRDOs)(b) What types of instrument are eligible for transfer within the SSS?All the types of instruments listed above are eligible for transferamong Participants of DTC by book-entry delivery within DTC.(c) Please describe whether eligible securities are dematerialized,immobilized or transferred physically.Except for U.S. Treasury securities (and a small number of otherissues) which are dematerialized, eligible securities are immobilized.- 6 -(d) Does the SSS provide safekeeping for physical certificates?Yes.2. Does the SSS provide cash accounts and/or provide funds transfers inconjunction with securities transfers? If so, in what currencies?DTC provides each of its Participants with both a securities account anda U.S. dollar money settlement account in order to permit Participants to effectdeliveries of securities against payment.3. Does the SSS provide a trade matching service? Do others provide suchservices for securities settled at the SSS?DTC does not provide a trade matching service. Currently, mostinstitutional trades that are to be settled at DTC are submitted for matching toOmgeo, a service provider that is jointly owned by DTC’s parent, TheDepository Trust & Clearing Corporation (“DTCC”), and Thomson FinancialESG.For trades netted in the Continuous Net Settlement (“CNS”) system ofNational Securities Clearing Corporation (“NSCC”), which is also a whollyownedsubsidiary of DTCC, NSCC provides a trade matching service. The CNSsystem, which is currently available only for DTC-eligible securities, continuallynets all trades due to settle the next day against each other and against priordays’ unsettled long and short positions in the same securities. As part ofNSCC’s guarantee of settlement of marketplace transactions in CNS-eligiblesecurities, NSCC becomes the contra-party to each CNS transaction. NSCCParticipants obligated to deliver securities deliver them to NSCC as free bookentrymovements at DTC (referred to herein as “short covers”). Likewise,NSCC Participants obligated to receive securities receive them from NSCC,also as free book-entry movements at DTC (referred to herein as “longallocations”).4. Does the SSS provide a trade netting service (as distinct fromundertaking the settlement of securities transfers on a net basis)? Do othersprovide such services for securities settled at the SSS? In either case, whattypes of netting (bilateral or multilateral), if any, are performed?- 7 -DTC itself does not provide a trade netting service as defined above.However, trades netted in NSCC’s CNS system are settled by transfers to andfrom accounts at DTC. NSCC’s CNS system provides for multilateral netting.5. Does the SSS offer a securities lending or borrowing program?DTC provides services that facilitate securities lending and borrowingtransactions initiated by its Participants.Securities lent by one Participant to another can be delivered bybook-entry either free or against payment. DTC’s payment order serviceprovides a vehicle for the transfer of cash between securities borrowers andlenders to account for adjustments in the market value of the borrowedsecurities during the period the loan is outstanding.6. Does the SSS provide custodial and/or related services such as thecollection of interest, dividends, principal or withholding tax reclamations?

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Which types of service are provided?DTC collects and distributes to Participants dividend and interestpayments for securities in its custody. When permitted by an issuer’sreinvestment plan, DTC’s Dividend Reinvestment service allows Participants,on behalf of interested customers, to reinvest dividends on shares withoutwithdrawing them from DTC.Participants can accept tender and exchange offers for securities intheir accounts and deliver them to offerors’ agents through DTC. Similarly,DTC provides the means for Participants to exercise warrants, puts,conversions, rights to purchase additional shares, and other rights respectingsecurities in their DTC accounts.When a security in the depository’s custody matures or is called by theissuer, DTC presents the security for redemption and distributes the proceedsto the appropriate Participants.DTC’s Proxy service permits Participants to exercise voting rights onsecurities in the depository’s custody. In effect, DTC’s nominee, Cede & Co.,the holder of record, assigns each Participant the voting rights on securitiescredited to that Participant’s securities account as of the record date.- 8 -With respect to withholding taxes applicable to dividends paid onforeign ordinary shares and American Depositary Receipts in DTC’s custody,through arrangements with the taxing authorities in certain countries DTCprovides a service for beneficial owners entitled to a reduced rate to obtainreduced withholding at source, rather than by refund.DTC provides services for the custody, clearance and settlement byphysical delivery of securities for which book-entry services are not madeavailable. These securities include certificates that the Participant desires tohave registered in its name or in the name of its customer, as well as securitiesissues that cannot be made eligible for book-entry services for legal orregulatory reasons (e.g., securities with certain transfer restrictions).7. Does the SSS act as a central counterparty or principal to transactionswith its participants?No.8. Other? Please specify.DTC offers a number of services that are related to its core custodialand securities settlement services. For example, DTC’s Underwriting servicepermits underwriters of new and secondary issues of securities to distributethem by book-entry against payment through the depository.Other services are described in DTC’s most recent annual report and inother DTC publications, which can be found on DTC’s website: www.dtc.org.D. What type of organization is the SSS?1. Please indicate whether the SSS is a public sector or private sectorentity.DTC is a private sector company owned by members of the financialindustry.2. Please indicate whether the SSS is organized on a for-profit or a nonprofitbasis.- 9 -DTC is organized on a for-profit basis. However, under a policy adoptedby DTC’s Board of Directors, no dividends are paid to stockholders and eachyear substantially all revenues in excess of DTC’s current and anticipatedneeds are refunded to Participants.3. What is the legal basis for the establishment of the SSS and forsecurities transfers made through it?DTC is a limited-purpose trust company organized under the New YorkBanking Law, a “banking organization” within the meaning of the New York

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Banking Law, and a member of the Federal Reserve System. DTC is also a“clearing corporation” within the meaning of Article 8 of the New YorkUniform Commercial Code. DTC is registered as a clearing agency with theU.S. Securities and Exchange Commission (“SEC”) pursuant to the provisionsof Sections 17A and 19(a) of the Securities Exchange Act of 1934, asamended (the “Exchange Act”).E. Please describe and provide a diagram outlining the organizational andownership structure of the SSS.Attached as Exhibit 1 are diagrams of the organizational and ownershipstructures of DTC.1. Who are the owners of the SSS?DTC is a wholly-owned subsidiary of DTCC. DTCC, in turn, is industryowned.Participants of DTCC, NSCC and the other registered clearing agenciesthat are subsidiaries of DTCC (GSCC, MBSCC and EMCC) are allocatedentitlements to purchase the common stock of DTCC based upon their usageof all five registered clearing agencies.Certain participants, such as some smaller broker-dealers, have chosennot to purchase the shares to which they are entitled. These shares are heldby their self-regulatory organizations in a representative capacity for theirmembers.2. What entity or entities operate the SSS? Which functions of the SSS,if any, are outsourced to third parties?- 10 -DTC carries on all of its own activities and has not outsourced itsoperations to third parties.3. Does the SSS have a Board of Directors?Yes.(a) What is its composition?The following is a list of DTC’s current Directors and theiraffiliations:Bradley AbelowManaging DirectorGoldman, Sachs & Co.Jonathan E. BeymanChief Information OfficerLehman BrothersFrank J. BisignanoChief Administrative Officer and Senior Executive Vice PresidentCitigroup/Salomon Smith Barney Corporate & Investment BankMichael C. BodsonManaging DirectorMorgan StanleyStephen P. CasperManaging Director and Chief Operating OfficerFischer Francis Trees & Watts, Inc.Jill M. ConsidineChairman, President and Chief Executive OfficerThe Depository Trust & Clearing CorporationDennis J. DirksChief Operating OfficerThe Depository Trust & Clearing Corporation- 11 -Mary M. FenoglioExecutive Vice PresidentState Street CorporationGeorge Hrabovsky

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PresidentAlliance Global Investor ServicesRonald J. KesslerVice ChairmanA.G. Edwards, Inc.Catherine R. KinneyPresident and Co-Chief Operating OfficerNew York Stock ExchangePeter B. MadoffSenior Managing DirectorBernard L. Madoff Investment SecuritiesJames H. MessengerChief Executive OfficerNational Financial Services LLCEileen K. MurrayManaging DirectorCredit Suisse First BostonThomas J. PernaSenior Executive Vice PresidentThe Bank of New YorkRonald PurporaChief Executive OfficerGarban LLCPeter QuickPresidentAmerican Stock ExchangeRobert H. SilverExecutive Vice President and President of PaineWebber ServicesUBS PaineWebber, Inc.- 12 -Thompson M. SwayneExecutive Vice PresidentJP Morgan ChaseArthur L. ThomasSenior Vice President and ChairmanMerrill Lynch Securities Services DivisionJames W. ZeigonManaging DirectorDeutsche Bank AG(b) What are its responsibilities?Generally, the Board of Directors is responsible for supervisingthe business and affairs of DTC in order to promote DTC’s ability toserve its Participants.F. Please describe the financial resources of the SSS.1. Amount of paid-in capital and retained earnings?As of December 31, 2001, DTC had $77.8 million paid-in capital and$24 million in retained earnings.2. Guarantees, insurance coverage or other similar arrangements?On occasion, DTC has required certain Participants to obtain a thirdpartyguarantee of their obligations to DTC.DTC currently maintains insurance coverage in the following amounts:. $650 million on premises coverage under Blanket Bond/All-Riskpolicies.. $650 million in-transit coverage under Blanket Bond/All-Risk policiesfor securities in transit while in the custody of messengers or a- 13 -

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transportation company; additional transit coverage is available fornon-negotiable securities.. $800 million in-transit coverage provided by the insurer of thearmored car carrier service used by DTC. DTC’s coverage under theBlanket Bonds/All-Risk policies provides secondary coverage forsecurities lost while in the custody of an armored carrier.. $1 million under Mail Policy covering registered securities lost afterhaving been sent via first class mail.. $25 million under Mail Policy covering registered securities lost afterhaving been sent via registered or express mail or express courier.3. Credit lines or letters of credit?DTC currently maintains a $1.75 billion committed line of credit with agroup of banks to provide liquidity in the event a Participant fails to pay itsdaily money settlement obligation to DTC. DTC also maintains a $50 millioncommitted line of credit with a bank to provide funds so that DTC candistribute principal and income payments to its Participants when the paymentsare received too late to allocate on the payable date.4. Powers to assess participants or equity holders?DTC has the right under its Rules to apply its Participants Fund to anyuninsured loss suffered by DTC and to require its Participants to makeadditional deposits to the Participants Fund in order to replenish it. Referenceis made to the discussion of DTC’s Participants Fund in Section VI below.G. Please describe whether the SSS or its operator is subject to authorization,supervision or oversight by an external authority.DTC and its activities are regulated by the SEC, the Board of Governorsof the Federal Reserve System (the “Fed”), and the New York State BankingDepartment.- 14 -II. RULES AND PROCEDURES OF THE SSSA. Does the SSS maintain a complete list of the rules and procedures governingthe rights and obligations of participants and the duties of the SSS?Yes. The rights and responsibilities of DTC to its Participants and ofDTC’s Participants to DTC are set forth in DTC’s Rules and Procedures.1. How can participants obtain a copy of the rules and procedures?DTC provides each Participant with a copy of DTC’s Rules andProcedures. Any changes are also provided to Participants.2. Does other documentation provided to participants (e.g., user guides)have the same status as the rules and procedures?Yes.3. Describe the process for changing rules and procedures, including anyneed for regulatory approval.(a) What authority is required, and how does this differ depending onthe type of change involved?Approval by DTC’s Board of Directors is required to amendDTC’s Rules. Changes in DTC’s Procedures are subject to approval bythe Board of Directors or by the Chairman of the Board. None of theamendments to DTC’s Rules and Procedures can become effective untilfiled with, and approved or otherwise permitted by, the SEC (afterreview by the Fed) pursuant to the standards set forth in Section 19(b)of the Exchange Act.(b) How are participants notified of changes in rules and procedures?DTC notifies Participants of revisions to its Rules and Proceduresby Important Notice.- 15 -(c) Is there a procedure for participants or others to comment onproposed rule changes?

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Yes. Participants or others may submit to DTC for itsconsideration their comments with respect to any proposal to revise itsRules or Procedures. It should be noted, however, that most DTCproposals (e.g., proposed new services) are developed in closeconsultation with Participants. Written comments, if any, received byDTC must be submitted to the SEC as part of DTC’s filing. Under SECprocedures, the SEC also solicits comments on proposals filed by DTC.B. Are the rules and procedures binding on the SSS as well as its participants?Under what conditions and on whose authority can written rules andprocedures be waived or suspended by the SSS?DTC’s Rules and Procedures are incorporated by reference into theParticipant Agreement that is executed by the Participant and DTC, and arebinding on both the Participant and DTC.DTC’s Rules allow for the extension, waiver or suspension of any ofDTC’s Rules by the Board of Directors, the Chairman of the Board, thePresident, or any Managing Director or Vice President, whenever such actionis deemed necessary or expedient.- 16 -III. RELATIONSHIPS WITH PARTICIPANTSA. Please describe the types of membership offered by the SSS.1. How do the types differ?DTC has two categories of membership:. Full service membership – “Participants”. Membership for certain services only – “Limited Participants”.Pledgees in DTC’s system are not required to be Participants.2. Within each membership category, are all participants subject to thesame rules and procedures? Please describe important exceptions, includingboth differences in rules across participants and the rationale for thesedifferences.Within each membership category each Participant is subject to thesame Rules and Procedures.While each Participant is required to make at least the minimum depositto DTC’s Participants Fund, a Limited Participant, depending upon whether theservices it utilizes could result in a settlement obligation to DTC, may not berequired to make a Participants Fund deposit.B. Can participants establish accounts for their customers’ assets that aresegregated from their own asset accounts at the SSS?Participants can request DTC to provide an additional account in DTC’ssystem in order to segregate their assets from those of their customers. Suchadditional accounts are subject solely to the instructions of the Participant.1. If so, is this accomplished through a single omnibus customer accountor through a multiplicity of accounts and/or sub-accounts?Participants have the option of segregating securities within their ownaccount (omnibus) or of using additional accounts.2. Is the segregation optional or compulsory?- 17 -The segregation of securities is not compulsory under DTC’s Rules andProcedures. DTC’s procedures are designed to facilitate its Participants’segregation of securities so that they may comply with their legal or regulatoryobligations.3. Does the fact that a sub-account at the SSS bears the name of a thirdparty give any rights to that third party as a participant under the rules of thesystem?No. A third party whose name may appear on an additional account hasno rights under DTC’s Rules.C. Please describe participant requirements for each type of membership.

