EXHIBIT 4.2
TRUST AGREEMENT
TRUST AGREEMENT, between MS Structured Asset Corp. (the "Depositor") and
LaSalle Bank National Association (the "Trustee"), made as of the date set
forth in Schedule I attached hereto, which Schedule together with Schedules II,
III and IV attached hereto, are made a part hereof. The terms of the Standard
Terms for Trust Agreements, dated September 25, 2003 (the "Standard Terms")
are, except to the extent otherwise expressly stated, hereby incorporated by
reference herein in their entirety with the same force and effect as though set
forth herein. Capitalized terms used herein and not defined shall have the
meanings defined in the Standard Terms. References to "herein", "hereunder",
"this Trust Agreement" and the like shall include the Schedule I attached
hereto and the Standard Terms so incorporated by reference.
WHEREAS, the Depositor and the Trustee desire to establish the Trust
identified in Schedule I attached hereto (the "Trust") for the primary purposes
of (i) holding the Underlying Securities, (ii) entering into any Swap Agreement
with the Swap Counterparty and (iii) issuing the Units;
WHEREAS, the Depositor desires that the respective beneficial interests in
the Trust be divided into transferable fractional shares, such shares to be
represented by the Units;
WHEREAS, the Depositor desires to appoint the Trustee as trustee of the
Trust and the Trustee desires to accept such appointment;
WHEREAS, the Depositor shall transfer, convey and assign to the Trust
without recourse, and the Trust shall acquire, all of the Depositor's right,
title and interest in and under the Underlying Securities and other property
identified in Schedule II to the Trust Agreement (the "Deposited Trust
Property"); and
WHEREAS, the Depositor agrees to transfer, convey and assign without
recourse all of its right, title and interest in the Deposited Trust Property
and the Trust agrees to acquire the Trust Property, including the Deposited
Trust Property, specified herein in consideration for Units having an initial
Unit Principal Balance identified in Schedule I attached hereto, subject to the
terms and conditions specified in the Trust Agreement;
NOW THEREFORE, the Depositor hereby appoints the Trustee as trustee
hereunder and hereby requests the Trustee to receive the Underlying Securities
from the Depositor, to enter into the Swap Agreement with the Swap Counterparty
and to issue in accordance with the instructions of the Depositor Units having
the terms specified in Schedule I attached hereto, and the Trustee accepts such
appointment and, for itself and its successors and assigns, hereby declares
that it shall hold all the estate, right, title and interest in any property
contributed to the trust account established hereunder (except property to be
applied to the payment or reimbursement of or by the Trustee for any fees,
expenses or other payments which under the terms hereof is to be so applied) in
trust for the benefit of all present and future Holders of the fractional
shares of beneficial interest issued hereunder, namely, the Unitholders, and
subject to the terms and provisions hereof.
IN WITNESS WHEREOF, each of the undersigned has executed this instrument
as of the date set forth in the Schedule I attached hereto.
LASALLE BANK NATIONAL ASSOCIATION
as Trustee
By: /s/ Ann M. Kelly
-----------------------------
Name: Ann M. Kelly
Title: Assistant Vice President
MS STRUCTURED ASSET CORP.
By: /s/ John Kehoe
-----------------------------
Name: John Kehoe
Title: Vice President
Attachments: Schedules I, II, III and IV
Schedule I
(Terms of Trust and Units)
Trust:.................................. CBT Series 2003-1 Units Trust
Date of Trust Agreement:................ September 25, 2003
Trustee:................................ LaSalle Bank National Association
Units:.................................. Corporate Bond TRACERS(SM) Units
Initial Aggregate Unit Principal
Balance of the Units:................... $25,000,000, subject to reduction as
described under "Unit Principal
Balance"
Number of Units:........................ 25,000 (Unit Principal Balance of
$1,000 each, subject to reduction as
described under "Unit Principal
Balance")
Authorized Denomination:................ The Units will be issued, maintained
and transferred on the book-entry
records of DTC and its participants
in denominations of one Unit and
integral multiples thereof.
Each Unit has an initial Unit
Principal Balance of $1,000, subject
to reduction as described under
"Unit Principal Balance" below.
Unit Principal Balance:................. The Initial Aggregate Unit Principal
Balance of the Units issued on the
Original Issue Date is initially
$25,000,000, and the Unit Principal
Balance of each Unit issued on the
Original Issue Date is initially
$1,000. The Unit Principal Balance
will be reduced to the extent of
distributions of principal on the
Units and upon the initiation of any
Mandatory Liquidation of an
Underlying Security in the event of
an Underlying Security Default with
respect to an Underlying Security or
in the event an Underlying Security
becomes a Disqualified Underlying
I-1
Security (as defined under
"Mandatory Liquidation") or upon any
other Mandatory Liquidation, as
determined by the Trustee.
Following any unscheduled
distribution of principal on the
Units, notice of such unscheduled
distribution will be provided
without amending this Agreement
promptly to holders of beneficial
interests in the Units by the
Trustee.
Closing Date:........................... September 25, 2003
Cut-Off Date/Pricing Date............... September 9, 2003
Specified Currency:..................... United States dollars
Business Day:........................... Any day other than (i) a Saturday
or Sunday or (ii) a day on which
commercial banks in New York, New
York or Chicago, Illinois are
authorized or required by applicable
law, regulation or executive order
to close.
Swap Agreement:......................... The ISDA Master Agreement and the
confirmations and schedules
applicable to the Units attached as
Schedule III and dated September 25,
2003, between the Trust and Morgan
Stanley Capital Services Inc.
Swap Counterparty:...................... Morgan Stanley Capital Services Inc.,
which is Party A to the Swap
Agreement attached as Schedule III
or any assignee permitted
thereunder.
Administration Agreement:............... The Administration Agreement dated as
of September 25, 2003, between the
Trustee and the Administrative Agent
named therein.
Underlying Distribution:................ Any payments received by the Trust
pursuant to the Swap Agreement or
any principal payments received by
the Trust on the Underlying
Securities.
I-2
Interest Received on
Underlying Securities:.................. The Trust shall pay to the Swap
Counterparty all amounts received by
the Trust, other than amounts
attributable to the payment or
repayment of principal and amounts
constituting Retained Interest of
the Depositor, with respect to each
Underlying Security on the Business
Day on which the Trustee receives
such payment as holder of that
Underlying Security, unless the
Trustee does not receive the payment
by 12 noon (New York City time) on
such Business Day, in which case the
payment shall be delivered on the
first following Business Day on
which the Trustee has received such
payment prior to 12 noon (New York
City time).
Interest Payments:...................... On each monthly Interest Payment
Date, the Trust will pay to the
holders of the Units interest in the
amounts set forth on Schedule IV
hereto, which Schedule IV may be
revised from time to time upon any
early redemption, repayment or
Mandatory Liquidation of any
Underlying Security. Interest on the
Units will be paid initially at the
rate of 5.22% per year on the
aggregate Unit Principal Balance of
the Units. The amount that holders
of the Units are entitled to receive
on each Interest Payment Date will
be the amount actually received by
the Trust, and not previously
distributed, from the Swap
Counterparty pursuant to the Swap
Agreement, less expenses as
described under "Expenses" below
and, in certain circumstances, less
any Reimbursement Payment owed by
the Trust to the Swap Counterparty,
as described under "Reimbursement
Payment" below.
I-3
If the Swap Agreement is terminated
in full prior to the Scheduled Final
Distribution Date, the amount that
holders of the Units are entitled to
receive on each Interest Payment
Date will be their pro rata share of
the amounts of interest actually
received by the Trust, and not
previously distributed, from the
Underlying Security Issuers, less
expenses as described under
"Expenses" below and, in certain
circumstances, less any
Reimbursement Payment owed by the
Trust to the Payment Counterparty. A
revised Schedule IV will be provided
by the Depositor to the Trustee, and
the Trustee shall promptly give
notice of such termination to
holders of the Units and file with
the SEC on a Form 8-K a revised
Schedule A to the Prospectus
Supplement relating to the Unit.
Interest Payment Dates:................. The 25th day of each month,
commencing October 27, 2003;
provided that if any such day is not
a Business Day, the Interest Payment
Date will be postponed to the
following Business Day.
Initial Rating:......................... A3 by Moody's
A- by S&P
Scheduled Final Distribution Date:...... July 25, 2013, which is the Interest
Payment Date immediately succeeding
the maturity date of the latest
maturing Underlying Security,
subject (i) to earlier final
distribution if such Underlying
Security is subject to a Mandatory
Liquidation or is repaid in full
prior to its expected maturity date,
or (ii) to extension in the event of
a default on any Underlying Security
on (or prior to) the Scheduled Final
Distribution Date; provided that the
Scheduled Final Distribution Date
will
I-4
be no later than the later of (a)
the fourth Business Day following
the completion of any Mandatory
Liquidation of the Underlying
Security and (b) the Scheduled Final
Distribution Date effective
immediately prior to any default
described in (ii) above.
Principal Distributions:................ The Trust shall distribute principal
amounts it receives from the
Underlying Security Issuers to the
holders of the Units in the amounts
and on the dates set forth on
Schedule IV. Principal Distribution
Dates on Schedule IV are subject to
change if an Underlying Security is
redeemed or repaid prior to its
maturity or if an Underlying
Security is subject to a Mandatory
Liquidation.
Principal Distribution Dates:........... The relevant Interest Payment Dates
set forth on Schedule IV, the
Interest Payment Date following the
conclusion of any Mandatory
Liquidation and the date upon which
distributions of liquidation
proceeds on the Underlying
Securities are available following a
Trust Wind-Up Event in accordance
with the terms hereof.
