Exhibit 4.1
STRATSSM CERTIFICATES SERIES SUPPLEMENT 2005-4
between
SYNTHETIC FIXED-INCOME SECURITIES, INC.,
as Trustor
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee and Securities Intermediary
STRATSSM TRUST FOR WAL-MART STORES, INC. SECURITIES, SERIES 2005-4
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........................................................................6
Section 5. Certificate Stated Amount and Denominations.....................................................6
Section 6. Currency of the Certificates....................................................................6
Section 7. Form of Securities..............................................................................7
Section 8. Swap Payments; Collateral Account...............................................................7
Section 9. Certain Provisions of Base Trust Agreement Not Applicable.......................................7
Section 10. Distributions...................................................................................7
Section 11. Termination of Trust...........................................................................10
Section 12. Limitation of Powers and Duties................................................................10
Section 13. Compensation of Trustee........................................................................11
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..................................................12
Section 16. Accounting.....................................................................................13
Section 17. No Investment of Amounts Received on Underlying Securities.....................................13
Section 18. No Event of Default............................................................................13
Section 19. Notices........................................................................................13
Section 20. Access to Certain Documentation................................................................14
Section 21. Advances.......................................................................................14
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Section 22. Ratification of Agreement......................................................................14
Section 23. Counterparts...................................................................................14
Section 24. Governing Law..................................................................................14
Section 25. Certificate of Compliance......................................................................14
Section 26. Certain Filing to be Made by the Trustee.......................................................14
Section 27. Establishment of Accounts......................................................................15
Section 28. Statement of Intent............................................................................15
Section 29. Filing of Partnership Returns..................................................................15
Section 30. "Financial Assets" Election....................................................................16
Section 31. Trustee's Entitlement Orders...................................................................16
Section 32. Conflict with Other Agreements.................................................................16
Section 33. Additional Trustee and Securities Intermediary Representations.................................16
Section 34. Additional Trustor Representations.............................................................17
Section 35. Certification Requirements.....................................................................17
Section 36. Additional Rights of the Swap Counterparty.....................................................17
Section 37. Modification of Certain Provisions of Base Trust Agreement.....................................17
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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STRATSSM SERIES SUPPLEMENT 2005-4, dated as of October 17, 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 STRATSSM Trust For Wal-Mart
Stores, Inc. Securities, Series 2005-4, and a new Series of trust certificates
to be issued thereby, which certificates shall be known as the STRATSSM
Certificates, Series 2005-4, 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 STRATSSM Certificates, Series 2005-4 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": October 17, 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.
"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.
"Maturity Date": February 15, 2030.
"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.
"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": (i) For so long as the Swap Agreement
shall not have been terminated the 15th day of each calendar month, or, if any
such day is not a Business Day, then the immediately following Business Day,
commencing November 15, 2005, until the
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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
(ii) upon the occurrence of a Swap Agreement Termination Event that is
not also a Trust Termination Event, 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 Issuer 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 thereto)
as supplemented by Confirmation Number 1238140, 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 Wal-Mart Stores, Inc. Securities, Series
2005-4.
"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 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": As of the Closing Date, $25,000,000 of 7.55%
Notes due 2030 issued by the Underlying Securities Issuer, sold to the Trustee
by Wachovia Securities and identified on Exhibit A hereto.
"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
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connection therewith) following a Payment Default or an Acceleration or other
default with respect to the Underlying Securities.
"Underlying Securities Issuer": Wal-Mart Stores, Inc.
"Underlying Securities Payment Date": The 15th day of each February and
August ending on February 15, 2030; 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.
"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 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 $32,205,250 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) $31,880,180.56 on the Closing
Date and (ii) $325,069.44 on February 15, 2006, 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 February
15, 2006. 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
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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 "STRATSSM Certificates, Series 2005-4". 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.
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 1,000,000 Certificates with an aggregate Stated Amount of
$25,000,000 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.
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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, an amount equal to all interest payments received by the
Trust in respect of the Underlying Securities on each Underlying Securities
Payment Date or on any other date such amounts are received by the Trust,
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) 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 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 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 or any Underlying
Securities Redemption 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
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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(h). 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, 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.
(d) 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(h). 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.
(e) 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).
(f) 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.
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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.
(g) 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, only if instructed by the Trustor,
proceed to liquidate or distribute the Underlying Securities in accordance
with Section 10(h).
(h) 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. 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(h)
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.
(i) Distributions to the Certificateholders on each Distribution Date
will be made to the Certificateholders of record on the Record Date.
