Exhibit 10.1
(Multicurrency -- Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of April 28, 2006
Wachovia Bank, National Association and STRATS(SM) Trust for Allstate
Corporation Securities,
Series 2006-3
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.
(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.
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(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)).
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(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,
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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
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described) in respect of such party, any Credit Support Provider of such party
or any applicable Specified Entity of such party under one or more agreements
or instruments relating to Specified Indebtedness of any of them (individually
or collectively) in an aggregate amount of not less than the applicable
Threshold Amount (as specified in the Schedule) which has resulted in such
Specified Indebtedness becoming, or becoming capable at such time of being
declared, due and payable under such agreements or instruments, before it
would otherwise have been due and payable or (2) a default by such party, such
Credit Support Provider or such Specified Entity (individually or
collectively) in making one or more payments on the due date thereof in an
aggregate amount of not less than the applicable Threshold Amount under such
agreements or instruments (after giving effect to any applicable notice
requirement or grace period);
(vii) Bankruptcy. The party, any Credit Support Provider of such party or any
applicable Specified Entity of such party: --
(1) is dissolved (other than pursuant to a consolidation, amalgamation
or merger); (2) becomes insolvent or is unable to pay its debts or fails
or admits in writing its inability generally to pay its debts as they
become due; (3) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (4) institutes or has
instituted against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency law or
other similar law affecting creditors' rights, or a petition is
presented for its winding-up or liquidation, and, in the case of any
such proceeding or petition instituted or presented against it, such
proceeding or petition (A) results in a judgment of insolvency or
bankruptcy or the entry of an order for relief or the making of an order
for its winding-up or liquidation or (B) is not dismissed, discharged,
stayed or restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its winding-up,
official management or liquidation (other than pursuant to a
consolidation, amalgamation or merger); (6) seeks or becomes subject to
the appointment of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets; (7) has a secured party
take possession of all or substantially all its assets or has a
distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all its
assets and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within
30 days thereafter; (8) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (1) to (7)
(inclusive); or (9) takes any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the foregoing
acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider of
such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at the
time of such consolidation, amalgamation, merger or transfer: --
(1) the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under this
Agreement or any Credit Support Document to which it or its predecessor
was a party by operation of law or pursuant to an agreement reasonably
satisfactory to the other party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend (without
the consent of the other party) to the performance by such resulting,
surviving or transferee entity of its obligations under this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii)
below, and, if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below: --
(i) Illegality. Due to the adoption of, or any change in, any applicable
law after the date on which a Transaction is entered into, or due to the
promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party): --
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in respect
of such Transaction or to comply with any other material provision
of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party (or
such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) Tax Event. Due to (x) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4)
(other than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) Tax Event Upon Merger. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
case as a result of a party consolidating or amalgamating with, or
merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event"
is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(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
ISDA(R) 1992
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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.
ISDA(R) 1992
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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.
ISDA(R) 1992
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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
ISDA(R) 1992
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to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. Notices
(a) Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated: --
(i) if in writing and delivered in person or by courier, on the date it
is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably: --
(i) submits to the jurisdiction of the English courts, if this Agreement
is expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York
City, if this Agreement is expressed to be governed by the laws of the
State of New York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(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
ISDA(R) 1992
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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.
ISDA(R) 1992
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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
ISDA(R) 1992
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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.
ISDA(R) 1992
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"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
ISDA(R) 1992
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 ALLSTATE
CORPORATION SECURITIES, SERIES 2006-3
By: The Bank of New York, as Trustee
By: /s/ Jeremy Swinson By: /s/ Kevin Pennant
--------------------------------- ----------------------------------
Name: Jeremy Swinson Name: Kevin Pennant
Title: Vice President Title: Assistant Vice President
Date: April 27, 2006 Date: April 28, 2006
ISDA(R) 1992
18
Execution Copy
SCHEDULE
to the
MASTER AGREEMENT
dated as of April 28, 2006 between
WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
and
STRATS(SM) TRUST FOR ALLSTATE CORPORATION SECURITIES,
SERIES 2006-3 ("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).
(i) Additional Termination Events.
(i) The occurrence of any of the following events shall be an
Additional Termination Event:
(A) The failure of Party A to comply with the following:
(i) Upon the occurrence of an S&P Required Rating
Downgrade Event (as defined below), Party A shall make
a Permitted Transfer in accordance with the provisions
of Part 6(a)(ii) of this Schedule within seven (7)
Business 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 confirms 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.
