(Multicurrency--Cross Border) Exhibit 10.1
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of July 16, 2004
between
MERRILL LYNCH CAPITAL SERVICES, INC. and PPLUS TRUST SERIES GSC-2
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 Swaps and Derivatives 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.
2 ISDA(R) 1992
(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)).
3 ISDA(R) 1992
(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,
4 ISDA(R) 1992
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
5 ISDA(R) 1992
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) becomesinsolvent 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
6 ISDA(R) 1992
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 ofany 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.
7 ISDA(R) 1992
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
8 ISDA(R) 1992
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
9 ISDA(R) 1992
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.
10 ISDA(R) 1992
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 tbe 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.
11 ISDA(R) 1992
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 beexecuted 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 momentthey agree to those terms (whether orally or
otherwise). A Confirmation shall he entered into as soon as practicable
and may he 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
12 ISDA(R) 1992
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 receiptrequested), 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
13 ISDA(R) 1992
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.
14 ISDA(R) 1992
"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
15 ISDA(R) 1992
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 meanings specified in the Schedule.
16 ISDA(R) 1992
"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
17 ISDA(R) 1992
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.
MERRILL LYNCH CAPITAL SERVICES, INC. PPLUS TRUST SERIES GSC-2
By: THE BANK OF NEW YORK, not in
its individual capacity but solely
as Trustee under the Trust
Agreement
By: /s/ Angelina Lopes By: /s/ Fernando Acebedo
------------------------ --------------------
Print Name: Angelina Lopes Print Name: Fernando Acebedo
Title: Authorized Signatory Title: Authorized Signatory
Date: July 16, 2004 Date: July 16, 2004
18 ISDA(R) 1992
SCHEDULE
to the
Master Agreement
dated as of July 16, 2004
between MERRILL LYNCH CAPITAL
SERVICES, INC. ("MLCS") PPLUS TRUST SERIES GSC-2 (the "Trust"),
a trust created pursuant to the
Standard Terms for Trust Agreements,
dated as of February 20, 1998 as
amended and supplemented by the Series
GSC-2 Supplement dated as of July 16,
2004 (collectively, the "Trust
Agreement").
All references herein to the Transaction shall mean the Transaction to be
evidenced by the Confirmation of even date herewith. Capitalized terms used and
not otherwise defined in this Agreement have the meanings specified in the
Standard Terms for Trust Agreements, dated as of February 20, 1998 as amended
and supplemented by the Series GSC-2 Supplement dated as of July 16, 2004.
Part 1. Termination Provisions
(a) "Specified Entity" means, in relation to MLCS, for the purpose of: -
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
and in relation to the Trust, for the purpose of: -
Section 5(a)(v), Not Applicable
Section 5(a)(vi), Not Applicable
Section 5(a)(vii), Not Applicable
Section 5(b)(iv), Not Applicable
(b) "Specified Transaction" will have the meaning specified in Section 14
of this Agreement.
(c) Events of Default. Notwithstanding Section 5(a) of the Agreement, only
the following Events of Default shall apply to the Transaction:
(i) Section 5(a)(i) ("Failure to Pay"), as amended below, which shall
apply to both parties.
(ii) Section 5(a)(vii) ("Bankruptcy"), which shall apply to both
parties.
No other Section 5(a) Events of Default shall apply to either party.
Section 5(a)(i) ("Failure to Pay") shall be amended by replacing
"third" where it occurs in the third line thereof with "fifth".
(d) Termination Events. Section 5(b) shall be amended as follows:
(i) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) will
not apply to MLCS or to the Trust.
(e) Cost of Funds. The cost of funding of MLCS for each month of the
relevant period, as set forth in the definition of "Default Rate," shall
be deemed to equal the three-month USD-LIBOR-BBA, as such term is
defined in the 2000 ISDA Definitions.
(f) The "Automatic Early Termination" provision of Section 6(a) will not
apply to MLCS or to the Trust.
