Exhibit 4.1
TRUST AGREEMENT
TRUST AGREEMENT, between MS 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;
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 and an initial Notional Amount, as applicable, 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/ Ann M. Kelly
----------------------------
Name: Ann M. Kelly
Title: Assistant Vice President
MS STRUCTURED ASSET CORP.
By: /s/ John Kehoe
----------------------------
Name: John Kehoe
Title: Vice President
Attachments: Terms Schedule (consisting of Schedules I, II and III)
Schedule I
(Terms of Trust and Units)
Trust:
SATURNS Trust No. 2003-3
Date of Trust Agreement: February 27, 2003
Depositor On November 8, 2002, the Depositor
changed its name from MSDW
Structured Asset Corp. to MS
Structured Asset Corp.
Trustee: LaSalle Bank National Association.
References to Chase Bank of Texas,
National Association in the Standard
Terms shall be inapplicable.
Units: The Trust will issue two classes of
Units: the Class A Units and the
Class B Units. Only the Class A
Units will be publicly offered.
Initial Unit Principal Balance
of the Class A Units: $41,608,000
Initial Notional Amount
of the Class B Units: $41,608,000
Issue Price of Units: Class A Units: 100%
Class B Units: As specified by the
Depositor
Number of Units: Class A Units:
1,664,320 (Unit Principal Balance of
$25 each)
Class B Units:
416.08 ($100,000 Notional Amount
each)
Minimum Denomination: Class A Units:
$25 and $25 increments in excess
thereof. The minimum denomination
specified in Section 5.01(a) of the
Standard Terms shall not apply to
the Class A Units. Each $25 of Unit
Principal Balance is a Unit.
Class B Units:
$100,000 and $1,000 increments in
excess thereof.
Cut-off Date: February 27, 2003
Closing Date: February 27, 2003
Specified Currency: United States dollars
Business Day: New York, New York and Chicago,
Illinois
Interest Rate: Class A Units:
8.000% 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, interest will continue
to accrue on the Unit Principal
Balance at 8.000% per annum and
interest will accrue on any deferred
interest at 8.000% per annum.
Class B Units:
0.1737% 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, interest will continue
to accrue on the Class B Unit
Notional Amount at 0.1737% per annum
and interest will accrue on any
deferred interest at a rate equal to
8.205% per annum.
The right of the Class A Units to
accrued interest is pari passu with
the right of the Class B Units to
accrued interest from accrued
interest on the securities.
Interest Reset Period: Not Applicable
Rating: Class A Units and Class B Units:
Baa3 by Moody's
BBB by S&P
Rating Agencies: Moody's and S&P
Scheduled Final Distribution Date: January 1, 2027. 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 call in accordance with
Schedule III. Any such call or
redemption will cause a redemption
of a proportional amount of the
Class A Units and a proportional
reduction in the Notional Amount of
the Class B Units.
If the call rights under the Swap
Agreement are partially exercised or
if there is a partial redemption of
the Securities, (i) the Trustee will
randomly select Class A Units to be
redeemed in full from the proceeds
of such partial exercise of the Swap
Agreement or partial redemption of
the Securities and (ii) the Trustee
will first redeem, up to a Notional
Amount equal to the principal amount
of Securities subject to such
exercised or terminated call, Class
B Units held by any Swap
Counterparty who has exercised its
call rights under the Swap Agreement
or who will be selected for
termination of call rights and then
by random selection. 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: Class A Units:
If any of the Securities are
redeemed by the Security Issuer
prior to February 27, 2008, each of
the Class A Units being redeemed in
connection with such redemption of
Securities or related exercise of
the call rights under the Swap
Agreement shall receive a pro rata
distribution from the proceeds of
such redemption or exercise in
respect of principal, price or
premium with respect to the
Securities in excess of the
corresponding Unit Principal Balance
of the Class A Units to be redeemed,
up to a maximum of $2.50 per Class A
Unit being redeemed.