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1. Are participants required to be domiciled or resident in a particularjurisdiction?No.2. Are participants required to be subject to a supervisory regime? If so,please describe.Yes. DTC’s Participant admissions policy permits entities to becomeParticipants only if they are subject to regulation in their home jurisdiction.3. Are participants required to hold an equity stake in the SSS?No.4. Are there financial, economic, personal or other requirements (e.g.,minimum capital requirements, “fit and proper” tests)? If so, please describe.Yes. DTC’s Rules set forth the basic standards for the admission ofDTC Participants. DTC’s Rules provide that the admission of a Participant issubject to an applicant’s demonstration that it meets reasonable standards offinancial responsibility, operational capability, and character. The Rules also- 18 -require all DTC Participants to demonstrate to DTC that these standards aremet on an ongoing basis.Each applicant is judged on its own merits. The extent and nature ofthe business which the applicant intends to conduct through DTC is carefullyanalyzed so that the likely range of settlement obligations that the applicantwill have in DTC and the degree of risk to DTC can be evaluated. DTCanalyzes the capital and financial stability of the applicant as well as thebusiness and market risks to which the applicant is subject and decideswhether the applicant has the financial capability to meet its likely DTCobligations. In no case, however, does DTC admit brokers-dealers with lessthan $500,000 in excess net capital or banks with less than $2 million inequity.DTC also evaluates the operational capability of the applicant - whetherit has the personnel, data processing capability, etc., to meet the technicaldemands of interfacing with the depository.D. Does the SSS engage in oversight of its participants to ensure that their actionsare in accordance with its rules and procedures? If so, please describe.Yes. DTC monitors its Participants on an ongoing basis to assure thatthe Participants are in compliance with DTC’s Rules and Procedures.DTC’s Compliance Department obtains information daily from otherinternal DTC departments regarding settlement, operational, or recordkeepingproblems experienced with any DTC Participant.The Compliance Department reviews the financial condition of all DTCParticipants at least quarterly. Financial statements filed with regulatoryagencies, information obtained from other self-regulatory organizations andinformation gathered from various financial publications are analyzed to assurethat the Participant continues to be financially stable. The Department alsomonitors Participants’ settlement obligations, capital adequacy, and transactionactivity on a daily basis to assure that the Participant continues to be capableof meeting its obligations to DTC.- 19 -E. Under what conditions can participants terminate their membership in the SSS?Does this mark the end of all liabilities of the participant? If not, pleasedescribe what liabilities could remain.A Participant may terminate its membership in DTC by so notifying DTCin writing. Notwithstanding any such termination, a Participant remainsobligated to satisfy any obligations and liabilities arising out of its membershipin DTC.F. Under what conditions can the SSS terminate a participant’s membership in theSSS?

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DTC will terminate a Participant’s membership (i.e., cease to act for theParticipant) upon determining that under DTC’s Rules the Participant is nolonger qualified or is deemed to be insolvent.In addition, DTC may terminate a Participant’s membership under anyof the following circumstances:. The Participant has failed to make required deposits to theParticipants Fund within the required ten business day period afterdemand.. The Participant has failed to make any other required deposit withDTC.. The Participant has failed to pay any fine, fee or other chargeprovided under DTC’s Rules or Procedures.. The Participant has failed to meet its settlement obligation to DTC.. The Participant’s financial or operational condition has deterioratedto a point that its continuation as a Participant would jeopardize theinterests of DTC and its other Participants.. DTC’s Board of Directors, or a committee authorized thereby, hasreasonable grounds to believe that the Participant or any person- 20 -associated with the Participant is responsible for (1) fraud,fraudulent acts or breach of fiduciary duty, (2) making amisstatement of a material fact or omitting to state a material factto DTC in connection with its application to become a Participant orthereafter, (3) violating any Rule or any agreement with DTC or (4)the willful violation of the Securities Act, the Exchange Act, theInvestment Company Act, the Investment Advisers Act, or any ruleor regulation thereunder.. The Participant or any person associated with the Participant ispermanently or temporarily enjoined by order, judgment or decree ofany court or other governmental authority of competent jurisdictionfrom acting as a broker, dealer, investment company, investmentadviser, underwriter, bank, trust company, fiduciary, insurancecompany or other financial institution or from engaging in orcontinuing any conduct or practice in connection with any suchactivity, or in connection with the purchase, sale or delivery of anysecurity.. The Participant or any person associated with the Participant isexpelled or suspended from a national securities association orexchange registered under the Exchange Act.G. Please describe the scope of the SSS’s liability to participants, including thestandard of liability (negligence, gross negligence, willful misconduct, strictliability or other), the force majeure standard, and any limitation to the scopeof liability of the SSS (e.g., indirect or consequential damages). Where arethese liabilities and their limitations set out (e.g., in statute or contract)?As a general proposition, DTC’s responsibilities to Participants for themanner in which DTC’s services are provided are a matter of contract betweenDTC and its Participants, and are set forth in DTC’s Procedures.- 21 -IV. RELATIONSHIPS WITH OTHER SSSs AND COMMERCIAL INTERMEDIARIESA. Does the SSS maintain linkages (including sub-custodian or cash correspondentrelationships) or other relationships with other SSSs?1. Please identify each of the other SSSs used and the type of securitiestransferred via the linkages.(a) What is the name of the other SSS? Where is it located?(b) What securities are eligible for transfer via the linkage to theother SSS?

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(c) Are transfers of securities made via the linkage to the other SSSlimited to only those that are free of payment or are transfers againstpayment also made via the linkage to the other SSS? If againstpayment, please describe the timing of the transfers and thecorresponding payments.(d) Does the other SSS provide custody services to the SSS and, ifso, who bears any credit or custody risks?DTC maintains an account at the Federal Reserve Bank of New York.Issues which are transferred over the Federal Reserve System’s securitiestransfer system (e.g., U.S. Treasury securities) and which are eligible at DTCmay be transferred to and from that account free of payment.Caja de Valores (Argentina), The Canadian Depository for SecuritiesCanada (“CDS”), CAVALI (Peru), Clearstream Banking Frankfurt (Germany),CRESTCo (the United Kingdom), Hong Kong Securities Clearing CompanyLimited (Hong Kong), Monte Titoli (Italy), NECIGEF (The Netherlands) and theTel Aviv Stock Exchange Clearinghouse (Israel) have each opened a Participantaccount at DTC. Transfers of DTC-eligible securities to and from the DTCaccounts of those central securities depositories may be made free of paymentand, in the case of CDS, against payment. The Canadian, German and Swiss(SIS Sega Intersettle) depositories provide custody services to DTC.DTC has indirect linkages with Euroclear and Clearstream Luxemburg.In each of those linkages, a DTC Participant acts on behalf of the SSS. ThatParticipant uses its DTC account to make and receive transfers of DTC-eligiblesecurities between DTC Participants and the SSS. The transfers at DTC to andfrom the account of that Participant may be free or against payment.- 22 -Transfers against payment are effected in the normal manner for suchtransfers at DTC. Neither SSS provides custody services to DTC.B. Does the SSS use securities custodians (other than the other SSSs addressedin the previous question) and/or commercial cash correspondents? Pleaseidentify the custodians or cash correspondents used and the duties that eachperforms.In DTC’s Fast Automated Securities Transfer (FAST) Program, a numberof transfer agents hold balance certificates registered in the name of DTC’snominee as custodians for DTC. As securities are deposited in and withdrawnfrom the DTC system, the quantities of securities represented by the applicablebalance certificates in the FAST program are adjusted accordingly.In DTC’s Depository Facility Program, certain banks (as well as regionaloffices of NSCC) hold securities overnight as custodians for DTC after thesecurities have been deposited in the DTC system. The securities are shippedto DTC on the next business day.C. Please describe the standards used in approving or reviewing relationships withother SSSs, custodians or cash correspondents, including any financial oroperational requirements or the presence of insurance or public supervision.DTC ‘s Risk Management Committee, which is described in Section VIIIbelow, reviews linkages with other securities settlements systems, custodiansand cash correspondents in order to assess any operational and financial risksarising from such linkages.SEC regulations require that the form of agreement that DTC executeswith a securities custodian contain certain specified provisions relating to,among other things, DTC’s ability to obtain its securities promptly. The formof agreement must be filed with the SEC for approval. DTC receives reportson the internal controls of its securities custodians from their independentaccountants or internal auditors.Most transfer agents in the FAST Program and all banks in theDepository Facility Program are required to carry insurance in a form and

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amount satisfactory to DTC.Securities and cash positions at all of DTC’s custodians and cashcorrespondents are balanced and confirmed daily.- 23 -D. Does the SSS advance funds or securities to or on behalf of otherintermediaries such as issuing or paying agents? If so, please identify thecircumstances in which such exposure could arise.No. DTC does not advance securities or funds to or on behalf of otherintermediaries, such as issuing and paying agents.E. Please describe measures in place to protect the SSS and its members againstthe failure of other SSSs or commercial intermediaries to meet obligations tothe SSS, including risk controls, collateral or alternative sources of funds andsecurities.As noted above, DTC does not advance securities or funds on behalf ofother intermediaries. Participant accounts maintained by securitiesdepositories are subject to all of DTC’s normal risk management controls,including collateral controls, as described in Section VIII below.- 24 -V. SECURITIES TRANSFERS, FUNDS TRANSFERSAND LINKAGES BETWEEN TRANSFERSA. Please discuss whether and how settlement instructions are matched betweenparticipants prior to processing by the SSS.1. Is matching required for all transactions without exception?2. What procedure is used when instructions do not match?3. Are matched settlement instructions binding on participants?(a) If so, please describe the consequences of failure by participantsto meet obligations (e.g., forced settlement, penalties, short positions).(b) Please describe whether this is a feature of the SSS’s rules andprocedures or of national law or regulations.(c) Please provide a time line indicating the points at which matchedinstructions become binding, as well as any pre-matching process thattakes place.No. Matching is not required for all transactions at DTC. A transfer ofsecurities at DTC can be effected on instructions to DTC only from thedelivering Participant. As described in Section I above, transfers of securitiesat DTC on the instructions of NSCC are the result of matching in the NSCCsystem. Broker-dealers and their institutional customers can agree on thedetails of trades by using a matching service provider such as Omgeo, andagreed-on trades can then be settled at DTC.B. Are securities transferred within the SSS registered?1. Who is the registrar?2. Is it normal practice to register the securities in the name of the SSS (orits nominee) or in the name of the beneficial owner? Are there instances inwhich securities housed within the SSS are registered to neither the SSS (orits nominee) nor the beneficial owner?3. If the SSS offers custodial services, will it hold securities registered inthe name of the beneficial owner?- 25 -4. Under what circumstances does the SSS initiate registration ofsecurities in the buyer’s name?5. How long does the registration process typically take? Are participantsnotified when registration is complete?6. Can securities be transferred within the SSS before registration in thebuyer’s name is complete? If so, do the rules and procedures of the SSSprovide for an unwind or reversal of such transfers in case of bankruptcy orother events which result in the buyer’s name not being entered on the

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register?With the exception of securities in DTC’s custody for which book-entryservices are not available, securities certificates for registered issuesdeposited in the DTC system are sent by DTC to the issuer’s transfer agent forregistration of transfer into the name of DTC’s nominee, Cede & Co. Bearersecurities can also be deposited at DTC.A Participant depositing a security is given immediate credit for thedeposit in the Participant’s DTC account and can use that credit to effect bookentrytransactions.For most registered securities issues, a Participant with securities ondeposit within the DTC system can withdraw the securities physically andhave them reregistered in the name of the Participant, its customer or anotherparty. On the instructions of the withdrawing Participant, DTC debits thesecurities from the Participant’s account and instructs the transfer agent toregister the transfer of the securities into the name designated by theParticipant. The reregistered securities are then sent to the Participant or itscustomer.For transfer agents required to register with the SEC, the time period forthe registration process referred to in the preceding paragraphs is subject toSEC rules. The registration process usually takes 2-3 days. The Participant,upon inquiry, is able to determine when registration is complete.A large number of registered securities issues are issued inbook-entry-only (“BEO”) form. For these issues, there are one or more globalcertificates registered in the name of Cede & Co. and the issuer does not makesecurities certificates available to Participants or their customers.- 26 -C. Please describe how securities transfers are processed within the SSS.1. Please indicate whether the transfers are processed as debits andcredits to members’ accounts or via some other method.2. On a continuous (real-time) basis, or in one or more batches?3. If continuous, during what hours does the processing occur? If inbatches, at what time or times is the processing initiated and completed?4. Do securities settlements occur daily? Please identify securities forwhich settlement occurs only on specific days of the week or month.Transfers of securities within the DTC system are processed by debitsand credits to Participants’ accounts. Some transfers are processed inbatches, and other transfers are processed on a real-time basis. The sourceof the transfer instructions determines whether a batch method or real-timemethod is used. For example, transfer instructions received early in theprocessing day from NSCC or from a trade matching service provider such asOmgeo are processed at that time in batches. Transfer instructions receivedfrom Participants during the day are processed on a real-time basis. Securitiessettlements occur daily. Transfers of securities delivered against payment areeffective simultaneously with payment.Generally, deliveries of securities for value can be effected until 3:30P.M. and free deliveries can be effected until 6:00 P.M.D. Please describe whether final funds transfers in conjunction with the SSS aremade as debits and credits to balances held at the SSS, at one or morecommercial banks, at the central bank, or via some other method.1. Does the SSS maintain cash accounts for its participants? Are theseaccounts equivalent to deposit accounts at a commercial or central bank or dothey serve only as “cash memorandum” accounts?2. On what entity (SSS or other) does the participant bear cash depositrisk?3. Under what circumstances does the SSS provide credit extensions oradvances of funds to its participants and thereby expose itself to credit risk?

