TRUST AGREEMENT
TRUST AGREEMENT, between MSDW Structured Asset Corp. (the
"Depositor") and LaSalle Bank National Association (the "Trustee"), made as of
the date set forth in Schedule I attached hereto, which Schedule together with
Schedules II and III attached hereto, are made a part hereof and are hereinafter
referred to collectively as the "Terms Schedule". The terms of the Standard
Terms for Trust Agreements, dated July 7, 1999 (the "Standard Terms") are,
except to the extent otherwise expressly stated, hereby incorporated by
reference herein in their entirety with the same force and effect as though set
forth herein. Capitalized terms used herein and not defined shall have the
meanings defined in the Standard Terms. References to "herein", "hereunder",
"this Trust Agreement" and the like shall include the Terms Schedule attached
hereto and the Standard Terms so incorporated by reference.
WHEREAS, the Depositor and the Trustee desire to establish the
Trust identified in Schedule I attached hereto (the "Trust") for the primary
purposes of (i) holding the Securities, (ii) entering into any Swap Agreement
with the Swap Counterparty and (iii) issuing the Units;
WHEREAS, the Depositor desires that the respective beneficial
interests in the Trust be divided into transferable fractional shares, such
shares to be represented by the Units; and
WHEREAS, the Depositor desires to appoint the Trustee as
trustee of the Trust and the Trustee desires to accept such appointment;
WHEREAS, the Depositor shall transfer, convey and assign to
the Trust without recourse, and the Trust shall acquire, all of the Depositor's
right, title and interest in and under the Securities and other property
identified in Schedule II to the Trust Agreement (the "Trust Property"); and
WHEREAS, the Trust agrees to acquire the Trust Property
specified herein in consideration for Units having an initial Unit Principal
Balance identified in Schedule I attached hereto, subject to the terms and
conditions specified in the Trust Agreement;
NOW THEREFORE, the Depositor hereby appoints the Trustee as
trustee hereunder and hereby requests the Trustee to receive the Securities from
the Depositor and to issue in accordance with the instructions of the Depositor
Units having the terms specified in Schedule I attached hereto, and the Trustee
accepts such appointment and, for itself and its successors and assigns, hereby
declares that it shall hold all the estate, right, title and interest in any
property contributed to the trust account established hereunder (except property
to be applied to the payment or reimbursement of or by the Trustee for any fees
or expenses which under the terms hereof is to be so applied) in trust for the
benefit of all present and future Holders of the fractional shares of beneficial
interest issued hereunder, namely, the Unitholders, and subject to the terms and
provisions hereof and of the Standard Terms.
IN WITNESS WHEREOF, each of the undersigned has executed this
instrument as of the date set forth in the Terms Schedule attached hereto.
LASALLE BANK NATIONAL ASSOCIATION
as Trustee on behalf of the Trust identified in Schedule
I hereto, and not in its individual capacity
By: /s/ Brian D. Ames
-------------------------------
Name: Brian D. Ames
Title: Vice President
MSDW STRUCTURED ASSET CORP.
By: /s/ John Kehoe
-------------------------------
Name: John Kehoe
Title: Vice President
Attachments: Terms Schedule (consisting of Schedules I, II and III)
I-7
I-1
Schedule I
(Terms of Trust and Units)
Trust: SATURNS Trust No. 2002-5
Date of Trust Agreement: May 14, 2002
Trustee: LaSalle Bank National Association.
References to Chase Bank of Texas,
National Association in the Standard
Terms shall be inapplicable.
Initial Unit Principal Balance: $25,792,500
Issue Price: 100%
Number of Units: 1,031,700 (Unit Principal Balance of
$25 each)
Minimum Denomination: $25 and $25 increments in excess
thereof. The minimum denomination
specified in Section 5.01(a) of the
Standard Terms shall not apply. Each
$25 of Unit Principal Balance is a
Unit.
Cut-off Date: May 14, 2002
Closing Date: May 14, 2002
Specified Currency: United States dollars
Business Day: New York, New York and Chicago,
Illinois
Interest Rate: 8.25% per annum on the basis of a
360 day year consisting of twelve 30
day months. During an extension
period with respect to the
Securities, while interest will
continue to accrue on the Unit
Principal Balance at 8.25% per
annum, interest will accrue on any
deferred interest at a rate equal to
the rate at which interest accrues
on deferred interest with respect to
the Securities.
Interest Reset Period: Not Applicable
Rating: Baa2 by Moody's
BBB- by S&P
Rating Agencies: Moody's and S&P
Scheduled Final Distribution Date: July 15, 2037. The Units will have
the same final maturity as the
Securities.
Prepayment/Redemption: The Trust Property is subject to
redemption in accordance with the
terms of the Securities and as
described in Schedule II and is
subject to liquidation upon exercise
of the call rights specified in
Schedule III. Any such redemption or
exercise of the call rights will
cause a redemption of a
corresponding portion of the Units.