(g) Payments on Early Termination. For purposes of Section 6(e) of this
Agreement (i) Market Quotation will apply, and (ii) the Second Method
will apply; provided, that if MLCS is the Defaulting Party or an
Affected Party in respect of a Guarantor SEC Reporting Failure,
notwithstanding Section 6(e), no amounts shall be payable by either
party in respect of an Early Termination Date.
(h) "Termination Currency" means United States Dollars.
(i) "Additional Termination Event" means the occurrence of any of the
following events:
(A) Underlying Securities Failure to Pay. An Underlying Securities
Failure to Pay will occur if there is a failure by the Underlying
Securities Issuer to make, when due, the payment of any
distribution on the Underlying Securities or any redemption price
of the Underlying Securities or the payment of principal of or any
make whole amount, if any, on the Underlying Securities.
If an Underlying Securities Failure to Pay occurs, the Trust
will be the sole Affected Party.
(B) Underlying Securities Bankruptcy. An Underlying Securities
Bankruptcy will occur if any of the events set forth in Section
5(a)(viii) of the Agreement occurs with respect to the Underlying
Securities Issuer or The Goldman Sachs Group, Inc.
If an Underlying Securities Bankruptcy occurs, the Trust will be
the sole Affected Party.
(C) Underlying Securities SEC Reporting Failure. An Underlying
Securities SEC Reporting Failure will occur if the Underlying
Securities Issuer fails or ceases to comply with any applicable
reporting requirement of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
If an Underlying Securities SEC Reporting Failure occurs, the
Trust will be the sole Affected Party.
(D) Guarantor SEC Reporting Failure. A Guarantor Securities SEC
Reporting Failure will occur if the Guarantor fails or ceases to
comply with any applicable reporting requirement of the Exchange
Act.
If a Guarantor Securities SEC Reporting Failure occurs, MLCS
will be the sole Affected Party.
2
(E) Unscheduled Payment Event. An Unscheduled Payment Event will occur
upon an optional redemption or repurchase of, or other unscheduled
payment on, 100% of the Underlying Securities prior to the final
distribution date.
If an Unscheduled Payment occurs, the Trust will be the sole
Affected Party.
(j) Guarantor Ratings Downgrade. If S&P downgrades ( the "S&P Downgrade")
the short-term debt rating of the Guarantor to below "A-1" (the "Minimum
Rating"), MLCS shall, at its own cost and expense, obtain either (A) a
guaranty of the Confirmation in form and substance satisfactory to S&P
from an entity with a short-term debt rating that is at least the
Minimum Rating or (B) the agreement of a replacement Counterparty with a
short-term debt rating that is at least the Minimum Rating to assume the
rights and obligations of MLCS under the Rate Confirmation; provided,
however, that prior to the procurement of such guaranty or replacement
counterparty, MLCS will receive written confirmation from S&P that any
such action will not result in the withdrawal or downgrading of the
rating (or credit estimate) of the Trust Certificates.
If MLCS is not able to satisfy either of the conditions in (A) or (B)
above within 30 days of the date of the S&P Downgrade, MLCS shall (i)
immediately post collateral to the Trust in an amount equal to the
greatest of (1) the Exposure (as defined in the 1994 ISDA Credit Support
Annex) of the Trust to MLCS calculated for the Confirmation in the
manner provided in the 1994 ISDA Credit Support Annex (the "CSA"), (2)
the amount of the next MLCS Payment Amount and (3) one percent of the
then current Notional Amount of the Confirmation, and (ii) continue to
take actions to satisfy the conditions in (A) or (B) above; provided,
however, that prior to executing a CSA, if any, in connection with the
posting of collateral described in clause (i) above, MLSC will receive
written confirmation from S&P that any such action will not result in
the withdrawal or downgrading of the rating (or credit estimate) of the
Trust Certificates.
Part 2. Tax Representations
(a) Payer Representation. For the purpose of Section 3(e) of this Agreement,
MLCS and the Trust will each make 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, it may rely on (i)
the accuracy of any representation made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement
of the other party 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) and the other party does not deliver a form or document under
Section 4(a)(iii) of this Agreement by reason of material prejudice to
its legal or commercial position.