If the Security Issuer gives notice
of a self-tender as to Securities
held by the Trust and a Swap
Counterparty exercises its call
rights under any Swap Agreement in
connection with such self-tender
prior to February 27, 2008, each
redeemed Class A Unitholder shall
receive an additional distribution
of $1.50 per Class A Unit from the
proceeds of such exercise in respect
of principal, price or premium with
respect to the Securities in excess
of the corresponding Unit Principal
Balance of the Class A Units to be
redeemed.
Class B Units:
If the Securities are redeemed by
the Security Issuer or if the Swap
Counterparty exercises its call
rights under the Swap Agreement,
then the Class B Units designated
for a reduction in Notional Amount
in connection with such redemption
or exercise shall receive (i) an
amount up to the Class B Present
Value Amount as of the date of such
reduction in Notional Amount as an
additional distribution from the
proceeds of such redemption
remaining after required
distributions to the Class A Units
or (ii) any Class B Unit Payment
Obligation as payable under the Swap
Agreement in connection with such
exercise, as applicable. In no event
will amounts payable on the Class B
Units under this provision exceed
the Class B Present Value Amount.
"Class B Present Value Amount"
means, with respect to a date, an
amount equal to the present value of
the Future Class B Unit Interest for
such date in respect of the
corresponding portion of the
Notional Amount of the Class B Units
being reduced discounted at a rate
of 8.205% per annum on the basis of
a 360 day year consisting of twelve
30 day months.
"Future Class B Unit Interest" means
with respect to any date of
reduction in the Notional Amount of
the Class B Units resulting from a
redemption of the Securities or
exercise of call rights under the
Swap Agreement, the interest on the
corresponding portion of the
Notional Amount of the Class B
Units, other than interest paid or
accrued through such date, that
would accrue at the rate and in the
manner specified hereunder and would
be payable at the times specified
hereunder on such corresponding
portion of the Notional Amount of
the Class B Units to the Scheduled
Final Distribution Date had such
reduction of the Notional Amount of
the Class B Units not occurred.
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, each Swap Counterparty
and the Guarantor.
Swap Agreement: The ISDA Master Agreement
referred to in Schedule III and any
assignment thereof. 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 of a partial redemption
or self-tender for the Securities:
(i) in the case of a partial
redemption, to the extent options
corresponding to more Securities
than are subject to such partial
redemption are exercised, a number
of options exercised by each Swap
Counterparty shall be deemed
rescinded (and each Swap
Counterparty shall be entitled to
exercise such rescinded options in
the future) such that (a) the total
amount of options exercised
corresponds to the number of
Securities redeemed and (b) each
Swap Counterparty's exercise is
reduced proportionately to the
number of options such Swap
Counterparty initially exercised.
(ii) in the case of a self-tender,
the Trustee shall tender to the
Security Issuer an amount of the
Securities equal to the total number
of options exercised, and shall
apply the proceeds of such tender in
cash settlement of such options as
provided in the Swap Agreement;
provided, however, that to the
extent any amount of Securities
tendered is not accepted by the
Security Issuer and paid for in
accordance with the terms of the
tender offer, such options relating
to the securities so tendered and
not accepted shall be deemed
rescinded and no settlement thereof
shall be deemed to have occurred,
with the number of such rescinded
options to be allocated among the
Swap Counterparties in proportion to
the number of options initially
exercised (and each Swap
Counterparty shall be entitled to
exercise such rescinded options in
the future).
Swap Termination Payment: With respect to each $1,000 face
amount of Securities and each
corresponding option under the Swap
Agreement, an amount equal to the
excess (if any) of the sale proceeds
or redemption proceeds of the
Securities, as applicable, reduced
by (x) accrued interest on the
Securities, (y) the $1,000 of Unit
Principal Balance of the Class A
Units and the Class B Present Value
Amount with respect to $1,000 of the
Notional Amount of Class B Units to
be redeemed in relation to such sale
or redemption and (z) any additional
distribution on the Class A Units to
be redeemed in relation to such sale
or distribution.
