TRUST AGREEMENT
TRUST AGREEMENT, between MSDW 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 and III attached hereto, are made a part hereof and are hereinafter
referred to collectively as the "Terms Schedule". The terms of the Standard
Terms for Trust Agreements, dated July 7, 1999 (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 Terms Schedule 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 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; and
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 Securities and other property
identified in Schedule II to the Trust Agreement (the "Trust Property"); and
WHEREAS, the Trust agrees to acquire the 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 Securities from
the Depositor and to issue in accordance with the instructions of the Depositor
Units having an initial Unit Principal Balance identified 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 or expenses 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 and of
the Standard Terms.
IN WITNESS WHEREOF, each of the undersigned has executed this
instrument as of the date set forth in the Terms Schedule attached hereto.
LASALLE BANK NATIONAL ASSOCIATION
as Trustee on behalf of the Trust identified
in Schedule I hereto, and not in its
individual capacity
By: /s/ Xxxxx X. Xxxx
--------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
MSDW STRUCTURED ASSET CORP.
By: /s/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
Attachments: Terms Schedule (consisting of Schedules I, II and III)
Schedule I
(Terms of Trust and Units)
Trust: SATURNS Trust No. 2001-7
Date of Trust Agreement: December 12, 2001
Trustee: LaSalle Bank National Association.
References to Chase Bank of Texas,
National Association in the Standard Terms
shall be inapplicable.
Initial Unit Principal Balance: $32,191,325
Issue Price: 100%
Number of Units: 1,287,653 (Unit Principal Balance of $25
each)
Minimum Denomination: $25 and $25 increments in excess thereof.
The minimum denomination specified in
Section 5.01(a) of the Standard Terms
shall not apply. Each $25 of Unit
Principal Balance is a Unit.
Cut-off Date: December 12, 2001
Closing Date: December 12, 0000
Xxxxxxxxx Xxxxxxxx: Xxxxxx Xxxxxx dollars
Business Day: New York, New York and Chicago, Illinois
Interest Rate: 8.25%. During an extension period with
respect to the securities, while interest
will continue to accrue on the Unit
Principal Balance at 8.25% per annum,
interest will accrue on any deferred
interest at a rate equal to the rate at
which interest accrues on deferred
interest with respect to the Securities.
Interest Reset Period: Not Applicable
Rating: Baa2 by Moody's
BBB- by S&P
Rating Agencies: Moody's and S&P
Scheduled Final Distribution Date: July 15, 2037. The Units will have the
same final maturity as the Securities.
Prepayment/Redemption: The Trust Property is subject to
redemption at any time and is subject to
call in accordance with Schedule III.
If the rights under the Swap Agreement is
partially exercised or if there is a
partial redemption of the Securities, the
Trustee will randomly select Units to be
redeemed in full from the proceeds of such
partial exercise of the Swap Agreement or
partial redemption of the Securities.
Additional Distribution: If any of the Securities are redeemed by
the Security Issuer prior to July 15,
2006, each of the Units which are redeemed
in connection with such redemption of
Securities will receive a pro rata
distribution from the proceeds of the
redemption of the Securities remaining
after payment of principal and interest on
such Units up to a maximum of $2.50 per
Unit.
Corporate Trust Office: The definition of "Corporate Trust Office"
in the Standard Terms shall not apply.
The Corporate Trust Office shall be the
Trustee's Asset-Backed Securities Trust
Services Group having an office at 000 X.
XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxx 00000 or such other addresses as
the Trustee may designate from time to
time by notice to the Unitholders, the
Depositor, the Swap Counterparty and the
Guarantor.
Swap Agreement: The ISDA Agreement referred to in Schedule
III. In addition, in connection with an
additional issuance of Units, any
additional Swap Agreement entered into in
connection therewith.
Swap Counterparty: Party A to the Swap Agreement referred to
in Schedule III or any assignee thereof.
In addition, in connection with an
additional issuance of Units, Party A to
any additional Swap Agreement or any
assignee thereof.
In the event that there is more than one
Swap Counterparty at any time when a
partial termination or a deemed exercise
is to occur under only part of the options
outstanding under all Swap Agreements, the
Trustee shall randomly select which
options under the Swap Agreements shall be
selected for such partial termination or
deemed exercise.