(b) Payee Representations. MLCS and the Trust make no Payee Tax
Representations.
Part 3. Agreement to Deliver Documents.
For the purpose of Section 4(a)(i) and 4(a)(ii) of this Agreement, MLCS and the
Trust each agree to deliver the following documents to the other as
applicable:-
3
(a) Tax forms, documents or certificates to be delivered are: - See Part
5(a) below.
(b) Other documents to be delivered are: -
PARTY REQUIRED FORM/DOCUMENT/ DATE BY WHICH COVERED BY SECTION 3(d)
TO DELIVER DOCUMENT CERTIFICATE TO BE DELIVERED REPRESENTATION
------------------- ----------- --------------- --------------
MLCS & Trust Any form or document As soon as practicable Yes
reasonably requested by the after request
other party to permit
payments without (or with
minimal) withholding for or
account of any Tax as
specified in Section
4(a)(iii) of this Agreement
MLCS & Trust Certificate of Incumbency Upon execution of this Yes
and Signing Authority of each Agreement.
person executing any document
on its behalf in connection
with this Agreement
MLCS Duly executed copy of the At or within 3 days of
Credit Support Document execution of this Agreement
Trust Trust Agreement Upon execution of this Yes
Agreement.
Part 4. Miscellaneous
(a) Addresses for Notices: For the purpose of MLCS:
Address: _____
Attention: _____
Facsimile No. _____ Telephone No.: _____
(with copy to)
Address: Merrill Lynch & Co., Inc.
Merrill Lynch World Headquarters
4 World Financial Center, 7th Floor
New York, NY 10080
Attention: Global Credit Derivatives
Facsimile No. 212-449-9054 Telephone No.: 212 449-9001
4
Additionally, a copy of all notices pursuant of Sections 5, 6 and 7 as
well any changes to the Trust's address, telephone number or facsimile number
should be sent to:
GMI Counsel
Merrill Lynch World Headquarters
4 World Financial Center, 12th Floor
New York, NY 10080
Attention: Swaps Legal
Facsimile No. 212-449-6993
Address for notices or communications to the Trust:
Address: The Bank of New York
101 Barclay Street
Floor 8E
New York, NY 10286
Attention: Dealing & Trading Group/Freddy Acebedo
Telephone No.: 212-815-2915
Facsimile No.: 212-815-2830
(b) Process Agent. For the purpose of Section 13(c) of this Agreement:
MLCS appoints as its Process Agent: Not Applicable
The Trust appoints as its Process Agent: Not Applicable.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:-
MLCS is not a Multibranch Party.
The Trust is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent is MLCS, unless otherwise
specified in the Confirmation. The failure of MLCS to perform its
obligations as Calculation Agent hereunder shall not be construed as an
Event of Default or Termination Event.
(f) Credit Support Document. With respect to MLCS, Guarantee of Merrill
Lynch & Co., Inc. (the "Guarantor") in the form attached hereto as
Exhibit A. With respect to the Trust, not applicable.
(g) Credit Support Provider. With respect to MLCS, the Guarantor. With
respect to the Trust, not applicable.
(h) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
(i) Netting of Payments. Sub-paragraph (ii) of Section 2(c) of this
Agreement will apply to all Transactions hereunder.
(j) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
5
Part 5. Other Provisions
(a) Indemnifiable Tax. If a Tax in respect of payments under this Agreement
is required to be paid pursuant to Section 2(d), neither MLCS nor the
Trust will in any circumstances be required to pay additional amounts in
respect of any Indemnifiable Tax or be under any obligation to pay to
the other any amount in respect of any liability of the other party for
or on account of such Tax and accordingly Section 2(d)(i)(4) and Section
2(d)(ii) of this Agreement shall not apply.
(b) Additional Representations. Section 3 of the Agreement is hereby amended
by adding the following, which shall constitute additional
representations for all purposes of the Agreement, including, without
limitation, Sections 3, 4, 5(a)(ii) and 5(a)(iv):
(i) Eligible Contract Participant. It is an "eligible contract
participant" as such term is defined in Section 1a(12) of the
Commodity Exchange Act, as amended.