Such Permitted Transfer by Party A shall have the
effect that no Additional Termination Event under this
Part 1(i)(i)(A)(i) shall exist with respect to the
Affected Transactions; or
(ii) Upon the occurrence of a Collateral Rating Downgrade
Event (as defined below), Party A shall, on or before
the Credit Support Commencement Date, either (i) amend
the Credit Support Annex with Party B and obtain S&P's
confirmation in writing that such amended 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 shall transfer to Party
B's Custodian under such amended Credit Support Annex
an amount of Eligible Collateral equal to the Delivery
Amount required to be transferred with respect to the
Affected Transactions in accordance with such amended
Credit Support Annex, (ii) make a Permitted Transfer
with respect to the Affected Transactions or (iii)
provide Alternative Credit Support (as defined below)
with respect to the Affected Transactions. Party A
shall notify Party B within five (5) Business Days of
the occurrence of a Collateral Rating Downgrade Event.
Such posting of collateral pursuant to an amended
Credit Support Annex, the provision of Alternative
Credit Support or such Permitted Transfer by Party A,
shall have the effect that no Additional Termination
Event under this Part 1(i)(i)(A)(ii) shall exist with
respect to the Affected Transactions;
(B) The Certificates become due and payable prior to their final
scheduled maturity date for any reason;
-2-
(C) Party B fails to comply with sub-paragraph (e)(i) of Part 6
of this Schedule; any prepayment, redemption, retirement,
liquidation or distribution of the Underlying Securities
(including as a result of a Payment Default, 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 Trust Agreement (or any notice
is given by the Trustee or any other party authorized by the
terms of the Trust Agreement of 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;
(D) Party B fails to comply with sub-paragraph (j)(i) of Part 1
of this Schedule to the extent of the applicable Affected
Notional Amount as described in that paragraph; or
(E) On any Distribution Date, the significance percentage
represented by the Transactions under this Agreement is 10%
or more and Party A fails to: (x) post Collateral to secure
its obligations hereunder in accordance with the terms of
the Credit Support Annex in an amount sufficient to reduce
the significance percentage to 7% or less; (y) provide
financial information and all necessary consents meeting the
applicable requirements of Item 1115(b) of Regulation AB; or
(z) transfer this Agreement in accordance with Part 6(a)
hereof to another swap provider that provides, as to itself,
the financial information and consents described in clause
(y) and that is otherwise acceptable to Party B, the
Depositor and Trustee and as to which S&P has given its
prior written confirmation that such transfer will not
result in a reduction or withdrawal of the then current
rating of the Certificates.
(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)(i), clause (A)(ii) and
clause (E) 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
-3-
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, BBB-;
provided that should S&P effect an overall downward adjustment of
its approach to assigning short-term or long-term debt ratings,
then the applicable Hedge Counterparty Required Rating shall be
downwardly adjusted accordingly so long as the Rating Agency
Condition (as defined herein) is satisfied.
(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":
--------------------------------------------------------------------
Party A Short-Term Party A Long-Term
Actual Certificate Collateral Threshold Collateral Threshold
Rating(1) 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 approach to assigning short-term or long-term debt ratings,
then the applicable Hedge Counterparty Collateral Threshold Rating
shall be downwardly adjusted accordingly; so long as the Rating
Agency Condition is satisfied.
(vi) "S&P Required Rating Downgrade Event" means, for the purposes of
Part 1(i)(i)(A)(i), the unsecured and unsubordinated debt
obligations of Party A, or its Credit Support Provider, as
applicable, are withdrawn or assigned a rating by S&P below the
Hedge Counterparty Required Rating.
- -----------------
(1) For purposes hereof, the term "Actual Certificate Rating" means the
actual long-term rating assigned by S&P with respect to the Certificates
outstanding under the Trust Agreement, and in the event S&P has assigned
more than one long-term rating with respect to the Certificates, then
the Actual Certificate Rating shall be the highest of such long-term
ratings.
(2) For purposes hereof, the term "Party A Short-Term Collateral Threshold
Rating shall mean the rating assigned by S&P with respect to the
short-term debt of Party A, if any.
(3) For purposes hereof, the term "Party A Long-Term Collateral Threshold
Rating shall mean the rating assigned by S&P with respect to the
long-term debt of Party A.
-4-
(vii) "Collateral Rating Downgrade Event" means, for the purposes of
Part 1(i)(i)(A)(ii), 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.
(viii) "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.
(ix) "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 as the result of any payment, repayment, retirement or
redemption of any amount of the Principal Balance under the Trust
Agreement on any date (a "Principal Payment Date"), (A) the
Principal Balance would be reduced to zero, or (B) the Hedge
Notional Amount would exceed the remaining Principal Balance
(after giving effect to that repayment), (the "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, then Party B
shall:
(1) notify Party A of the 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 the 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
-5-
Period of all Transactions outstanding under any Swap Agreement (as
defined in the Trust Agreement) then in effect.