Guaranty: Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. (the
"Guarantor") shall guarantee the
obligations of Xxxxxx Xxxxxxx & Co.
International Limited ("MSIL") for so long
as MSIL is Party A to any Swap Agreement
with the Trust.
Swap Notional Amount: The Notional Amount specified in Schedule
III.
Swap Payment Date: Any date upon which the rights under the
Swap Agreement may be exercised.
Swap Rate: Not Applicable
Additional Swap Agreements: In connection with an additional issuance
of Units, the Depositor may arrange for
the Trust to enter into an additional Swap
Agreement with identical terms as the Swap
Agreement entered into as of the Closing
Date with an additional Swap Counterparty,
except that such Swap Agreement may have a
different Swap Counterparty and premium
amount than the Swap Agreement entered
into on the Closing Date. The Rating
Agency Condition must be satisfied in
connection with respect to the Swap
Counterparty.
Distribution Date: Each January 15 and July 15, commencing
January 15, 2002.
If any payment with respect to the
Securities held by the Trust is not
received by the Trustee by 12 noon (New
York City time) on a Distribution Date,
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.
Record Date: Each January 1 and July 1, regardless of
whether such day is a Business Day.
Form: Global
Depositary: DTC
Trustee Fees and Expenses: As compensation for and in payment of
trust expenses related to its services
hereunder other than Extraordinary Trust
Expenses, the Trustee will receive Trustee
Fees on each Distribution Date in the
amount equal to $3,750. The Trustee Fee
shall cease to accrue after termination of
the Trust. The "Trigger Amount" with
respect to Extraordinary Trust Expenses
for the Trust is $25,000 and the Maximum
Reimbursable Amount is $100,000. The
Trustee Fee will be paid by the Expense
Administrator. Expenses will be reimbursed
by the Expense Administrator in accordance
with the Expense Administration Agreement.
Expense Administrator: The Depositor will act as Expense
Administrator on behalf of the Trust
pursuant to an Expense Administration
Agreement, dated as of December 12, 2001
(the "Expense Administration Agreement"),
between the Depositor as Expense
Administrator (the "Expense
Administrator") and the Trust.
The Expense Administrator will receive a
fee equal to 0.025% per annum of the
principal amount of the Securities held by
the Trust as its fee, payable on the basis
of a 360 day year consisting of twelve 30
day months. The Expense Administrator will
be entitled to interest on any deferred
fee amounts that would have been payable
but for deferral of interest on the
Securities at the rate interest accrues on
any deferred interest with respect to the
Securities. The Expense Administrator's
fee is payable only from available
interest receipts received with respect to
the Securities after application of such
receipts to payment of accrued interest on
the Units and any Swap Termination
Payments currently owing.
In addition the Expense Administrator
shall own that portion of the Securities
which represent the interest of a
fractional Unitholder that would remain
after a partial exercise or deemed
exercise of the Swap Agreement had the
Swap Counterparty not been obligated to
pay the Fractional Unit Make Whole Amount
(pursuant to and as defined in the Swap
Agreement). The Expense Administrator
shall receive all interest and principal
with respect to such portion of the
Securities.
The Expense Administrator will be
responsible for paying the Trustee Fee and
reimbursing certain other expenses of the
Trust in accordance with the Expense
Administration Agreement.
Listing: The Depositor has applied to list the
Units on the New York Stock Exchange
ERISA Restrictions: None of the restrictions in the Standard
Terms relating to the Employee Retirement
Income Security Act of 1974, as amended,
and related matters shall apply.
Deemed Representations: Not Applicable
QIB Restriction: Not Applicable
Trust Wind-Up Event: The Trust Wind-Up Events specified in
Sections 9.01(a), 9.01(c), 9.01(d),
9.01(f) and 9.01(h) shall not apply. The
Trust Wind Events specified in Sections
9.01(b) (Security Default), 9.01(e) (Early
Termination Date designated due to
"illegality" or "tax event" under the Swap
Agreement), 9.01(g) (Disqualified
Securities), 9.01(i) (Excess Expense
Event) shall apply. Pursuant to Section
9.01(j), the following events also shall
constitute Trust Wind-Up Events: (i)
redemption (or completion of a
self-tender) by the Security Issuer of all
Securities held by the Trust and (ii)
exercise of the right to purchase
Securities under the Swap Agreement as to
all Securities held by the Trust.