(ii) Transactions are Arm's Length. It is entering into this
Agreement and each Transaction in reliance upon its own judgment
and upon any tax, accounting, regulatory and financial advice as
it has deemed necessary and not upon any view expressed by the
other party, and all trading decisions are and will be the
result of arm's length negotiations between the parties.
(iii) Risks are Fully Understood. It is entering into this Agreement
and each Transaction with full understanding of all materials
risks thereof, and it is capable (including having the financial
wherewithal) of assuming and willing to assume those risks and
it has relied upon such tax, accounting, regulatory, legal and
financial advice as it deems necessary and not upon any view
expressed by the other party.
(c) Change of Account. Section 2(b) of this Agreement is hereby amended by
the addition of the following after the word "delivery" in the first
line thereof:
"to another account in the same legal and tax jurisdiction as the
original account"
(d) Consent to Telephonic Recording. Each party hereto consents to the
monitoring or recording, at any time and from time to time, by the other
party of any and all communications between officers or employees of the
parties, waives any further notice of such monitoring or recording,
agrees to notify its officers and employees of any such monitoring or
recording, and agrees that any such tape recordings may be submitted in
evidence in any Proceedings relating to this Agreement and any
Transaction hereunder.
(e) Transfer/Assignment. Notwithstanding the provisions of Section 7, MLCS
may, without the consent of the Trust or any Holder, transfer or assign
its rights and obligations under any Transaction, in whole or in part,
to the Guarantor or any affiliate of the Guarantor (any such transferee
or assignee, a "Transferee"); provided that no such transfer or
assignment shall be effective until the Trust has received (a) an
executed acceptance and assumption by the Transferee of the transferred
obligations of MLCS under the Transactions(s) (the "Transferred
Obligations"); and (b) unless the Transferee is the Guarantor, an
executed guarantee of the Transferred Obligations by the Guarantor, in
substantially the same form as delivered by the Guarantor on the Issue
Date. MLCS may not otherwise transfer or assign its rights and
obligations hereunder to any other person. Upon the date such transfer
is effective, (i) MLCS shall be released from all obligations and
liabilities arising under the Transferred Obligations; and (ii) the
Transferred Obligations shall cease to be Transaction(s) under this
Agreement and shall be
6
deemed to be Transaction(s) under the master agreement between the
Transferee and the Trust. Except as provided in this paragraph, no party
may assign or transfer this Agreement.
Notwithstanding the foregoing, MLCS will not transfer or assign its
rights and obligations under any Transaction unless the Trust has
received written confirmation from each rating agency, if any, that has
rated the Trust Certificates that such transfer or assignment will not
result in a withdrawal or downgrading of the then current rating of the
Trust Certificates.
(f) Method of Notice. Section 12(a)(ii) of the Master Agreement is deleted
in its entirety.
(g) Trustee Liability. It is expressly understood and agreed by the parties
hereto that (a) this Agreement is executed and delivered by The Bank of
New York as Trustee not individually or personally but solely as trustee
of the Trust, in the exercise of the powers and authority conferred and
vested in the Trustee, (b) each representation, undertaking and
agreement made herein by the Trustee is made and intended not as a
personal representation, undertaking and agreement on the part of the
Trustee but is made and intended for the purpose of binding only the
Trust, (c) nothing herein contained herein shall be construed as
creating any liability on the Trustee, individually or personally, to
perform any covenant either expressed or implied contained herein, all
such liability, if any, being expressly waived by MLCS, and (d) under no
circumstances shall the Trustee be personally liable for the payment of
any indebtedness or expenses of the Trust or be liable for the breach
failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement; provided, however, that
clauses (c) and (d) above shall in no way exculpate or otherwise relieve
the Trustee from any liability resulting from the Trustee's failure to
perform the Trustee's duties as trustee under the Trust Agreement. This
provision shall survive the termination of this Agreement.