If any payment with respect to the
Underlying Securities held by the
Trust is not received by the Trustee
by 12 noon (New York City time) on
an Interest Payment Date or
Principal Distribution Date, as the
case may be, the corresponding
distribution on the Units will not
occur until the next Business Day
that the Trust is in receipt of
proceeds of such payment prior to 12
noon, with no adjustment to the
amount distributed or the Record
Date.
Early Redemption of an
Underlying Security:.................... The Unit Principal Balance is
subject to reduction upon any
redemption of an
I-5
Underlying Security prior to its
scheduled maturity date in
accordance with the terms of such
Underlying Securities. The proceeds
of any such redemption of an
Underlying Security (exclusive of
any "make-whole" amounts) will be
distributed to holders of the Units
on the Interest Payment Date next
succeeding the date such early
payment with respect to such
Underlying Security is received by
the Trust.
Record Date:............................ The Record Date with respect to any
Interest Payment Date or Principal
Distribution Date will be the
Business Day immediately preceding
such date. The Record Date with
respect to a Mandatory Liquidation
will be the Business Day selected by
the Administrative Agent and
specified in the notice of Mandatory
Liquidation; provided that the
Record Date so specified will
generally be no earlier than the
second Business Day following the
date of such notice.
Principal Distributions and Interest
Payments shall be made to DTC (or its
nominee) as Record Owner of the
Units for distribution to the
securities intermediaries acting on
behalf of the holders of Units in
accordance with DTC's procedures.
Record Owner:........................... DTC or its nominee.
Mandatory Liquidation:.................. The Trustee shall cause the sale of
an Underlying Security and deliver
the proceeds of such sale (less any
Liquidation Costs and any applicable
Reimbursement Payment) to the
holders of Units upon its actual
knowledge of the occurrence of
either of the following events:
I-6
(i) an Underlying Security
Default occurs with respect to the
Underlying Security; or
(ii) the Underlying Security
becomes a Disqualified Underlying
Security.
In addition, the Trustee shall be
required to cause the sale of the
Underlying Securities and to deliver
the proceeds of such sale (less any
Liquidation Costs and any applicable
Reimbursement Payment) to the
holders of the Units if a Trust
Wind-Up Event, other than a Trust
Wind-Up Event caused by a redemption
of all of the Underlying Securities,
occurs.
Upon a Mandatory Liquidation of
an Underlying Security, the Trustee
shall deliver notice to each holder
of Units of the initiation of the
Mandatory Liquidation of such
Underlying Security which notice
shall set forth the date of such
event. For a Mandatory Liquidation
of an Underlying Security that
becomes a Disqualified Underlying
Security as described in clause (ii)
above, the Administrative Agent
shall use reasonable efforts to
liquidate as promptly as practicable
the relevant Underlying Securities
on behalf of the holders of the
Units, and the Trustee shall pay the
proceeds of such liquidation, less
any Liquidation Costs and any
applicable Reimbursement Payment, to
the holders of the Units on the
Interest Payment Date immediately
following its receipt of such
liquidation proceeds. For a
Mandatory Liquidation resulting from
an Underlying Security Default,
after waiting 45 days from the date
of such Underlying Security Default
(regardless of whether such
I-7
Underlying Security Default is
continuing at such time), the
Administrative Agent shall use
reasonable efforts to liquidate the
relevant Underlying Securities on
behalf of the holders of the Units,
and the Trustee shall pay the
proceeds of such liquidation, less
any Liquidation Costs and any
applicable Reimbursement Payment, to
the holders of the Units on the
immediately following Interest
Payment Date.
"Liquidation Costs" will include
any customary expenses of
liquidation of an Underlying
Security incurred by the
Administrative Agent and the
Trustee, and if the Swap Agreement
is terminated in full prior to the
Scheduled Final Distribution Date,
"Liquidation Costs" will include any
amount due for trust expenses that
would otherwise have been taken from
any payment of accrued interest as
described under "Expenses" below. In
no event, however, will the
Liquidation Costs associated with
the liquidation of an Underlying
Security exceed the proceeds of such
liquidation less any associated
Reimbursement Payment.
Trust Wind-Up Event:................... The Trust Wind-Up Events specified
in Section 9.02 of the Standard
Terms shall be superseded and
replaced in their entirety by the
following provisions. A Trust
Wind-Up Event shall occur if any of
the following events occurs:
(i) all of the Underlying
Securities then held by the Trust
are redeemed;
(ii) all of the Underlying
Securities then held by the Trust
are subject to Mandatory
Liquidation;
(iii) any Excess Expense Event
occurs;
I-8
(iv) designation by the Trustee of
a Tax Wind-Up Event; or
(v) the Trust ceases to satisfy the
requirements of the exemption
provided under Rule 3a-7.
Upon the termination of the Trust
due to a Trust Wind-Up Event
described in clauses (iii), (iv) or
(v) above, the Trustee shall deliver
notice to each holder of Units of
the occurrence of a Trust Wind-Up
Event and set forth the date of the
Trust Wind-Up Event. Such notice
will state that holders should
surrender their Units to the Trustee
or give, to the Trustee's reasonable
satisfaction, appropriate indemnity
or security in exchange for cash
payment of the liquidated proceeds
of the Trust. Such notice shall also
specify the cause of the Trust
Wind-Up Event and the location and
hours of the office or agency of the
Trustee at which Units should be
presented and surrendered.
The Administrative Agent shall use
reasonable efforts to liquidate as
promptly as practicable all of the
Underlying Securities held by the
Trust on behalf of the holders in
the case of a Trust Wind-Up Event
resulting from an event described
under clauses (iii), (iv) and (v)
above. The Trustee shall pay the
proceeds of such liquidation
together with any cash amounts held
by the Trust (less Liquidation
Costs, any applicable Reimbursement
Payment and any other amounts due to
the Trustee or the Administrative
Agent) to holders of Units on a pro
rata basis promptly but no later
than the fourth Business Day
following the completion of
liquidation
I-9
of all of the Underlying Securities
upon the Trustee's receipt of such
holders' Units or appropriate and
satisfactory indemnity or Underlying
Security.
If the Trust must cause the sale of
Underlying Securities upon a
Mandatory Liquidation or a Trust
Wind-Up Event, the Administrative
Agent shall solicit bids for the
affected Underlying Securities held
by the Trust from at least four
unaffiliated, registered broker-
dealers of national reputation, at
the time making a market in such
Underlying Security (or, if there
are fewer than four such dealers,
from such dealer or dealers). The
Administrative Agent shall, on
behalf of the Trust, sell the
Underlying Securities at the
highest bid price received to the
highest bidder, or, at such price
to one of its affiliates.
A "Tax Wind-Up Event" shall occur
with respect to the Trust if the
Trustee shall have obtained an
opinion of nationally recognized
independent tax counsel experienced
in such matters to the effect that
there is more than an insubstantial
risk that at such time, or within 90
days of the date thereof, the Trust
is, or would be, subject to more
than a de minimis amount of taxes,
duties or other governmental
charges.
Reimbursement Payment:.................. (a) With respect to a Mandatory
Liquidation or a Trust Wind-Up Event
described in clauses (iii) and (iv)
above, the Reimbursement Payment
payable by the Trust to the Swap
Counterparty shall be equal to the
accrued but unpaid interest on each
applicable Underlying Security, in
accordance with its terms, for the
period from and excluding the last
interest payment date for each such
I-10
Underlying Security on which the
full amount of interest due was
actually paid (or from and excluding
the Cut-Off Date if the last such
interest payment date for the
Underlying Security was prior to
the Cut-Off Date) to and including
the Interest Payment Date
immediately preceding the date of
such Mandatory Liquidation or Trust
Wind-Up Event (or to and including
the Cut-Off Date if such Mandatory
Liquidation or Specified Trust
Wind-Up Event occurs prior to the
first Interest Payment Date). In the
event that the ending date for the
foregoing accrual period is prior to
the starting date for the accrual
period, or in the event that both
the ending date and starting date of
such accrual period are the same
date, the Reimbursement Payment
shall be zero.
Such Reimbursement Payment shall be
paid by the Trust to the Swap
Counterparty upon receipt of the
liquidation proceeds of each such
Underlying Security, but only from
the amount of such liquidation
proceeds that are attributable to
accrued but unpaid interest on the
Underlying Security (the "Interest
Component"), as determined by the
Calculation Agent under the Swap
Agreement. In the event the Interest
Component is insufficient to make
the Reimbursement Payment in full,
the Trust's obligation to pay the
Reimbursement Payment shall be
satisfied in full upon payment of
the Interest Component to the Swap
Counterparty.
In the event that any such
Underlying Security is liquidated
while trading "with accrued"
interest (as determined by the
Calculation Agent), the Interest
Component shall be equal to the full
I-11
amount of the accrued but unpaid
interest on the Underlying Security.
In the event that the Underlying
Security is liquidated at a time it
is not trading "with accrued"
interest (as determined by the
Calculation Agent), the Interest
Component shall be equal to the
product of the liquidation proceeds
multiplied by a fraction, the
numerator of which is the amount of
the accrued but unpaid interest on
the Underlying Security and the
denominator of which is the sum of
the then outstanding principal
amount of the Underlying Security
plus the amount of the accrued and
unpaid interest on the Underlying
Security.