Termination: If a Trust Wind-Up Event occurs (other
than due to exercise of the right to
purchase Securities under the Swap
Agreement as to all Securities held by the
Trust), any Securities held by the Trust
will be liquidated (in the case of a Trust
Wind-Up Event resulting from a self-tender
offer, by tender to the Security Issuer)
and the proceeds will be applied first to
redeem the Units at 100% of their
principal balance plus accrued interest
and then to apply any remaining amounts to
the payment of any amounts owed to the
Swap Counterparty as a Swap Termination
Payment under the Swap Agreement.
In the event the Security Issuer makes a
self-tender offer for the Securities, 100%
of the Unitholders may direct the Trustee
to tender all of the Securities held by
the Trust. The Trustee will only accept an
instruction to tender the Securities if
all of the Securities held by the Trust
are to be tendered. The Units will receive
the proceeds after payment of a Swap
Termination Payment determined on the
basis of "Market Quotation" under the Swap
Agreement (with the Trust as sole Affected
Party) as advised by the Swap
Counterparty.
Terms of Retained Interest: The Depositor retains the right to receive
any and all interest that accrues on the
Securities prior to the Closing Date. The
Depositor will receive such accrued
interest on the first Distribution Date
for the Units and such amount shall be
paid from the interest payment made with
respect to the Securities on January 15,
2002.
The amount of the Retained Interest is
$1,084,445.
If a Security Default occurs on or prior
to January 15, 2002 and the Depositor does
not receive such Retained Interest amount
in connection with such Distribution Date,
the Depositor will have a claim for such
Retained Interest, and will share pro rata
with holders of the Units to the extent of
such claim in the proceeds from the
recovery on the Securities.
Call Option Terms: Not applicable.
Security Default: The definition of Security Default in the
Standard Terms shall not apply. A
"Security Default" shall mean one of the
following events: (i) the acceleration of
the outstanding Securities under the terms
of the Securities and/or the applicable
Security Agreement and failure to pay the
accelerated amount on the acceleration
date, (ii) the failure of the Security
Issuer to pay an installment of principal
of, or any amount of interest due on, the
Securities after the due date thereof and
after the expiration of any applicable
grace period; or (iii) the occurrence of
certain events of default under such
Securities and/or Security Agreement
relating to the insolvency or bankruptcy
of the Security Issuer.
Sale of Securities: If the Trust must sell the Securities it
holds, the Trust will sell the Securities
through the Selling Agent in accordance
with Section 9.03(b) and the following
terms. The Selling Agent will solicit bids
for all of the Securities held by the
Trust from at least three registered
broker-dealers of national reputation. The
Selling Agent will, on behalf of the
Trust, sell the Securities at the highest
bid price received.
Additional Issuance of Units: Upon no less than 5 days' notice to the
Trustee, the Depositor may deposit
additional Securities at any time in
exchange for additional Units in a minimum
aggregate amount of $250,000 and, if in
excess of such amount, in a $25 integral
multiple in excess thereof. The principal
amount of Securities deposited must be in
the same ratio to the Unit Principal
Balance of the Units received as the ratio
of the aggregate Unit Principal Balance on
the Closing Date to the aggregate
principal balance of the Securities on the
Closing Date. The Depositor must either
arrange for the Swap Counterparty and the
Trust to increase proportionally the
notional amount under the Swap Agreement
or arrange for an additional Swap
Agreement to be entered into between the
Trust and an additional Swap Counterparty.
The Rating Agency Condition must be
satisfied in connection with any such
additional issuance.
Selling Agent: Xxxxxx Xxxxxxx & Co. Incorporated.
Notwithstanding any provision of the
Standard Terms to the contrary, any sale
of the Securities shall be conducted by
and through the Selling Agent and not the
Trustee.
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) oral or written
confirmation by Moody's (for so long as
the Units are outstanding and rated by
Moody's) and (ii) written confirmation 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;
provided, however, that if the Rating
Agency Condition specified herein is to be
satisfied only with respect to Moody's or
S&P, only clause (i) or clause (ii) shall
be applicable. 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.