(h) Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of the Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. The parties hereto shall endeavor in good faith
negotiations to replace the prohibited or unenforceable provision with a
valid provision, the economic effect of which comes as close as possible
to that of the prohibited or unenforceable provision.
(i) Waiver of Jury Trial. Each party hereby irrevocably waives any and all
right to trial by jury with respect to any legal proceeding arising out
of or relating to this Agreement or any Transaction contemplated
hereunder.
(j) Limited Recourse. MLCS agrees that the obligations of the Trust
hereunder to make payments to MLCS shall be satisfied solely out of the
Trust Property.
(k) No Petition for Bankruptcy. MLCS shall not, prior to one year and one
day after the Trust has paid in full to the Holders all amounts due in
respect of the Trust Certificates, (i) commence or sustain an action
against the Trust or cause or join in any action against the Trust under
any federal or state bankruptcy, insolvency or similar law, or (ii)
appoint a receiver or other similar official of the Trust, or (iii) make
an assignment for the benefit of creditors, or (iv) order the winding up
or liquidation of the Trust; provided that the foregoing shall not
prevent MLCS from filing any proof of claim or taking any similar action
if any other parties initiate any of the foregoing actions.
(l) Set-Off. Set-Off shall not apply to any Transaction under this
Agreement.
7
(m) Amendments. Each of the parties agrees that it will not amend this
Agreement unless (a) it has received written confirmation from each
Rating Agency, if any, that such amendment will not result in a
withdrawal or downgrading of the rating (or credit estimate) of the
Trust Certificates or (b) Holders holding 100% of the Trust Certificates
consent to such amendment and each Rating Agency, if any, has been
notified of such amendment.
(n) Jurisdiction. Section 13(b) of the Agreement is amended to read in its
entirety as follows:
"Jurisdiction. With respect to any suit, action or proceedings relating
to any dispute arising out of or in connection with this Agreement
("Proceedings"), each party irrevocably submits to the jurisdiction of
the courts of the United States District Court located in the Borough of
Manhattan in New York City, which submission shall be exclusive unless
none of such courts has lawful jurisdiction over such Proceedings.
8
[GRAPHIC OMITTED]
DATE: July 16, 2004
TO: PPLUS TRUST SERIES GSC-2
ATTENTION: FREDDY ACEBEDO
FROM: MERRILL LYNCH CAPITAL SERVICES, INC.
RE: TRANSACTION - REFERENCE _____
CONFIRMATION (RATE CONFIRMATION)
Dear Sir or Madam:
The purpose of this confirmation (this "Confirmation") is to confirm the terms
and conditions of the Rate Swap Transaction entered into between Merrill Lynch
Capital Services, Inc. ("MLCS") and PPLUS TRUST SERIES GSC-2 (the "Trust") on
the Trade Date specified below (the "Transaction"). This Confirmation
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below and is the "Swap Agreement" referred to in both (i) the
Prospectus Supplement dated July 16, 2004 (the "Prospectus Supplement") relating
to the Trust Certificates issued under the Standard Terms for Trust Agreements,
dated as of February 20, 1998 as amended and supplemented by the Series GSC-2
Supplement dated as of July 16, 2004 (collectively, the "Trust Agreement") and
(ii) the Trust Agreement. Capitalized terms used and not defined herein have the
meanings specified in the Trust Agreement.
The definitions and provisions contained in the 2000 ISDA Definitions (the
"Definitions"), as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.
This Confirmation supplements, forms a part of, and is subject to, the ISDA
Master Agreement dated as of the date hereof as amended and supplemented from
time to time (the "Agreement"), between you and us. All provisions contained in
the Agreement govern this Confirmation except as expressly modified below.
The terms of the Transaction to which this Confirmation relates are as follows:
1. General Terms
Type of Transaction: Rate Swap.
Trade Date: July 16, 2004.
Effective Date: July 16, 2004.
Termination Date: February 15, 2034.