(b) With respect to a termination
of the Swap Agreement due to the
designation by the Swap Counterparty
of an "Early Termination Date" under
the Swap Agreement, the
Reimbursement Payment payable by the
Trust to the Swap Counterparty shall
be equal to the accured but unpaid
interest on each Underlying
Security, in accordance with its
terms, for the period from and
excluding the last interest payment
date for each such Underlying
Security on which the full amount of
interest due was actually paid (or
from and excluding the Cut-Off Date
if the last such interest payment
date for the Underlying Security was
prior to the Cut-Off Date) to and
including the Interest Payment Date
immediately preceding the date of
such Early Termination Date (or to
and including the Cut-Off Date if
such Early Termination Date occurs
prior to the first Interest Payment
Date). In the event that the ending
date for the foregoing accrual
period is prior to the starting date
for the accrual period, or in the
I-12
event that both the ending date and
starting date of such accrual
period are the same date, the
Reimbursement Payment shall be
zero. Such Reimbursement Payment
shall be paid over time by the
Trust to the Swap Counterparty upon
receipt by the Trust of the
interest payments on the Underlying
Securities.
In the event an Early Redemption or
Mandatory Liquidation occurs prior
to payment in full of such
Reimbursement Payment, such
Reimbursement Payment payable upon a
designation of an Early Termination
Date shall be paid to the Swap
Counterparty from the portion of the
proceeds of the Early Redemption or
Mandatory Liquidation representing
accrued but unpaid interest on the
applicable Underlying Security prior
to any payments to holders of the
Units from such portion of the
proceeds.
Expenses:............................... The Trustee shall retain an amount
of each Underlying Distribution
received from the Swap Counterparty
equal to 0.063% per annum of the
then current principal amount of the
Underlying Securities (computed on a
30/360 day count basis), in order to
pay the expenses of the Trust and
shall deposit such amounts in an
"Expense Account." The Trustee shall
be responsible for paying the
Trustee Fees on behalf of the Trust
and paying other expenses of the
Trust, including rating agency and
listing fees.
In addition, the Trust shall invest
any Underlying Distributions of
principal it receives between
Interest Payment Dates in "Eligible
Assets," as defined in Rule 3a-7,
that mature prior to the succeeding
Interest Payment Date and
I-13
that are Permitted Investments. The
Trust shall deliver such Underlying
Distributions of principal to
holders on the subsequent Interest
Payment Date and shall retain any
income the Trust earns on those
investments and deposit such income
in the Expense Account. The Trust
shall not be responsible or liable
for any losses on such investments.
Any of such income not used to pay
the expenses of the Trust will be
distributed quarterly to the
Depositor as described below.
In the event that the Swap Agreement
is terminated in full prior to the
Scheduled Final Distribution Date,
the Trustee shall retain, for its
own expenses and the expenses of the
Administrative Agent, a portion of
each Interest Payment it receives
from each Underlying Security Issuer
and a portion of the accrued and
unpaid interest received upon a
Mandatory Liquidation of an
Underlying Security. The amount
retained for expenses at the time of
an Interest Payment will be equal to
the aggregate amount of such
distribution multiplied by a
fraction, the numerator of which is
0.063% and the denominator of which
is the per annum interest rate
applicable to such Underlying
Security for the relevant accrual
period. The amount retained for
expenses at the time of a Mandatory
Liquidation will be equal to the
accrued but unpaid interest on such
Underlying Security as of the date
of the Mandatory Liquidation
multiplied by a fraction, the
numerator of which is 0.063% and the
denominator of which is the per
annum interest rate applicable to
such Underlying Security for the
relevant accrual period.
As compensation for and in payment
of
I-14
trust expenses related to its
services under the Trust Agreement
(other than Extraordinary Trust
Expenses), the Trustee will receive
Trustee fees on each Interest
Payment Date in an amount equal to
1/12 of $5,000.00 ("Trustee Fees").
To the extent that the amount
retained by the Trust is not
sufficient to cover the Trust's
expenses, the Depositor shall be
responsible for such shortfall. The
Trustee shall not be permitted to
divert, utilize or access any Trust
Property (other than as explicitly
permitted herein) to cover such
shortfall. If any amount remains in
the Expense Account upon payment of
the Trust's expenses, such amount
shall be distributed on the 25th day
of each March, June, September and
December or the next succeeding
Business Day, commencing December
26, 2003 to the Depositor.
Extraordinary Trust Expenses:........... The Depositor shall indemnify the
Trustee for Extraordinary Trust
Expenses incurred by the Trustee up
to the Maximum Reimbursable Amount
in the aggregate. If the Trustee
incurs Extraordinary Trust Expenses
that in the aggregate exceed the
Trigger Amount, an "Excess Expense
Event" will occur unless the
Depositor, in its sole discretion,
agrees to increase the Maximum
Reimbursable Amount. If, after the
Depositor has increased the Maximum
Reimbursable Amount, Extraordinary
Trust Expenses reach the
then-applicable Trigger Amount, an
"Excess Expense Event" will again
occur unless the Depositor, in its
sole discretion, further increases
the Maximum Reimbursable Amount.
I-15
Maximum Reimbursement Amount:........... Initially $100,000, and thereafter
any higher amount specified by the
Depositor in writing to the Trustee;
provided that any increase in the
Maximum Reimbursable Amount shall
result in a Maximum Reimbursable
Amount at least $25,000 higher than
the amount of all Extraordinary
Trust Expenses incurred to the date
of such increase.
Trigger Amount:......................... The Maximum Reimbursable Amount minus
$75,000
Specified Percentage:................... 66-2/3%
Form:................................... Global Underlying Security
Depositary:............................. DTC
Listing:................................ The Units have been approved for
listing on the American Stock
Exchange.
ERISA Restrictions:..................... No ERISA restrictions will apply to
the Units.
QIB Restriction:........................ Not applicable to the Units.
Depositor Optional Exchange:............ Not applicable to the Units.
Retained Interest:...................... The Depositor retains the right to
receive any and all interest that
accrues on the Underlying Securities
prior to the Cut-off Date. The
Depositor shall receive such accrued
interest with respect to each
Underlying Security on the date such
interest is received by the Trust
from the relevant Underlying
Security Issuer.
I-16
If an Underlying Security Default
occurs with respect to an Underlying
Security on or prior to the first
Interest Payment Date with respect
to that Underlying Security and the
Depositor does not receive such
retained interest amount, the
Depositor shall have a claim for
such retained interest, and shall be
paid pari passu with any payments
owed to holders of the Units after
the Cut-off Date from any proceeds
recovered on the Underlying
Security.
See Schedule II for the amount of
the Retained Interest for each
Underlying Security.
Rating Agency Condition:................. The definition of Rating Agencies
Condition in the Standard Terms
shall not apply.
"Rating Agency Condition": With
respect to any specified action or
determination, means receipt of (i)
written confirmation by Moody's (if
the Units are rated by Moody's, for
so long as the Units are
outstanding and rated by Moody's)
and (ii) written confirmation by
S&P (if the Units are rated by S&P,
for so long as the Units are
outstanding and rated by S&P), that
such specified action or
determination will not result in
the reduction or withdrawal of
their then-current ratings on the
Units. Such satisfaction may relate
either to a specified transaction
or may be a confirmation with
respect to any future transactions
which comply with generally
applicable conditions published by
the applicable rating agency.
I-17
Notices to Rating Agencies:............. Section 12.07 of the Standard Terms
is hereby amended to include the
following additional items:
(vi) the occurrence of any Trust
Wind-Up Event; and
(v) the occurrence of any Mandatory
Liquidation.
I-18
Schedule II
(Terms of Deposited Trust Property)
- ----------------------------------------------------------------------------------------------------
Underlying Issuer Interest Credit Rating: Principal Amount Interest Original
and Underlying Rate Moody's/S&P per Underlying Payment Dates Issue Date
Security Security
- ----------------------------------------------------------------------------------------------------
Bank of America 4.875% Aa2/A+ $1,000,000 January 15 and January 23,
Corporation 4.875% July 15 2003
Senior Notes due 2013
- ----------------------------------------------------------------------------------------------------
Bank One Corporation 5.250% A1/A- $1,000,000 January 30 and October 24,
5.25% Subordinated July 30 2002
Notes due 2013
- ----------------------------------------------------------------------------------------------------
BB&T Corporation 4.750% A2/A- $1,000,000 April 1 and September 24,
4.75% Subordinated October 1 2002
Notes due 2012
- ----------------------------------------------------------------------------------------------------
Boeing Capital 5.800% A3/A $1,000,000 January 15 and July 25, 2002
Corporation 5.80% July 15
Senior Notes due 2013
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Underlying Issuer Maturity Redemption(1) CUSIP No. Retained Commission
and Underlying Date Interest File No.
Security
- --------------------------------------------------------------------------------------------
Bank of America January Tax Redemption 060505AX2 $ 9,479.17 1-6523
Corporation 4.875% 15, 2013
Senior Notes due 2013
- --------------------------------------------------------------------------------------------
Bank One Corporation January Tax Redemption 06423AAS2 $ 8,020.83 1-15323
5.25% Subordinated 30, 2013
Notes due 2013
- --------------------------------------------------------------------------------------------
BB&T Corporation October 1, N/A 054937AD9 $22,958.33 1-10853
4.75% Subordinated 2012
Notes due 2012
- --------------------------------------------------------------------------------------------
Boeing Capital January Make-whole; 097014AH7 $11,277.78 1-10795
Corporation 5.80% 15, 2013 Tax Redemption
Senior Notes due 2013
- --------------------------------------------------------------------------------------------
- --------
(1) Redemption Terms:
o Tax Redemption - redemption by the Security Issuer upon the occurrence of certain tax
events.
o Make-whole - redemption by the Security Issuer at any time for a make-whole amount
equal to the principal balance plus the present value of all scheduled interest
payments.
o N/A - not redeemable by the Security Issuer at any time.