If the call rights under the Swap
Agreement are partially exercised or
if there is a partial redemption of
the Securities, the Trustee will
randomly select Units to be redeemed
in full from the proceeds of such
partial exercise of the Swap
Agreement or partial redemption of
the Securities. If sufficient funds
are not available to redeem each
such redeemed Unit in full, one Unit
may be fractionally redeemed as a
result of each such partial
redemption or exercise.
Additional Distribution: If any of the Securities are
redeemed by the Security Issuer
prior to July 15, 2007, each of the
Units which are redeemed in
connection with such redemption of
Securities (or related exercise of
the Swap Agreement) will receive a
pro rata distribution from the
proceeds of the redemption of the
Securities (or related exercise of
the Swap Agreement if physical
settlement applies) remaining after
payment of principal and interest on
such Units up to a maximum of $2.50
per Unit. The Units will also
receive any additional amounts
available at maturity or upon a
redemption by the Security Issuer if
all or a portion of the Swap
Agreement has expired unexercised.
Corporate Trust Office: The definition of "Corporate Trust
Office" in the Standard Terms shall
not apply.
The Corporate Trust Office shall be
the Trustee's Asset-Backed
Securities Trust Services Group
having an office at 135 S. LaSalle
Street, Suite 1625, Chicago,
Illinois 60603 or such other
addresses as the Trustee may
designate from time to time by
notice to the Unitholders, the
Depositor, the Swap Counterparty and
the Guarantor.
Swap Agreement: The ISDA Agreement referred to in
Schedule III. In addition, in
connection with an additional
issuance of Units, any additional
Swap Agreement entered into in
connection therewith.
Swap Counterparty:
Party A to the Swap Agreement
referred to in Schedule III or any
assignee thereof. In addition, in
connection with an additional
issuance of Units, Party A to any
additional Swap Agreement or any
assignee thereof.
In the event that there is more than
one Swap Counterparty at any time
when a partial redemption of the
Securities occurs, the Trustee shall
randomly select which options under
the Swap Agreements shall be
selected for exercise or termination
(and receipt of a Swap Termination
Payment).
Guaranty: Morgan Stanley Dean Witter & Co.
(the "Guarantor") shall guarantee
the obligations of Morgan Stanley &
Co. International Limited ("MSIL")
for so long as MSIL is Party A to
any Swap Agreement with the Trust.
Swap Notional Amount: The notional amount specified in
Schedule III.
Swap Payment Date: Not Applicable
Swap Rate: Not Applicable
Additional Swap Agreements: In connection with an additional
issuance of Units, the Depositor may
arrange for the Trust to enter into
an additional Swap Agreement with
identical terms to those of the Swap
Agreement entered into as of the
Closing Date with an additional Swap
Counterparty, except that such Swap
Agreement may have a different Swap
Counterparty, number of options, and
premium amount than the Swap
Agreement entered into on the
Closing Date. The Rating Agency
Condition must be satisfied with
respect to such additional Swap
Agreement.
Distribution Date: Each January 15 and July 15,
commencing July 15, 2002.
If any payment with respect to the
Securities held by the Trust is not
received by the Trustee by 12 noon
(New York City time) on a
Distribution Date, the corresponding
distribution on the Units will not
occur until the next Business Day
that the Trust is in receipt of
proceeds of such payment prior to 12
noon, with no adjustment to the
amount distributed.
Record Date: Each January 1 and July 1,
regardless of whether such day is a
Business Day.
Form: Global Security
Depositary: DTC
Trustee Fees and Expenses: As compensation for and in payment
of trust expenses related to its
services hereunder other than
Extraordinary Trust Expenses, the
Trustee will receive Trustee Fees on
each Distribution Date in the amount
equal to $3,750. The Trustee Fee
shall cease to accrue after
termination of the Trust. The
"Trigger Amount" with respect to
Extraordinary Trust Expenses for the
Trust is $25,000 and the Maximum
Reimbursable Amount is $100,000. The
Trustee Fee will be paid by the
Expense Administrator. Expenses will
be reimbursed by the Expense
Administrator in accordance with the
Expense Administration Agreement.
Expense Administrator: The Depositor will act as Expense
Administrator on behalf of the Trust
pursuant to an Expense
Administration Agreement, dated as
of the date of the Trust Agreement
(the "Expense Administration
Agreement"), between the Depositor
as Expense Administrator (the
"Expense Administrator") and the
Trust.
The Expense Administrator will
receive a fee equal to 0.06% per
annum of the principal amount of the
Securities held by the Trust as its
fee, payable on the basis of a 360
day year consisting of twelve 30 day
months. The Expense Administrator
will be entitled to interest on any
deferred fee amounts that would have
been payable but for deferral of
interest on the Securities at the
rate interest accrues on any
deferred interest with respect to
the Securities. The Expense
Administrator's fee is payable only
from available interest receipts
received with respect to the
Securities after application of such
receipts to payment of accrued
interest (including accrued interest
on deferred interest) on the Units.
In addition the Expense
Administrator shall own that portion
of the Securities which represents
the interest of a fractional
Unitholder that would remain after a
partial exercise of the Swap
Agreement had the Swap Counterparty
not been obligated to pay the
Fractional Unit Make Whole Amount
(pursuant to and as defined in the
Swap Agreement). The Expense
Administrator shall receive all
interest and principal with respect
to such portion of the Securities.
The Expense Administrator will be
responsible for paying the Trustee
Fee and reimbursing certain other
expenses of the Trust in accordance
with the Expense Administration
Agreement.
Listing: The Depositor has applied to list
the Units on the New York Stock
Exchange
ERISA Restrictions: None of the restrictions in the
Standard Terms relating to the
Employee Retirement Income Security
Act of 1974, as amended, and related
matters shall apply.
Alternative ERISA Restrictions: Not Applicable
Deemed Representations: Not Applicable
QIB Restriction Not Applicable
Trust Wind-Up Event: The Trust Wind-Up Events specified
in Sections 9.01(a), 9.01(c),
9.01(d), 9.01(f) and 9.01(h) shall
not apply. The Trust Wind Events
specified in Sections 9.01(b)
(Security Default), 9.01(e) (Early
Termination Date designated due to
"illegality" or "tax event" under
the Swap Agreement), 9.01(g)
(Disqualified Securities), 9.01(i)
(Excess Expense Event) shall apply.
Pursuant to Section 9.01(j), the
following events also shall
constitute Trust Wind-Up Events: (i)
redemption (or completion of a
self-tender) by the Security Issuer
of all Securities held by the Trust
and (ii) exercise of the call rights
under the Swap Agreement as to all
Securities held by the Trust.
Termination: If a Trust Wind-Up Event occurs
(other than due to exercise of the
call rights under the Swap Agreement
as to all Securities held by the
Trust), any Securities held by the
Trust will be liquidated (in the
case of a Trust Wind-Up Event
resulting from a self-tender offer
or redemption by the Security
Issuer, by delivery to the Security
Issuer) and the proceeds will be
applied first to redeem the Units at
100% of their principal balance plus
accrued interest and then to apply
any remaining amounts to the payment
of any amounts owed to the Swap
Counterparty as a Swap Termination
Payment under the Swap Agreement.
Self-Tender by Security Issuer: In the event the Security Issuer
makes a self-tender offer for the
Securities, 100% of the Unitholders
may direct the Trustee to tender all
of the Securities held by the Trust.
The Trustee will only accept an
instruction to tender the Securities
if all of the Securities held by the
Trust are to be tendered.
Terms of Retained Interest: The Depositor retains the right to
receive any and all interest that
accrues on the Securities prior to
the Closing Date. The Depositor will
receive such accrued interest on the
first Distribution Date for the
Units and such amount shall be paid
from the interest payment made with
respect to the Securities on the
first Distribution Date.
The amount of the Retained Interest
is $703,383.
If a Security Default occurs on or
prior to the first Distribution Date
and the Depositor does not receive
such Retained Interest amount in
connection with such Distribution
Date, the Depositor will have a
claim for such Retained Interest,
and will share pro rata with holders
of the Units to the extent of such
claim in the proceeds from the
recovery on the Securities.
Call Option Terms: Not Applicable
Security Default: The definition of Security Default
in the Standard Terms shall not
apply. A "Security Default" shall
mean one of the following events:
(i) the acceleration of the
outstanding Securities under the
terms of the Securities and/or the
applicable Security Agreement and
failure to pay the accelerated
amount on the acceleration date;
(ii) the failure of the Security
Issuer (or the Security Guarantor on
its behalf or under the Security
Guaranty) to pay an installment of
principal of, or any amount of
interest due on, the Securities
after the due date thereof and after
the expiration of any applicable
grace period; or (iii) the
occurrence of any of the events of
default under such Securities and/or
Security Agreement relating to the
insolvency or bankruptcy of the
Security Issuer or the Security
Guarantor.
Sale of Securities: If the Trust must sell the
Securities it holds, the Trust will
sell the Securities through the
Selling Agent in accordance with
Section 9.03(b) and the following
terms. The Selling Agent must
solicit at least three bids for all
of the Securities held by the Trust.
The Selling Agent must solicit at
least three of such bids from
registered broker-dealers of
national reputation, but additional
bids may be solicited from one or
more financial institutions or other
counterparties with credit
worthiness acceptable to the Selling
Agent in its discretion. The Selling
Agent will, on behalf of the Trust,
sell the Securities at the highest
bid price received. The Selling
Agent may not bid for the
Securities.
Additional Issuance of Units: Upon no less than 5 days' notice to
the Trustee, the Depositor may
deposit additional Securities at any
time in exchange for additional
Units in a minimum aggregate amount
of $250,000 and, if in excess of
such amount, in a $25 integral
multiple in excess thereof. The
principal amount of Securities
deposited must be in the same ratio
to the Unit Principal Balance of the
Units received as the ratio of the
aggregate principal amount of
Securities deposited on the Closing
Date to the aggregate Unit Principal
Balance on the Closing Date. The
Depositor must either arrange for
the Swap Counterparty and the Trust
to increase proportionally the
notional amount under the Swap
Agreement or arrange for an
additional Swap Agreement to be
entered into between the Trust and
an additional Swap Counterparty. Any
accrued interest will be reflected
in the price of the additional Units
and the Securities. The Rating
Agency Condition must be satisfied
in connection with any such
additional issuance.
Selling Agent: Morgan Stanley & Co. Incorporated.
Notwithstanding any provision of the
Standard Terms to the contrary, any
sale of the Securities shall be
conducted by and through the Selling
Agent and not the Trustee.
Rating Agency Condition: The definition of Rating Agencies
Condition in the Standard Terms
shall not apply.
"Rating Agency Condition": With
respect to any specified action or
determination, means receipt of (i)
oral or written confirmation by
Moody's (for so long as the Units
are outstanding and rated by
Moody's) and (ii) written
confirmation by S&P (for so long as
the Units are outstanding and rated
by S&P), that such specified action
or determination will not result in
the reduction or withdrawal of their
then-current ratings on the Units;
provided, however, that if the
Rating Agency Condition specified
herein is to be satisfied only with
respect to Moody's or S&P, only
clause (i) or clause (ii) shall be
applicable. Such satisfaction may
relate either to a specified
transaction or may be a confirmation
with respect to any future
transactions which comply with
generally applicable conditions
published by the applicable rating
agency.
Eligible Account: The definition of "Eligible Account"
in the Standard Terms shall not
apply.
"Eligible Account": A non-interest
bearing account, held in the United
States, in the name of the Trustee
for the benefit of the Trust that is
either (i) a segregated account or
segregated accounts maintained with
a Federal or State chartered
depository institution or trust
company the short-term and long-term
unsecured debt obligations of which
(or, in the case of a depository
institution or trust company that is
the principal subsidiary of a
holding company, the short-term and
long-term unsecured debt obligations
of such holding company) are rated
P-1 and Aa2 by Moody's, A-1+ and AA
by S&P, and, if rated by Fitch, F1
and AA by Fitch at the time any
amounts are held on deposit therein
including when such amounts are
initially deposited and all times
subsequent or (ii) a segregated
trust account or segregated accounts
maintained as a segregated account
or as segregated accounts and held
by the Trustee in its Corporate
Trust Office in trust for the
benefit of the Unitholders.
Permitted Investments: The following shall be a Permitted
Investment in addition to the
investments specified in the
Standard Terms:
Units of the Dreyfus Cash Management
Fund Investor Shares or any other
money market funds which are rated
in the highest applicable rating
category by each Rating Agency (or
such lower rating if the Rating
Agency Condition is satisfied).
Amendment of Trust Agreement: Section 12.01(a) of the Standard
Terms shall be replaced with the
following:
(a) The Trust Agreement may be
amended from time to time by the
Depositor and the Trustee without
the consent of any of the
Unitholders, upon delivery by the
Depositor of an Opinion of Counsel
acceptable to the Trustee to the
effect that such amendment will not
materially and adversely affect the
interests of any holder of a Class
of Units that is not voting with
respect to such amendment pursuant
to Section 12.01(b), for any of the
following purposes: (i) to cure any
ambiguity or defect or to correct or
supplement any provision in the
Trust Agreement which may be
defective or inconsistent with any
other provision in the Trust
Agreement; (ii) to provide for any
other terms or modify any other
terms with respect to matters or
questions arising under the Trust
Agreement; (iii) to amend the
definitions of Trigger Amount and
Maximum Reimbursable Amount so as to
increase, but not decrease, the
respective amounts contained in such
definitions or to otherwise amend or
waive the terms of Section 10.05(b)
in any manner which shall not
adversely affect the Unitholders in
any material respect; (iv) to amend
or correct or to cure any defect
with respect to the Trustee Fee or
Expense Administrator's fee; (v) to
evidence and provide for the
acceptance of appointment under the
Trust Agreement by a successor
Trustee; or (vi) to add or change
any of the terms of the Trust
Agreement as shall be necessary to
provide for or facilitate the
administration of the Trust,
including any amendment necessary to
ensure the classification of the
Trust as a grantor trust for United
States federal income tax purposes;
provided, however, that in the case
of any amendment pursuant to any of
clauses (i) through (v) above, the
Rating Agency Condition shall be
satisfied with respect to such
amendment. If more than one Class of
Units has been issued under the
Trust Agreement, the provisions of
this Section 12.01(a) shall apply to
each Class of Units that is not
materially and adversely affected by
such amendment.
Section 12.01(c) shall be
re-designated Section 12.01(d).
Section 12.01(b) shall be
re-designated Section 12.01(c).
The following shall constitute
Section 12.01(b):
(b) The Trust Agreement may
be amended from time to time by the
Depositor and the Trustee with the
consent of a 100% of the outstanding
Unit Principal Balance of each Class
of Units materially and adversely
affected thereby. The Rating Agency
Condition shall be satisfied with
respect to such amendment unless
Units representing 100% of the Unit
Principal Balance of all affected
Units vote in favor of such
amendment with notice that the
Rating Agency Condition will not be
satisfied.
The following shall constitute
Section 12.01(e):
(e) For purposes of this
Section 12.01, Schedule III to any
Trust Agreement and any Swap
Agreements entered into in
connection with any related Trust
shall not be considered part of the
Trust Agreement. Section 7.02 shall
govern action taken under the Trust
Agreement with respect to any
amendments to such Swap Agreements.
Other Terms:
The Trust shall not merge or
consolidate with any other trust,
entity or person and the Trust shall
not acquire the assets of, or an
interest in, any other trust, entity
or person except as specifically
contemplated herein.
The Trustee shall provide to the
Unitholders copies of any notices it
receives with respect to a
redemption of the Securities or
exercise of the call rights under
the Swap Agreement and any other
notices with respect to the
Securities.
The reference to "B2" in the
definition of Certificate in the
Standard Terms shall be replaced
with "Exhibit B2".
The reference to "Section 10.02(ix)"
in the definition of Available Funds
in the Standard Terms shall be
replaced with "Section
10.02(a)(ix)".
The reference to "Section 3.04" in
the definition of Unit Account in
the Standard Terms shall be replaced
with "Section 3.05".
The transfer by the Depositor to the
Trustee specified in Section 2.01(a)
of the Standard Terms shall be in
trust.
Section 2.06 of the Standard Terms
shall be incorporated herein by
inserting "cash in an amount equal
to the premium under the Swap
Agreement and" after the phrase
"constituting the Trust Property,"
therein.
The reference to "calendar day" in
the last sentence of Section 3.06 of
the Standard Terms shall be replaced
with "Business Day".
Section 4.02(d) of the Standard
Terms shall be incorporated herein
by striking "and the Trustee on
behalf of the Unitholders" from the
first sentence of the second
paragraph thereof.
Section 5.03(c) of the Standard
Terms shall be incorporated herein
by striking "(if so required by the
Trustee or the Unit Registrar)" from
the first sentence thereof.
Section 7.01(c)(i) of the Standard
Terms shall be incorporated herein
by replacing the first word thereof
("after") with "alter".
Section 7.01(c) of the Standard
Terms shall be incorporated herein
by inserting "(i)" between
"Securities" and "would" in the
clause that begins "and provided,
further," and adding at the end of
the same sentence "and (ii) will not
alter the classification of the
Trust for Federal income tax
purposes."
Section 7.02 of the Standard Terms
shall be incorporated herein by
striking "(i) the Trustee determines
that such amendment will not
adversely affect the interests of
the Unitholders and (ii)" from the
first sentence thereof, inserting
"on which it may conclusively rely"
after "Opinion of Counsel" in such
sentence, and striking "clause (ii)"
from the second sentence of such
Section.
Section 9.03(a) of the Standard
Terms shall be incorporated herein
by striking "or oral" after the "at
any time by" in the third sentence
thereof.
Clause (ix) of Section 10.02(a)
shall not apply.
Section 10.02(a)(x) of the Standard
Terms shall be replaced with the
following:
(x) the Trustee shall have
the power to sell the Securities and
other Trust Property, in accordance
with Article IX and XI, through the
Selling Agent or, if the Selling
Agent shall have resigned or
declined to sell some or all of the
Securities, any broker selected by
the Trustee (at the direction of the
Depositor) with reasonable care, in
an amount sufficient to pay any
amount due to the Swap Counterparty
under the Swap Agreement (including
Termination Payments) or
reimbursable to itself in respect of
unpaid Extraordinary Trust Expenses
and to use the proceeds thereof to
make such payments after the
distribution of funds or Trust
Property to Unitholders. Any such
broker shall be instructed by the
Trustee to sell such Trust Property
in a reasonable manner designed to
maximize the sale proceeds.
Section 10.05(b) of the Standard
Terms shall be incorporated herein
by replacing ", pursuant to the
first sentence of this paragraph"
with "the Trustee shall be
indemnified by the Trust, however,"
in the last sentence thereof.
Section 10.06(a) of the Standard
Terms shall be incorporated herein
by inserting "or association" after
the word "corporation" in the second
sentence thereof.
Section 10.07(a) of the Standard
Terms shall be incorporated herein
by replacing "notice or resignation"
with "notice of resignation" in the
second sentence thereof and striking
the last two sentences thereof.
Section 10.10(b) of the Standard
Terms shall be incorporated herein
by inserting "The Trustee shall not
be liable for the acts or omissions
of any co-trustee." after the last
sentence thereof.
Section 10.14 of the Standard Terms
shall be replaced with the
following:
SECTION 10.14. Non-Petition. Prior
to the date that is one year and one
day after all distributions in
respect of the Units have been made,
none of the Trustee, the Trust or
the Depositor shall take any action,
institute any proceeding, join in
any action or proceeding or
otherwise cause any action or
proceeding against any of the others
under the United States Bankruptcy
Code or any other liquidation,
insolvency, bankruptcy, moratorium,
reorganization or similar law
("Insolvency Law") applicable to any
of them, now or hereafter in effect,
or which would be reasonably likely
to cause any of the others to be
subject to, or seek the protection
of, any such Insolvency Law.
Section 12.01(a) of the Standard
Terms shall be incorporated herein
by replacing "(v)" with "(vi)" in
the last proviso thereof.
Section 12.01(c) of the Standard
Terms shall be incorporated herein
by inserting ",provided at the
expense of the party requesting such
amendment," after "Opinion of
Counsel".
Section 12.05 of the Standard Terms
shall be incorporated herein by
striking "the Trustee and" in the
last sentence of the second
paragraph thereof.
The reference to "its President, its
Treasurer, or one of its Vice
Presidents, Assistant Vice
Presidents or Trust Officers" in the
first sentence of Section 5.02(a) of
the Standard Terms shall be replaced
with "a Responsible Officer".
The reference to "the proper
officers" in the second sentence of
Section 5.02(a) of the Standard
Terms shall be replaced with "a
Responsible Officer".
The reference to "one of its
authorized signatories" in the first
sentence of Section 5.02(d) of the
Standard Terms shall be replaced
with "a Responsible Officer".
The reference to the "Trust" in the
first sentence of Section 5.08(b) of
the Standard Terms shall be replaced
with the "Trustee".
References to D&P in the Standard
Terms shall be incorporated as
references to Fitch Inc. ("Fitch").
Schedule II
(Terms of Trust Property)
Securities: SAFECO Capital Trust I 8.072% trust
preferred capital securities due
July 15, 2037
Security Issuer: SAFECO Capital Trust I
Security Guarantor: SAFECO Corporation
The Security Guarantor will be
considered the "Security Issuer" for
purposes of determining whether the
Security Issuer is an Eligible
Issuer and whether the Securities
are Disqualified Securities.
Guarantor Debentures: The Guarantor's 8.072% junior
subordinated debentures due 2037.
Such debentures are the only assets
of the Security Issuer.
In the event that the Guarantor
Debentures are exchanged for the
Securities or distributed in
liquidation of the Security Issuer,
the Guarantor Debentures shall be
treated as the Securities for all
purposes and the Security Guarantor
shall be treated as the Security
Issuer for all purposes. Such
exchange or liquidation shall not be
considered a redemption.
Principal Amount: $26,525,000
Security Rate: 8.072%
Credit Ratings: Baa2 by Moody's
BBB- by S&P
Listing: Not Applicable
Security Agreement:
As to the Securities, the amended
and restated declaration of trust
dated as of July 15, 1997 relating
to the Security Issuer. As to the
Guarantor Debentures, the indenture,
dated as of July 15, 1997, between
the Security Guarantor and JPMorgan
Chase Bank (as successor to The
Chase Manhattan Bank).
Form: Global
Currency of
Denomination: United States dollars
Acquisition Price by Trust: $25,046,349
Security Payment Date: Each January 15 and July 15.
Original Issue Date: The Securities were issued July 15,
1997.
Maturity Date: July 15, 2037.
Sinking Fund Terms: Not Applicable
Redemption Terms: The Guarantor Debentures and the
Securities may be redeemed upon a
"tax event" (as defined in the
underlying indenture and declaration
of trust). The Guarantor Debentures
may also be distributed in exchange
for the Securities or in liquidation
of the Issuer. In such event the
Guarantor Debentures would become
the Securities under the Trust
Agreement.
CUSIP No.:/ISIN No. 786427 AC8
Security Trustee:
JPMorgan Chase Bank (as successor to
The Chase Manhattan Bank)
Guarantor Debenture Trustee: JPMorgan Chase Bank (as successor to
The Chase Manhattan Bank)
Available Information
Regarding the Security Issuer
(if other than U.S.
Treasury obligations): The Security Guarantor is subject to
the informational requirements of
the Securities Exchange Act of 1934,
as amended, and in accordance
therewith files reports and other
information with the Securities and
Exchange Commission (the
"Commission"). Such reports and
other information can be inspected
and copied at the public reference
facilities maintained by the
Commission at 450 Fifth Street,
N.W., Washington, District of
Columbia 20549 and at the following
Regional Offices of the Commission:
Woolworth Building, 233 Broadway,
New York, New York 10279, and
Northwest Atrium Center, 500 West
Madison Street, Chicago, Illinois
60661. Copies of such materials can
be obtained from the Public
Reference Section of the Commission
at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed
rates.