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- 27 -4. How long can such credit extensions last? How long do they typicallylast?DTC does not maintain cash accounts for its Participants. In additionto a securities account at DTC, each Participant has a settlement account.During the day, debits and credits are entered into the Participant’s settlementaccount. The debits and credits arise from securities transfers againstpayment made and received by the Participant and from other transactionssuch as principal and income payments received in respect of securitiescredited to the Participant’s securities account. At the end of each day, thedebits and credits in the Participant’s settlement account are netted. Then,DTC and NSCC net the settlement balances of each DTC Participant that isalso a member of NSCC. After netting with NSCC, DTC pays any net creditbalance in the account to the Participant, and the Participant pays any netdebit balance to DTC. Payments are made to and from DTC’s account at theFederal Reserve Bank of New York through the Federal Reserve System’smoney transfer system (sometimes called the Fedwire system). EachParticipant must engage a Settling Bank, which is a DTC Participant bank withaccess to the Fedwire system, to act on the Participant’s behalf in settling withDTC. A Participant which qualifies as a Settling Bank may act as its ownSettling Bank. A Settling Bank is not required to pay DTC a debit balance onbehalf of a Participant and is not required to advance funds to a Participant.DTC neither advances funds nor provides intra-day credit extensions toits Participants.E. Is the SSS a DVP system? If so, please describe the DVP model used accordingto the models outlined in the DVP Report (see the Introduction). Please alsoprovide a diagram indicating the timing of events in the processing of securitiesand funds transfers in the SSS. Where the SSS provides more than onealternative for settlement processing, please provide a response for eachalternative and indicate the relative importance of each alternative.1. Are funds transfers and securities transfers processed within the samesystem or in different systems? If different, how are they linked?(a) Please describe whether each securities transfer is linked to aspecific funds transfer on a trade-by-trade basis or on a net basis or viasome other method.(b) Does the SSS “split” large transactions into multiple transactionsor require participants to do so?- 28 -2. When do securities transfers and funds transfers become final?(a) At what time do securities transfers become final? After whatevent or events?(b) At what time do funds transfers become final? After what eventor events? Does this timing allow for same-day retransfer of fundsreceived in exchange for securities?(c) If final delivery of securities precedes the final transfer of funds,can participants dispose freely of such securities prior to funds finality?If so, what actions will be taken if funds are not received?(d) If final delivery of funds precedes the final transfer of securities,can participants dispose freely of such funds prior to securities finality?If so, what actions will be taken if securities are not received?(e) Does the timing of finality differ depending on the type ofsecurity transferred or the currency in which payment is to be made?Please describe.3. Please discuss whether participants are notified of securities or fundstransfers while they are still provisional, only when they are final, or both.The DTC system provides a DVP mechanism. The DTC system is

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similar to Model 2. DTC employs three principal risk management controls toprotect DTC and its Participants against the risk that a Participant will fail topay the net debit balance in its settlement account. Those risk managementcontrols, which are discussed in Section VIII below, are the collateral control,the net debit cap control and the largest provisional net credit procedureapplicable to money market instruments (“MMIs”).Funds transfers and securities transfers are processed within the samesystem at DTC. As described in subsection D, above, when a delivery ofsecurities against payment is made at DTC, the corresponding debit and creditare entered in the settlement accounts of the receiving and deliveringParticipants. At the end of the processing day, the debits and credits in eachParticipant’s settlement account are netted, and the net credit balance or netdebit balance is settled between DTC and the Participant. Large transactionsare not split into multiple transactions. However, there is a size limitation of$50 million on deliveries against payment of MMIs.- 29 -Securities transfers at DTC are final when made, from the standpointof the delivering Participant. Under certain circumstances, however, thereceiving Participant can return (reclaim) the securities on the day of thetransfer or the next day.Funds transfers over the Fedwire between DTC and a Settling Bankacting on behalf of a Participant are final when made.A receiving Participant is permitted to dispose of securities prior tomoney settlement with DTC subject to the application of DTC’s riskmanagement controls, which are described in Section VIII below.The timing of finality of securities transfers and funds transfers does notdepend on the type of security transferred. At present, all payments in DTC’sdaily money settlement are made in U.S. dollars.Participants are notified of securities or funds transfers by DTC whenprocessed.Attached as Exhibit 2 is a schedule of the times of significantprocessing events.F. Does the SSS itself “guarantee” funds or securities transfers?1. Under what circumstances and at what point are transfers guaranteedby the SSS?2. What actions does the guarantee obligate the SSS to take?3. Please indicate whether the guarantee is a feature of the SSS’s rulesand procedures or of national law or regulations.No. DTC does not itself guarantee any funds or securities transferswhich its Participants are obligated to make.- 30 -VI. DEFAULT PROCEDURESA. Please discuss the events or circumstances that would constitute default of aparticipant under the rules and procedures of the SSS or that would lead theSSS to make use of exceptional settlement arrangements or unwindprocedures.1. Failure by a participant to meet a test of its solvency under theapplicable laws of its jurisdiction?2. Failure to make payments or deliveries of securities within the timespecified?3. To the extent that the rules and procedures grant discretion in thedetermination of the use of default or other exceptional procedures, pleasediscuss where the authority to exercise such discretion resides and thecircumstances in which this authority would be used.The conditions under which DTC will cease to act for a Participant areset forth in Section III above. DTC will employ the default procedures

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described below only if DTC has determined that the Participant is insolvent asdefined in DTC’s Rules (e.g., entry of a court order adjudging the Participant abankrupt or insolvent) or the Participant fails to settle with DTC.B. What procedures are followed by the SSS once it has determined that a defaultevent has occurred or that exceptional settlement arrangements are to beemployed?1. How and at what point are participants notified that this has occurred?Notification of DTC’s decision to cease to act for a Participant will beprovided immediately to the SEC and to other clearing agencies in which theParticipant is also a member. DTC will broadcast such notification to itsParticipants over DTC’s Participant Terminal System (PTS), publish anImportant Notice to its Participants and submit a filing to the SEC.2. Would the SSS be expected to continue to meet all its obligations toparticipants under these circumstances? Please discuss the resources in placeto ensure that this would occur (e.g., collateral, participants fund, insurance,loss-sharing arrangements, etc.).- 31 -3. Please describe and provide a time line indicating the order in whichthese resources would be used as well as the timing of participant notificationsand important deadlines (e.g., when the SSS’s obligations to participants wouldbe met, when participants would need to cover their loss-sharing obligations).In the event that it ceases to act for a Participant, DTC will be expectedto continue to meet all its obligations, including the completion of settlement.DTC has available liquidity resources of $2.35 billion, consisting of an all cashParticipants Fund (the “Fund”) of $600 million and a committed bank line ofcredit of $1.75 billion, in order to complete settlement.Each Participant is required to make a deposit to the Fund based upona sixty business-day rolling average of the Participant’s intra-day net debitpeaks. In the event that DTC becomes concerned with a Participant’soperational or financial soundness, DTC may require an additional deposit tothe Fund. The minimum deposit is $10,000. A Participant may make avoluntary deposit to the Fund in excess of the amount required.In addition to being a liquidity resource, the Fund is available to satisfyany uninsured loss incurred by DTC, including a loss resulting from aParticipant’s failure to settle. In the event of such loss, DTC would first chargethe loss to that Participant’s deposit to the Fund (including its voluntarydeposit, if any). If the loss exceeded the failing Participant’s deposit, DTCcould charge the excess to its retained earnings or pro rata to the requiredFund deposits of all other Participants. Should DTC make a charge against aParticipant’s required deposit to the Fund (pro rata or otherwise), theParticipant must make an additional deposit to the Fund in an amount equal tothe charge.If the Fund is applied to a loss, DTC is required to notify the SEC andeach Participant promptly thereafter. Each Participant’s obligation to make anadditional deposit to the Fund will be reflected as a debit in its moneysettlement account on the business day following such notification.4. Please describe all conditions under which provisional transfers ofsecurities or funds could be unwound by the SSS.- 32 -(a) How and on what authority would a decision to unwind securitiesor funds transfers be made by the SSS?(b) When and how would participants be notified of a decision tounwind provisional securities or funds transfers?(c) How long would participants have to cover any debit positions intheir own securities or funds accounts resulting from an unwind?(d) In the event of an unwind, would all transfers be unwound or

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would only a subset of transfers (e.g., only securities purchases or onlythose of a subset of participants) by unwound?(e) If only a subset of transfers, what procedure would be followedto determine which transfers and in what order?In the event of a Participant’s failure to settle, DTC will first use theFund (including any voluntary deposits) as a liquidity resource to completesettlement. If the Fund is not sufficient, DTC will borrow from its line of creditbanks, pledging collateral securities in the failing Participant’s account. Thesefunds will ordinarily be restored on the day following the failure to settle, whenthe failing Participant pays DTC. The failing Participant has until 10:00 A.M.on that day to wire the necessary settlement funds, including interest, toDTC’s account.If the Participant fails to wire the necessary settlement funds, DTC isauthorized to sell the collateral securities in the failing Participant’s account.5. Can bankruptcy or insolvency be declared retrospectively in the SSS’sjurisdiction (e.g., under a “zero-hour” rule), and could this cause provisionalsecurities or funds transfers to be unwound?No.6. Please describe any circumstances in which transfers of securities orfunds that were defined as final in response to question V.E.2 above wouldever be unwound.Transfers of securities or funds so defined are final.- 33 -C. Has a participant in the SSS ever been declared in default or become insolvent?1. Have loss-sharing procedures been invoked?2. Please describe whether any of these defaults or insolvencies resultedin losses for the SSS or its participants and how they were absorbed.Since the creation of the depository in 1973, DTC has never suffereda loss resulting from a Participant default or insolvency and has never made acharge against the Participants Fund.VII. SECURITIES OVERDRAFTS, SECURITIES LENDINGAND BACK-TO-BACK-TRANSACTIONSA. Is it possible for debit positions (overdrafts) in securities accounts at the SSSto arise?Yes. Debit positions (i.e., short positions) can occur.1. Under what conditions could such debit positions occur?Normally, since deliveries are not processed by DTC unless thedelivering Participant has a sufficient quantity of securities credited to itsaccount prior to the delivery, a Participant cannot overdraw its account atDTC. However, two processes initiated externally can cause short positionsto arise.. Deposit Rejects: Most short positions are the result of depositrejects. As described in Section V above, a Participant depositinga registered security at DTC is given immediate credit for thedeposit in the Participant’s DTC account, and the depositedcertificate is sent by DTC to the issuer’s transfer agent forregistration of transfer into the name of DTC’s nominee. If thetransfer agent refuses to register the security in the name of DTC’snominee, the deposited certificate rejected by the transfer agent isreturned to the Participant and the quantity of the deposited securityis deducted from the Participant’s DTC account. If that deductionresults in a negative position in the Participant’s account (a “shortposition”), the Participant is required to provide a cash securitydeposit to DTC (the “short position penalty”) equal to 130% of themarket value of the deposited security (marked to the market eachday) until the matter is resolved.

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- 34 -. Partial Call Lotteries: Under DTC’s Procedures relating to a call (i.e.,redemption) of part of an issue, DTC allocates the called securitiesby means of an impartial lottery, based upon Participants’ net longpositions as of the close of business on the day prior to thepublication of the call notice. For the vast majority of partial callsof callable securities on deposit with DTC, the depository does notreceive notice of the call in advance of the publication date and,therefore, must run its lottery after publication date. To the extentthat, because of deliveries effected by a Participant between thepublication date and the date DTC is able to allocate calledsecurities to its account, the Participant’s remaining long position isless than the amount allocated, the Participant will be left with ashort position.(a) Do these conditions always result in debit positions in securitiesaccounts rather than failed transactions? If not, please explain thebasis for differential treatment by the SSS.The processes described above result in short positions only, anddo not create failed transactions.(b) Are these situations covered explicitly by the rules andprocedures of the SSS?Yes.2. How long can such debit positions last? How long do they typicallylast?While theoretically there is no limit to the time short positions can beoutstanding, short positions in debt securities (which represent the vastmajority of short positions at DTC) can be outstanding at most until thesecurities are redeemed or mature. Currently, the average age of a shortposition at DTC is between seven and eight days.3. How are debit positions in securities accounts prevented, rectified ormanaged?DTC discourages short positions by charging the short position penaltyuntil the position is covered. DTC also has a number of procedures to helpreduce and eliminate short positions, particularly those that are outstanding for- 35 -long periods because, for example, the issues are difficult to purchase on theopen market. The following briefly describes a few of these procedures:. A Participant having a short position in a particular security as theresult of a rejected deposit is permitted for a limited period of timeto reverse book-entry deliveries of that security effected by theParticipant between the date of the deposit and the date of thereject. If a book-entry delivery is reversed under this procedure, thesettlement obligations of the parties are reopened (i.e., theParticipant that reverses the book-entry delivery will still have anobligation to deliver to the receiving Participant securities insettlement of the original transaction).. A Participant having a short position in a particular security as theresult of the partial call allocation process is permitted for a limitedperiod of time to reverse book-entry deliveries of that securityeffected by the Participant between the publication date and theallocation date. If a book-entry delivery is reversed under thisprocedure, the settlement obligations of the parties are re-opened.. DTC permits a Participant having a short position in a particularsecurity to use DTC’s facilities to communicate with otherParticipants having long positions in that security in order to arrangeto purchase a sufficient quantity to cover the short position.