In connection with a partial
redemption, such Swap Termination
Payment shall be allocated among
multiple Swap Counterparties in
proportion to the number of options
held by each Swap Counterparty
(after giving effect to any exercise
of options in connection with such
partial redemption as set forth
above under "Swap Counterparty").
Guaranty: Morgan Stanley (formerly known as
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, 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 prior to
the effectiveness of such additional
Swap Agreement. Each Swap
Counterparty must consent to any
additional issuance.
Distribution Date: Each January 1 and July 1, or the
next succeeding Business Day if such
day is not a Business Day,
commencing July 1, 2003.
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: The record date for each
Distribution Date shall be 15 days
prior to such Distribution Date
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 $2,000. 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 Trustee 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 Trustee as
Expense Administrator (the "Expense
Administrator") and the Trust.
The Expense Administrator will
receive a fee equal to $6,512
payable on each Distribution Date.
Amounts in respect of an additional
payment obligation of any Swap
Counterparty in respect of the
Expense Administrator's fee shall
also be considered part of the
Expense Administrator's fee
hereunder and under the Expense
Administration Agreement. 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 on the Units. The Amounts
specified in the paragraph are also
referred to as the "Expense
Administrator's Fee".
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 Class A 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 to the Class A
Units.
The restrictions shall apply to the
Class B Units and no ERISA Benefit
Plan may acquire an interest in the
Class B Units.
Alternative ERISA Restrictions: Not Applicable
Deemed Representations: Not Applicable
QIB Restriction: Not applicable to the Class A Units.
Applicable to the Class B Units.
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 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.
If (i) cash settlement applies under
the Swap Agreement (other than in
connection with a redemption or
self-tender by the Security Issuer
for the Securities), (ii) a Trust
Wind-Up Event has occurred in
connection with the exercise of any
Option under the Swap Agreement and
(iii) the Selling Agent cannot
obtain a bid for the Securities in
excess of the amount specified in
the Swap Agreement, then the
Securities will not be sold, the
Swap Counterparty's exercise of the
call option will be rescinded (and
the Swap Counterparty shall be
entitled to exercise such options in
the future) and any related Trust
Wind-Up Event will be deemed not to
have occurred.
Termination: If a Trust Wind-Up Event occurs, any
Securities held by the Trust will be
liquidated (by delivery to the
Security Issuer in the event of a
redemption, pursuant to the terms of
the Swap Agreement in the event of
an exercise of options under the
Swap Agreement or otherwise by sale
thereof).
If the related Trust Wind-Up Event
occurs due to a redemption of the
Securities by the Security Issuer or
an exercise of the call rights under
the Swap Agreement as to all
Securities held by the Trust, (i)
amounts received as accrued interest
on the Securities will be applied
pro rata as to amounts treated as
accrued interest outstanding on the
Class A Units and the Class B Units,
(ii) amounts received as principal
or par on the Securities (including
any portion of the Strike Price (as
defined in the Swap Agreement) equal
to par) will be applied to the Unit
Principal Balance of the Class A
Units up to 100% of the Unit
Principal Balance of each Class A
Unit and (iii) any additional
amounts received in respect of
principal, price or premium (or any
portion of the Strike Price in
excess of the amount in (ii)) will
be in each case applied first to the
Class A Units as an additional
distribution and second to the Class
B Units as an additional
distribution, but only up to the
amount specified under "Additional
Distribution" in this Trust
Agreement. Notwithstanding the
foregoing, any Class B Unit Payment
Obligation made by the Swap
Counterparty under the Swap
Agreement will be distributed to the
Class B Units as set forth under
"Additional Distributions."
Remaining accrued interest will be
applied to the Expense
Administrator's fee. Amounts in
respect of an additional payment
obligation of each Swap Counterparty
in respect of the Expense
Administrator's Fee will be paid to
the Expense Administrator. Remaining
amounts will be allocated to any
applicable additional distribution
on the Class B Units and then to the
Swap Termination Payment.
