Exhibit 4.1
STRATS(SM) CERTIFICATES SERIES SUPPLEMENT 2005-1
between
SYNTHETIC FIXED-INCOME SECURITIES, INC.,
as Trustor
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee and Securities Intermediary
STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I SECURITIES, SERIES 2005-1
TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT.........................................................................................1
Section 1. Certain Defined Terms...........................................................................1
Section 2. Creation and Declaration of Trust; Sale of Underlying Securities; Acceptance by Trustee.........5
Section 3. Designation.....................................................................................6
Section 4. Date of the Certificates........................................................................7
Section 5. Certificate Stated Amount and Denominations.....................................................7
Section 6. Currency of the Certificates....................................................................7
Section 7. Form of Securities..............................................................................7
Section 8. Swap Payments; Collateral Account...............................................................7
Section 9. Certain Provisions of Base Trust Agreement Not Applicable.......................................8
Section 10. Distributions...................................................................................8
Section 11. Termination of Trust...........................................................................10
Section 12. Limitation of Powers and Duties................................................................11
Section 13. Compensation of Trustee........................................................................12
Section 14. Modification or Amendment of the Base Trust Agreement, the Series Supplement or the
Swap Agreement.................................................................................12
Section 15. Assignment of Rights under the Swap Agreement..................................................13
Section 16. Accounting.....................................................................................13
Section 17. No Investment of Amounts Received on Underlying Securities.....................................13
Section 18. No Event of Default............................................................................14
Section 19. Notices........................................................................................14
Section 20. Access to Certain Documentation................................................................14
Section 21. Advances.......................................................................................15
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Section 22. Ratification of Agreement......................................................................15
Section 23. Counterparts...................................................................................15
Section 24. Governing Law..................................................................................15
Section 25. Certificate of Compliance......................................................................15
Section 26. Certain Filing to be Made by the Trustee.......................................................15
Section 27. Establishment of Accounts......................................................................15
Section 28. Statement of Intent............................................................................16
Section 29. Filing of Partnership Returns..................................................................16
Section 30. "Financial Assets" Election....................................................................16
Section 31. Trustee's Entitlement Orders...................................................................16
Section 32. Conflict with Other Agreements.................................................................17
Section 33. Additional Trustee and Securities Intermediary Representations.................................17
Section 34. Additional Trustor Representations.............................................................17
Section 35. Certification Requirements.....................................................................18
Section 36. Additional Rights of the Swap Counterparty.....................................................18
Section 37. Modification of Certain Provisions of Base Trust Agreement.....................................18
Section 38. Evidence of Integration for Tax Purposes.......................................................18
Section 39. Optional Exchange..............................................................................18
Exhibit A -- Identification of the Underlying Securities as of Closing Date
Exhibit B -- Terms of the Certificates as of Closing Date
Exhibit C -- Form of Certificates
Exhibit D -- Form of Swap Agreement
Exhibit E -- Evidence of Integration for Tax Purposes
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STRATS(SM) SERIES SUPPLEMENT 2005-1, dated as of June 13, 2005 (this
"Series Supplement"), between SYNTHETIC FIXED-INCOME SECURITIES,
INC., a Delaware corporation, as Trustor (the "Trustor"), and U.S.
Bank Trust National Association, a national banking association, as
trustee (the "Trustee") and as securities intermediary (the
"Securities Intermediary").
PRELIMINARY STATEMENT
Pursuant to the Base Trust Agreement, dated as of September 26, 2003
(the "Base Trust Agreement" and, as supplemented pursuant to the Series
Supplement, the "Agreement"), between the Trustor and the Trustee, such
parties may at any time and from time to time enter into a series supplement
supplemental to the Base Trust Agreement for the purpose of creating a trust.
Section 5.13 of the Base Trust Agreement provides that the Trustor may at any
time and from time to time direct the Trustee to authenticate and deliver, on
behalf of any such trust, a new Series of trust certificates. Each trust
certificate of such new Series of trust certificates will represent a
fractional undivided beneficial interest in such trust. Certain terms and
conditions applicable to each such Series are to be set forth in the related
series supplement to the Base Trust Agreement.
Pursuant to this Series Supplement, the Trustor and the Trustee
shall create and establish a new trust to be known as STRATS(SM) Trust For
Goldman Sachs Capital I Securities, Series 2005-1, and a new Series of trust
certificates to be issued thereby, which certificates shall be known as the
STRATS(SM) Certificates, Series 2005-1, and the Trustor and the Trustee shall
herein specify certain terms and conditions in respect thereof. The Trust
shall also enter into a swap agreement (the "Swap Agreement") pursuant to
which the Trust will exchange interest payments due on the Underlying
Securities for payments from the Swap Counterparty which will be passed
through to the Certificateholders.
The STRATS(SM) Certificates, Series 2005-1 shall be floating rate
Certificates (the "Certificates") issued in the form thereof set forth in
Exhibit C.
On behalf of and pursuant to the authorizing resolutions of the
Board of Directors of the Trustor, an authorized officer of the Trustor has
authorized the execution, authentication and delivery of the Certificates, and
has authorized the Base Trust Agreement, the Swap Agreement (as defined
below), and this Series Supplement in accordance with the terms of Section
5.13 of the Base Trust Agreement.
Section 1. Certain Defined Terms. (a) All terms used in this Series
Supplement that are defined in the Base Trust Agreement, either directly or by
reference therein, have the meanings assigned to such terms therein, except to
the extent such terms are defined or modified in this Series Supplement or the
context requires otherwise. The Base Trust Agreement also contains rules as to
usage which shall be applicable hereto.
(b) Pursuant to Article I of the Base Trust Agreement, the meaning of
certain defined terms used in the Base Trust Agreement shall, when applied to
the trust certificates of a particular Series, be as defined in Article I but
with such additional provisions and modifications
as are specified in the related series supplement. With respect to the
Certificates, the following definitions shall apply:
"Acceleration": The acceleration of the maturity of the Underlying
Securities after the occurrence of any default on the Underlying Securities
other than a Payment Default.
"Accounts": Collectively the Certificate Account and the Collateral
Account.
"Affected Party": Shall have the meaning provided under the Swap
Agreement.
"Agreement": Agreement shall have the meaning specified in the
Preliminary Statement to this Series Supplement.
"Base Trust Agreement": Base Trust Agreement shall have the meaning
specified in the Preliminary Statement to this Series Supplement.
"Business Day": Any day other than a Saturday, Sunday or a day on
which banking institutions in New York, New York or London, England are
authorized or obligated by law, executive order or governmental decree to be
closed.
"Calculation Agent": Wachovia Bank, National Association, in its
capacity as calculation agent under the Swap Agreement.
"Certificate Account": With respect to this Series, the Eligible
Account, which shall be a securities account established and maintained by the
Securities Intermediary in the Trustee's name, to which the Underlying
Securities and all payments made on or with respect to the related Underlying
Securities and all payments made to the Trust on or with respect to the Swap
Agreement shall be credited.
"Certificateholder" or "Holder": With respect to any Certificate,
the Holder thereof.
"Certificateholders" or "Holders": The Holders of the Certificates.
"Certificates": Certificates shall have the meaning specified in the
Preliminary Statement to this Series Supplement.
"Closing Date": June 13, 2005.
"Collateral Account": With respect to this Series, the Eligible
Account, which shall be a securities account established and maintained by the
Securities Intermediary in the Trustee's name, to which any Posted Collateral
and all proceeds thereof shall be credited in accordance with the Swap
Agreement.
"Collection Period": The period from (but excluding) the preceding
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date), through and including the current Distribution
Date.
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"Corporate Trust Office": U.S. Bank Trust National Association, 100
Wall Street, Suite 1600, New York, New York 10005 or such other corporate
trust office as the Trustee shall designate in writing to the Trustor and the
Certificateholders.
"Defaulting Party": Shall have the meaning provided under the Swap
Agreement.
"Deferral Period": Any period during which Interest Collections
payable on a Scheduled Distribution Date will not be paid as a result of the
deferral of interest payments on the Junior Subordinated Debentures and,
consequently, on the Underlying Securities.
"Depositary": The Depositary Trust Company.
"Depositor": The Trustor acting specifically with respect to the
conveyance of the Underlying Securities under this Series Supplement.
"Distribution Date": Any Scheduled Distribution Date, the Maturity
Date or any Underlying Securities Default Distribution Date or, if applicable,
any Underlying Securities Redemption Distribution Date.
"Interest Collections": For any Distribution Date, the sum of (i)
all amounts received during the Collection Period ending on such Distribution
Date from the Swap Counterparty pursuant to the Swap Agreement and (ii) any
amounts representing interest on the Underlying Securities that are actually
received by the Trust pursuant to the Underlying Securities on such
Distribution Date and not required to be paid to the Swap Counterparty
pursuant to the Swap Agreement.
"Junior Subordinated Debentures": 6.345% junior subordinated
debentures due February 15, 2034 issued by the Underlying Securities
Guarantor.
"Maturity Date": February 15, 2034.
"Optional Exchange": Any exchange of Certificates held by the
Depositor for Underlying Securities under Section 39 of this Series
Supplement.
"Payment Default": A default by the Underlying Securities Issuer in
the payment of any amount due on the Underlying Securities after the same
becomes due and payable on any Underlying Securities Payment Date (and the
expiration of any applicable grace period on the Underlying Securities).
"Place of Distribution": New York, New York.
"Posted Collateral": Shall have the meaning provided under the Swap
Agreement.
"Rating Agency": S&P and any successor thereto. References to "the
Rating Agency" in the Agreement shall be deemed to be such credit rating
agency.
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"Record Date": With respect to any Distribution Date, the day
immediately preceding such Distribution Date.
"S&P": Standard & Poor's Ratings Services or any successor thereto.
"Scheduled Distribution Date": (a) For so long as the Swap Agreement
shall not have been terminated, and no Deferral Period shall have occurred,
the 15th day of each calendar month, or, if any such day is not a Business
Day, then the immediately following Business Day, commencing July 15, 2005,
until the date on which the Certificates have been retired; provided, however,
that payment on each Scheduled Distribution Date shall be subject to prior
payment of interest or principal, as applicable, on the Underlying Securities
or
(b) following (i) a Swap Agreement Termination Event that is not
also a Trust Termination Event or (ii) a Deferral Period, subject to the
conditions set forth in Section 10(d) herein, Scheduled Distribution Dates
will thereafter occur semi-annually on each February 15 and August 15, or the
immediately following Business Day, until the Certificates have been retired.
"SEC Reporting Failure": Any circumstance in which the Underlying
Securities Guarantor either (x) states in writing that it intends permanently
to cease filing periodic reports required under the Securities Exchange Act of
1934 or (y) fails to file its required periodic reports for any quarterly
reporting period, and (2) the Trustor determines after consultation with the
Securities and Exchange Commission, that under applicable securities laws,
rules or regulations the Trust must be liquidated or the Underlying Securities
distributed.
"Specified Currency": United States Dollars.
"Swap Agreement": The ISDA Master Agreement dated as of the Closing
Date, between the Trust and the Swap Counterparty (including the Schedule and
Credit Support Annex thereto) as supplemented by Confirmation Number 1146670,
1146672, in the form attached hereto as Exhibit D.
"Swap Agreement Termination Event": The occurrence of any "Event of
Default" or "Termination Event" under the Swap Agreement.
"Swap Counterparty": Wachovia Bank, N.A., or any permitted successor
or assign thereto.
"Trust": STRATS(SM) Trust For Goldman Sachs Capital I Securities,
Series 2005-1.
"Trust Termination Event": (a) the payment in full at maturity or
upon early redemption of the Certificates, (b) the final distribution of the
proceeds received upon a recovery on the Underlying Securities (after
deducting the costs incurred in connection therewith) after an Acceleration or
other default with respect to the Underlying Securities (and the expiration of
any applicable grace period on the Underlying Securities), (c) the
distribution (or liquidation and distribution) of the Underlying Securities in
accordance with Section 10(i) hereof in the event of an SEC Reporting Failure,
(d) any Swap Agreement Termination Event pursuant to which the
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Trust is the Defaulting Party or an Affected Party and amounts are owed by the
Trust under the Swap Agreement that are in excess of the redemption proceeds
or other current distributions on the Underlying Securities or (e) any
Optional Exchange of all Certificates then outstanding.
"Underlying Securities": (a) As of the Closing Date, $10,000,000 (by
aggregate liquidation amount) of 6.345% Capital Securities due February 15,
2034 issued by the Underlying Securities Issuer, sold to the Trustee by
Wachovia Securities and identified on Exhibit A hereto or (b) an aggregate
principal amount of Junior Subordinated Debentures equal to a corresponding
aggregate liquidation amount of Underlying Securities distributed or exchanged
for the Underlying Securities by the Underlying Securities Issuer or the
Underlying Securities Guarantor.
"Underlying Securities Default Distribution Date": The date on which
the Trustee makes a final distribution of the proceeds received in connection
with a recovery on the Underlying Securities (in the case of Payment Default,
after deducting any costs incurred in connection therewith) following a
Payment Default or an Acceleration or other default with respect to the
Underlying Securities.
"Underlying Securities Guarantor": The Goldman Sachs Group, Inc.
"Underlying Securities Issuer": Goldman Sachs Capital I.
"Underlying Securities Payment Date": The 15th day of each February
and August ending on February 15, 2034; provided, however, that if any
Underlying Securities Payment Date would otherwise fall on a day that is not a
Business Day, such Underlying Securities Payment Date will be the following
Business Day.
"Underlying Securities Redemption Distribution Date": Any date on
which the payment of the principal of the Underlying Securities, either in
whole or in part, is paid to the Trustee, except that to the extent that the
Junior Subordinated Debentures are distributed to the Trustee by the
Underlying Securities Issuer, no Underlying Securities Redemption Distribution
Date shall have occurred.
"Underlying Securities Trustee": The trustee for the Underlying
Securities.
"Unpaid Amounts": As to the Trust or the Swap Counterparty,
respectively, an amount equal to the regular scheduled payments that such
party is otherwise required to make under the Swap Agreement, through, but
excluding, the date on which the Swap Agreement is terminated.
"Voting Rights": The Certificateholders shall have 100% of the total
Voting Rights with respect to the Certificates and shall be allocated among
all Holders of Certificates in proportion to the Stated Amounts held by such
Holders on any date of determination.
"Wachovia Securities": Wachovia Capital Markets, LLC.
Section 2. Creation and Declaration of Trust; Sale of Underlying
Securities; Acceptance by Trustee. (a) The Trust, of which the Trustee is the
trustee, is hereby created
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under the laws of the State of New York for the benefit of the holders of the
Certificates and the Swap Counterparty. The Trust shall be irrevocable.
(b) The Trustor, acting as Depositor, does hereby sell, assign,
convey and set-over to the Trustee, on behalf and for the benefit of the
Trust, the Underlying Securities at a purchase price of $10,470,000 in cash.
The Trustee shall pay the full purchase price for the Underlying Securities by
delivering to Wachovia Securities, for the account of the Depositor, and as
the assignee of Depositor with respect to such amounts, (i) $10,470,000 on the
Closing Date and (ii) $35,250 on August 15, 2005, which represents the accrued
and unpaid interest of the Underlying Securities on the Closing Date. The
amounts to be paid to Wachovia Securities set forth in clause (i) above, shall
be paid from the proceeds of the issuance of the Certificates to be received
by the Trustee on the Closing Date. The amounts to be paid to Wachovia
Securities set forth in clause (ii) above, shall be paid from the interest
payment on the Underlying Securities to be received by the Trustee on August
15, 2005. In the event that such interest payment on the Underlying Securities
is not received by the Trustee on such date or is otherwise insufficient to
pay such amount of accrued and unpaid interest to Wachovia Securities,
Wachovia Securities, for the account of the Depositor, and as assignee of
Depositor with respect to such amounts, shall have a claim for the unpaid
portion of such amount and shall share pari passu with Certificateholders to
the extent of such claim in the proceeds from the sale or recovery of the
Underlying Securities. The Trustor hereby instructs the Trustee on behalf of
and for the benefit of the Trust to enter into and execute the Swap Agreement
and perform the obligations thereunder on behalf of the Trust, including, but
not limited to, receiving and returning any collateral posted by the Swap
Counterparty in accordance with the Swap Agreement.
(c) The Trustee hereby (i) acknowledges such sale, deposit and
delivery, pursuant to subsection (b) above, and receipt by it of the
Underlying Securities, (ii) acknowledges receipt of the duly authorized and
executed Swap Agreement, (iii) accepts the trusts created hereunder in
accordance with the provisions hereof and of the Base Trust Agreement but
subject to the Trustee's obligation, as and when the same may arise, to make
any payment or other distribution of the assets of the Trust as may be
required pursuant to this Series Supplement, the Base Trust Agreement, the
Certificates and the Swap Agreement, and (iv) agrees to perform the duties
herein or therein required and any failure to receive reimbursement of
expenses and disbursements under Section 13 hereof shall not release the
Trustee from its duties herein or therein.
Section 3. Designation. There is hereby created a Series of trust
certificates to be issued pursuant to the Base Trust Agreement and this Series
Supplement to be known as the "STRATS(SM) Certificates, Series 2005-1". The
Certificates shall have the terms provided for in this Series Supplement. The
Certificates shall be issued in the amount set forth in Section 5 and with the
additional terms set forth in Exhibit B to this Series Supplement. The
Certificates shall be issued in substantially the form set forth in Exhibit C
to this Series Supplement with such necessary or appropriate changes as shall
be approved by the Trustor and the Trustee, such approval to be manifested by
the execution and authentication thereof by the Trustee. The Certificates
shall evidence undivided ownership interests in the assets of the Trust,
subject to the liabilities of the Trust and shall be payable solely from
payments or property received by the Trustee on or in respect of the
Underlying Securities and the Swap Agreement.
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Section 4. Date of the Certificates. The Certificates that are
authenticated and delivered by the Trustee to or upon Trustor Order on the
Closing Date shall be dated the Closing Date. All other Certificates that are
authenticated after the Closing Date for any other purpose under the Agreement
shall be dated the date of their authentication.
Section 5. Certificate Stated Amount and Denominations. On the
Closing Date, up to 10,000 Certificates with an aggregate Stated Amount of
$10,000,000 may be authenticated and delivered under the Base Trust Agreement
and this Series Supplement. The Stated Amount of the Certificates shall equal
100% of the initial principal amount of Underlying Securities sold to the
Trustee and deposited in the Trust. Such Stated Amount shall be calculated
without regard to Certificates authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Certificates pursuant
to Sections 5.3, 5.4 or 5.5 of the Base Trust Agreement.
Section 6. Currency of the Certificates. All distributions on the
Certificates will be made in the Specified Currency.
Section 7. Form of Securities. The Trustee shall execute and deliver
the Certificates in the form of one or more global certificates registered in
the name of the Depositary or its nominee.