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. With respect to a Participant short position that has beenoutstanding for 90 days or more, DTC itself is authorized topurchase a sufficient quantity of the security to cover the shortposition, using the Participant’s short position penalty to fund thepurchase price.4. What procedures would be followed by the SSS in case the debit cannotbe rectified (e.g., failure by a participant with a debit balance in a securitiesaccount or unavailability of the securities in the market).(a) Application of loss-sharing provisions allocating the loss toparticipants?(b) Absorption of the loss by the SSS?(c) Other? Please specify.- 36 -The short position penalty would be available to cover theobligation of a failing Participant. In the extremely unlikely event thatthe short position penalty and the failing Participant’s deposit to theParticipants Fund are not sufficient to cover any loss suffered by DTC,DTC’s retained earnings as well as the Participants Fund (involving losssharing by Participants on a pro rata basis) would be available for suchloss.B. Under what circumstances does the SSS provide for the lending of securitiesto ensure settlements?1. Is the process for lending securities automatic? If not, please describethe procedures used by the SSS to determine whether a securities loan will bemade.2. At what point are participants notified that securities are being lent tothem in order to complete their settlements?3. Which securities on deposit at the SSS are eligible for lending? Doparticipants have the option to make securities available for lending or is itmandatory?4. Are lent securities identified by the SSS with specific participants aslenders or only with a common pool of securities available for lending? Doesthe participant whose securities are lent become a principal to the transaction?DTC itself does not provide for the lending of securities to ensuresettlements. However, as described in Section I above, DTC provides servicesthat facilitate securities lending by its Participants and their customers.C. How does the SSS settle back-to-back transactions?1. Under what conditions are delivery instructions by participants receivingand redelivering securities on the same day under back-to-back transactionssettled for same-day value?(a) Only if the participant has securities on deposit with the SSS thathave been received pursuant to a final securities transfer?(b) If the participant has securities on deposit with the SSS that havebeen received pursuant to a provisional securities transfer?- 37 -(c) Before securities have been received either provisionally orfinally, but when a matched receipt instruction exists for the same orgreater value? Is such a practice limited to markets where matching isbinding?(d) Before securities have been received either provisionally orfinally, but when a third party has promised to deliver to the SSSsecurities of the same or greater value? Must the provider of theguarantee have itself received the securities through a final transfer?Please describe how the SSS evaluates such promises, and whetherthey are addressed by the written rules and procedures of the SSS.(e) Other? Please specify.

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2. Please describe limits or controls in place with respect to any of theabove arrangements for the settlement of back-to-back transactions, includinglimits on amounts involved or related to the liquidity of the underlyingsecurities.3. Under what conditions are payment instructions by participants in theSSS under back-to-back transactions settled for same-day value? Canparticipants use the proceeds of an on-delivery of securities without the needfor an extension of credit?DTC does not settle “back-to-back” transactions as defined herein.However, a Participant receiving a delivery of securities intra-day is able toredeliver those securities for same-day value in advance of final settlement solong as DTC’s collateral, net debit cap and Largest Provisional Net Credit(“LPNC”) controls applicable to both the redelivering Participant and thecounterparty to the redelivery are satisfied. These controls are described inSection VIII below.- 38 -VIII. RISK CONTROL MEASURESA. Please describe the roles and responsibilities of those areas of the SSSresponsible for risk management and control.DTC has a Risk Management Committee (the “Committee”) to evaluateand coordinate the risk management activities within the organization. TheCommittee is composed of nine officers, representing the following areas:Finance, Auditing, Information Services, Operations, Risk, International,Systems Processing and Legal. DTC’s General Counsel acts as Chairman.The Committee reports to the Audit Committee of DTC’s Board ofDirectors.1. Please describe the process for the internal review of risk managementpolicies and procedures.DTC continually performs risk assessments of its operations, dataprocessing systems, communications networks and facilities. Whenever a newor expanded service is proposed, the project is reviewed by members of seniormanagement. Risk assessment is a crucial element of such reviews. Inappropriate cases, a project may be subject to risk assessment reviews by theCommittee, attorneys, internal auditors and DTC’s independent accountant.2. Is there a risk management policy that addresses the review andapproval of new products and services offered by the SSS? At what level ofthe organization is risk management approval given for a new product orservice?As a matter of DTC practice, before being offered, a new product orservice must receive risk management approval by DTC’s Chief OperatingOfficer, President or Chairman.3. Does the SSS have a risk management function with clear independencefrom and authority over operational marketing functions?Yes. The Committee is independent from the operational and marketingfunctions.- 39 -4. Does the Board of Directors review risk management policies andprocedures? Does the Board have a risk management or audit committee?Yes. DTC’s Board of Directors has an Audit Committee whoseresponsibilities include the review of DTC’s risk management policies andprocedures.B. Please describe any internal or external audits or supervisory/regulatoryexaminations that are performed with respect to the SSS. For each such auditor examination, please address the following questions.1. Who performs the audit or examination?DTC’s Internal Audit Department and its independent accountant

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regularly review the adequacy of DTC’s internal controls, procedures andrecords. In addition, the Federal Reserve Bank of New York, the New YorkState Banking Department, and the Securities and Exchange Commissionroutinely examine the depository.2. What is the scope of the audit or examination?(a) Please indicate whether and how it addresses the sufficiency ofand compliance with internal controls.Evaluations of DTC’s financial statements and internal controlsover securities and related monies processed and/or held forParticipants and others are conducted on a periodic basis. Suchexaminations cover all critical processing areas of the operation, as wellas the data processing environment.(b) Please indicate whether and how it addresses the SSS’scompliance with its own rules and procedures.All examinations are designed to test for compliance with DTC’sRules and Procedures. Any instances of noncompliance are reported tosenior DTC management and are corrected.3. What is the frequency of the audit or examination?- 40 -DTC’s independent accountant, the Federal Reserve Bank of New Yorkand the New York State Banking Department each conduct annual reviews.The Securities and Exchange Commission conducts an annual inspectionof DTC’s data processing areas and has conducted an inspection of selectedoperating areas every other year.DTC’s Internal Audit Department conducts, on a rotation schedule, anannual audit of all critical areas.4. Are audit or examination reports available for review by participants?DTC’s independent accountant issues a report on internal controlswhich is provided to all Participants and interested third parties.C. Please discuss whether the SSS has the capacity to value (i.e., mark to market)the securities that it holds.1. Please describe how these valuations are used by risk control systemsat the SSS.DTC monitors the value of the securities used as collateral to supporta Participant’s net settlement debit. The collateralization control is meant toassure that DTC has available sufficient collateral to cover the Participant’s netsettlement debit in the event that it fails to settle.2. How frequently are securities revalued?Daily.3. What are the sources for security valuations?(a) What outside price or data sources are used?DTC attempts to obtain an end-of-day price in an automatedformat from a third-party vendor for each of its eligible securities. Inthe case of CMOs, which are complex, highly interest-rate-sensitivesecurities, DTC attempts to obtain pricing data from two outsidesources. In addition, pricing data is supplied by lead underwriters fornew issues not yet priced by a vendor.- 41 -(b) If pricing models are used, please describe how the models arechosen and how the model inputs are obtained.The above vendor data is supplemented with DTC’s mainframebasedpricing models for Money Market Instruments.D. Please discuss whether the SSS has a lien on the securities held in ortransferred through it.1. Does the lien apply only to the securities owned by the participantsthemselves or does it extend to the securities beneficially owned by customers

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of participants?2. Under what circumstances and in what manner would such a lien allowthe SSS to use the securities?As indicated above, the goal of DTC’s collateralization control is toassure that DTC has access to sufficient collateral of the Participant to coverany net debit in its money settlement account. Collateral includes: (1) theParticipant’s deposit to the Participants Fund; (2) securities in the Participant’saccount that the Participant has designated as collateral; and (3) securities thathave been delivered intra-day to the Participant’s account against payment.DTC is not aware of the beneficial ownership of securities credited tothe accounts of its Participants, including securities that are treated ascollateral. DTC’s Rules give DTC the right to pledge such collateral securitiesto DTC’s line of credit banks in the event of a Participant failure to settle.In the event that a failing Participant is insolvent and unable to pay itssettlement debit, DTC is authorized to sell the collateral securities in order tocover that debit.E. Please discuss the circumstances in which the SSS requires collateral to limitor mitigate risks.1. Does the SSS manage its own collateral system?Yes. DTC manages its own collateral system.- 42 -2. Does the SSS share a collateral system with another SSS or paymentsystem?No. DTC does not share its collateral system with any other SSS.DTC and NSCC have entered into a limited cross-guaranty agreementwhich provides, with respect to CNS long allocations, a DTC guarantee eitherto return the securities to NSCC or to compensate NSCC for these securitiesif the receiving DTC Participant (which is also a member of NSCC) redeliversthe securities. DTC’s guarantee eliminates a potential NSCC risk. Not givingcollateral value to long allocations, together with the collateral controlsapplicable in DTC’s system, mitigates DTC’s risk in providing this guarantee.3. Can collateral at the SSS be posted and returned on the same day?Yes. Collateral can be returned to the Participant intra-day as long asthe returned collateral is excess (i.e., at the time of the return the Participant’snet debit with DTC is fully supported by other collateral acceptable to DTC).4. What types of transaction at the SSS involve the use of collateral?Transactions that are processed in DTC’s end-of-day net settlementsystem are subject to DTC’s collateral requirements.5. What are the policies with regard to the type of collateral used orhaircuts required?All types of securities that are eligible for deposit may be used ascollateral.The collateral value attributed to securities is equal to the prior businessday’s closing market price, less a haircut as determined by DTC. Because DTCmay have to finance a Participant’s failure to settle, the haircut structure takesinto consideration market fluctuations and the haircuts imposed on DTC byDTC’s line of credit banks. Securities that are not acceptable to the banksreceive no collateral value in DTC’s system.6. How are collateral valuation methodologies developed and reviewed?- 43 -A security’s haircut is determined by the application of criteria relatingto security type, rating, market price and whether the security is traded on anexchange (including NASDAQ). DTC’s haircuts range from 2% to 100%.DTC’s haircut policy is reviewed at least annually, usually in conjunction withthe renewal of its agreement with its line-of-credit banks. DTC’s RiskManagement Committee is responsible for approving any changes in the

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established haircut levels. The market values of collateral securities aremonitored daily based upon price and rating data provided by independentsources.7. To what extent are collateral policies described in the written rules andprocedures of the SSS?DTC collateral policies are described in DTC’s Procedures.F. Please describe the SSS’s use of limits on exposures to monitor or control risks.1. Please explain the types of limit used and the exposures to which theyapply.DTC’s principal risk would arise from the failure of one or more of itsParticipants to settle their net debit obligations with DTC at the end of abusiness day. In order to assure that DTC is able to complete settlement onthe day of a Participant failure, DTC maintains liquidity resources of $2.35billion, including a cash Participants Fund and a committed line of credit. DTCalso employs net debit caps, collateral requirements and the LargestProvisional Net Credit (“LPNC”) control.DTC’s settlement system imposes net debit caps on all Participants.Each Participant’s net debit is limited throughout the processing day to a netdebit cap that is the lesser of four amounts: (1) a net debit cap based on thethree largest net debits that each Participant incurs over a rolling three-monthperiod; (2) an amount, if any, determined by the Participant’s Settling Bank;(3) an amount, if any, determined by DTC; or (4) $1.8 billion (an amount thatis $550 million less than the amount of DTC’s total liquidity resources).As discussed above, DTC’s system requires that a Participant’s netsettlement debit be fully collateralized.- 44 -The LPNC control is designed to address risks associated with DTC’sprocessing of maturity payments on MMIs. For most securities that payprincipal at maturity, for example corporate or municipal bonds, DTC receivesmaturity proceeds from the issuer’s paying agent by Fedwire and does notcredit these proceeds to Participants until they are received. For MMIs,however, maturities are handled differently. The issuer’s paying agent mustbe a DTC Participant. Early on the maturity date, maturity proceeds areautomatically debited to the paying agent’s Participant account and creditedto the accounts of Participants that have positions in the MMI. Until 3:00 P.M.,however, these debits and credits are only provisional because the payingagent has until that time to inform DTC of its refusal to pay for the maturity.In such a case, DTC would invoke MMI issuer failure procedures which entailreversing all of that day’s activities in the issuer’s MMI, including any newissuances that day. All of these reversals would be processed without regardto the system’s collateral and net debit cap controls.To help limit the risk to DTC arising from the combination of an issuer’sfailure and a Participant’s failure to settle, DTC established the LPNC control.This control operates by prohibiting the Participant prior to 3:00 P.M. fromusing the largest net settlement credit it has received with respect to anysingle MMI issuer. This credit is not available as collateral, nor is it used in thecalculation of the Participant’s net debit. The LPNC control is lifted after 3:00P.M. in the absence of a refusal to pay.2. Do the limits apply to all participants and/or to other SSSs with whichthe SSS is linked? What are the exceptions to the limits?The risk management controls apply to all Participants, including otherSSSs that participate in DTC’s system.3. Do limits apply to participants individually or in the aggregate or both?Risk management controls are applied to Participants on an individualbasis.4. Do limits apply to implicit as well as explicit extensions of credit or

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securities (e.g., when on-deliveries of securities are permitted pursuant toprovisional but not final delivery of securities)?Reference is made to information provided in response to subsectionV.E. above.- 45 -5. Does the SSS automatically reject transactions that exceed limits or iscompliance determined ex post?DTC’s collateral monitor control systematically reviews eachtransaction to assure that if completed there will be enough collateral in theaccounts of both the deliverer and the receiver to support the net debit ofeach.If a completed transaction will result in a net settlement debit that iseither not fully collateralized or exceeds the Participant’s net debit, thetransaction will be automatically blocked and pended.6. How are limit policies developed and reviewed?DTC’s Risk Management Committee is responsible for developing limitpolicies. These policies are reviewed by DTC senior management and by theAudit Committee of DTC’s Board of Directors. DTC’s Compliance Departmentis responsible for the application of these policies.7. To what extent are limit policies described in the written rules andprocedures of the SSS? Where does additional authority to set or amend limitpolicies reside?DTC’s limit policies are described in its written Procedures. Theauthority to set or amend these policies coincides with the authority to amendDTC’s Procedures (as described in Section I above).G. Please describe other controls to mitigate or reduce risks at the SSS.1. Does the SSS or its participants have the capacity to monitorparticipants’ accounts continuously during processing?Each DTC Participant has the capability to monitor its own account ona real-time basis. DTC has the capacity to monitor all of its Participants’accounts on a real-time basis.- 46 -2. Is there a special risk control regime that the SSS would apply to aparticipant known to be experiencing financial difficulties?DTC maintains relationships with other self-regulatory organizations sothat there is an exchange of vital information concerning Participants’operational and financial soundness. In the event of financial inadequacy, DTCcarefully monitors a Participant’s daily activity and may exercise its right underits Rules to limit the Participant’s access to DTC services. Depending upon thecircumstances, DTC could take the following possible courses of action:. Increase the Participant’s required deposit to the Participants Fund.. Lower the Participant’s net debit cap.. If the troubled Participant is a primary market maker or the specialistin an issue or issues, DTC could raise the haircuts in its collateralvaluation of those securities.. Require the Participant to settle its net debit earlier in the day.. Request that the Participant arrange to clear its transactions throughanother DTC Participant and itself retire as a Participant.3. Does the SSS maintain or administer loss-sharing arrangements otherthan those applicable to events of default and addressed in Section VI above?Are these loss-sharing pools pre-funded by participants?No. DTC does not maintain or administer loss-sharing arrangementsother than as described in Section VI above.- 47 -IX. OPERATIONAL RISKSA. Please provide assessments of the operational reliability of the computer and