If the Trust is terminated for any
other reason, the proceeds of
liquidation will be applied to
redeem the Class A Units and the
Class B Units. The Class A Units
will have a claim on the proceeds of
the liquidation equal to their
aggregate Unit Principal Balance
plus accrued interest. The Class B
Units will have a claim on the
proceeds of liquidation equal to
accrued interest plus the Class B
Present Value Amount, in each case
as of such date of termination. If
the proceeds of the liquidation are
less than the combined claim amounts
of the Class A Units and the Class B
Units, the proceeds will be
distributed in proportion to the
claim amounts of the Class A Units
and the Class B Units in full
satisfaction of the claims of the
Units. If the proceeds of
liquidation exceed the claims of the
Class A and B Units and the accrued
interest on the Securities, the
excess will be paid to the Swap
Counterparty as a Swap Termination
Payment under the Swap Agreement,
other than amounts payable to the
Expense Administrator in respect of
the Expense Administrator's Fee.
Self-Tenders by Security Issuer: The Trust will not participate in
any self-tender by the Security
Issuer for the Securities and the
Trustee will not accept any
instructions to the contrary from
the Unitholders except in connection
with an exercise by a Swap
Counterparty of its option rights.
The Swap Counterparty may exercise
its option rights in connection with
any self-tender in accordance with
the Swap Agreement.
Depositor Optional Exchange: Depositor Optional Exchange applies
to this Series of Units.
The Depositor may exchange Units for
a pro rata portion of the Trust
Property subject only to the
following conditions: (i) the
exchange is made with respect to
Class A Units with a minimum Unit
Principal Balance of $250,000 and in
$25 integral multiples in excess
thereof and a corresponding Notional
Amount of Class B Units; (ii) such
exchange is to be effected on any
Distribution Date or any date that
is 90 days before or after a
Distribution Date (or the succeeding
Business Day if such date is not a
Business Day) with 45 days notice;
(iii) each Swap Counterparty
consents to the exchange and (iv)
the Expense Administrator consents
to the exchange.
Terms of Retained Interest: Notwithstanding any other provision
herein or in the Standard Terms, 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 (or
redemption date if earlier) 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 $529,031.
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; (iii) the initiation
by the Security Issuer or Security
Guarantor of any proceedings seeking
a judgment of insolvency or
bankruptcy or seeking relief under
bankruptcy or insolvency laws or
similar laws affecting creditor's
rights; or (iv) if not otherwise
addressed in (iii), the passage of
thirty (30) calendar days since the
day upon which any person or entity
initiates any proceedings against
the Security Issuer or Security
Guarantor seeking a judgment of
insolvency or bankruptcy or seeking
relief under bankruptcy or
insolvency laws or similar laws
affecting creditor's rights and such
proceeding has not been dismissed
prior to such thirtieth day.
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. None of the
Selling Agent, its affiliates or its
agents, may bid for the Securities.
With respect to each Swap
Counterparty that is not an
affiliate of the Selling Agent, the
Selling Agent will extend a right of
first refusal to each such Swap
Counterparty to purchase the
Securities at the highest bid
received by the Selling Agent.
If more than one Swap Counterparty
exercises such right of first
refusal, Securities will be sold to
each exercising Swap Counterparty in
proportion to the number of options
held by such Swap Counterparty;
provided, that if only one Swap
Counterparty exercises such right of
first refusal, such Swap
Counterparty shall be entitled to
purchase all of the Securities to be
sold by the Selling Agent.
If cash settlement applies and if a
Swap Counterparty exercises any of
its call rights other than in
connection with a redemption of or a
self-tender for the Securities by
the Security Issuer, a number of
Securities corresponding to the
number of call rights exercised by
the Swap Counterparty (or in the
event of an exercise of call rights
in excess of the amount to be
redeemed, the number of call rights
equal to such excess) will be sold
by the Selling Agent on behalf of
the Trust. If the Selling Agent
cannot obtain a bid for the
Securities in excess of the amount
specified in the Swap Agreement,
then the Securities will not be
sold, the Swap Counterparty's
exercise, other than with respect to
Securities being redeemed, will be
rescinded (and the Swap Counterparty
shall be entitled to exercise such
call rights in the future) and any
related Trust Wind-Up Event will be
deemed not to have occurred.