"Principal Balance" means, on any date, the aggregate principal amount
of the Certificates, outstanding under the Trust Agreement on that date,
after giving effect to all repayments, redemptions, advances or
distributions of principal thereon on that date.
(ii) For each Transaction for which a corresponding Affected Notional
Amount is specified ("Affected Transaction") pursuant to
sub-paragraph (i) above, the Notional Amount of that Affected
Transaction shall be reduced as of the Mandatory Reduction Date by
an amount equal to the Affected Notional Amount (and, if the
Notional Amount otherwise accretes or amortizes after the
Mandatory Reduction Date, the effect of that reduction shall be to
reduce proportionately the Notional Amount of each future
Calculation Period remaining under the Transaction), and an
Additional Termination Event and Early Termination Date shall be
deemed to have occurred on the Mandatory Reduction Date for that
Transaction and Party B will be the sole Affected Party. For
purposes of such Early Termination Date, the term "Terminated
Transaction" as used in Section 6(e) of this Agreement shall be
only that part of the Affected Transaction relating to the
Affected Notional Amount, and the remainder of the Affected
Transaction shall continue in full force and effect as a
Transaction hereunder subject to the terms of this Agreement. The
amount payable under Section 6(e) of this Agreement with respect
to any such Early Termination Date shall be due and payable in
accordance with such Section 6(e), provided that such payment
shall be made no later than the next "Distribution Date" under the
Trust Agreement to occur after the Mandatory Reduction Date, and
provided further that the Market Quotation with respect to any
Terminated Transaction under this sub-paragraph (ii) shall be
determined on the basis of the quotation of one Reference
Market-maker selected by Party A, which may be Party A to the
extent its quotation is reasonably determined in good faith.
(k) Events of Default. An Event of Default shall not occur with respect to
Party A under Section 5(a)(v)(1) or (2) or Section 5(a)(vi) when the
failure to pay or deliver, or the default, event of default or other
similar condition or event, as the case may be, arises solely (i) out of
a wire transfer problem or an operational or administrative error or
omission (so long as the required funds or property required to make
that payment or delivery were otherwise available to Party A), or (ii)
from the general unavailability of the relevant currency due to exchange
controls or other similar governmental action, but in either case only
if the payment or delivery is made within three Local Business Days
after the problem has been corrected, the error or omission has been
discovered or the currency becomes generally available.
(l) Modification of Section 5(a)(i) - Failure to Pay or Deliver. Section
5(a)(i) is hereby amended to add the following language immediately
after the word "party" at the end of the third line of such subsection
"provided, however, such cure period shall not apply with respect to any
amounts payable on the Termination Date".
-6-
(m) Reports. For purposes hereof, Party B shall cause to be delivered to
Party A within 10 days of the end of each calendar month a statement
("Reporting Statement") showing the Stated Amount of all Outstanding
Certificates as of the end of such month and the Hedge Notional Amount
as of the end of such month and each following month during the term of
this Agreement for all outstanding Transactions under all Swap
Agreements which Party B has entered into, whether the same have already
commenced or are scheduled to commence on a future date.
Part 2. Tax Provisions
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, each party makes the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii) or 6(e) of this Agreement) to be made by it to the other party
under this Agreement.
In making this representation, a party may rely on (i) the accuracy of
any representations made by the other party pursuant to Section 3(f) of
this Agreement, (ii) the satisfaction of the agreement contained in
Section 4(a)(i) or 4(a)(iii) of this Agreement, and the accuracy and
effectiveness of any document provided by the other party pursuant to
Section 4(a)(i) or 4(a)(iii) of this Agreement, and (iii) the
satisfaction of the agreement of the other party contained in Section
4(d) of this Agreement, provided that it shall not be a breach of this
representation where reliance is placed on clause (ii) above and the
other party does not deliver a form or document under Section 4(a)(iii)
by reason of material prejudice to its legal or commercial position.
(b) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement:
(i) Party A makes the following representation(s):
(A) It is a national banking association organized or formed
under the laws of the United States and is a United States
resident for United States federal income tax purposes.
(B) Party A makes no other Payee Tax Representations.
(ii) Party B makes the following representation(s):
(A) It is a common law trust organized or formed under the laws
of New York.
-7-
(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 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 each
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;
-8-
(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 facsimile number
specified in the relevant Confirmation, provided that any notice under
Section 5 or 6 of this Agreement, and any notice under this Agreement
not related to a particular Transaction, shall be sent to a party at its
address, telex number or facsimile number specified below; provided
further that any notice under the Credit Support Annex shall be sent to
a party at its address, telex number or facsimile number specified in
the Credit Support Annex.
