EXHIBIT 4.1
SERIES SUPPLEMENT
CORPORATE BACKED TRUST CERTIFICATES,
VERIZON NEW YORK DEBENTURE-BACKED
SERIES 2004-5 TRUST
between
XXXXXX ABS CORPORATION,
as Depositor,
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee,
Dated as of February 25, 2004
Table of Contents
Page
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Section 1. Incorporation of Standard Terms.................................1
Section 2. Definitions.....................................................2
Section 3. Designation of Trust and Certificates...........................9
Section 4. Trust Certificates.............................................10
Section 5. Distributions..................................................10
Section 6. Early Redemption of Certificates...............................12
Section 7. Optional Exchange..............................................12
Section 8. Trustee's Fees.................................................14
Section 9. Swap Payments..................................................14
Section 10. Notices of Swap Agreement Termination Events and
Underlying Securities Events of Default........................15
Section 11. Miscellaneous..................................................15
Section 12. Governing Law..................................................19
Section 13. Counterparts...................................................19
Section 14. Termination of the Trust.......................................19
Section 15. Sale of Underlying Securities..................................19
Section 16. Amendments.....................................................19
Section 17. Voting of Underlying Securities, Modification of
Underlying Securities Indenture, Modification of
Swap Agreement.................................................20
Section 18. Additional Depositor Representation............................21
SCHEDULE I SERIES 2004-5 UNDERLYING SECURITIES SCHEDULE
EXHIBIT A FORM OF TRUST CERTIFICATE
EXHIBIT B FORM OF SWAP AGREEMENT
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SERIES SUPPLEMENT
CORPORATE BACKED TRUST CERTIFICATES,
VERIZON NEW YORK DEBENTURE-BACKED SERIES 2004-5 TRUST
SERIES SUPPLEMENT, Corporate Backed Trust Certificates, Verizon New
York Debenture-Backed Series 2004-5, dated as of February 25, 2004 (the
"Series Supplement"), by and between XXXXXX ABS CORPORATION, as Depositor (the
"Depositor"), and U.S. BANK TRUST NATIONAL ASSOCIATION, as Trustee (the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Depositor desires to create the Trust designated herein
(the "Trust") by executing and delivering this Series Supplement, which shall
incorporate the terms of the Standard Terms for Trust Agreements, dated as of
January 16, 2001 (the "Standard Terms" and, together with this Series
Supplement, the "Trust Agreement"), by and between the Depositor and the
Trustee, as modified by this Series Supplement;
WHEREAS, the Depositor desires to deposit into the Trust the
Underlying Securities set forth on Schedule I attached hereto (the "Underlying
Securities Schedule") the general terms of which are described in the
Prospectus Supplement under the heading "Description of the Underlying
Securities;"
WHEREAS, the Depositor desires that the Trust enter into a swap
agreement pursuant to which the Trust will exchange interest payments due on
the Underlying Securities for payments from the Swap Counterparty which will
be passed through the Certificateholders;
WHEREAS, in connection with the creation of the Trust, the deposit
therein of the Underlying Securities and the entering into the Swap Agreement
thereby, it is desired to provide for the issuance of trust certificates
evidencing undivided interests in the Trust; and
WHEREAS, the Trustee has joined in the execution of the Standard
Terms and this Series Supplement to evidence the acceptance by the Trustee of
the Trust.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants expressed herein, it is hereby agreed by and between the
Depositor and the Trustee as follows:
Section 1. Incorporation of Standard Terms. Except as otherwise provided
herein, all of the provisions of the Standard Terms are hereby incorporated
herein by reference in their entirety, and this Series Supplement and the
Standard Terms shall form a single agreement between the parties. In the event
of any inconsistency between the provisions of this Series Supplement and the
provisions of the Standard Terms, the provisions of this Series Supplement
will control with respect to the Corporate Backed Trust Certificates, Verizon
New York Debenture-Backed Series 2004-5 Certificates and the transactions
described herein.
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Section 2. Definitions.
(a) Except as otherwise specified herein or as the context may otherwise
require, the following terms shall have the respective meanings set forth
below for all purposes under this Series Supplement. (Section 2(b) below sets
forth terms listed in the Standard Terms which are not applicable to this
Series.) Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Standard Terms.
"Available Funds" shall mean, for any Distribution Date, Available
Interest Funds and Available Principal Funds for such Distribution Date.
"Available Interest Funds" shall mean, for any Distribution Date,
the sum of (i) all amounts received on or prior to such Distribution Date from
the Swap Counterparty pursuant to the Swap Agreement with respect to the
preceding Interest Accrual Period and (ii) any amounts representing interest
on the Underlying Securities that are actually received by the Trust pursuant
to the Underlying Securities Indenture on such Distribution Date and not
required to be paid to the Swap Counterparty pursuant to the Swap Agreement.
"Available Principal Funds" shall mean all amounts received from the
Underlying Securities Issuer with respect to principal of the Underlying
Securities on the Final Scheduled Distribution Date or any other date.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to be closed.
"Calculation Agent" shall mean Xxxxxx Brothers Special Financing
Inc.
"Certificate Principal Balance" shall have the meaning specified in
Section 3 hereof.
"Certificate Account" shall have the meaning specified in the
Standard Terms.
"Certificates" shall mean the Certificates, in the form attached
hereto as Exhibit A, to be issued by the Trust representing a proportionate
undivided beneficial ownership interest in certain distributions to be made by
the Trust and having the characteristics described herein and in the
Certificates.
"Closing Date" shall mean February 25, 2004.
"Code" means the Internal Revenue Code of 1986, as amended.
"Corporate Trust Office" shall mean the office of U.S. Bank Trust
National Association located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"Currency" shall mean United States Dollars.
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"Depository" shall mean The Depository Trust Company, its nominees
and their respective successors.
"Discontinuation Date" shall mean the date determined by the
Depositor within a reasonable time following the Underlying Securities
Issuer's either (x) having stated in writing that it intends permanently to
cease filing periodic reports required under the Exchange Act or (y) having
failed to file all required periodic reports for one full year.
"Distribution Date" shall mean (i) for so long as the Swap Agreement
shall not have been terminated, the first Business Day of each calendar month
(or if such date is not a Business Day, the next succeeding Business Day) or
(ii) upon the occurrence of a Swap Agreement Termination Event that is not
also a Trust Termination Event, April 1st and October 1st of each year (or if
such date is not a Business Day, the next succeeding Business Day), commencing
on April 1, 2004, and ending on the earlier of the Final Scheduled
Distribution Date and any date on which all Underlying Securities are redeemed
pursuant to the Underlying Securities Indenture or prepaid or liquidated in
whole for any reason other than at their maturity.
"Early Swap Termination Date" shall mean the date so designated as
such in accordance with the terms of the Swap Agreement.
"Early Trust Termination Date" shall mean the same date as an Early
Swap Termination Date occurring due to a Trust Termination Event.
"Early Termination Payment" shall mean, with respect to any Early
Swap Termination Date, the amount payable by the Trust, on such Early Swap
Termination Date pursuant to the Swap Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the United States Securities and Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Final Scheduled Distribution Date" shall mean April 1, 2032, or, if
such day is not a business day, the next succeeding business day.
"Interest Accrual Period" shall mean (i) with respect to the first
Distribution Date, the period from and including the Original Issue Date to,
but excluding, the first Distribution Date and (ii) with respect to any
Distribution Date thereafter, the period from and including the preceding
Distribution Date but excluding such current Distribution Date.
"Interest Distribution Amount" shall mean, with respect to each
Distribution Date, (i) for so long as the Swap Agreement shall not have been
terminated, an amount equal to the Floating Rate Payor Payment Amount (as
defined in the Swap Agreement) and (ii) following any termination of the Swap
Agreement, an amount equal to accrued interest at a rate of 7.375% per annum
on the outstanding Certificate Principal Balance.
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"Interest Rate" shall mean, 4.00% per annum until the Distribution
Date in April 2004 and, for each Interest Accrual Period thereafter, a
floating rate, equal to the lessor of (i) the greater of (x) One-Month USD
LIBOR (as defined herein) plus 1.125% and (y) 4.00% and (ii) 7.50%. Following
the occurrence of a Swap Agreement Termination Event that is not a Trust
Termination Event, interest will be payable at a fixed rate equal to 7.375%
per annum.
"LIBOR Determination Date" shall mean for the Interest Accrual
Period beginning on and after the first Distribution Date, the second London
Banking Date preceding the commencement of such Interest Accrual Period.
"Liquidation Proceeds" shall mean with respect to a liquidation of
the Underlying Securities in accordance with the Sale Procedures, the net
proceeds received from the sale by the Marketing Agent, in accordance with the
Sale Procedures, of the entire principal amount of the Underlying Securities.
"London Banking Day" shall mean any day on which the commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) in London.
"Marketing Agent" shall mean Xxxxxx Brothers Inc.
"Maturity Date" shall have the meaning specified in Schedule I
hereto.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"One-Month USD LIBOR" shall mean, with respect to any LIBOR
Determination Date, the London interbank offered rate for one-month (such
period being referred to as the "Index Maturity") United States dollar
deposits, commencing on the second London Banking Day (as defined herein)
immediately following such LIBOR Determination Date, which appears on Telerate
Page 3750 (as defined herein) as of 11:00 A.M., London time, on such LIBOR
Determination Date. If Telerate Page 3750 is unavailable at such time, LIBOR
for the appropriate Index Maturity will be determined at approximately 11:00
A.M., London time, on such LIBOR Determination Date on the basis of the rate
at which LIBOR having such Index Maturity is offered by four major banks
selected by the Calculation Agent in the London interbank market commencing on
the second London Banking Day immediately following such LIBOR Determination
Date. The Calculation Agent will request the principal London office of each
of such banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such Index Maturity will be the arithmetic
mean of such quotations. If fewer than two quotations are provided, LIBOR for
a given Index Maturity for such LIBOR Determination Date will be the
arithmetic mean of LIBOR quoted at approximately 11:00 A.M., New York City
time, on such LIBOR Determination Date by three major banks in New York City
selected by the Calculation Agent for LIBOR having such Index Maturity,
commencing on the second London Banking Day immediately following such LIBOR
Determination Date; provided, however, that if the banks selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
for such Index Maturity will be LIBOR for such Index Maturity in effect on
such LIBOR Determination Date.
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"Optional Exchange" shall mean the exchange of the Certificates by
the Trust for the Underlying Securities pursuant to Sections 7(a), 7(b) and
7(c) hereof.
"Optional Exchange Date" shall mean any date on which Underlying
Securities subject to an Optional Exchange are distributed to a
Certificateholder.
"Ordinary Expenses" shall mean the Trustee's ordinary expenses and
overhead in connection with its services as Trustee, including the items
referred to in the definition of Ordinary Expenses in the Standard Terms.
"Partial Swap Agreement Termination Event" shall have the meaning
specified in the Swap Agreement.
"Plan" means (a) an employee benefit plan (as defined in Section
3(3) of ERISA), (b) a plan described in Section 4975(e)(1) of the Code or (c)
any entity whose underlying assets are treated as assets of any such plan by
reason of such plan's investment in the entity.
"Prospectus Supplement" shall mean the Prospectus Supplement, dated
February 13, 2004, relating to the Certificates.
"Rating Agency" shall mean Moody's and S&P.
"Record Date" shall mean, with respect to each Distribution Date,
the day immediately preceding the related Distribution Date.
"Required Percentage-Amendment" shall be 66-2/3% of the aggregate
Voting Rights.
"Required Percentage-Direction of Trustee" shall be 66-2/3% of the
aggregate Voting Rights.
"Required Percentage-Remedies" shall be 66-2/3% of the aggregate
Voting Rights.
"Required Percentage-Removal" shall be 66-2/3% of the aggregate
Voting Rights.
"Reset Date" shall mean, until the Final Scheduled Distribution
Date, each Distribution Date, commencing on the Distribution Date in April
2004.
"Required Rating" shall mean, in the case of Moody's, the rating
assigned to the Underlying Securities by Moody's as of the Closing Date, and,
in the case of S&P, the rating assigned to the Underlying Securities by S&P as
of the Closing Date.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
The XxXxxx-Xxxx Companies, Inc.
"Sale Procedures" shall mean the process by which the Marketing
Agent, on behalf of the Trust, will sell the Underlying Securities to the
solicited bidder (which bidders will
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be determined by the Marketing Agent in its sole and absolute discretion and
which bidders may include Xxxxxx Brothers Inc. or any of its Affiliates but in
any case shall include at least two bidders which are not affiliated with
Xxxxxx Brothers Inc.; provided, however, that neither Xxxxxx Brothers Inc. or
any of its affiliates is obligated to bid, and that such bidders need not be
limited to recognized broker dealers; and provided further that if Xxxxxx
Brothers Inc. or any of its affiliates are bidders, any bid made by them shall
not be greater than the fair value of the Underlying Securities) that provides
the highest firm bid for the Underlying Securities. In the sole judgement of
the Marketing Agent, bids may be evaluated on the basis of bids for all or a
portion of the Underlying Securities being sold or any other basis selected in
a commercially reasonable manner by the Marketing Agent.
"SEC Reporting Failure" shall mean the date determined by the
Depositor within a reasonable time following the Underlying Securities
Issuer's either (x) having stated in writing that it intends permanently to
cease filing periodic reports required under the Exchange Act or (y) having
failed to file all required periodic reports for one full year.
"Securities Act" shall mean the United States Securities Act of
1933, as amended.
"Securities Intermediary" shall have the meaning set forth in
Section 18 hereof.
"Series" shall mean Verizon New York Debenture-Backed Series 2004-5.
"Swap Agreement" shall mean the ISDA Master Agreement dated as of
the Closing Date, between the Trust and the Swap Counterparty (including the
Schedule thereto) as supplemented by the Confirmation dated February 25, 2004,
in the form attached hereto as Exhibit B.
"Swap Agreement Termination Event" shall mean the occurrence of any
event that would constitute an "Event of Default" or "Termination Event" under
the Swap Agreement.
"Swap Counterparty" shall mean Xxxxxx Brothers Special Financing
Inc., or any permitted successor or assign thereto.
"Swap Guarantor" shall mean Xxxxxx Brothers Holdings Inc.
"Telerate Page 3750" shall mean the display on the Dow Xxxxx
Telerate Service on page 3750 (or any other page as may replace such page on
that service for the purpose of displaying LIBOR).
"Trustee Fee" shall mean the amount paid to the Trustee by the
Depositor on the Closing Date.
"Trust Property" shall mean the Underlying Securities described on
Schedule I hereto and the Swap Agreement and the Certificate Account; each
subject to the obligations of the Trust under the Swap Agreement.