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 (with respect to the
Class A Units issued ) and, if in
excess of such amount, in a $25
integral multiple in excess thereof
(with respect to the Class A Units
issued). The principal amount of
Securities deposited must be in the
same ratio to the Unit Principal
Balance (and Notional Amount with
respect to the Class B Units) of the
Units received for such deposit as
the ratio of the aggregate principal
amount of the Securities deposited
on the Closing Date to the aggregate
Unit Principal Balance (and
aggregate Notional Amount with
respect to the Class B Units) on the
Closing Date. The Depositor must
either arrange for one or more Swap
Counterparties and the Trust to
increase proportionally the notional
amount under the applicable Swap
Agreement or arrange for an
additional Swap Agreement, with a
notional amount equal to the
principal amount of the additional
Securities deposited, to be entered
into between the Trust and an
additional Swap Counterparty (or a
combination of an additional Swap
Agreement and a notional balance
increase of the existing Swap
Agreement(s), with the combined
effect of such proportional increase
in the notional amount of the Swap
Agreements). The Depositor must also
arrange the issuance of Class B
Units with a Notional Amount equal
to the Unit Principal Balance of the
Class A Units being issued in
connection with an additional
issuance. 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. Each Swap
Counterparty must consent to any
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 or any Swap Counterparty
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 (vi) 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 and Notional
Amount, as applicable, 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. No amendment to the Trust
Agreement that would adversely
effect the Swap Counterparty shall
be effective without the consent of
the Swap Counterparty.
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.
Securities Intermediary: LaSalle Bank National Association
acting in the capacity of securities
intermediary.
Additional Representations
Of Trustee and Securities
Intermediary: The Unit Account is a "securities
account" within the meaning of
Section 8-501 of the UCC and is held
only in the name of the Trust. The
Securities Intermediary is acting
with respect to the Unit Account in
the capacity of a "securities
intermediary" within the meaning of
Section 8-102(a)(l4) of the UCC.
All Securities have been (i)
delivered to the Securities
Intermediary pursuant to the Trust
Agreements; (ii) credited to the
Unit Account; and (iii) registered
in the name of the Securities
Intermediary or its nominee,
indorsed to the Securities
Intermediary or in blank or credited
to another securities account
maintained in the name of the
Securities Intermediary. In no case
will any Securities or other
financial asset credited to a Unit
Account be registered in the name of
the Depositor, payable to the order
of the Depositor or specially
indorsed to the Depositor except to
the extent the foregoing have been
specially indorsed to the Securities
Intermediary or in blank.
The Unit Account is an account to
which financial assets are or may be
credited, and the Securities
Intermediary shall treat the Trustee
as entitled to exercise the rights
that comprise any financial asset
credited to the account.
The Securities Intermediary hereby
agrees that the Securities credited
to the Unit Account shall be treated
as a "financial asset" within the
meaning of Section 8-102(a)(9) of
the UCC.
If at any time the Securities
Intermediary shall receive any order
from the Trustee directing the
transfer or redemption of any
Securities on deposit in any Unit
Account, the Securities Intermediary
shall comply with such entitlement
order without further consent by the
Depositor or any other Person. The
Securities Intermediary shall take
all instructions (including without
limitation all notifications and
entitlement orders) with respect to
each Unit Account solely from the
Trustee.