To Party A:
WACHOVIA BANK, NATIONAL ASSOCIATION
301 South College, DC-8
Charlotte, NC 28202-0600
Attention: Bruce M. Young
Senior Vice President, Risk Management
-9-
Fax: (704) 383-0575
Phone: (704) 383-8778
To Party B:
STRATS(SM) Trust for Allstate Corporation Securities, Series 2006-3
The Bank of New York
101 Barclay Street, 8 East
New York, NY 10286
Attention: Kevin Pennant
Fax: (212) 815-2849
Phone: (212) 815-2850
(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: a Credit
Support Annex dated the date hereof and duly executed and
delivered by Party A and Party B and any applicable document
governing Alternative Credit Support beginning on the effective
date of such document.
(ii) For Party B, the following is a Credit Support Document: a Credit
Support Annex dated the date hereof and duly executed and
delivered by Party A and Party B.
(g) Credit Support Provider.
(i) For Party A, Credit Support Provider means: none specified;
provided that such party (other than Party A) executing a document
governing Alternative Credit Support shall be a Credit Support
Provider hereunder beginning on the effective date of such
document.
(ii) For Party B, Credit Support Provider means: none specified.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the law (and not the law of conflicts except with
respect to ss.ss. 5-1401 and 5-1402 of the New York General Obligations
Law) of the State of New York.
-10-
(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
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.
-11-
"Relevant Agreement" means this Agreement, each Transaction, each
Confirmation, any Credit Support Document, and any agreement (including
any amendment, modification, transfer or early termination) between the
parties relating thereto or to any Transaction.
(h) Eligibility. It is an "eligible contract participant" within the
meaning of the Commodity Exchange Act (as amended by the Commodity
Futures Modernization Act of 2000).
(i) FDIC Requirements. If it is a bank subject to the requirements of 12
U.S.C. ss. 1823(e), its execution, delivery and performance of this
Agreement (including the Schedule, Credit Support Annex and each
Confirmation) have been approved by its board of directors or its loan
committee, such approval is reflected in the minutes of said board of
directors or loan committee, and this Agreement (including the Schedule,
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.
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
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(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 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 Scheduled by either (i)
amending the 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
-13-
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.
(g) No Bankruptcy Petition. Party A agrees that, prior to the date which is
at least one year and one day after all Rated Indebtedness (as
hereinafter defined) has been paid in full, it will not institute
against, or join any other person or entity in instituting against,
Party B any bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings, or other proceedings under
federal or State bankruptcy or similar laws, provided that nothing
herein shall preclude, or be deemed to estop, Party A from taking any
action in any case or proceeding voluntarily filed or commenced by or on
behalf of Party B or in any involuntary case or proceeding after it has
commenced.
(h) Limitation of Liability. Notwithstanding anything contained herein to
the contrary, in executing this Agreement (including the Schedule,
Credit Support Annex and each Confirmation) on behalf of Party B, the
Trustee is acting solely in its capacity as trustee of Party B and not
in its individual capacity, and in no event shall the Trustee, in its
individual
-14-
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) calendar
day after the occurrence of the Collateral Rating Downgrade Event.
"Depositor" means Synthetic Fixed-Income Securities, Inc.
"Rated Indebtedness" means the Certificates issued under the Trust
Agreement.
"Rating Agency Condition" means, S&P has confirmed in writing that it
will not withdraw, suspend or reduce the applicable rating on the
Certificates.
"Securities Intermediary" means The Bank of New York or any successor,
acting as Securities Intermediary pursuant to the Trust Agreement.
"Trust Agreement" means that certain trust agreement dated February 28,
2006 and including the related series supplement dated April 28, 2006
between Synthetic Fixed-Income Securities, Inc and The Bank of New York,
as trustee, pursuant to which Party B was formed.
"Trustee" means The Bank of New York or any successor, acting as Trustee
pursuant to the Trust Agreement.
-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: /s/ Jeremy Swinson
-----------------------
Name: Jeremy Swinson
Title: Vice President
STRATS(SM) TRUST FOR ALLSTATE CORPORATION SECURITIES, SERIES 2006-3
By: The Bank of New York, as Trustee
By: /s/ Kevin Pennant
---------------------------
Name: Kevin Pennant
Title: Assistant Vice President
S-1
Execution Copy
ISDA(R)
International Swaps and Derivatives Association, Inc.