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"Trust Regulatory Event" shall mean the occurrence of a Swap
Agreement Termination Event due to certain legislative, regulatory or judicial
action that make it unlawful for the Trust to comply with any material
provision of the Swap Agreement.
"Trust Swap Payment Default" shall mean the occurrence of a Swap
Agreement Termination Event related to the failure of the Trust to make any
payment under the Swap Agreement.
"Trust Termination Event" shall mean a Trust Swap Payment Default,
an Underlying Securities Bankruptcy Default, an Underlying Securities Payment
Default, a Trust Regulatory Event, an SEC Reporting Failure, an Optional
Exchange pursuant to Section 7 hereof of all of the outstanding Certificates
for all of the Underlying Securities held by the Trust, and an optional
redemption or other prepayment of 100% of the Underlying Securities.
"Underlying Securities Bankruptcy Default" shall mean the occurrence
of an Underlying Securities Event of Default relating to a bankruptcy,
insolvency or reorganization of the Underlying Securities Issuer.
"Underlying Securities" shall mean $25,000,000 aggregate principal
amount of 7 3/8% Debentures, Series B, due April 1, 2032 issued by the
Underlying Securities Issuer, as set forth in Schedule I attached hereto.
"Underlying Securities Event of Default" shall mean any "Event of
Default" under the Underlying Securities Indenture.
"Underlying Securities Indenture" shall mean the indenture, dated as
of December 1, 2001 among the Underlying Securities Issuer and the Underlying
Securities Trustee, pursuant to which the Underlying Securities were issued.
"Underlying Securities Issuer" shall mean Verizon New York Inc.
"Underlying Securities Payment Default" shall mean the occurrence of
an Underlying Securities Event of Default relating to the payment of interest
on the Underlying Securities or the payment of principal of or premium, if
any, on the Underlying Securities when due.
"Underlying Securities Payment Date" shall mean April 1st and
October 1st of each year (or if such date is not a Business Day, the next
succeeding Business Day), ending on the earlier of the Final Scheduled
Distribution Date and any date on which all Underlying Securities are redeemed
pursuant to the Underlying Securities Indenture.
"Underlying Securities Trustee" shall mean JPMorgan Chase Bank or
any successor thereto acting as indenture trustee pursuant to the Underlying
Securities Indenture.
"Underwriter" shall mean Xxxxxx Brothers Inc.
"U.S. Government Securities Business Day" means, any day except for
a Saturday, Sunday or a day on which The Bond Market Association recommends
that the fixed
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income departments of its members be closed for the entire day for purposes of
trading in U.S. government securities.
"Voting Rights" shall be allocated among all Certificateholders in
proportion to the then unpaid Certificate Principal Balances of their
respective Certificates.
(b) The terms listed below are not applicable to this Series.
"Accounting Date"
"Administrative Fees"
"Advance"
"Allowable Expense Amounts"
"Basic Documents"
"Call Premium Percentage"
"Credit Support"
"Credit Support Instrument"
"Credit Support Provider"
"Cut-off Date"
"Eligible Expense"
"Eligible Investments"
"Exchange Rate Agent"
"Fixed Pass-Through Rate"
"Guaranteed Investment Contract"
"Letter of Credit"
"Limited Guarantor"
"Limited Guaranty"
"Minimum Wire Denomination"
"Pass-Through Rate"
"Place of Distribution"
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"Purchase Price"
"Required Premium"
"Required Principal"
"Requisite Reserve Amount"
"Retained Interest"
"Sub-Administration Account"
"Sub-Administration Agreement"
"Sub-Administration Agent"
"Surety Bond"
Section 3. Designation of Trust and Certificates. The Trust created
hereby shall be known as the "Corporate Backed Trust Certificates, Verizon New
York Debenture-Backed Series 2004-5 Trust." The certificates evidencing
certain undivided ownership interests therein shall be known as "Corporate
Backed Trust Certificates, Verizon New York Debenture-Backed Series 2004-5"
(the "Certificates").
(a) The Certificates shall be held through the Depository in
book-entry form and shall be substantially in the form attached hereto as
Exhibit A. The Certificates shall be issued in denominations of $25. Except as
provided in the Standard Terms and in paragraph (d) of this Section, the Trust
shall not issue additional Certificates or incur any indebtedness.
(b) The Certificates have an initial aggregate Certificate Principal
Balance of $25,000,000.
(c) The holders of the Certificates will be entitled to receive on
each Distribution Date an amount equal to the related Interest Distribution
Amount.
(d) The Depositor may sell to the Trustee additional Underlying
Securities on any date hereafter upon at least 3 Business Days' notice to the
Trustee (or such shorter period as shall be mutually satisfactory to the
Depositor and the Trustee) and upon (i) satisfaction of the Rating Agency
Condition, (ii) prior consent of the Swap Counterparty and (iii) delivery of
an Opinion of Counsel to the effect that the sale of such additional
Underlying Securities will not cause the Trust to be taxed as an association
or publicly traded partnership taxable as a corporation for federal income tax
purposes. Each condition to be satisfied with respect to a sale of Underlying
Securities on or prior to the Closing Date shall be satisfied with respect to
a sale of additional Underlying Securities no later than the date of sale
thereof, each representation and warranty set forth in the Standard Terms to
be made on the Closing Date shall be made on such date of sale, and from and
after such date of sale, all Underlying Securities held by the Trustee shall
be held on the same terms and conditions. Upon such sale to the Trustee, the
Trustee shall deposit such additional Underlying Securities in the Certificate
Account, and shall authenticate and deliver to
9
the Depositor, on its order, Certificates in a Certificate Principal Balance
equal to the principal amount of such additional Underlying Securities. Any
such additional Certificates authenticated and delivered shall have the same
terms and rank pari passu with the Certificates previously issued in
accordance with this Series Supplement.
(e) On the Distribution Date occurring in April 2004, the Trustee
shall cause the Trust to pay to the Depositor the amount of interest accrued
and paid on the Underlying Securities from October 1, 2003, to but not
including the Closing Date; provided, however, that in the event an Optional
Exchange Date shall occur prior to the Distribution Date in April 2004, a pro
rata portion of such amount shall be paid to the Depositor on the Optional
Exchange Date in accordance with the provisions of Section 7(b)(ix) hereof. If
the Depositor is not paid any such amount on such date, it shall have a claim
for such amount. If Available Funds are insufficient to pay such amount, the
Trustee will pay the Depositor its pro rata share, based on the ratio the
amount owed to the Depositor bears to all amounts owed on the Certificates in
respect of accrued interest, of any proceeds from the recovery on the
Underlying Securities.
Section 4. Trust Certificates. The Trustee hereby acknowledges
receipt, on or prior to the Closing Date, of:
(a) the Underlying Securities set forth on Schedule I hereto;
(b) the duly authorized and executed Swap Agreement; and
(c) all documents required to be delivered to the Trustee pursuant
to Section 2.01 of the Standard Terms.
Section 5. Distributions.
(a) Except as otherwise provided in Sections 5(b), 5(c) and Section
6, on each applicable Distribution Date, the Trustee shall apply Available
Funds in the Certificate Account as follows:
(i) The Trustee will pay from Available Interest Funds:
(1) first, to the Trustee, as reimbursement for any
Extraordinary Trust Expenses incurred by the Trustee in
accordance with Section 8(b) below and approved by 100% of the
Certificateholders; and
(2) second, to the holders of the Certificates, interest
accrued and unpaid, pro rata in proportion to their
entitlements thereto;
provided, however, that if the Trustee has not received any amounts
of Available Interest Funds on or prior to the related Distribution Date, such
amounts shall be applied in accordance with this Section 5(a) promptly upon
receipt of such amounts.
(ii) The Trustee will pay Available Principal Funds, first, to the
Trustee, as reimbursement for any Extraordinary Trust Expenses incurred
by the Trustee in accordance with Section 8(b) below and approved by 100%
of the Certificateholders; and
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second, to the Certificateholders, pro rata, from Available Principal
Funds, an amount not to exceed the then outstanding principal on the
Certificates.
(iii) Any Available Funds remaining in the Certificate Account after
the payments set forth in clauses 5(a)(i) and 5(a)(ii) above shall be
paid first, to the Trustee, as reasonable compensation for services
rendered to the Depositor, up to $1,000 and, thereafter, to the
Certificateholders, pro rata.
Any portion of the Available Funds (i) that does not constitute principal of,
or interest on, the Underlying Securities, (ii) that is not received in
connection with a redemption, prepayment or liquidation of the Underlying
Securities and (iii) for which allocation by the Trustee is not otherwise
contemplated by this Series Supplement, shall be remitted by the Trustee to
the Certificateholders.
(b) Notwithstanding the foregoing, if the Underlying Securities are
redeemed, prepaid or liquidated in whole or in part prior to the Final
Scheduled Distribution Date due to the occurrence of an Underlying Securities
Payment Default, an Underlying Securities Bankruptcy Default, an SEC Reporting
Failure, a Trust Swap Payment Default or a Trust Regulatory Event, the
proceeds received by the Trustee and any Early Termination Payment payable
from the Swap Counterparty to the Trust, pursuant to the Swap Agreement will
be allocated as follows:
(i) first, to the Swap Counterparty, in an amount equal to any
Early Termination Payment payable by the Trust to the Swap
Counterparty and
(ii) thereafter, any remainder will be paid to the
Certificateholders.
(c) Notwithstanding the foregoing, if the Underlying Securities are
redeemed, prepaid or liquidated in whole or in part for any reason other than
due to the occurrence of an Underlying Securities Payment Default, an
Underlying Securities Bankruptcy Default, an SEC Reporting Failure, a Trust
Swap Payment Default or a Trust Regulatory Event, then the proceeds received
by the Trust in connection with the related redemption, prepayment or
liquidation will be paid:
(i) first, to the Certificateholders, in an amount equal to the sum
of (x) the principal amount of the Underlying Securities so
redeemed or prepaid and (y) any accrued and unpaid interest on
the amount of Certificates so redeemed or prepaid; and
(ii) any remainder shall be paid to the Swap Counterparty as
compensation for any Early Termination Payment.
In the event only a portion of the Underlying Securities are redeemed,
prepaid or liquidated, the amount set forth in clause (ii) above shall
represent the full amount payable to the Swap Counterparty as compensation for
any Early Termination Payment. In the event the amount of the Early
Termination Payment shall exceed the amount set forth in clause (ii) above,
the Swap Counterparty shall not have a claim for additional payment.
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Section 6. Early Redemption of Certificates.
(a) Upon the occurrence of an Underlying Securities Payment Default, an
Underlying Securities Bankruptcy Default, a Trust Swap Payment Default, a
Trust Regulatory Event or SEC Reporting Failure, thirty (30) days after giving
notice pursuant to Section 10 hereof, the Trustee shall sell the Underlying
Securities pursuant to Section 15 hereof and deposit the Liquidation Proceeds,
if any, into the Certificate Account for distribution not later than two (2)
Business Days after the receipt of immediately available funds in accordance
with Sections 5(b) hereof, provided, however, that if a Certificateholder
designates an Optional Exchange Date pursuant to Section 7, the portion of
Underlying Securities related to such Optional Exchange shall not be sold but
shall be distributed to the exchanging Certificateholder pursuant to Section
7.
(b) Notwithstanding Section 3.12 of the Standard Terms, upon the
occurrence of an SEC Reporting Failure, the Depositor shall instruct the
Trustee within a reasonable time to (i) notify the Certificateholder that the
Underlying Securities are proposed to be sold and that the Certificateholders
rights pursuant to Section 6(d) to receive their pro rata portion of
Underlying Securities must be exercised no later than the date specified in
the notice (which shall be not less than ten Business Days after the date of
such notice) and (ii) to the extent that the Certificateholder fail to elect
pursuant to Section 6(d) to receive their pro rata portion of the Underlying
Securities, to sell the Underlying Securities and distribute the Liquidation
Proceeds to the Certificateholder in accordance with Section 5(b).
(c) If the Trustee receives non-cash property in respect of the
Underlying Securities as a result of a payment default on the Underlying
Securities (including from the sale thereof), the Trustee will promptly give
notice to the Depository, or for any Certificates which are not then held by
DTC or any other depository, directly to the registered holders of the
Certificates then outstanding and unpaid. Such notice shall state that the
Trustee shall and the Trustee shall, not later than 30 days after the receipt
of such property, allocate and distribute such property to the Holders of
Certificates then outstanding and unpaid (after deducting the costs incurred
in connection therewith) their pro rata portion of such property. Property
other than cash will be liquidated by the Trustee, and the proceeds thereof
distributed in cash, only to the extent necessary to avoid distribution of
fractional securities to Certificateholders. In-kind distribution of such
property to Certificateholders, based on the market value of such property as
of the date of distribution to Certificateholders, will be deemed to reduce
the Certificate Principal Balance on a dollar-for-dollar basis.
(d) Within five Business Days (or such longer period as shall be
acceptable to the Trustee) of receipt of notice of a Trust Termination Event
occurring in connection with a redemption, prepayment or liquidation in whole
or in part of the Underlying Securities, each Certificateholder may direct the
Trustee to distribute all or a portion of such Certificateholder's pro rata
share of the Underlying Securities to it, in lieu of any proceeds received
upon liquidation of the Underlying Securities. Any proceeds from the
liquidation of Underlying Securities will be distributed in the manner
described under Section 5(b) and Section 5(c), as applicable.
Section 7. Optional Exchange.
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(a) On (A) any Underlying Securities Payment Date occurring on or after
February 25, 2006 or (B) any date on which the Underlying Securities Issuer
consummates a tender offer or exchange offer for some or all of the Underlying
Securities, any holder of Certificates (other than Xxxxxx Brothers Inc. or any
Affiliate thereof) may exchange such Certificates for a distribution of
Underlying Securities representing the same percentage of the Underlying
Securities as such Certificates represent of all outstanding Certificates.
(b) On (A) any Distribution Date or (B) any date on which the Underlying
Securities Issuer consummates a tender offer or exchange offer for some or all
of the Underlying Securities, Xxxxxx Brothers Inc. or any Affiliate thereof
may exchange such Certificates for a distribution of Underlying Securities
representing the same percentage of the Underlying Securities as such
Certificates represent of all outstanding Certificates, provided, however,
that (i) the Trustee shall have received a certification from the
Certificateholder that any Certificates being surrendered have been held for
at least six months, (ii) the Certificates being surrendered may represent no
more than 5% (or 25% in the case of Certificates acquired by the Underwriters
but never distributed to investors) of the then outstanding Certificates and
(iii) an Optional Exchange pursuant to this Section 7(b) will not be permitted
to occur more frequently than once in any six month calendar period.
(c) The following conditions shall apply to any Optional Exchange.