Eligible Account: The definition of "Eligible Account" in
the Standard Terms shall not apply.
"Eligible Account": A non-interest bearing
account, held in the United States, in the
name of the Trustee for the benefit of the
Trust that is either (i) a segregated
account or segregated accounts maintained
with a Federal or State chartered
depository institution or trust company
the short-term and long-term unsecured
debt obligations of which (or, in the case
of a depository institution or trust
company that is the principal subsidiary
of a holding company, the short-term and
long-term unsecured debt obligations of
such holding company) are rated P-1 and
Aa2 by Moody's, A-1+ and AA by S&P, and,
if rated by Fitch, F1 and AA by Fitch at
the time any amounts are held on deposit
therein including when such amounts are
initially deposited and all times
subsequent or (ii) a segregated trust
account or segregated accounts maintained
as a segregated account or as segregated
accounts and held by the Trustee in its
Corporate Trust Office in trust for the
benefit of the Unitholders.
Permitted Investments: The following shall be a Permitted
Investment in addition to the investments
specified in the Standard Terms:
Units of the Dreyfus Cash Management Fund
Investor Shares or any other money market
funds which are rated in the highest
applicable rating category by each Rating
Agency (or such lower rating if the Rating
Agency Condition is satisfied).
Non-U.S. Persons: Notwithstanding anything to the contrary
herein or in the Standard Terms, any
beneficial owner of any Units which is a
non-U.S. person shall not be entitled to
exercise any rights of the Unitholders to
instruct or direct Trustee.
Other Terms: The Trust shall not merge or consolidate
with any other trust, entity or person and
the Trust shall not acquire the assets of,
or an interest in, any other trust, entity
or person except as specifically
contemplated herein.
The Trustee shall provide to the
Unitholders copies of any notices it
receives with respect to a redemption of
the Securities or a call of the Securities
under the Swap Agreement and any other
notices with respect to the Securities.
The reference to "B2" in the definition of
Certificate in the Standard Terms shall be
replaced with "Exhibit B2".
The reference to "Section 10.02(ix)" in
the definition of Available Funds in the
Standard Terms shall be replaced with
"Section 10.02(a)(ix)".
The reference to "Section 3.04" in the
definition of Unit Account in the Standard
Terms shall be replaced with "Section
3.05".
The transfer by the Depositor to the
Trustee specified in Section 2.01(a) of
the Standard Terms shall be in trust.
Section 2.06 of the Standard Terms shall
be incorporated herein by inserting "cash
in an amount equal to the premium under
the Swap Agreement and" after the phrase
"constituting the Trust Property,"
therein.
The reference to "calendar day" in the
last sentence of Section 3.06 of the
Standard Terms shall be replaced with
"Business Day".
Section 4.02(d) of the Standard Terms
shall be incorporated herein by striking
"and the Trustee on behalf of the
Unitholders" from the first sentence of
the second paragraph thereof.
Section 5.03(c) of the Standard Terms
shall be incorporated herein by striking
"(if so required by the Trustee or the
Unit Registrar)" from the first sentence
thereof.
Section 7.01(c)(i) of the Standard Terms
shall be incorporated herein by replacing
the first word thereof ("after") with
"alter".
Section 7.02 of the Standard Terms shall
be incorporated herein by striking "(i)
the Trustee determines that such amendment
will not adversely affect the interests of
the Unitholders and (ii)" from the first
sentence thereof, inserting "on which it
may conclusively rely" after "Opinion of
Counsel" in such sentence, and striking
"clause (ii)" from the second sentence of
such Section.
Section 9.03(a) of the Standard Terms
shall be incorporated herein by striking
"or oral" after the "at any time by" in
the third sentence thereof.
Clause (ix) of Section 10.02(a) shall not
apply.
Section 10.02(a)(x) of the Standard Terms
shall be replaced with the following:
(x) the Trustee shall have the power to
sell the Securities and other Trust
Property, in accordance with Article IX
and XI, through the Selling Agent or, if
the Selling Agent shall have resigned or
declined to sell some or all of the
Securities, any broker selected by the
Trustee (at the direction of the
Depositor) with reasonable care, in an
amount sufficient to pay any amount due to
the Swap Counterparty under the Swap
Agreement (including Termination Payments)
or reimbursable to itself in respect of
unpaid Extraordinary Trust Expenses and to
use the proceeds thereof to make such
payments after the distribution of funds
or Trust Property to Unitholders. Any such
broker shall be instructed by the Trustee
to sell such Trust Property in a
reasonable manner designed to maximize the
sale proceeds.