CREDIT SUPPORT ANNEX
to the Schedule to the
ISDA MASTER AGREEMENT
dated as of April 28, 2006
between
WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
and
STRATS(SM) TRUST FOR ALLSTATE CORPORATION SECURITIES,
SERIES 2006-3
("Party B")
This Annex supplements, forms part of, and is subject to, the ISDA Master
Agreement referred to above (this "Agreement"), is part of its Schedule and is
a Credit Support Document under this Agreement with respect to Party A.
Accordingly, the parties agree as follows:
Paragraphs 1 - 12. Incorporation
Paragraphs 1 through 12 inclusive of the ISDA Credit Support Annex (Bilateral
Form) (ISDA Agreements Subject to New York Law Only) published in 1994 by the
International Swaps and Derivatives Association, Inc. are incorporated herein
by reference and made a part hereof, except as follows:
Paragraph 1(b) is hereby amended in its entirety to read as follows:
"(b) Secured Party and Pledgor. Notwithstanding anything contained in
this Annex to the contrary, (i) all references in this Annex to
the "Secured Party" and all references to "other party" in
Paragraphs 2, 9 and 11(b) of this Annex, will be to Party B
exclusively, and (iii) all references in this Annex to the
"Pledgor" and all references to "Each party" or "a party" in
Paragraphs 2, 9 and 11(b) of this Annex, will be to Party A
exclusively."
Paragraph 7(iii) shall not apply to Party A or Party B.
Paragraph 13. Elections and Variables
(a) Security Interest for "Obligations". The term "Obligations" as used in
this Annex includes no obligations of Secured Party and, for purposes of
the definition of Obligations in Paragraph 12, includes no additional
obligations of Pledgor.
A-1
(b) Credit Support Obligations.
(i) Delivery Amount, Return Amount and Credit Support Amount.
(A) "Delivery Amount" has the meaning specified in Paragraph
3(a).
(B) "Return Amount" has the meaning specified in Paragraph 3(b).
(C) "Credit Support Amount" has the meaning specified in
Paragraph 3.
(ii) Eligible Collateral. The following items will qualify as "Eligible
Collateral":
A-2
Valuation
Percentage (S&P):
(A) U.S. Cash: U.S. Dollars in depositary 100%
account form.
(B) U.S. Treasury Securities: negotiable debt 98.60%
obligations issued by the U.S. Treasury
Department ("Treasuries") having a
remaining maturity of up to and not more
than 1 year.
(C) Treasuries having a remaining maturity of 94.10%
greater than 1 year but not more than 5
years.
(D) Treasuries having a remaining maturity of 90.70%
greater than 5 years but not more than 10
years.
(E) Treasuries having a remaining maturity of 85.30%
greater than 10 years but not more than 20
years.
(F) Treasuries having a remaining maturity of 85.30%
greater than 20 years not more than 30
years.
A-3
(iii) Other Eligible Support. Not applicable.
(iv) Thresholds.
"Independent Amount" means for Pledgor: zero.
"Independent Amount" means for Secured Party:
zero
(A) "Threshold" means an amount equal to seven percent (7%) of the
Underlying Securities (as defined in the Trust Agreement) held
by Party B, as calculated by Party A.
(B) "Minimum Transfer Amount" is $50,000.00 for any Delivery
Amount of Pledgor, and zero for any Return Amount of Secured
Party.
(C) Rounding: The Delivery Amount and the Return Amount will be
rounded down to the nearest integral multiple of $10,000.
(c) Valuation and Timing.
(i) "Valuation Agent" means, for purposes of Paragraphs 3, 4(d)(ii), 5
and 6(d), the Pledgor.
(ii) "Valuation Date" means, monthly on the 1st calendar day of each
month, commencing on May 1, 2006, or if such date is not a business
day, the next succeeding business day.
(iii) "Valuation Time" means the close of business in New York City on the
Local Business Day before the Valuation Date or date of calculation,
as applicable; provided that the calculations of Value and Exposure
will be made as of approximately the same time on the same date.
(iv) "Notification Time" means 11:00 a.m., New York time, on a Local
Business Day.
(d) Conditions Precedent and Secured Party's Rights and Remedies. No Specified
Conditions apply.
(e) Substitution.
(i) "Substitution Date" has the meaning specified in Paragraph 4(d)(ii).
(ii) Consent. The Pledgor is not required to obtain the Secured Party's
consent for any substitution pursuant to Paragraph 4(d).
A-4
(f) Dispute Resolution.
(i) "Resolution Time" means 1:00 p.m., New York time, on the Local
Business Day following the date on which the notice is given that
gives rise to a dispute under Paragraph 5.
(ii) Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of
Posted Credit Support other than Cash will be calculated based upon
the mid-point between the bid and offered purchase rates or prices
for that Posted Credit Support as reported on the Bloomberg
electronic service as of the Resolution Time, of if unavailable, as
quoted to the Valuation Agent as of the Resolution Time by a dealer
in that Posted Credit Support of recognized standing selected in
good faith by the Valuation Agent, which calculation shall include
any unpaid interest on that Posted Credit Support.