Schedule III
(Call Option Confirm)
MORGAN STANLEY
- --------------------------------------------------------------------------------
Date: May 14, 2002
To: SATURNS Trust No. 2002-5 From: Morgan Stanley &
Co. International
Limited
Attn: Asset-Backed Securities Group Contact: Chris Boas
SATURNS Trust No. 2002-5
Fax: 312-904-2084 Fax: 212-761-0406
Tel: 312-904-9387 Tel: 212-761-1395
- --------------------------------------------------------------------------------
Re: Bond Option Transaction. MS Reference Number SQ1D6
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between you and Morgan Stanley & Co.
International Limited ("MSIL"), with Morgan Stanley & Co. Incorporated
("MS&Co."), as agent, on the Trade Date specified below (the "Transaction").
This letter agreement constitutes a "Confirmation" as referred to in the
Agreement below.
The definitions and provisions contained in the 1997 ISDA Government
Bond Option Definitions as published by the International Swaps and Derivatives
Association, Inc. ("ISDA") are incorporated into this Confirmation and this
transaction shall be deemed a "Government Bond Option Transaction" for purposes
of such definitions. In the event of any inconsistency between those definitions
and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms a part of, and is subject to,
the ISDA Master Agreement dated as of the date hereof, as amended and
supplemented from time to time (the "Agreement"), between you and us. All
provisions contained in the Agreement govern this Confirmation except as
expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
I. General Terms
- ----------------
Trade Date: May 7, 2002
Option Style: American
Option Type: Call
Buyer: MSIL ("Party A")
Seller: SATURNS Trust No. 2002-5
("Party B")
Bonds: The obligation identified as follows:
Bond Issuer: SAFECO Capital Trust I
Issue: 8.072% Debentures due 2037
CUSIP: 786427 AC8
Coupon: 8.072%
Maturity Date: July 15, 2037
Face Amount Purchased: USD 26,525,000
Premium: USD 66,313
Premium Payment Date: May 14, 2002
Number of Options: 26,525
Option Entitlement: USD 1,000 of face amount of the
Bonds per Option.
Strike Price: (i) For any Exercise Date prior to
July 15, 2007, the redemption
price of the Bonds including any
make-whole amount (expressed as a
percentage) subject to a maximum
of 110% of the face amount of the
Bonds exclusive of accrued
interest, or (ii) for any Exercise
Date on or after July 15, 2007,
97.239% of the face amount of the
Bonds exclusive of accrued
interest.
Calculation Agent: Party A
II. Exercise Terms
- ------------------
Automatic Exercise: Inapplicable
Exercise Period: Any Business Day from, and
including, 9:00 a.m. (New York
time) on July 15, 2007, to, and
including, the Expiration Time on
the Expiration Date; provided,
however, the Exercise Period shall
also include any Business Day
prior to July 15, 2007, if notice
of redemption has been delivered
by the Bond Issuer.
Exercise Date: For each Option exercised, the day
during the Exercise Period on
which that Option is exercised.
Multiple Exercise: Applicable
Minimum Number of Options: 1
Written Confirmation of Exercise: Applicable. Buyer shall give
irrevocable exercise notice which
may be given orally (including by
telephone) during the Exercise
Period but no later than the
Notification Date. Buyer will
execute and deliver a written
exercise notice confirming the
substance of such oral notice,
however, failure to provide such
written notice will not affect the
validity of the oral notice.
Limitation on Rights of MSIL: For so long as Party A is MSIL or
an Affiliate thereof, Party A may
only exercise Options hereunder in
conjunction with a redemption by
the Bond Issuer. MSIL or, if
applicable, an Affiliate thereof,
may only exercise the number of
Options corresponding to the
number of Bonds owned by Party B
being redeemed. This restriction
shall be of no further force and
effect as to any Options assigned
by MSIL to a person or entity who
is not an Affiliate of MSIL.
For purposes of these limitations
of rights with respect to MSIL and
its Affiliates, the definition of
"Affiliate" (as defined in the
Agreement) shall be construed to
include a person or entity that is
an Affiliate of MSIL and a person
or entity of whom MSIL is an
Affiliate.
Notification Date: Any date at least 20 calendar days
but not more than 60 calendar days
prior to the Exercise Date,
provided that any date that is at
least 10 calendar days prior to
the Exercise Date is also a
Notification Date if the Bond
Issuer has provided notice of
redemption.
Limited Right to Confirm Exercise: Inapplicable
Expiration Date: July 15, 2034
Expiration Time: 4:00 p.m. New York time
Business Days: New York and Chicago
III. Settlements:
- -----------------
Settlement: Cash Settlement if MSIL is Party
A; otherwise Physical Settlement.
Party A will notify Party B
separately regarding the clearance
system details for Physical
Settlement.
Spot Price (Cash Settlement Only): The redemption price paid by the
Bond Issuer, excluding accrued
interest.