Section 10.05(b) of the Standard Terms
shall be incorporated herein by replacing
", pursuant to the first sentence of this
paragraph" with "the Trustee shall be
indemnified by the Trust, however," in the
last sentence thereof.
Section 10.06(a) of the Standard Terms
shall be incorporated herein by inserting
"or association" after the word
"corporation" in the second sentence
thereof.
Section 10.07(a) of the Standard Terms
shall be incorporated herein by replacing
"notice or resignation" with "notice of
resignation" in the second sentence
thereof and striking the last two
sentences thereof.
Section 10.10(b) of the Standard Terms
shall be incorporated herein by inserting
"The Trustee shall not be liable for the
acts or omissions of any co-trustee."
after the last sentence thereof.
Section 10.14 of the Standard Terms shall
be replaced with the following:
SECTION 10.14. Non-Petition. Prior to the
date that is one year and one day after
all distributions in respect of the Units
have been made, none of the Trustee, the
Trust or the Depositor shall take any
action, institute any proceeding, join in
any action or proceeding or otherwise
cause any action or proceeding against any
of the others under the United States
Bankruptcy Code or any other liquidation,
insolvency, bankruptcy, moratorium,
reorganization or similar law ("Insolvency
Law") applicable to any of them, now or
hereafter in effect, or which would be
reasonably likely to cause any of the
others to be subject to, or seek the
protection of, any such Insolvency Law.
Section 12.01(a) of the Standard Terms
shall be incorporated herein by replacing
"(v)" with "(vi)" in the last proviso
thereof.
Section 12.01(c) of the Standard Terms
shall be incorporated herein by inserting
",provided at the expense of the party
requesting such amendment," after "Opinion
of Counsel".
Section 12.05 of the Standard Terms shall
be incorporated herein by striking "the
Trustee and" in the last sentence of the
second paragraph thereof.
The reference to "its President, its
Treasurer, or one of its Vice Presidents,
Assistant Vice Presidents or Trust
Officers" in the first sentence of Section
5.02(a) of the Standard Terms shall be
replaced with "a Responsible Officer".
The reference to "the proper officers" in
the second sentence of Section 5.02(a) of
the Standard Terms shall be replaced with
"a Responsible Officer".
The reference to "one of its authorized
signatories" in the first sentence of
Section 5.02(d) of the Standard Terms
shall be replaced with "a Responsible
Officer".
The reference to the "Trust" in the first
sentence of Section 5.08(b) of the
Standard Terms shall be replaced with the
"Trustee".
References to D&P in the Standard Terms
shall be incorporated as references to
Fitch Inc. ("Fitch").
Schedule II
(Terms of Trust Property)
Securities: SAFECO Capital Trust I 8.072% trust
preferred capital securities due July 15,
2037
Security Issuer: SAFECO Capital Trust I
Security Guarantor: SAFECO Corporation
The Security Guarantor will be considered
the "Security Issuer" for purposes of
determining whether the Security Issuer is
an Eligible Issuer and whether the
Securities are Disqualified Securities.
Guarantor Debentures: The Guarantor's 8.072% junior subordinated
debentures due 2037. Such debentures are
the only assets of the Security Issuer.
In the event that the Guarantor Debentures
are exchanged for the Securities or
distributed in liquidation of the Security
Issuer, the Guarantor Debentures shall be
treated as the Securities. Such exchange
or liquidation shall not be considered a
redemption.
Principal Amount: $33,070,000
Security Rate: 8.072%
Credit Ratings: Baa2 by Xxxxx'x
BBB- by S&P
Listing: Not applicable
Security Agreement: As to the Securities, the amended and
restated declaration of trust dated as of
July 15, 1997 relating to the Security
Issuer. As to the Guarantor Debentures,
the indenture, dated as of July 15, 1997,
between the Guarantor and The Chase
Manhattan Bank.
Form: Global
Currency of United States dollars
Denomination:
Acquisition Price 94.5267%
by Trust:
Security Payment Date: Each January 15 and July 15, commencing
January 15, 1998.
Original Issue Date: The Securities were issued July 15, 1997.
Maturity Date: July 15, 2037.
Sinking Fund Terms: Not Applicable
Redemption Terms: The Guarantor Debentures and the
Securities may be redeemed upon a "tax
event" (as defined in the underlying
indenture and declaration of trust). The
Guarantor Debentures may also be
distributed in exchange for the Securities
or in liquidation of the Issuer. In such
event the Guarantor Debentures would
become the Securities under the Trust
Agreement.
CUSIP No.:/ISIN No. 786427 AC8
Security Trustee: The Chase Manhattan Bank
Guarantor Debenture Trustee: The Chase Manhattan Bank
Available Information The Security Guarantor is subject to the
Regarding the Security Issuer informational requirements of the
(if other than U.S. Securities Exchange Act of 1934, as
Treasury obligations): amended, and in accordance therewith files
reports and other information with the
Securities and Exchange Commission (the
"Commission"). Such reports and other
information can be inspected and copied at
the public reference facilities maintained
by the Commission at 000 Xxxxx Xxxxxx,
X.X., Xxxxxxxxxx, X.X. 00000 and at the
following Regional Offices of the
Commission: Xxxxxxxxx Xxxxxxxx, 000
Xxxxxxxx, Xxx Xxxx, XX 00000, and
Northwest Atrium Center, 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. Copies of
such materials can be obtained from the
Public Reference Section of the Commission
at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000 at prescribed rates.
Schedule III
(Call Option Confirm)
XXXXXX XXXXXXX
--------------------------------------------------------------------------------------------------
Date: December 12, 2001
To: SATURNS Trust No. 2001-7 From: Xxxxxx Xxxxxxx & Co. International Limited
Attn: Asset-Backed Securities Group Contact: Xxxxx Xxxx
SATURNS Trust No. 2001-7
Fax: 000-000-0000 Fax: 000-000-0000
Tel: 000-000-0000 Tel: 000-000-0000
------- ----------------------------------- ---------- ----------------------------------------------
Re: Bond Option Transaction. MS Reference Number S7503
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between you and Xxxxxx Xxxxxxx & Co.
International Limited ("MSIL"), with Xxxxxx Xxxxxxx & Co. Incorporated
("MS&Co."), as agent, on the Trade Date specified below (the "Transaction").
This letter agreement constitutes a "Confirmation" as referred to in the
Agreement below.
The definitions and provisions contained in (i) the 1991 ISDA
Definitions and the 1997 ISDA Government Bond Option Definitions (the "Bond
Option Definitions") (each as published by the International Swaps and
Derivatives Association, Inc. ("ISDA")) and (ii) to the extent of terms not
defined herein or in the Bond Option Definitions the 1996 ISDA Equity
Derivatives Definitions (as published by ISDA) (the "Equity Definitions"), are
incorporated into this Confirmation. In the event of any inconsistency between
those definitions and this Confirmation, this Confirmation will govern.
1. This Confirmation supplements, forms a part of, and is subject to,
the ISDA Master Agreement dated as of December 12, 2001, as amended and
supplemented from time to time (the "Agreement"), between you and us. All
provisions contained in the Agreement govern this Confirmation except as
expressly modified below.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
I. General Terms
Trade Date: December 4, 2001
Commencement Date: December 12, 2001
Option Style: American
Option Type: Call
Buyer: MSIL ("Party A")
Seller: SATURNS Trust No. 2001-7 ("Party B")
Bonds: The obligation identified as follows:
Bond Issuer: SAFECO Capital Trust I
Issue: 8.072% Debentures due 2037
CUSIP: 786427 AC8
Coupon: 8.072%
Maturity Date: July 15, 2037
Face Amount Purchased: USD 33,070,000
Premium: USD 82,675
Number of Options: 33,070
Option Entitlement: USD 1,000 of face amount of the Bonds per
Option.
Strike Price: (i) For any Exercise Date on or prior to
July 15, 2007, the redemption price of the
Bonds including any make-whole amount
(expressed as a percentage) subject to a
maximum of 110% of the aggregate Unit
Principal Balance, or (ii) for any
Exercise Date after July 15, 2007, 97.343%
of the face amount of the Bonds.