II-1
- ----------------------------------------------------------------------------------------------------
Underlying Issuer Interest Credit Rating: Principal Amount Interest Original
and Underlying Rate Moody's/S&P per Underlying Payment Dates Issue Date
Security Security
- ----------------------------------------------------------------------------------------------------
Campbell Soup 5.000% A3/A $1,000,000 June 3 and December 2,
Company 5.00% December 3 2002
Notes due 2012
- ----------------------------------------------------------------------------------------------------
Citigroup Inc. 5.625% Aa2/A+ $1,000,000 February 27 August 26,
5.625% Subordinated and 2002
Notes due 2012 August 27
- ----------------------------------------------------------------------------------------------------
ConocoPhillips 4.750% A3/A- $1,000,000 April 15 and March 4, 2003
4.75% Notes due 2012 October 15
- ----------------------------------------------------------------------------------------------------
Consolidated Edison 5.625% A1/A $1,000,000 January 1 and June 24, 2002
Company of New York, July 1
Inc. 5.625% Debentures,
Series 2002 A due
2012
- ----------------------------------------------------------------------------------------------------
Credit Suisse First 6.500% Aa3/A+ $1,000,000 January 15 and January 11,
Boston (USA), Inc. July 15 2002
6.50% Notes due
January 15, 2012
- ----------------------------------------------------------------------------------------------------
Dominion Resources, 5.700% Baa1/BBB+ $1,000,000 March 17 and September 16,
Inc. September 17 2002
2002 Series C 5.70%
Senior Notes due 2012
- ----------------------------------------------------------------------------------------------------
The Dow Chemical 6.000% A3/A- $1,000,000 April 1 and August 29,
Company 6% Notes due October 1 2002
2012
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Underlying Issuer Maturity Redemption(1) CUSIP No. Retained Commission
and Underlying Date Interest File No.
Security
- --------------------------------------------------------------------------------------------
Campbell Soup December Make-whole 134429AR0 $15,555.56 1-3822
Company 5.00% 3, 2012
Notes due 2012
- --------------------------------------------------------------------------------------------
Citigroup Inc. August 27, Tax Redemption 172967BP5 $ 4,375.00 1-09924
5.625% Subordinated 2012
Notes due 2012
- --------------------------------------------------------------------------------------------
ConocoPhillips October Make-whole 20825CAE4 $21,111.11 0-49987
4.75% Notes due 2012 15, 2012
- --------------------------------------------------------------------------------------------
Consolidated Edison July 1, N/A 209111DZ3 $13,125.00 1-1217
Company of New York, 2012
Inc. 5.625% Debentures,
Series 2002 A due
2012
- --------------------------------------------------------------------------------------------
Credit Suisse First January Make-whole; 22541LAC7 $12,638.89 1-6862
Boston (USA), Inc. 15, 2012 Tax Redemption
6.50% Notes due
January 15, 2012
- --------------------------------------------------------------------------------------------
Dominion Resources, September Make-whole 257469AF3 $ 1,266.67 1-8489
Inc. 17, 2012
2002 Series C 5.70%
Senior Notes due 2012
- --------------------------------------------------------------------------------------------
The Dow Chemical October 1, Make-whole 260543BR3 $29,000.00 1-3433
Company 6% Notes due 2012
2012
- --------------------------------------------------------------------------------------------
II-2
- ----------------------------------------------------------------------------------------------------
Underlying Issuer Interest Credit Rating: Principal Amount Interest Original
and Underlying Rate Moody's/S&P per Underlying Payment Dates Issue Date
Security Security
- ----------------------------------------------------------------------------------------------------
Duke Energy 5.625% Baa1/BBB+ $1,000,000 May 30 and November 20,
Corporation 5.625% November 30 2002
Senior Notes due 2012
- ----------------------------------------------------------------------------------------------------
Ford Motor Credit 7.250% A3/BBB $1,000,000 April 25 and October 25,
Company 7.250% October 25 2001
GlobLs due October
25, 2011
- ----------------------------------------------------------------------------------------------------
General Electric 5.000% Aaa/AAA $1,000,000 February 1 and January 28,
Company 5% Notes due August 1 2003
2013
- ----------------------------------------------------------------------------------------------------
General Motors 6.875% A3/BBB $1,000,000 February 28 and August 29,
Acceptance August 28 2002
Corporation 6.875%
Notes due August 28,
2012
- ----------------------------------------------------------------------------------------------------
The Goldman Sachs 4.750% Aa3/A+ $1,000,000 January 15 and July 15, 2003
Group, Inc. July 15
4.750% Notes due 2013
- ----------------------------------------------------------------------------------------------------
John Deere Capital 5.100% A3/A- $1,000,000 January 15 and January 10,
Corporation 5.10% July 15 2003
Global Debentures
due January 15, 2013
- ----------------------------------------------------------------------------------------------------
Johnson & Johnson 3.800% Aaa/AAA $1,000,000 May 15 and May 22, 2003
3.80% Debentures due November 15
May 15, 2013
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Underlying Issuer Maturity Redemption(1) CUSIP No. Retained Commission
and Underlying Date Interest File No.
Security
- --------------------------------------------------------------------------------------------
Duke Energy November Make-whole 264399EF9 $17,968.75 1-4928
Corporation 5.625% 30, 2012
Senior Notes due 2012
- --------------------------------------------------------------------------------------------
Ford Motor Credit October Tax Redemption 345397TY9 $30,208.33 1-6368
Company 7.250% 25, 2011
GlobLs due October
25, 2011
- --------------------------------------------------------------------------------------------
General Electric February N/A 369604AY9 $ 7,500.00 1-35
Company 5% Notes due 1, 2013
2013
- --------------------------------------------------------------------------------------------
General Motors August 28, Tax Redemption 370425SE1 $ 5,156.25 1-3754
Acceptance 2012
Corporation 6.875%
Notes due August 28,
2012
- --------------------------------------------------------------------------------------------
The Goldman Sachs July 15, Tax Redemption 38141GDK7 $ 9,236.11 1-14965
Group, Inc. 2013
4.750% Notes due 2013
- --------------------------------------------------------------------------------------------
John Deere Capital January Tax Redemption 244217BK0 $ 9,916.67 1-6458
Corporation 5.10% 15, 2013
Global Debentures
due January 15, 2013
- --------------------------------------------------------------------------------------------
Johnson & Johnson May 15, N/A 478160AM6 $12,983.33 1-3215
3.80% Debentures due 2013
May 15, 2013
- --------------------------------------------------------------------------------------------
II-3
- ----------------------------------------------------------------------------------------------------
Underlying Issuer Interest Credit Rating: Principal Amount Interest Original
and Underlying Rate Moody's/S&P per Underlying Payment Dates Issue Date
Security Security
- ----------------------------------------------------------------------------------------------------
Limited Brands, Inc. 6.125% Baa1/BBB+ $1,000,000 June 1 and December 3,
6.125% Notes due December 1 2002
December 1, 2012
- ----------------------------------------------------------------------------------------------------
Marsh and McLennan 4.850% A2/AA- $1,000,000 February 15 and February 19,
Companies, Inc. August 15 2003
4.850% Senior Notes
due 2013
- ----------------------------------------------------------------------------------------------------
Merck & Co., Inc. 4.375% Aaa/AAA $1,000,000 February 15 and February 18,
4.375% Notes due 2013 August 15 2003
- ----------------------------------------------------------------------------------------------------
SBC Communications 5.875% A1/A+ $1,000,000 February 15 and August 19,
Inc. 5.875% Global August 15 2002
Notes Due August 15,
2012
- ----------------------------------------------------------------------------------------------------
Union Oil Company of 5.050% Baa2/BBB+ $1,000,000 April 1 and October 3,
California 5.05% October 1 2002
Senior Notes due 2012
- ----------------------------------------------------------------------------------------------------
Verizon Virginia 4.625% Aa3/A+ $1,000,000 March 15 and March 14,
Inc. 4.625% September 15 2003
Debentures, Series
A, due 2013
- ----------------------------------------------------------------------------------------------------
Wal-Mart Stores, 4.550% Aa2/AA $1,000,000 May 1 and April 29,
Inc. 4.55% Notes Due November 1 2003
2013
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Underlying Issuer Maturity Redemption(1) CUSIP No. Retained Commission
and Underlying Date Interest File No.
Security
- --------------------------------------------------------------------------------------------
Limited Brands, Inc. December Make-whole 532716AH0 $19,395.83 1-8344
6.125% Notes due 1, 2012
December 1, 2012
- --------------------------------------------------------------------------------------------
Marsh and McLennan February N/A 571748AJ1 $ 5,388.89 1-5998
Companies, Inc. 15, 2013
4.850% Senior Notes
due 2013
- --------------------------------------------------------------------------------------------
Merck & Co., Inc. February N/A 589331AH0 $ 4,861.11 1-3305
4.375% Notes due 2013 15, 2013
- --------------------------------------------------------------------------------------------
SBC Communications August 15, Make-whole 78387GAK9 $ 6,527.78 1-8610
Inc. 5.875% Global 2012
Notes Due August 15,
2012
- --------------------------------------------------------------------------------------------
Union Oil Company of October 1, Make-whole 907770BG5 $24,408.33 1-8483
California 5.05% 2012
Senior Notes due 2012
- --------------------------------------------------------------------------------------------
Verizon Virginia March 15, Make-whole 92345NAA8 $ 1,284.72 1-6964
Inc. 4.625% 2013
Debentures, Series
A, due 2013
- --------------------------------------------------------------------------------------------
Wal-Mart Stores, May 1, 2013 Tax Redemption 931142BT9 $18,452.78 1-6991
Inc. 4.55% Notes Due
2013
- --------------------------------------------------------------------------------------------
II-4
Schedule III
Swap Agreement Confirm
III-1
- --------------------------------------------------------------------------------
Date: September 25, 2003
To: Structured Asset Trust Unit From: Morgan Stanley
Repackagings CBT Series 2003-1 Units Capital Services Inc.