(i) A notice specifying the number of Certificates being surrendered
and the Optional Exchange Date shall be delivered to the Trustee no less
than 5 days (or such shorter period acceptable to the Trustee) but not
more than 30 days before the Optional Exchange Date.
(ii) Certificates shall be surrendered to the Trustee no later than
10:00 a.m. (New York City time) on the Optional Exchange Date.
(iii) The Trustee shall have received an opinion of counsel stating
that the Optional Exchange would not cause the Trust to be treated as an
association or publicly traded partnership taxable as a corporation for
federal income tax purposes.
(iv) In connection with any Optional Exchange pursuant to subsection
(a) above, the Certificates tendered for exchange must represent no less
than 10% of the aggregate Certificate Principal Balance as of the Closing
Date.
(v) The Trustee shall not be obligated to determine whether an
Optional Exchange complies with the applicable provisions for exemption
under Rule 3a-7 of the Investment Company Act of 1940, as amended, or the
rules or regulations promulgated thereunder.
(vi) The provisions of Section 4.07 of the Standard Terms shall not
apply to an Optional Exchange pursuant to this Section 7(c). This Section
7(c) shall not provide any Person with a lien against, an interest in or
a right to specific performance with respect to the Underlying
Securities; provided that satisfaction of the conditions set forth in
this Section 7(b) shall entitle the Certificateholder to a distribution
thereof.
13
(vii) The aggregate principal balance of Certificates exchanged in
connection with any Optional Exchange pursuant to this Section shall be
in an amount that will entitle the Certificateholders thereof to
Underlying Securities in an even multiple of the minimum denomination of
such Underlying Securities.
(viii) In the event a Termination Payment shall be payable by the
Trust to the Swap Counterparty in connection with a termination of the
Swap Agreement, in whole or in part, as a result of such Optional
Exchange, the payment of such Early Termination Payment will be satisfied
by the distribution to the Swap Counterparty of a portion of the
Underlying Securities that were to be exchanged for Certificates pursuant
to the Optional Exchange, having a fair market value (as determined by
the Marketing Agent) equal to such Early Termination Payment. If any
Termination Payment shall be payable by the Swap Counterparty, the
Trustee will remit such payment to the Person consummating the Optional
Exchange.
(ix) In the event such Optional Exchange shall occur prior to the
Distribution Date in April 2004, the Certificateholders shall have paid
to the Trustee, for distribution to the Depositor, on the Optional
Exchange Date an amount equal to the sum obtained by multiplying the
amount of accrued interest on the Underlying Securities from October 1,
2003 through, but excluding, the Closing Date by a fraction, the
numerator of which shall be the number of Certificates being exchanged on
such Optional Exchange Date and the denominator of which shall be the
total number of Certificates.
Section 8. Trustee's Fees.
(a) As compensation for its services hereunder, the Trustee shall be
entitled to the Trustee Fee and any amounts payable under clauses 5(a)(iii)
above. The Trustee Fee shall be paid by the Depositor and not from Trust
Property. The Trustee shall bear all Ordinary Expenses. Failure by the
Depositor to pay such amount shall not entitle the Trustee to any payment or
reimbursement from the Trust, nor shall such failure release the Trustee from
the duties it is required to perform under the Trust Agreement.
(b) Extraordinary Trust Expenses shall not be paid out of the Trust
Property unless all the holders of the Certificates then outstanding have
directed the Trustee to incur such Extraordinary Trust Expenses. The Trustee
may incur other Extraordinary Trust Expenses if any lesser percentage of the
Certificateholders requesting such action pursuant hereto reimburse the
Trustee for the cost thereof from their own funds in advance. If Extraordinary
Trust Expenses are not approved unanimously as set forth in the first sentence
of this Section 8(b), such Extraordinary Trust Expenses shall not be an
obligation of the Trust, and the Trustee shall not file any claim against the
Trust therefor notwithstanding failure of Certificateholders to reimburse the
Trustee.
Section 9. Swap Payments. For so long as the Swap Agreement shall not
have been terminated, the Trust shall pay to the Swap Counterparty (i) all
interest payments paid to the Trust in respect of the Underlying Securities on
the date such amounts are received by the Trust, excluding any amount of
interest that accrued with respect to the Underlying Securities from the
Underlying Securities Payment Date next preceding the Closing Date to, but
excluding, the
14
Closing Date and (ii) upon the occurrence of any Swap Agreement Termination
Event that is also a Trust Termination Event, an amount equal to any Early
Termination Payment owed by it to the Swap Counterparty under the Swap
Agreement.
Section 10. Notices of Swap Agreement Termination Events and Underlying
Securities Events of Default. As promptly as practicable after, and in any
event within 30 days after, the occurrence of any Swap Agreement Termination
Event or Underlying Securities Event of Default actually known to the Trustee,
the Trustee shall give notice of such Swap Agreement Termination Event or
Underlying Securities Event of Default to the Depository, or, if any
Certificates are not then held by DTC or any other depository, directly to the
registered holders of such Certificates.
Section 11. Miscellaneous.
(a) The provisions of Section 4.04, Advances, of the Standard Terms shall
not apply to the Corporate Backed Trust Certificates, Verizon New York
Debenture-Backed Series 2004-5 Certificates.
(b) The provisions of Section 4.07, Optional Exchange, of the Standard
Terms shall not apply to the Corporate Backed Trust Certificates, Verizon New
York Debenture-Backed Series 2004-5 Certificates.
(c) The Trustee shall simultaneously forward reports to
Certificateholders and to the Swap Counterparty pursuant to Section 4.03 of
the Standard Terms and to the New York Stock Exchange.
(d) Except as expressly provided herein, the Certificateholders shall not
be entitled to terminate the Trust or cause the sale or other disposition of
the Underlying Securities.
(e) The provisions of Section 3.07(d) of the Standard Terms shall not
apply to the Corporate Backed Trust Certificates, Verizon New York
Debenture-Backed Series 2004-5 Certificates.
(f) The outstanding principal balance of the Certificates shall not be
reduced by the amount of any Realized Losses (as defined in the Standard
Terms).
(g) The Trust may not engage in any business or activities other than in
connection with, or relating to, the holding, protecting and preserving of the
Trust Property and the issuance of the Certificates, and other than those
required or authorized by the Trust Agreement or the Swap Agreement or
incidental and necessary to accomplish such activities. The Trust may not
issue or sell any certificates or other obligations other than the
Certificates or otherwise incur, assume or guarantee any indebtedness for
money borrowed. Notwithstanding Section 3.05 of the Standard Terms, funds on
deposit in the Certificate Account shall not be invested.
(h) Notwithstanding anything in the Trust Agreement to the contrary, the
Trustee may be removed upon 60 days prior written notice delivered by the
holders of Certificates representing the Required Percentage-Removal. Section
2.01(f) of the Standard Terms shall be superseded by this provision.
15
(i) In the event that the Internal Revenue Service challenges the
characterization of the Trust as a grantor trust, the Trustee shall then file
such forms as the Depositor may specify to establish the Trust's election
pursuant to Section 761 of the Code to exclude the Trust from the application
of Subchapter K of the Code and is hereby empowered to execute such forms on
behalf of the Certificateholders.
(j) Notwithstanding anything in the Standard Terms to the contrary, the
Trustee, upon written direction by the Depositor, will execute the
Certificates.
(k) The Trustee shall appoint a firm of independent certified public
accountants to determine that the asset of the Trust exists at the balance
sheet date and that such asset of the Trust reflects the correct value on that
date and to review each of the distribution reports prepared by the Trustee
pursuant to Section 4.03 of the Standard Terms and to verify (x) that such
reports and the calculations made therein were made accurately and in
accordance with the terms of the Trust Agreement and (y) that the Depositor
and the Trustee have each fulfilled their obligations under this Trust
Agreement. The Trustee shall instruct the accountants (i) to promptly report
to the Trustee any errors in such distribution reports discovered in verifying
such calculations and (ii) to render to the Trustee an annual examination
report, prepared in compliance with procedures to be agreed upon between the
Depositor and such independent certified public accountants based on
established or stated criteria as set forth in the professional standards of
the American Institute of Certified Public Accountants, within 45 days (or
such longer period as may be acceptable to the Trustee) following the end of
each calendar year that specifies the calculations made in reviewing the
distribution reports prepared by the Trustee for the previous calendar year
and such accountants' associated findings.
(l) In relation to Section 7.01(f) of the Standard Terms, any periodic
reports filed by the Trustee pursuant to the Exchange Act in accordance with
the customary practices of the Depositor, need not contain any independent
reports. Notwithstanding anything to the contrary, any references in such
reports (or any exhibits attached thereto) to "servicing obligations" of the
Trustee shall be limited to the obligations of the Trustee expressly set forth
in the Trust Agreement.
(m) Notwithstanding anything in the Trust Agreement to the contrary, the
Trustee will have no recourse to the Underlying Securities.
(n) The Trust will not merge or consolidate with any other entity without
confirmation from each Rating Agency that such merger or consolidation will
not result in the qualification, reduction or withdrawal of its then-current
rating on the Certificates.
(o) All directions, demands and notices hereunder or under the Standard
Terms shall be in writing and shall be delivered as set forth below (unless
written notice is otherwise provided to the Trustee).
If to the Depositor, to:
Xxxxxx ABS Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
16
Attention: Structured Credit Trading
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Trustee, to:
U.S. Bank Trust National Association
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
17
If to the Rating Agencies, to:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: CBO/CLO Monitoring Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and to:
Standard & Poor's Ratings Services
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Surveillance Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the New York Stock Exchange, to:
New York Stock Exchange, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Managing Director, Investment
Banking Services/Structured Products
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Swap Counterparty, to:
Xxxxxx Brothers Special Financing Inc.
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Documentation Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any notices given to the Depositor under this Agreement shall also be
given to the Swap Counterparty.
(p) Each of the representations, covenants and agreements made herein by
each of the Depositor and the Trustee are for the benefit of the
Certificateholders.
(q) The provisions of Section 2.01(d)(iii) of the Standard Terms shall
not apply to the Corporate Backed Trust Certificates, Verizon New York
Debenture-Backed Series 2004-5 Certificates and the following shall be deemed
to be inserted in its place:
18
"at the time of delivery of the Underlying Securities, the Depositor
owns such Underlying Securities, has the right to transfer its interest in
such Underlying Securities and such Underlying Securities are free and clear
of any lien, pledge, encumbrance, right, charge, claim or other security
interest; and"
(r) For purposes of making any determination under the Swap Agreement, in
connection with the termination of the Swap Agreement, the Trustee hereby
appoints the Depositor as the agent of the Trustee.
Section 12. Governing Law. THIS SERIES SUPPLEMENT AND THE TRANSACTIONS
DESCRIBED HEREIN SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS
PROVISIONS THEREOF.
Section 13. Counterparts. This Series Supplement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
all such counterparts shall constitute but one and the same instrument.
Section 14. Termination of the Trust. The Trust shall terminate upon the
earliest to occur of (i) the distribution in full of all amounts due to the
Certificateholders following a Swap Agreement Termination Event; (ii) the
Final Scheduled Distribution Date and (iii) the expiration of 21 years from
the death of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the
late Ambassador of the United States to the Court of St. Xxxxx, living on the
date hereof.
Section 15. Sale of Underlying Securities. In the event of a sale of the
Underlying Securities pursuant to Section 6 hereof, the Marketing Agent shall
sell the Underlying Securities in accordance with the Sale Procedures. In the
event of an Optional Exchange, the Trustee shall only deliver the Underlying
Securities to the purchaser of such Underlying Securities or sell the
Underlying Securities pursuant to this Section 15, as the case may be, against
payment in same day funds deposited into the Certificate Account.
Section 16. Amendments. Notwithstanding anything in the Trust Agreement
to the contrary, in addition to the other restrictions on modification and
amendment contained therein, the Trustee shall not enter into any amendment or
modification of the Trust Agreement which would adversely affect in any
material respect the interests of the holders of the Certificates without the
consent of the holders of 100% of such Certificates; provided, however, that
no such amendment or modification will be permitted which would cause the
Trust to be taxed as an association or publicly traded partnership taxable as
a corporation for federal income tax purposes. The Trustee shall not enter
into any amendment or modification of the Trust Agreement that would affect
the method, amount or timing of payment due to the Swap Counterparty or the
consent rights of the Swap Counterparty hereunder without the prior written
consent of the Swap Counterparty. Unless otherwise agreed, the Trustee shall
provide five Business Days written notice to each Rating Agency and the Swap
Counterparty before entering into any amendment or modification of the Trust
Agreement pursuant to this Section 16.
19
Section 17. Voting of Underlying Securities, Modification of Underlying
Securities Indenture, Modification of Swap Agreement.
(a) The Trustee, as holder of the Underlying Securities, has the right to
vote and give consents and waivers in respect of the Underlying Securities as
permitted by the Depository and except as otherwise limited by the Trust
Agreement. In the event that the Trustee receives a request from the
Depository, the Underlying Securities Trustee or the Underlying Securities
Issuer for its consent to any amendment, modification or waiver of the
Underlying Securities, the Underlying Securities Indenture or any other
document thereunder or relating thereto, or receives any other solicitation
for any action with respect to the Underlying Securities, the Trustee shall
mail a notice of such proposed amendment, modification, waiver or solicitation
to the Swap Counterparty and each Certificateholder of record as of such date.
The Certificateholders shall have all rights to vote on any matters with
respect to the Underlying Securities, and in such event: (i) the Trustee shall
request instructions from the Certificateholders as to whether or not to
consent to or vote to accept such amendment, modification, waiver or
solicitation; (ii) the Trustee shall consent or vote, or refrain from
consenting or voting, in the same proportion (based on the relative
outstanding Certificate Principal Balances of the Certificates) as the
Certificates of the Trust were actually voted or not voted by the
Certificateholders thereof as of a date determined by the Trustee prior to the
date on which such consent or vote is required. However, notwithstanding
anything in the Trust Agreement to the contrary (including this Section 17),
the Trustee shall at no time vote on or consent to any matter (A) unless such
vote or consent would not (based on an opinion of counsel) cause the Trust to
be taxed as an association or publicly traded partnership taxable as a
corporation under the Code, (B) which would alter the timing or amount of any
payment on the Underlying Securities, including, without limitation, any
demand to accelerate the Underlying Securities, except in the event of a
default under the Underlying Securities or an event which with the passage of
time would become an event of default under the Underlying Securities and with
the unanimous consent of holders of all outstanding Certificates, or (C) which
would result in the exchange or substitution of any of the outstanding
Underlying Securities pursuant to a plan for the refunding or refinancing of
such Underlying Securities except in the event of a default under the
Underlying Securities Indenture and only with the consent of
Certificateholders representing 100% of the Certificates. The Trustee shall
have no liability for any failure to act resulting from late return of, or
failure to return, directions requested by the Trustee from the
Certificateholders.