Calculation Agent: Party A
II. Exercise Terms
Automatic Exercise: Inapplicable
Exercise Period: Any Business Day from, and including, 9:00
a.m. (New York time) on the Commencement
Date to, and including, the Expiration
Time on the Expiration Date; if on or
prior to such day with respect to any such
Bonds notice of redemption has been
delivered by the Issuer (including if
necessary, additional Bonds to allow for
the exercise of whole Options).
Exercise Date: For each Option exercised or deemed
exercised, the day during the Exercise
Period on which that Option is or is
deemed to be exercised, subject to the
Deemed Exercise and Alternative Settlement
provision set forth below.
Multiple Exercise: Applicable
Minimum Number of Options: 1
Maximum Number of Options: 33,070
Integral Multiple: 1
Written Confirmation of Exercise: Applicable. Buyer shall give irrevocable
exercise notice which may be given orally
(including by telephone) during the
Exercise Period but no later than the
Notification Date. Buyer will execute and
deliver a written exercise notice
confirming the substance of such oral
notice, however, failure to provide such
written notice will not affect the
validity of the oral notice.
Notification Date: Any date at least 20 calendar days but not
more than 60 calendar days prior to the
Exercise Date, provided that any date
which is 30 calendar days after the Bond
Issuer provides notice of redemption is
also a Notification Date.
Limited Right to Confirm Exercise: Inapplicable
Expiration Date: July 15, 2034
Expiration Time: 4:00 p.m. New York time
Business Days: New York and Chicago
III. Settlements:
Settlement: Physical Settlement (subject to the Deemed
Exercise and Alternative Settlement
provision below). Party A will notify
Party B separately regarding the clearance
system details.
Bond Payment: An amount equal to the sum of:
(i) The product of the Strike Price and
the Exercised Call Notional Amount,
(ii) The accrued interest, if applicable,
and
(iii) Any Fractional Unit Make Whole
Amount.
In addition, in connection with any
partial exercise, Party A shall pay to the
Expense Administrator an amount equal to
the present value of the Trustee Fee (as
defined in the Trust Agreement) that will
accrue from the date of such exercise
until the Scheduled Final Distribution
Date (as defined in the Trust Agreement),
assuming for this purpose that the Trust
(as defined in the Trust Agreement) is not
terminated prior to the Scheduled Final
Distribution Date, multiplied by the
Exercised Call Notional Amount and divided
by $33,070,000.
Exercised Call Notional Amount: The product of the Option Entitlement and
the number of Options exercised on the
relevant Exercise Date.
Settlement Date: Exercise Date
Deposit of Bond Payment: Except in the event of a deemed exercise,
Party A must deposit the Bond Payment with
the Trustee on the Business Day prior to
the Exercise Date. The Bonds are to be
delivered "free" to Party A.
Deemed Exercise and Alternative In the event that any of the Bonds held by
Settlement: Party B are redeemed by the Bond Issuer
and paid in full in accordance with their
terms, an equivalent number of Options
with respect to any remaining Bonds held
by Party B shall be deemed to have been
exercised (and the requirements of notice
of exercise and written confirmation of
exercise deemed satisfied), in the same
proportion as the portion of the Bonds
held by Party B that are redeemed. The
effective date of deemed exercise shall be
20 calendar days prior to the date on
which Party B receives the cash proceeds
delivered in connection with the
redemption. As a result of such deemed
exercise, (i) Party B shall pay to Party
A, against the payment by Party A set
forth in clause (ii), the cash proceeds
delivered in connection with such
redemption (including any cash paid or
delivered in respect of accrued interest
on the Bonds) and (ii) Party A shall pay
to Party B, against the payment and/or
delivery set forth in clause (i), the Bond
Payment.
3. Additional Definitions.
"Expense Administration Agreement" means the expense administration
agreement dated as of December 12, 2001 between Party B and the Expense
Administrator.
"Expense Administrator" means MSDW Structured Asset Corp. acting
pursuant to the Expense Administration Agreement.
"Fractional Unit Make Whole Amount" means the amount specified in
paragraph 9.