(iii) Alternative. The provisions of Paragraph 5 will apply.
(g) Holding and Using Posted Collateral.
(i) Eligibility to Hold Posted Collateral; Custodians. Secured Party
will not be entitled to hold Posted Collateral itself, and instead
the Secured Party will be entitled to hold Posted Collateral through
a Custodian pursuant to Paragraph 6(b), provided that (1) Posted
Collateral may be held in New York or an alternative jurisdiction
acceptable to Party A, (2) the Custodian shall at all times be a
bank or trust company with total assets in excess of $10 billion and
having a rating assigned to its unsecured and unsubordinated
long-term debt or deposit obligations of at least BBB+ from S&P and
(3) Posted Collateral may be held by the Trustee (acting as trustee
on behalf of the Secured Party). Initially the Custodian will be The
Bank of New York.
(ii) Use of Posted Collateral. The provisions of Paragraph 6(c) will not
apply to Secured Party and without prejudice to Secured Party's
rights under Paragraph 8 of the Credit Support Annex, Secured Party
will not take any action specified in such Section 6(c).
(h) Interest Amount.
(i) Interest Rate. The "Interest Rate" will be the rate actually earned
by the Custodian on the Posted Collateral as from time to time in
effect and the Custodian shall hold all Posted Collateral in the
form of Cash in Eligible Investments (as defined in the Trust
Agreement) at the direction of the Pledgor. Custodian will provide
details concerning such earnings upon Party A's request.
(ii) Transfer of Interest Amount. The Transfer of the Interest Amount
will be made on the first Local Business Day of each calendar month
and on any Local Business Day that Posted Collateral in the form of
Cash is Transferred to the Pledgor pursuant to Paragraph 3(b).
(iii) Alternative to Interest Amount. The provisions of Paragraph 6(d)(ii)
will apply.
A-5
(i) Additional Representation(s). Not applicable.
(j) Other Eligible Support and Other Posted Support. Not applicable.
(k) Demands and Notices. All demands, specifications and notices under this
Annex will be made to a party as follows unless otherwise specified from
time to time by that party for purposes of this Annex in a written notice
given to the other party:
To Pledgor:
WACHOVIA BANK, NATIONAL ASSOCIATION
201 South College Street, 6th Floor
Charlotte, NC 28288-0601
Attention: Collateral Management Group
Fax: (704) 383-3194
Phone: (704) 383-9529
To Secured Party:
STRATS(SM) TRUST FOR ALLSTATE CORPORATION SECURITIES, SERIES 2006-3
The Bank of New York
101 Barclay Street, 8 East
New York, NY 10286
Attention: Kevin Pennant
Fax: (212) 815-2849
Phone: (212) 815-2850
(l) Addresses for Transfers.
(i) For each Transfer hereunder to Pledgor, instructions will be
provided by Pledgor for that specific Transfer.
(ii) For each Transfer hereunder to Secured Party, instructions will be
provided by Secured Party for that specific Transfer.
(m) Miscellaneous.
(i) Exposure. The definition of "Exposure" in Paragraph 12 is amended in
its entirety to read as follows:
"Exposure" means for any Valuation Date or other date for which
Exposure is calculated, and subject to Paragraph 5 in the case of a
dispute, the amount calculated by Party A based upon a reasonable
good faith estimate of the unmitigated maximum
A-6
probable credit exposure that Party B has to Party A with respect to
all Transactions under the Agreement. The calculation of Exposure
shall be made in substantially the same manner as that used in Party
A's internal risk management process in respect of similar
agreements.
(ii) Limited Applicability. Notwithstanding anything contained herein or
in the Agreement, to the contrary, in no event shall Party A be
required to post any Collateral to Party B under the terms of this
Credit Support Annex, and Party B shall immediately return, or cause
its Custodian to return, to Party A any and all Posted Collateral,
in the event that: (x) Party A elects to provide to Party B the
financial information and all necessary consents to meet the
applicable requirements of Item 1115(b) of Regulation AB (as
reasonably determined by Party B and the Depositor); (y) the
"significance percentage" (as described in Item 1115 of Regulation
AB) represented by the Transactions under this Agreement, and
exclusive of any Posted Collateral under this Credit Support Annex,
is less than 10% (as reasonably determined by Party B and the
Depositor); or (z) Regulation AB is either (i) amended or modified
in such a manner as to no longer required the disclosure of
financial information concerning Party A with respect to the
Agreement, or (ii) withdrawn or repealed, and no other similar rule,
regulation or statute that applies to Party B or the Certificates is
enacted or adopted which would require the disclosure of financial
information concerning Party A with respect to the Agreement.