(b) In the event that an offer is made by the Underlying Securities
Issuer or any other Person to issue new obligations in exchange and
substitution for any of the Underlying Securities, pursuant to a plan for the
refunding or refinancing of the outstanding Underlying Securities or any other
offer is made for the Underlying Securities, the Trustee shall notify the Swap
Counterparty and the Certificateholders of such offer promptly. The Trustee
must reject any such offer unless a default on the Underlying Securities shall
have occurred, and the Trustee is directed by affirmative vote of the holders
of 100% of the Certificates to accept such offer and the Trustee has received
the tax opinion described above. If pursuant to the preceding two sentences,
the Trustee accepts any such offer the Trustee shall promptly notify the
Rating Agencies.
(c) If an event of default under the Underlying Securities Indenture
occurs and is continuing, and if directed by a majority of the outstanding
Certificateholders, the Trustee shall
20
vote the Underlying Securities in favor of directing, or take such other
action as may be appropriate to direct, the Underlying Securities Trustee to
declare the unpaid principal amount of the Underlying Securities and any
accrued and unpaid interest thereon to be due and payable.
(d) Until a Responsible Officer of the Trustee has actual knowledge of
the occurrence of an event that would constitute a Swap Agreement Termination
Event, the Trustee shall be entitled to assume (and shall be fully protected,
indemnified and held harmless in doing so, in accordance with Section 7.12 of
the Standard Terms) that no Swap Agreement Termination Event has occurred and
may accordingly seek instructions under this Section 17 exclusively from the
Swap Counterparty.
(e) The Trustee shall not consent to any amendment to the Swap Agreement
unless (i) it shall have received the prior consent to such amendment of
Certificateholders representing 66 2/3% of the aggregate Voting Rights and
(ii) each Rating Agency shall have confirmed in writing that such amendment
will not result in a reduction or withdrawal of the then current rating of the
Certificates; provided, however, the Trustee may consent to any amendment to
the Swap Agreement without the consent of the Certificateholders to cure any
ambiguity in, or to correct or supplement any provision of the Swap Agreement
which may be inconsistent with any other provision thereof, or to otherwise
cure any defect therein, provided that any such amendment does not materially
adversely affect the interest of the Certificateholders and that each Rating
Agency shall have given its prior written confirmation that such amendment
will not result in a reduction or withdrawal of the then current rating of the
Certificates; provided further, however, that notwithstanding anything to the
contrary, the Trustee shall not consent to any amendment to the Swap Agreement
that alters the timing or amount of any payment on the Swap Agreement unless
(i) it shall have received the prior consent to such amendment of
Certificateholders representing 100% of the aggregate Voting Rights and (ii)
each Rating Agency been given prior written notice of any such amendment (and
no rating confirmation shall be required).
Section 18. Additional Depositor Representation. It is the express intent
of the parties hereto that the conveyance of the Underlying Securities by the
Depositor to the Trustee be, and be construed as, a sale of the Underlying
Securities by the Depositor and not a pledge of any Underlying Securities by
the Depositor to secure a debt or other obligation of the Depositor. In the
event that, notwithstanding the aforementioned intent of the parties, any
Underlying Securities are held to be property of the Depositor, then, it is
the express intent of the parties that such conveyance be deemed a pledge of
such Underlying Securities and all proceeds thereof by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor, pursuant to
Section 10.07 of the Standard Terms. In connection with any such grant of a
security interest in the Underlying Securities and all proceeds thereof
(including any such grant in connection with any sale of additional Underlying
Securities pursuant to Section 3(d)), the Depositor hereby represents and
warrants to Trustee as follows:
(i) In the event the Underlying Securities are held to be
property of the Depositor, then the Trust Agreement creates a
valid and continuing security interest (as defined in the
UCC) in the Underlying Securities in favor of the Securities
Intermediary which security interest is prior to all
21
other liens, and is enforceable as such as against creditors
of, and purchasers from, the Depositor.
(ii) The Underlying Securities have been credited to a trust
account (the "Securities Account") established in the name of
the Trustee in accordance with Section 2.01 of the Standard
Terms. U.S. Bank Trust National Association, as securities
intermediary (the "Securities Intermediary") has established
the Securities Account and has agreed to treat the Underlying
Securities as "financial assets" within the meaning of the
UCC.
(iii) Immediately prior to the transfer of the Underlying
Securities to the Trust, the Depositor owned and had good and
marketable title to the Underlying Securities free and clear
of any lien, claim or encumbrance of any Person.
(iv) The Depositor has received all consents and approvals
required by the terms of the Underlying Securities for the
transfer to the Trustee all of the Depositor's interest and
rights in the Underlying Securities as contemplated by the
Trust Agreement.
(v) The Depositor has taken all steps necessary to cause the
Securities Intermediary to identify on its records that the
Trustee is the Person owning the security entitlements
credited to the Securities Account.
(vi) Other than the security interest granted to the Trust
pursuant to this Agreement, the Depositor has not assigned,
pledged, sold, granted a security interest in or otherwise
conveyed any interest in the Underlying Securities (or, if
any such interest has been assigned, pledged or otherwise
encumbered, it has been released). The Depositor has not
authorized the filing of and is not aware of any financing
statements against the Depositor that include a description
of the Underlying Securities other than any financing
statement relating to the security interest granted to the
Trust hereunder. The Depositor is not aware of any judgment
or tax lien filings against the Depositor.
(vii) The Securities Account is not in the name of any Person other
than the Trustee. The Depositor has not consented to the
compliance by the Securities Intermediary, with entitlement
orders of any Person other than the Trustee.
22
IN WITNESS WHEREOF, the parties hereto have caused this Series
Supplement to be duly executed by their respective authorized officers as of
the date first written above.
XXXXXX ABS CORPORATION,
as Depositor
By: /s/ Xxxx Xxxxxxxxxxx
--------------------
Name: Xxxx Xxxxxxxxxxx
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Trustee on behalf of the
Corporate Backed Trust Certificates,
Verizon New York Debenture-Backed
Series 2004-5 Trust
By: /s/ Xxxxx Xxxxxxxxxx
--------------------
Name: Xxxxx Xxxxxxxxxx
Title:
23
SCHEDULE I
CORPORATE BACKED TRUST CERTIFICATES, VERIZON NEW YORK
DEBENTURE-BACKED SERIES 2004-5
UNDERLYING SECURITIES SCHEDULE
Underlying Securities: 7 3/8 Debentures Due 2032.
Issuer: Verizon New York Inc..
CUSIP Number: 00000XXX0.
Principal Amount Deposited: $25,000,000.
Original Issue Date: The Underlying Securities were issued on
March 28, 2003.
Principal Amount of
Underlying Securities
Originally Issued: $500,000,000.
Maturity Date: April 1, 2032.
Interest Rate: 7 3/8% per annum.
Interest Payment Dates: April 1st and October 1st.
I-1
EXHIBIT A
FORM OF TRUST CERTIFICATE
TRUST CERTIFICATE
-----------------
NUMBER 1 1,000,000 $25 PAR CERTIFICATES
CUSIP NO. 00000X000
SEE REVERSE FOR CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE REPRESENTS A PROPORTIONATE UNDIVIDED BENEFICIAL
OWNERSHIP INTEREST IN THE TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN
INTEREST IN, AND IS NOT GUARANTEED BY THE DEPOSITOR OR THE TRUSTEE OR ANY OF
THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE TRUST ASSETS ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
A-1
XXXXXX ABS CORPORATION
1,000,000 $25 PAR CERTIFICATES
CORPORATE BACKED TRUST CERTIFICATES, VERIZON NEW YORK
DEBENTURE-BACKED SERIES 2004-5
INTEREST RATE: 4.00% UNTIL THE DISTRIBUTION DATE IN APRIL 2004 AND AT A
FLOATING RATE NOT TO EXCEED 7.50% PER ANNUM, EQUAL TO THE GREATER OF (A)
ONE-MONTH USD LIBOR PLUS 1.125% AND (B) 4.00%, THEREAFTER
evidencing a proportionate undivided beneficial ownership interest
in the Trust, as defined below, the property of which consists principally of
$25,000,000 aggregate principal amount of 7 3/8% Debentures due 2032, issued
by Verizon New York Inc. (the "Underlying Securities Issuer") and all payments
received thereon, deposited in trust by Xxxxxx ABS Corporation (the
"Depositor"), and certain rights of the Trust under the Swap Agreement (the
"Trust Property").
THIS CERTIFIES THAT CEDE & CO. is the registered owner of an
aggregate of $25,000,000 principal amount nonassessable, fully-paid,
proportionate undivided beneficial ownership interest in the Corporate Backed
Trust Certificates, Verizon New York Debenture-Backed Series 2004-5 Trust,
formed by the Depositor.
The Trust was created pursuant to a Standard Terms for Trust
Agreements, dated as of January 16, 2001 (the "Standard Terms"), between the
Depositor and U.S. Bank Trust National Association, a national banking
association, not in its individual capacity but solely as Trustee (the
"Trustee"), as supplemented by the Series Supplement in respect of the
Corporate Backed Trust Certificates, Verizon New York Debenture-Backed Series
2004-5, dated as of February 25, 2004 (the "Series Supplement" and, together
with the Standard Terms, the "Trust Agreement"), between the Depositor and the
Trustee. This Certificate does not purport to summarize the Trust Agreement
and reference is hereby made to the Trust Agreement for information with
respect to the interests, rights, benefits, obligations, proceeds and duties
evidenced hereby and the rights, duties and obligations of the Trustee with
respect hereto. A copy of the Trust Agreement may be obtained from the Trustee
by written request sent to the Corporate Trust Office. Capitalized terms used
but not defined herein have the meanings assigned to them in the Trust
Agreement.
This Certificate is one of the duly authorized Certificates
designated as the "Corporate Backed Trust Certificates, Verizon New York
Debenture-Backed Series 2004-5" (herein called the "Certificates"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. The Trust Property consists of: (i) Underlying Securities
described in the Trust Agreement, (ii) all payments on or collections in
respect of the Underlying Securities accrued on or after February 25, 2004,
together with any and all income, proceeds and payments with respect thereto;
provided, however, that any income from the investment of Trust funds in
certain permitted investments ("Eligible Investments") does not constitute
Trust Property and (iii) the rights of the
A-2
Trust under the Swap Agreement (subject to the Trust's obligations to the Swap
Counterparty under the Swap Agreement).
Subject to the terms and conditions of the Trust Agreement
(including the availability of funds for distributions) and until the
obligation created by the Trust Agreement shall have terminated in accordance
therewith, distributions will be made on each Distribution Date, to the Person
in whose name this Certificate is registered on the applicable Record Date, in
an amount equal to such Certificateholder's proportionate undivided beneficial
ownership interest in the amount required to be distributed to the Holders of
the Certificates on such Distribution Date. The Record Date applicable to any
Distribution Date is the close of business on the day immediately preceding
such Distribution Date (whether or not a Business Day). If a payment with
respect to the Underlying Securities is made to the Trustee after the date on
which such payment was due, then the Trustee will distribute any such amounts
received on the next occurring Business Day.
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not at any time
institute against the Trust, or join in any institution against the Trust of,
any bankruptcy proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Certificates
or the Trust Agreement.
Distributions made on this Certificate will be made as provided in
the Trust Agreement by the Trustee by wire transfer in immediately available
funds, or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the
making of any notation hereon, except that with respect to Certificates
registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee shall be Cede & Co.), payments will be made by
wire transfer in immediately available funds to the account designated by such
nominee. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the Corporate
Trust Office or such other location as may be specified in such notice.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not
entitle the Holder hereof to any benefit under the Trust Agreement or be valid
for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
A-3
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed as of the date set forth below.
CORPORATE BACKED TRUST
CERTIFICATES, VERIZON NEW YORK
DEBENTURE-BACKED SERIES 2004-5
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
not in its individual capacity but
solely as Trustee,
By: ______________________________
Authorized Signatory
Dated: February 25, 2004
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Corporate Backed Trust Certificates, Verizon
New York Debenture-Backed Series 2004-5, described in the Trust Agreement
referred to herein.
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely
as Trustee,
By: _____________________________________
Authorized Signatory
A-4
(REVERSE OF CERTIFICATE)
The Certificates are limited in right of distribution to certain
payments and collections respecting the Swap Agreement and the Underlying
Securities, all as more specifically set forth herein and in the Trust
Agreement. The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Property (to the extent of its rights
therein) for distributions hereunder.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the Trustee and the rights of the
Certificateholders under the Trust Agreement at any time by the Depositor and
the Trustee with the consent of the Swap Counterparty and the Holders of the
Certificates in the manner set forth in the Series Supplement and the Standard
Terms. Any such consent by the Holder of this Certificate (or any predecessor
Certificate) shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not a
notation of such consent is made upon this Certificate. The Trust Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Certificates.
The Certificates are issuable in fully registered form only in
denominations of $25.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register upon surrender of this Certificate
for registration of transfer at the offices or agencies of the Certificate
Registrar maintained by the Trustee in the Borough of Manhattan, the City of
New York, duly endorsed by or accompanied by an assignment in the form below
and by such other documents as required by the Trust Agreement, and thereupon
one or more new Certificates of the same class in authorized denominations
evidencing the same principal amount will be issued to the designated
transferee or transferees. The initial Certificate Registrar appointed under
the Trust Agreement is U.S. Bank Trust National Association.
No service charge will be made for any registration of transfer or
exchange, but the Trustee may require exchange of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with
any transfer or exchange of Certificates.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
any such agent shall be affected by any notice to the contrary.
It is the intention of the parties to the Trust Agreement that the
Trust created thereunder shall constitute a fixed investment trust for federal
income tax purposes under Treasury Regulation Section 301.7701-4, and the
Certificateholder agrees to treat the Trust, any distributions therefrom and
its beneficial interest in the Certificates consistently with such
characterization.
A-5
The Trust and the obligations of the Depositor and the Trustee
created by the Trust Agreement with respect to the Certificates shall
terminate upon the earliest to occur of (i) the distribution in full of all
amounts due to the Certificateholders following a Swap Agreement Termination
Event; (ii) the Final Scheduled Distribution Date and (iii) the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of St. Xxxxx,
living on the date hereof.
An employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), a plan described in Section
4975(e) of the Code, an entity whose underlying assets include plan assets by
reason of any such plan's investment in the entity, including an individual
retirement account or Xxxxx plan (any such, a "Plan") may purchase and hold
Certificates if the Plan can represent and warrant that its purchase and
holding of the Certificates would not be prohibited under ERISA or the Code.
A-6
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or type name and address, including postal zip code, of
assignee) the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing ______________________ Attorney to
transfer said Certificate on the books of the Certificate Register, with full
power of substitution in the premises.