Section 8. Swap Payments; Collateral Account. (a) The Trust shall
pay to the Swap Counterparty (i) for so long as the Swap Agreement shall not
have been terminated, except during a Deferral Period, an amount equal to all
interest payments received by the Trust in respect of the Underlying
Securities on each Underlying Securities Payment Date, excluding any amount of
interest that accrued with respect to the Underlying Securities from the
Underlying Securities Payment Date immediately preceding the Closing Date to,
but excluding, the Closing Date and (ii) all other amounts owing to the Swap
Counterparty under the Swap Agreement to the extent Trust assets are
sufficient therefor, including but not limited to all Unpaid Amounts upon the
occurrence of any Swap Agreement Termination Event
(b) In the event that any payment with respect to the Underlying
Securities is not received by the Trustee by 12 noon (New York City time) on
an Underlying Securities Payment Date as a result of any Deferral Period, the
Trustee shall not make any payment to the Swap Counterparty on such Underlying
Securities Payment Date. If any payment with respect to the Underlying
Securities is made to the Trustee after an Underlying Securities Payment Date
on which such payment was due, the Trustee shall promptly distribute such
amount received to the Swap Counterparty on any date the Trustee receives such
payment, or as soon as practicable thereafter.
(c) The Trustee shall within 3 Business Days of the Closing Date
establish the Collateral Account. Any and all amounts at any time on deposit
in the Collateral Account shall be held in trust by the Trustee for the
benefit of Certificateholders and the Swap Counterparty; provided, that, the
only permitted withdrawal from or application of funds on deposit in, or
otherwise to the credit of, the Collateral Account shall be (i) for
application to obligations of the Swap Counterparty to the Trust under the
Swap Agreement in accordance with the terms of the Swap Agreement or (ii) to
return Posted Collateral to the Swap Counterparty when and as
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required by the Swap Agreement, which the Trustee shall return to the Swap
Counterparty in accordance with the related Swap Agreement.
Section 9. Certain Provisions of Base Trust Agreement Not
Applicable. The provisions of Sections 5.11, 5.16, 6.2, Article VII, 8.1, 8.2
and 8.10 of the Base Trust Agreement and any other provision of the Base Trust
Agreement which imposes obligations on or creates rights in favor of the
Trustee or the Certificateholders as a result of or in connection with an
"Event of Default" or "Administrative Agent Termination Event" shall be
inapplicable with respect to the Certificates. In addition, there is no
"Administrative Agent" specified herein, and all references to "Administrative
Agent" in the Base Trust Agreement, therefore shall be inapplicable with
respect to the Certificates.
Section 10. Distributions. (a) On each Distribution Date, except
during any Deferral Period during which no distributions to Certificateholders
shall be made, so long as no Swap Agreement Termination Event has occurred for
which the Trust is the Defaulting Party or an Affected Party, the Trustee
shall distribute to the Certificateholders the Interest Collections. On the
Maturity Date, and to the extent received on any other Scheduled Distribution
Date, so long as no Swap Agreement Termination Event has occurred for which
the Trust is the Defaulting Party or an Affected Party, the Trustee shall
distribute to the Certificateholders, the principal amount of the Underlying
Securities to the extent the principal of the Underlying Securities is
received by the Trustee on such date or during the related Collection Period
plus any accrued interest thereon.
(b) If a Swap Agreement Termination Event has occurred for which the
Trust is the Defaulting Party or an Affected Party, the Trustee, first, shall
distribute all collections received on the Underlying Securities to the Swap
Counterparty until all amounts owing to the Swap Counterparty under the Swap
Agreement for payments in connection with such Swap Agreement Termination
Event (including any Unpaid Amounts) have been paid in full and, second, shall
distribute all remaining amounts to the Certificateholders. If the
distribution in the preceding sentence is insufficient to pay in full all
amounts owing to the Swap Counterparty, the Trustee shall proceed to liquidate
or distribute the Underlying Securities in accordance with Section 10(i). Upon
any liquidation of the Underlying Securities, the Trustee, first, shall
distribute the proceeds thereof to the Swap Counterparty until all amounts
owing to the Swap Counterparty have been paid in full and, second, shall
distribute all remaining amounts to the Certificateholders. In the event of a
Swap Agreement Termination Event, after paying all amounts due to the Swap
Counterparty as set forth in the first sentence of this Section 10(b), if no
Trust Termination Event has occurred, all Interest Collections shall
thereafter be distributed to Certificateholders on each applicable
Distribution Date. If a Swap Agreement Termination Event has occurred for
which the Swap Counterparty is the Defaulting Party or the only Affected
Party, notwithstanding the termination of the Swap Agreement, the Trustee
shall distribute any Unpaid Amounts to the Swap Counterparty from Interest
Collections on the Underlying Securities.
(c) In all cases hereunder, except as provided in subsections 8(b)
and 10(d) hereof, if any payment with respect to the Underlying Securities is
made to the Trustee after the Underlying Securities Payment Date on which such
payment was due, the Trustee shall distribute such amount received on the
Business Day following such receipt.
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(d) Upon the occurrence of any Deferral Period (i) the Trustee shall
not be obligated to distribute Interest Collections on any Scheduled
Distribution Date until (x) payments on the Underlying Securities have resumed
and (y) all amounts due and payable on the Underlying Securities have been
received by the Trust and any amounts owed to the Swap Counterparty under the
Swap Agreement have been paid to the Swap Counterparty. Upon the satisfaction
of these conditions, the Trustee shall distribute the Interest Collections to
Certificateholders in accordance with subsection 10(a) above.
(e) In the event of a Payment Default while the Swap Agreement is in
effect and if any payment is due to the Swap Counterparty, the Underlying
Securities will be liquidated in accordance with Section 10(i). Otherwise, in
the event of a Payment Default, the Trustee shall proceed against the
Underlying Securities Issuer on behalf of the Certificateholders to enforce
the Underlying Securities or otherwise to protect the interests of the
Certificateholders, subject to the receipt of indemnity in form and substance
satisfactory to the Trustee; provided, that Holders of the Certificates
representing a majority of the Voting Rights on the Certificates will be
entitled to direct the Trustee in any such proceeding or direct the Trustee to
sell the Underlying Securities, subject to the Trustee's receipt of
satisfactory indemnity.
(f) In the event of an Acceleration and a corresponding payment on
the Underlying Securities prior to any liquidation of the Underlying
Securities hereunder, the Trustee shall distribute the proceeds to the
Certificateholders no later than two (2) Business Days after the receipt of
immediately available funds pursuant to Section 10(b).
(g) In the event the Trustee receives property other than cash in
respect of the Underlying Securities such property will be applied first, to
the Swap Counterparty until all amounts owing to the Swap Counterparty have
been paid in full and, second, to the Certificateholders. Property other than
cash will be liquidated by the Trustee, and the proceeds thereof distributed
in cash, to the extent necessary to pay to the Swap Counterparty all amounts
owed to it under the Swap Agreement and, thereafter, to the extent necessary
to avoid distribution of fractional securities to Certificateholders. In-kind
distribution of Underlying Securities or other property to Certificateholders
will be deemed to reduce the Stated Amount of Certificates on a proportionate
basis. Following such in-kind distribution, all Certificates will be
cancelled. No amounts will be distributed to the Trustor in respect of the
Underlying Securities. The Swap Counterparty shall direct the Trustee with
respect to any liquidation of such property to the extent of the full amount
owed to it under the Swap Agreement.
(h) If an SEC Reporting Failure occurs, then the Trustor shall
promptly notify the Trustee, the Swap Counterparty and the Rating Agency of
such SEC Reporting Failure and the Trustee shall proceed to liquidate or
distribute the Underlying Securities in accordance with Section 10(i).
(i) If at any time, the Trustee is directed to sell the Underlying
Securities, the Trustee shall solicit bids for the sale of the Underlying
Securities with settlement thereof on or before the third (3rd) Business Day
after such sale from three leading dealers in the relevant market, which may
include but is not limited to any three of the following dealers: (1) Wachovia
Securities, (2) Goldman, Sachs & Co., (3) Lehman Brothers Inc., (4) Merrill
Lynch, Pierce, Fenner & Smith Incorporated, (5) Citigroup Global Markets Inc.,
(6) J.P. Morgan Securities Inc.
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and (7) Deutsche Bank Securities Inc.; provided, however, that no bid from
Wachovia Securities or any affiliate thereof shall be accepted unless such bid
equals the then fair market value of such Underlying Securities. The Trustee
shall not be responsible for the failure to obtain a bid so long as it has
made reasonable efforts to obtain bids. If a bid for the sale of the
Underlying Securities has been accepted by the Trustee but the sale has failed
to settle on the proposed settlement date, the Trustee shall request new bids
from such leading dealers. In any circumstance in which the sale of the
Underlying Securities is required hereunder, the Trustee shall, to the extent
it is so directed by the Trustor, provide Certificateholders with the option
to elect to receive an "in-kind" distribution of their pro rata share of the
Underlying Securities; provided, that, (1) an in-kind distribution shall be
subject to the prior sale of Underlying Securities in accordance with the
provisions of this Section 10(i) to the extent necessary, to pay any amounts
owing to the Swap Counterparty under Section 10(b), (2) a Certificateholders'
pro rata share of the Underlying Securities shall be a principal amount of
Underlying Securities equal to the aggregate principal amount of the
Underlying Securities minus the amount required to be distributed to the Swap
Counterparty pursuant to the second sentence of Section 10(b) multiplied by a
fraction the numerator of which is the Stated Amount of that holder's
Certificates and the denominator of which is the aggregate principal amount of
the Underlying Securities and (3) odd-lot amounts that cannot be distributed
in-kind because they are not within the authorized denominations of the
Underlying Securities shall be distributed in cash. Any such in-kind
distribution shall constitute the final distribution in respect of the
Certificates as to which such option is exercised.
(j) Distributions to the Certificateholders on each Distribution
Date will be made to the Certificateholders of record on the Record Date.
(k) All distributions to Certificateholders shall be allocated pro
rata among the Certificates based on their respective Outstanding Amounts as
of the Record Date.
(l) Notwithstanding any provision of the Agreement to the contrary,
to the extent funds are available, the Trustee will initiate payment in
immediately available funds by 1:00 P.M. (New York City time) on each
Distribution Date of all amounts payable to each Certificateholder with
respect to any Certificate held by such Certificateholder or its nominee
(without the necessity for any presentation or surrender thereof or any
notation of such payment thereon) in the manner and at the address as each
Certificateholder may from time to time direct the Trustee in writing 15 days
prior to such Distribution Date requesting that such payment will be so made
and designating the bank account to which such payments shall be so made. The
Trustee shall be entitled to rely on the last instruction delivered by the
Certificateholder pursuant to this Section 10(g) unless a new instruction is
delivered 15 days prior to a Distribution Date.
(m) The rights of the Certificateholders to receive distributions in
respect of the Certificates, and all interests of the Certificateholders in
such distributions, shall be as set forth in this Series Supplement. The
Trustee shall in no way be responsible or liable to the Certificateholders nor
shall any Certificateholder in any way be responsible or liable to any other
Certificateholder in respect of amounts previously distributed on the
Certificates based on their respective Outstanding Amounts.
Section 11. Termination of Trust. (a) The Trust shall terminate upon
the occurrence of any Trust Termination Event.
10
(b) Except for any reports and other information required to be
provided to Certificateholders hereunder and under the Base Trust Agreement
and except as otherwise specified herein and therein, the obligations of the
Trustee will terminate upon the distribution to the Swap Counterparty and
Certificateholders of all amounts required to be distributed to them and the
disposition of all Underlying Securities held by the Trustee. The Trust shall
thereupon terminate, except for surviving rights of indemnity.
Section 12. Limitation of Powers and Duties. (a) The Trustee shall
administer the Trust and the Underlying Securities solely as specified herein
and in the Base Trust Agreement.
(b) The Trust is constituted solely for the purpose of acquiring and
holding the Underlying Securities, entering into and performing its
obligations under the Swap Agreement and issuing the Certificates. The Trustee
is not authorized to acquire any other investments or engage in any activities
not authorized herein and, in particular, unless expressly provided in the
Agreement, the Trustee is not authorized (i) to sell, assign, transfer,
exchange, pledge, set-off or otherwise dispose of any of the Underlying
Securities, once acquired, or interests therein, including to
Certificateholders, (ii) to merge or consolidate the Trust with any other
entity, or (iii) to do anything that would materially increase the likelihood
that the Trust will fail to qualify as a grantor trust for United States
federal income tax purposes. In addition, the Trustee has no power to create,
assume or incur indebtedness or other liabilities in the name of the Trust
other than as contemplated herein and in the Base Trust Agreement.
(c) The parties acknowledge that the Trustee, as the holder of the
Underlying Securities, has the right to vote and give consents and waivers in
respect of the Underlying Securities and enforce the other rights, if any, of
a holder of the Underlying Securities, except as otherwise limited by the Base
Trust Agreement or this Series Supplement. In the event that the Trustee
receives a request from the Underlying Securities Trustee, the Underlying
Securities Issuer, the Underlying Securities Guarantor or, if applicable, the
Depositary with respect to the Underlying Securities, for the Trustee's
consent to any amendment, modification or waiver of the Underlying Securities,
or any document relating thereto, or receives any other solicitation for any
action with respect to the Underlying Securities, the Trustee shall within two
(2) Business Days mail a notice of such proposed amendment, modification,
waiver or solicitation to the Swap Counterparty and each Certificateholder of
record as of the date of such request. The Trustee shall request instructions
from the Certificateholders as to what action to take in response to such
request and shall be protected in taking no action if no direction is
received. Except as otherwise provided herein, the Trustee shall consent or
vote, or refrain from consenting or voting, in the same proportion (based on
the Stated Amounts of the Certificates of each Class as allocated based on the
respective Voting Rights of each Class) as the Certificates were actually
voted or not voted by the Holders thereof as of the date determined by the
Trustee prior to the date such vote or consent is required; provided, however,
that, notwithstanding anything to the contrary in the Base Trust Agreement or
this Series Supplement, the Trustee shall at no time vote in favor of or
consent to any matter (i) which would alter the timing or amount of any
payment on the Underlying Securities (including, without limitation, any
demand to accelerate the Underlying Securities) or (ii) which would result in
the exchange or substitution of any Underlying Security whether or not
pursuant to a plan for the refunding or refinancing of such Underlying
Security, except in each case with the unanimous consent of the
Certificateholders;
11
provided, further, that the Trustee shall not take any such action if it would
affect the method, amount or timing of payments due to the Swap Counterparty
or otherwise materially adversely affect the interests of the Swap
Counterparty under the Swap Agreement and result in a Swap Agreement
Termination Event, in each case without the prior written consent of the Swap
Counterparty. The Trustee shall have no liability for any failure to act or to
refrain from acting resulting from the Certificateholders' late return of, or
failure to return, directions requested by the Trustee from the
Certificateholders.
(d) Notwithstanding any provision of the Agreement to the contrary,
the Trustee may require from the Certificateholders prior to taking any action
at the direction of the Certificateholders, an indemnity agreement of a
Certificateholder or any of its Affiliates to provide for security or
indemnity against the costs, expenses and liabilities the Trustee may incur by
reason of any such action. An unsecured indemnity agreement, if acceptable to
the Trustee, shall be deemed to be sufficient to satisfy such security or
indemnity requirement.
(e) Notwithstanding any provision of the Agreement to the contrary,
the Trustee shall act as the sole Authenticating Agent, Paying Agent and
Registrar.
Section 13. Compensation of Trustee. The Trustee shall be entitled
to receive from the Trustor as compensation for its services hereunder,
trustee's fees pursuant to a separate agreement between the Trustee and the
Trustor, and shall be reimbursed for all reasonable expenses, disbursements
and advances incurred or made by it (including the reasonable compensation,
disbursements and expenses of its counsel and other persons not regularly in
its employ). The Trustor shall indemnify and hold harmless the Trustee and its
successors, assigns, agents and servants against any and all loss, liability
or reasonable expense (including attorney's fees) incurred by it in connection
with the administration of this trust and the performance of its duties
thereunder. The Trustee shall notify the Trustor promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Trustor
shall not relieve the Trustor of its obligations hereunder. The Trustor need
not reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct,
negligence or bad faith. The indemnities contained in this Section 13 shall
survive the resignation or termination of the Trustee or the termination of
this Agreement.
Failure by the Trustor to pay, reimburse or indemnify the
Trustee shall not entitle the Trustee to any payment, reimbursement or
indemnification from the Trust, nor shall such failure release the Trustee
from the duties it is required to perform under this Series Supplement. Any
unpaid, unreimbursed or unindemnified amounts shall not be borne by the Trust
and shall not constitute a claim against the Trust, but shall be borne by the
Trustee in its individual capacity, and the Trustee shall have no recourse
against the Trust with respect thereto.
Section 14. Modification or Amendment of the Base Trust Agreement,
the Series Supplement or the Swap Agreement. (a) The Trustee shall not enter
into any modification or amendment of the Base Trust Agreement or this Series
Supplement unless such modification or amendment is in accordance with Section
10.1 of the Base Trust Agreement. If the Rating Agency Condition is not
satisfied with respect to any proposed modification or amendment of the Base
Trust Agreement or this Series Supplement, then any such modification or
amendment must be approved by 100% of the Certificateholders. The Trustee
shall not enter into any
12
amendment or modification of this Agreement that would affect the method,
amount or timing of payment due to the Swap Counterparty or the consent rights
of the Swap Counterparty hereunder or otherwise materially adversely affect
the interests of the Swap Counterparty under the Swap Agreement and result in
a Swap Agreement Termination Event, in each case without the prior written
consent of the Swap Counterparty. The Trustee shall provide fifteen Business
Days written notice to the Swap Counterparty before entering into any
amendment or modification of this Agreement pursuant to this Section 14.
(b) The Trustee shall not enter into any modification or amendment
of the Swap Agreement without the prior written consent of holders of
Certificates representing 66 ?% of the Voting Rights and without prior written
confirmation from the Rating Agency that such amendment will not result in a
reduction or withdrawal of the then current rating of the Certificates;
provided, however, that each of the Swap Counterparty and the Trustee may
amend the Swap Agreement without the prior written consent of
Certificateholders to cure any ambiguity in, or to correct or supplement any
provision of the Swap Agreement which may be inconsistent with any other
provision of the Swap Agreement, or to otherwise cure any defect in the Swap
Agreement, provided that any such amendment does not materially adversely
affect the interest of the Certificateholders and that the Rating Agency will
have given its prior written confirmation that such amendment will not result
in a reduction or withdrawal of the then current rating of the Certificates;
provided further, however, that notwithstanding anything to the contrary, no
amendment may alter the timing or amount of any payment on the Swap Agreement
without the prior consent of 100% of the Certificateholders and without giving
the Rating Agency prior written notice of any such amendment.
(c) Until a Responsible Officer of the Trustee has actual knowledge
of the occurrence of an event that would constitute a Swap Agreement
Termination Event, the Trustee shall be entitled to assume (and shall be fully
protected, indemnified and held harmless in doing so) that no Swap Agreement
Termination Event has occurred and may accordingly seek instructions under
Section 12 and this Section 14 exclusively from the Swap Counterparty.
Section 15. Assignment of Rights under the Swap Agreement. The
Trustee may consent to any transfer or assignment by the Swap Counterparty of
its rights under the Swap Agreement, so long as the Rating Agency shall have
given its prior written confirmation that such transfer or assignment will not
result in a reduction or withdrawal of the then current rating of the
Certificates.
Section 16. Accounting. Notwithstanding Section 3.16 of the Base
Trust Agreement, "Independent Public Accountants' Administration Report," no
such accounting reports shall be required. Pursuant to Section 4.2 of the Base
Trust Agreement, "Reports to Certificateholders," the Trustee shall cause the
statement described in Section 4.2 to be prepared and forwarded as provided
therein.