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other systems used by the SSS, including any criteria that the SSS usesinternally for this purpose.1. What is the percentage uptime of the systems used by the SSS?(a) Whole system overall?(b) Broken down by major components (e.g., communicationsnetwork, central processing facility)?(c) During critical processing periods?2. Has the SSS experienced major operational problems during the pasttwo years?(a) Have settlements been delayed, been disrupted or otherwisefailed because of operational problems during this period?(b) Please describe the nature of any such problems.DTC conducts self-assessments of the operational reliability of thedepository’s computer and other systems, including communications networks,and reports the monthly results quarterly to the DTC Board of Directors.These reliability reports include hardware, software applications, on-timesettlement performance and terminal systems performance. Definitions ofthese metrics follow:. “Hardware Availability” is defined as the readiness of productionsystem hardware to process deliveries and complete settlement.The period measured is 8:00 a.m. to 5:00 p.m., which covers peakParticipant use. Outages are measured whenever a failure occursthat affects mission-critical systems that in turn delay Participantprocessing.. “Software Availability” is defined as the ability of DTC’s softwareto operate without downtime. The period measured is 8:00 a.m. to5:00 p.m., which covers peak Participant use. Outages are- 48 -measured whenever a failure occurs that affects mission-criticalsystems that in turn delay Participant processing.. “On-Time Settlement Performance” is achieved if settlement cut-offand payment of credits are not later than 15 minutes beyondscheduled times and key prior cut-offs are not 30 minutes late.. “Participant Terminal Availability” is defined as the availability ofDTC’s Participant Terminal System (PTS) terminal network inParticipant locations. The period measured is 8:00 a.m. to 5:00p.m., which covers peak Participant use.Over the period January 2000 through December 2001, the systemsused by DTC were available at a rate of 99.85% overall and 99.865% duringcritical period processing, in both cases exceeding DTC’s goals. Statistics forcritical period processing (between 8:00 a.m. and 5:00 p.m.) for major systemscomponents are as follows -- Hardware Availability, 99.98%; SoftwareAvailability, 99.85%; On-Time Settlement Performance, 99.865%; ParticipantTerminal Availability, 99.866%.DTC has not experienced any major operational problems during thepast two years. DTC has never experienced a failure in its daily settlement.B. Please describe contingency or disaster recovery planning at the SSS.1. Does the SSS have a formal plan for business continuity in place?2. Is this plan available for review by participants?3. How often is this plan tested? Does this involve participants in the SSS?4. What are the major elements of the business continuity plan?5. How long would it take the SSS to resume operations if primary systemsbecome unusable?DTC maintains an alternate data center and has a state-of-the-artdisaster recovery capability. This capability provides for full recovery of DTC’sentire system within one hour, with no loss of data. The system uses a remote

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data facility under which mainframe-based disk drives connected to theproduction mainframe immediately replicate any changes to disk drives on the- 49 -back-up system located at a separate site. Thus, in the event of a disaster atthe primary production site data center, the back-up mainframe at a secondarysite would be initialized for production using a complete duplicate set ofproduction files maintained at the back-up site.Extensive physical and environmental control systems are used in boththe data centers. Backup emergency generators and an uninterrupted powersupply are available and tested periodically. A command center for monitoringkey environmental control systems is staffed 24 hours a day, seven days aweek. Any potential problems result in an alarm sounding and triggersupervisory intervention. DTC periodically operates its production system andcommunications network from its alternate data center. New program codeis extensively tested through established certification procedures before beingmoved to the production environment.Internal systems contingency and disaster recovery testing is conductedweekly. Each weekend DTC tests the system by comparing a portion of thedata between the two sites. The recovery processes are documented andpracticed by DTC staff. DTC also switches primary and alternate processingsites on a quarterly basis thereby testing the disaster recovery processes withevery Participant that utilizes the remote access capabilities of the depository.Most of the depository’s business processes rely on operationalactivities as well as computer facilities. To ensure its ability to sustainbusiness processes in the event of fire, flood, civil disturbance, or any othercontingency affecting its operating premises, the depository has developed aBusiness Continuity plan; this plan is tested on an ongoing basis. The planaddresses a single catastrophic failure, such as the loss of one building. Theplan details how critical operational units would displace less urgent functionsin the event the critical operation’s facilities were not available.DTC conducts disaster recovery tests for each mission critical operationon an ongoing basis. Testing varies from tabletop testing to actually closingdepartments and resuming operations at the contingency site.The details of the disaster recovery plan are not available for reviewexcept by DTC’s regulators.- 50 -C. What are the key features of the internal controls covering operations andsecurity at the SSS (e.g., change controls or those covering remote access)?1. Please describe controls or security procedures in place to ensure thatthe SSS acts only on authentic settlement instructions from valid participants.2. Are internal operational and security controls included in the internaland/or external audits of the SSS?3. Are internal operational and security controls covered by regulatoryrequirements applicable to the SSS?Annual risk assessments include the review of DTC’s primary datacenters, the integrity of DTC’s computer processing, and possible securitybreaches.In addition to verification procedures in place permitting Participants toverify that only valid settlement instructions have been received for comparedtrades, electronic access to DTC’s computers is generally controlled via leasedlines and dial-in/call-back networks. User ID and password authentication isrequired in order to help prevent unauthorized transactions from entering DTCsystems, to prevent security breaches and to establish accountability fortransactions entered. In many cases, instantaneous confirmation of recordedtransactions is available to Participants through PTS. Access to sensitive PTSfunctions requires the authorization of a DTC officer. All systems activity is

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logged and is available for reporting purposes as the need arises. Securityviolation reports are monitored and appropriate follow-up action is taken.Formal escalation procedures exist for reporting, investigating and resolvingattempted security violations. The use of sensitive computer consolecommands is restricted via a console security system.All securities transactions are included on daily activity statementsgiven to Participants. Participants are responsible for reporting to DTC anyproblems with recorded transactions, and reported differences are followed upuntil resolved by DTC personnel.A variety of measures are taken by DTC to protect the Data Center andCommunications areas.The systems development and maintenance activities also arecontrolled through the use of a separate test machine. An independentCertification Unit is responsible for transferring all application programs fromtest to production libraries and source code is recompiled prior to being moved- 51 -into production. Finally, standards and procedures over the certificationprocess have been developed, documented and adherence by employees isrequired.DTC works diligently to eliminate the possibility of access to sensitivedata and records by unauthorized users and programs. Unauthorized access isprevented through awareness, organizational structure, prevention,accountability, and violation monitoring. The goal of DTC’s internal controlstructure is to ensure that the integrity of our production systems is neverjeopardized. In addition to the authentication and access procedures describedabove, the internal control structure includes:. A high-level Security Committee, which addresses key areas of riskassociated with Information Services and directs that appropriateactions be taken to minimize risk; and. An extensive Information Services Security Policy Statement(distributed to all employees annually), which helps ensure theaccuracy and integrity of company data, the confidentiality ofproprietary, personal, and other sensitive data, the continuance ofdata processing in the event of an emergency, company-wideawareness of the need for data security, and managementparticipation in implementing the data security policy.DTC’s internal operational and security controls are included in theinternal and external audits of DTC and are covered by the regulatoryrequirements applicable to DTC. For example, the depository is subject to theSEC’s Automation Review Policy (ARP), under which the SEC evaluates variousaspects of DTC’s data processing environment, including:. Capacity planning processes.. Systems development methodologies.. Contingency planning processes.. Security assessments.In this connection, SEC technical staff makes annual on-site visits to DTC andconfers with DTC staff from time-to-time throughout the year.In addition to the internal and external audits described above, DTC hasfrom time-to-time retained outside consultants to provide independentassessments of DTC’s systems and systems security.- 52 -D. Does the SSS impose minimum operational or performance standards on thirdparties (e.g., communications providers)?1. How does the SSS ensure that such standards are met on a continuingbasis and what sanctions are available to the SSS if they are not?2. How would the SSS allocate losses incurred due to operational problems

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caused by third parties?DTC imposes both operational and performance standards on itssoftware vendors as part of its contractual agreements. Actual performanceagainst standards is monitored as part of DTC’s ongoing systems reliabilityanalysis and reporting.In the event that losses are incurred by the depository as the result ofoperational problems caused by systems or applications software packages orexternal data provided by vendors (third parties), DTC will pursue a claimagainst the vendor. If DTC’s claim is not fully satisfied, any remaining lossesnot covered by DTC’s insurance will be satisfied from DTC’s retained earningsor the Participants Fund.Attachments- 53 -EXHIBIT I

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5946- 16Ming the MechanicThe NewsLog of Flemming Funch

 The unknown 20 trillion dollar company 2003-10-30 17:3713 comments

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by Flemming Funch

There is a busy little private company you probably never have heard about, but which you should. Its name is the Depository Trust & Clearing Corporation. See their website. Looks pretty boring. Some kind of financial service thing, with a positive slogan and out there to make a little business. You can even get a job there. Now, go and take a look at their annual report. Starts with a nice litte Flash

presentation and has a nice message from the CEO. And take a look at the numbers. It turns out that this company holds 23 trillion dollars in assets, and had 917 trillion dollars worth of transactions in 2002. That's trillions, as in thousands of thousands of millions. 23,000,000,000,000 dollars in assets.

As it so turns out, it is not because DTCC has a nice website and says good things about saving their customers money that they are trusted with that kind of resources. Rather it is because they seem to have a monopoly on what they do. In brief, they process the vast majority of all stock transactions in the United States as well as for many other countries. And - and that's the real interesting part - 99% of all stocks in the U.S. appear to be legally owned by them.

In the old days, when you owned stocks you would have the stock certificates lying in your safe. And if you needed to trade them, you needed to get them shipped off to a broker. Nowadays that would be considered very cumbersome, and it would be impractical to invest via computer or over the phone. So the shortcut was invented that the broker would hold your stocks instead of you. And in order for him to legally be able to trade them for you, the stocks were placed under their "street name". I.e. they're in the name of the brokerage, but they're just holding them in trust and trading them for you. And you're in reality the beneficiary rather than the owner. Which is all fine and dandy if everything goes right. Now, it appears the rules were then changed so the brokers are not allowed any longer to put the stocks in their own name. Instead, what they typically do is to put the stocks into the name of "Cede and Company" or "Cede & Co" or some such variation. And the broker might tell you that it is just a fictitious name, and will explain why it is really more practical to do that than to put it in your name.

The problem with that is that it appears that Cede isn't just some dummy name, but an actual corporation that DTCC controls. And, well, if you ask anybody about this, who actually knows about it, they will naturally tell you that it is all a formality. To serve you better, of course. And, well, maybe it is. DTCC seems like a nice and friendly company. It is a private company, owned by the same people (major U.S. banks) who own the Federal Reserve Bank. And if they all stick to their job, and just keep the money and your stocks flowing smoothly, I'm sure that is all well and good. But if somebody at some point should decide otherwise, and there's a national U.S. emergency and/or the U.S. government becomes unable to pay its debts, well, they might just not give you your stocks back. Because legally they own them. Something to think about.

An fascinating article about this whole thing is here. I will include it at the bottom too, in case it should disappear. Not that I can vouch for or agree with everything the guy is saying, and some of it is a little whacko, but obviously he's been researching this quite a bit. You'll find very little about it on the net otherwise.

The Unknown $19 Trillion Depository Trust Company by Anthony Wayne

Part I of II

This exclusive report is a compilation of interviews and background research from October 1995 through April 1999.

The Depository Trust Company (DTC) is the best kept secret in America. Headquartered at 55 Water Street in New York City, the average American has no clue that this financial institution is the most powerful banking corporation in the world. The general public has no knowledge of what the DTC is or what they do. How can a private banking trust company hold assets of over $19 trillion and be unknown? In a recent press release dated April 19, 1999, the Depository Trust Company stated:

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The Depository Trust Company (DTC) is the world's largest securities depository, holding nearly $19 trillion in assets for its Participants and their customers.... Last year, DTC processed over 164 million book-entry deliveries valued at more than $77 trillion.

In dealing with the trust department of Midlantic Bank, N.A. in New Jersey [now PNC Bank, N.A.], this writer was authorized, as trustee and power of attorney, to transfer original trust assets comprising of common stocks and bonds to a new trust set up in another jurisdiction. An Assistant Vice President from the Trust & Financial Management Office of Midlantic Bank said to me "it will take at least 6 weeks to do this as the majority of the stocks and bonds are not held in the name of the trust". This same Midlantic Bank Assistant V.P. also stated in a letter dated November 17, 1995, "Of the 11 municipal bonds, 8 are held in book entry only. This means they cannot be physically re-registered with a certificate sent to the new trustees." (* these are not the actual figures quoted in the letter in order to protect the privacy of the account holder, at their request. Also, we were asked not to name the Midlantic Assistant V.P. in order to protect her privacy Rights. We respect these requests with full moral compliance). In disbelief, I brought this matter to the attention of our research assistants at the Christian Common Law Institute [formerly the North Bridge News] and we began our lengthy investigation into the matter. After 3 years, the can of worms we've opened up should frighten every American. With the advent of reported Y2K computer glitches and the possible collapse of our 'paper asset' economy, every person who has a stock or bond in their portfolio had better read this report and act on the information we are disclosing here.