Calculation Agent: MLCS
2. Trust Payment Amounts
Trust Payment Dates: Each date on which the Trust receives
a payment of interest (for the
avoidance of doubt, such payment of
interest does not include the
Make-whole Amount) on the Underlying
Securities (which, for purposes of
this Transaction, shall include, as
applicable, the 6.345% Junior
Subordinated Debentures Due 2034
issued by The Goldman Sachs Group,
Inc.) (each an "Underlying Securities
Payment Date").
Trust Payment Amounts: On each Trust Payment Date, the Trust
Payment Amount then payable by the
Trust to MLCS shall equal the amount
of interest paid to the Trust in
respect of the Underlying Securities.
3. MLCS Payment Amounts
Notional Amount: U.S. $35,000,000, provided that (i)
the Notional Amount shall be subject
to reduction as provided in Section 5
hereof; provided, further that such
reduction shall be effective upon the
calendar day immediately following
the related MLCS Payment Date.
Business Day: New York and London.
Business Day Convention: Following.
MLCS Payment Dates: Subject to the Business Day
Convention, the 15th day of each
February, May, August and November,
plus any date (an "Unscheduled
Payment Date") on which the
Underlying Securities Issuer makes
any payment related to an optional
redemption or repurchase of, or other
unscheduled payment on, the
Underlying Securities, commencing on
the earlier to occur of an
Unscheduled Payment Date and August
15, 2004; provided that upon the
occurrence and during the
continuation of an Extension Period,
no MLCS Payment Amount shall be
payable to the Trust.
Floating Rate Option: USD-LIBOR-BBA; provided that the
Floating Rate Option, together with
the Spread, shall not exceed the Cap
Rate nor fall below the Floor Rate.
Spread: 0.85%
2
Cap Rate: 8.00%
Floor Rate: 3.00%
Designated Maturity: Three-Months
Reset Date: The first day of each Calculation
Period
Floating Rate Day Actual/360
Count Fraction:
Additional MLCS Floating Upon the expiration of any Extension
Amounts: Period, any accrued and unpaid
interest and interest on such accrued
and unpaid interest upon the
expiration of an Extension Period,
(all such interest, "Deferred
Interest")
4. Notice and Account Details
Telephone, Telex and/or
Facsimile Numbers and
Contact Details for Notices:
Notices to MLCS: _____
Copy to:
_____
Copy to:
_____
Notices to the Trust: c/o The Bank of New York
Attn.: Corporate Trust Dealing &
Trading Group/Freddy Acebedo
Tel: (212) 815-2915
Fax: (212) 815-2830
Account Details:
Payments to MLCS: _____
Payments to the Trust: _____
5. Reduction in Notional Amount. If the Underlying Securities Issuer
effects any optional redemption or repurchase of, or other unscheduled payment
on, less than 100% of the Underlying Securities prior to the Termination Date,
the Notional Amount will automatically, without need for any action by the Trust
or MLCS, be reduced to reflect such redemption, repurchase or other unscheduled
payment.
6. Additional Provisions.
3
Each party represents to the other party that it is acting for its own account,
and has made its own independent decisions to enter into this Transaction and as
to whether this Transaction is appropriate or proper for it based on its own
judgment and upon advice from such legal, tax, regulatory, accounting and/or
other advisors as it has deemed necessary. It is not relying on any
communication (written or oral) of the other party as investment advice or as a
recommendation to enter into this Transaction, it being understood that
information and explanations related to the terms and conditions of this
Transaction shall not be considered investment advice or a recommendation to
enter into this Transaction. No communication (written or oral) received from
the other party shall be deemed to be an assurance or guarantee as to the
expected results of this Transaction.
4
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to us by facsimile
transmission on _____, attention: _____, telephone: _____.
Yours sincerely,
MERRILL LYNCH CAPITAL SERVICES, INC.
By: /s/ Angelina Lopes
---------------------------
Angelina Lopes
Authorized Signatory
Accepted and confirmed as
of the Trade Date written above:
PPLUS TRUST SERIES GSC-2
By: THE BANK OF NEW YORK, not in its individual capacity but solely
as Trustee under the Trust Agreement
By: /s/ Fernando Acebedo
---------------------------
Name: Fernando Acebedo
Title: Authorized Signatory
5