Dated:
*
Signature Guaranteed:
*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Signatures must be guaranteed
by an "eligible guarantor institution" meeting the requirements of the
Certificate Registrar, which requirements include membership or participation
in the Security Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the Certificate
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
A-7
EXHIBIT B
FORM OF SWAP AGREEMENT
B-1
(Multicurrency--Cross Border)
ISDA(R)
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of February 25, 2004
among
XXXXXX BROTHERS SPECIAL FINANCING INC. and CORPORATE BACKED TRUST
CERTIFICATES, VERIZON NEW YORK
DEBENTURE-BACKED SERIES 2004-5
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.
(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
(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
(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 perforating 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
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(c)
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
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
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
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
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
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
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 convened 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
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
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 xxxxx, on the date the recipient's answer back 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
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
"Defaulting Party" has the meaning specified in Section 6(a).
"Early Termination Date" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"Event of Default" has the meaning specified in Section 5(a) and, if
applicable, in the Schedule.
"Illegality" has the meaning specified in Section 5(b).
"Indemnifiable Tax" means any Tax other than a Tax that would not be imposed
in respect of a payment under this Agreement but for a present or former
connection between the jurisdiction of the government or taxation authority
imposing such Tax and the recipient of such payment or a person related to
such recipient (including, without limitation, a connection arising from such
recipient or related person being or having been a citizen or resident of such
jurisdiction, or being or having been organised, present or engaged in a trade
or business in such jurisdiction, or having or having had a permanent
establishment or fixed place of business in such jurisdiction, but excluding a
connection arising solely from such recipient or related person having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or a Credit Support Document).
"law" includes any treaty, law, rule or regulation (as modified, in the case
of tax matters, by the practice of any relevant governmental revenue
authority) and "lawful" and "unlawful" will be construed accordingly.
"Local Business Day" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and
foreign currency deposits) (a) in relation to any obligation under Section
2(a)(i), in the place(s) specified in the relevant Confirmation or, if not so
specified, as otherwise agreed by the parties in writing or determined
pursuant to provisions contained, or incorporated by reference, in this
Agreement, (b) in relation to any other payment, in the place where the
relevant account is located and, if different, in the principal financial
centre, if any, of the currency of such payment, (c) in relation to any notice
or other communication, including notice contemplated under Section 5(a)(i),
in the city specified in the address for notice provided by the recipient and,
in the case of a notice contemplated by Section 2(b), in the place where the
relevant new account is to be located and (d) in relation to Section
5(a)(v)(2), in the relevant locations for performance with respect to such
Specified Transaction.
"Loss" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be
its total losses and costs (or gain, in which case expressed as a negative
number) in connection with this Agreement or that Terminated Transaction or
group of Terminated Transactions, as the case may be, including any loss of
bargain, cost of funding or, at the election of such party but without
duplication, loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading position
(or any gain resulting from any of them). Loss includes losses and costs (or
gains) in respect of any payment or delivery required to have been made
(assuming satisfaction of each applicable condition precedent) on or before
the relevant Early Termination Date and not made, except, so as to avoid
duplication, if Section 6(e)(i)(1) or (3) or 6(e)(ii)(2)(A) applies. Loss does
not include a party's legal fees and out-of-pocket expenses referred to under
Section 11. A party will determine its Loss as of the relevant Early
Termination Date, or, if that is not reasonably practicable, as of the
earliest date thereafter as is reasonably practicable. A party may (but need
not) determine its Loss by reference to quotations of relevant rates or prices
from one or more leading dealers in the relevant markets.
"Market Quotation" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number) or
by such party (expressed as a positive number) in consideration of an
agreement between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the quoting
Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in
respect of such Terminated Transaction or group of Terminated Transactions
that would, but for the occurrence of the relevant Early Termination Date,
have
15
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is
to be included. The Replacement Transaction would be subject to such
documentation as such party and the Reference Market-maker may, in good faith,
agree. The party making the determination (or its agent) will request each
Reference Market-maker to provide its quotation to the extent reasonably
practicable as of the same day and time (without regard to different time
zones) on or as soon as reasonably practicable after the relevant Early
Termination Date. The day and time as of which those quotations are to be
obtained will be selected in good Faith by the party obliged to make a
determination under Section 6(e), and, if each party is so obliged, after
consultation with the other. If more than three quotations are provided, the
Market Quotation will be the arithmetic mean of the quotations, without regard
to the quotations having the highest and lowest values. If exactly three such
quotations are provided, the Market Quotation will be the quotation remaining
after disregarding the highest and lowest quotations. For this purpose, if
more than one quotation has the same highest value or lowest value, then one
of such quotations shall be disregarded. If fewer than three quotations are
provided, it will be deemed that the Market Quotation in respect of such
Terminated Transaction or group of Terminated Transactions cannot be
determined.
"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.
"Non-defaulting Party" has the meaning specified in Section 6(a).
"Office" means a branch or office of a party, which may be such party's head
or home office.
"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Reference Market-makers" means four leading dealers in the relevant market,
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.
"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.
"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.
"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of: --
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"Specified Entity" has the meanings specified in the Schedule.
16
"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
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.
XXXXXX BROTHERS SPECIAL FINANCING INC. CORPORATE BACKED TRUST
CERTIFICATES, VERIZON NEW YORK
DEBENTURE-BACKED SERIES 2004-5
TRUST
(Party A) (Party B)
By: U.S. Bank Trust National
Association, not in its
individual capacity but solely
as Trustee under the Trust
By: Agreement
-------------------
Name: Xxxxxx Xxxxxxxx
Title: Authorized Signatory By:
--------------------
Name: Xxxxx Xxxxxxxxxx
Title:
18
SCHEDULE
to the Master Agreement
dated as of February 25, 2004
between
XXXXXX BROTHERS SPECIAL FINANCING INC. ("Party A"),
-------
a corporation organized under
the laws of
the State of Delaware
and
CORPORATE BACKED TRUST CERTIFICATES, VERIZON NEW YORK
DEBENTURE-BACKED SERIES 2004-5 TRUST ("Party B")
-------
a trust created under the laws of the State of New York
pursuant to the Trust Agreement (as defined herein)
Part 1. Termination Provisions.
In this Agreement: --
(a) "Specified Entity" means in relation to Party A for the purpose of: --
Section 5(a)(v) Not Applicable.
Section 5(a)(vi) Not Applicable.
Section 5(a)(vii) Not Applicable.
Section 5(b)(iv) Not Applicable.
and in relation to Party B for the purpose of:--
Section 5(a)(v) Not Applicable.
Section 5(a)(vi) Not Applicable.
Section 5(a)(vii) Not Applicable.
Section 5(b)(iv) Not Applicable.
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(c) Failure to Pay or Deliver. Section 5(a) is hereby amended by replacing
the word "third" with the word "fifth" in the last line of subsection
(i) thereof.
(d) Section 5(a) is hereby amended by: (1) deleting the word "or" at the end
of Subsection vii thereof (2) deleting the period at the end of
Subsection (viii) thereof and (3) adding the following Subsection (ix)
and Subsection (x) at the end of such Section 5(a):
19
(ix) Underlying Securities Payment Default. An Underlying Securities
Payment Default shall have occurred and be continuing; or
(x) Underlying Securities Bankruptcy Default. An Underlying Securities
Bankruptcy Default shall have occurred and be continuing.
For the purpose of the Events of Default described in Section 5(a)(ix)
and 5(a)(x), the Defaulting Party shall be Party B.
(e) The provisions of Section 5(a) (as modified by (c) and (d) above) and
Section 5(b) will apply to Party A and to Party B as follows: --
Section 5(a) Party A Party B
------------ ------- -------
(i) "Failure to Pay or Deliver" Applicable. Applicable.
(ii) "Breach of Agreement" Not Applicable. Not Applicable.
(iii) "Credit Support Default" Applicable. Not Applicable.
(iv) "Misrepresentation" Not Applicable. Not Applicable.
(v) "Default under Specified Transaction" Not Applicable. Not Applicable.
(vi) "Cross Default" Not Applicable. Not Applicable.
(vii) "Bankruptcy" Applicable. Not Applicable.
(viii)"Merger Without Assumption" Not Applicable. Not Applicable.
(ix) "Underlying Securities Payment Default" Not Applicable. Applicable.
(x) "Underlying Securities Bankruptcy
Default" Not Applicable. Applicable.
Section 5(b) Party A Party B
------------ ------- -------
(i) "Illegality" Applicable. Applicable.
(ii) "Tax Event" Not Applicable. Not Applicable.
(iii) "Tax Event Upon Merger" Not Applicable. Not Applicable.
(iv) "Credit Event Upon Merger" Not Applicable. Not Applicable.
(v) "Additional Termination Event" Applicable. Applicable.
(f) The following shall each be specified as "Additional Termination Events"
pursuant to Section 5(b)(v):
SEC Reporting Failure. If the Underlying Securities Issuer either (x)
states in writing that it intends permanently to cease filing periodic
reports required under the Securities Exchange Act of 1934, as amended
or (y) fails to file all required periodic reports for one full year
(each, an "SEC Reporting Failure"), the Depositor shall within a
reasonable period of time instruct the Trustee to cause the Marketing
Agent to liquidate the Underlying Securities, in which case, (1) the
Transactions shall be terminated and (2) the Early Termination Date
shall be the date on which the Underlying Securities are liquidated. For
the purposes the foregoing Additional Termination Event, Party B shall
be the Affected Party.
20
Optional Redemption. The exercise of optional redemption or other
prepayment of the Underlying Securities by the Underlying Securities
Issuer, in which case, (1) a portion of the Notional Amount of the
Transactions equal to the related optional redemption shall be
terminated and (2) the Early Termination Date with respect to such
portion of the Notional Amount of the Transactions shall be the date on
which the optional redemption is exercised. For the purposes the
foregoing Additional Termination Event, Party B shall be the Affected
Party.
Optional Exchange. The exercise of an Optional Exchange in accordance
with Section 7 of the Series Supplement, in which case, (1) a portion of
the Notional Amount of the Transactions equal to the related Optional
Exchange shall be terminated and (2) the Early Termination Date with
respect to such portion of the Notional Amount of the Transactions shall
be the related date the Optional Exchange is exercised. For the purposes
the foregoing Additional Termination Event, Party B shall be the
Affected Party.
(g) Automatic Early Termination. The "Automatic Early Termination"
provisions of Section 6(a) will not apply to Party A or Party B.
(h) Additional Definitions.
As used in this Schedule, the following terms shall have the following
meanings:
"Business Day" means any day (which is neither a Saturday nor a Sunday)
nor a day on which banks in New York City or the place of payment in
respect of the Underlying Securities are authorized or required to be
closed.
"LBHI" means Xxxxxx Brothers Holdings Inc.
"Xxxxx'" means Xxxxx'x Investors Service, Inc.
"Person" means any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality
thereof.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc.
"Underlying Securities Issuer" means Verizon New York Inc..
(i) "Termination Currency" means United States Dollars ("USD").
21
Part 2. Tax Representations.
(A) Payer Tax Representation. For the purpose of Section 3(e) of this
Agreement, Party A and Party B each make the following representations:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of
any Tax from any payment (other than interest under Section 2(e),
6(d)(ii), or 6(e) of this Agreement) to be made by it to the other party
under this Agreement. In making this representation, it may rely on (i)
the accuracy of any representations made by the other party pursuant to
Section 3(f) of this Agreement, (ii) the satisfaction of the agreement
contained in Section 4(a)(i) or 4(a)(iii) of this Agreement, and the
accuracy and effectiveness of any document provided by the other party
pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement, and (iii)
the satisfaction of the agreement of the other party contained in
Section 4(d) of this Agreement, provided that it shall not be a breach
of this representation where reliance is placed on clause (ii) and the
other party does not deliver a form or document under Section 4(a)(iii)
by reason of material prejudice to its legal or commercial position.
(B) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, Party A makes the following representations: --
(i) The following representation applies to Party A: --
Party A is a corporation organized under the laws of the State of
Delaware.
(ii) The following representation applies to Party B: --
Party B is a trust that has not elected to be treated as a
corporation for U.S. federal income tax purposes.
Part 3. Agreement to Deliver Documents.
For the purpose of Section 4(a)(i) and Section 4(a)(ii) of this Agreement,
Party A and Party B each agree to deliver the following documents, as
applicable: --
(a) Tax forms, documents or certificates to be delivered are.-
Form, Document Date by which Covered
Party or Certificate to be Delivered by
required to Section
deliver 3(d)
document
Party A A complete and (i) Before the No
executed U.S. first Payment Date
Internal Revenue under this
Service Form W-9 Agreement, (ii)
(or any successor
thereto), that
22
Form, Document Date by which Covered
Party or Certificate to be Delivered by
required to Section
deliver 3(d)
document
eliminates U.S. promptly upon
federal backup reasonable demand
withholding tax on by Party B, and
payments under (iii) promptly
this Agreement. provided by Party
upon learning that A has become obsolete
any such Form or incorrect.
previously
Party B A complete and (i) Before the No
executed U.S. first Payment Date
Internal Revenue under this
Service Form W-9 Agreement, (ii)
(or any successor promptly upon
thereto) and a reasonable demand
complete and by Party A, and
executed U.S. (iii) promptly
Internal Revenue upon learning that
Service Form any such Form
W-8BEN, W-8IMY, previously
W-8ECI or W-9 (or provided by Party
any successor B has become
thereto) from each obsolete or
Certificateholder incorrect.
(and, where
applicable, such
forms from the
beneficial owners
of such
Certificates) and
in any case in
which the
Certificateholder
is eligible for
the benefits of an
income tax treaty
with the United
States, a Form
W-8BEN including a
claim of treaty
benefits under
Part II, claiming
such benefits with
respect to all
payments received
with respect to
the Certificates,
and with Part III
marked, in each
case that
eliminates U.S.
federal
withholding tax
and backup
withholding on
payments under
this Agreement.
(b) Other documents to be delivered are:
Form, Document Date by which Covered
Party or Certificate to be Delivered by
required to Section
deliver 3(d)
document
23
Form, Document Date by which Covered
Party or Certificate to be Delivered by
required to Section
deliver 3(d)
document
Party A An opinion of Promptly after No
counsel to Party A execution of this
substantially in Agreement.
the form of
Exhibit B-1 and
B-2 to this
Schedule.
Party A An incumbency Upon execution of Yes
certificate with this Agreement.
respect to the
signatory of this
Agreement.
Party A A guarantee of Upon execution of No
LBHI substantially this Agreement.
in the form of
Exhibit D to
this Schedule.
Party B An opinion of Promptly after No
counsel to Party B execution of this
substantially in Agreement.
the form of
Exhibit C to this
Schedule.