Trust -- Corporate Bond TRACERS(SM)
Units
Attn: Asset-Backed Securities Group Contact: Chris Boas
Structured Asset Trust Unit
Repackagings CBT Series 2003-1 Units
Trust -- Corporate Bond TRACERS(SM)
Units
Fax: 312-904-2084 Fax: 212-761-0406
Tel: 312-904-9387 Tel: 212-761-1395
- --------------------------------------------------------------------------------
Re: Interest Rate Swap Transaction. MS Reference Number
The purpose of this letter agreement and the Schedule A attached hereto is
to confirm the terms and conditions of the 25 Transactions entered into between
you and Morgan Stanley Capital Services Inc. on the Trade Date specified below
(the "Transactions"). With respect to each Underlying Security held by the
Trust as of the Trade Date, the terms as set forth in Schedule A hereto with
respect to such Underlying Security together with the terms of this letter
agreement constitute a separate "Confirmation" of a Transaction as referred to
in the Agreement.
The definitions and provisions contained in the 2000 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.
("ISDA")) are incorporated into this letter agreement. In the event of any
inconsistency between those definitions and this letter agreement, this letter
agreement will govern.
1. Each Confirmation supplements, forms a part of, and is subject to,
the ISDA Master Agreement dated as of September 25, 2003, as amended and
supplemented from time to time (the "Agreement"), between you and us. All
provisions contained in the Agreement govern each Confirmation except as
expressly modified below.
2. With respect to each Underlying Security, the terms of the
Transaction to which this letter agreement relates are as follows:
Fixed Rate I Payer: Morgan Stanley Capital Services Inc.
("MSCS" or "Party A")
Fixed Rate II Payer: CBT Series 2003-1 Units Trust (the
"Trust" or "Party B")
Trade Date: September 9, 2003
Effective Date: September 25, 2003
1
Termination Date: The earliest of (i) the occurrence of a
Mandatory Liquidation of the Underlying
Security, (ii) the occurrence of a
Specified Trust Wind-Up Event, (iii)
the Fixed Rate I Payer Payment Date
immediately following the occurrence of
any early redemption or prepayment of
the entire principal amount of the
Underlying Security held by the Trust
(an "Early Repayment") and (iv) the
Fixed Rate I Payer Payment Date
immediately following the Maturity Date
for the Underlying Security, subject to
Section 4 below.
If in connection with an Early
Repayment or on the Maturity Date,
Party B does not receive the full
amount of principal and accrued and
unpaid interest on the Underlying
Security on the payment date therefor,
no Termination Date shall occur with
respect to such Early Repayment or
Maturity Date unless and until such
principal and accrued and unpaid
interest are paid in full. In the event
such failure to pay such amounts when
due results in a Mandatory Liquidation,
the Transaction with respect to the
Underlying Security will terminate
pursuant to such Mandatory Liquidation.
Business Days: New York and Chicago
Calculation Agent: Party A
I. Fixed Rate I Payments:
Fixed Rate I Notional Amount: For each Fixed Rate I Calculation
Period, the "Notional Amount" as set
forth in Schedule A (as amended from
time to time) hereto corresponding to
the Underlying Security as determined
at the beginning of each Calculation
Period; provided that for any Fixed
Rate I Calculation Period, the Fixed
Rate I Notional Amount will be zero in
the event the Underlying Security is
subject to a Mandatory Liquidation or a
Specified Trust Wind-Up Event occurs
during such Fixed Rate I Calculation
Period.
Fixed Rate I Fixed Rate: For any Fixed Rate I Period End Date,
the Rate set forth in Schedule A (as
amended from time to time) hereto
corresponding to the Underlying
Security.
2
Fixed Rate I Modifications: In the event that any payment terms of
the Underlying Security are modified or
the principal amount of the Underlying
Security held by the Trust is reduced,
the Calculation Agent will adjust the
Fixed Rate I Notional Amount and/or the
Fixed Rate I Fixed Rate corresponding
to the Underlying Security to reflect
such modification or reduction. The
Calculation Agent shall determine in a
commercially reasonable manner the date
such modified or reduced Fixed Rate I
Fixed Rate is effective.
Fixed Rate I Day Count Fraction: 30/360
Fixed Rate I Payment Date: The 25th day of each calendar month,
from and including October 25, 2003 to
and including the Termination Date and
the Termination Date, but only if such
Termination Date is caused by an Early
Repayment or the occurrence of the
Maturity Date, in each case subject to
adjustment in accordance with the
Modified Following Business Day
Convention.
Fixed Rate I Period End Dates: Each Fixed Rate I Payment Date;
provided that with respect to any Fixed
Rate I Payment Date resulting from the
occurrence of an Early Repayment or the
occurrence of the Maturity Date, the
applicable Fixed Rate I Period End Date
shall be the next Fixed Rate I Payment
Date that would have occurred but for
the occurrence of such Early Repayment
or Maturity Date.
II. Fixed Rate II Payments:
Fixed Rate II Payment Amounts: All amounts received by Party B as the
holder of a principal amount of the
Underlying Security equal to the
Notional Amount set forth in Schedule A
hereto corresponding to the Underlying
Security, other than (i) amounts due to
Party B with respect to the payment or
repayment of principal and (ii) amounts
constituting Retained Interest. For the
avoidance of doubt, any make-whole
premium or similar amount paid to Party
B upon an early redemption of an
Underlying Security will not be treated
as the payment or repayment of
principal.
Fixed Rate II Payment Dates: With respect to any Fixed Rate II
Amount, the Business Day such amount is
received by the Trust; provided that if
any such amount is not received by the
Trust by 12 noon (New York City time)
on such Business Day, such Fixed Rate
II Payment Date shall be the next
Business Day.
3
III. Additional Payments:
Payments upon Mandatory In the event of a termination of the
Liquidation or Specified Transaction due to the Mandatory
Trust Wind-Up Event: Liquidation of the Underlying Security
or a Specified Trust Wind-Up Event,
Party A shall be entitled to receive
from Party B a Reimbursement Payment
(as defined below).
The "Reimbursement Payment" with
respect to a Mandatory Liquidation or a
Specified Trust Wind-Up Event shall be
equal to the accrued but unpaid
interest on the Underlying Security, in
accordance with its terms, for the
period from and excluding the last
interest payment date for the
Underlying Security on which the full
amount of interest due was actually
paid (or from and excluding the
Effective Date if the last such
interest payment date for the
Underlying Security was prior to the
Effective Date) to and including the
Fixed Rate I Payment Date immediately
preceding the date of such Mandatory
Liquidation or Specified Trust Wind-Up
Event (or to and including the
Effective Date if such Mandatory
Liquidation or Specified Trust Wind-Up
Event occurs prior to the first Fixed
Rate I Payment Date). For the avoidance
of doubt, in the event that the ending
date for the foregoing accrual period
is prior to the starting date for the
accrual period, or in the event that
both the ending date and starting date
of such accrual period are the same
date, the Reimbursement Payment shall
be zero.
Such Reimbursement Payment shall be
paid by Party B to Party A upon receipt
of the liquidation proceeds of the
Underlying Security, but only from the
amount of such liquidation proceeds
that are attributable to accrued but
unpaid interest on the Underlying
Security (the "Interest Component"), as
determined by the Calculation Agent. In
the event the Interest Component is
insufficient to make the Reimbursement
Payment in full, Party B's obligation
to pay the Reimbursement Payment shall
be satisfied in full upon payment of
the Interest Component to Party A.
4
In the event that the Underlying
Security is liquidated while trading
"with accrued" interest (as determined
by the Calculation Agent), the Interest
Component shall be equal to the full
amount of the accrued but unpaid
interest on the Underlying Security. In
the event that the Underlying Security
is liquidated at a time it is not
trading "with accrued" interest (as
determined by the Calculation Agent),
the Interest Component shall be equal
to the product of the liquidation
proceeds multiplied by a fraction, the
numerator of which is the amount of the
accrued but unpaid interest on the
Underlying Security and the denominator
of which is the sum of the then
outstanding principal amount of the
Underlying Security plus the amount of
the accrued and unpaid interest on the
Underlying Security.
IV. Net Expense Limitation: In the event that Party A or its Credit
Support Provider is downgraded to Baa1
or lower by Moody's Investor Service,
Inc., for so long as Party A or its
Credit Support Provider is rated Baa1
or lower, the Fixed Rate II Payment
Amounts shall be reduced to the extent
that such payment would result in a
negative Net Exposure Amount. In the
event that a Fixed Rate II Payment
Amount is so reduced, the next Fixed
Rate I Payment Amount due to Party B
shall also be reduced by the same
amount.
"Net Exposure Amount" means, on each
Fixed Rate I Payment Date, (a) the sum
of all Reimbursement Payments that
would be due to Party A under each then
outstanding Transaction if a Specified
Trust Wind-Up Event were to occur on
such date (not taking into account the
corresponding Fixed Rate II Payment
Amount), less (b) such corresponding
Fixed Rate II Payment Amount.
3. Additional Definitions.
"Mandatory Liquidation" has the meaning set forth in the Trust
Agreement.
"Maturity Date" means the maturity date listed in Schedule A
with respect to an Underlying Security.
"Retained Interest" has the meaning set forth in the Trust
Agreement.
"Specified Trust Wind-Up Event" means a Trust Wind-Up Event
resulting from: (i) the occurrence of an "Excess Expense Event", (ii) a
designation of a "Tax Event" under the Trust Agreement or (iii) the failure of
the Trust to satisfy the requirements of "Rule 3a-7" (terms in quotations in
(i), (ii) and (iii) having the meanings set forth in the Trust Agreement).
5
"Trust Agreement" means the trust agreement dated as of
September 25, 2003, between MS Structured Asset Corp. and LaSalle Bank National
Association.
"Trust Wind-Up Event" has the meaning set forth in the Trust
Agreement.
"Underlying Security" has the meaning set forth in the Trust
Agreement.
4. Swap Termination Payments.
In the event an Early Termination Date is designated, a
termination payment shall not be determined in accordance with Section 6(e) of
the Agreement, but instead shall be calculated and paid as follows. Upon the
occurrence of an Early Termination Date, Party A shall be entitled to receive
from Party B a Reimbursement Payment (as defined below). Other than Unpaid
Amounts (which shall be paid in accordance with the terms of the Agreement) and
such Reimbursement Payment (which shall be paid as described below), no other
payments shall be due or payable by either Party after the occurrence of such
Early Termination Date. For the avoidance of doubt, the designation of an Early
Termination Date shall not cause a date to become a Fixed Rate I Payment Date
or a Fixed Rate II Payment Date that would not have otherwise been such a
payment date.
The "Reimbursement Payment" with respect to an Early Termination
Date for the Underlying Security shall be equal to the accrued but unpaid
interest on the Underlying Security, in accordance with its terms, for the
period from and excluding the last interest payment date for the Underlying
Security on which the full amount of interest due was actually paid (or from
and excluding the Effective Date if the last such interest payment date for the
Underlying Security was prior to the Effective Date) to and including the Fixed
Rate I Payment Date immediately preceding such Early Termination Date (or to
and including the Effective Date if such Early Termination Date occurs prior to
the first Fixed Rate I Payment Date). For the avoidance of doubt, in the event
that the ending date for the foregoing accrual period is prior to the starting
date for the accrual period, or in the event that both the ending date and
starting date of such accrual period are the same date, the Reimbursement
Payment shall be zero. Such Reimbursement Payment shall be paid over time by
Party B to Party A upon receipt by Party B of amounts that would have
constituted Fixed Rate II Payment Amounts had the Transaction not been
terminated.
In the event an Early Repayment or the Maturity Date occurs
prior to payment in full of such Reimbursement Payment, the Reimbursement
Payment shall be paid out of the interest proceeds received by Party B in
connection with any such Early Repayment or occurrence of the Maturity Date. In
the event a Mandatory Liquidation or Specified Trust Wind-Up Event occurs prior
to payment in full of such Reimbursement Payment, the Reimbursement Payment
shall be paid out of the liquidation proceeds of the Underlying Security, but
only from the portion of such liquidation proceeds constituting the Interest
Component (as defined above), as determined by the Calculation Agent. In the
event the Interest Component is insufficient to make the Reimbursement Payment
in full, Party B's obligation to pay the Reimbursement Payment shall be
satisfied in full upon payment of the Interest Component to Party A.
5. Account Details.
Payments to Party A: USD: PAY CITIBANK NEW YORK (CITIUS33)
FAV: MORGAN STANLEY CAPITAL SERVICES
ACC:
ABA: 021 000 089
Operations Contact: Barbara Kent
Tel: 212-537-1449
Fax: 212-537-1868
6
Payments to Party B: LaSalle Bank National Association, Chicago,
Illinois
ABA No. 071 000 505
Reference: CBT Series 2003-1 Units Trust
Unit Account
Account No.:
Operations Contact: Andy Streepey
Tel: 312-904-9387
Fax: 312-904-2084
7
Please confirm that the foregoing correctly sets forth the terms of our
agreement MS Reference Number by executing this Confirmation and returning it
to us.
Best Regards,
MORGAN STANLEY CAPITAL SERVICES INC.
BY: /s/ John Kehoe
-----------------------------
Name: John Kehoe
Title: Attorney-in-Fact
Acknowledged and agreed as of the date first written above:
STRUCTURED ASSET TRUST UNIT REPACKAGINGS CBT SERIES 2003-1 UNITS TRUST
BY: LaSalle Bank National Association,
as Trustee
BY: /s/ Ann M. Kelly
-----------------------------
Name: Ann M. Kelly
Title: Assistant Vice President
SCHEDULE
to the
Master Agreement
dated as of September 25, 2003
between
MORGAN STANLEY CAPITAL SERVICES INC.
("Party A")
and
CBT SERIES 2003-1 UNITS TRUST
("Party B" or the "Trust")
Part 1. Termination Provisions.
(a) "Failure to Pay or Deliver", "Breach of Agreement", "Credit Support
Default" "Misrepresentation", "Default Under Specified Transaction",
"Cross-Default", "Bankruptcy", "Merger Without Assumption": Section 5(a)
will not apply to Party B. Sections 5(a)(v) and 5(a)(vi) shall not apply
to Party A.
(b) "Credit Event Upon Merger"; "Tax Event Upon Merger": Sections 5(b)(iii)
and 5(b)(iv) will not apply to Party A or Party B.
(c) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Party A or Party B.
(d) Payments on Early Termination. "Market Quotation" and "Second Method" will
apply for purposes of Section 6(e) of this Agreement.
(e) "Termination Currency" means United States Dollars.
(f) Additional Termination Event will apply. Any "Trust Wind-Up Event" under
the Trust Agreement, dated the date hereof (the "Trust Agreement"),
between Party B and LaSalle Bank National Association, shall constitute an
Additional Termination Event. Party B shall be the Affected Party and all
Transactions shall be Affected Transactions.
If a Trust Wind-Up Event has occurred and Party A has not designated an
Early Termination Date in accordance with Section 6(b) of the Master
Agreement, as applicable, within three Business Days after receiving
written notice from Party B, then Party B shall be entitled to designate
an Early Termination Date.
Part 2. Tax Representations.
(a) Payer Tax Representations. For the purpose of Section 3(e), Party A and
Party B each makes the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant
governmental revenue authority, of any Relevant Jurisdiction to make any
deduction or withholding for or on account of any Tax from any payment
(other than interest under Section 2(a)(iii), 2(e), 6(d)(ii) or 6(e)) 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);
(ii) the satisfaction of the agreement of the other party contained in
Section 4(a)(i) or 4(a)(iii) and the accuracy and effectiveness of
any document provided by the other party pursuant to Section 4(a)(i)
or 4(a)(iii); and
(iii) the satisfaction of the agreement of the other party contained in
Section 4(d);
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) by reason of material prejudice
to its legal or commercial position.
(b) Payee Tax Representations. There are no payee representations.
Part 3. Agreement to Deliver Documents.
Party required to Date by which Covered by Section 3(d)
deliver document Form/Document/Certificate to be delivered Representations
Party A and Party B Either (1) a signature booklet The earlier of the fifth Yes
containing secretary's certificate Business Day after the Trade
and resolutions ("authorizing Date of the first Transaction
resolutions") authorizing the party or upon execution of this
to enter into derivatives Agreement and as deemed
transactions of the type contemplated necessary for any further
by the parties or (2) a secretary's documentation.
certificate, authorizing resolutions
and incumbency certificate for such
party and any Credit Support Provider
of such party reasonably satisfactory
in form and substance to the other
party.
Party B Certified copies of documents As soon as practicable after Yes
evidencing Party B's capacity to the execution of this Agreement
execute this Agreement, each
Confirmation and any Credit Support
Document (if applicable) and to
perform its obligations hereunder and
thereunder.
Party B A written opinion of legal counsel to Upon execution of this No
Party B, reasonably satisfactory to Agreement and as deemed
Party A. necessary for any further
documentation.
Party required to Date by which Covered by Section 3(d)
deliver document Form/Document/Certificate to be delivered Representations
Party A and Party B Such other documents as the other Upon request. No
party may reasonable request.
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a) of this
Agreement:-
(i) Address for notices or communications to Party A:-
Morgan Stanley Capital Services Inc. 1585 Broadway
New York, NY 10036
Attention: Derivative Products Group -- Documentation
Facsimile No.: 212-761-0580; Telephone No.: 212-761-2533
(ii) Address for notices or communications to Party B:-
CBT Series 2003-1 Units Trust c/o LaSalle Bank National Association
135 S LaSalle Street
Chicago, Illinois 60603
Attention: Asset Backed Securities Trust Services Group -
CBT Series 2003-1
Facsimile No.: 312-904-2084; Telephone No.: 312-904-9387
(b) Notices. Section 12(a) is amended by adding in the third line thereof
after the phrase "messaging system" and before the ")" the words, ";
provided, however, any such notice or other communication may be given by
facsimile transmission if telex is unavailable, no telex number is
supplied to the party providing the notice, or if answer back confirmation
is not received from the party to whom the telex is sent."
(c) Process Agent. For the purpose of Section 13(c) of this Agreement, Party B
irrevocably appoints as its Process Agent:
Same address as above for notices.
(d) Offices. The provisions of Section 10(a) will apply to this Agreement.
(e) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(f) "Calculation Agent" means Party A.
(g) "Credit Support Document" means any credit support annex, any Confirmation
and any other document any of which by its terms secures, guarantees or
otherwise supports either or both parties' obligations under this
Agreement, including, but not limited to, the guarantee of Morgan Stanley
set forth in a letter to the Trust.
(h) "Credit Support Provider" means in relation to Party A, Morgan Stanley.
(i) Governing Law; Jurisdiction. This Agreement, and Credit Support Document
and each Confirmation will be will be governed by and construed in
accordance with the laws of the State of New York. Section 13(b) is
amended by: (1) deleting "non-" from the second line of clause (i); and
(2) deleting the final paragraph.
(j) Waiver of Jury Trial. Each party waives, to the fullest extent permitted
by applicable law, any right it may have to a trial by jury in respect of
any Proceedings relating to this Agreement or any Credit Support Document.
(k) Netting of Payment. Clause (ii) of Section 2(c) will apply to any amounts
payable with respect to Transactions from the date of this Agreement.
(l) "Affiliate" has the meaning specified in Section 14, but excludes Morgan
Stanley Derivative Products Inc.
Part 5. Other Provisions.
(a) Trustee Capacity. It is expressly understood and agreed by the parties
hereto that insofar as this Agreement is executed on behalf of the Trust
(i) this Agreement is executed and delivered by LaSalle Bank National
Association, as Trustee under the Trust Agreement in the exercise of the
powers and authority conferred and vested in it, (ii) each of the
representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as representations, warranties,
covenants, undertakings and agreements by LaSalle Bank National
Association in its individual capacity but is made and intended for the
purpose of binding only the Trust and (iii) under no circumstances shall
LaSalle Bank National Association in its individual capacity be personally
liable for the payment of any indebtedness or expenses of the Trust or be
liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Agreement.
(b) Additional Representations. Section 3 is hereby amended by adding at the
end thereof the following Subparagraphs:
"(g) It is an "Eligible Contract Participant" as defined in Section 1a(12)
of the Commodity Exchange Act, as amended.
(h) It has entered into this Agreement (including each Transaction
evidenced hereby) in conjunction with its line of business (including
financial intermediation services) or the financing of its business.
(i) Non-Reliance. It is acting for its own account, and it has made its
own independent decisions to enter into that Transaction and as to whether
that Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisers 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 that
Transaction; it being understood that information and explanations related
to the terms and conditions of a Transaction shall not be considered
investment advice or a recommendation to enter into that 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 that
Transaction.
(j) Assessment and Understanding. It is capable of assessing the merits of
and understanding (on its own behalf or through independent professional
advice), and understands and accepts, the terms, conditions and risks of
that Transaction. It is also capable of assuming, and assumes, the risks
of that Transaction.
(k) Status of Parties. The other party is not acting as a fiduciary for or
adviser to it in respect of that Transaction. It is entering into this
Agreement, any Credit Support Document to which it is a party, each
Transaction and any other documentation relating to this Agreement or any
Transaction as principal (and not as agent or in any other capacity,
fiduciary or otherwise)."
(c) Confirmations. Party A will deliver to Party B a Confirmation relating to
each Transaction.
(d) Security. As collateral security for the prompt and complete payment and
performance when due of the obligations of Party B hereunder, Party B
hereby grants to Party A a continuing security interest in all of Party
B's right, title and interest in the Trust Property as such term is
defined in the Trust Agreement pursuant to which Party B was formed. Such
security interest shall remain in full force and effect until Party A has
received amounts due to it hereunder.
(e) Further Acknowledgments. Each party agrees and acknowledges that:
(i) Each transfer of funds, securities or other property under this
Agreement or any Transaction hereunder constitutes a transfer that
may not be avoided under Sections 544, 545, 547, 548(a)(2) or 548(b)
of Title 11 of the United States Code (the "Bankruptcy Code").
(ii) The rights given to each party hereunder upon an Event of Default by
the other to cause the liquidation and termination of this Agreement
and each Transaction hereunder, and to set off mutual debts and
claims in connection therewith, may not be stayed, limited or
avoided under the Bankruptcy Code, including, without limitation,
Section 362, 365(c) or 105(a) thereof.
(f) Setoff and Related Matters.
(i) The occurrence or designation of an Early Termination Date on
account of an Event of Default with respect to a party hereto ("Y")
shall constitute a material breach and event of default (howsoever
described) under all Specified Transactions to which Y is a party,
whereupon the Nondefaulting Party ("X") or any Affiliate of X shall
have the right to terminate, liquidate and otherwise close out any
such Specified Transactions (and Y shall be liable for any damages
suffered by X and any Affiliate of X as a result thereof). For
purposes of Section 6(a) of this Agreement, each Transaction will be
deemed to be outstanding until all obligations (including payment,
delivery and exchange obligations) in respect of such Transaction
have been fully discharged and satisfied.
(ii) Upon such occurrence, or designation of any Early Termination Date
on account on an Event of Default, any amount payable by X or any
Affiliate of X under this Agreement, any Specified Transaction with
Y, or in respect of any other matured, liquidated or terminated
obligation to Y will, at the option of X or any Affiliate of X (and
without prior notice to Y), be reduced by its setoff and recoupment
against any amount(s) payable by Y to X or any Affiliate of X under
this Agreement, any Specified Transaction with Y or in respect of
any other matured, liquidated or terminated obligation of Y (and any
such amount(s) payable by Y will be discharged promptly and in all
respects to the extent it is so setoff). X or an Affiliate of X, as
appropriate, will give notice to Y after any setoff and recoupment
is effected under this paragraph. If an obligation is unascertained,
X or any Affiliate of X, as appropriate, may in good faith estimate
that obligation and setoff and recoup in respect of that estimate,
subject to the relevant party's accounting to the other(s) when the
obligation is ascertained. All obligations of X and any Affiliate of
X under this Agreement, any Specified Transaction with Y or in
respect of any other matured, liquidated or terminated obligation to
Y are subject to the condition precedent that Y shall have performed
all of its obligations to X and any Affiliate of X under this
Agreement, any Specified Transaction with X and in respect of any
other matured, liquidated or terminated obligation of Y. Party A and
Party B
and their Affiliates intend that all Transactions and Specified
Transactions be treated as mutual and part of a single, indivisible
contractual and business relationship.
(iii) If either party ("C"), its Credit Support Provider or any Affiliate
of C has reasonable grounds for insecurity regarding a potential
default under this Agreement or any Specified Transaction by the
other party ("D"), any Credit Support Provider or any Affiliate of
D, then C or any Affiliate of C may transfer its rights and
obligations under this Agreement or any agreement for a Specified
Transaction to any Affiliate of C or to C, and each of the parties
hereto agrees to such transfer and to use commercially reasonable
efforts to obtain any required consents from its relevant Affiliate
to any such transfer.
(iv) Nothing in this Part 5(f) shall be effective to create a charge or
other security interest. This Part 5(f) shall be without prejudice
and in addition to any right of setoff, recoupment, combination of
accounts, lien or other right to which any party or any of its
Affiliates is at any time otherwise entitled (whether by operation
of law, contract or otherwise).
(g) Non-Petition. Prior to the date that is one year and one day after all
distributions in respect of the Units issued by the Trust have been made,
Party A shall not take any action, institute any proceeding, join in any
action or proceeding or otherwise cause any action or proceeding against
the Trust under the United States Bankruptcy Code or any other
liquidation, insolvency, bankruptcy, moratorium, reorganization or similar
law ("Insolvency Law") applicable to the Trust, now or hereafter in
effect, or which would be reasonably likely to cause the Trust to be
subject to, or seek the protection of, any such Insolvency Law.
(h) Rating Agency Condition. No amendment to this Agreement shall take effect
unless and until the Rating Agencies Condition specified in the Trust
Agreement shall be satisfied with respect to such amendment.
IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized officers as of the date hereof.
MORGAN STANLEY CAPITAL SERVICES INC.
By: /s/ John Kehoe
-----------------------------------
Name: John Kehoe
Title: Attorney-in-Fact
Date: September 25, 2003
CBT SERIES 2003-1 UNITS TRUST
By: LaSalle Bank National Association, as Trustee
By: /s/ Ann M. Kelly
-----------------------------------
Name: Ann M. Kelly
Title: Assistant Vice President
Date: September 25, 2003
(Multicurrency--Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of September 25, 2003
MORGAN STANLEY and CBT SERIES 2003-1
CAPITAL SERVICES INC. UNITS TRUST
("Party A") ("Party B")
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:--
1. Interpretation
(a) Definitions. The terms defined in Section 14 and in the Schedule will have
the meanings therein specified for the purpose of this Master Agreement.
(b) Inconsistency. In the event of any inconsistency between the provisions of
the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purpose of the relevant Transaction.
(c) Single Agreement. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmations form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. Obligations
(a) General Conditions.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for value
on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the required
currency. Where settlement is by delivery (that is, other than by payment),
such delivery will be made for receipt on the due date in the manner
customary for the relevant obligation unless otherwise specified in the
relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to (1)
the condition precedent that no Event of Default or Potential Event of
Default with respect to the other party has occurred and is continuing, (2)
the condition precedent that no Early Termination Date in respect of the
relevant Transaction has occurred or been effectively designated and (3)
each other applicable condition precedent specified in this Agreement.
Copyright(C)1992 by International Swap Dealers Association, Inc.
(b) Change of Account. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) Netting. If on any date amounts would otherwise be payable:--
(i) in the same currency; and
(ii) in respect of the same Transaction,
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be made
in the Schedule or a Confirmation by specifying that subparagraph (ii) above
will not apply to the Transactions identified as being subject to the election,
together with the starting date (in which case subparagraph (ii) above will not,
or will cease to, apply to such Transactions from such date). This election may
be made separately for different groups of Transactions and will apply
separately to each pairing of Offices through which the parties make and receive
payments or deliveries.
(d) Deduction or Withholding for Tax.
(i) Gross-Up. All payments under this Agreement will be made without any
deduction or withholding for or on account of any Tax unless such deduction
or withholding is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, then in effect. If
a party is so required to deduct or withhold, then that party ("X") will:--
(1) promptly notify the other party ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to be
deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y under
this Section 2(d)) promptly upon the earlier of determining that such
deduction or withholding is required or receiving notice that such
amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified copy),
or other documentation reasonably acceptable to Y, evidencing such
payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition to the
payment to which Y is otherwise entitled under this Agreement, such
additional amount as is necessary to ensure that the net amount
actually received by Y (free and clear of Indemnifiable Taxes, whether
assessed against X or Y) will equal the full amount Y would have
received had no such deduction or withholding been required. However,
X will not be required to pay any additional amount to Y to the extent
that it would not be required to be paid but for:--
(A) the failure by Y to comply with or perform any agreement
contained in Section 4(a)(i), 4(a)(iii) or 4(d); or
(B) the failure of a representation made by Y pursuant to Section
3(f) to be accurate and true unless such failure would not have
occurred but for (I) any action taken by a taxing authority, or
brought in a court of competent jurisdiction, on or after the
date on which a Transaction is entered into (regardless of
whether such action is taken or brought with respect to a party
to this Agreement) or (II) a Change in Tax Law.
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) becomes insolvent or is unable to pay its debts or
fails or admits in writing its inability generally to pay its debts as
they become due; (3) makes a general assignment, arrangement or
composition with or for the benefit of its creditors; (4) institutes
or has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any bankruptcy or
insolvency law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation, and, in the
case of any such proceeding or petition instituted or presented
against it, such proceeding or petition (A) results in a judgment of
insolvency or bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case within 30
days of the institution or presentation thereof; (5) has a resolution
passed for its winding-up, official management or liquidation (other
than pursuant to a consolidation, amalgamation or merger); (6) seeks
or becomes subject to the appointment of an administrator, provisional
liquidator, conservator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets; (7) has a
secured party take possession of all or substantially all its assets
or has a distress, execution, attachment, sequestration or other legal
process levied, enforced or sued on or against all or substantially
all its assets and such secured party maintains possession, or any
such process is not dismissed, discharged, stayed or restrained, in
each case within 30 days thereafter; (8) causes or is subject to any
event with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified
in clauses (1) to (7) inclusive); or (9) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; or
(viii) Merger Without Assumption. The party or any Credit Support Provider
of such party consolidates or amalgamates with, or merges with or into, or
transfers all or substantially all its assets to, another entity and, at
the time of such consolidation, amalgamation, merger or transfer:--
(1) the resulting, surviving or transferee entity fails to assume all
the obligations of such party or such Credit Support Provider under
this Agreement or any Credit Support Document to which it or its
predecessor was a party by operation of law or pursuant to an
agreement reasonably satisfactory to the other party to this
Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by such
resulting, surviving or transferee entity of its obligations under
this Agreement.
(b) Termination Events. The occurrence at any time with respect to a party or,
if applicable, any Credit Support Provider of such party or any Specified Entity
of such party of any event specified below constitutes an Illegality if the
event is specified in (i) below, a Tax Event if the event is specified in (ii)
below or a Tax Event Upon Merger if the event is specified in (iii) below, and,
if specified to be applicable, a Credit Event
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 of any Indemnifiable Tax in respect of which the
other party is not required to pay an additional amount (other than by
reason of Section 2(d)(i)(4)(A) or (B)), in either case as a result of a
party consolidating or amalgamating with, or merging with or into, or
transferring all or substantially all its assets to, another entity (which
will be the Affected Party) where such action does not constitute an event
described in Section 5(a)(viii);
(iv) Credit Event Upon Merger. If "Credit Event Upon Merger" is specified
in the Schedule as applying to the party, such party ("X"), any Credit
Support Provider of X or any applicable Specified Entity of X consolidates
or amalgamates with, or merges with or into, or Transfers all or
substantially all its assets to, another entity and such action does not
constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case may be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate, will
be the Affected Party); or
(v) Additional Termination Event. If any "Additional Termination Event" is
specified in the Schedule or any Confirmation as applying, the occurrence
of such event (and, in such event, the Affected Party or Affected Parties
shall be as specified for such Additional Termination Event in the Schedule
or such Confirmation).
(c) Event of Default and Illegality. If an event or circumstance which would
otherwise constitute or give rise to an Event of Default also constitutes an
Illegality, it will be treated as an Illegality and will not constitute an Event
of Default.
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 the purpose of this Section 8, it will be sufficient
for a party to demonstrate that it would have suffered a loss had an actual
exchange or purchase been made.
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 be executed and delivered in counterparts (including by
facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of each
Transaction from the moment they agree to those terms (whether orally or
otherwise). A Confirmation shall be entered into as soon as practicable and
may be executed and delivered in counterparts (including by facsimile
transmission) or be created by an exchange of telexes or by an exchange of
electronic messages on an electronic messaging system, which in each case
will be sufficient for all purposes to evidence a binding supplement to
this Agreement. The parties will specify therein or through another
effective means that any such counterpart, telex or electronic message
constitutes a Confirmation.
(f) No Waiver of Rights. A failure or delay in exercising any right, power or
privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) Headings. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. Offices; Multibranch Parties
(a) If Section 10(a) is specified in the Schedule as applying, each party that
enters into a Transaction through an Office other than its head or home office
represents to the other party that, notwithstanding the place of booking office
or jurisdiction of incorporation or organisation of such party, the obligations
of such party are the same as if it had entered into the Transaction through its
head or home office. This representation will be deemed to be repeated by such
party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. Expenses
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
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 receipt requested), on the date that mail is delivered
or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that electronic
message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. Governing Law and Jurisdiction
(a) Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) Jurisdiction. With respect to any suit, action or proceedings relating to
this Agreement ("Proceedings"), each party irrevocably:--
(i) submits to the jurisdiction of the English courts, if this Agreement is
expressed to be governed by English law, or to the non-exclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City, if
this Agreement is expressed to be governed by the laws of the State of New
York; and
(ii) waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that
such Proceedings have been brought in an inconvenient forum and further
waives the right to object, with respect to such Proceedings, that such
court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) Service of Process. Each party irrevocably appoints the Process Agent (if
any) specified opposite its name in the Schedule to receive, for it and on its
behalf, service of process in any Proceedings. If for any
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(c)(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 meaning 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.
MORGAN STANLEY CAPITAL SERVICES INC. CBT SERIES 2003-1 UNITS TRUST
(Name of Party) (Name of Party)
By: LaSalle Bank National Association,
as Trustee
By: /s/ John Kehoe By: /s/ Ann M. Kelly
----------------------------------- ----------------------------------
Name: John Kehoe Name: Ann M. Kelly
Title: Attorney-in-Fact Title: Assistant Vice President
Date: September 25, 2003 Date: September 25, 2003
18 ISDA(R)1992
Schedule IV
Schedule of Payments on Corporate Bond TRACERS Units
The table below sets forth the anticipated Distribution Dates for the
Corporate Bond TRACERS Units and the anticipated distribution per Corporate
Bond TRACERS Unit on each Distribution Date. This schedule of payments will be
amended upon the early redemption, repayment or Mandatory Liquidation of any
Underlying Security. A revised schedule of payments will be filed with the SEC
by the Trustee on Form 8-K and will be available from your Morgan Stanley
financial advisor upon request and the Trustee will provide notice of the
change to holders of the Corporate Bond TRACERS.
As of September 9, 2003, the Unit Principal Balance of a Corporate
Bond TRACERS Unit is $1,000, the Moody's rating for the Corporate Bond TRACERS
Units is A3 and the S&P rating for the Corporate Bond TRACERS Units is A-.
There will not be any scheduled payment of principal until the Distribution
Date following September 26, 2011, the earliest date upon which any of the
Underlying Securities mature.
The amounts set forth under "Scheduled Trust Payments of Interest"
below reflect the deduction for expenses of an amount equal to 0.063% of the
Unit Principal Balance from each scheduled monthly payment from the Payment
Counterparty to the Trust as described under "Description of Corporate Bond
TRACERS Units--Expenses" in the prospectus supplement.
Scheduled Trust Effective Rate of Scheduled Payments Unit Principal
Distribution Date(1) Payments of Interest Interest(2) of Principal Balance(3)
- ----------------------- -------------------- ----------------- ------------------ --------------
Monthly on the 25th of
each month beginning
October 27, 2003 to and
including
September 26, 2011 $4.350 5.220% - $1,000
October 25, 2011 $4.350 5.220% $40 $1,000
November 25, 2011 $4.113 5.142% - $960
December 27, 2011 $4.113 5.142% - $960
January 25, 2012 $4.113 5.142% $40 $960
February 27, 2012 $3.901 5.088% - $920
March 26, 2012 $3.901 5.088% - $920
April 25, 2012 $3.901 5.088% - $920
IV-1
Scheduled Trust Effective Rate of Scheduled Payments Unit Principal
Distribution Date(1) Payments of Interest Interest(2) of Principal Balance(3)
- ----------------------- -------------------- ----------------- ------------------ --------------
May 25, 2012 $3.901 5.088% - $920
June 25, 2012 $3.901 5.088% - $920
July 25, 2012 $3.901 5.088% $40 $920
August 27, 2012 $3.718 5.070% $40 $880
September 25, 2012 $3.527 5.038% $120 $840
October 25, 2012 $2.934 4.890% $160 $720
November 26, 2012 $2.266 4.856% - $560
December 26, 2012 $2.266 4.856% $120 $560
January 25, 2013 $1.722 4.696% $120 $440
February 25, 2013 $1.208 4.529% $160 $320
March 25, 2013 $0.575 4.312% $40 $160
April 25, 2013 $0.424 4.243% - $120
May 28, 2013 $0.424 4.243% $80 $120
June 25, 2013 $0.154 4.627% - $40
July 25, 2013 $0.154 4.627% $40 $40
- ---------------
(1) If any Distribution Date is not a Business Day, the payment will be made on
the next succeeding Business Day.
(2) The October 27, 2003 Interest Payment will accrue from and including the
Settlement Date to but excluding October 27, 2003. The Effective Rate of
Interest presented for each period is based on the applicable Unit Principal
Balance and not on the issue price of the Corporate Bond TRACERS Units.
(3) The Unit Principal Balance is reduced following each scheduled payment of
principal.
IV-2