A-7
IN WITNESS WHEREOF the parties have executed this Credit Support Annex as of the
date hereof.
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Jeremy Swinson
--------------------------
Name: Jeremy Swinson
Title: Vice President
STRATS(SM) TRUST FOR ALLSTATE CORPORATION SECURITIES, SERIES 2006-3
By: The Bank of New York, as Trustee
By: /s/ Kevin Pennant
-------------------------
Name: Kevin Pennant
Title: Assistant Vice President
S-1
FORWARD RATE AGREEMENT CONFIRMATION
[LOGO OMITTED] WACHOVIA
Date: March 31, 2006
To: STRATS (SM) Trust for Allstate Corporation Securities,
Series 2006-3 ("Counterparty")
Address: The Bank of New York, as Trustee
101 Barclay Street
New York NY
10286 USA
Fax: 212-815-2850
Attention: Sir or Madam
From: Wachovia Bank, N.A. ("Wachovia")
Ref. No: 1401515, 1401514, 1401513, 1401512, 1401508, 1401507,
1401506, 1401505, 1401504, 1401499, 1401498, 1401497,
1422849 (Internal Reference 1404672)
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 (the "Definitions"). The parties hereby
acknowledge and agree that this Confirmation is intended to document 13 separate
Transactions, one of which shall apply with respect to each Payment Date
specified herein
1. The terms of the particular Transactions to which the Confirmation relates
are as follows:
Transaction Type: Forward Rate Agreement
Currency for Payments: U.S. Dollars
Notional Amount: USD 35,000,000.00
Trade Date: March 31, 2006
Effective Date: April 28, 2006
Termination Date: May 01, 2007
Fixed Rate Payer: Wachovia
Fixed Rate: 7.20%
Period End Dates: Monthly on the 1st of each month commencing May 01,
2006, through and including the Termination Date;
No Adjustment.
Payment Dates: Monthly on the 1st of each month commencing May 01,
2006, through and including the Termination Date
Floating Rate Option: USD-TBILL-H.15
Designated Maturity: 3 Months
Spread: None
Fixed Rate Day Count
Fraction: 30/360
Reset Dates: The Monday immediately preceding the first day of
each Calculation Period
FRA Discounting: Inapplicable
FRA Amount: Notwithstanding anything contained herein or in
the Definitions to the contrary, the only amount
payable hereunder with respect to each Payment
Date hereunder shall be the FRA Amount (as
hereinafter defined), if any, which FRA Amount
shall be payable by Wachovia to the Counterparty on
each Payment Date. For purposes hereof, the term
"FRA Amount" shall mean, with respect to each
Calculation Period, the result of subtracting the
"Floating Amount" (as hereinafter defined) from the
"Fixed Amount" (as hereinafter defined); provided,
however, if such result is a negative number, then
the FRA Amount shall be deemed to be zero, and no
FRA Amount shall be payable by Wachovia to the
Counterparty.
For purposes hereof, the term "Fixed Amount" shall
mean the product of the following formula:
Notional Amount x Fixed Rate x (30/360).
For purposes hereof, the term "Floating Amount"
shall mean the product of the following formula:
Notional Amount x Floating Rate x (30/360).
2. The additional provisions of this Confirmation are as follows:
Calculation Agent: Wachovia
Payment Instructions: Wachovia Bank, N.A.
CIB Group, ABA 053000219
Ref: Derivative Desk (Trade No: 1401515, 1401514,
1401513, 1401512, 1401508, 1401507, 1401506,
1401505, 1401504, 1401499, 1401498, 1401497,
1422849 (Internal Reference 1404672))
Account #: 04659360006116
Wachovia Contacts: Settlement and/or Rate Resets:
1-800-249-3865
1-704-383-8429
Documentation:
Tel: (704) 383-4599
Fax: (704) 383-9139
Collateral:
Tel: (704) 383-9529
Please quote transaction reference number.
Payments to Counterparty: The Bank of New York
ABA #: 021000018
GLA #: 111-565
Account #: 338133 STRATS Allstate Series 2006-3
Phone: 1-212-815-2849 Fax: 1-212-815-2850
Documentation
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement between Wachovia and Counterparty dated as of April 28, 2006, 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.
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.
Very truly yours,
Wachovia Bank, N.A.