Party B (with An incumbency Upon execution of Yes
respect to the certificate with this Agreement.
Trustee) respect to the
signatory of this
Agreement.
Party B (with A certified copy Upon execution of Yes
respect to the of the resolution this Agreement
Trustee) or resolutions or (unless an
applicable Bylaws Authorizing
(the "Authorizing Resolution has
Resolution") of previously been
the Board of furnished by the
Directors or loan Trustee to Party
committee of the A) and, with
Trustee, certified respect to each
by a secretary, or Swap Transaction
an assistant not covered by a
secretary of the previously furnished
Trustee, pursuant to Authorizing Resolution,
which the Trustee within five Business
is authorized, on Days of the Trade Date.
behalf of the Trust,
to enter into this
Agreement and each
Swap Transaction
entered into under
this Agreement.
Party B A certified copy Upon execution of Yes
of the
24
Form, Document Date by which Covered
Party or Certificate to be Delivered by
required to Section
deliver 3(d)
document
Trust Agreement and Agreement and on
and each amendment the date of
thereof. each amendment
thereof.
Part 4. Miscellaneous.
(a) Addresses for Notices. For purpose of Section 10(a):
Address for notices or communications to Party A: --
Address: Xxxxxx Brothers Special Financing Inc.
c/x Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Documentation Manager
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Address for notices or communications to Party B: --
Address: U.S. Bank Trust National Association
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust
Facsimile No.: (000) 000-0000
(b) Process Agent. For the purpose of Section 13(c): --
Party A appoints as its Process Agent: Not Applicable.
Party B appoints as its Process Agent: Not Applicable.
(c) Offices. The provisions of Section 10(a) will apply to this Agreement.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:
--
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
25
(e) Calculation Agent. The Calculation Agent is Party A. The failure of
Party A to perform its obligations as Calculation Agent shall not be
construed as an Event of Default or Termination Event.
(f) Credit Support Document. Details of any Credit Support Document: --
In the case of Party A, a guarantee of Party A's obligations hereunder
substantially in the form of Exhibit D attached to this Schedule.
In the case of Party B, not applicable.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: LBHI.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) Limitation on Trustee Liability. In the absence of negligence, willful
misconduct or bad faith on the part of the Trustee, the Trustee shall
have no personal liability for the payment of any indebtedness or
expenses of Party B or be personally liable for the breach or any
failure of any obligation, representation, warranty or covenant made or
undertaken by Party B under this Transaction or the Trust Agreement
within the scope of the Trustee's discharge of its duties under this
Transaction or the Trust Agreement or for any amounts due under this
Transaction from Party B, such amounts to be paid solely from the
assets of Party B in accordance with the Trust Agreement.
(i) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without regard to
choice of law doctrine).
(j) Jurisdiction. Section 13(b) is hereby amended by: (i) deleting in the
second line of subparagraph (i) thereof the word "non-"; and (ii)
deleting the final paragraph thereof.
(k) Netting of Payments. Section 2(c)(ii) will apply to all Transactions.
(1) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
Part 5. Other Provisions.
(a) Confirmation. Each Confirmation supplements, forms part of, and will be
read and construed as one with the Agreement. A form of Confirmation is
set forth as Exhibit A hereto.
(b) Early Termination. Notwithstanding any other provision of this
Agreement, in the event of the occurrence of an Event of Default with
respect to Party A, the Depositor shall make the determination to
designate an Early Termination Date in connection with the termination
of this Agreement on behalf of Party B. In addition, the Early
26
Termination Date so designated shall be at least five Business Days
following the date on which Party B receives such direction from the
Depositor.
(c) No Bankruptcy Petition. Prior to the date that is one year and one day
(or the applicable preference period) after the date upon which the
trust created under the Trust Agreement is terminated in accordance
with the terms thereof, Party A shall not institute against, or join
any other person in instituting against, the trust created thereby, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy
or similar law.
(d) Transfer. Section 7 is hereby amended by: (i) adding the words "(which
consent may not be unreasonably withheld)" after the word "consent" in
the second line thereof, (ii) adding the words "(and notice of the
transferee to)" after the word "of" in the third line thereof, (iii)
adding the words "and the consent of holders of 100% of the then
outstanding Certificates, and each Rating Agency shall have given its
prior written confirmation that such transfer will not result in a
reduction or withdrawal of the then current rating of the Certificates"
after the word "party" in the third line thereof and (iv) adding the
words "(subject to providing written notice of the transferee to the
other party)" after the word "transfer" in the fourth and seventh line
thereof. Party B shall not consent to any transfer or assignment by
Party A of its rights and obligations hereunder unless holders of 100%
of the outstanding Certificates have consented to such assignment or
transfer.
(e) Intention to Enter into a "Swap Agreement". Each of Party A and Party
B hereby acknowledges and agrees that this Agreement and all Additional
Direct Agreements and each Transaction hereunder or thereunder is
intended to be a "swap agreement" as that term is defined in the U.S.
Bankruptcy Code (as amended from time to time) and that the rights
granted to each party under Section 6 include a contractual right to
terminate a "swap agreement" and to offset and net out termination
values and payments in conjunction therewith.
(f) Waiver of Right to Trial by Jury. Each party hereby irrevocably waives,
to the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect of any suit, action or proceeding relating
to this Agreement or any Credit Support Document. Each party (i)
certifies that no representative, agent or attorney of the other party
or any Credit Support Provider has represented, expressly or otherwise,
that such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this
Agreement and provide for any Credit Support Document, as applicable,
by, among other things, the mutual waivers and certifications in this
section.
(g) Assignment of Agreement. Upon the occurrence of an S&P Downgrade, Party
A will promptly assign its rights under this Agreement to an S&P
Replacement Swap Counterparty; provided, all costs and expenses in
connection with such assignment to the S&P Replacement Swap
Counterparty will be paid by Party A. Following such assignment the
Credit Support Document in the case of Party A shall be terminated. If
an S&P Replacement Swap Counterparty is not designated within 30 days
of the occurrence
27
of an S&P Downgrade, Party A shall enter into an arrangement with Party
B pursuant to which Party A or the Swap Guarantor will deliver
Collateral to Party B, which Collateral will at all times be sufficient
to maintain the then current ratings of the Certificates; provided, upon
the completion of the assignment of this Agreement to an S&P Replacement
Swap Counterparty, any outstanding arrangement with respect to the
Collateral shall terminate.
(h) Accuracy of Specified Information. Section 3(d) is hereby amended by
adding in the third line thereof after the word "respect" and before the
period the words "or, in the case of audited or unaudited financial
statements, a fair presentation, in all material respects, of the
financial condition of the relevant person."
(i) Additional Representations. For purposes of Section 3 of this Agreement,
the following shall be added, immediately following paragraph (f)
thereof:
(g) No Agency. It is entering into this Agreement and each Transaction
as principal (and not as agent or in any other capacity, fiduciary
or otherwise); provided, that the Trustee is acting not in its
individual capacity but solely as Trustee for Party B.
(h) Eligible Contract Participant. It is an "eligible contract
participant" as that term is defined in the Commodity Exchange
Act, as amended.
(i) Non-Reliance. Party A 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. Party B is entering into the
Transaction pursuant to the terms of the Trust Agreement.
Neither party is 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 an adviser to it in respect of that Transaction.
(j) No Setoff to Party A Affiliates. Party B agrees that all payments
required to be made by it under this Agreement shall be made without
setoff or counterclaim for, and that it shall not withhold payment or
delivery under this Agreement in respect of, any default by any
Affiliate of Party A under any Other Agreement or any amount relating
to any Other
28
Agreement between Party B and such Affiliate of Party A or between an
Affiliate of Party B and such Affiliate of Party A. As used herein,
"Other Agreement" means any agreement, including, but not limited to,
(i) any transaction (including an agreement with respect thereto) which
is a rate swap transaction, basis swap, forward rate transaction,
commodity swap, commodity option, interest rate option, foreign exchange
transaction, cap transaction, floor transaction, currency option or any
other similar transaction (including any option with respect to any of
these transactions), (ii) any liability, claim or obligation (whether
present or future, contingent or otherwise), or (iii) any combination of
one or more of the transactions described above. This paragraph (1)
shall supersede any setoff right contained in any Other Agreement or any
agreement relating to any Other Agreement between Party B and any such
Affiliate of Party A or between an Affiliate of Party B and such
Affiliate of Party A.
(k) Notices. For the purposes of subsections (iii) and (v) of Section 12(a),
the date of receipt shall be presumed to be the date sent if sent on a
Local Business Day or, if not sent on a Local Business Day, the date of
receipt shall be presumed to be the first Local Business Day following
the date sent.
(l) Service of Process. The penultimate sentence of Section 13(c) shall be
amended by adding the following language at the end thereof "if
permitted in the jurisdiction where the proceedings are initiated and in
the jurisdiction where service is to be made."
(m) Additional Definitions.
"Certificates" shall mean Corporate Backed Trust Certificates, Verizon
New York Debenture-Backed Series 2004-5 Trust Certificates, due April l,
2032, issued pursuant to the Trust Agreement.
"Collateral" shall mean (i) cash in U.S. Dollars; (ii) direct registered
obligations of, and registered obligations the timely payment of
principal of and interest on which is fully and expressly guaranteed by,
the United States of America, or any agency or instrumentality of the
United States of America the obligations of which are backed by the full
faith and credit of the United States of America; or (iii) negotiable
debt obligations which are issued and/or guaranteed as to both principal
and interest by the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association, or the Government National Mortgage
Association, including mortgage-backed securities and REMICs, but
excluding interest only securities, principal only securities and
residual interests.
"Optional Exchange" shall have the meaning specified therefor in the
Trust Agreement.
"S&P Downgrade" means the Swap Guarantor is downgraded below the short
term unsecured debt rating of "A-1" by S&P.
"S&P Replacement Swap Counterparty" means a swap counterparty having a
short term unsecured debt rating of rating of at least "A-1" by S&P and
otherwise acceptable to each Rating Agency.
29
"Swap Guarantor" means LBHI.
"Trust Agreement" shall mean, collectively, the Series Supplement (the
"Series Supplement"), dated as of February 25, 2004, which supplements
and amends the Standard Terms for Trust Agreements ("Standard Terms"),
dated as of January 16, 2001, each between Xxxxxx ABS Corporation, as
depositor, and U.S. Bank Trust National Association, as trustee, as the
same may be amended or supplemented from time to time as provided
therein.
"Trust Regulatory Event" shall mean the occurrence of a Termination
Event as described in Section 5(b)(i) with Party B as the Affected
Party.
"Trust Swap Payment Default" shall mean the occurrence of an Event of
Default as described in Section 5(a)(i) with Party B as the Defaulting
Party.
"Trustee" shall mean U.S. Bank Trust National Association, as Trustee of
Party B, and any additional or successor trustee of Party B.
"Underlying Securities" shall have the meaning specified therefor in the
Trust Agreement.
"Underlying Securities Bankruptcy Default" shall mean the occurrence of
any event of bankruptcy, insolvency or reorganization that would be an
event of default under the Underlying Securities Indenture.
"Underlying Securities Payment Default" shall mean the failure by the
Underlying Securities Issuer to pay interest or principal with respect
to the Underlying Securities within any applicable grace period after
the same shall become due.
Terms used herein and not otherwise defined shall have the meaning
ascribed to them in the Trust Agreement.
30
The parties executing this Schedule have executed the Master
Agreement and have agreed as to the contents of this Schedule.
XXXXXX BROTHERS SPECIAL FINANCING INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Authorized Signatory
CORPORATE BACKED TRUST CERTIFICATES,
VERIZON NEW YORK DEBENTURE-BACKED
SERIES 2004-5 TRUST
By: U.S. Bank Trust National Association, not in
its individual capacity but solely as Trustee
under the Trust Agreement
By:
----------------------------
Name: Xxxxx Xxxxxxxxxx
Title:
31
EXHIBIT A TO SCHEDULE
FORM OF CONFIRMATION
Confirmation
DATE: February 25, 2004
TO: Corporate Backed Trust Certificates, Verizon New York
Debenture-Backed Series 2004-5 Trust
FROM: Xxxxxx Brothers Special Financing Inc.
SUBJECT: INTEREST RATE SWAP TRANSACTION
To U.S. Bank Trust National Association, as Trustee:
The purpose of this communication is to set forth the terms and
conditions of the transaction entered into on the Trade Date referred to below
(the "Transaction"), between Xxxxxx Brothers Special Financing Inc. ("Party
A") and Corporate Backed Trust Certificates, Verizon New York Debenture-Backed
Series 2004-5 Trust ("Party B"), a trust created under the laws of the State
of New York pursuant to that certain Series Trust Agreement (the "Series
Supplement"), dated February 25, 2004, which incorporates the Standard Terms
for Trust Agreements (collectively, the "Trust Agreement"). This communication
constitutes a "Confirmation" as referred to in the Master Agreement specified
below.
1. This Confirmation supplements, forms a part of and is subject
to the 1992 ISDA Master Agreement (Multicurrency - Cross Border), (the "Master
Agreement") (including the Schedule thereto), dated as of February 25, 2004,
between Party A and Party B. All provisions contained in, or incorporated by
reference to, such Master Agreement shall govern this Confirmation except as
expressly modified below.
2. This communication incorporates the definitions and provisions
contained in the 2000 ISDA Definitions (as published by the International
Swaps and Derivatives Association, Inc.) (the "Definitions"). In addition,
certain capitalized terms used herein but not defined herein shall have the
meaning ascribed to them in the Trust Agreement. In the event of any
inconsistency between this Confirmation and the Definitions or Master
Agreement, this Confirmation shall prevail.
3. The terms of the particular Transaction to which this
communication relates are as follows:
Party A: Xxxxxx Brothers Special Financing Inc.
Party B: Corporate Backed Trust Certificates,
Verizon New York Debenture-Backed Series
2004-5 Trust
Trade Date: February 13, 2004
Effective Date: February 25, 2004
Scheduled Termination Date: April 1, 2032, subject to adjustment in
accordance with the Modified Following
Business Day Convention.
Calculation Agent: Party A
Business Days: Any day (which is neither a Saturday nor
a Sunday) nor a day on which banks in
New York City and the place of payment
in respect of the Underlying Securities
are authorized or required to be closed,
subject to the Modified Following
Business Day Convention.
The "Modified Following Business Day
Convention" shall apply if the specified
day is not a Business Day and shall mean
the first following day that is a
Business Day unless that day falls in
the next calendar month, in which case
that date will be first preceding day
that is a Business Day.
Notional Amount: $25,000,000, subject to reduction as a
result of an early termination of all or
a portion of the Transaction. The
Notional Amount shall at all times equal
the outstanding principal amount of the
Certificates. See "Early Termination
Payment" below.