The Securities Intermediary hereby
confirms and agrees that:
(a) There are no other agreements
entered into between the Securities
Intermediary and the Depositor with
respect to any Unit Account;
(b) It has not entered into, and
until the termination of this
Agreement will not enter into, any
agreement with any other Person
relating to any Unit Account and/or
any financial assets credited
thereto pursuant to which it has
agreed to comply with entitlement
orders (as defined in Section
8-102(a)(8) of the UCC) of such
other Person; and
(c) It has not entered into, and
until the termination of the Trust
Agreements will not enter into, any
agreement with the Depositor or the
Trustee purporting to limit or
condition the obligation of the
Securities Intermediary to comply
with entitlement orders as set forth
above
The Trustee hereby represents and
warrants as follows:
(a) The Trustee maintains its books
and records with respect to its
securities accounts in the State of
Illinois; and
(b) The Trustee has not granted any
lien on the Securities nor are the
Securities subject to any lien on
properties of the Trustee in its
individual capacity; the Trustee has
no actual knowledge and has not
received actual notice of any lien
on the Securities (other than any
liens of the Trustee in favor of the
beneficiaries of the Trust
Agreements); other than the
interests of the Unitholders and the
potential interests of the Call
Option holders, the books and
records of the Trustee do not
identify any Person as having an
interest in the Securities.
The Trustee makes no representation
as to (i) the validity, legality,
sufficiency or enforceability of any
of the Securities or (ii) the
collectability, insurability,
effectiveness or suitability of any
of the Securities.
Additional Depositor
Representations: The Depositor hereby represents and
warrants to the Trustee as follows
(with respect to the Closing Date
and any additional issuance):
(a) Immediately prior to the
transfer of the Securities to the
applicable Trust, the Depositor
owned and had good and marketable
title to the Securities free and
clear of any lien, claim or
encumbrance of any Person.
(b) The Depositor has received all
consents and approvals required by
the terms of the Securities to the
transfer to the Trustee of its
interest and rights in the
Securities as contemplated by the
Trust Agreements.
(c) The Depositor has not assigned,
pledged, sold, granted a security
interest in or otherwise conveyed
any interest in the Securities (or,
if any such interest has been
assigned, pledged or otherwise
encumbered, it has been released),
except such interests granted
pursuant to the Trust Agreements.
The Depositor has not authorized the
filing of and is not aware of any
financing statements against the
Depositor that includes a
description of the Securities, other
than any such filings pursuant to
the Trust Agreements. The Depositor
is not aware of any judgment or tax
lien filings against Depositor.
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 and the Swap
Counterparties copies of any notices
it receives with respect to a
redemption of or self-tender offer
for the Securities or an exercise of
the call rights under the Swap
Agreement and any other notices with
respect to the Securities. The
Trustee shall provide to the Swap
Counterparty any notice from the
Securities Issuer regarding an early
redemption of or self-tender offer
for the Securities within two (2)
Business Days of receipt of such
notice.
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.
For the avoidance of doubt, Section
9.03(c) of the Standard Terms shall
not be incorporated herein. For the
avoidance of doubt, the Securities
may not be distributed to
Unitholders under any circumstances,
other than to the Depositor
exercising exchangeable series
rights.
Section 9.03(i) of the Standard
Terms shall be incorporated herein
by striking "or oral" after the
phrase "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 any Swap Counterparty
under any 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: Aon Capital A 8.205% trust preferred
capital securities due January 1,
2027
Security Issuer: Aon Capital A
Security Guarantor: Aon 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 Security Guarantor's 8.205%
junior subordinated debentures due
2027. 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: $41,608,000
Security Rate: 8.205%
Credit Ratings: Baa3 by Moody's
BBB by S&P
Listing: None
Security Agreement: As to the Securities, the
amended and restated declaration of
trust dated as of January 13, 1997
relating to the Security Issuer. As
to the Guarantor Debentures, the
indenture, dated as of January 13,
1997, between the Security Guarantor
and The Bank of New York.
Form: Global
Currency of
Denomination: United States dollars
Acquisition Price by Trust: $41,050,368
Security Payment Date: Each January 1 and July 1
Original Issue Date: The Securities were
issued on or about January 13, 1997.
The Security Issuer offered to
exchange the securities then issued
for publicly registered securities
and such offering closed on or about
May 5, 1997.
Maturity Date: January 1, 2027.