In November 1995, after encountering numerous "no comments" and a myriad of "that's not my department" excuses via telephone, I eventually spoke with Mr. Jim McNeff who told me his position was Director of Training for the DTC. He said he'd been employed there for 19 years and was "very proud" of his employer. During my initial telephone interview, either Jim's employer or some other unknown person or persons were illegally listening or taping our telephone conversation according to the electronic eavesdropping equipment we have installed on our end. Why did anyone feel it was necessary to illegally record our conversation without advising us? Was some federal alphabet agency monitoring DTC calls to safeguard National Security? That in itself is suspicious enough to warrant a big red warning flag.

Jim informed me back then (1995) that "the DTC is the largest limited trust company in the world with assets of $ 9.1 trillion". In July 1998, I spoke with Ms. Rose Barnabic of the DTC Finance Department who said that "DTC assets are currently estimated at around $11 trillion". As of April 19, 1999, the DTC itself has stated that their assets total "nearly $19 trillion" (see above). Mr. McNeff had also stated "the DTC is a brokerage clearing firm and transfer center. We're a private bank for securities. We handle the book entry transactions for all banks and brokers. Every bank and brokerage firm must secure their membership with us in case they become insolvent, so your assets are secure with DTC". Yes, you read that correctly. The DTC is a private bank that processes every stock and bond (paper securities) for all U.S. banks and brokerage houses. The big question is this; Just who gave this private bank and trust company such a broad range of financial power and clout?

The reason the public doesn't know about DTC is that they're a privately owned depository bank for institutional and brokerage firms only. They process all of their book entry settlement transactions. Jim McNeff said "There's no need for the public to know about us... it's required by the Federal Reserve that DTC handle all transactions". The Federal Reserve Corporation, a/k/a The Federal Reserve System, is also a private company and is not an agency or department of our federal government, according to the 1998 Federal Registry. The Federal Reserve Board of Governors is listed, but they are not the owners. The Federal Reserve Board, headed by Mr. Alan Greenspan, is nothing more than a liaison advisory panel between the owners and the Federal Government. The FED, as they are more commonly called, mandates that the DTC process every securities transaction in the US. It's no wonder that the DTC (including the Participants Trust Company, now the Mortgage-Backed Securities Division of the DTC) is owned by the same stockholders as the Federal Reserve System. In other words, the Depository Trust Company is really just a 'front' or a division of the Federal Reserve System.

"DTC is 35.1% owned by the New York Stock Exchange on behalf of the Exchange's members. It is operated by a separate management and has an independent board of directors. It is a limited purpose trust company and is a unit of the Federal Reserve." -New York Stock Exchange, Inc.

Now, let's see how this effects the average working American family. If you're not aware how the system works,

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you should visit or call a stock broker or bank and instruct them you want to purchase some shares of common stock or a small municipal bond, for example. They will set up a brokerage account for you and act as your agent with full durable power of attorney (which you must legally sign over to them) to conduct business on your behalf, upon your buy or sell instructions. The broker will place your stock or bond purchase into their safekeeping under a "street name". According to Mr. McNeff of the DTC, no bank or broker can place any stock or bond into their firm's own name due to Federal Trade Commission (FTC) and Security and Exchange Commission (SEC) regulations.

The broker or bank must then send the transaction to the DTC for ledger posting or book entry settlement under mandate by the Federal Reserve System. Remember, since your bank or broker can't use their name on the certificate, they use a fictitious street name. "Since the DTC is a banking trust company, we can't hold the certificates in our name, so the DTC transfers the certificates to our own private holding company or nominee name." states Mr. McNeff. The DTC's private holding company or street name, as shown on certificates we have personally examined from numerous certificate holders, is shown as either "CEDE and Company", "Cede Company" or "Cede & Co". We have searched every source known to learn who CEDE really is, but have been unable to get any background information on them. Is Cede Company fictitious or is their identity perhaps a larger secret than DTC? We must presume that the information Mr. McNeff gave us was correct when he confirmed that Cede Company was a controlled private holding company of the DTC. We have now found the following proof that CEDE is real from the Bear Stearns internet site:

NEW YORK, New York - March 16, 1999 - Bear Stearns Finance LLC today announced that it will redeem all of the 6,000,000 outstanding 8.00% Exchangeable Preferred Income Cumulative Shares, Series A ("EPICS") of Bear Stearns Finance LLC, liquidation preference of $25.00 per Series A Share, CUSIP number G09198105. All of the Series A Shares are held by Cede & Co., as nominee of The Depository Trust Company, and the payment of the redemption price will be made to Cede & Co. by ChaseMellon Shareholder Services, LLC, as paying agent, whose address is: 85 Challenger Road, Ridgefield Park, New Jersey 07660.

The banks and brokers are merely custodians for their clients. By federal law (SEC), they cannot hold any assets in the customer's name. The assets must be held in the name of DTC's holding company, CEDE & Co. That's how DTC has more than $19 trillion dollars of assets in trust... or is it really in "trust" if the private Federal Reserve System is technically holding it in their "unknown" entity's name? Obviously, if stock and bond certificates you've purchased aren't in your name, then the "holder" (the Federal Reserve System) could theoretically refuse to surrender them back to you under a "national emergency" according to the Trading with the Enemy Act (as amended). Is this the collateral being held by the private Federal Reserve System to pay off the national debt owed to them by our federal government, first initiated by Lincoln's debt bonds of 1864?

According to Mr. McNeff, the DTC was a former member of the New York Stock Exchange (NYSE), and "Our sister company is the National Securities Clearing Corporation... the NSCC" (they have since merged). He was correct since we now know that the NYSE holds 35.1% of the "ownership" of the DTC on behalf of their NYSE members. Simply put, the Depository Trust Company absolutely controls every paper asset transaction in the United States as well as the majority of overseas transactions, and they now physically hold (as of April 1999) 99% of all stock and bond book-entrys in their street name, not the actual owner's names. If you have stock or bond certificates in your name buried in your back yard or under your mattress, we suggest you keep them there. If not, it might be very wise to cancel your brokerage account and power of attorney status, re-register the stocks and bonds in your name (if you still can), and keep them hidden where only you know their location. Otherwise, you have absolutely no control over them (see Part II of our exclusive research report on the DTC for more information on beneficial ownership status). However, getting a stock or bond certificate these days is not so easy if possible at all:

"For the most part, issuers know little about the role of the Depository Trust Company (DTC). The DTC was created in 1973 as a user-owned cooperative for post-trade settlement. Our members are banks and broker/dealers, whom we refer to as participants. We handle listed and unlisted equities, including 51,000 equity issues and 170,000 corporate debt issues, equating to more than 78% of shares outstanding on the New York Stock Exchange (NYSE). We also have more than 95% of all municipals on deposit.

In the 1980s, the "Group of 30" [business leaders] recommended that stock certificates be eliminated, because

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physical certificates create risk. The Securities Exchange Commission (SEC) issued a concept release in 1994 to gradually decrease certificates, providing optional direct registration on the books of the issuer instead of a certificate.... this enhances the portability of shares between transfer agents and brokerage accounts. With the direct registration system, brokers transmit instructions to purchase through DTC, which the issuer or transfer agent then registers, so shares can be delivered electronically." -John D. Faith, Manager, Corporate Trust Services, The Depository Trust Company (1996)

Now we're about to reveal to you the most shocking discovery we came across during our research into this matter. Most of us remember a few years back the purported computerized selling of stocks that resulted in Wall Street's "Black Monday":

Dow Dives 508.32 Points in Panic on Wall Street

"The largest stock-market drop in Wall Street history occurred on "Black Monday" -- October 19, 1987 -- when the Dow Jones Industrial Average plunged 508.32 points, losing 22.6% of its total value. That fall far surpassed the one-day loss of 12.9% that began the great stock market crash of 1929 and foreshadowed the Great Depression. The Dow's 1987 fall also triggered panic selling and similar drops in stock markets worldwide" -Source: Facts on File World News CD ROM

The stock exchanges had dramatic record losses, and a record volume of shares were traded on that infamous Monday in October 1987. We all asked ourselves how computers could have done this by themselves without someone knowing about it. After all, someone has to program a computer to tell it what to do, what not to do, or even when to do or not do it.

During my telephone conversation, Mr. McNeff was trying to assure me that they [the DTC] have "never lost a certificate or made a mistake in a book ledger transaction". In attempting to give me an example of how trustworthy the DTC is when I asked him how he could back up such a statement, he replied "DTC's first controlled test was 4 or 5 years ago. Do you remember Black Monday? There were 535 million transactions on Monday, and 400 million transactions on Tuesday". He was very proud to inform me that "DTC cleared every transaction without a single glitch!". Read these quotes again: He stated that Black Monday was a controlled test. Black Monday was a deliberately manipulated disaster for many Americans at the whim of a controlled test by the DTC.

What was the purpose of this test? Common sense tells you that you test something before you intend to use it. It's quite obvious that the stock markets are going to 'crash and burn' at some future date and for some 'unknown' reason since the controlled test was so successful. Was this just one of the planned tests for a Y2K internationally planned worldwide economic meltdown? The Great Depression is about to be repeated, and it will be as deliberate and manipulated as the first one that began with the stock market crash of 1929. We are, without a doubt, on the brink of the Mother of all economic Depressions. As of May 3, 1999, the Dow Jones Industrial Average (DJIA) went above a record 11,000 points. Just prior to the 1929 stock market crash, Wall Street was posting record prices, record earnings, and record profits.... just like the scenario we are experiencing today. Will Y2K be a manipulated and deliberate a financial meltdown? Too many facts already support this probability.

On June 7, 1995, the federal government issued a new regulation requiring stock and bond certificate transfers to be cleared in three days instead of the previous five day time period. It coincided with the infamous Regulation CC that purportedly gave us faster three day availability of funds from deposited checks. This means that brokers and banks must get your stock or bond transaction into the street name (Cede & Co.) of the DTC within 3 working days. That's hard to do considering banks claim it takes 3 or more days to clear a check that you've submitted to pay for a stock purchase. But, there's a reason for this new regulation and it coincides with the introduction of the new FRS "dollars".

On February 22, 1996, "the DTC will flip the switch" according to Mr. McNeff. "What switch?", I asked. "This is the day that clearing house funds will no longer be accepted for stock or bond transactions" was my reply from Jim. "Instead, only Fed Funds will be accepted". Fed Funds, or a Fedwire, are electronic computer ledger debit transfers between Federal Reserve System member banks. No checks or drafts have been allowed from that day, just as Mr. McNeff accurately stated. This is more commonly called a 'cashless transaction'. I call it the reality of the mark of the beast. This is the manifestation of the new international god, the New World Order [I prefer the term 'New

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World DISorder' as a more accurate description].

Consider this my fellow Christian Americans: All pension funds and other institutional 'managed funds' are comprised of paper asset investments such as stocks, bonds, and mutual funds. These certificates are technically in the name of DTC's private holding company, CEDE and Company. The DTC is owned by the private Federal Reserve System owners (Click for a complete list of names). Congress has attempted, on no less than two occasions since 1995, to pass legislation allowing pension funds to be used by the government as purported 'loans'. All the Federal Reserve System has to do is hand it over. But, what happens to the people counting on those pension fund investments in order to feed themselves in their retirement? Too bad for them.... they're out of luck because for the 'good of the nation', they may be forced to share or relinquish their lifetime of hard-earned wealth. This can be done without the consent of Congress under an Executive Order based on the War and Emergency Powers Act and a state of National Emergency, just like we are already under (See further Executive Orders). Since the Federal Reserve System already holds our stocks and bonds in their fictitious DTC "street name", CEDE, then perhaps they'll cash them in for the federal government's failure to repay the loans that have become way overdue. Heck, some of Lincoln's gold backed bonds from 1864 have not been repaid yet.... and for a reason.

On March 6, 1933, all bullion gold and gold coins were forcibly taken from the hands of private citizens (see New York Times). Under the War Powers Act, President Roosevelt declared a national emergency touted as a "Banking Holiday". It was declared due to the deliberately calculated stock market crash that preceded the Great Depression. Where did this gold end up? Into the hands of the Federal Reserve System owners. The majority is stored in the impervious rock vaults they own beneath New York City. Is it any surprise that the DTC physically holds all the remaining non-book entry issued stock and bond certificates in the same place?

Technically, our entire nation is still under the Executive Order declaration of the War Powers Act and in a continual state of national emergency (See Clinton's 1994 Executive Order 12919). The President can enforce any new emergency at any time under Executive Order or Presidential Directive. In 1995, we [the former North Bridge News] published that we expected a new national "dollar" emergency to be declared within a year or two. Just like we thought at the time, they have now blamed it on the purported drug dealers who are allegedly destroying our currency by money laundering schemes.

Since late 1996, old U.S. $100 FRB notes issued by the Federal Reserve Bank are being exchanged for new $100 FRS issued by the Federal Reserve System. These new notes have scanable magnetic platinum encryption on the plastic strips embedded inside the bills. The U.S. Treasury claims this is for "the blind". Now, new $20 and $50 FRS's are replacing the older notes as well. What people don't realize is that very soon, the older FRB notes will no longer be 'legal' and there will be a penalty for hoarding them. This is what happened to those Americans holding gold and gold coins after 1933.

"We are most gratified with the successful introduction of the new $100 and $50 notes and look forward to the same success with the new $20s," Chairman Greenspan said. For the first time, a machine-readable capability has been incorporated for the blind. A new feature in the $20 will facilitate the development of convenient scanning devices that could identify the note as a $20. -U.S. Treasury, Office of Public Affairs, RR-2449 released May 20, 1998.