Party A Floating Rate Payer Payment
Amounts:
Party A Floating Rate Payer An amount equal to the product of (i)
Payment Amounts: the Notional Amount, (ii) the Floating
Rate and (iii) the Party A Day Count
Fraction; provided, however that at no
time shall the Party A Floating Rate
Payer Payment Amount be less than 4.00%
or greater than 7.50%.
Party A Payment Dates: The 1st day of each month during the
term of this Transaction, commencing in
April 2004 and ending on April 1, 2032,
subject to adjustments in accordance
with the Modified Following Business Day
Convention.
Party A Floating Rate for the 4.00%
Initial Calculation Period:
Party A Floating Rate Option: USD-LIBOR-BBA (Telerate Page 3750)
Designated Maturity: One Months
Party A Floating Rate Spread: plus 1.125%
Party A Day Count Fraction: Actual/360
Reset Dates: The first day of each Calculation Period.
Other: Party A will have no obligation to make
a Party A Floating Rate Payment Amount
unless and until Party B has made the
related payment, if any, to Party A.
Party B Fixed Rate Payment Amounts:
Party B Fixed Rate Payment Any amounts received by Party B in
Amounts: respect of interest on the Underlying
Securities, excluding any amount of
interest that accrued with respect to
the Underlying Securities from the
Underlying Securities Payment Date next
preceding the Effective Date to, but
excluding, the Effective Date.
Party B Payment Dates: Any date on which distributions are
received by Party B in respect of
interest on the Underlying Securities,
commencing in April 2004.
Underlying Securities: Issuer: Verizon New York Inc.
Maturity Date: April 1, 2032
Coupon: 7 3/8%
Day Count: 30/360
Payment Dates: The 1st day of each
April and October
(subject to
applicable grace
periods)
commencing in
April 2004 and
ending on the
Final Scheduled
Distribution Date.
Other: In the event of a discrepancy between
the Party B Fixed Rate Payment Amounts
due in respect of any Calculation Period
and the interest amount payable on the
Underlying Securities for the related
period (as calculated in accordance with
the terms of the Underlying Securities),
the terms of the Underlying Securities
shall govern the calculation of the
Party B Fixed Rate Payment Amount for
such Calculation Period; provided,
however, that the Party B Fixed Rate
Payment Amount shall not include any
amount of interest that accrued with
respect to the Underlying Securities
from the Underlying Securities Payment
Date next preceding the Effective Date
to, but excluding, the Effective Date.
Early Termination Payment: Section 6(e) of the Master Agreement is
hereby deleted, other than with respect
to Section 6(e)(iii) and 6(e)(iv), and
replaced with the following:
(e) Payments on Early Termination.
(A) If notice is given designating
either (i) an Early Termination Date in
respect of the entire Notional Amount in
connection with a Trust Swap Payment
Default, an Underlying Securities
Payment Default, an Underlying
Securities Bankruptcy Default, a Trust
Regulatory Event, or an SEC Reporting
Failure, or (ii) the entire or a portion
of the Notional Amount in connection
with the exercise of an Optional
Redemption by the Underlying Securities
Issuer or the exercise of an Optional
Exchange pursuant to Section 7 of the
Series Supplement, a termination payment
shall be due under Section 6(e) of the
Master Agreement; provided, however,
that pursuant to Section 7 of the
Series Supplement in the event a
termination payment shall be payable
by Party B to Party A in connection
with an Early Termination, in whole
or in part, as a result of such
Optional Exchange, the payment of
such termination payment will be
satisfied by the distribution to
Party A of a portion of the
Underlying Securities that were to
be exchanged for Certificates
pursuant to the Optional Exchange,
having a fair market value (as
determined by the Marketing Agent)
equal to such termination payment.
If any termination payment shall be
payable by Party A, Party B will
remit such payment to the Person
consummating the Optional Exchange.
(B) No termination payment shall be
payable by either Party A or Party B
following (i) an Event of Default as
described in Section 5(a)(i) with Party
A as the Defaulting Party, (ii) an
Event of Default as described in
Section 5(a)(iii) with Party A as the
Defaulting Party, (iii) an Event of
Default as described in Section
5(a)(vii) with Party A as the
Defaulting Party, and (iv) the
occurrence of a Termination Event as
described in Section 5(b)(i) with Party
A as the Affected Party.
(C) If an Early Termination Date is a
result of an Optional Redemption, Party
B will only be obligated to make the
related Early Termination Payment to
the extent it has funds available
therefor.
(D) If an Early Termination Date in,
respect of the entire Notional Amount
of the Transaction or a portion of the
Notional Amount of the Transaction is
designated and a payment is due, Market
Quotation and Second Method shall be
used to calculate any termination
payments owing by either party under
Section 6(e) of the Master Agreement.
(E) If an Event of Default or
Termination Event occurs in which Party
A is the "Defaulting Party" or the only
"Affected Party," Party B will
determine a Market Quotation. In all
other Events of Default or Termination
Events, Party A will determine a Market
Quotation.
Amendment: Section 9(b) of the Master Agreement is
hereby deleted and replaced with the
following:
This Agreement may not be amended without the prior written consent of
Party A, the holders of 66 2/3% of the then outstanding Certificates, and
without prior written confirmation from each Rating Agency that such amendment
will not result in a reduction or withdrawal of the then current rating of the
Certificates; provided, however, that Party A and Party B may amend the Swap
Agreement without the prior written consent of the holders of the then
outstanding Certificates to cure any ambiguity in, or to correct or supplement
any provision of the Agreement which may be inconsistent with any other
provision of the Agreement, or to otherwise cure any defect in the Agreement,
provided that any such amendment does not materially adversely affect the
interest of the
certificateholders and that each Rating Agency will have given its prior
written confirmation that such amendment will not result in a reduction or
withdrawal of the then current rating of the Certificates; provided further,
however, that notwithstanding anything to the contrary, no amendment may alter
the timing or amount of any payment hereunder without the prior consent of the
holders of 100% of the then outstanding Certificates, and without giving each
Rating Agency prior written notice of any such amendment. Notwithstanding
anything contained herein to the contrary, in connection with any sale of
additional Underlying Securities to the Trust pursuant to Section 3(d) of the
Series Supplement, the parties hereto shall enter into a Supplement to this
Confirmation whereby the Notional Amount shall be increased by an amount equal
to the principal amount of the additional Underlying Securities sold to the
Trust.
4. Other Terms
(a) Interpretation. Each reference to the singular shall include the plural
and vice versa.
(b) Limitation on Trustee Liability. In the absence of negligence, willful
misconduct or bad faith on the part of the Trustee, the Trustee shall have no
personal liability for the payment of any indebtedness or expenses of Party B
or be personally liable for the breach or any failure of any obligation,
representation, warranty or covenant made or undertaken by Party B under this
Transaction or the Trust Agreement within the scope of the Trustee's discharge
of its duties under this Transaction or the Trust Agreement or for any amounts
due under this Transaction from Party B, such amounts to be paid solely from
the assets of Party B in accordance with the Trust Agreement.
5. Account Details
Payments to Party A
Account for payments: JPMorgan Chase Bank
ABA # 000000000
A/C # 066143543
For the account of: Xxxxxx
Brothers Special Financing Inc.
Payments to Party B
Account for payments: U.S. Bank
National Association,
Minneapolis, MN
ABA# 000 000 000
For Credit to A/C 1801 2116 7365
FBO: U.S. Bank Trust N.A.
For further Credit to A/C 4730017
OBI = CBTC
2004-5 VERIZON NEW YORK A/C,
784684000
Please confirm that the foregoing correctly sets forth the terms
of our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us.
Yours sincerely,
XXXXXX BROTHERS SPECIAL FINANCING INC.
By:
----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Authorized Signatory
Confirmed as of the date first written:
CORPORATE BACKED TRUST CERTIFICATES, VERIZON NEW YORK DEBENTURE-BACKED SERIES
2004-5 TRUST
By: U.S. BANK TRUST NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Trustee under the Trust Agreement
By:
--------------------------
Name: Xxxxx Xxxxxxxxxx
Title:
7
EXHIBIT B-1 TO SCHEDULE
FORM OF OPINION OF COUNSEL FOR PARTY A
XXXXXX XXXXXX XXXXX & XXXX LLP
BEIJING 000 XXXXXXX XXXXXX XXX XXXXXXX
----- NEW YORK, NEW YORK 10019 -----
BRUSSELS TELEPHONE 000 000 0000 NEW YORK
----- FACSIMILE 212 839 5599 -----
CHICAGO xxx.xxxxxx.xxx SAN FRANCISCO
----- -----
DALLAS FOUNDED 1866 SHANGHAI
----- -----
GENEVA SINGAPORE
----- -----
HONG KONG TOKYO
----- -----
LONDON WASHINGTON, D.C.
February 25, 2004
To the Persons listed on
Schedule A hereto
Re: Xxxxxx ABS Corporation
Corporate Backed Trust Certificates,
Verizon New York Debenture-Backed Series 2004-5
Ladies and Gentlemen:
We have acted as special counsel in connection with (i) the transfer of
$25,000,000 aggregate principal amount of 7?% Debentures, Series B, due 2032
(the "Underlying Securities") of Verizon New York Inc., by Xxxxxx ABS
Corporation ("LABS") to the Corporate Backed Trust Certificates, Verizon New
York Debenture-Backed Series 2004-5 Trust (the "Trust") established by LABS
and (ii) the issuance by the Trust on February 25, 2004 (the "Closing Date")
of the Corporate Backed Trust Certificates Verizon New York Debenture-Backed
Series 2004-5 (the "Certificates"), issued pursuant to a standard terms for
trust agreements, dated as of January 16, 2001 (the "Standard Terms"), between
LABS and U.S. Bank Trust National Association ("U.S. Bank"), as trustee (the
"Trustee"), as supplemented by a series supplement thereto, dated as of
February 25, 2004 (the "Series Supplement" and, together with the Standard
Terms, the "Trust Agreement"), between LABS and the Trustee. Capitalized terms
defined in the Trust Agreement and used but not otherwise defined herein are
used herein as so defined.
In connection with this opinion, we have examined and are familiar with
originals or copies certified or otherwise identified to our satisfaction of
(i) the Trust Agreement; (ii) a securities account control agreement dated as
of February 25, 2004 between LABS and U.S. Bank, as trustee and securities
intermediary; (iii) the form of the Certificates; (iv) an ISDA Master
Agreement, dated as of February 25, 2004 (the "ISDA Master Agreement"),
between the
Trust and Xxxxxx Brothers Special Financing Inc. (the "Swap Counterpart"),
dated as of February 25, 2004, a schedule thereto dated February 25, 2004 (the
"Schedule"), between the Trust and the Swap Counterparty and a confirmation
thereunder dated February 25, 2004 (the "Confirmation" and, together with the
ISDA Master Agreement and the Schedule, the "Swap Agreement"); (v) an
underwriting agreement dated February 13, 2004 between LABS and Lehman, as
underwriter; and (vi) such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of LABS, and have made such inquiries of
such officers and representatives, as we have deemed relevant and necessary as
a basis for the opinions hereinafter set forth.
As to all questions of fact material to this opinion that have not been
independently established, we have relied upon certificates or comparable
documents of officers and representatives of LABS, the Swap Counterparty and
the Trustee and upon the representations and warranties of the Swap
Counterparty and the Trust contained in the Swap Agreement. We have also
assumed (i) the due organization and valid existence of the Swap Counterparty
and the Trustee, (ii) that the Swap Counterparty and the Trustee have all
requisite corporate power and authority to execute and deliver the Swap
Agreement and to perform their obligations thereunder, (iii) the due and valid
authorization by all necessary corporate action of the Swap Counterparty and
the Trustee of the execution, delivery and performance by them of the Swap
Agreement, (iv) the due and valid execution and delivery by the Swap
Counterparty and the Trustee of the Swap Agreement, (v) that the Swap
Agreement constitutes the legal, valid and binding obligation of the Swap
Counterparty and the Trust, enforceable against the Swap Counterparty and the
Trust in accordance with its terms and (vi) the absence of any agreement or
understanding among the parties other than those contained in the Swap
Agreement or otherwise called to our attention.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. The execution and delivery by the Swap Counterparty of the Swap Agreement
and the performance by Swap Counterparty of its obligations thereunder will
not conflict with, constitute a default under, or violate any New York,
Delaware corporate or federal law or regulation (other than federal and state
securities or blue sky laws, as to which we express no opinion in this
paragraph).
2. The Swap Agreement is not subject to regulation under the Commodity
Exchange Act, as amended, or the rules and regulations thereunder.
* * * *
We are members of the bar of the State of New York, and we do not
express any opinion as to any laws other than the law of the State of New
York, the General Corporation Law of the State of Delaware and the federal
laws of the United States.
This opinion letter is not intended to be employed in any transaction
other than the one described above and is being delivered to you on the
understanding that neither it nor its contents may be published, communicated
or otherwise made available, in whole or in part, to any other party or
entity, without in each instance, our specific prior written consent.
Very truly yours,
48
Schedule A
Xxxxxx ABS Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Brothers Special Financing Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
U.S. Bank Trust National Association
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
EXHIBIT B-2 TO SCHEDULE
FORM OF OPINION OF COUNSEL FOR PARTY A
[Xxxxxx Brothers Letterhead]
February 25, 2004
To the Addressees Listed on the Attached Schedule I
Ladies and Gentlemen:
I have acted as counsel to Xxxxxx Brothers Special Financing Inc., a
Delaware corporation ("Party A"), and am familiar with matters pertaining to
the execution and delivery of the 1992 ISDA Master Agreement
(Multicurrency--Cross Border) (the "Master Agreement") dated as of February
25, 2004 between Party A and the Corporate Backed Trust Certificates, Verizon
New York Debenture-Backed Series 2004-5 Trust ("Party B"). The Master
Agreement is supplemented by a confirmation of swap transaction dated as of
February 25, 2004 between Party A and Party B (the "Confirmation"), and the
Master Agreement and the Confirmation together constitute one agreement.
In connection with this opinion, I have examined or have had
examined on my behalf an executed copy of the Master Agreement and the
Confirmation, certificates and statements of public officials and officers
and/or employees of Party A and such other agreements, instruments, documents
and records as I have deemed necessary or appropriate for the purposes of this
opinion.
Based upon the foregoing, but subject to the assumptions,
exceptions, qualifications and limitations hereinafter expressed, I am of the
opinion that:
1. Party A is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
2. The execution, delivery and performance of the Master Agreement
and the Confirmation are within the corporate power of Party A, have been duly
authorized by all necessary corporate action and do not conflict with any
provision of its certificate of incorporation or by-laws.