(j) All distributions to Certificateholders shall be allocated pro rata
among the Certificates based on their respective Outstanding Amounts as of the
Record Date.
(k) 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
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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(k)
unless a new instruction is delivered 15 days prior to a Distribution Date.
(l) 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.
(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 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
10
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; 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.
11
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 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
12
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 and all payments made to the Trust on or with respect to the Swap
Agreement shall be held uninvested by the Trustee.
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: Structured Notes 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.
13
(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 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
14
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 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).
15
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.
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.
16
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
(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
17
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 December 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 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) 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.
(E) 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.
(F) 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.
(G) 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
18
the principal amount of the Underlying Securities after giving effect to
the Optional Exchange.
(H) 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: Wal-Mart Stores, Inc.
Underlying Securities: $25,000,000 7.55% Notes due 2030.
Maturity Date/Final Distribution Date: February 15, 2030.
Original Principal Amount Issued: $2,750,000,000
CUSIP No.: 931142BF9
Stated Interest Rate: 7.55% per annum.
Interest Payment Dates: February 15 and August 15
Principal Amount of Underlying $25,000,000.
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 STRATSSM 1,000,000
Certificates, Series 2005-4:
Aggregate Stated Amount of STRATSSM $25,000,000
Certificates, Series 2005-4:
Authorized Denomination: $25 and integral multiples thereof.
Rating Agency: S&P.
Closing Date: October 17, 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 STRATSSM
Trust For Wal-Mart Stores, Inc.
Securities, Series 2005-4
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 $25,000,000 Certificate Stated Amount
CUSIP: 86312E200 1,000,000 Certificates
CERTIFICATE INTEREST RATE: Variable Floating Rate
STRATSSM CERTIFICATES, SERIES 2005-4
evidencing an undivided interest in the Trust, as defined below, the assets of
which include $25,000,000 of 7.55% Notes due February 15, 2030 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 STRATSSM Trust For
Wal-Mart Stores, Inc. Securities, Series 2005-4 (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 solely as Trustee (the
"Trustee"), as supplemented by the STRATSSM Certificates Series
C-1
Supplement 2005-4, dated as of October 17, 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
"STRATSSM Certificates, Series 2005-4 (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, 2030. The Swap Agreement
provides for payments on the 15th calendar day of each month, commencing on
November 15, 2005.
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 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
C-2
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.
STRATSSM TRUST FOR WAL-MART STORES, INC.
SECURITIES, SERIES 2005-4
By: U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but solely
as Trustee
By:
----------------------------------------
Authorized Signatory
Dated: October 17, 2005
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the STRATSSM Certificates, Series 2005-4, 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
C-4
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.
C-5
EXHIBIT D-1
(Multicurrency -- Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of October 17, 2005
Wachovia Bank, National Association and STRATS(SM) Trust for
Wal-Mart Stores, Inc.
Securities, Series 2005-4
have entered and/or anticipate entering into one or 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
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.
Copyright (C) 1992 by International Swap Dealers Association, Inc.
D-1-1
(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 the 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 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.
D-1-2
(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
(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)).
D-1-3
(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 or 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.
(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,
D-1-4
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 of 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
D-1-5
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
D-1-6
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).
(c) 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)(1), (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.
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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: --
(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
D-1-12
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.
(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
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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.
"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.
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"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 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
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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 WAL-MART STORES, INC.
SECURITIES, SERIES 2005-4
By: U.S. Bank Trust National Association, as Trustee
By: By:
----------------------------------- ------------------------------------------
Name: Name:
Title: Title:
Date: Date:
D-1-18
Exhibit D-2
SCHEDULE
to the
MASTER AGREEMENT
dated as of October 17, 2005 between
WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
and
STRATS(SM) TRUST FOR WAL-MART STORES, INC. SECURITIES, SERIES 2005-4
("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 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);
(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).
D-2-1
(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 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 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) enters into a Credit Support Annex with Party B and
S&P confirms in writing that such Credit Support Annex 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 and
Party A transfers to Party B's Custodian under such Credit
Support Annex an amount of Eligible Collateral equal to the
Delivery Amount required to be transferred with respect to the
Affected Transactions on the effective date of such 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 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 in
full (including as a result of a Payment Default or an
Acceleration or an SEC Reporting Failure (as such terms are
defined in the Trust Agreement)) 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
D-2-2
Trust Agreement (or any notice is given by the Trustee or any
other party authorized by the terms of the Trust Agreement or
by law) 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-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 the Hedge
Counterparty Required 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":
D-2-3
---------------------------------------------------------------------
Actual Certificate Party A Short-Term Collateral 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 the
Hedge Counterparty Collateral Threshold 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.
(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 "Hedge 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
______________
(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
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 Hedge 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 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)
D-2-5
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 Hedge 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:
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
D-2-6
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 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
D-2-7
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.
(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
D-2-8
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 any 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 Wal-Mart Stores, Inc. Securities, Series 2005-4
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.
(f) Credit Support Document.
(i) For Party A, the following is a Credit Support Document: to the
extent executed under Part 1(i)(i)(B)(i), the Credit Support Annex
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
D-2-9
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.
(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
D-2-10
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 any 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 any 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 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.
D-2-11
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 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 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 Sections 6(b)(ii) or 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. Upon the occurrence of a
Collateral Rating Downgrade Event, Party A will use its best efforts to
make
D-2-12
a Permitted Transfer with respect to the Affected Transactions, provided
that Party A does not otherwise elect to avoid an Additional Termination
Event under Part 1(i)(i)(B) of this Schedule by either: (i) entering into
a Credit Support Annex with Party B, or (ii) providing Alternative Credit
Support, each in accordance with the provisions specified in Part
1(i)(i)(B) of this Schedule; provided, however, in no event shall Party
A's failure to make any such Permitted Transfer constitute an Event of
Default.
(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 any 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 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.
D-2-13
(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, any 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.
"Credit Support Commencement Date" means the thirtieth (30th) day after
the occurrence of the Collateral Rating Downgrade Event.
"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 2005-4 between Synthetic Fixed-Income Securities, Inc., as
trustor (the "Trustor") and the Trustee and Securities Intermediary,
dated as of October 17, 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 WAL-MART STORES, INC. SECURITIES, SERIES 2005-4
By: U.S. Bank Trust National Association, as Trustee
By: __________________________________
Name:
Title:
Exhibit D-3
SWAP TRANSACTION CONFIRMATION
[LOGO OMITTED] WACHOVIA
Date: October 21, 2005
To: STRATS(SM) Trust for JPMorgan Chase Capital XVII Securities,
Series 2005-4 ("Counterparty")
Address: US Bank Trust, National Association
100 Wall Street
Suite 1600
New York NY 10005
USA
Fax: 212-809-5459
Attention: Confirmations
From: Wachovia Bank, N.A. ("Wachovia")
Ref. No. 1210312, 1210313
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.
This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement between Wachovia and Counterparty dated as of October 26,
2005, as amended and supplemented from time to time (the "ISDA Master
Agreement"). All provisions contained or incorporated by reference in the
Master Agreement will govern this Confirmation except as expressly modified
herein.
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 15,000,000.00
Term:
Trade Date: October 12, 2005
Effective Date: October 24, 2005. The Effective Date is 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: August 01, 2035 in respect of Fixed Amounts,
subject to the Following Business Day
Convention.
August 01, 2035 in respect of Floating
Amounts, subject to the Modified Following
Business Day Convention.
Fixed Amounts:
Fixed Rate Payer: Counterparty
Period End Dates: Semi-annually on the 1st of each February and
August commencing February 01,
D-3-1
2006, through and including the Termination
Date.
Payment Dates: Semi-annually on the 1st of each February and
August commencing February 01, 2006, through
and including the Termination Date.
Business Day Convention: Following
Business Day: New York, London
Fixed Rate: 5.85%
Fixed Rate Day Count
Fraction: 30/360
Additional Fixed Amount:
Fixed Amount Payer: Wachovia
Fixed Amount: USD 18,000.00
Fixed Amount
Payment Date: October 24, 2005
Floating Amounts:
Floating Rate Payer: Wachovia
Period End Dates: Monthly on the 1st of each month, commencing
November 01, 2005, through and including the
Termination Date.
Payment Dates: Monthly on the 1st of each month, commencing
November 01, 2005, through and including the
Termination Date. Provided, however, following
the occurrence of any Deferral Period (as
defined in the Trust Agreement), Payment Dates
shall automatically change to be semi-annually
on the 1st of August and February commencing
on the February 1st or August 1st 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
Floating Rate for initial
Calculation Period: Determined two London Banking Days prior to the
Effective Date.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 6 Months
Spread: Plus 1.00%
Floating Rate Day Count
Fraction: 30/360
Floating Rate determined: Two 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:
Floating Rate Payer: Counterparty
Cap Rate: 8.00%
D-3-2
Period End Dates: Monthly on the 1st of each month, commencing
November 01, 2005, through and including the
Termination Date.
Payment Dates: Monthly on the 1st of each month, commencing
November 01, 2005, through and including the
Termination Date. Provided, however, following
the occurrence of any Deferral Period (as
defined in the Trust Agreement), Payment Dates
shall automatically change to be semi-annually
on the 1st of August and February commencing
on the February 1st or August 1st 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
Floating Rate for initial
Calculation Period: Determined two London Banking Days prior to
the Effective Date.
Floating Rate Option: USD-LIBOR-BBA
Designated Maturity: 6 Months
Spread: Plus 1.00%
Floating Rate Day Count
Fraction: 30/360
Floating Rate determined: Two 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.
2. The additional provisions of this Confirmation are as follows:
Calculation Agent: Wachovia
Payment Instructions: Wachovia Wholesale Lockbox
P.O. Box 60308
Charlotte, NC 28260-0308
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: Please provide written payment instructions.
Wachovia will make no payment until written
payment instructions are received.
Phone: 1-800-249-3865 Fax: 1-704-383-8429
Additional Terms:
"Trust Agreement" means that certain STRATS(SM) Certificates Series Supplement
2005-5 between Synthetic Fixed Income Securities, Inc., as trustor (the
"Trustor") and the Trustee and Securities Intermediary dated October 26, 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 Trustee.
D-3-3
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, 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).
D-3-4
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 or
by sending to us a letter substantially similar to this letter, which letter
sets forth the material terms of the Transaction to which this Confirmation
relates and indicates your agreement to those terms.
Very truly yours,
Wachovia Bank, N.A.
By:_____________________________
Name:
Title:
SP __
Ref. No. 1210312, 1213013
Accepted and confirmed as of date first above written:
STRATS(SM) Trust for JPMorgan Chase Capital XVII Securities, Series 2005-5
By: U.S. Bank Trust National Association, as Trustee
By:___________________________
Name:
Title:
D-3-5
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 October 17, 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 $25,000,000 in aggregate principal
amount of 7.55% Notes due 2030 issued by Wal-Mart Stores, Inc. 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 thereto) dated as of October 17, 2005 and as
supplemented by a confirmation number 1238140, 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 $25,000,000 is payable on the
maturity date of February 15, 2030. Interest payments at three-month LIBOR
plus 0.50% per annum (but no more than 7.50% per annum) (each such interest
payment, an "Interest Payment") are 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).
For any Interest Period (as hereinafter defined), "three-month
LIBOR" will be, with respect to any LIBOR Determination Date (as hereinafter
defined), the London interbank offered rate for three-month (such period being
referred to as the "Designated Maturity") United States dollar deposits,
commencing on the second London Banking Day (as defined below) immediately
following such LIBOR Determination Date, which appears on Telerate Page 3750
(as defined below) as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750 at such time, LIBOR
for the Designated Maturity will be determined on the basis of the rates at
which deposits in U.S. Dollars are offered by the
E-1
Reference Banks (as defined below) at approximately 11:00 a.m., London time,
on the LIBOR Determination Date to prime banks in the London interbank market
for a period of the Designated Maturity commencing on the first day of the
related Interest Period and in an amount that is representative for a single
transaction in such market at the relevant time. The Calculation Agent will
request the principal London office of each of the Reference Banks to provide
a quotation of its rate. If at least two such quotations are provided, the
rate for that Interest Period will be the arithmetic mean of the quotations.
If fewer than two quotations are provided as requested, the rate for that
Interest Period will be the arithmetic mean of the rates quoted by major banks
in New York City, selected by the Calculation Agent, at approximately 11:00
a.m., New York City time, on the first day of the related Interest Period for
loans in U.S. Dollars to leading European banks for a period of the Designated
Maturity commencing on the first day of the related Interest Period and in an
amount that is representative for a single transaction in such market at the
relevant time.
"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, November 15, 2005, and 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.
"LIBOR Determination Date" means for each Interest Period,
the second London Banking Day preceding the commencement of such Interest
Period.
"London Banking Day" means, any day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) in London.
"Reference Banks" means four major banks in the London
interbank market on the related LIBOR Determination Date, as selected by the
Calculation Agent.
"Telerate Page 3750" means the display page so designated on
Moneyline's Telerate Service (or such other page as may replace that page on
that service, or such other service as may be nominated as the information
vendor, for the purpose of displaying LIBOR).
E-2