Section 17. No Investment of Amounts Received on Underlying
Securities. All amounts received on or with respect to the Underlying
Securities shall be held uninvested by the Trustee.
13
Section 18. No Event of Default. There shall be no Events of Default
defined with respect to the Certificates.
Section 19. Notices. (a) All directions, demands and notices
hereunder and under the Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered or mailed by first
class mail, postage prepaid or by express delivery service or by certified
mail, return receipt requested or delivered in any other manner specified
herein, (i) in the case of the Trustor, to Synthetic Fixed-Income Securities,
Inc., One Wachovia Center 301 South College Street, DC-7 Charlotte, NC 28288,
Attention: Investment Grade Debt Syndicate Desk, or such other address as may
hereafter be furnished to the Trustee in writing by the Trustor, and (ii) in
the case of the Trustee, to U.S. Bank Trust National Association, 100 Wall
Street, Suite 1600, New York, New York 10005, Attention: Corporate Trust,
facsimile number (212) 809-5459, or such other address as may hereafter be
furnished to the Trustor in writing by the Trustee.
(b) For purposes of delivering notices to the Rating Agency under
Section 10.07 of the Base Trust Agreement, "Notice to Rating Agency," or
otherwise, such notices shall be mailed or delivered as provided in such
Section 10.07, "Notice to Rating Agency," to: Standard & Poor's Ratings
Services, 55 Water Street, New York, New York 10041; or such other address as
the Rating Agency may designate in writing to the parties hereto.
(c) In the event a Payment Default or an Acceleration occurs, the
Trustee shall promptly give notice to the Swap Counterparty and to the
Depositary or, for any Certificates which are not then held by the Depositary
or any other depository, directly to the registered holders of the
Certificates thereof. Such notice shall set forth (i) the identity of the
issue of Underlying Securities, (ii) the date and nature of such Payment
Default or Acceleration, (iii) the principal amount of the interest or
principal in default, (iv) the Certificates affected by the Payment Default or
Acceleration, and (v) any other information which the Trustee may deem
appropriate.
(d) Notwithstanding any provisions of the Agreement to the contrary,
the Trustee shall deliver all notices or reports required to be delivered to
or by the Trustee or the Trustor to the Certificateholders or the Swap
Counterparty without charge to such Certificateholders or the Swap
Counterparty.
(e) The Trustee shall, in connection with any notice or delivery of
documents to Certificateholders (whether or not such notice or delivery is
required pursuant to the Agreement), provide such notice or documents to the
Swap Counterparty concurrently with the delivery thereof to the
Certificateholders.
Section 20. Access to Certain Documentation. Access to documentation
regarding the Underlying Securities will be afforded without charge to any
Certificateholder so requesting pursuant to Section 3.17 of the Base Trust
Agreement, "Access to Certain Documentation." Additionally, the Trustee shall
provide at the request of any Certificateholder without charge to such
Certificateholder the name and address of each Certificateholder of
Certificates hereunder as recorded in the Certificate Register for purposes of
contacting the other
14
Certificateholders with respect to their rights hereunder or for the purposes
of effecting purchases or sales of the Certificates, subject to the transfer
restrictions set forth herein.
Section 21. Advances. There is no Administrative Agent specified
herein; hence no person (including the Trustee) shall be permitted or
obligated to make Advances as described in Section 4.3 of the Base Trust
Agreement, "Advances."
Section 22. Ratification of Agreement. With respect to the Series
issued hereby, the Base Trust Agreement (including the grant of a security
interest in Section 10.8 of the Base Trust Agreement with respect to the
Underlying Securities conveyed hereunder), as supplemented by this Series
Supplement, is in all respects ratified and confirmed, and the Base Trust
Agreement as so supplemented by this Series Supplement shall be read, taken
and construed as one and the same instrument. To the extent there is any
inconsistency between the terms of the Base Trust Agreement and this Series
Supplement, the terms of this Series Supplement shall govern.
Section 23. Counterparts. This Series Supplement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and
the same instrument.
Section 24. Governing Law. This Series Supplement and each
Certificate issued hereunder shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely therein without reference to such State's principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws. The State of New York is the securities intermediary's jurisdiction of
the Securities Intermediary for purposes of the UCC.
Section 25. Certificate of Compliance. The Trustor shall deliver to
the Trustee and the Swap Counterparty on or prior to June 30 of each year
prior to a Trust Termination Event the Officer's Certificate as to compliance
as required by Section 6.1(b) of the Base Trust Agreement.
Section 26. Certain Filing to be Made by the Trustee. In the event
that an event requiring the sale of the Underlying Securities under this
Agreement occurs and the Underlying Securities are liquidated at a loss, the
Trustee will disclose pursuant to Treasury Regulation Section 1.6011-4 the
loss in accordance with the procedures of such regulation, unless the Trustee
obtains advice from counsel that such disclosure is not necessary. In general,
the Trustee will (x) attach a completed Form 8886 to its tax return in the
year the requisite loss occurs and (y) file a completed form with the Office
of Tax Shelter Analysis (OTSA) at: Internal Revenue Service LM:PFTG:OTSA,
Large and Midsize Business Division, 1111 Constitution Avenue., NW.,
Washington DC 20224 (or such other address subsequently required).
Section 27. Establishment of Accounts. The Securities Intermediary
and the Trustee hereby represent and warrant that:
(a) Each Account for the Trust is a "securities account" within the
meaning of Section 8-501 of the UCC and is held only in the name of the
Trustee on behalf of the Trust. The
15
Securities Intermediary is acting in the capacity of a "securities
intermediary" within the meaning of Section 8-102(a)(14) of the UCC;
(b) All Underlying Securities have been (i) delivered to the
Securities Intermediary pursuant to the Agreement and (ii) credited to the
Certificate Account; and
(c) Each 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 Accounts.
Section 28. Statement of Intent. It is the intention of the parties
hereto that, for purposes of federal income taxes, state and local income and
franchise taxes and any other taxes imposed upon, measured by or based upon
gross or net income, the Trust shall be treated as a grantor trust, but
failing that, as a partnership (other than a publicly traded partnership
taxable as a corporation) and, in any event, shall not be classified as a
corporation. The parties hereto agree that, unless otherwise required by
appropriate tax authorities, the Trustee shall file or cause to be filed
annual or other necessary returns, reports and other forms consistent with
such intended characterization. In the event that the Trust is characterized
by appropriate tax authorities as a partnership for federal income tax
purposes, each Certificateholder, by its acceptance of its Certificate, agrees
to report its respective share of the items of income, deductions, and credits
of the Trust on its respective returns. As further consideration for each
Certificateholder's purchase of a Certificate, each such Certificateholder is
deemed to agree not to irrevocably delegate to any person (for a period of
more than one year) authority to purchase, sell or exchange its Certificates.
Each Certificateholder (and each beneficial owner of a Certificate)
by acceptance of its Certificate (or its beneficial interest therein) agrees,
unless otherwise required by appropriate tax authorities, to file its own tax
returns and reports in a manner consistent with the characterization indicated
above.
Section 29. Filing of Partnership Returns. In the event that the
Trust is characterized (by appropriate tax authorities) as a partnership for
United States federal income tax purposes the Trustor agrees to reimburse the
Trust for any expenses associated with the filing of partnership returns (or
returns related thereto).
Section 30. "Financial Assets" Election. The Securities Intermediary
hereby agrees that the Underlying Securities credited to the Certificate
Account and any Posted Collateral credited to the Collateral Account shall be
treated as a "financial asset" within the meaning of Section 8-102(a)(9) of
the UCC.
Section 31. Trustee's Entitlement Orders. If at any time the
Securities Intermediary shall receive any order from the Trustee directing the
transfer or redemption of any Underlying Securities credited to the Accounts,
the Securities Intermediary shall comply with such entitlement order without
further consent by the Trustor or any other Person. The Securities
Intermediary shall take all instructions (including without limitation all
notifications and entitlement orders) with respect to the Accounts solely from
the Trustee.
16
Section 32. Conflict with Other Agreements. The Securities
Intermediary hereby confirms and agrees that:
(a) There are no other agreements entered into between the
Securities Intermediary and the Trustor with respect to the Accounts. Each
Account and all property credited to the Account is not subject to, and the
Securities Intermediary hereby waives, any lien, security interest, right of
set off, or encumbrance in favor of the Securities Intermediary or any Person
claiming through the Securities Intermediary (other than the Trustee);
(b) It has not entered into, and until the termination of the
Agreement will not enter into, any agreement with any other Person relating to
the Accounts and/or any financial assets credited thereto pursuant to which it
has agreed to comply with entitlement orders of any Person other than the
Trustee; and
(c) It has not entered into, and until the termination of the
Agreement will not enter into, any agreement with any Person purporting to
limit or condition the obligation of the Securities Intermediary to comply
with entitlement orders as set forth in Section 31 hereof.
Section 33. Additional Trustee and Securities Intermediary
Representations. The Trustee and the Securities Intermediary each hereby
represents and warrants as follows:
(a) The Trustee and the Securities Intermediary each maintains its
books and records with respect to its securities accounts in the State of New
York;
(b) The Trustee and the Securities Intermediary each has not granted
any lien on the Underlying Securities nor are the Underlying Securities
subject to any lien on properties of the Trustee or the Securities
Intermediary in its individual capacity; the Trustee and the Securities
Intermediary each has no actual knowledge and has not received actual notice
of any lien on the Underlying Securities (other than any liens of the Trustee
in favor of the beneficiaries of the Trust Agreement); other than the
interests of the Trustee, the Certificateholders and the Swap Counterparty,
the books and records of the Trustee and the Securities Intermediary each do
not identify any Person as having an interest in the Underlying Securities;
and
(c) The Trustee and the Securities Intermediary each makes no
representation as to (i) the validity, legality, sufficiency or enforceability
of any of the Underlying Securities or (ii) the collectability, insurability,
effectiveness or suitability of any of the Underlying Securities.
Section 34. Additional Trustor Representations. The Trustor hereby
represents and warrants to the Trustee as follows:
(a) Immediately prior to the sale of the Underlying Securities to
the Trustee, the Trustor, as Depositor, owned and had good and marketable
title to the Underlying Securities free and clear of any lien, claim or
encumbrance of any Person;
(b) The Trustor, as Depositor, has received all consents and
approvals required by the terms of the Underlying Securities to the sale to
the Trustee of its interest and rights in the Underlying Securities as
contemplated by the Agreement; and
17
(c) The Trustor has not assigned, pledged, sold, granted a security
interest in or otherwise conveyed any interest in the Underlying Securities
(or, if any such interest has been assigned, pledged or otherwise encumbered,
it has been released), except such interests sold pursuant to the Agreement.
The Trustor has not authorized the filing of and is not aware of any financing
statements against the Trustor that includes a description of the Underlying
Securities, other than any such filings pursuant to the Agreement. The Trustor
is not aware of any judgment or tax lien filings against Trustor.
Section 35. Certification Requirements. The Trustee agrees to
obtain, at the Trustor's direction and expense, a report of an independent
public accountant sufficient for the Trustor on behalf of the Trust to satisfy
its obligations with respect to certification requirements under Rules 13a-14
and 15d-14 of the Exchange Act.
Section 36. Additional Rights of the Swap Counterparty. Section 10.8
of the Base Trust Agreement is hereby modified for purposes of this Series
Supplement to provide that the security interest referred to and created
pursuant thereto in the Trust assets shall, in addition to the obligations
provided for under Section 10.8(b)(3), secure all of the obligations of the
Trustor and the Trust to the Swap Counterparty under the Swap Agreement and
this Agreement. The Swap Counterparty shall have the rights of a third party
beneficiary with respect to this Agreement.
Section 37. Modification of Certain Provisions of Base Trust
Agreement. The provisions of the Base Trust Agreement shall be modified as
they are applied with respect to this Series of Certificates to provide that
(i) notwithstanding Section 3.9 of the Base Trust Agreement, the Certificate
Account shall be held for the benefit of Certificateholders and the Swap
Counterparty and amounts in the Certificate Account shall be used to make
distributions to the Swap Counterparty as and when required under this Series
Supplement, (ii) the appointment of any successor of the Trustee under Section
8.7 of the Base Trust Agreement shall be subject to the prior approval of the
Swap Counterparty and (iii) notwithstanding Section 9.1(a) of the Base Trust
Agreement and subject to the proviso therein, the respective obligations and
responsibilities under this Agreement of the Trustor and the Trustee shall
terminate upon the distribution to Certificateholders and the Swap
Counterparty of all amounts held in all the Accounts and required to be paid
to such Holders or the Swap Counterparty pursuant to this Agreement and the
Swap Agreement on the Distribution Date coinciding with or following the final
payment on or other liquidation of the Underlying Securities and the
disposition of all amounts acquired therefrom in accordance with this
Agreement and the Swap Agreement and the disposition of the final payments
received under the Swap Agreement.
Section 38. Evidence of Integration for Tax Purposes. The Trustee
retains Exhibit E on behalf of each Certificateholder.
Section 39. Optional Exchange.
(a) On any Business Day occurring on or after August 15, 2005,
subject to satisfaction of all of the conditions set forth in clause (b), the
Depositor may exchange Certificates held by it for a distribution of
Underlying Securities representing the same
18
percentage of the Underlying Securities as such Certificates represent of all
outstanding Certificates.
(b) The following conditions shall apply to any Optional Exchange:
(A) A notice specifying the number of Certificates being surrendered
and the optional exchange date shall be delivered to the Trustee no less
than 5 days (or such shorter period acceptable to the Trustee) but not
more than 30 days before the optional exchange date.
(B) Certificates shall be surrendered to the trustee no later than
10:00 a.m. (New York City time) on the optional exchange date.
(C) The Trustee shall have received an opinion of counsel stating
that the Optional Exchange would not cause the Trust to be classified as
a corporation or publicly traded partnership taxable as a corporation for
federal income tax purposes.
(D) No more than one (1) Optional Exchange shall occur in any
Collection Period.
(E) The Trustee shall not be obligated to determine whether an
Optional Exchange complies with the applicable provisions for exemption
under Rule 3a-7 of the Investment Company Act of 1940, as amended, or the
rules or regulations promulgated thereunder.
(F) The provisions of Section 4.5 of the Base Trust Agreement shall
not apply to an Optional Exchange pursuant to this Section 39. This
Section 39 shall not provide any Person with a lien against, an interest
in or a right to specific performance with respect to the Underlying
Securities; provided that satisfaction of the conditions set forth in
this Section 39 shall entitle the Depositor to a distribution thereof.
(G) The aggregate principal balance of Certificates exchanged in
connection with any Optional Exchange pursuant to this Section 39 shall
be in an amount that results in a distribution of Underlying Securities
in an even multiple of the minimum denomination of the Underlying
Securities.
(H) No Swap Agreement Termination Event shall have occurred as a
result of the Optional Exchange except to the extent of a termination
resulting from the reduction in the Hedge Notional Amount (as defined in
the Swap Agreement) to an amount equal to the principal amount of the
Underlying Securities after giving effect to the Optional Exchange.
(I) Any payments due under the Swap Agreement as a result of the
reduction in such Hedge Notional Amount and any such Swap Agreement
Termination Event (x) that are due to the Swap Counterparty (including
but not limited to Unpaid Amounts) shall have been paid to the Swap
Counterparty by the Depositor and (y) that are payable by the Swap
Counterparty, shall be payable for the account of the Depositor.
19
IN WITNESS WHEREOF, the parties hereto have caused this Series Trust
Agreement to be executed by their respective duly authorized officers as of
the date first above written.
SYNTHETIC FIXED-INCOME SECURITIES, INC.
By:
----------------------------------------------
Authorized Signatory
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee and Securities Intermediary
By:
----------------------------------------------
Responsible Officer
EXHIBIT A
IDENTIFICATION OF THE UNDERLYING SECURITIES AS OF CLOSING DATE
Underlying Securities Issuer: Goldman Sachs Capital I
Underlying Securities: (a) $10,000,000 (by aggregate liquidation amount)
of 6.345% Capital Securities due February 15, 2034.
Underlying Securities Guarantor: The Goldman Sachs Group, Inc.
Maturity Date/Final Distribution Date: February 15, 2034.
Original Principal Amount Issued: $2,750,000,000.
CUSIP No.: 38143VAA7.
Stated Interest Rate: 6.345% per annum.
Interest Payment Dates: February 15 and August 15
Principal Amount of Underlying $10,000,000.
Securities Deposited Under
Trust Agreement:
The Underlying Securities will be held by the Trustee as securities
entitlements credited to an account of the Trustee or its agent at the
Depositary.
A-1
EXHIBIT B
TERMS OF THE CERTIFICATES AS OF CLOSING DATE
Maximum Number of STRATS(SM) 10,000.
Certificates, Series 2005-1:
Aggregate Stated Amount of STRATS(SM)
Certificates, $10,000,000.
Series 2005-1:
Authorized Denomination: $1,000 and integral multiples thereof.
Rating Agency: S&P.
Closing Date: June 13, 2005.
Record Date: With respect to any Distribution
Date, the day immediately
preceding such Distribution Date.
Trustee's Fees: The Trustee's fees shall be
payable by the Trustor pursuant to
a separate fee agreement between
the Trustee and the Trustor.
Initial Certificate Registrar: U.S. Bank Trust National Association
Corporate Trust Office: U.S. Bank Trust National
Association 100 Wall Street, Suite
1600 New York, New York 10005
Attention: Corporate Trust
Department, Regarding STRATS(SM)
Trust For Goldman Sachs Capital I
Securities, Series 2005-1
B-1
EXHIBIT C
FORM OF CERTIFICATE
THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST IN THE TRUST AND DOES NOT
EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY THE
TRUSTOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE DEPOSITED ASSETS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CERTIFICATE NUMBER: 1 $10,000,000 Certificate Stated Amount
CUSIP: 86312BAA5 10,000 Certificates
CERTIFICATE INTEREST RATE: Variable Floating Rate
STRATS(SM) CERTIFICATES, SERIES 2005-1
evidencing an undivided interest in the Trust, as defined below, the assets of
which include $10,000,000 (by aggregate liquidation amount) of 6.345% Capital
Securities due February 15, 2034 issued by the Underlying Securities Issuer.
This Certificate does not represent an interest in or obligation of the
Trustor or any of its affiliates.
THIS CERTIFIES THAT Cede & Co. is the registered owner of a
nonassessable, fully-paid, fractional undivided interest in STRATS(SM) Trust For
Goldman Sachs Capital I Securities, Series 2005-1 (the "Trust") formed by
SYNTHETIC FIXED-INCOME SECURITIES, INC., as Trustor (the "Trustor") evidenced
by Certificates in the number and the Stated Amount set forth above.
The Trust was created pursuant to a Base Trust Agreement, dated as of
September 26, 2003 (as amended and supplemented, the "Agreement"), between the
Trustor and U.S. Bank Trust National Association, a national banking
association, not in its individual capacity but
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solely as Trustee (the "Trustee"), as supplemented by the STRATS(SM)
Certificates Series Supplement 2005-1, dated as of June 13, 2005 (the "Series
Supplement" and, together with the Agreement, the "Trust Agreement"), between
the Trustor and the Trustee. This Certificate does not purport to summarize
the Trust Agreement and reference is hereby made to the Trust Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee with respect hereto. A copy of the Trust Agreement may be obtained
from the Trustee by written request sent to the Corporate Trust Office.
Capitalized terms used but not defined herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as "STRATS(SM) Certificates, Series 2005-1 (herein called the
"Certificate" or "Certificates"). This Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The assets of the
Trust include the Underlying Securities, all proceeds of the Underlying
Securities and the Trust's rights under the Swap Agreement.
Under the Trust Agreement, there shall be distributed on the dates
specified in the Trust Agreement (a "Distribution Date"), to the person in
whose name this Certificate is registered at the close of business on the
related Record Date, such Certificateholder's fractional undivided interest in
the amount of distributions of the Underlying Securities to be distributed to
Certificateholders on such Distribution Date and distributions to the Trust
under the Swap Agreement. The Underlying Securities will pay interest on
February 15 and August 15 of each year. The principal of the Underlying
Securities is scheduled to be paid on February 15, 2034. The Swap Agreement
provides for payments on the 15th calendar day of each month, except during a
Deferral Period, commencing on July 15, 2005.
During any Deferral Period, interest on the Certificates will
continue to accrue at a specified rate and will be payable on the next
succeeding Underlying Securities Payment Date once (i) distributions on the
Underlying Securities have resumed and (ii) all amounts due and payable on the
Underlying Securities have been received by the Trust and any amounts owed to
the Swap Counterparty under the Swap Agreement have been paid to the Swap
Counterparty. Thereafter, and so long as the Swap Agreement is in effect,
interest on the Certificates will be payable semi-annually on each February 15
and August 15 (or the next succeeding business day), until the Certificates
have been retired.
The distributions in respect of this Certificate are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts as set forth in the
Series Trust Agreement.
The Underlying Securities held by the Trust are subject to the
rights of the Swap Counterparty, as provided for in the Series Supplement and
the Swap Agreement, and each Certificateholder, by accepting its Certificate,
acknowledges such rights in accordance with the terms of the Series Supplement
and the Swap Agreement.
It is the intent of the Trustor and the Certificateholders that the
Trust will be classified as a grantor trust under subpart E, Part I of
subchapter J of the Internal Revenue Code of 1986, as
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amended. Except as otherwise required by appropriate taxing authorities, the
Trustor and the Trustee, by executing the Trust Agreement, and each
Certificateholder, by acceptance of a Certificate, agrees to treat, and to
take no action inconsistent with the treatment of, the Certificates for such
tax purposes as interests in a grantor trust and the provisions of the Trust
Agreement shall be interpreted to further this intention of the parties.
By acceptance of a Certificate, each Certificateholder (1) elects to
integrate the Underlying Securities and the Swap Agreement for United States
federal income tax purposes, (2) authorizes and directs the trustee (or the
trustee's agent) to retain, as part of the Certificateholder's books and
records, information that (a) describes the Underlying Securities and the Swap
Agreement, (b) identifies the two positions as integrated for federal income
tax purposes and (c) describes the features of the resulting "synthetic" debt
instrument and (3) agrees to retain copies of such information as provided to
the Certificateholder by the Trust.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder shall not, prior to the date
which is one year and one day after the termination of the Trust Agreement,
acquiesce, petition or otherwise invoke or cause the Trustor to invoke the
process of any court or governmental authority for the purpose of commencing
or sustaining a case against the Trustor under any federal or state
bankruptcy, insolvency, reorganization or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trustor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trustor.
Certificates may not be acquired by or for the account of any
employee benefit plan, trust or account, including an individual retirement
account, that is subject to the requirements of Title I of the Employee
Retirement Income Security Act of 1974, as amended, or that is described in
Section 4975(e)(1) of the Code, or by or for the account of any entity whose
underlying assets include any assets subject to these laws by reason of
investment in that entity by such plans, trusts or accounts. By accepting and
holding this Certificate, the holder of this Certificate will be deemed to
have represented and warranted that it is not a plan or entity described
above, and that its acquisition and holding of this Certificate are in
compliance with the foregoing restrictions.
The Trust Agreement permits the amendment thereof, in certain
circumstances, without the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee by manual signature, this
Certificate shall not entitle the Holder hereof to any benefit under the Trust
Agreement or be valid for any purpose.
A copy of the Trust Agreement is available upon request and all of
its terms and conditions are hereby incorporated by reference and made a part
hereof.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed as of the date set forth below.
STRATS(SM) TRUST FOR Goldman Sachs
Capital I SECURITIES, SERIES 2005-1
By: U.S. BANK TRUST NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Trustee
By:
--------------------------------------
Authorized Signatory
Dated: June 13, 2005
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the STRATS(SM) Certificates, Series 2005-1, described in the
Trust Agreement referred to herein.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By:
-------------------------------------------------
Authorized Signatory
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of
assignee) __________________________ the within Certificate, and all rights
thereunder, hereby irrevocably constituting and appointing __________________
Attorney to transfer said Certificate on the books of the Certificate
Register, with full power of substitution in the premises.
Dated:
*
___________________________________
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Signatures must be guaranteed
by an "eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or participation
in the Security Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
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EXHIBIT D
Exhibit D-1
(Multicurrency - Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of June 13, 2005
WACHOVIA BANK, NATIONAL and STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I
ASSOCIATION SECURITIES, SERIES 2005-1
have entered and/or anticipate entering into one of more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming
those Transactions.
Accordingly, the parties agree as follows: --
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the
provisions of the Schedule and the other provisions of this Master Agreement,
the Schedule will prevail. In the event of any inconsistency between the
provisions of any Confirmation and this Master Agreement (including the
Schedule), such Confirmation will prevail for the purpose of the relevant
Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on
the fact that this Master Agreement and all Confirmations form a single
agreement between the parties (collectively referred to as this "Agreement"),
and the parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of
this Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the
relevant Confirmation or otherwise pursuant to this Agreement, in
freely transferable funds and in the manner customary for payments in
the required currency. Where settlement is by delivery (that is,
other than by payment), such delivery will be made for receipt on the
due date in the manner customary for the relevant obligation unless
otherwise specified in the relevant Confirmation or elsewhere in this
Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject
to (1) the condition precedent that no Event of Default or Potential
Event of Default with respect to the other party has occurred and is
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continuing, (2) the condition precedent that no Early Termination
Date in respect of the relevant Transaction has occurred or been
effectively designated and (3) each other applicable condition
precedent specified in this Agreement.
(b) Change of Account. Either party may change its account for receiving
a payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a
reasonable objection to such change.
(c) Netting. If on any date amounts would otherwise be payable: --
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other. then, on such date, each party's obligation to
make payment of any such amount will be automatically satisfied and discharged
and, if the aggregate amount that would otherwise have been payable by one
party exceeds the aggregate amount that would otherwise have been payable by
the other party, replaced by an obligation upon the party by whom the larger
aggregate amount would have been payable to pay to the other party the excess
of the larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii)
above will not, or will cease to, apply to such Transactions from such date).
This election may be made separately for different groups of Transactions and
will apply separately to each pairing of Offices through which the parties
make and receive payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made
without any deduction or withholding for or on account of any Tax
unless such deduction or withholding is required by any applicable
law, as modified by the practice of any relevant governmental revenue
authority, then in effect. If a party is so required to deduct or
withhold, then that party ("X") will: --
(1) promptly notify the other party ("Y") of such
requirement;
(2) pay to the relevant authorities the full amount required
to be deducted or withheld (including the full amount
required to be deducted or withheld from any additional
amount paid by X to Y under this Section 2(d)) promptly upon
the earlier of determining that such deduction or
withholding is required or receiving notice that such amount
has been assessed against Y;
(3) promptly forward to Y an official receipt (or a
certified copy), or other documentation reasonably
acceptable to Y, evidencing such payment to such
authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in
addition to the payment to which Y is otherwise entitled
under this Agreement, such additional amount as is necessary
to ensure that the net amount actually received by Y (free
and clear of Indemnifiable Taxes. whether assessed against X
or Y) will equal ft full amount Y would have received had no
such deduction or withholding been required. However, X will
not be required to pay any additional amount to Y to the
extent that it would not be required to be paid but for: --
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii)
or 4(d); or
(B) the failure of a representation made by Y
pursuant to Section 3(f) to be accurate and true
unless such failure would not have occurred but for
(I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or
after the date on which a
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Transaction is entered into (regardless of whether
such action is taken or brought with respect to a
party to this Agreement) or (II) a Change in Tax
Law.
(ii) Liability. If: --
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to
make any deduction or withholding in respect of which X
would not be required to pay an additional amount to Y under
Section 2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the
amount of such liability (including any related liability for
interest, but including any related liability for penalties only if Y
has failed to comply with or perform any agreement contained in
Section 4(a)(i), 4(a)(iii) or 4(d)).
(e) Default Interest; Other Amounts. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant
Transaction, a party that defaults in the performance of any payment
obligation will, to the extent permitted by law and subject to Section 6(c),
be required to pay interest (before as well as after judgment) on the overdue
amount to the other party on demand in the same currency as such overdue
amount, for the period from (and including) the original due date for payment
to (but excluding) the date of actual payment, at the Default Rate. Such
interest will be calculated on the basis of daily compounding and the actual
number of days elapsed. If, prior to the occurrence or effective designation
of an Early Termination Date in respect of the relevant Transaction, a party
defaults in the performance of any obligation required to be settled by
delivery, it will compensate the other party on demand if and to the extent
provided for in the relevant Confirmation or elsewhere in this Agreement.
3. Representations
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered
into and, in the case of the representations in Section 3(f), at all times
until the termination of this Agreement) that: --
(a) Basic Representations.
(i) Status. It is duly organised and validly existing under the laws
of the jurisdiction of its organisation or incorporation and, if
relevant under such laws, in good standing;
(ii) Powers. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it
has under any Credit Support Document to which it is a party and has
taken all necessary action to authorise such execution, delivery and
performance;
(iii) No Violation or Conflict. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment
of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it
or any of its assets;
(iv) Consents. All governmental and other consents that are required
to have been obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party have been obtained and
are in full force and effect and all conditions of any such consents
have been complied with; and
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(v) Obligations Binding. Its obligations under this Agreement and any
Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganisation,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles
of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law)).
(b) Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.
(c) Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator that is likely to affect the legality, validity
or enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material
respect.
(e) Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.
(f) Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
4. Agreements
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: --
(a) Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs: --
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule of any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or
document that may be required or reasonably requested in writing in
order to allow such other party or its Credit Support Provider to
make a payment under this Agreement or any applicable Credit Support
Document without any deduction or withholding for or on account of
any Tax or with such deduction or withholding at a reduced rate (so
long as the completion, execution or submission of such form or
document would not materially prejudice the legal or commercial
position of the party in receipt of such demand), with any such form
or document to be accurate and completed in a manner reasonably
satisfactory to such other party and to be executed and to be
delivered with any reasonably required certification, in each case by
the date specified in the Schedule or such Confirmation or, if none
is specified, as soon as reasonably practicable.
(b) Maintain Authorisations. It will use all reasonable efforts to
maintain in full force and effect all consents of any governmental or other
authority that are required to be obtained by it with respect to this
Agreement or any Credit Support Document to which it is a party and will use
all reasonable efforts to obtain any that may become necessary in the future.
(c) Comply with Laws. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) Tax Agreement. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning
of such failure.
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(e) Payment of Stamp Tax. Subject to Section 11, it will pay any Stamp
Tax levied or imposed upon it or in respect of its execution or
performance of this Agreement by a jurisdiction in which it is
incorporated, organised, managed and controlled. or considered to
have its seat, or in which a branch or office through which it is
acting for the purpose of this Agreement is located ("Stamp Tax
Jurisdiction") and will indemnify the other party against any Stamp
Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp
Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
respect to the other party.
5. Events or Default and Termination Events
(a) Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party: --
(i) Failure to Pay or Deliver. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section
2(a)(i) or 2(e) required to be made by it if such failure is not
remedied on or before the third Local Business Day after notice of
such failure is given to the party;
(ii) Breach of Agreement. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
with or performed by the party in accordance with this Agreement if
such failure is not remedied on or before the thirtieth day after
notice of such failure is given to the party;
(iii) Credit Support Default.
(1) Failure by the party or any Credit Support Provider of
such party to comply with or perform any agreement or
obligation to be complied with or performed by it in
accordance with any Credit Support Document if such failure
is continuing after any applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of
this Agreement (in either case other than in accordance with
its terms) prior to the satisfaction of all obligations of
such party under each Transaction to which such Credit
Support Document relates without the written consent of the
other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) Misrepresentation. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been
made or repeated by the party or any Credit Support Provider of such
party in this Agreement or any Credit Support Document proves to have
been incorrect or misleading in any material respect when made or
repeated or deemed to have been made or repeated;
(v) Default under Specified Transaction. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after
giving effect to any applicable notice requirement or grace period,
there occurs a liquidation of, an acceleration of obligations under,
or an early termination of, that Specified Transaction, (2) defaults,
after giving effect to any applicable notice requirement or grace
period, in making any payment or delivery due on the last payment,
delivery or exchange date of, or any payment on early termination of,
a Specified Transaction (or such default continues for at least three
Local Business Days if there is no applicable notice requirement or
grace period) or (3) disaffirms, disclaims, repudiates or rejects, in
whole or in part, a Specified Transaction (or such action is taken by
any person or entity appointed or empowered to operate it or act on
its behalf);
(vi) Cross Default. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a
default, event of default or other similar condition or event
(however
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described) in respect of such party, any Credit Support Provider of
such party or any applicable Specified Entity of such party under one
or more agreements or instruments relating to Specified Indebtedness
of any of them (individually or collectively) in an aggregate amount
of not less than the applicable Threshold Amount (as specified in the
Schedule) which has resulted in such Specified Indebtedness becoming,
or becoming capable at such time of being declared, due and payable
under such agreements or instruments, before it would otherwise have
been due and payable or (2) a default by such party, such Credit
Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof
in an aggregate amount of not less than the applicable Threshold
Amount under such agreements or instruments (after giving effect to
any applicable notice requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such
party or any applicable Specified Entity of such party:-
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable
to pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for
the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its
winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it,
such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief
or the making of an order for its winding-up or liquidation
or (B) is not dismissed, discharged, stayed or restrained in
each case within 30 days of the institution or presentation
thereof, (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes
subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or
other similar official for it or for all or substantially
all its assets; (7) has a secured party take possession of
all or substantially all its assets or has a distress,
execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession,
or any such process is not dismissed, discharged, stayed or
restrained, in each case within 30 days thereafter; (8)
causes or is subject to any event with respect to it which,
under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses
(1) to (7) (inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges
with or into, or transfers all or substantially all its assets to,
another entity and, at the time of such consolidation, amalgamation,
merger or transfer: -
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit
Support Provider under this Agreement or any Credit Support
Document to which it or its predecessor was a party by
operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to
extend (without the consent of the other party) to the
performance by such resulting, surviving or transferee
entity of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a
party or, if applicable, any Credit Support Provider of such party or any
Specified Entity of such party of any event specified below constitutes an
Illegality if the event is specified in (i) below, a Tax Event if the event is
specified in (ii) below or a Tax Event Upon Merger if the event is specified
in (iii) below, and, if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:--
(i) Illegality. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into,
or due to the promulgation of, or any change in, the interpretation
by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after such date. it becomes
unlawful (other than as a result of a breach by the party of Section
4(b)) for such party (which will be the Affected Party):--
(1) to perform any absolute or contingent obligation to make
a payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other
material provision of this Agreement relating to such
Transaction; or
(2) to perform, or for any Credit Support Provider of such
party to perform, any contingent or other obligation which
the party (or such Credit Support Provider) has under any
Credit Support Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such
action is taken or brought with respect to a party to this Agreement)
or (y) a Change in Tax Law, the party (which will be the Affected
Party) will, or there is a substantial likelihood that it will, on
the next succeeding Scheduled Payment Date (1) be required to pay to
the other party an additional amount in respect of an Indemnifiable
Tax under Section 2(d)(i)(4) (except in respect of interest under
Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which
an amount is required to be deducted or withheld for or on account of
a Tax (except in respect of interest under Section 2(e), 6(d)(ii) or
6(e)) and no additional amount is required to be paid in respect of
such Tax under Section 2(d)(i)(4) (other than by reason of Section
2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has
been deducted or withheld for or on account of any Indemnifiable Tax
in respect of which the other party is not required to pay an
additional amount (other than by reason of Section 2(d)(i)(4)(A) or
(B)), in either case as a result of a party consolidating or
amalgamating with, or merging with or into, or transferring all or
substantially all its assets to, another entity (which will be the
Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity
of X consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and
such action does not constitute an event described in Section
5(a)(viii) but the creditworthiness of the resulting, surviving or
transferee entity is materially weaker than that of X, such Credit
Support Provider or such Specified Entity, as the case may be,
immediately prior to such action (and, in such event, X or its
successor or transferee, as appropriate, will be the Affected Party);
or
(v) Additional Termination Event. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying.
the occurrence of such event (and, in such event. the Affected Party
or Affected Parties shall be as specified for such Additional
Termination Event in the Schedule or such Confirmation).
(j) Event of Default and Illegality. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also
constitutes an Illegality, it will be treated as an Illegality and will not
constitute an Event of Default.
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6. Early Termination
(a) Right to Terminate Following Event of Default. If at any time an
Event of Default with respect to a party (the "Defaulting Party") has occurred
and is then continuing, the other party (the "Non-defaulting Party") may, by
not more than 20 days notice to the Defaulting Party specifying the relevant
Event of Default, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all outstanding
Transactions. If, however, "Automatic Early Termination" is specified in the
Schedule as applying to a party, then an Early Termination Date in respect of
all outstanding Transactions will occur immediately upon the occurrence with
respect to such party of an Event of Default specified in Section
5(a)(vii)(l), (3), (5), (6) or, to the extent analogous thereto, (8), and as
of the time immediately preceding the institution of the relevant proceeding
or the presentation of the relevant petition upon the occurrence with respect
to such party of an Event of Default specified in Section 5(a)(vii)(4) or, to
the extent analogous thereto, (8).
(b) Right to Terminate Following Termination Event.
(i) Notice. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party,
specifying the nature of that Termination Event and each Affected
Transaction and will also give such other information about that
Termination Event as the other party may reasonably require.
(ii) Transfer to Avoid Termination Event. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition
to its right to designate an Early Termination Date under Section
6(b)(iv), use all reasonable efforts (which will not require such
party to incur a loss, excluding immaterial, incidental expenses) to
transfer within 20 days after it gives notice under Section 6(b)(i)
all its rights and obligations under this Agreement in respect of the
Affected Transactions to another of its Offices or Affiliates so that
such Termination Event ceases to exist.
If the Affected Party is not able to make such a transfer it will
give notice to the other party to that effect within such 20 day
period, whereupon the other party may effect such a transfer within
30 days after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be
subject to and conditional upon the prior written consent of the
other party, which consent will not be withheld if such other party's
policies in effect at such time would permit it to enter into
transactions with the transferee on the terms proposed.
(iii) Two Affected Parties. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party
will use all reasonable efforts to reach agreement within 30 days
after notice thereof is given under Section 6(b)(i) on action to
avoid that Termination Event.
(iv) Right to Terminate. If:--
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected
with respect to all Affected Transactions within 30 days
after an Affected Party gives notice under Section 6(b)(i);
or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event
Upon Merger or an Additional Termination Event occurs, or a
Tax Event Upon Merger occurs and the Burdened Party is not
the Affected Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a
Tax Event or an Additional Termination Event if there is more than
one Affected Party, or the party which is not the Affected Party in
the case of a Credit Event Upon Merger or an Additional Termination
Event if there is only one Affected Party may, by not more than 20
days notice to the other party and provided that the relevant
Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) Effect of Designation.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the
date so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) Calculations.
(i) Statement. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and
will provide to the other party a statement (1) showing, in
reasonable detail, such calculations (including all relevant
quotations and specifying any amount payable under Section 6(e)) and
(2) giving details of the relevant account to which any amount
payable to it is to be paid. In the absence of written confirmation
from the source of a quotation obtained in determining a Market
Quotation, the records of the party obtaining such quotation will be
conclusive evidence of the existence and accuracy of such quotation.
(ii) Payment Date. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the
day that notice of the amount payable is effective (in the case of an
Early Termination Date which is designated or occurs as a result of
an Event of Default) and on the day which is two Local Business Days
after the day on which notice of the amount payable is effective (in
the case of an Early Termination Date which is designated as a result
of a Termination Event). Such amount will be paid together with (to
the extent permitted under applicable law) interest thereon (before
as well as after judgment) in the Termination Currency, from (and
including) the relevant Early Termination Date to (but excluding) the
date such amount is paid, at the Applicable Rate. Such interest will
be calculated on the basis of daily compounding and the actual number
of days elapsed.
(e) Payments on Early Termination. If an Early Termination Date
occurs, the following provisions shall apply based on the parties' election in
the Schedule of a payment measure, either "Market Quotation" or "Loss", and a
payment method, either the "First Method" or the "Second Method". If the
parties fail to designate a payment measure or payment method in the Schedule,
it will be deemed that "Market Quotation" or the "Second Method", as the case
may be, shall apply. The amount, if any, payable in respect of an Early
Termination Date and determined pursuant to this Section will be subject to
any Set-off.
(i) Events of Default. If the Early Termination Date results from an
Event of Default:--
(1) First Method and Market Quotation. If the First Method
and Market Quotation apply, the Defaulting Party will pay to
the Non-defaulting Party the excess, if a positive number,
of (A) the sum of the Settlement Amount (determined by the
Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party over (B)
the Termination Currency Equivalent of the Unpaid Amounts
owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss
apply, the Defaulting Party will pay to the Non-defaulting
Party, if a positive number, the Non-defaulting Party's Loss
in respect of this Agreement.
(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal
to (A) the sum of the Settlement Amount (determined by the
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Non-defaulting Party) in respect of the Terminated
Transactions and the Termination Currency Equivalent of the
Unpaid Amounts owing to the Non-defaulting Party less (B)
the Termination Currency Equivalent of the Unpaid Amounts
owing to the Defaulting Party. If that amount is a positive
number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is
a positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that
amount to the Defaulting Party.
(ii) Termination Events. If the Early Termination Date results from a
Termination Event:--
(1) One Affected Party. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section
6(e)(i)(4), if Loss applies, except that, in either case,
references to the Defaulting Party and to the Non-defaulting
Party will be deemed to be references to the Affected Party
and the party which is not the Affected Party, respectively,
and, if Loss applies and fewer than all the Transactions are
being terminated, Loss shall be calculated in respect of all
Terminated Transactions.
(2) Two Affected Parties. If there are two Affected
Parties:--
(A) if Market Quotation applies, each party will
determine a Settlement Amount in respect of the
Terminated Transactions, and an amount will be
payable equal to (I) the sum of (a) one-half of the
difference between the Settlement Amount of the
party with the higher Settlement Amount ("X") and
the Settlement Amount of the party with the lower
Settlement Amount ("Y") and (b) the Termination
Currency Equivalent of the Unpaid Amounts owing to
X less (II) the Termination Currency Equivalent of
the Unpaid Amounts owing to Y; and
(B) if Loss applies, each party will determine its
Loss in respect of this Agreement (or, if fewer
than all the Transactions are being terminated, in
respect of all Terminated Transactions) and an
amount will be payable equal to one-half of the
difference between the Loss of the party with the
higher Loss ("X") and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to
X; if it is a negative number, X will pay the absolute value
of that amount to Y.
(iii) Adjustment for Bankruptcy. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies
in respect of a party, the amount determined under this Section 6(e)
will be subject to such adjustments as are appropriate and permitted
by law to reflect any payments or deliveries made by one party to the
other under this Agreement (and retained by such other party) during
the period from the relevant Early Termination Date to the date for
payment determined under Section 6(d)(ii).
(iv) Pre-Estimate. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and the loss of protection against future risks
and except as otherwise provided in this Agreement neither party will
be entitled to recover any additional damages as a consequence of
such losses.
7. Transfer
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of
the other party, except that:--
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(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in any
amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be
void.
8. Contractual Currency
(a) Payment in the Contractual Currency. Each payment under this
Agreement will be made in the relevant currency specified in this Agreement
for that payment (the "Contractual Currency"). To the extent permitted by
applicable law, any obligation to make payments under this Agreement in the
Contractual Currency will not be discharged or satisfied by any tender in any
currency other than the Contractual Currency, except to the extent such tender
results in the actual receipt by the party to which payment is owed, acting in
a reasonable manner and in good faith in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the
amount in the Contractual Currency so received falls short of the amount in
the Contractual Currency payable in respect of this Agreement, the party
required to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual
Currency payable in respect of this Agreement, the party receiving the payment
will refund promptly the amount of such excess.
(b) Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is
rendered (i) for the payment of any amount owing in respect of this Agreement,
(ii) for the payment of any amount relating to any early termination in
respect of this Agreement or (iii) in respect of a judgment or order of
another court for the payment of any amount described in (i) or (ii) above,
the party seeking recovery, after recovery in full of the aggregate amount to
which such party is entitled pursuant to the judgment or order, will be
entitled to receive immediately from the other party the amount of any
shortfall of the Contractual Currency received by such party as a consequence
of sums paid in such other currency and will refund promptly to the other
party any excess of the Contractual Currency received by such party as a
consequence of sums paid in such other currency if such shortfall or such
excess arises or results from any variation between the rate of exchange at
which the Contractual Currency is converted into the currency of the judgment
or order for the purposes of such judgment or order and the rate of exchange
at which such party is able, acting in a reasonable manner and in good faith
in converting the currency received into the Contractual Currency, to purchase
the Contractual Currency with the amount of the currency of the judgment or
order actually received by such party. The term "rate of exchange" includes,
without limitation, any premiums and costs of exchange payable in connection
with the purchase of or conversion into the Contractual Currency.
(c) Separate Indemnities. To the extent permitted by applicable law,
these indemnities constitute separate and independent obligations from the
other obligations in this Agreement, will be enforceable as separate and
independent causes of action, will apply notwithstanding any indulgence
granted by the party to which any payment is owed and will not be affected by
judgment being obtained or claim or proof being made for any other sums
payable in respect of this Agreement.
(d) Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had
an actual exchange or purchase been made.
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9. Miscellaneous
(a) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) Amendments. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced
by a facsimile transmission) and executed by each of the parties or confirmed
by an exchange of telexes or electronic messages on an electronic messaging
system.
(c) Survival of Obligations. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) Remedies Cumulative. Except as provided in this Agreement, the
rights, powers, remedies and privileges provided in this Agreement are
cumulative and not exclusive of any rights, powers, remedies and privileges
provided by law.
(e) Counterparts and Confirmations.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts
(including by facsimile transmission), each of which will be deemed
an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts
(including by facsimile transmission) or be created by an exchange of
telexes or by an exchange of electronic messages on an electronic
messaging system, which in each case will be sufficient for all
purposes to evidence a binding supplement to this Agreement. The
parties will specify therein or through another effective means that
any such counterpart, telex or electronic message constitutes a
Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right,
power or privilege in respect of this Agreement will not be presumed to
operate as a waiver, and a single or partial exercise of any right, power or
privilege will not be presumed to preclude any subsequent or further exercise,
of that right, power or privilege or the exercise of any other right, power or
privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of
booking office or jurisdiction of incorporation or organisation of such party,
the obligations of such party are the same as if it had entered into the
Transaction through its head or home office. This representation will be
deemed to be repeated by such party on each date on which a Transaction is
entered into.
(b) Neither party may change the Office through which it makes and
receives payments or deliveries for the purpose of a Transaction without the
prior written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a
Transaction will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other
party for and against all reasonable out-of-pocket expenses, including legal
fees and Stamp Tax, incurred by such other party by reason of the enforcement
and protection of its rights under this Agreement or any Credit Support
Document
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to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that
transmission is received by a responsible employee of the recipient
in legible form (it being agreed that the burden of proving receipt
will be on the sender and will not be met by a transmission report
generated by the sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas)
or the equivalent (return receipt requested), on the date that mail
is delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change
the address, telex or facsimile number or electronic messaging system details
at which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan
in New York City, if this Agreement is expressed to be governed by
the laws of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconvenient
forum and further waives the right to object, with respect to such
Proceedings, that such court does not have any jurisdiction over such
party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
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(c) Service of Process. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any reason any
party's Process Agent is unable to act as such, such party will promptly
notify the other party and within 30 days appoint a substitute process agent
acceptable to the other party. The parties irrevocably consent to service of
process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) Waiver of Immunities. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues
and assets (irrespective of their use or intended use), all immunity on the
grounds of sovereignty or other similar grounds from (i) suit, (ii)
jurisdiction of any court, (iii) relief by way of injunction, order for
specific performance or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or enforcement of
any judgment to which it or its revenues or assets might otherwise be entitled
in any Proceedings in the courts of any jurisdiction and irrevocably agrees,
to the extent permitted by applicable law, that it will not claim any such
immunity in any Proceedings.
14. Definitions
As used in this Agreement: --
"Additional Termination Event" has the meaning specified in Section 5(b).
"Affected Party" has the meaning specified in Section 5(b).
"Affected Transactions" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"Affiliate" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control"
of any entity or person means ownership of a majority of the voting power of
the entity or person.
"Applicable Rate" means: --
(a) in respect of obligations payable or deliverable (or which would have been
but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of either
party from and after the date (determined in accordance with Section 6(d)(ii))
on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which would
have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"Burdened Party" has the meaning specified in Section 5(b).
"Change in Tax Law" means the enactment, promulgation, execution or
ratification of, or any change in or amendment to, any law (or in the
application or official interpretation of any law) that occurs on or after the
date on which the relevant Transaction is entered into.
"consent" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"Credit Event Upon Merger" has the meaning specified in Section 5(b).
"Credit Support Document" means any agreement or instrument that is specified
as such in this Agreement.
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"Credit Support Provider" has the meaning specified in the Schedule.
"Default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus 1% per annum.
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed
in respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to
such recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case
of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) (a) in relation to any obligation under Section
2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so
specified, as otherwise agreed by the parties in writing or determined
pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, in the place where the
relevant account is located and, if different. in the principal financial
centre, if any, of the currency of such payment, (c) in relation to any notice
or other communication, including notice contemplated under Section 5(a)(i),
in the city specified in the address for notice provided by the recipient and,
in the case of a notice contemplated by Section 2(b), in the place where the
relevant new account is to be located and (d) in relation to Section
5(a)(v)(2), in the relevant locations for performance with respect to such
Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before
the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 11. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but need
not) determine its Loss by reference to quotations of relevant rates or prices
from one or more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or
by such party (expressed as a positive number) in consideration of an
agreement between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the quoting
Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether
D-1-15
the underlying obligation was absolute or contingent and assuming the
satisfaction of each applicable condition precedent) by the parties under
Section 2(a)(i) in respect of such Terminated Transaction or group of
Terminated Transactions that would, but for the occurrence of the relevant
Early Termination Date, have been required after that date. For this purpose,
Unpaid Amounts in respect of the Terminated Transaction or group of Terminated
Transactions are to be excluded but, without limitation, any payment or
delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction
would be subject to such documentation as such party and the Reference
Market-maker may, in good faith, agree. The party making the determination (or
its agent) will request each Reference Market-maker to provide its quotation
to the extent reasonably practicable as of the same day and time (without
regard to different time zones) on or as soon as reasonably practicable after
the relevant Early Termination Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by the party
obliged to make a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values, If
exactly three such quotations are provided, the Market Quotation will be the
quotation remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head
or home office.
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of.-
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meaning specified in the Schedule.
D-1-16
"Specified Indebtedness" means, subject to the Schedule, any obligation
(whether present or future, contingent or otherwise, as principal or surety or
otherwise) in respect of borrowed money.
"Specified Transaction" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter
entered into between one party to this Agreement (or any Credit Support
Provider of such party or any applicable Specified Entity of such party) and
the other party to this Agreement (or any Credit Support Provider of such
other party or any applicable Specified Entity of such other party) which is a
rate swap transaction, basis swap, forward rate transaction, commodity swap,
commodity option, equity or equity index swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions),
(b) any combination of these transactions and (c) any other transaction
identified as a Specified Transaction in this Agreement or the relevant
confirmation.
"Stamp Tax" means any stamp, registration, documentation or similar tax.
"Tax" means any present or future tax, levy, impost, duty, charge, assessment
or fee of any nature (including interest, penalties and additions thereto)
that is imposed by any government or other taxing authority in respect of any
payment under this Agreement other than a stamp, registration, documentation
or similar tax.
"Tax Event" has the meaning specified in Section 5(b).
"Tax Event Upon Merger" has the meaning specified in Section 5(b).
"Terminated Transactions" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in
effect immediately before the effectiveness of the notice designating that
Early Termination Date (or, if "Automatic Early Termination" applies,
immediately before that Early Termination Date).
"Termination Currency" has the meaning specified in the Schedule.
"Termination Currency Equivalent" means, in respect of any amount denominated
in the Termination Currency, such Termination Currency amount and, in respect
of any amount denominated in a currency other than the Termination Currency
(the "Other Currency"), the amount in the Termination Currency determined by
the party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or,
if the relevant Market Quotation or Loss (as the case may be), is determined
as of a later date, that later date, with the Termination Currency at the rate
equal to the spot exchange rate of the foreign exchange agent (selected as
provided below) for the purchase of such Other Currency with the Termination
Currency at or about 11:00 a.m. (in the city in which such foreign exchange
agent is located) on such date as would be customary for the determination of
such a rate for the purchase of such Other Currency for value on the relevant
Early Termination Date or that later date. The foreign exchange agent will, if
only one party is obliged to make a determination under Section 6(e), be
selected in good faith by that party and otherwise will be agreed by the
parties.
"Termination Event" means an Illegality, a Tax Event or a Tax Event Upon
Merger or, if specified to be applicable, a Credit Event Upon Merger or an
Additional Termination Event.
"Termination Rate" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as
certified by such party) if it were to fund or of funding such amounts.
"Unpaid Amounts" owing to any party means, with respect to an Early
Termination Date, the aggregate of (a) in respect of all Terminated
Transactions, the amounts that became payable (or that would have become
payable but for Section 2(a)(iii)) to such party under Section 2(a)(i) on or
prior to such Early Termination Date and which remain unpaid as at such Early
Termination Date and (b) in respect of each Terminated Transaction, for each
obligation under Section 2(a)(i) which was (or would have been but for Section
2(a)(iii)) required to be settled by delivery to such party on or prior to
such Early Termination Date and which has not been so settled as at such Early
Termination Date, an amount equal to the fair market
D-1-17
value of that which was (or would have been) required to be delivered as of
the originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or
would have been required to have been paid or performed to (but excluding)
such Early Termination Date, at the Applicable Rate. Such amounts of interest
will be calculated on the basis of daily compounding and the actual number of
days elapsed. The fair market value of any obligation referred to in clause
(b) above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
WACHOVIA BANK, NATIONAL ASSOCIATION STRATS(SM) TRUST FOR GOLDMAN SACHS
(Name of Party) CAPITAL I SECURITIES, SERIES 2005-1
(Name of Party)
By: ------------------------------ By: -----------------------------------
Name: Name:
Title: Title:
Date: Date:
D-1-18
EXHIBIT D
Exhibit D-2
SCHEDULE
to the
MASTER AGREEMENT
dated as of June 13, 2005 between
WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
and
STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I SECURITIES,
SERIES 2005-1 ("Party B")
Part 1. Termination Provisions
----------------------
(a) "Specified Entity" means, with respect to Party A for all purposes of
this Agreement, none specified, and with respect to Party B for all
purposes of this Agreement, none specified.
(b) "Specified Transaction" has its meaning as defined in Section 14 of
this Agreement.
(c) "Cross Default" does not apply to Party A or Party B.
(d) "Credit Event Upon Merger" does not apply to Party A or Party B.
(e) "Automatic Early Termination" does not apply to Party A or Party B.
(f) Payments on Early Termination. Except as otherwise provided in this
Schedule, "Market Quotation" and the "Second Method" apply. In the
case of any Terminated Transaction that is, or is subject to, any
unexercised option, the words "economic equivalent of any payment or
delivery" appearing in the definition of "Market Quotation" shall be
construed to take into account the economic equivalent of the option.
Additionally, in the event an Early Termination Date is designated by
Party B in connection with an Event of Default or Termination Event
with respect to which Party A is the Defaulting Party or sole
Affected Party, then in no event shall any Settlement Amount be
payable under Section 6(e) of the Agreement by either Party A or
Party B.
(g) "Termination Currency" means United States Dollars.
(h) Limitation on Defaults. The Events of Default specified in Section 5
of this Agreement shall not apply to Party A or Party B except for
the following:
(i) Section 5(a)(i) of this Agreement (Failure to Pay or
Deliver); provided, however, notwithstanding anything
contained in Section 5(a)(i) of this Agreement, in no event
shall any failure to pay by: (x) Party A during the
occurrence of any Deferral Period (as defined in the Trust
Agreement) and continuing until such time as any amounts
owed by Party B during such Deferral Period have been paid
in full; or (y) Party B during the occurrence of any
Deferral Period, constitute an Event of Default under
Section 5(a)(i) of this Agreement; provided, further, that
notwithstanding the foregoing provision, during any such
Deferral Period, the "Default Interest"
D-2-1
provisions of Section 2(e) hereof shall apply with respect
to any amounts which are otherwise due and payable, but have
not been paid hereunder (expressly including any
non-payments which, as a result of subsection (x) or (y)
above, would not constitute an Event of Default under
Section 5(a)(i) of this Agreement) and for purposes hereof
only, the Default Rate shall be deemed to be 6.345% and
compounded semi-annually on a 30/360 basis notwithstanding
any provisions in Section 2(e) to the contrary.
(ii) Section 5(a)(vii) of this Agreement (Bankruptcy), provided
that, the failure to make any payment of interest on or
principal of the Certificates which does not give rise to an
event of default pursuant to the terms of the Trust
Agreement shall not be deemed to constitute a Bankruptcy
within the meaning of clause (2) thereof with respect to
Party B; and
(iii) Section 5(a)(viii) of this Agreement (Merger Without
Assumption).
(i) Additional Termination Events.
(i) The occurrence of any of the following events shall be an
Additional Termination Event:
(A) the unsecured and unsubordinated debt, deposit or
letter of credit obligations of Party A or its
Credit Support Provider, as applicable, are
assigned a rating by S&P below the Hedge
Counterparty Required Rating ("S&P Required Rating
Downgrade Event"), and Party A fails to make a
Permitted Transfer in accordance with the
provisions of Part 6(a)(ii) of this Schedule within
seven (7) days of such S&P Required Rating
Downgrade Event, provided, however, that
termination due to any such S&P Required Rating
Downgrade Event shall not be permitted if S&P
agrees in writing that it will not downgrade,
reduce, suspend or withdraw S&P's then-current
rating on the Certificates if this Agreement
remains in full force and effect with respect to
each transaction hereunder. Party A shall notify
Party B within one (1) Business Day of the
occurrence of a S&P Required Rating Downgrade
Event;
(B) the unsecured and unsubordinated debt, deposit or
letter of credit obligations of Party A or its
Credit Support Provider, as applicable, are
assigned a rating by S&P below the Hedge
Counterparty Collateral Threshold Rating
("Collateral Rating Downgrade Event"), unless Party
A either (i) transfers to Party B's Custodian under
the Credit Support Annex an amount of Eligible
Collateral equal to the Delivery Amount required to
be transferred with respect to the Affected
Transactions on that Credit Support Commencement
Date (as defined in the Credit Support Annex) or
(ii) makes a Permitted Transfer with respect to the
Affected Transactions or (iii) provides Alternative
Credit Support (as defined below) with respect to
the Affected Transactions on or before the Credit
Support Commencement Date. Party A
D-2-2
shall notify Party B within five (5) Business Days
of the occurrence of a Collateral Rating Downgrade
Event;
(C) The Certificates become due and payable prior to
their final scheduled maturity date for any reason;
(D) Party B fails to comply with sub-paragraph (e)(i)
of Part 6 of this Schedule; any prepayment,
redemption, retirement, liquidation or distribution
of the Underlying Securities (including as a result
of a Payment Default or an Acceleration) or other
prepayment in full of all Certificates outstanding
occurs under the Trust Agreement (or any notice is
given to that effect and such prepayment,
redemption, retirement, liquidation or distribution
of the Underlying Securities is not capable of
being rescinded); any Trust Termination Event (as
defined in the Trust Agreement) occurs under the
Trust Agreement (or any notice is given by the
Trustee or any other authorized party to that
effect) and the Trustee, the Certificateholders or
any other authorized party thereunder takes any
action or exercises any rights or remedies under
the Trust Agreement or under law that would result
in (1) the appropriation of all right, title and
interest in and to the assets under the Trust
Agreement in satisfaction, in whole or in part, of
the obligations secured thereby, (2) the sale,
liquidation or disposition of the assets under the
Trust Agreement and the application of the proceeds
thereof, in whole or in part, to the obligations
secured thereby, or (3) the release of the security
interest in the assets granted under the Trust
Agreement in exchange for receiving either the
payment, in whole or in part, of the obligations
secured thereby or substitute collateral or credit
support; or
(E) Party B fails to comply with sub-paragraph (j)(i)
of Part 1 of this Schedule, or any Additional
Termination Event occurs under paragraph (j) of
Part 1 of this Schedule in either event to the
extent of the applicable Affected Notional Amount
as described in that paragraph.
(ii) For purposes of the right to terminate under Section
6(b)(iv), Party A will be the sole Affected Party for any
Additional Termination Event described in clause (A) or (B)
of sub-paragraph (i) above, and Party B will be the sole
Affected Party for any other Additional Termination Event.
(iii) Notwithstanding which party is the Affected Party for any
Additional Termination Event, upon the occurrence of an
Early Termination Date for any Additional Termination Event
under this Part 1(i), Party A shall make the calculations
under Section 6(e) of this Agreement as though it were the
non-Affected Party for purposes of Section 6(e)(ii)(1) of
this Agreement.
(iv) "Hedge Counterparty Required Rating" means, as applicable,
at any time that any Certificates are outstanding under the
Trust Agreement and have a long-term rating of at least A by
S&P, with respect to a Person as an issuer or with respect
to long-
D-2-3
term senior unsecured debt of such Person, BBB- by S&P (for
so long as any Certificates are outstanding under the Trust
Agreement and are rated by S&P); provided that should S&P
effect an overall downward adjustment of its short-term or
long-term ratings, then the applicable Hedge Counterparty
Required Rating shall be downwardly adjusted accordingly;
provided further, that any adjustment to a rating shall be
subject to the prior written consent of S&P.
(v) "Hedge Counterparty Collateral Threshold Rating" means, so
long as any Certificates are outstanding under the Trust
Agreement and are rated by S&P, the applicable "Party A
Long-Term Collateral Threshold Rating" as set forth in the
following table and determined based upon the applicable
"Actual Certificate Rating" and the applicable "Party A
Short-Term Collateral Threshold Rating":
---------------------------------------------------------------------------------------
Actual Certificate Party A Short-Term Party A Long-Term
Rating(1) Collateral Threshold Collateral Threshold
Rating(2) Rating(3)
---------------------------------------------------------------------------------------
AA- or above A-1 A
---------------------------------------------------------------------------------------
AA- or above unrated A+
---------------------------------------------------------------------------------------
A+ A-2 or unrated A-
---------------------------------------------------------------------------------------
A A-2 or unrated A-
---------------------------------------------------------------------------------------
A- or below Not applicable Same rating as the Actual
Certificate Rating
---------------------------------------------------------------------------------------
provided that should S&P effect an overall downward
adjustment of its short-term or long-term ratings, then the
applicable Hedge Counterparty Collateral Threshold Rating
shall be downwardly adjusted accordingly; provided further,
that any adjustment to a rating shall be subject to the
prior written consent of S&P.
(vi) "Alternative Credit Support" means an absolute and
unconditional guarantee, credit intermediation arrangement,
letter of credit or other additional credit support or
collateral, in a form which meets S&P's then current
criteria with respect to such types of credit support
reasonably acceptable to S&P and for which S&P confirms in
writing that such support will not cause the reduction or
withdrawal of its then current rating of any outstanding
class of Certificates under the Trust Agreement with respect
to which it has previously issued a rating.
- -------------------------
(1) For purposes hereof, the term "Actual Certificate Rating" means the actual
long-term rating assigned by S&P with respect to the Certificates outstanding
under the Trust Agreement, and in the event S&P has assigned more than one
long-term rating with respect to the Certificates, then the Actual Certificate
Rating shall be the highest of such long-term ratings.
(2) For purposes hereof, the term "Party A Short-Term Collateral Threshold
Rating shall mean the rating assigned by S&P with respect to the short-term
debt of Party A, if any.
(3) For purposes hereof, the term "Party A Long-Term Collateral Threshold
Rating shall mean the rating assigned by S&P with respect to the long-term
debt of Party A.
D-2-4
(vii) "S&P" means, Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies ("S&P") (so long as any
Certificates deemed outstanding under the Trust Agreement
are rated by S&P).
(j) Mandatory Reduction Events. To protect Party A's interest in the
Trust Agreement as a source of payment for Party B's obligations
hereunder, including the priority of those payments under the Trust
Agreement, the following provisions shall apply with respect to all
Transactions hereunder:
(i) If either (x) without the prior written consent of Party A,
Party B enters into any "Swap Agreement" (as defined in the
Trust Agreement) on any date (a "Principal Payment Date")
with any person or entity that would result in the Hedge
Notional Amount exceeding the remaining Principal Balance on
any date or (y) as the result of any payment, repayment,
retirement or redemption of any amount of the Principal
Balance under the Trust Agreement on any date (a "Principal
Payment Date"), (A) the Principal Balance would be reduced
to zero, or (B) the Hedge Notional Amount would exceed the
remaining Principal Balance (after giving effect to that
repayment), (each, a "Mandatory Reduction Event"), then not
later than 1:00 p.m. (New York City time) on the date
("Mandatory Reduction Date") which is the second New York
Business Day prior to that Principal Payment Date, Party B
shall:
(1) notify Party A of that Mandatory Reduction Event,
including the amount to be repaid and the
outstanding Hedge Notional Amount; and
(2) specify in that notice each outstanding Transaction
hereunder and the corresponding amount by which the
Transactional Notional Amount of that Transaction
is to be reduced for that Mandatory Reduction Event
("Affected Notional Amount") so that the Hedge
Notional Amount for any date (after giving effect
to all such reductions) would not exceed the
Principal Balance for that date (after giving
effect to any repayment) (except that if the
Principal Balance is reduced to zero, the Hedge
Notional Amount shall be reduced to zero).
"Hedge Notional Amount" means, as of the date of determination, an
amount equal to the aggregate Notional Amount outstanding on that
date and for the then current Calculation Period of all Transactions
outstanding under any Swap Agreement (as defined in the Trust
Agreement) then in effect.
"Principal Balance" means, on any date, the aggregate principal
amount of the Certificates, outstanding under the Trust Agreement on
that date, after giving effect to all repayments, redemptions,
advances or distributions of principal thereon on that date.
(ii) For each Transaction for which a corresponding Affected
Notional Amount is specified ("Affected Transaction")
pursuant to sub-paragraph (i) above, the Notional Amount of
that Affected Transaction shall be reduced as of the
Mandatory Reduction Date by an amount equal to the Affected
Notional Amount (and, if the Notional
D-2-5
Amount otherwise accretes or amortizes after the Mandatory
Reduction Date, the effect of that reduction shall be to
reduce proportionately the Notional Amount of each future
Calculation Period remaining under the Transaction), and an
Additional Termination Event and Early Termination Date
shall be deemed to have occurred on the Mandatory Reduction
Date for that Transaction and Party B will be the sole
Affected Party. For purposes of such Early Termination Date,
the term "Terminated Transaction" as used in Section 6(e) of
this Agreement shall be only that part of the Affected
Transaction relating to the Affected Notional Amount, and
the remainder of the Affected Transaction shall continue in
full force and effect as a Transaction hereunder subject to
the terms of this Agreement. The amount payable under
Section 6(e) of this Agreement with respect to any such
Early Termination Date shall be due and payable in
accordance with such Section 6(e), provided that such
payment shall be made no later than the next "Distribution
Date" under the Trust Agreement to occur after the Mandatory
Reduction Date, and provided further that the Market
Quotation with respect to any Terminated Transaction under
this sub-paragraph (ii) shall be determined on the basis of
the quotation of one Reference Market-maker selected by
Party A, which may be Party A to the extent its quotation is
reasonably determined in good faith.
(k) Events of Default. An Event of Default shall not occur with respect
to Party A under Section 5(a)(v)(1) or (2) or Section 5(a)(vi) when
the failure to pay or deliver, or the default, event of default or
other similar condition or event, as the case may be, arises solely
(i) out of a wire transfer problem or an operational or
administrative error or omission (so long as the required funds or
property required to make that payment or delivery were otherwise
available to Party A), or (ii) from the general unavailability of the
relevant currency due to exchange controls or other similar
governmental action, but in either case only if the payment or
delivery is made within three Local Business Days after the problem
has been corrected, the error or omission has been discovered or the
currency becomes generally available.
(l) Modification of Section 5(a)(i) - Failure to Pay or Deliver. Section
5(a)(i) is hereby amended to add the following language immediately
after the word "party" at the end of the third line of such
subsection "provided, however, such cure period shall not apply with
respect to any amounts payable on the Termination Date".
(m) Reports. For purposes hereof, Party B shall cause to be delivered to
Party A within 10 days of the end of each calendar month a statement
("Reporting Statement") showing the Stated Amount of all Outstanding
Certificates as of the end of such month and the Hedge Notional
Amount as of the end of such month and each following month during
the term of this Agreement for all outstanding Transactions under all
Swap Agreements which Party B has entered into, whether the same have
already commenced or are scheduled to commence on a future date.
Part 2. Tax Provisions
--------------
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, each party makes the following representation:
D-2-6
It is not required by any applicable law, as modified by the practice
of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account
of any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
party under this Agreement.
In making this representation, a party may rely on (i) the accuracy
of any representations made by the other party pursuant to Section
3(f) of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement, and the
accuracy and effectiveness of any document provided by the other
party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement, and
(iii) the satisfaction of the agreement of the other party contained
in Section 4(d) of this Agreement, provided that it shall not be a
breach of this representation where reliance is placed on clause (ii)
above and the other party does not deliver a form or document under
Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement:
(i) Party A makes the following representation(s):
(A) It is a national banking association organized or
formed under the laws of the United States and is a
United States resident for United States federal
income tax purposes.
(B) Party A makes no other Payee Tax Representations.
(ii) Party B makes the following representation(s):
(A) It is a common law trust organized or formed under
the laws of New York.
(c) Tax Forms.
(i) Delivery of Tax Forms. For the purpose of Section 4(a)(i),
and without limiting Section 4(a)(iii), each party agrees to
duly complete, execute and deliver to the other party the
tax forms specified below with respect to it (A) before the
first Payment Date under this Agreement, (B) promptly upon
reasonable demand by the other party and (C) promptly upon
learning that any such form previously provided by the party
has become obsolete or incorrect.
In addition, in the case of any tax form that is a Periodic
Tax Form required to be delivered by Party B under this
Agreement, Party B agrees to renew such tax form prior to
its expiration by completing, executing and delivering to
Party A that tax form ("Renewal Tax Form") in each
succeeding third year following the year of execution of any
such tax form or Renewal Tax Form delivered by Party B to
Party A under this Agreement so that Party A receives each
Renewal Tax Form not later than December 31 of the relevant
year. "Periodic Tax Form" means any IRS Form W-9
D-2-7
that is delivered by Party B to Party A without a U.S.
Taxpayer Identification Number.
(ii) Tax Forms to be Delivered by Party A:
Party A will deliver a correct, complete and duly executed
U.S. Internal Revenue Service Form W-9 (or successor
thereto), together with appropriate attachments, that
eliminates U.S. federal withholding and backup withholding
tax on payments to Party A under this Agreement.
(iii) Tax forms to be Delivered by Party B:
Party B will deliver a correct, complete and duly executed
U.S. Internal Revenue Service Form W-9 (or successor
thereto), together with appropriate attachments, that
eliminates U.S. federal withholding and backup withholding
tax on payments to Party B under this Agreement.
Part 3. Documents
---------
(a) Delivery of Documents. When it delivers this Agreement, each party
shall also deliver its Closing Documents to the other party in form
and substance reasonably satisfactory to the other party. For each
Transaction, a party shall deliver, promptly upon request, a duly
executed incumbency certificate for the person(s) executing the
Confirmation for that Transaction on behalf of that party.
(b) Closing Documents.
(i) For Party A, "Closing Documents" mean:
(A) an opinion of Party A's counsel addressed to Party
B in form and substance acceptable to Party B;
(B) a duly executed incumbency certificate for each
person executing this Agreement for Party A, or in
lieu thereof, a copy of the relevant pages of its
official signature book; and
(C) each Credit Support Document (if any) specified for
Party A in this Schedule, together with a duly
executed incumbency certificate for the person(s)
executing that Credit Support Document, or in lieu
thereof, a copy of the relevant pages of its
official signature book.
(ii) For Party B, "Closing Documents" mean:
(A) an opinion of Party B's counsel addressed to Party
A in form and substance acceptable to Party A;
(B) a duly executed copy of the Trust Agreement and the
other operative documents relating thereto and
referred to therein, executed and delivered by the
parties thereto.
D-2-8
(C) a copy, certified by the secretary or assistant
secretary of Party B, of the resolutions of the
board of directors or extracts from the bylaws of
Party B authorizing the execution, delivery and
performance by Party B of this Agreement and
authorizing Party B to enter into Transactions
hereunder; and
(D) a duly executed certificate of the secretary or
assistant secretary of Party B certifying the name
and true signature of each person authorized to
execute this Agreement and enter into Transactions
for Party B.
Part 4. Miscellaneous
-------------
(a) Addresses for Notices. For purposes of Section 12(a) of this
Agreement, all notices to a party shall, with respect to any
particular Transaction, be sent to its address, telex number or
facsimile number specified in the relevant Confirmation, provided
that any notice under Section 5 or 6 of this Agreement, and any
notice under this Agreement not related to a particular Transaction,
shall be sent to a party at its address, telex number or facsimile
number specified below; provided further that any notice under the
Credit Support Annex shall be sent to a party at its address, telex
number or facsimile number specified in the Credit Support Annex.
To Party A:
WACHOVIA BANK, NATIONAL ASSOCIATION
301 South College, DC-8
Charlotte, NC 28202-0600
Attention: Bruce M. Young
Senior Vice President, Risk Management
Fax: (704) 383-0575
Phone: (704) 383-8778
To Party B:
STRATS(SM) Trust for Goldman Sachs Capital I Securities, Series 2005-1
U.S. Bank Trust National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporate Trust
Fax: (212)809-5459
(b) Process Agent. Not applicable.
(c) Offices. Section 10(a) applies.
(d) Multibranch Party. Neither party is a Multibranch Party.
(e) "Calculation Agent" means Party A.
D-2-9
(f) Credit Support Document.
(i) For Party A, the following is a Credit Support Document: a
Credit Support Annex dated the date hereof and duly executed
and delivered by Party A and Party B and any applicable
document governing Alternative Credit Support beginning on
the effective date of such document.
(ii) For Party B, the following is a Credit Support Document:
none specified.
(g) Credit Support Provider.
(i) For Party A, Credit Support Provider means: none specified;
provided that such party (other than Party A) executing a
document governing Alternative Credit Support shall be a
Credit Support Provider hereunder beginning on the effective
date of such document.
(ii) For Party B, Credit Support Provider means: none specified.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the law (and not the law of conflicts except with
respect to ss.ss. 5-1401 and 5-1402 of the New York General
Obligations Law) of the State of New York.
(i) Waiver of Jury Trial. To the extent permitted by applicable law, each
party irrevocably waives any and all right to trial by jury in any
legal proceeding in connection with this Agreement, any Credit
Support Document to which it is a party, or any Transaction.
(j) Netting of Payments. Section 2(c)(ii) of this Agreement will apply.
(k) "Affiliate" has its meaning as defined in Section 14 of this
Agreement.
Part 5. Other Provisions
----------------
(a) ISDA Publications.
(i) 2000 ISDA Definitions. This Agreement and each Transaction
are subject to the 2000 ISDA Definitions (including its
Annex) published by the International Swaps and Derivatives
Association, Inc. (together, the "2000 ISDA Definitions")
and will be governed by the provisions of the 2000 ISDA
Definitions. The provisions of the 2000 ISDA Definitions are
incorporated by reference in, and shall form part of, this
Agreement and each Confirmation. Any reference to a "Swap
Transaction" in the 2000 ISDA Definitions is deemed to be a
reference to a "Transaction" for purposes of this Agreement
or any Confirmation, and any reference to a "Transaction" in
this Agreement or any Confirmation is deemed to be a
reference to a "Swap Transaction" for purposes of the 2000
ISDA Definitions. The provisions of this Agreement
(exclusive of the 2000 ISDA Definitions) shall prevail in
the event of any conflict between such provisions and the
2000 ISDA Definitions.
D-2-10
(b) Additional Representations. Section 3 is amended by adding the
following Sections 3(g), (h), (i) and (j):
"(g) Non-Reliance. For any Relevant Agreement: (i) it acts as
principal and not as agent; (ii) it acknowledges that the other party
acts only at arm's length and is not its agent, broker, advisor or
fiduciary in any respect, and any agency, brokerage, advisory or
fiduciary services that the other party (or any of its affiliates)
may otherwise provide to the party (or to any of its affiliates)
excludes the Relevant Agreement; (iii) with respect to Party A, it
understands the Relevant Agreement and those risks, has determined
they are appropriate for it, and willingly assumes those risks, and
with respect to Party B, it has been directed to execute the Relevant
Agreement and it understands the Relevant Agreement and those risks
and willingly assumes those risks; (iv) it has not relied and will
not be relying upon any evaluation or advice (including any
recommendation, opinion, or representation) from the other party, or
the representatives or advisors of the other party (except
representations expressly made in the Relevant Agreement or an
opinion of counsel required thereunder); and (vi) if a party is
acting as a Calculation Agent or Valuation Agent, it does so not as
the other party's agent or fiduciary, but on an arm's length basis
for the purpose of performing an administrative function in good
faith.
"Relevant Agreement" means this Agreement, each Transaction, each
Confirmation, any Credit Support Document, and any agreement
(including any amendment, modification, transfer or early
termination) between the parties relating thereto or to any
Transaction.
(h) Eligibility. It is an "eligible contract participant" within the
meaning of the Commodity Exchange Act (as amended by the Commodity
Futures Modernization Act of 2000).
(i) FDIC Requirements. If it is a bank subject to the requirements of
12 U.S.C. ss. 1823(e), its execution, delivery and performance of
this Agreement (including the Credit Support Annex and each
Confirmation) have been approved by its board of directors or its
loan committee, such approval is reflected in the minutes of said
board of directors or loan committee, and this Agreement (including
the Credit Support Annex and each Confirmation) will be maintained as
one of its official records continuously from the time of its
execution (or in the case of any Confirmation, continuously until
such time as the relevant Transaction matures and the obligations
therefor are satisfied in full).
(j) ERISA. It is not (i) an employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") or a plan as defined in Section 4975(e) of the
Internal Revenue Code of 1986, as amended (the "Code"), subject to
Title I of ERISA or Section 4975 of the Code, or a plan as so defined
but which is not subject to Title I of ERISA or Section 4975 of the
Code (each, an "ERISA Plan"), (ii) a person or entity acting on
behalf of an ERISA Plan, or (iii) a person or entity the assets of
which constitute assets of an ERISA Plan.
(c) Recorded Conversations. Each party and any of its Affiliates may
electronically record any of its telephone conversations with the
other party or with any of the other party's Affiliates in connection
with this Agreement or any Transaction, and any such recordings may
be
D-2-11
submitted in evidence in any proceeding to establish any matters
pertinent to this Agreement or any Transaction.
(d) Confirmation Procedures. Upon receipt thereof, Party B shall examine
the terms of each Confirmation sent by Party A, and unless Party B
objects to the terms within three New York business days after
receipt of that Confirmation, those terms shall be deemed accepted
and correct absent manifest error, in which case that Confirmation
will be sufficient to form a binding supplement to this Agreement
notwithstanding Section 9(e)(ii) of this Agreement.
Part 6. Additional Terms Relating to the Trust Agreement
------------------------------------------------
(a) Permitted Transfers.
(i) Notwithstanding Section 7 of this Agreement, Party A may
make a Permitted Transfer without the prior written consent
of Party B, and at Party A's own cost and expense, if either
of the following events occurs:
(A) the unsecured and unsubordinated debt, deposit or
letter of credit obligations of Party A are rated
below the Hedge Counterparty Required Rating or the
Hedge Counterparty Collateral Threshold Rating by
S&P at the time of the transfer; or
(B) any Tax Event or Tax Event Upon Merger exists with
respect to Party A at the time of the transfer.
(ii) "Permitted Transfer" means a transfer, in whole but not in
part, of all of Party A's rights and obligations under this
Agreement and which meets all of the following requirements:
(A) the transferee is a "Qualified Hedge Party " (as
defined in the Trust Agreement) or a recognized
dealer in interest rate swaps organized under the
laws of the United States of America or a
jurisdiction located in the United States of
America (or another jurisdiction reasonably
acceptable to Party B and the Trustee under the
Trust Agreement) that, at the time of the transfer,
maintains (or its proposed guarantor maintains) the
Hedge Counterparty Required Rating from S&P on its
unsecured and unsubordinated debt, deposit or
letter of credit obligations;
(B) S&P confirms in writing that such transfer will not
result in a reduction or withdrawal of its then
current rating of the Certificates under the Trust
Agreement with respect to which it has previously
issued a rating;
(C) neither an Event of Default with respect to the
transferee nor a Termination Event would exist
immediately after that transfer;
(D) the transferee executes and delivers a written
agreement reasonably satisfactory to Party B and
the Trustee under the Trust Agreement in which
D-2-12
the transferee, among other things, legally and
effectively accepts all the rights and assumes all
the obligations of Party A under this Agreement;
and
(E) such transfer otherwise complies with the terms of
the Trust Agreement.
(b) Transfer. No Party to this Agreement may transfer its obligations
under this Agreement pursuant to Section 7(a) of this Agreement
except upon written confirmation from S&P that, any such reduction
would not cause S&P's then-current rating on the Certificates to be
adversely qualified, reduced, suspended or withdrawn.
(c) Payments. All payments to Party B under this Agreement or any
Transaction shall be made to the Certificate Account created under
the Trust Agreement.
(d) Set-off. Party A and Party B hereby waive any and all right of
set-off with respect to any amounts due under this Agreement or any
Transaction, provided that nothing herein shall be construed to waive
or otherwise limit the netting provisions contained in Sections 2(c)
and 6(e) of this Agreement or the setoff rights contained in the
Credit Support Annex.
(e) Trust Agreement
(i) Party B hereby acknowledges that Party A is a secured party
under the Trust Agreement with respect to this Agreement and
a third-party beneficiary under the Trust Agreement and
Party B agrees for the benefit of Party A that neither it
nor any other Person will take any action (whether in the
form of an amendment, a modification, waiver, approval,
consent or otherwise) which may have a material adverse
effect with respect to the rights, interest or benefits
granted to Party A under the Trust Agreement with respect to
this Agreement, whether or not this Agreement is
specifically referred to or identified therein.
(ii) On the date Party B executes and delivers this Agreement and
on each date on which a Transaction is entered into, Party B
hereby represents and warrants to Party A: that the Trust
Agreement is in full force and effect; that Party B is not
party to any separate agreement with any of the parties to
the Trust Agreement that would have the effect of
diminishing or impairing the rights, interests or benefits
that have been granted to Party A under, and which are
expressly set forth in, the Trust Agreement; that Party B's
obligations under this Agreement are secured under the Trust
Agreement; and that nothing herein violates or conflicts
with any of the provisions of the Trust Agreement or any
other documents executed in connection therewith.
(f) Consent to Notice & Communications. Party B hereby consents to the
giving to the Trustee of notice by Party A of Party A's address and
telecopy and telephone numbers for all purposes of the Trust
Agreement, and in addition, Party A shall also be entitled at any
time to provide the Trustee with copies of this Agreement, including
all Confirmations. In addition, Party A shall not be precluded from
communicating with the Trustee or any party to, or any third party
beneficiary under, the Trust Agreement for the purpose of exercising,
enforcing or
D-2-13
protecting any of Party A's rights or remedies under this Agreement
or any rights, interests or benefits granted to Party A under the
Trust Agreement.
(g) No Bankruptcy Petition. Party A agrees that, prior to the date which
is at least one year and one day after all Rated Indebtedness (as
hereinafter defined) has been paid in full, it will not institute
against, or join any other person or entity in instituting against,
Party B any bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings, or other proceedings under
federal or State bankruptcy or similar laws, provided that nothing
herein shall preclude, or be deemed to estop, Party A from taking any
action in any case or proceeding voluntarily filed or commenced by or
on behalf of Party B or in any involuntary case or proceeding after
it has commenced.
(h) Limitation of Liability. Notwithstanding anything contained herein to
the contrary, in executing this Agreement (including the Schedule,
Credit Support Annex and each Confirmation) on behalf of Party B, the
Trustee is acting solely in its capacity as trustee of Party B and
not in its individual capacity, and in no event shall the Trustee, in
its individual capacity or as beneficial owner of Party B, have any
liability for the representations, warranties, covenants, agreements
or other obligations of Party B hereunder, for which recourse shall
be had solely to the assets of Party B.
(i) Party A Rights Solely Against Collateral. The liability of Party B to
Party A hereunder is limited in recourse to the assets of Party B and
to the extent that the proceeds of such assets, when applied in
accordance with the Trust Agreement, are insufficient to meet the
obligations of Party B hereunder in full, Party B shall have no
further liability in respect of any such outstanding obligations and
any obligations of Party B which remain outstanding shall be
extinguished. Party A further agrees that it shall not take any
action against the directors, shareholders, administrator or officers
of Party B to recover any amounts due hereunder (absent fraud or
willful misconduct by any such person). This clause shall survive the
termination of this agreement for any reason.
Part 7. Definitions:
------------
All capitalized terms used herein and not defined, shall have the
definition ascribed to them in the Trust Agreement.
"Rated Indebtedness," means the Certificates issued under the Trust
Agreement.
"Securities Intermediary" means U.S. Bank Trust, National Association
or any successor, acting as Securities Intermediary pursuant to the
Trust Agreement.
"Trust Agreement" means that certain STRATS(SM) Certificates Series
Supplement 2005-1 between Synthetic Fixed-Income Securities, Inc., as
trustor (the "Trustor") and the Trustee and Securities Intermediary,
dated as of June 13, 2005, which was entered into pursuant to, and as
a supplement to, that certain Base Trust Agreement, dated as of
September 26, 2003 by and between the Trustor and the Trustee.
D-2-14
"Trustee" means U.S. Bank Trust, National Association or any
successor, acting as Trustee pursuant to the Trust Agreement.
D-2-15
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized signatories as of the date hereof.
WACHOVIA BANK, NATIONAL ASSOCIATION
By: __________________________________
Name:
Title:
STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I SECURITIES, SERIES 2005-1
By: U.S. Bank Trust National Association, as Trustee
By: __________________________________
Name:
Title:
D-2-16
EXHIBIT D
Exhibit D-3
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA MASTER AGREEMENT
dated as of June 13, 2005
between
WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
and
STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I SECURITIES,
SERIES 2005-1
("Party B")
This Annex supplements, forms part of, and is subject to, the ISDA Master
Agreement referred to above (this "Agreement"), is part of its Schedule and is
a Credit Support Document under this Agreement with respect to Party A.
At any time a Collateral Event has occurred and is continuing with respect to
Party A, Party A shall be obligated to transfer Eligible Collateral in
accordance with the terms of this Annex commencing on the applicable Credit
Support Commencement Date. If a Collateral Event occurs and thereafter ceases
to be continuing (and provided that no Event of Default or Potential Event of
Default exists with respect to Party A) or Party A has made a Permitted
Transfer under this Agreement, then Party A's obligations to transfer Eligible
Collateral under this Annex will immediately cease with respect to that
Collateral Event, and Party B will, upon demand by Party A, return to Party A,
or cause its Custodian to return, all Collateral held under this Annex.
"Collateral Event" means that the unsecured and unsubordinated debt, deposit
or letter of credit obligations of Party A carry an assigned rating by S&P
that is below the Hedge Counterparty Collateral Threshold Rating. The "Credit
Support Commencement Date" is in connection with a Collateral Rating Downgrade
Event, the first Business Day following the 30-day period after the occurrence
of the Collateral Rating Downgrade Event. "Credit Support Commencement Date"
means (A) in connection with a Collateral Rating Downgrade Event, the first
Business Day following the 30 day period after the occurrence of the
Collateral Rating Downgrade Event and (B) in connection with a S&P Required
Rating Downgrade Event, the first Business Day following the 7 day period
after the occurrence of the S&P Required Rating Downgrade Event.
Accordingly, the parties agree as follows:
Paragraphs 1 - 12. Incorporation
Paragraphs 1 through 12 inclusive of the ISDA Credit Support Annex (Bilateral
Form) (ISDA Agreements Subject to New York Law Only) published in 1994 by the
International Swaps and Derivatives Association, Inc. are incorporated herein
by reference and made a part hereof, except that Paragraph 1(b) is hereby
amended in its entirety to read as follows:
D-3-1
"(b) Secured Party and Pledgor. Notwithstanding anything
contained in this Annex to the contrary, (i) all references
in this Annex to the "Secured Party" and all references to
"other party" in Paragraphs 2, 9 and 11(b) of this Annex,
will be to Party B exclusively, and (iii) all references in
this Annex to the "Pledgor" and all references to "Each
party" or "a party" in Paragraphs 2, 9 and 11(b) of this
Annex, will be to Party A exclusively."
Paragraph 13. Elections and Variables
(a) Security Interest for "Obligations". The term "Obligations" as used
in this Annex includes no obligations of Secured Party and, for
purposes of the definition of Obligations in Paragraph 12, includes
no additional obligations of Pledgor.
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount.
(A) "Delivery Amount" has the meaning specified in Paragraph
3(a).
(B) "Return Amount" has the meaning specified in Paragraph 3(b).
(C) "Credit Support Amount" means (x) on and after a Credit
Support Commencement Date and during the continuance of the
related Collateral Event the amount specified in Paragraph
3(b); provided, however, if on or after such Credit Support
Commencement Date Party A's ratings from S&P are below the
Hedge Counterparty Collateral Threshold Rating for S&P, then
it shall mean the S&P Credit Support Amount (as defined in
Schedule 1 hereof).
"Transaction Notional Amount" shall mean, as of the date of
determination, an amount equal to the aggregate Notional
Amount outstanding at the beginning of the related
Calculation Period under the applicable Affected
Transactions.
(ii) Eligible Collateral. The following items will qualify as
"Eligible Collateral":
D-3-2
Valuation
Percentage (S&P):
(A) U.S Cash: U.S. Dollars in depositary account 100%
form.
(B) U.S. Treasury Securities: negotiable debt 98.60%
obligations issued by the U.S. Treasury
Department ("Treasuries") having a remaining
maturity of up to and not more than 1 year.
(C) Treasuries having a remaining maturity of 94.10%
greater than 1 year but not more than 5
years.
(D) Treasuries having a remaining maturity of 90.70%
greater than 5 years but not more than 10
years.
(E) Treasuries having a remaining maturity of 85.30%
greater than 10 years but not more than 20
years.
(F) Treasuries having a remaining maturity of 85.30%
greater than 20 years not more than 30 years.
(G) Agency Securities: negotiable debt 98.20%
obligations of the Federal National Mortgage
Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Federal Home
Loan Banks (FHLB), Federal Farm Credit Banks
(FFCB), Student Loan Marketing Association
(SLMA), Tennessee Valley Authority (TVA)
(collectively, "Agency Securities") having a
remaining maturity of not more than 1 year.
(H) Agency Securities having a remaining maturity 93.30%
of greater than 1 year but not more than 5
years.
(I) Agency Securities having a remaining maturity 88.60%
of greater than 5 years but not more than 10
years.
(J) Agency Securities having a remaining maturity 80.80%
of greater than 10 years but not more than 20
years.
(K) Agency Securities having a remaining maturity 80.80%
of greater than 20 years but not more than 30
years.
D-3-3
(L) FHLMC Certificates. Mortgage participation 93%
certificates issued by FHLMC evidencing
undivided interests or participations in
pools of first lien conventional or FHA/VA
residential mortgages or deeds of trust,
guaranteed by FHLMC, and having a remaining
maturity of not more than 30 years.
(M) FNMA Certificates. Mortgage-backed 90%
pass-through certificates issued by FNMA
evidencing undivided interests in pools of
first lien mortgages or deeds of trust on
residential properties, guaranteed by FNMA,
having a remaining maturity of not more than
30 years.
(N) GNMA Certificates. Mortgage-backed 90.60%
pass-through certificates issued by private
entities, evidencing undivided interests in
pools of first lien mortgages or deeds of
trust on single family residences, guaranteed
by the Government National Mortgage
Association (GNMA) with the full faith and
credit of the United States, and having a
remaining maturity of not more than 30 years.
(O) Commercial Paper. Commercial Paper with a 98%
rating of at least P-1 by Moody's and at
least A-1 by S&P and having a remaining
maturity of not more than 30 days.
(P) Other Items of Credit Support approved by the % to be determined
S&P to the extent any Certificates are rated
by S&P.
D-3-4
(iii) Other Eligible Support. Not applicable.
(iv) Thresholds.
"Independent Amount" means for Pledgor: zero.
"Independent Amount" means for Secured Party: zero
(B) "Threshold" means for Pledgor: at any time prior to a Credit
Support Commencement Date, infinite; and thereafter, zero.
(C) "Minimum Transfer Amount" is $50,000.00 for any Delivery
Amount of Pledgor, and zero for any Return Amount of Secured
Party.
(D) Rounding: The Delivery Amount and the Return Amount will be
rounded down to the nearest integral multiple of $10,000.
(c) Valuation and Timing.
(i) "Valuation Agent" means, for purposes of Paragraphs 3,
4(d)(ii), 5 and 6(d), the Pledgor.
(ii) "Valuation Date" means, for any Collateral Event, the second
New York Business Day prior to the Credit Support
Commencement Date and thereafter any Local Business Day
while the Collateral Event is continuing, provided that
there shall be one Valuation Date per week on a date
selected by the Valuation Agent, which shall be the same
calendar day each week to the extent practicable, on a
reasonably consistent basis. If the Delivery Amount for the
Valuation Date associated with the Credit Support
Commencement Date or a weekly Valuation Date equals or
exceeds the Pledgor's Minimum Transfer Amount, then the
demand by the Secured Party referred to in Paragraph 3(a) of
this Annex shall be deemed to have been given (A) with
respect to a Credit Support Commencement Date, on the first
New York Business Day preceding the Credit Support
Commencement Date, prior to the Notification Time and (B)
with respect to a weekly Valuation Date, on that weekly
Valuation Date, prior to the Notification Time, and subject
to the terms and conditions of this Annex, the Pledgor will
transfer to the Secured Party the amount of Eligible
Collateral it is required to Transfer with respect to that
Valuation Date in accordance with Paragraph 3(a) of this
Annex.
(iii) "Valuation Time" means the close of business in New York
City on the Local Business Day before the Valuation Date or
date of calculation, as applicable; provided that the
calculations of Value and Exposure will be made as of
approximately the same time on the same date.
(iv) "Notification Time" means 11:00 a.m., New York time, on a
Local Business Day.
D-3-5
(d) Conditions Precedent and Secured Party's Rights and Remedies. No
Specified Conditions apply.
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph
4(d)(ii).
(ii) Consent. The Pledgor is not required to obtain the Secured
Party's consent for any substitution pursuant to Paragraph
4(d).
(f) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m., New York time, on the
Local Business Day following the date on which the notice is
given that gives rise to a dispute under Paragraph 5.
(ii) Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the
Value of Posted Credit Support other than Cash will be
calculated based upon the mid-point between the bid and
offered purchase rates or prices for that Posted Credit
Support as reported on the Bloomberg electronic service as
of the Resolution Time, of if unavailable, as quoted to the
Valuation Agent as of the Resolution Time by a dealer in
that Posted Credit Support of recognized standing selected
in good faith by the Valuation Agent, which calculation
shall include any unpaid interest on that Posted Credit
Support.
(iii) Alternative. The provisions of Paragraph 5 will apply.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodians. Secured
Party will not be entitled to hold Posted Collateral itself,
and instead the Secured Party will be entitled to hold
Posted Collateral through a Custodian pursuant to Paragraph
6(b), provided that (1) Posted Collateral may be held in New
York or an alternative jurisdiction acceptable to Party A,
(2) the Custodian shall at all times be a bank or trust
company with total assets in excess of $10 billion and
having a rating assigned to its unsecured and unsubordinated
long-term debt or deposit obligations of at least BBB+ from
S&P and (3) Posted Collateral may be held by the Trustee.
Initially the Custodian will be U.S. Bank Trust National
Association.
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c)
will not apply to Secured Party and without prejudice to
Secured Party's rights under Paragraph 8 of the Credit
Support Annex, Secured Party will not take any action
specified in such Section 6(c).
(h) Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the rate actually
earned by the Custodian on the Posted Collateral as from
time to time in effect and the Custodian shall hold all
Posted Collateral in the form of Cash in Eligible
Investments (as defined in the
D-3-6
Trust Agreement) at the direction of the Pledgor. Custodian
will provide details concerning such earnings upon Party A's
request.
(ii) Transfer of Interest Amount. The Transfer of the Interest
Amount will be made on the first Local Business Day of each
calendar month and on any Local Business Day that Posted
Collateral in the form of Cash is Transferred to the Pledgor
pursuant to Paragraph 3(b).
(iii) Alternative to Interest Amount. The provisions of Paragraph
6(d)(ii) will apply.
(i) Additional Representation(s). Not applicable.
(j) Other Eligible Support and Other Posted Support. Not applicable.
(k) Demands and Notices. All demands, specifications and notices under
this Annex will be made to a party as follows unless otherwise
specified from time to time by that party for purposes of this Annex
in a written notice given to the other party:
To Pledgor:
WACHOVIA BANK, NATIONAL ASSOCIATION
201 South College Street, 6th Floor
Charlotte, NC 28288-0601
Attention: Collateral Management Group
Fax: (704) 383-3194
Phone: (704) 383-9529
To Secured Party:
STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I SECURITIES, SERIES 2005-1
U.S. Bank Trust National Association
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Corporation Trust
Fax: (212) 809-5459
(l) Addresses for Transfers.
(i) For each Transfer hereunder to Pledgor, instructions will be
provided by Pledgor for that specific Transfer.
(ii) For each Transfer hereunder to Secured Party, instructions
will be provided by Secured Party for that specific
Transfer.
D-3-7
IN WITNESS WHEREOF the parties have executed this Credit Support Annex as of
the date hereof.
WACHOVIA BANK, NATIONAL ASSOCIATION
By: __________________________________
Name:
Title:
STRATS(SM) TRUST FOR GOLDMAN SACHS CAPITAL I SECURITIES, SERIES 2005-1
By: U.S. Bank Trust National Association, as Trustee
By: __________________________________
Name:
Title:
EXHIBIT D
Exhibit D-4
Schedule 1
----------
S&P Credit Support Amount
The term "S&P Credit Support Amount" shall mean for any Valuation
Date (i) Party B's Exposure for that Valuation Date plus (ii) the product of
the applicable S&P Volatility Buffer (as determined by reference to the
applicable provisions below) times the Transaction Notional Amount, minus
(iii) Party A's Threshold; provided, however the S&P Credit Support Amount
shall be zero if (x) S&P is no longer rating any of the Certificates, or (y)
Party A's ratings from S&P are not below the Hedge Counterparty Collateral
Threshold Rating for S&P.
S&P Volatility Buffers
If, on the related Valuation Date, the highest rated Certificates are
rated "AA-" or higher by S&P, then the Volatility Buffer will be determined
using the following table:
- -----------------------------------------------------------------------------------------------------
Party A Rating (as Remaining Maturity of the Highest Rated Certificates:
hereinafter defined)*
- -----------------------------------------------------------------------------------------------------
Up to 5 years Up to 10 years Up to 30 years
A-2 3.25% 4.00% 4.75%
A-3 4.00% 5.00% 6.25%
BB+ or lower 4.50% 6.75% 7.50%
- -----------------------------------------------------------------------------------------------------
If, on the related Valuation Date, the highest rated Certificates are
rated "A" or "A+" by S&P, then the Volatility Buffer will be determined using
the following table:
- -----------------------------------------------------------------------------------------------------
Party A Rating (as Remaining Maturity of the Highest Rated Certificates:
hereinafter defined)*
- -----------------------------------------------------------------------------------------------------
Up to 5 years Up to 10 years Up to 30 years
BBB+/BBB/BBB- 3.25% 4.00% 4.50%
A-2 3.25% 4.00% 4.50%
A-3 3.50% 4.50% 6.00%
BB+ or lower 4.00% 5.25% 7.00%
- -----------------------------------------------------------------------------------------------------
If, on the related Valuation Date, the highest rated Certificates are
rated "A-" or below by S&P, then the Volatility Buffer will be determined in
consultation with S&P and will be at such levels as may be required in order
for S&P to agree in writing that it will not downgrade, reduce, suspend or
withdraw S&P's then-current rating on the Certificates; provided, however, in
no event shall such Volatility Buffer levels exceed the levels set forth in
the table set forth
- ------------------------------
* If Party A has a long-term or short-term rating from S&P which is not
expressly set forth in the applicable table above, then the S&P Volatility
Buffer shall be deemed to be 0.0%.
D-4-1
immediately above which would have applied had the highest rated Certificates
been rated "A" or "A+" by S&P.
"Party A Rating" means, Party A's rating with respect to its long-term senior
unsecured debt or its short-term debt, as applicable, by S&P on the related
Valuation Date; provided, however, if both Party A's long-term debt and
short-term debt are rated by S&P on such Valuation Date, then Party A Rating
shall mean the higher of the two ratings by S&P.
D-4-2
EXHIBIT D
Exhibit D-5
WACHOVIA
SWAP TRANSACTION CONFIRMATION
- ------------------------------------------------------------------------------
Date: June 10, 2005
To: STRATS (SM) Trust For Goldman Sachs Capital I Securities, Series
2005-1 ("Counterparty")
Address: US Bank National Association Trust
100 Wall Street, Suite 1600
New York, NY 10005 USA
Fax: 212-809-5459
Attention: Corporate Trust
From: Wachovia Bank, N.A. ("Wachovia")
Ref. No. 1146670, 1146672
Dear Sir or Madam:
This confirms the terms of the Transaction described below between
Counterparty and Wachovia. The definitions and provisions contained in the
2000 ISDA Definitions, as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the event of
any inconsistency between those definitions and provisions and this
Confirmation, this Confirmation will govern.
1. The terms of the particular Transaction to which the Confirmation relates
are as follows:
Transaction Type: Interest Rate Swap
Currency for Payments: U.S. Dollars
Notional Amount: USD 10,000,000.00
Term:
Trade Date: May 18, 2005
Effective Date: June 13, 2005. The Effective Date is the first day of the
first Calculation Period. However, the rights and
obligations of both parties under this Transaction are in
effect as of the Trade Date.
Termination Date: February 15, 2034
Fixed Amounts:
Fixed Rate Payer: Counterparty
Period End Dates: Semi-annually on the 15th of each August and February
commencing August 15, 2005, through and including the
Termination Date; No Adjustment.
Payment Dates: Semi-annually on the 15th of each August and February
commencing August 15, 2005, through and including the
Termination Date.
Business Day Convention: Following
Business Day: New York
Fixed Rate: 6.345%
Fixed Rate Day Count
Fraction: 30/360
Floating Amounts:
Floating Rate Payer: Wachovia
Period End Dates: Monthly on the 15th of each month, commencing July 15,
2005, through and including the Termination Date; No
Adjustment.
Payment Dates: Monthly on the 15th of each month, commencing July 15,
2005, through and including the Termination Date,
provided, however, upon the occurrence of any Deferral
Period
D-5-1
(as defined in the Trust Agreement), Payment Dates shall
automatically change to be semi-annually on the 15th day
of each August and February, commencing on the February
15th or August 15th occurring on or immediately after the
termination of the applicable Deferral Period, through and
including the Termination Date.
Business Day Convention: Following
Business Day: New York, London
Floating Rate for initial
Calculation Period: Determined two New York and London Banking Days prior to
the Effective Date.
Floating Rate Option: USD-ISDA-Swap Rate, provided that for purposes of this
Transaction the definition of USD-ISDA-Swap Rate appearing
in the ISDA definitions, is amended by replacing the words
"the day that is two U.S. Government Securities Business
Days preceding" with "the day that is two New York and
London Business Days preceding".
Designated Maturity: 10 Years
Spread: Plus 0.20%
Floating Rate Day Count
Fraction: 30/360
Floating Rate determined: Two New York and London Banking Days prior to each Reset Date.
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Rounding convention: 5 decimal places per the ISDA Definitions.
Interest Rate Cap:
Cap Buyer: Wachovia
Cap Rate: 8.00%
Period End Dates: Monthly on the 15th of each month, commencing July 15,
2005, through and including the Termination Date; No
Adjustment.
Payment Dates: Monthly on the 15th of each month, commencing July 15,
2005, through and including the Termination Date,
provided, however, upon the occurrence of any Deferral
Period (as defined in the Trust Agreement), Payment Dates
shall automatically change to be semi-annually on the 15th
day of each August and February, commencing on the
February 15th or August 15th occurring on or immediately
after the termination of the applicable Deferral Period,
through and including the Termination Date.
Business Day Convention: Following
Business Day: New York, London
Floating Rate for initial
Calculation Period: Determined two New York and London Banking Days prior to
the Effective Date.
Floating Rate Option: USD-ISDA-Swap Rate, provided that for purposes of this
Transaction the definition of USD-ISDA-Swap Rate appearing
in the ISDA definitions, is amended by replacing the words
"the day that is two U.S. Government Securities Business
Days preceding" with "the day that is two New York and
London Business Days preceding".
Designated Maturity: 10 Years
Spread: Plus 0.20%
Floating Rate Day Count
Fraction: 30/360
Floating Rate determined: Two New York and London Banking Days prior to each Reset Date.
Reset Dates: The first day of each Calculation Period.
Compounding: Inapplicable
Rounding convention: 5 decimal places per the ISDA Definitions.
D-5-2
2. The additional provisions of this Confirmation are as follows:
Calculation Agent: Wachovia
Payment Instructions: Wachovia Bank, N.A.
CIB Group, ABA 053000219
Ref: Derivative Desk (Trade No: 1146670, 1146672)
Account #: 04659360006116
Wachovia Contacts: Settlements and/or Rate Resets:
Tel: (800) 249-3865
Fax: (704) 383-9139
Documentation :
Tel: (704) 383-4599
Fax: (704) 383-9139
Collateral :
Tel: (704) 383-9529
Please quote transaction reference number.
Payments to Counterparty: US Bank Trust, N.A. ABA 091000022
Account number: 180121167365
For Account of:
F/F/C:
3. Miscellaneous:
The parties hereby acknowledge and agree that the Payments hereunder shall be
subject to the Provisions of Part 1(h)(i) of the Schedule to the ISDA Master
Agreement entered into by and between the Counterparty and Wachovia, dated as
of June 13, 2005, including, but not limited to the obligation to pay default
interest in connection with any non-payments hereunder due to a Deferral
Period (as defined in the Trust Agreement).
Documentation
If at any time there exists an executed ISDA Master Agreement between the
parties governing this Transaction, this Confirmation supplements, forms part
of and will be governed by that ISDA Master Agreement, and all provisions
contained or incorporated by reference in that ISDA Master Agreement will
govern this Confirmation except as expressly modified herein. In the absence
of that ISDA Master Agreement, this Confirmation shall supplement, form a part
of, and be subject to an agreement in the form of the ISDA Master Agreement
(Local Currency--Single Jurisdiction) published in 1992 by the International
Swaps and Derivatives Association, Inc. as if the parties had executed an
agreement in such form (the provisions of which are hereby incorporated by
reference), but without any Schedule except for the election of New York law
(without regard to conflicts of law principles) as the governing law.
References in this Confirmation to the "ISDA Master Agreement" shall be to
whichever of the foregoing is applicable. Neither party is acting as the other
party's financial advisor for this Transaction nor is it relying on the other
party for any evaluation of the present or future results, consequences,
risks, and benefits of this transaction, whether financial, accounting, tax,
legal, or otherwise.
D-5-3
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation and returning it to us at
fax number (704) 383-9139.
Very truly yours,
Wachovia Bank, N.A.
By:
Name:
Title:
Ref. No. 1146670, 1146672
Accepted and confirmed as of date first above written:
STRATS (SM) Trust for Goldman Sachs Capital I Securities, Series 2005-1
By:
Name:
Title:
D-5-4
EXHIBIT E
EVIDENCE OF INTEGRATION FOR TAX PURPOSES
This information is retained on behalf of each Certificateholder and
is intended to comply with requirements imposed by Section 1.1275-6(e) of the
United States Treasury Regulations.
(1) The date the qualifying debt instrument was issued or acquired (or is
expected to be issued or acquired) by the taxpayer and the date the
Section 1.1275-6 hedge was entered into by the taxpayer.
The Trust acquired the qualifying debt instrument on June 13, 2005 and
entered into the Section 1.1275-6 hedge on the same date. Each
Certificateholder simultaneously acquires its interest in the qualifying
debt instrument and enters into the Section 1.1275-6 hedge on the trade
date identified in the trade confirmation for the purchase of
Certificates.
(2) A description of the qualifying debt instrument and the Section
1.1275-6 hedge.
The qualifying debt instrument is $10,000,000 in aggregate principal
amount of 6.345% Capital Securities due February 15, 2034 issued by
Goldman Sachs Capital I. The Section 1.1275-6 hedge is a swap agreement
between the Trust and Wachovia Bank, N.A, as evidenced by an ISDA Master
Agreement (including a schedule and credit support annex thereto) dated
as of June 13, 2005 and as supplemented by a confirmation number 1146670,
1146672, in the form attached to this series supplement as Exhibit D.
(3) A summary of the cash flows and accruals resulting from treating the
qualifying debt instrument and the Section 1.1275-6 hedge as an
integrated transaction (that is, the cash flows and accruals on the
synthetic debt instrument).
A single principal payment of $10,000,000 is payable on the maturity
date of February 15, 2034. Except during a Deferral Period, interest payments
at the ten year Constant Maturity Swap rate (reset monthly) plus 0.20% per
annum (but no more than 8.00% per annum) (each such interest payment, an
"Interest Payment") is payable on the 15th day of each calendar month (or if
the 15th calendar day is not a business day, on the next succeeding business
day).
During any Deferral Period, the interest for each Interest Period
will be calculated as described above and will accumulate additional interest
on the amount of each deferred Interest Payment from the Distribution Date on
which it otherwise would have been paid at the Underlying Securities Interest
Rate compounded semi-annually on the basis of a 360-day year consisting of
twelve 30-day months. The amount of the Interest Payment payable for any
partial period will be computed on the basis of the actual number of days
elapsed per 30-day month. Such Interest Payments will resume once (i)
distributions on the Underlying Securities have resumed and (ii) all amounts
due and payable on the Underlying Securities have been received
E-1
by the Trust and any amounts owed to the Swap Counterparty under the Swap
Agreement have been paid to the Swap Counterparty. Following the satisfaction
of these conditions, Interest Payments, as described above, on the
Certificates will be payable on the next succeeding Underlying Securities
Payment Date once distributions on the Underlying Securities have resumed.
Thereafter, the Interest Payment for each Interest Period during the term of
the Swap Agreement will be payable semi-annually on each February 15 and
August 15 (or the next succeeding business day), until the Certificates have
been retired in an amount obtained by multiplying (i) the Swap Notional Amount
by (ii) the Swap Agreement Rate (reset monthly) plus 0.20% per annum and by
(iii) a fraction the numerator of which is 30 and the denominator of which is
360, subject to a maximum interest rate of 8.00%, meaning that for any
distribution date for which the ten year Constant Maturity Swap rate plus
0.20% per annum is greater than 8.00%, the Interest Payment on the Swap
Agreement will equal 8.00% per annum.
For any Interest Period (as hereinafter defined), the ten year
Constant Maturity Swap rate will be the USD-ISDA-Swap Rate (as hereinafter
defined) as determined for each Reset Date (as hereinafter defined) during the
applicable Interest Period.
For purposes hereof, the term "USD-ISDA-Swap Rate" shall mean for
U.S. Dollar swaps with a maturity of ten years (such period being referred to
as the "Designated Maturity"), expressed as a percentage, which appears on the
Reuters Screen ISDAFIX1 Page as of 11:00 a.m., New York City time, on the day
that is two New York and London Banking Days preceding that Reset Date. If
such rate does not appear on the Reuters Screen ISDAFIX1 Page, the rate for
that Reset Date will be determined as if the parties had specified
"USD-CMS-Reference Banks" as the Swap Agreement Rate.
"USD-CMS-Reference Banks" shall mean that the rate for a Reset Date
will be a percentage determined on the basis of the mid-market semi-annual
swap rate quotations provided by the Reference Banks at approximately 11:00
a.m., New York City time, on the day that is two New York and London Banking
Days preceding that Reset Date, and, for this purpose, the semi-annual swap
rate means the mean of the bid and offered rates for the semi-annual fixed
leg, calculated on a 30/360 day count basis, of a fixed-for-floating U.S.
Dollar interest rate swap transaction with a term equal to the Designated
Maturity commencing on that Reset Date and in a Representative Amount with an
acknowledged dealer of good credit in the swap market, where the floating leg,
calculated on an Actual/360 day count basis, is equivalent to USD-LIBOR-BBA
(as further described in the Swap Agreement) with a maturity of three months.
The Calculation Agent will request the principal New York City office of each
of the Reference Banks to provide a quotation of its rate. If at least three
quotations are provided, the rate for that Reset Date will be the arithmetic
mean of the quotations, eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest).
"Actual/360 day count" means that the rate determined by the
USD-CMS-Reference Banks will be multiplied by a fraction equal to the actual
number of days in the related Interest Period over 360.
"Interest Period" means, with respect to the first distribution
date, the period from and including the original issue date of the
Certificates to, but excluding, July 15, 2005, and
E-2
thereafter, so long as the Swap Agreement is in effect, the period from and
including the 15th day of the preceding calendar month to, but excluding, the
15th day of the current calendar month.
"New York and London Banking Days" mean any day on which commercial
banks and foreign exchange markets settle payments and are open for general
business (including dealings in foreign exchange and foreign currency
deposits) in New York and London.
"Reference Banks" means the five leading Swap dealers in the New
York City interbank market.
"Representative Amount" means an amount that is representative for a
single transaction in the relevant market at the relevant time.
"Reset Date" means the first day of each applicable Interest Period.
"Reuters Screen ISDAFIX1 Page" means the display on the Reuters
Money 3000 Service (or any successor services) on the "ISDAFIX1" page (or any
other page as may replace that page on that service) for the purpose of
displaying rates or prices comparable to that floating rate payment).
E-3