3. The Master Agreement and the Confirmation have been duly executed
and delivered by Party A and constitute legally valid and binding obligations
of Party A enforceable against it in accordance with their respective terms.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
-2- February 25, 2004
A. My opinion in paragraph 3 above is subject to the effect of any
bankruptcy, insolvency, reorganization, receivership, moratorium or similar
laws affecting the enforcement of creditors' rights generally (including,
without limitation, the effect of statutory or other laws regarding fraudulent
or other similar transfers) and general principles of equity, regardless of
whether enforceability is considered in a proceeding in equity or at law.
B. I am a member of the Bar of the State of New York and render no
opinion on the laws of any jurisdiction other than the laws of the State of
New York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware.
C. My opinions are limited to the present laws and to the facts as
they presently exist and no opinion is to be inferred or implied beyond the
matters expressly so stated. I assume no obligation to revise or supplement
this opinion should the present laws of the jurisdictions referred to in
paragraph B above be changed by legislative action, judicial decision or
otherwise.
D. This letter is rendered to you in connection with the Master
Agreement and the Confirmation and the transactions related thereto and may
not be relied upon by any other person, entity or agency or by you in any
other context or for any other purpose. This letter may not be quoted in whole
or in part, nor may copies thereof be furnished or delivered to any other
person, without the prior written consent of Xxxxxx Brothers Special Financing
Inc., except that you may furnish copies hereof (i) to your independent
auditors and attorneys, (ii) to any United States, state or local authority
having jurisdiction over you or over Party A, (iii) pursuant to the order of
any legal process of any court of competent jurisdiction or any governmental
agency, and (iv) in connection with any legal action arising out of the Master
Agreement or the Confirmation.
E. I have assumed with your permission (i) the genuineness of all
signatures by each party other than Party A, (ii) the authenticity of
documents submitted to me as originals and the conformity to authentic
original documents of all documents submitted to me as copies, and (iii) the
due execution and delivery, pursuant to due authorization, of the Master
Agreement and the Confirmation by each party thereto other than Party A.
Very truly yours,
SCHEDULE I
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Standard and Poor's, a
Division of The XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
U.S. Bank Trust National Association
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
New York Stock Exchange, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
EXHIBIT C TO SCHEDULE
FORM OF OPINION OF COUNSEL FOR PARTY B
[Xxxxxx & Xxxxxxx LLP Letterhead]
February 25, 2004
Standard and Poor's, a Division of
Xxxxxx Brothers Inc. The XxXxxx-Xxxx Companies, Inc.
000 Xxxxxxx Xxxxxx 00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx ABS Corporation Xxxxx'x Investors Service, Inc.
000 Xxxxxxx Xxxxxx 00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
Re: Corporate Backed Trust Certificates, Verizon New York
Debenture-Backed Series 2004-5 Trust (the "Trust" or
the "Issuer")
Dear Ladies and Gentlemen:
We have acted as special counsel to U.S. Bank Trust National
Association as trustee (the "Trustee") in connection with a Standard Terms For
Trust Agreements, dated as of January 16, 2001 (as supplemented by the Series
Supplement, Series 2004-5 dated as of February 25, 2004, and collectively
referred to herein as the "Trust Agreement"), between Xxxxxx ABS Corporation,
a Delaware corporation (the "Depositor") and the Trustee. Pursuant to the
Trust Agreement, the Trust shall issue certain Certificates on the Closing
Date (the "Securities").
For purposes of giving the opinion hereinafter set forth, we have
examined executed or conformed counterparts, or copies otherwise proved to our
satisfaction, of the Trust Agreement, the Securities, the Securities Account
Control Agreement dated as of the date hereof (the "Control Agreement") among
the Depositor, the Trustee and U.S. Bank Trust National Association, as
securities intermediary (the "Securities Intermediary") and the ISDA Master
Agreement between the Trust and Xxxxxx Brothers Special Financing Inc. (the
"Swap Counterparty"), the Schedule thereto and the Confirmation thereunder,
each dated as of the date hereof (collectively, the "Swap Agreement", which
together with the Trust Agreement, the Securities, and the Control Agreement
are hereinafter collectively referred to herein as the "Documents").
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed thereto in the Documents, as applicable.
We have also obtained or have been furnished with, and have relied
exclusively upon, the Trust Permit and the Charter of the Office of the
Comptroller of the Currency in rendering this opinion. We have made no other
investigations or examinations in rendering this opinion, and our opinions
expressed herein are solely in reliance on the aforementioned documents and on
the Documents. With respect to all documents examined by us, we have assumed
that (i) all signatures on documents examined by us are genuine, (ii) all
documents
XXXXXX & XXXXXXX LLP o XXX.XXXXXX.XXX o T 612.340.2600 o F 712.340.2868
SUITE 0000 x 00 XXXXX XXXXX XXXXXX x XXXXXXXXXXX, XXXXXXXXX 00000-0000
USA CANADA EUROPE ASIA
Xxxxxx Brothers Inc. [GRAPHIC OMITTED]
Xxxxxx ABS Corporation
Standard and Poor's, a Division of
The XxXxxx-Xxxx Companies, Inc.
Xxxxx'x Investors Service, Inc.
February 25, 2004
Page 2
submitted to us as originals are authentic, and (iii) all documents
submitted to us as copies conform with the original copies of those documents.
For the purpose of this opinion, we have assumed (i) the legal
capacity for all purposes relevant hereto of all natural persons, (ii) the due
authorization, execution and delivery by all parties thereto (other than the
Trustee and the Securities Intermediary) of all documents examined by us,
(iii) that each party to the Documents (other than the Trustee and the
Securities Intermediary) has the power and authority to enter in and perform
all of its obligations thereunder, (iv) that the Documents are the legal,
valid and binding obligations of the Issuer enforceable against the Issuer in
accordance with their terms, and (v) that the Issuer is an "eligible contract
participant" as that term is defined in the Commodity Exchange Act.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that:
1. The Trustee is a national banking association with trust powers
validly existing, duly organized and in good standing under the laws of the
United States of America. The Trustee has all requisite power to execute and
deliver the Documents, perform its obligations thereunder, and to authenticate
the Securities. The Securities Intermediary has all requisite power to execute
and deliver the Control Agreement and to perform its obligations thereunder;
2. The Documents have been duly executed and delivered by the
Trustee and the Control Agreement has been duly executed and delivered by the
Securities Intermediary;
3. The Securities have been authenticated by a duly authorized
signatory of the Trustee; and
4. The Trust Agreement and the Control Agreement each constitutes
the legal, valid and binding obligation of the Trustee, enforceable against
the Trustee in accordance with its terms. The Control Agreement constitutes
the legal, valid and binding obligation of the Securities Intermediary,
enforceable against the Securities Intermediary in accordance with its terms.
The Swap Agreement constitutes the legal, valid and binding obligation of the
Trustee on behalf of the Trust, enforceable against the Trustee on behalf of
the Trust in accordance with its terms.
The opinions set forth above are subject to the following
qualifications and exceptions:
XXXXXX & XXXXXXX LLP
Xxxxxx Brothers Inc. [GRAPHIC OMITTED]
Xxxxxx ABS Corporation
Standard and Poor's, a Division of
The XxXxxx-Xxxx Companies, Inc.
Xxxxx'x Investors Service, Inc.
February 25, 2004
Page 3
(a) Our opinions in paragraph 4 above are subject to the effect of
applicable receivership, conservatorship, insolvency, reorganization,
moratorium, fraudulent transfer or similar laws of general application
affecting creditors' or secured creditors' rights.
(b) Our opinions in paragraph 4 above are subject to the effect of
general principles of equity, including, without limitation, concepts of
materiality, diligence, reasonableness, good faith and fair dealing, election
of remedies, estoppels and other similar doctrines affecting the
enforceability of agreements generally in any proceeding in equity or at law.
(c) The enforceability of provisions in the Documents to the effect
that terms may not be waived or modified except in writing may be limited
under certain circumstances.
(d) The availability of specific performance, injunctive relief and
other equitable remedies is subject to the discretion of the tribunal before
which any proceeding therefor may be brought.
(e) We express no opinion as to the enforceability of provisions of
the Documents to the extent they contain forum selection provisions or waivers
of any constitutional rights or remedies.
(f) We express no opinion as to the enforceability of provisions of
the Documents to the extent they contain cumulative remedies to the extent
such cumulative remedies purport to compensate, or would have the effect of
compensating, the party entitled to the benefits thereof in an amount in
excess of the actual loss suffered by such party.
(g) We express no opinion as to the enforceability of provisions of
the Documents to the extent they contain remedies that are determined to
result in a penalty, or otherwise to result in a recovery that is determined
to be unreasonable in relation to the actual damages or grossly
disproportionate to the actual damages suffered.
(h) We express no opinion with respect to (i) the compliance with,
or the effect of non-compliance with, any federal or state securities laws or
regulations, the Commodity Exchange Act, as amended, or the rules and
regulations of the Commodity Futures Trading Commission promulgated
thereunder, (ii) the creation, validity, perfection or priority of any
security interest granted under any Document, (iii) any indemnification or
contribution provision under any Document or (iv) Section 6(e) of the ISDA
Master Agreement insofar as it relates to the amount of damages payable by a
party upon termination.
XXXXXX & XXXXXXX LLP
Xxxxxx Brothers Inc. [GRAPHIC OMITTED]
Xxxxxx ABS Corporation
Standard and Poor's, a Division of
The XxXxxx-Xxxx Companies, Inc.
Xxxxx'x Investors Service, Inc.
February 25, 2004
Page 4
The foregoing opinions are limited to matters involving the laws of
the State of New York and the federal laws of the United States of America. We
express no opinion as to any matter other than as expressly set forth above,
and no other opinion may be implied or interpreted herefrom. Our opinions are
rendered only with respect to such laws, and the rules, regulations and orders
thereunder, that are currently in effect, and we disclaim any obligation to
advise you of any change in law or fact that occurs after the date hereof.
This letter is furnished by us solely for your benefit in connection
with the transactions referred to in the Documents and may not be circulated
to, or relied upon by, any other person without our prior written consent.
Sincerely,
[GRAPHIC OMITTED]
EXHIBIT D TO SCHEDULE
FORM OF GUARANTEE
GUARANTEE OF XXXXXX BROTHERS HOLDINGS INC.
------------------------------------------
XXXXXX BROTHERS SPECIAL FINANCING INC. ("Party A") and CORPORATE
BACKED TRUST CERTIFICATES, VERIZON NEW YORK DEBENTURE-BACKED, SERIES 2004-5
TRUST ("Party B") have entered into a Master Agreement, dated as of February
25, 2004, pursuant to which Party A and Party B have entered and/or anticipate
entering into one or more transactions (each a "Transaction"), the
Confirmation of each of which supplements, forms part of, and will be read and
construed as one with, the Master Agreement (collectively referred to as the
"Agreement"). This Guarantee is a Credit Support Document as contemplated in
the Agreement. For value received, and in consideration of the financial
accommodation accorded to Party A by Party B under the Agreement, XXXXXX
BROTHERS HOLDINGS INC., a corporation organized and existing under the laws of
the State of Delaware ("Guarantor"), hereby agrees to the following:
(a) Guarantor hereby unconditionally guarantees to Party B the due
and punctual payment of all amounts payable by Party A under each Transaction
when and as Party A's obligations thereunder shall become due and payable in
accordance with the terms of the Agreement. In case of the failure of Party A
to pay punctually any such amounts, Guarantor hereby agrees, upon written
demand by Party B, to pay or cause to be paid any such amounts punctually when
and as the same shall become due and payable.
(b) Guarantor hereby agrees that its obligations under the Guarantee
constitute a guarantee of payment when due and not of collection.
(c) Guarantor hereby agrees that its obligations under the Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Agreement against Party A (other than as a result of the
unenforceability of the Agreement against Party B), the absence of any action
to enforce Party A's obligations under the Agreement, any waiver or consent by
Party B with respect to any provisions thereof, the entry by Party A and Party
B into additional Transactions under the Agreement or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of
a guarantor (excluding the defense of payment or statute of limitations,
neither of which are waived); provided, however, that Guarantor shall be
entitled to exercise any right that Party A could have exercised under the
Agreement to cure any default in respect of its obligations under the
Agreement or to setoff, counterclaim or withhold payment in respect of any
Event of Default or Potential Event of Default in respect of Party B or any
Affiliate, but only to the extent such right is provided to Party A under the
Agreement. The Guarantor acknowledges that Party A and Party B may from time
to time enter into one or more Transactions pursuant to the Agreement and
agrees that the obligations of the Guarantor under this Guarantee will upon
the execution of any such Transaction by Party A and Party B extend to all
such Transactions without the taking of further action by the Guarantor.
(d) Guarantor shall be subrogated to all rights of Party B against
Party A in respect of any amounts paid by Guarantor pursuant to the provisions
of this Guarantee; provided, however, that Guarantor shall not be entitled to
enforce or to receive any payments arising out of,
or based upon, such right of subrogation until all amounts then due and
payable by Party A under the Agreement, shall have been paid in full.
(e) Guarantor further agrees that this Guarantee shall continue to
be effective or be reinstated, as the case may be, if at any time, payment, or
any part thereof, of any obligation or interest thereon is rescinded or must
otherwise be restored by Party B upon an Event of Default as set forth in
Section 5(a)(vii) of the Agreement affecting Party A or Guarantor.
(f) Guarantor hereby waives (i) promptness, diligence, presentment,
demand of payment, protest, order and, except as set forth in paragraph (a)
hereof, notice of any kind in connection with the Agreement and this
Guarantee, or (ii) any requirement that Party B exhaust any right to take any
action against Party A or any other person prior to or contemporaneously with
proceeding to exercise any right against Guarantor under this Guarantee.
(g) Guarantor further agrees that prior to the date that is one year
and one day after the date upon which the trust created under the Trust
Agreement (as defined in the Agreement) is terminated in accordance with the
terms thereof, Guarantor shall not institute against, or join any other person
in instituting against, the trust created thereby, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law.
This Guarantee shall be governed by and construed in accordance with
the laws of the State of New York, without reference to choice of law
doctrine. All capitalized terms not defined in this Guarantee, are defined in
the Agreement.
Any notice hereunder will be sufficiently given if given in
accordance with the provisions for notices under the Agreement and will be
effective as set forth therein. All notices hereunder shall be delivered to
Xxxxxx Brothers Holdings Inc., Attention: Corporate Counsel, at 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 XXX (Facsimile No. (212)
520-0176) with a copy to Xxxxxx Brothers Special Financing Inc., Attention:
Swap Notice Generation, at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 XXX.
IN WITNESS WHEREOF, Xxxxxxxxx has caused this Guarantee to be
executed in its corporate name by its duly authorized officer as of the date
of the Agreement.
XXXXXX BROTHERS HOLDINGS INC.
By: ____________________________________
Name:
Title:
