Document:

Exhibit 4.1

                 STRATS(SM) CERTIFICATES SERIES SUPPLEMENT 2004-16

                                     between

                    SYNTHETIC FIXED-INCOME SECURITIES, INC.,
                                   as Trustor

                                       and

                      U.S. BANK TRUST NATIONAL ASSOCIATION,
                     as Trustee and Securities Intermediary

          STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES, SERIES 2004-16

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                                TABLE OF CONTENTS

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PRELIMINARY STATEMENT.......................................................1

Section 1.   Certain Defined Terms..........................................1

Section 2.   Creation and Declaration of Trust; Sale of Underlying
             Securities; Acceptance by Trustee..............................5

Section 3.   Designation....................................................6

Section 4.   Date of the Certificates.......................................6

Section 5.   Certificate Stated Amount and Denominations....................6

Section 6.   Currency of the Certificates...................................6

Section 7.   Form of Securities.............................................6

Section 8.   Swap Payments; Collateral Account..............................6

Section 9.   Certain Provisions of Base Trust Agreement Not Applicable......7

Section 10.  Distributions..................................................7

Section 11.  Termination of Trust..........................................10

Section 12.  Limitation of Powers and Duties...............................10

Section 13.  Compensation of Trustee.......................................11

Section 14.  Modification or Amendment of the Base Trust Agreement,
             the Series Supplement or the Swap Agreement...................12

Section 15.  Assignment of Rights under the Swap Agreement.................12

Section 16.  Accounting....................................................12

Section 17.  No Investment of Amounts Received on Underlying Securities....13

Section 18.  No Event of Default...........................................13

Section 19.  Notices.......................................................13

Section 20.  Access to Certain Documentation...............................14

Section 21.  Advances......................................................14

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Section 22.  Ratification of Agreement.....................................14

Section 23.  Counterparts..................................................14

Section 24.  Governing Law.................................................14

Section 25.  Certificate of Compliance.....................................14

Section 26.  Certain Filing to be Made by the Trustee......................14

Section 27.  Establishment of Accounts.....................................15

Section 28.  Statement of Intent...........................................15

Section 29.  Filing of Partnership Returns.................................15

Section 30.  "Financial Assets" Election...................................15

Section 31.  Trustee's Entitlement Orders..................................16

Section 32.  Conflict with Other Agreements................................16

Section 33.  Additional Trustee and Securities Intermediary
             Representations...............................................16

Section 34.  Additional Trustor Representations............................16

Section 35.  Certification Requirements....................................17

Section 36.  Additional Rights of the Swap Counterparty....................17

Section 37.  Modification of Certain Provisions of Base Trust Agreement....17

Section 38.  Evidence of Integration for Tax Purposes......................18

Section 39.  Optional Exchange.............................................18

Exhibit A -- Identification of the Underlying Securities as of Closing Date
Exhibit B -- Terms of the Certificates as of Closing Date
Exhibit C -- Form of Certificates
Exhibit D -- Form of Swap Agreement
Exhibit E -- Evidence of Integration for Tax Purposes

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        STRATS(SM) SERIES SUPPLEMENT 2004-16, dated as of December 22, 2004
        (this "Series Supplement"), between SYNTHETIC FIXED-INCOME SECURITIES,
        INC., a Delaware corporation, as Trustor (the "Trustor"), and U.S.
        Bank Trust National Association, a national banking association, as
        trustee (the "Trustee") and as securities intermediary (the "Securities
        Intermediary").

                              PRELIMINARY STATEMENT

               Pursuant to the Base Trust Agreement, dated as of September 26,
2003 (the "Base Trust Agreement" and, as supplemented pursuant to the Series
Supplement, the "Agreement"), between the Trustor and the Trustee, such parties
may at any time and from time to time enter into a series supplement
supplemental to the Base Trust Agreement for the purpose of creating a trust.
Section 5.13 of the Base Trust Agreement provides that the Trustor may at any
time and from time to time direct the Trustee to authenticate and deliver, on
behalf of any such trust, a new Series of trust certificates. Each trust
certificate of such new Series of trust certificates will represent a fractional
undivided beneficial interest in such trust. Certain terms and conditions
applicable to each such Series are to be set forth in the related series
supplement to the Base Trust Agreement.

               Pursuant to this Series Supplement, the Trustor and the Trustee
shall create and establish a new trust to be known as STRATS(SM) Trust For
Morgan Stanley Securities, Series 2004-16, and a new Series of trust
certificates to be issued thereby, which certificates shall be known as the
STRATS(SM) Certificates, Series 2004-16, and the Trustor and the Trustee shall
herein specify certain terms and conditions in respect thereof. The Trust shall
also enter into a swap agreement (the "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 to the
Certificateholders.

               The STRATS(SM) Certificates, Series 2004-16 shall be floating
rate Certificates (the "Certificates") issued in the form thereof set forth in
Exhibit C.

               On behalf of and pursuant to the authorizing resolutions of the
Board of Directors of the Trustor, an authorized officer of the Trustor has
authorized the execution, authentication and delivery of the Certificates, and
has authorized the Base Trust Agreement, the Swap Agreement (as defined below),
and this Series Supplement in accordance with the terms of Section 5.13 of the
Base Trust Agreement.

               Section 1. Certain Defined Terms. (a) All terms used in this
Series Supplement that are defined in the Base Trust Agreement, either
directly or by reference therein, have the meanings assigned to such terms
therein, except to the extent such terms are defined or modified in this
Series Supplement or the context requires otherwise. The Base Trust Agreement
also contains rules as to usage which shall be applicable hereto.

               (b) Pursuant to Article I of the Base Trust Agreement, the
meaning of certain defined terms used in the Base Trust Agreement shall, when
applied to the trust certificates of a particular Series, be as defined in
Article I but with such additional provisions and modifications

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as are specified in the related series supplement. With respect to the
Certificates, the following definitions shall apply:

               "Acceleration": The acceleration of the maturity of the
Underlying Securities after the occurrence of any default on the Underlying
Securities other than a Payment Default.

               "Accounts": Collectively the Certificate Account and the
Collateral Account.

               "Affected Party": Shall have the meaning provided under the
Swap Agreement.

               "Agreement": Agreement shall have the meaning specified in the
Preliminary Statement to this Series Supplement.

               "Base Trust Agreement": Base Trust Agreement shall have the
meaning specified in the Preliminary Statement to this Series Supplement.

               "Business Day": Any day other than a Saturday, Sunday or a day on
which banking institutions in New York, New York are authorized or obligated by
law, executive order or governmental decree to be closed.

               "Calculation Agent": Wachovia Bank, National Association, in its
capacity as calculation agent under the Swap Agreement.

               "Certificate Account": With respect to this Series, the Eligible
Account, which shall be a securities account established and maintained by the
Securities Intermediary in the Trustee's name, to which the Underlying
Securities and all payments made on or with respect to the related Underlying
Securities and all payments made to the Trust on or with respect to the Swap
Agreement shall be credited.

               "Certificateholder" or "Holder": With respect to any
Certificate, the Holder thereof.

               "Certificateholders" or "Holders": The Holders of the
Certificates.

               "Certificates": Certificates shall have the meaning specified
in the Preliminary Statement to this Series Supplement.

               "Closing Date":  December 22, 2004.

               "Collateral Account": With respect to this Series, the Eligible
Account, which shall be a securities account established and maintained by the
Securities Intermediary in the Trustee's name, to which any Posted Collateral
and all proceeds thereof shall be credited in accordance with the Swap
Agreement.

               "Collection Period": The period from (but excluding) the
preceding Distribution Date (or, in the case of the first Distribution Date,
from and including the Closing Date), through and including the current
Distribution Date.

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               "Corporate Trust Office": U.S. Bank Trust National Association,
100 Wall Street, Suite 1600, New York, New York 10005 or such other corporate
trust office as the Trustee shall designate in writing to the Trustor and the
Certificateholders.

               "Defaulting Party": Shall have the meaning provided under the
Swap Agreement.

               "Depositary":  The Depositary Trust Company.

               "Depositor": The Trustor acting specifically with respect to
the conveyance of the Underlying Securities under this Series Supplement.

               "Distribution Date": Any Scheduled Distribution Date, the
Maturity Date or any Underlying Securities Default Distribution Date or, if
applicable, any Underlying Securities Redemption Distribution Date.

               "Interest Collections": For any Distribution Date, the sum of (i)
all amounts received during the Collection Period ending on such Distribution
Date from the Swap Counterparty pursuant to the Swap Agreement and (ii) any
amounts representing interest on the Underlying Securities that are actually
received by the Trust pursuant to the Underlying Securities on such Distribution
Date and not required to be paid to the Swap Counterparty pursuant to the Swap
Agreement.

               "Maturity Date":  April 1, 2014.

               "Optional Exchange": Any exchange of Certificates held by the
Depositor for Underlying Securities under Section 39 of this Series
Supplement.

               "Payment Default": A default by the Underlying Securities Issuer
in the payment of any amount due on the Underlying Securities after the same
becomes due and payable on any Underlying Securities Payment Date (and the
expiration of any applicable grace period on the Underlying Securities).

               "Place of Distribution":  New York, New York.

               "Posted Collateral": Shall have the meaning provided under the
Swap Agreement.

               "Rating Agency": S&P and any successor thereto. References to
"the Rating Agency" in the Agreement shall be deemed to be such credit rating
agency.

               "Record Date": With respect to any Distribution Date, the day
immediately preceding such Distribution Date.

               "S&P": Standard & Poor's Ratings Services or any successor
thereto.

               "Scheduled Distribution Date": (i) For so long as the Swap
Agreement shall not have been terminated, the 1st day of each calendar month,
or, if any such day is not a Business Day, then the immediately following
Business Day, commencing January 1, 2005, until the date

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on which the Certificates have been retired; provided, however, that payment
on each Scheduled Distribution Date shall be subject to prior payment of
interest or principal, as applicable, on the Underlying Securities, or (ii)
upon the occurrence of a Swap Agreement Termination Event that is not also a
Trust Termination Event, Scheduled Distribution Dates will thereafter occur
semiannually on each April 1 and October 1, or the immediately following
Business Day, until the Certificates have been retired.

               "SEC Reporting Failure": Any circumstance in which 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
or (y) fails to file its required periodic reports for any quarterly reporting
period, and (2) the Trustor determines after consultation with the Securities
and Exchange Commission, that under applicable securities laws, rules or
regulations the Trust must be liquidated or the Underlying Securities
distributed.

               "Specified Currency":  United States Dollars.

               "Swap Agreement": The ISDA Master Agreement dated as of the
Closing Date, between the Trust and the Swap Counterparty (including the
Schedule and Credit Support Annex thereto) as supplemented by Confirmation
Number 1043897, 1043896, in the form attached hereto as Exhibit D.

               "Swap Agreement Termination Event": The occurrence of any "Event
of Default" or "Termination Event" under the Swap Agreement.

               "Swap Counterparty": Wachovia Bank, N.A., or any permitted
successor or assign thereto.

               "Trust": STRATS(SM) Trust For Morgan Stanley Securities, Series
2004-16.

               "Trust Termination Event": (a) the payment in full at maturity or
upon early redemption of the Certificates, (b) the final distribution of the
proceeds received upon a recovery on the Underlying Securities (after deducting
the costs incurred in connection therewith) after an Acceleration or other
default with respect to the Underlying Securities (and the expiration of any
applicable grace period on the Underlying Securities), (c) the distribution (or
liquidation and distribution) of the Underlying Securities in accordance with
Section 10(i) hereof in the event of an SEC Reporting Failure, (d) any Swap
Agreement Termination Event pursuant to which the Trust is the Defaulting Party
or an Affected Party and amounts are owed by the Trust under the Swap Agreement
that are in excess of the redemption proceeds or other current distributions on
the Underlying Securities or (e) any Optional Exchange of all Certificates then
outstanding.

               "Underlying Securities": As of the Closing Date, $15,000,000
aggregate principal amount of 4.75% Subordinated Notes due 2014 issued by the
Underlying Securities Issuer, sold to the Trustee by Wachovia Securities and
identified on Exhibit A hereto.

               "Underlying Securities Default Distribution Date": The date on
which the Trustee makes a final distribution of the proceeds received in
connection with a recovery on the Underlying Securities (in the case of Payment
Default, after deducting any costs incurred in

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connection therewith) following a Payment Default or an Acceleration or other
default with respect to the Underlying Securities.

               "Underlying Securities Issuer":  Morgan Stanley

               "Underlying Securities Payment Date": The 1st day of each April
and October ending on April 1, 2014; provided, however, that if any Underlying
Securities Payment Date would otherwise fall on a day that is not a Business
Day, such Underlying Securities Payment Date will be the following Business Day.

               "Underlying Securities Trustee": The trustee for the Underlying
Securities.

               "Unpaid Amounts": As to the Trust or the Swap Counterparty,
respectively, an amount equal to the regular scheduled payments that such party
is otherwise required to make under the Swap Agreement, through, but excluding,
the date on which the Swap Agreement is terminated.

               "Voting Rights": The Certificateholders shall have 100% of the
total Voting Rights with respect to the Certificates and shall be allocated
among all Holders of Certificates in proportion to the Stated Amounts held by
such Holders on any date of determination.

               "Wachovia Securities":  Wachovia Capital Markets, LLC.

               Section 2. Creation and Declaration of Trust; Sale of
Underlying Securities; Acceptance by Trustee. (a) The Trust, of which the
Trustee is the trustee, is hereby created under the laws of the State of New
York for the benefit of the holders of the Certificates and the Swap
Counterparty. The Trust shall be irrevocable.

               (b) The Trustor, acting as Depositor, does hereby sell, assign,
convey and set-over to the Trustee, on behalf and for the benefit of the
Trust, the Underlying Securities at a purchase price of $14,950,312.50 in
cash. The Trustee shall pay the full purchase price for the Underlying
Securities by delivering to Wachovia Securities, for the account of the
Depositor, and as the assignee of Depositor with respect to such amounts, (i)
$14,790,000 on the Closing Date and (ii) $160,312.50 on April 1, 2005, which
represents the accrued and unpaid interest of the Underlying Securities on the
Closing Date. The amounts to be paid to Wachovia Securities set forth in
clause (i) above, shall be paid from the proceeds of the issuance of the
Certificates to be received by the Trustee on the Closing Date. The amounts to
be paid to Wachovia Securities set forth in clause (ii) above, shall be paid
from the interest payment on the Underlying Securities to be received by the
Trustee on April 1, 2005. In the event that such interest payment on the
Underlying Securities is not received by the Trustee on such date or is
otherwise insufficient to pay such amount of accrued and unpaid interest to
Wachovia Securities, Wachovia Securities, for the account of the Depositor,
and as assignee of Depositor with respect to such amounts, shall have a claim
for the unpaid portion of such amount and shall share pari passu with
Certificateholders to the extent of such claim in the proceeds from the sale
or recovery of the Underlying Securities. The Trustor hereby instructs the
Trustee on behalf of and for the benefit of the Trust to enter into and
execute the Swap Agreement and perform the obligations thereunder on behalf of
the Trust, including, but not limited to, receiving and returning any
collateral posted by the Swap Counterparty in accordance with the Swap
Agreement.

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               (c) The Trustee hereby (i) acknowledges such sale, deposit and
delivery, pursuant to subsection (b) above, and receipt by it of the
Underlying Securities, (ii) acknowledges receipt of the duly authorized and
executed Swap Agreement, (iii) accepts the trusts created hereunder in
accordance with the provisions hereof and of the Base Trust Agreement but
subject to the Trustee's obligation, as and when the same may arise, to make
any payment or other distribution of the assets of the Trust as may be
required pursuant to this Series Supplement, the Base Trust Agreement, the
Certificates and the Swap Agreement, and (iv) agrees to perform the duties
herein or therein required and any failure to receive reimbursement of
expenses and disbursements under Section 13 hereof shall not release the
Trustee from its duties herein or therein.

               Section 3. Designation. There is hereby created a Series of
trust certificates to be issued pursuant to the Base Trust Agreement and this
Series Supplement to be known as the "STRATS(SM) Certificates, Series 2004-16".
The Certificates shall have the terms provided for in this Series Supplement.
The Certificates shall be issued in the amount set forth in Section 5 and with
the additional terms set forth in Exhibit B to this Series Supplement. The
Certificates shall be issued in substantially the form set forth in Exhibit C
to this Series Supplement with such necessary or appropriate changes as shall
be approved by the Trustor and the Trustee, such approval to be manifested by
the execution and authentication thereof by the Trustee. The Certificates
shall evidence undivided ownership interests in the assets of the Trust,
subject to the liabilities of the Trust and shall be payable solely from
payments or property received by the Trustee on or in respect of the
Underlying Securities and the Swap Agreement.

               Section 4. Date of the Certificates. The Certificates that are
authenticated and delivered by the Trustee to or upon Trustor Order on the
Closing Date shall be dated the Closing Date. All other Certificates that are
authenticated after the Closing Date for any other purpose under the Agreement
shall be dated the date of their authentication.

               Section 5. Certificate Stated Amount and Denominations. On the
Closing Date, up to 15,000 Certificates with an aggregate Stated Amount of
$15,000,000 may be authenticated and delivered under the Base Trust Agreement
and this Series Supplement. The Stated Amount of the Certificates shall equal
100% of the initial principal amount of Underlying Securities sold to the
Trustee and deposited in the Trust. Such Stated Amount shall be calculated
without regard to Certificates authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Certificates pursuant
to Sections 5.3, 5.4 or 5.5 of the Base Trust Agreement.

               Section 6. Currency of the Certificates. All distributions on
the Certificates will be made in the Specified Currency.

               Section 7. Form of Securities. The Trustee shall execute and
deliver the Certificates in the form of one or more global certificates
registered in the name of the Depositary or its nominee.

               Section 8. Swap Payments; Collateral Account. (a) The Trust
shall pay to the Swap Counterparty (i) for so long as the Swap Agreement shall
not have been terminated, an amount equal to all interest payments payable on
the Underlying Securities on each Underlying Securities Payment Date or on any
other date on which such amounts are received by the Trust,

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excluding any amount of interest that accrued with respect to the Underlying
Securities from the Underlying Securities Payment Date immediately preceding
the Closing Date to, but excluding, the Closing Date and (ii) all other
amounts owing to the Swap Counterparty under the Swap Agreement to the extent
Trust assets are sufficient therefor, including but not limited to all Unpaid
Amounts upon the occurrence of any Swap Agreement Termination Event

               (b) The Trustee shall within 3 Business Days of the Closing
Date establish the Collateral Account. Any and all amounts at any time on
deposit in the Collateral Account shall be held in trust by the Trustee for
the benefit of Certificateholders and the Swap Counterparty; provided, that,
the only permitted withdrawal from or application of funds on deposit in, or
otherwise to the credit of, the Collateral Account shall be (i) for
application to obligations of the Swap Counterparty to the Trust under the
Swap Agreement in accordance with the terms of the Swap Agreement or (ii) to
return Posted Collateral to the Swap Counterparty when and as required by the
Swap Agreement, which the Trustee shall return to the Swap Counterparty in
accordance with the related Swap Agreement.

               Section 9. Certain Provisions of Base Trust Agreement Not
Applicable. The provisions of Sections 5.11, 5.16, 6.2, Article VII, 8.1, 8.2
and 8.10 of the Base Trust Agreement and any other provision of the Base Trust
Agreement which imposes obligations on or creates rights in favor of the
Trustee or the Certificateholders as a result of or in connection with an
"Event of Default" or "Administrative Agent Termination Event" shall be
inapplicable with respect to the Certificates. In addition, there is no
"Administrative Agent" specified herein, and all references to "Administrative
Agent" in the Base Trust Agreement, therefore shall be inapplicable with
respect to the Certificates.

               Section 10. Distributions. (a) On each Distribution Date, so
long as no Swap Agreement Termination Event has occurred for which the Trust
is the Defaulting Party or an Affected Party, the Trustee shall distribute to
the Certificateholders the Interest Collections. On the Maturity Date, and to
the extent received on any other Scheduled Distribution Date, so long as no
Swap Agreement Termination Event has occurred for which the Trust is the
Defaulting Party or an Affected Party, the Trustee shall distribute to the
Certificateholders, the principal amount of the Underlying Securities to the
extent the principal of the Underlying Securities is received by the Trustee
on such date or during the related Collection Period plus any accrued interest
thereon.

               (b) If a Swap Agreement Termination Event has occurred for
which the Trust is the Defaulting Party or an Affected Party the Trustee,
first, shall distribute all collections received on the Underlying Securities
to the Swap Counterparty until all amounts owing to the Swap Counterparty
under the Swap Agreement for payments in connection with such Swap Agreement
Termination Event (including any Unpaid Amounts) have been paid in full and,
second, shall distribute all remaining amounts to the Certificateholders. If
the distribution in the preceding sentence is insufficient to pay in full all
amounts owing to the Swap Counterparty, the Trustee shall proceed to liquidate
or distribute the Underlying Securities in accordance with Section 10(h). Upon
any liquidation of the Underlying Securities, the Trustee, first, shall
distribute the proceeds thereof to the Swap Counterparty until all amounts
owing to the Swap Counterparty have been paid in full and, second, shall
distribute all remaining amounts to the Certificateholders. In the event of a
Swap Agreement Termination Event, after paying all

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amounts due to the Swap Counterparty as set forth in the first sentence of
this Section 10(b), if no Trust Termination Event has occurred, all Interest
Collections shall thereafter be distributed to Certificateholders on each
applicable Distribution Date. If a Swap Agreement Termination Event has
occurred for which the Swap Counterparty is the Defaulting Party or the only
Affected Party, notwithstanding the termination of the Swap Agreement, the
Trustee shall distribute any Unpaid Amounts to the Swap Counterparty from
Interest Collections on the Underlying Securities.

               (c) In all cases hereunder, if any payment with respect to the
Underlying Securities is made to the Trustee after the Underlying Securities
Payment Date on which such payment was due, the Trustee shall distribute such
amount received on the Business Day following such receipt.

               (d) In the event of a Payment Default while the Swap Agreement
is in effect and if any payment is due to the Swap Counterparty, the
Underlying Securities will be liquidated in accordance with Section 10(h).
Otherwise, in the event of a Payment Default, the Trustee shall proceed
against the Underlying Securities Issuer on behalf of the Certificateholders
to enforce the Underlying Securities or otherwise to protect the interests of
the Certificateholders, subject to the receipt of indemnity in form and
substance satisfactory to the Trustee; provided, that Holders of the
Certificates representing a majority of the Voting Rights on the Certificates
will be entitled to direct the Trustee in any such proceeding or direct the
Trustee to sell the Underlying Securities, subject to the Trustee's receipt of
satisfactory indemnity.

               (e) In the event of an Acceleration and a corresponding payment
on the Underlying Securities prior to any liquidation of the Underlying
Securities hereunder, the Trustee shall distribute the proceeds to the
Certificateholders no later than two (2) Business Days after the receipt of
immediately available funds pursuant to Section 10(b).

               (f) In the event the Trustee receives property other than cash
in respect of the Underlying Securities such property will be applied first,
to the Swap Counterparty until all amounts owing to the Swap Counterparty have
been paid in full and, second, to the Certificateholders. Property other than
cash will be liquidated by the Trustee, and the proceeds thereof distributed
in cash, to the extent necessary to pay to the Swap Counterparty all amounts
owed to it under the Swap Agreement and, thereafter, to the extent necessary
to avoid distribution of fractional securities to Certificateholders. In-kind
distribution of Underlying Securities or other property to Certificateholders
will be deemed to reduce the Stated Amount of Certificates on a proportionate
basis. Following such in-kind distribution, all Certificates will be
cancelled. No amounts will be distributed to the Trustor in respect of the
Underlying Securities. The Swap Counterparty shall direct the Trustee with
respect to any liquidation of such property to the extent of the full amount
owed to it under the Swap Agreement.

               (g) If an SEC Reporting Failure occurs, then the Trustor shall
promptly notify the Trustee, the Swap Counterparty and the Rating Agency of
such SEC Reporting Failure and the Trustee shall proceed to liquidate or
distribute the Underlying Securities in accordance with Section 10(h).

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               (h) If at any time, the Trustee is directed to sell the
Underlying Securities, the Trustee shall solicit bids for the sale of the
Underlying Securities with settlement thereof on or before the third (3rd)
Business Day after such sale from three leading dealers in the relevant
market, which may include but is not limited to any three of the following
dealers: (1) Wachovia Securities, (2) Goldman, Sachs & Co., (3) Lehman
Brothers Inc., (4) Merrill Lynch, Pierce, Fenner & Smith Incorporated, (5)
Citigroup Global Markets Inc., (6) J.P. Morgan Securities Inc. and (7)
Deutsche Bank Securities Inc.; provided, however, that no bid from Wachovia
Securities or any affiliate thereof shall be accepted unless such bid equals
the then fair market value of such Underlying Securities. The Trustee shall
not be responsible for the failure to obtain a bid so long as it has made
reasonable efforts to obtain bids. If a bid for the sale of the Underlying
Securities has been accepted by the Trustee but the sale has failed to settle
on the proposed settlement date, the Trustee shall request new bids from such
leading dealers. In any circumstance in which the sale of the Underlying
Securities is required hereunder, the Trustee shall, to the extent it is so
directed by the Trustor, provide Certificateholders with the option to elect
to receive an "in-kind" distribution of their pro rata share of the Underlying
Securities; provided, that, (1) an in-kind distribution shall be subject to
the prior sale of Underlying Securities in accordance with the provisions of
this Section 10(h) to the extent necessary, to pay any amounts owing to the
Swap Counterparty under Section 10(b), (2) a Certificateholders' pro rata
share of the Underlying Securities shall be a principal amount of Underlying
Securities equal to the aggregate principal amount of the Underlying
Securities minus the amount required to be distributed to the Swap
Counterparty pursuant to the second sentence of Section 10(b) multiplied by a
fraction the numerator of which is the Stated Amount of that holder's
Certificates and the denominator of which is the aggregate principal amount of
the Underlying Securities and (3) odd-lot amounts that cannot be distributed
in-kind because they are not within the authorized denominations of the
Underlying Securities shall be distributed in cash. Any such in-kind
distribution shall constitute the final distribution in respect of the
Certificates as to which such option is exercised.

               (i) Distributions to the Certificateholders on each
Distribution Date will be made to the Certificateholders of record on the
Record Date.

               (j) All distributions to Certificateholders shall be allocated
pro rata among the Certificates based on their respective Outstanding Amounts
as of the Record Date.

               (k) Notwithstanding any provision of the Agreement to the
contrary, to the extent funds are available, the Trustee will initiate payment
in immediately available funds by 1:00 P.M. (New York City time) on each
Distribution Date of all amounts payable to each Certificateholder with
respect to any Certificate held by such Certificateholder or its nominee
(without the necessity for any presentation or surrender thereof or any
notation of such payment thereon) in the manner and at the address as each
Certificateholder may from time to time direct the Trustee in writing 15 days
prior to such Distribution Date requesting that such payment will be so made
and designating the bank account to which such payments shall be so made. The
Trustee shall be entitled to rely on the last instruction delivered by the
Certificateholder pursuant to this Section 10(f) unless a new instruction is
delivered 15 days prior to a Distribution Date.

               (l) The rights of the Certificateholders to receive
distributions in respect of the Certificates, and all interests of the
Certificateholders in such distributions, shall be as set forth in this Series
Supplement. The Trustee shall in no way be responsible or liable to the

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Certificateholders nor shall any Certificateholder in any way be responsible
or liable to any other Certificateholder in respect of amounts previously
distributed on the Certificates based on their respective Outstanding Amounts.

               Section 11. Termination of Trust. (a) The Trust shall terminate
upon the occurrence of any Trust Termination Event.

               (b) Except for any reports and other information required to be
provided to Certificateholders hereunder and under the Base Trust Agreement
and except as otherwise specified herein and therein, the obligations of the
Trustee will terminate upon the distribution to the Swap Counterparty and
Certificateholders of all amounts required to be distributed to them and the
disposition of all Underlying Securities held by the Trustee. The Trust shall
thereupon terminate, except for surviving rights of indemnity.

               Section 12. Limitation of Powers and Duties. (a) The Trustee
shall administer the Trust and the Underlying Securities solely as specified
herein and in the Base Trust Agreement.

               (b) The Trust is constituted solely for the purpose of
acquiring and holding the Underlying Securities, entering into and performing
its obligations under the Swap Agreement and issuing the Certificates. The
Trustee is not authorized to acquire any other investments or engage in any
activities not authorized herein and, in particular, unless expressly provided
in the Agreement, the Trustee is not authorized (i) to sell, assign, transfer,
exchange, pledge, set-off or otherwise dispose of any of the Underlying
Securities, once acquired, or interests therein, including to
Certificateholders, (ii) to merge or consolidate the Trust with any other
entity, or (iii) to do anything that would materially increase the likelihood
that the Trust will fail to qualify as a grantor trust for United States
federal income tax purposes. In addition, the Trustee has no power to create,
assume or incur indebtedness or other liabilities in the name of the Trust
other than as contemplated herein and in the Base Trust Agreement.

               (c) The parties acknowledge that the Trustee, as the holder of
the Underlying Securities, has the right to vote and give consents and waivers
in respect of the Underlying Securities and enforce the other rights, if any,
of a holder of the Underlying Securities, except as otherwise limited by the
Base Trust Agreement or this Series Supplement. In the event that the Trustee
receives a request from the Underlying Securities Trustee, the Underlying
Securities Issuer or, if applicable, the Depositary with respect to the
Underlying Securities, for the Trustee's consent to any amendment,
modification or waiver of the Underlying Securities, or any document relating
thereto, or receives any other solicitation for any action with respect to the
Underlying Securities, the Trustee shall within two (2) Business Days mail a
notice of such proposed amendment, modification, waiver or solicitation to the
Swap Counterparty and each Certificateholder of record as of the date of such
request. The Trustee shall request instructions from the Certificateholders as
to what action to take in response to such request and shall be protected in
taking no action if no direction is received. Except as otherwise provided
herein, the Trustee shall consent or vote, or refrain from consenting or
voting, in the same proportion (based on the Stated Amounts of the
Certificates of each Class as allocated based on the respective Voting Rights
of each Class) as the Certificates were actually voted or not voted by the
Holders thereof as of the date determined by the Trustee prior to the date
such vote or consent is required;

                                      10
<PAGE>

provided, however, that, notwithstanding anything to the contrary in the Base
Trust Agreement or this Series Supplement, the Trustee shall at no time vote
in favor of or consent to any matter (i) which would alter the timing or
amount of any payment on the Underlying Securities (including, without
limitation, any demand to accelerate the Underlying Securities) or (ii) which
would result in the exchange or substitution of any Underlying Security
whether or not pursuant to a plan for the refunding or refinancing of such
Underlying Security, except in each case with the unanimous consent of the
Certificateholders; provided, further, that the Trustee shall not take any
such action if it would affect the method, amount or timing of payments due to
the Swap Counterparty or otherwise materially adversely affect the interests
of the Swap Counterparty under the Swap Agreement and result in a Swap
Agreement Termination Event, in each case without the prior written consent of
the Swap Counterparty. The Trustee shall have no liability for any failure to
act or to refrain from acting resulting from the Certificateholders' late
return of, or failure to return, directions requested by the Trustee from the
Certificateholders.

               (d) Notwithstanding any provision of the Agreement to the
contrary, the Trustee may require from the Certificateholders prior to taking
any action at the direction of the Certificateholders, an indemnity agreement
of a Certificateholder or any of its Affiliates to provide for security or
indemnity against the costs, expenses and liabilities the Trustee may incur by
reason of any such action. An unsecured indemnity agreement, if acceptable to
the Trustee, shall be deemed to be sufficient to satisfy such security or
indemnity requirement.

               (e) Notwithstanding any provision of the Agreement to the
contrary, the Trustee shall act as the sole Authenticating Agent, Paying Agent
and Registrar.

               Section 13. Compensation of Trustee. The Trustee shall be
entitled to receive from the Trustor as compensation for its services
hereunder, trustee's fees pursuant to a separate agreement between the Trustee
and the Trustor, and shall be reimbursed for all reasonable expenses,
disbursements and advances incurred or made by it (including the reasonable
compensation, disbursements and expenses of its counsel and other persons not
regularly in its employ). The Trustor shall indemnify and hold harmless the
Trustee and its successors, assigns, agents and servants against any and all
loss, liability or reasonable expense (including attorney's fees) incurred by
it in connection with the administration of this trust and the performance of
its duties thereunder. The Trustee shall notify the Trustor promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Trustor shall not relieve the Trustor of its obligations hereunder. The
Trustor need not reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own willful
misconduct, negligence or bad faith. The indemnities contained in this Section
13 shall survive the resignation or termination of the Trustee or the
termination of this Agreement.

               Failure by the Trustor to pay, reimburse or indemnify the
Trustee shall not entitle the Trustee to any payment, reimbursement or
indemnification from the Trust, nor shall such failure release the Trustee
from the duties it is required to perform under this Series Supplement. Any
unpaid, unreimbursed or unindemnified amounts shall not be borne by the Trust
and shall not constitute a claim against the Trust, but shall be borne by the
Trustee in its individual capacity, and the Trustee shall have no recourse
against the Trust with respect thereto.

                                      11
<PAGE>

               Section 14. Modification or Amendment of the Base Trust
Agreement, the Series Supplement or the Swap Agreement. (a) The Trustee shall
not enter into any modification or amendment of the Base Trust Agreement or
this Series Supplement unless such modification or amendment is in accordance
with Section 10.1 of the Base Trust Agreement. If the Rating Agency Condition
is not satisfied with respect to any proposed modification or amendment of the
Base Trust Agreement or this Series Supplement, then any such modification or
amendment must be approved by 100% of the Certificateholders. The Trustee
shall not enter into any amendment or modification of this 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 or
otherwise materially adversely affect the interests of the Swap Counterparty
under the Swap Agreement and result in a Swap Agreement Termination Event, in
each case without the prior written consent of the Swap Counterparty. The
Trustee shall provide fifteen Business Days written notice to the Swap
Counterparty before entering into any amendment or modification of this
Agreement pursuant to this Section 14.

               (b) The Trustee shall not enter into any modification or
amendment of the Swap Agreement without the prior written consent of holders
of Certificates representing 66 ?% of the Voting Rights and without prior
written confirmation from the Rating Agency that such amendment will not
result in a reduction or withdrawal of the then current rating of the
Certificates; provided, however, that each of the Swap Counterparty and the
Trustee may amend the Swap Agreement without the prior written consent of
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 of the Swap Agreement, or to otherwise cure any defect in the Swap
Agreement, provided that any such amendment does not materially adversely
affect the interest of the Certificateholders and that the 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 on the Swap Agreement
without the prior consent of 100% of the Certificateholders and without giving
the Rating Agency prior written notice of any such amendment.

               (c) 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) that no Swap Agreement
Termination Event has occurred and may accordingly seek instructions under
Section 12 and this Section 14 exclusively from the Swap Counterparty.

               Section 15. Assignment of Rights under the Swap Agreement. The
Trustee may consent to any transfer or assignment by the Swap Counterparty of
its rights under the Swap Agreement, so long as the Rating Agency shall have
given its prior written confirmation that such transfer or assignment will not
result in a reduction or withdrawal of the then current rating of the
Certificates.

               Section 16. Accounting. Notwithstanding Section 3.16 of the
Base Trust Agreement, "Independent Public Accountants' Administration Report,"
no such accounting reports shall be required. Pursuant to Section 4.2 of the
Base Trust Agreement, "Reports to

                                      12
<PAGE>

Certificateholders," the Trustee shall cause the statement described in
Section 4.2 to be prepared and forwarded as provided therein.

               Section 17. No Investment of Amounts Received on Underlying
Securities. All amounts received on or with respect to the Underlying
Securities shall be held uninvested by the Trustee.

               Section 18. No Event of Default. There shall be no Events of
Default defined with respect to the Certificates.

               Section 19. Notices. (a) All directions, demands and notices
hereunder and under the Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered or mailed by first
class mail, postage prepaid or by express delivery service or by certified
mail, return receipt requested or delivered in any other manner specified
herein, (i) in the case of the Trustor, to Synthetic Fixed-Income Securities,
Inc., One Wachovia Center 301 South College Street, DC-7 Charlotte, NC 28288,
Attention: Investment Grade Debt Syndicate Desk, or such other address as may
hereafter be furnished to the Trustee in writing by the Trustor, and (ii) in
the case of the Trustee, to U.S. Bank Trust National Association, 100 Wall
Street, Suite 1600, New York, New York 10005, Attention: Corporate Trust,
facsimile number (212) 809-5459, or such other address as may hereafter be
furnished to the Trustor in writing by the Trustee.