Why new paper 'money' and for what purpose? Because the new FRS notes in your pocket can be scanned and whoever scans them can know exactly how much money you have on you. The older FRB notes are not encoded to do this. This writer knows firsthand of at least one machine, manufactured by Diebold, Inc. (a/k/a InterBold) that scans the money in your pockets, wallet or purse no different in theory than a credit card scanner, but much more sophisticated. I participated in a 'test' of this machine at a U.S. international airport in 1998. To me, it looks much like the standard metal detector scanners you walk through at all airports. I was asked (by who I believe was a U.S. Treasury Agent, as he introduced himself and flashed his ID quickly in my face so I couldn't read it) if I had any of the new $100 or $50 bills in my pockets. I looked in my wallet and saw I had one new $100 FRS note. I told him "yes", then he said "Good, but don't tell me how much". After saying he would "really appreciate it" if I would help them with a test, he asked me to walk through what looked like a typical airport scanner. No beeps. No noise. No sound at all. He looked at a computer screen and said "Do you have a new $100 bill?". When I confirmed that was true, he thanked me and told me to please move on. I tried to ask him how the machine knew that, but he ignored my question. I took a good look at the scanning system and believe I have now spotted them at Kennedy, Atlanta,

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Miami and Los Angeles airports.

The odd part about this is that these machines seem to all be located in the customs areas where you enter the U.S. from a foreign country. Obviously, they want to know if someone is carrying more than $10,000 into the U.S. Common sense dictates that they should be more concerned about people leaving with more than $10,000 if they're really trying to thwart the drug dealers.... until you begin to realize that there must be some other hidden agenda: They are apparently going to stop money from entering the U.S. for a reason.

Will the President call for the confiscation of all gold bullion and bullion coins as Roosevelt did? Who will end up with it? The Federal Reserve System owners, just like before. Since June 1998, international gold supplies have been so low that some private Swiss Banks have been paying a premium above the market wholesale value for gold bullion. This was confirmed to us by a gold and diamond mining Chief Executive from Rex Mining in Guinea, West Africa, who supplies raw gold to a major Swiss Banking company smelter and processor The spot gold market has been manipulated to keep the price low so that the Federal Reserve System owners can purchase all that is available through their various trusts and corporations. World gold availability on the open market is now at a record low and mining production of gold is also at a record low output.

What happened to 'supply and demand' with gold and silver? Normally, when supply is high the price decreases. When supply is low, precious metal prices increase. Perhaps the private FED will peg the new dollar to gold prices, as many experts have already speculated. What will stocks and bonds purchased with old dollars be worth then? Pennies to the dollar, so to speak. Who ends up being the only winner? The Federal Reserve System stockholders. They control the circulation amounts of paper money in the U.S. Combine that with the new scanner to stop large amounts from entering into the U.S., and the scenario amounts to a planned shortage of paper FRS notes, the banning of the older FRB notes, and the soon to be astronomical price of gold which most Americans will be forbidden to have or hoard, once again. The facts we've presented in this report all point to this.

People will be at the mercy of the federal government for daily food and for jobs. Checks are soon to be totally phased out. Banks issue ATM debit cards and tell you they must charge more for your account if you use a real live human teller instead of the machine. The switch is being turned on. This is not speculation. This is the truth of reality. It's already been tested, and their new system works. Just ask Jim McNeff of the DTC.

The day has come when you must decide to accept or reject the beast and the New World Disorder.

Part II of II-

You don't own your Stocks....or any of your Bonds...The Depository Trust Company does. by Anthony Wayne

In Part I of this series, excerpts of which were first published in November 1995 by the former North Bridge News, we exposed The Depository Trust Company (DTC) as the Unknown $ 9.1 Trillion Company. It appears that our startling discoveries of the inner-workings of the DTC had only scratched the surface. We'd like to add more fuel to this blazing fire by further exposing the DTC and those behind it.

The Depository Trust Company has grown since October 1995. On July 1998, this amount was estimated by a DTC employee at more than $11 Trillion. As of April 19, 1999, the DTC itself has stated in a press release that their asset value is nearly $19 trillion. In 3 1/2 years, their assets increased nearly $ 10 Trillion. That's a lot of stocks and bonds supposedly held in trust. The latest trend over the past ten years is for stock and bond brokers to offer "book-entry ownership" only. Every book-entry stock or bond is literally owned by the DTC. Since 1985, most bond and many stock issuers have converted from the issuance of certificates to book-entry systems administered and controlled by the DTC. As of March 1999, the National Securities Clearing Corporation (NSCC) and the Participants Trust Company (PTC) are now merged into the DTC. Practically, there isn't one stock or bond issued that is not controlled by the DTC.

If you purchase any stock or bond through a broker, it is being held for you under a "street name" by the DTC

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unless you have specifically requested to hold the certificate yourself. If you have a book entry stock or bond, you won't be issued a certificate. It's important to note that you have purchased that particular stock or bond without becoming a registered holder of the actual stock or bond certificate. Instead, you have become a beneficial owner. The difference between the two is like night and day. Take the time to absorb and understand the following definitions:

REGISTERED HOLDER- A Registered Holder literally possesses, owns, and holds, his stock or bond with his name appearing on the face of the certificate. The company that issued the certificate has registered the owner's (holder's) name on their official books. This is the safest way to own a paper asset. You literally possess the fully registered certificate and only you can transfer or sell it. By all Rights and definition of law, you are the owner. You have it, you hold it, you possess it, and you keep it. You have the complete control over it.

BENEFICIAL OWNER- A Beneficial Owner is nothing more than a beneficiary, "One who is entitled to the benefit of a contract"- A Dictionary of Law, 1893. All book-entry stocks and bonds you purchase make you the beneficial owner, not the registered holder. The owner of a book-entry stock or bond is the entity or name that it is registered under.

The DTC owns that bond or stock, not you. Rather than in your name, it's registered (as the legal Registered Owner or agent) in their "street name", Cede & Company. (In the past, it may have been registered in your broker's street name, but this is no longer allowed). The DTC is the Registered Owner - holder - of your stock or bond. The DTC is the legal property-holder, share-holder, stock-holder, owner and purchaser. Your name appears nowhere on the book entry or certificate as the actual owner. Instead, you have been designated by the legal registered owner, the DTC, as the Beneficial Owner. This means that your lawful Rights in that stock or bond are confined to that of a successor or heir.

At the University of Utah College of Law, we found the following examination question about Cede & Co.:

The common stock of LargeCo, Inc. is publicly traded on the New York Stock Exchange. Over 2/3rds of the shares are registered on LargeCo's books in the name of Cede & Co. Cede is a depository company which holds the shares as nominee on behalf of brokerage firms, mutual funds and other active traders. The brokerage firms in turn are also nominees with respect to some of the shares, which they hold on behalf of their customers. Nominees, such as Cede and brokerage firms holding for customers, view the customer as the beneficial owner of the shares and consider the customer to be the one with the right to vote the shares; mutual funds, however, view the fund as the owner of the shares it holds and vote the shares themselves.

Most of the remainder of LargeCo's stock (26% of the total) is held by the Large family, which is still actively involved in management. LargeCo is aware that the beneficial owner of about half the stock registered in Cede's name is the Small family, who live next door to the Larges in downtown Rome, and that the remainder of the Cede stock is beneficially owned by several well known mutual funds.

According to the DTC, under the US Security and Exchange Commission (SEC) rules, you only have the right to "receive proceeds or other advantages as the beneficiary". You are not the owner... you are the consignee, "One who has deposited with a third person an article of property for the benefit of a creditor"- A Dictionary of Law, 1893. In legal terms, you are considered the heir presumptive or heir at law to the stock or bond you paid for. The DTC controls, possesses as creditor, holds and owns your book-entry stock or bond. This is a difficult pill to swallow for those who have placed their assets in stocks and bonds over the past decade. Your broker sends you a fancy accounting every month of your purported holdings, along with dividend and interest payments paid. The fact is, you only receive the benefit of ownership (interest and dividends) without holding title to your property. You are at the mercy of the registered owner, the DTC. If you don't believe this is true, then call your broker right now and ask them who's name is listed as the Registered Holder of your book-entry stocks and bonds. If you're lucky, the broker will tell you "why of course you're the Beneficial Owner", then you'll know the truth. He may emphasize to you that the stocks and bonds are being held in "safe keeping" for your own protection. This is broker language for "your stocks and bonds are held by the DTC in their street name as the creditor".

From J.P. Morgan's internet site:

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Registered and beneficial shareholders

There are two types of shareholders: registered, who hold an ADR in physical form, and beneficial, whose ADRs are held by third-parties and are listed under a "nominee" or "street" name.

Registered shareholders are listed directly with the issuer or its U.S. transfer agent. The transfer agent handles the record-keeping associated with changes in share ownership, distribution of dividend payments, and investor inquiries; it also facilitates annual meetings. An issuer's depositary bank can provide the identities of registered shareholders on a regular basis. However, this may not provide the level of shareholder identification required for a successful investor relations effort. Registered shareholders are typically individual investors who have physical possession of their share certificates, generally in lots of 100 shares or fewer. The registered list also includes nominee names such as Cede & Co., which represent the aggregate position of the Depository Trust Company (DTC), the primary safekeeping, clearing, and settlement organization for securities traded in the United States. DTC uses electronic book-entry to facilitate settlement and custody rather than the physical delivery of certificates.

Beneficial shareholders, which can include individual as well as institutional investors, do not have physical possession of their certificates; third-party broker-dealers or custodian banks hold their securities on their behalf. These shares are said to be held in street name because they are kept with the DTC in the name of the broker-dealer or the custodian bank - not the underlying shareholder. Lists of beneficial shareholders who do not object to disclosing their holdings are available from banks and broker-dealers. These lists, called NOBO for Non-Objecting Beneficial Owner, typically provide the names of individual investors.

To help identify institutional investors, who do not usually disclose their holdings, issuers use publicly available filings. Large holders, including investment managers, are required to make periodic filings - such as 13-F, 13-G, and 13-D - with the Securities and Exchange Commission (SEC) disclosing the name and value of the positions in their portfolios.

Which brings us to the street name used, registered, and designated by the DTC as the registered owner of over $19 Trillion (USD) of our stocks and bonds... CEDE & Co. Everyone in the brokerage business keeps pronouncing this name as "See Dee" and Company, but it's spelled C-E-D-E and pronounced "Seed". This is where the real irony comes.

According to Black's Law Dictionary, Sixth Edition, 1990, the word Cede is defined as "To yield up; to assign; to grant; to surrender; to withdraw. Generally used to designate the transfer of territory from one government to another". In the Black's 1951 Fourth Edition, it lists the following as supportive case law; Goetze v. United States, C.C.N.Y., 103 Fed. 72.

Have you made the connection yet? Your book-entry stocks and bonds and all stock and bond certificates purchased through your broker and held by them under your brokerage account are owned by CEDE & COMPANY (the DTC) as the registered owner. You have surrendered, assigned and granted ownership to someone else other than yourself. Their name says it all.

How ironic and sarcastic can they be?

"CEDE- To surrender possession of, especially by treaty. See Synonyms at 'relinquish'." -American Heritage Dictionary of the English Language, 3rd Edition of 1992

If Americans had any idea that they have relinquished the lawful ownership of their stocks and bonds to someone or something else, there would be a revolution. In a sense, that's why we are exposing this paper asset scam to you. The point is, now that you know the truth, do something about it and get your assets back into your name.

Our suggestion to you is this: If you don't literally have every stock and bond registered certificate in your possession, then promptly call your broker and tell him you want all your securities transferred and re-registered into your name as the Registered Holder and Owner. If he says he can't do that because your stock or bond is a book-entry transaction only, we strongly suggest, for your own security, that you sell your book-entry assets

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immediately. Don't let the broker tell you that it's "safer" for you if they keep your certificates. Remember, you know the truth. Even if all your stock and bond certificates were burned in a fire, the process to have them replaced is simple. If someone were to steal your certificates, you simply report them stolen to the company that issued them and they're automatically cancelled, just like a stolen credit card. Replacement certificates are then issued to replace the lost or stolen originals.

Most people don't realize that when they open a brokerage account, they have entered into an contractural agreement allowing the broker to assign the stocks and bonds to an undisclosed creditor, the DTC. (We suggest you read the small print on your brokerage agreement). This gives the broker your express written permission to place all your securities into the ownership of the DTC. Your broker is an agent for the DTC through mandatory Securities and Exchange Commission regulations and mandates by the Federal Reserve System private bank. Your broker represents them, not you. Your brokerage account is nothing more than a ledger of accounting. It reflects no assets held in your name. The assets are registered in a "street name" that is not you or your name. Sure.... you receive the interest and dividends, but you do so as a beneficiary to the real owner. Your brokerage account in no way, shape, or manner reflects who literally owns your securities. What you own is a brokerage account and nothing more.

A greater consideration is just exactly who does the DTC hold these securities for? As the owner, who has the DTC pledged these securities to? Our research points to the Federal Reserve System, an international private banking cartel with major offices found in Moscow, London, Tokyo, and Peking. By treaty with the United Nations and in compliance with the Bretton Woods Agreement, the DTC under regulation of the Federal Reserve System has pledged all those stocks and bonds to the International Monetary Fund (IMF). These are the same paper securities found in your IRA and pension fund accounts, as well as in your brokerage account. Remember, you don't own them.... you're just a beneficiary.

The truth is, the securities you purchased and paid for with your hard earned money is collateral for the United Nations which is backed by the Federal Reserve System and it's associated agencies, such as the International Monetary Fund. Is it any wonder that the UN can operate year after year with increasing budgets, but without sufficient funds? The UN has nearly $19 Trillion of backing and reserves, thanks to millions of duped Americans. We are financing the New World Dis-Order with our stocks and bonds.

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13 comments

31 Oct 2003 @ 14:33 by waalstraat : The way I see itDTC is merely stocking up for our falling.............  

31 Oct 2003 @ 17:44 by koravya : Thanks for this InfoI appreciate it, and so the Economics students I share it with. Clearly, we all need to know what kind of scenario we may be looking forward to.  

6 Nov 2003 @ 09:14 by Stefanti @80.137.195.30 : WeakThe more I learn about the "free" global economy over the years, the more unbelievable it looks and the more weaker I feel. What to do with the information now? Sell the few shares I hold? This sort of information makes long term planning increasingly difficult.

Stefan Thiesen  

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6 Nov 2003 @ 14:17 by ming : InvestingWell, if the little secret mentioned above actually resulted in all stocks being confiscated, the world economy would crash. So, I don't really think that's what anybody has in mind. More likely it is being used as a collateral. So, I wouldn't really change my investment habits based on this. Diversification is always good, of course, so don't just have stocks.  

10 Nov 2003 @ 03:13 by Stefanti @80.137.206.87 : InvestingWell Ming - what I mean also is that by simply buying stocks, we all seem to hand over incredible power to an organization of tremendous size and with totally dubious goals and no democratic legitimation whatsoever.  

10 Nov 2003 @ 05:29 by ming : Handing over powerYeah, but it is worse than that. By just using national currencies for anything whatsoever we all hand over incredible power to essentially the same unelected bunch of people. So, if we are to create an alternative, it would have to cover most aspects of what we need, or you'll just be feeding another arm of the same monster. We'd need an economic system that isn't tied in at all with dollars and the stock market and banks, but that would fill the same needs that are met for us from those. I.e. an easy way of gathering and transporting and storing and exchanging tokens of value. And that is not as unlikely a battle as it might seem. If somebody came up with some expanded PayPal type of scheme that really worked better than the alternatives, and which we could trust, and which was anchored into different bedrock, lots of people wouldn't look back at all.  

22 Dec 2003 @ 14:11 by tony @68.14.28.235 : dtc/cedeBank deposits appear to be similar to stock "deposits" with cede. Check your state laws. For instance, in MA, funds on general deposit in a bank are the property of the bank. The bank account is the property of the depositor, and the relationship between the depositor and the bank is that of creditor to debtor. If you have your property in the hands of a third party, the third party might unlawfully (without a court order) deprive you of your asset. Of course you can then sue them, if you can still afford to do so!  

26 Jun 2004 @ 15:02 by hscott @68.52.209.126 : Trying to verifyI checked out the DTC annual report and cannot find the numbers you suggest. Their Asset column for 2002 shows $17.9 Billion NOT $23 Trillion as you state. And the Liability column shows approximately the same value, which would make sense if they are holding securities in trust.

Where exactly did you get the $23 Trillion dollar number?  

26 Jun 2004 @ 16:05 by ming : VerificationGlad you're checking it out. Well, part of the trick is that DTC (which handles stock transfers) is a separate company from CEDE (which is the legal owner), but CEDE is a wholly owned subsidiary. The way I understand it. But let me see again where I found the number ... Yeah, the document called DTC Consolidated Financial Statements shows 17.9 billion in assets. I think it was the annual report. Which has changed since last year and now shows the 2003 report. ... So, it says its subsidiaries settled transactions worth $923 trillion, and it says that values of securities on deposit is 24.6 trillion, which sounds like that 23 trillion number for 2003 rather than 2002. Hm, I do seem to remember them saying it more directly, and using the word "assets". But it was in a somewhat promotional piece (like the annual report), where they were bragging about it, rather than in their actual financial statement.

Anyway, a key to the argument is what the relation is between DTC and CEDE. If DTC owns CEDE and CEDE legally owns those now 24.6 trillion - that's what's remarkable. Even if everybody involved will say that "oh, it is just a formality, and of course it really is the stock holders' stocks". Oh, even if they didn't own them, it should be major news that they're even holding that amount of stocks for anybody. But the truly earth-shattering part would be the CEDE part.

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Unfortunately, the relationship between DTC and CEDE, or even the factual existence of CEDE, is based on heresay and rumors. I.e. I haven't seen any documentation of it. And obviously DTC don't even mention CEDE as far as I can see.

Even if they do own CEDE, and CEDE does own all the stocks, I don't find it surprising that they can get away with ignoring it in their actual financial statement. If the auditors even knew that, they would probably be quite content with the explanation that, oh, it is just stuff we're temporarily holding, and it is of course all the customer's money. All seems logical and reasonable. Except for that it isn't, if the legal reality, when it comes down to it, is that they own it and the customers don't.  

28 Jun 2004 @ 09:38 by hscott @68.52.209.126 : re: verificationI understand your concern but from a pure accounting perspective the $23 trillion dollars in assets would be offset by exactly the amount in liabilities such that in terms of book value its a wash. Neither company is "worth" $23 trillion. This facility is absolutely necessary in order to have a liquid marketplace and that liquidity is a big portion of the grease that keeps the machine of our economy moving. The best thing that could be done to stabalize the markets and defend us from bubbles that ultimately burst would be to eliminate the taxation of dividends. If all companies paid dividends, that would be a throttle switch which prevents irrational pricing. PE ratios would be held in check by Dividend Yeilds because stockholders would have two sources of value, the equity value of the stock AND the stream of cash flows from dividends. The lack of dividends by most companies is what creates upward price pressure beyond a rational valuation of a company because that's the only way a person can make a return in the markets. Every trade has a seller who think the stock is capped out and a buyer who thinks it has upside potential.  

28 Jun 2004 @ 14:07 by ming : EconomyIt is probably very useful to have mechanisms like that in the economy. And, I'm sure, normal proper accounting wouldn't count the $23 trillion as an asset, even if it is in CEDE's name some or all of the time. For most people it matters not very much if CEDE owns their stocks, because they let you trade them and get the money. A bit like how most everything else works in the money system. You put your money in the bank without much hesitation, because you expect that you can use it when you feel like it, and most of the time you can. You trust the paper money others give you, even though it is only pieces of paper, because you expect them to convert to stuff you want, any time.

But it can also get to look a bit like musical chairs. It is no problem at all as long as the music keeps playing. We hope it doesn't stop, and maybe it won't. But if it does, one might suddenly become painfully aware of a lot of small print one didn't pay attention to. Like that one's stocks are owned by somebody else. And I understand that it works in a very similar way the ownership of real estate and of motor vehicles. I'll have to write about that some other time. But, essentially, unless you have a land patent on your land, it is really owned by a government agency. Which gracefully lets you live there and use it and act like you're buying and selling it. Likewise with a car. There's a certain piece of paper that most people don't know about that the factory sends to the government, unless you insist that they don't and give it to you instead. Which legally (again, just as a formality, to serve you better) gives the government the ownership, so they can then issue you a pink slip which gives you the right to use it, including the ability to transfer that right to somebody else (=selling it).  

30 Nov 2004 @ 18:03 by Kent @63.85.201.10 : Necessity? Any accountability to me?hscott said: "This facility is absolutely necessary in order to have a liquid marketplace and that liquidity is a big portion of the grease that keeps the machine of our economy moving."

Let's assume your premise is correct; does the need also justify ignoring individual investors (me)? While I am not "old", I have been around long enough to know when something is not on the up-and-up. Why avoid me?

This clearinghouse has no advocates for the individual investor. Its secondary reason for existence has become that of feeding the financial community whose livelyhood depends upon betting on the future values of stock. Translation: it benefits those who expect something for nothing.

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See my link above for my frustrating trial with this "necessary facility".  

21 Dec 2004 @ 18:42 by di @66.139.39.158 : other trillion companies?What information! Thank you for all of the details.  

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  opentopiaUCC is not law. Three elements of law Rules and Regulations, Authority, Control. Article 1 is General Provisions. Article 2 Sales, Article 3 Negotiable Instruments. Article 4 is Bank Collections. Article 5 Letters of Credit, Article 8 Investment or Entitlement Securities. There has to be a sale or contract under Article 2 before there is a secured interest. Title 22 section 286, U.S. became member of IMF [International Monetary Fund]. Under Buck Act all States became an arm of the United States Government. Agreements are implied, remedies are written. Understand comes from the old French word which means to stand under. Bank commits deceptive trade practices by pretending to lend you there Capital and Interest or money. Law is remedy. Claims court is where common law is. Entitlement Rights under Article 8 are Four major issues to understand under code as ascertained by Professor Grant Gilmore who wrote the book, the law of admiralty and Article 9 and they are 1.) Attachment 2.) Control 3.) Perfection and 4.) Enforcement. Must be a Creditor and Debtor. Debtor has Entitlement Rights. Debtor had to have right, title, and interest in order to pass it to secured party or creditor. If bank claims ownership, where did they get ownership ?, it had to be sold to them by debtor. When Did bank tell you that you were selling them note ? What did they give to you for note ? Did I, just give you the note so I could get a loan of Capital and Interest ? Debtor is defined in Article 9-102 (28) “(A) as a person having an interest [ownership], other than a security interest or other lien, in the collateral, whether or not the person is an obligor.” Organic Act of 1871 created District of Columbia and Bureau of Vital Statistics, where the Birth Certificate is registered is an agency of District of Columbia or United States. Consent comes from Accord. Attachment is the most aspect of UCC. Perfection equals filing. Filing Makes security agreement public filing. Entitlement is only valid if value has been given. If the Bank gave value where did they get it from ? Debtor collector must have entitlement rights in order to collect a debt. Possession is subject to provisions of Article 4-210. In order to have attachment rights they must be seller. 1.) Perfection [Attachment] 2.) Possession 3.) Control [Attachment] 4.) Priority [who is first ?] Attachment is paramount.

Article 9-102 (29) “Deposit account” means a demand, time, savings, passbook, or similar account maintained with a bank. The term does not include investment property or accounts evidenced by an instrument. Signed shows intent. 1-201 (370). Who has first control and attachment ?. The Debtor does.

1.) Attachment

2.) Entitlement

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3.) Control

4.) Priority

They have to prove there case or claim. You have to use cut off rule. Priority rule is purchaser or bill of sale, which gives attachment rights. Promissory Note is order for payment, there is no sale agreement. Article 3 is governed by Article 4. Promissory Note is order to pay.

Article 4A 104 (c) defines payment order “Originator” means the sender of the first payment order in a funds transfer.

Security Intermediary is Bank.

3-105. Issue of Instrument.

(a) “Issue” means the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.

(b)

How are you entitled to stand here as the Plaintiff ? How can you have a lien on something that was never sold ?

Loan Originator Will the real bank please stand up ?

All Banks are nothing but a servicer or laundering machine and not Lenders, they are under a pooling and service agreement through a parent Trust Company for transferred Certificated Securities [also known as promissory notes] from you as the Originator under Article 4A-104 of U.C.C. [means the sender of the first payment order in a funds transfer] or Issue under 3-105 (a) of the U.C.C. being ” the first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person” and 3-105 (c) “Issuer” issued and unissued instruments and means a maker or drawer of an instrument.” Under 4-102 Applicability (a) “To the extent that items [commercial paper] within this Article are also within Articles 3 and 8, they are subject to those Articles. If there is a conflict, this Article governs Article 3, but Article 8 [Investment Securities] governs this Article.” All banks file a Registration Statement Form S-3 under the Securities Act of 1933 with the Commodity & Securities Exchange, this form under Exhibit 4.3 states “UNLESS AND UNTIL IT [PROMISSORY NOTE] IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY [55 WATER STREET, NEW YORK, NEW YORK] TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF BANK ONE CORPORATION AND ARE NOT INSURED

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BY THE FEDERAL DEPOSITORY INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY GOVERNMENTAL AGENCY.

Under an indenture agreement the bank is to make interest payments at maturity on the principal to the person in whose name the note or one or more predecessor Securities is registered at the close of business on the Regular Record Date for such interest. Any such interest not punctually paid or duly provided for shall forthwith cease to be payable to the holder on such Regular Record Date and may either be paid to the person in whose name this note [or one or more Predecessor Securities] is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities. The word lender is defined in Mortgage Banking terms from the Mortgage Bankers Association as a “person or entity that originates mortgage loans.” This is a reiteration of section 4A104 (c).

The Investment Company Act of 1940 section 8 (a) requires all investment companies organized or created under the laws of the United States to register with the Securities Exchange Commission by filing a Notification of Registration Form N-8A. For purposes of the Act, unincorporated investment organizations, such as trusts, funds, or any organized groups of persons, are regarded as distinct entities. In such cases it is the trust, the fund or other unincorporated entity must file an individual notification of registration. This is true even though such entities have been created under and pursuant to the same indenture of trust or contract of custodianship, or have the same corporate trustee, investment adviser, manager depositor, or distributor of their securities.

Attention is further directed to the fact that a trust or other form of organization which issues periodic payment plan certificates and the assets of which are securities issued by an investment company is itself an investment company, and has such must file a notification of registration independent of that of the investment company the securities of which constitute its assets. Investment Companies must also file a FORM S-3 REGISTRATION STATEMENT under section 12 of the Commodities Securities Exchange Act of 1934 as amended.

3-105 (a) “Issue” means the first delivery of an instrument by the marker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person.

(c) “Issuer” applies to issued and unissued instruments and means a maker or drawer of an instrument.

4A104. Funds Transfer-Definitions

In this Article:

(a) “Funds transfer” means the series of transactions, beginning with the originator’s payment order, made for the purpose of making payment to the beneficiary of the order. The term includes any payment order

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issued by the originator’s bank or an intermediary bank intended to carry out the originator’s payment order. A funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order.

(b) “Intermediary bank” means a receiving bank other than the originator’s bank or the beneficiary’s bank.

(c) “Originator” means the sender of the first payment order in a funds transfer.

(d) “Originator bank” means (i) the receiving bank to which the payment order of the originator is issued if the originator is not a bank, or (ii) the originator if the originator is a bank.

Issuer is defined in the Securities Exchange Act of 1933 section 2 (4) as every person who issues or proposes to issue any security; except with respect to certificates of deposit, voting-trust certificates, or

collateral-trust certificates, or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors (or persons performing similar functioning) or of the

fixed, restricted management, or unit type, the term “issuer” the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other

agreement or instrument under which such securities are issued; except that in the case of an unincorporated association which provides by its articles for limited liability of any or all of its members,

or in the case of a trust, committee or other legal entity; except that with respect to equipment-trust certificates or like securities, the term “issuer” means the person by whom the equipment or property is to be used; and except that with respect to fractional undivided interests in oil, gas, or such right or of any interest in such right (whether whole or fractional) who creates fractional interests therein for the

purpose of public offering.

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