By: /s/ Kim V. Farr
--------------------------------
Name: Kim V. Farr
Title: Director
SP__
Ref. No. 1401515, 1401514, 1401513, 1401512,
1401508, 1401507, 1401506, 1401505, 1401504,
1401499, 1401498, 1401497, 1422849 (Internal
Reference 1404672)
Accepted and Confirmed as of date first
written above:
STRATS (SM) Trust for Allstate
Corporation Securities, Series 2006-3
By: The Bank of New York, as Trustee
By: /s/ Kevin Pennant
- -------------------------------
Name: Kevin Pennant
Title: Assistant Vice President
SWAP TRANSACTION CONFIRMATION
[LOGO OMITTED] WACHOVIA
Date: March 31, 2006
To: STRATS (SM) Trust for Allstate Corporation Securities,
Series 2006-3 ("Counterparty")
Address: The Bank of New York, as Trustee
101 Barclay Street
New York NY
10286 USA
Fax: 212-815-2850
Attention: Sir or Madam
From: Wachovia Bank, N.A. ("Wachovia")
Ref. No: 1393468, 1404674
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. Fixed Amounts and Floating Amounts for each
applicable Payment Date hereunder will be calculated in accordance with the ISDA
Definitions, and if any Fixed Amount and Floating Amount are due for the same
Payment Date hereunder, then those amounts shall not be payable and instead the
Fixed Rate Payer shall pay the positive amount, if any, which results from the
Floating Amount being subtracted from the Fixed Amount and the Floating Rate
Payer shall pay the positive amount, if any, which results from the Fixed Amount
being subtracted from the Floating Amount.
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 35,000,000.00
Term:
Trade Date: March 31, 2006
Effective Date: April 28, 2006, in respect of the Fixed Amounts and
the Floating Amounts May 01, 2007, in respect of
the Interest Rate Cap
Termination Date: April 01, 2036
Fixed Amounts:
Fixed Rate Payer: Counterparty
Period End Dates: Semi-annually on the 1st of each May and November
commencing May 01, 2006, through and including the
Termination Date; No Adjustment.
Payment Dates: Semi-annually on the 1st of each May and November
commencing May 01, 2006, through and including the
Termination Date
Business Day
Convention: Following
Business Day: New York
Fixed Rate: 5.95%
Fixed Rate Day Count
Fraction: 30/360
Additional Fixed Amount:
Fixed Amount Payer: Wachovia
Fixed Amount: USD 1,469,000.00
Payment Date: April 28, 2006
Floating Amounts:
Floating Rate Payer: Wachovia
Period End Dates: Monthly on the 1st of each month commencing May 01,
2006, through and including the Termination Date;
No Adjustment.
Payment Dates: Monthly on the 1st of each month commencing May 01,
2006, through and including the Termination Date
Business Day
Convention: Following
Business Day: New York
Floating Rate Option: USD-TBILL-H.15
Designated Maturity: 3 Months
Spread: Plus 0.80%
Floating Rate Day
Count Fraction: 30/360
Reset Dates: The Monday immediately preceding 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%
Period End Dates: Monthly on the 1st of each month commencing June
01, 2007, through and including the Termination
Date; No Adjustment.
Payment Dates: Monthly on the 1st of each month commencing June
01, 2007, through and including the Termination
Date
Business Day
Convention: Following
Business Day: New York
Floating Rate Option: USD-TBILL-H.15
Designated Maturity: 3 Months
Spread: Plus 0.80%
Floating Rate Day
Count Fraction: 30/360
Reset Dates: The Monday immediately preceding 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 Bank, N.A.
CIB Group, ABA 053000219
Ref: Derivative Desk (Trade No: 1393468, 1404674)
Account #: 04659360006116
Wachovia Contacts: Settlement and/or Rate Resets:
1-800-249-3865
1-704-383-8429
Documentation:
Tel: (704) 383-4599
Fax: (704) 383-9139
Collateral:
Tel: (704) 383-9529
Please quote transaction reference number.
Payments to Counterparty: The Bank of New York
ABA #: 021000018
GLA #: 111-565
Account #: 338133 STRATS Allstate Series 2006-3
Phone: 1-212-815-2849 Fax: 1-212-815-2850
Documentation
This Confirmation supplements, forms part of, and is subject to, the ISDA Master
Agreement between Wachovia and Counterparty dated as of April 28, 2006, 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.
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.
Very truly yours,
Wachovia Bank, N.A.
By: /s/ Kim V. Farr
-------------------------------
Name: Kim V. Farr
Title: Director
SP__
Ref. No. 1393468, 1404674
Accepted and Confirmed as
of date first written above:
STRATS (SM) Trust for Allstate
Corporation Securities, Series 2006-3
By: The Bank of New York, as Trustee
By: /s/ Kevin Pennant
- --------------------------------
Name: Kevin Pennant
Title: Assistant Vice President