Deposit of Bond Payment (Physical Party A must deposit the Bond
Payment with the Trustee on
Settlement Only): the Business Day
prior to the Exercise Date. The
Bonds are to be delivered "free"
to Party A.
Additional Payment Obligation of To the Expense Administrator (the
Party A: "Expense Administrator
Payment Obligation"):
If the Bond Issuer has not given
notice of redemption in connection
with the exercise of Options
hereunder and if any such exercise
is an exercise of less than all
Options remaining unexercised
hereunder, Party A shall pay to
the Expense Administrator an
amount equal to the present value
of a stream of payments equal to
$6,601 payable on each payment
date for the Bonds until the
maturity of the Bonds discounted
at a rate of 6.0% per annum on the
basis of a 360 day year consisting
of twelve 30 day months from the
date of such exercise until the
Scheduled Final Distribution Date
(as defined in the Trust
Agreement), assuming for this
purpose that the Trust (as defined
in the Trust Agreement) is not
terminated prior to the Scheduled
Final Distribution Date,
multiplied by the Option
Entitlement multiplied by the
number of Options exercised and
divided by $26,525,000.
To Party B:
Upon any exercise, Party A shall
pay to Party B the Fractional Unit
Make-Whole Amount. Party A shall
be entitled to reimbursement of
any amounts paid or netted from
payments received in respect of
the Fractional Unit Make-Whole
Amount from the Expense
Administrator to the extent, and
only to the extent, provided in
the Expense Administration
Agreement.
Settlement Date: For Cash Settlement, the Business
Day of settlement of a redemption
of Bonds by the Bond Issuer. For
Physical Settlement, the Exercise
Date.
3. Additional Definitions.
----------------------
"Expense Administration Agreement" means the expense administration
agreement dated as of the date hereof between Party B and the Expense
Administrator.
"Expense Administrator" means MSDW Structured Asset Corp. acting
pursuant to the Expense Administration Agreement.
"Fractional Unit Make Whole Amount" means an amount equal to the Unit
Principal Balance (as defined in the Trust Agreement) of any fractional Unit (as
defined in the Trust Agreement) that would remain after any exercise hereunder
if no provision were made to pay to Party B an additional amount equal to such
Unit Principal Balance, together with accrued interest on such fractional Unit
and, if applicable, any Additional Distribution (as defined in the Trust
Agreement) on such fractional Unit.
"Trust Agreement" means the trust agreement dated as of the date
hereof, between the MSDW Structured Asset Corp. and LaSalle Bank National
Association.
4. Representations. Morgan Stanley & Co. Incorporated is acting as
agent for both parties but does not guarantee the performance of Party A.
5. Additional Termination Event. As set forth in the Agreement, a Trust
Wind-Up Event will result in an Additional Termination Event under the Agreement
with respect to which Party B shall be the Affected Party and this Transaction
shall be an Affected Transaction.
6. Swap Termination Payments. In the event an Early Termination
Date is designated with respect to which this Transaction is an Affected
Transaction, there shall be payable to Party A as a termination payment in lieu
of the termination payment determined in accordance with Section 6(e) of the
Agreement an amount equal to the excess (if any) of the sale proceeds (or
redemption proceeds), excluding accrued interest, of the Bonds in excess of the
Strike Price.
7. Assignment. The rights under this Confirmation and the
Agreement may be assigned at any time and from time to time in whole or in part;
provided that the Rating Agency Condition (as defined in the Trust Agreement) is
satisfied with respect to such assignment and any transfer. The transferee in
any such assignment or transfer must be a qualified institutional buyer as
defined in Rule 144A under the Securities Act of 1933.
8. Account Details.
---------------
Payments to Party A: Citibank, N.A., New York
SWIFT BIC Code: CITIUS33
ABA No. 021 000 089
FAO: Morgan Stanley & Co. International Limited
Account No. 3042-1519
Operations Contact: Barbara Kent
Tel 212-537-1449
Fax 212-537-1868
Payments to Party B: LaSalle Bank, Chicago, Illinois
ABA No. 071 000 505
Reference: SATURNS 2002-5
Unit Account / AC-2090067/
Account No.: 67-9000-80-2
Operations Contact: Andy Streepey
Tel: 312-904-9387
Fax: 312-904-2084
Please confirm that the foregoing correctly sets forth the terms of our
agreement MS Reference Number SQ1D6 by executing this Confirmation and returning
it to us.
Best Regards,
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
BY:
-----------------------
Name: Chris Boas
Title: Attorney in fact
Acknowledged and agreed as of the date first written above:
SATURNS TRUST NO. 2002-5
BY: LaSalle Bank National Association,
solely as Trustee and not in its individual capacity.
BY:
-----------------------
Name: Brian D. Ames
Title: Vice President
MORGAN STANLEY & CO. INCORPORATED hereby agrees to and
acknowledges its role as agent for both parties in accordance with
the Schedule to the Agreement.
BY:
-----------------------
Name: John Kehoe
Title: Attorney in fact