"Trust Agreement" means the trust agreement dated as of December 12,
2001, between the MSDW Structured Asset Corp. and LaSalle Bank National
Association.
4. Representations. Xxxxxx Xxxxxxx & Co. Incorporated is acting as
agent for both parties but does not guarantee the performance of Party A.
5. Additional Termination Event. As set forth in the Agreement, a Trust
Wind-Up Event will result in an Additional Termination Event under the Agreement
with respect to which Party B shall be the Affected Party and this Transaction
shall be an Affected Transaction.
6. Swap Termination Payments. In the event an Early Termination Date is
designated with respect to which this Transaction is an Affected Transaction
(other than as a result of a self-tender), there shall be payable to Party A as
a termination payment in lieu of the termination payment determined in
accordance with Section 6(e) of the Agreement an amount equal to the excess (if
any) of the sale proceeds in excess of the principal of and interest on the
Units. If an early termination occurs due to a tender of the Bonds to the Bond
Issuer, the Swap Termination Payment shall be determined under Section 6(e)
determined on the basis of "Market Quotation" under the Swap Agreement (with
Party B as sole Affected Party). If an early termination occurs due to a tender
of the Bonds to the Bond Issuer, the Swap Termination Payment shall be paid
prior to any payment on the Units.
7. Assignment. The rights under this Confirmation and the Agreement may
be assigned at any time and from time to time in whole or in part; provided that
any such assignment shall be an assignment of whole Options and provided further
that Rating Agency Condition is satisfied (as provided in the Trust Agreement)
with respect to such assignment and any transfer.
8. Account Details.
Payments to Party A: Citibank, New York
ABA No. 021 000 089
For: Xxxxxx Xxxxxxx & Co. International
Limited
Account No. 0000 0000
Operations Contact: Xxxxxxx Xxxx
Tel: 000-000-0000
Fax: 000-000-0000
Payments to Party B: LaSalle Bank, Chicago, Illinois
ABA No. 071 000 505
Reference: SATURNS 2001-7
Unit Account / AC-0000000/
Account No.: 00-0000-00-0
Operations Contact: Xxxxx Xxxx
Tel: 000-000-0000
Fax: 000-000-0000
9. Fractional Unit Make-Whole Amount. In the event any exercise or
deemed exercise hereunder would result in a fractional Unit (as defined in the
Trust Agreement) remaining after such exercise, Party A shall, in addition to
amounts payable hereunder, pay to Party B the remaining fractional Unit
Principal Balance (as defined in the Trust Agreement) together with accrued
interest on such Unit and, if applicable, any Additional Distribution (as
defined in the Trust Agreement). Party A shall be entitled to reimbursement from
the Expense Administrator to the extent provided in the Expense Administration
Agreement.
10. Representations. Xxxxxx Xxxxxxx & Co. Incorporated is acting as
agent for both parties but does not guarantee the performance of Party A. Party
B represents and warrants to Party A, which representation and warranty will be
deemed to be repeated by Party B on each date on which a Transaction is entered
into, that it owns or controls (or, in the case of an investment advisor
(whether or not registered under the United States Investment Advisors Act of
1940), has under management) in excess of USD 33 million in Aggregate Financial
Assets (as defined below).
For purposes hereof, Aggregate Financial Assets of an entity means the
total, on a gross basis, without deduction for liabilities of the entity, of all
cash, money-market instruments, securities of unaffiliated issuers, futures and
options.
Please confirm that the foregoing correctly sets forth the terms of our
agreement MS Reference Number S7503 by executing this Confirmation and returning
it to us.
Best Regards,
XXXXXX XXXXXXX & CO. INTERNATIONAL LIMITED
BY: /s/ Xxxx Xxxxx
------------------------------
Name: Xxxx Xxxxx
Title: Vice President
Acknowledged and agreed as of the date first written above:
SATURNS TRUST NO. 2001-7
BY: LaSalle Bank National Association,
solely as Trustee and not in its individual capacity.
BY: /s/ Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
XXXXXX XXXXXXX & CO. INCORPORATED hereby agrees to and
acknowledges its role as agent for both parties in accordance with
the Schedule to the Agreement.
BY: /s/ Xxxxx Xxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxx
Title: Attorney in fact