Sinking Fund Terms: Not Applicable
Redemption Terms: The Guarantor Debentures and the
Securities may be redeemed upon a
"tax event" or an "investment
company event" (as defined in the
underlying indenture and trust
agreement). 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. 037388AE5
Security Trustee: The Bank of New York
Guarantor Debenture Trustee: The Bank of New York
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, D.C. 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, District of
Columbia 20549 at prescribed rates.
Schedule III
(Call Option Confirm)
MORGAN STANLEY
- --------------------------------------------------------------------------------
Date: February 27, 2003
To: SATURNS Trust No. 2003-3 From: Morgan Stanley & Co.
International Limited
Attn: Asset-Backed Securities Group Contact: John Kehoe
SATURNS Trust No. 2003-3
Fax: 312-904-2084 Fax: 212-761-0406
Tel: 312-904-9387 Tel: 212-761-1395
- --------------------------------------------------------------------------------
Re: Bond Option Transaction. MS Reference Number SQ256
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: February 27, 2003
Option Style: American
Option Type: Call
Buyer: MSIL ("Party A")
Seller: SATURNS Trust No. 2003-3 ("Party B")
Bonds: The obligation identified as
follows:
Bond Issuer: Aon Capital A
Issue: 8.205% trust preferred
capital
securities due 2027
CUSIP: 037388AE 5
Coupon: 8.205%
Maturity
Date: January 1, 2027
Face Amount
Purchased: USD 41,608,000
Premium: USD $104,020
Premium Payment Date: February 27, 2003
Number of Options: 41,608
Option Entitlement: USD 1,000 of face amount of the
Bonds per Option.
Strike Price:
(i) For any Exercise Date prior to
February 27, 2008, the redemption
price of the Bonds including any
make-whole amount (expressed as a
percentage) subject to a maximum of
110%, in the case of an exercise
related to a redemption, or 106%, in
the case of an exercise related to a
self-tender by the Bond Issuer for
Bonds held by the Trust, in each
case of the corresponding portion of
the face amount of the Bonds but
exclusive of accrued interest on the
Bonds or (ii) for any Exercise Date
on or after February 27, 2008, 100%
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 February 27, 2008, to, and
including, the Expiration Time on
the Expiration Date; provided,
however, the Exercise Period shall
also include any Business Day prior
to February 27, 2008, if notice of
redemption or self-tender has been
delivered by the Bond Issuer as to
Bonds held by the Trust.
Exercise Date: For each Option exercised, the day
during the Exercise Period on which
that Option is exercised.
Rescission of Exercise: Party A may rescind its notice of
exercise at any time prior to the
Settlement Date by providing notice
of rescission to Party B.
If Cash Settlement applies and if
Party B cannot obtain a bid for
the Bonds held by it in excess of
the Strike Price together with
accrued interest on the Bonds,
then Party A's notice of exercise
shall be rescinded; provided that
this provision shall not apply in
connection with a redemption. If
Cash Settlement applies and if
Party A exercises its Options in
connection with a self-tender for
settlement prior to February 27,
2008, Party A's notice of exercise
shall be automatically rescinded
if the price offered by the Bond
Issuer does not exceed the Strike
Price together with accrued
interest on the Bonds.
Upon any rescission of exercise
(whether pursuant to the foregoing
sentence or otherwise) the Options
for which notice of exercise was
given and for which exercise was
rescinded shall continue in full
force and effect without regard to
such provision of notice.
Any Options exercised under this
Transaction may be deemed
rescinded to the extent so
provided under Schedule I to the
Trust Agreement.
Multiple Exercise: Applicable
Minimum Number of Options: 1
Written Confirmation of Exercise: Applicable. Buyer shall give
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: Buyer may, by written notice thereof
to Seller, delegate its rights to
provide a notice of exercise
hereunder to a third party (the
"Third Party"). Any such delegation
will be irrevocable by Buyer without
the written consent of the Third
Party. Any such Third Party will
have the same rights and obligations
regarding providing notice of
exercise hereunder as the Buyer had
prior to such delegation. While any
such delegation is effective, Seller
will only recognize a notice of
exercise that is provided by the
Third Party.
Notification Date: The Swap Counterparty may give
notice of its intention to exercise
the call rights under the Swap
Agreement on not less than 15 or
more than 60-calendar days' notice.
The Swap Counterparty may give
notice of its intention to exercise
its call rights under the Swap
Agreement with respect to Bonds held
by the Trust as to which the Bond
Issuer has given notice of its
intention to redeem or notice of a
self-tender with two business days
notice prior to the settlement of
exercise but no later than 4:00 p.m.
New York time on the second Business
Day immediately preceding the
scheduled settlement of the
redemption or self-tender.
Limited Right to Confirm Exercise: Inapplicable
Expiration Date: January 1, 2024
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
or if the Options are exercised in
connection with a redemption or
self-tender; otherwise Physical
Settlement. Party A will notify
Party B separately regarding the
clearance system details for
Physical Settlement.
Spot Price (Cash Settlement Only): The cash proceeds received by Party
B in connection with sale of the
Bonds by Party B, excluding any
amounts in respect of accrued
interest. In the event of a
redemption or self-tender by the
Bond Issuer, the redemption price or
self tender price, as applicable,
paid by the Bond Issuer, excluding
accrued interest.
Cash Settlement Amount (Cash
Settlement Only): The Cash Settlement Amount shall be
adjusted to reflect the Additional
Payment Obligation of Party A.
Bond Payment (Physical Settlement Only): The Bond Payment shall also include
the Additional Payment Obligation of
Party A.
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 Party A: To the Expense Administrator (the
"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 $6,512
payable on each payment date for the
Bonds until the maturity of the
Bonds discounted at a rate of 5% 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 $41,608,000.
To Party B for Payment on the
Class B Units (the "Class B Unit
Payment Obligation"):
Upon any exercise hereunder, Party
A shall pay to Party B (whether
Cash Settlement or Physical
Settlement applies), for
distribution with respect to the
Class B Units outstanding under
the Trust Agreement, the Class B
Present Value Amount (as defined
in the Trust Agreement).
Settlement Date: For Cash Settlement, as applicable,
the Business Day of settlement of
the sale of the Bonds by Party B or
the Business Day of settlement of a
redemption of Bonds by the Bond
Issuer. For Physical Settlement, the
Exercise Date.
3. Additional Definitions.
"Expense Administrator" means LaSalle Bank National Association acting
pursuant to the "Expense Administration Agreement".
"Trust Agreement" means the trust agreement dated as of the date hereof
between the MS 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. A redemption by the Bond Issuer of a portion
of the Bonds held by Party B will result in a partial Additional Termination
Event to the extent of the Bonds being so redeemed (or, to the extent there are
multiple Swap Counterparties, to such portion of the Bonds being redeemed
allocable to the options held by Party A) if Party A does not exercise Options
hereunder corresponding to such Bonds.
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 for each option so
terminated in lieu of the termination payment determined in accordance with
Section 6(e) of the Agreement, the amount specified as the Swap Termination
Payment in the Trust Agreement.
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, as amended.
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 2003-3
Unit Account / AC-2090067/
Account No.: 67-9170-209
Operations Contact: Andy Streepey
Tel: 312-904-9387
Fax: 312-904-2084
MORGAN STANLEY
Please confirm that the foregoing correctly sets forth the terms of our
agreement MS Reference Number SQ256 by executing this Confirmation and returning
it to us.
Best Regards,
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
BY: /s/ John Kehoe
-------------------------
Name: John Kehoe
Title: Attorney in fact
Acknowledged and agreed as of the date first written above:
SATURNS TRUST NO. 2003-3
BY: LaSalle Bank National Association,
solely as Trustee and not in its individual capacity.
BY: /s/ Ann M. Kelly
-------------------------
Name: Ann M. Kelly
Title: Assistant 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: /s/ John Kehoe
-------------------------
Name: John Kehoe
Title: Attorney in fact