               (b) For purposes of delivering notices to the Rating Agency
under Section 10.07 of the Base Trust Agreement, "Notice to Rating Agency," or
otherwise, such notices shall be mailed or delivered as provided in such
Section 10.07, "Notice to Rating Agency," to: Standard & Poor's Ratings
Services, 55 Water Street, New York, New York 10041; or such other address as
the Rating Agency may designate in writing to the parties hereto.

               (c) In the event a Payment Default or an Acceleration occurs,
the Trustee shall promptly give notice to the Swap Counterparty and to the
Depositary or, for any Certificates which are not then held by the Depositary
or any other depository, directly to the registered holders of the
Certificates thereof. Such notice shall set forth (i) the identity of the
issue of Underlying Securities, (ii) the date and nature of such Payment
Default or Acceleration, (iii) the principal amount of the interest or
principal in default, (iv) the Certificates affected by the Payment Default or
Acceleration, and (v) any other information which the Trustee may deem
appropriate.

               (d) Notwithstanding any provisions of the Agreement to the
contrary, the Trustee shall deliver all notices or reports required to be
delivered to or by the Trustee or the Trustor to the Certificateholders or the
Swap Counterparty without charge to such Certificateholders or the Swap
Counterparty.

               (e) The Trustee shall, in connection with any notice or
delivery of documents to Certificateholders (whether or not such notice or
delivery is required pursuant to the Agreement), provide such notice or
documents to the Swap Counterparty concurrently with the delivery thereof to
the Certificateholders.

                                      13
<PAGE>

               Section 20. Access to Certain Documentation. Access to
documentation regarding the Underlying Securities will be afforded without
charge to any Certificateholder so requesting pursuant to Section 3.17 of the
Base Trust Agreement, "Access to Certain Documentation." Additionally, the
Trustee shall provide at the request of any Certificateholder without charge
to such Certificateholder the name and address of each Certificateholder of
Certificates hereunder as recorded in the Certificate Register for purposes of
contacting the other Certificateholders with respect to their rights hereunder
or for the purposes of effecting purchases or sales of the Certificates,
subject to the transfer restrictions set forth herein.

               Section 21. Advances. There is no Administrative Agent
specified herein; hence no person (including the Trustee) shall be permitted
or obligated to make Advances as described in Section 4.3 of the Base Trust
Agreement, "Advances."

               Section 22. Ratification of Agreement. With respect to the
Series issued hereby, the Base Trust Agreement (including the grant of a
security interest in Section 10.8 of the Base Trust Agreement with respect to
the Underlying Securities conveyed hereunder), as supplemented by this Series
Supplement, is in all respects ratified and confirmed, and the Base Trust
Agreement as so supplemented by this Series Supplement shall be read, taken
and construed as one and the same instrument. To the extent there is any
inconsistency between the terms of the Base Trust Agreement and this Series
Supplement, the terms of this Series Supplement shall govern.

               Section 23. Counterparts. This Series Supplement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.

               Section 24. Governing Law. This Series Supplement and each
Certificate issued hereunder shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed entirely therein without reference to such State's principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws. The State of New York is the securities intermediary's jurisdiction of
the Securities Intermediary for purposes of the UCC.

               Section 25. Certificate of Compliance. The Trustor shall
deliver to the Trustee and the Swap Counterparty on or prior to June 30 of
each year prior to a Trust Termination Event the Officer's Certificate as to
compliance as required by Section 6.1(b) of the Base Trust Agreement.

               Section 26. Certain Filing to be Made by the Trustee. In the
event that an event requiring the sale of the Underlying Securities under this
Agreement occurs and the Underlying Securities are liquidated at a loss, the
Trustee will disclose pursuant to Treasury Regulation Section 1.6011-4 the
loss in accordance with the procedures of such regulation, unless the Trustee
obtains advice from counsel that such disclosure is not necessary. In general,
the Trustee will (x) attach a completed Form 8886 to its tax return in the
year the requisite loss occurs and (y) file a completed form with the Office
of Tax Shelter Analysis (OTSA) at: Internal Revenue

                                      14
<PAGE>

Service LM:PFTG:OTSA, Large and Midsize Business Division, 1111 Constitution
Avenue., NW., Washington DC 20224 (or such other address subsequently
required).

               Section 27. Establishment of Accounts. The Securities
Intermediary and the Trustee hereby represent and warrant that:

               (a) Each Account for the Trust is a "securities account" within
the meaning of Section 8-501 of the UCC and is held only in the name of the
Trustee on behalf of the Trust. The Securities Intermediary is acting in the
capacity of a "securities intermediary" within the meaning of Section
8-102(a)(14) of the UCC;

               (b) All Underlying Securities have been (i) delivered to the
Securities Intermediary pursuant to the Agreement and (ii) credited to the
Certificate Account; and

               (c) Each Account is an account to which financial assets are or
may be credited, and the Securities Intermediary shall treat the Trustee as
entitled to exercise the rights that comprise any financial asset credited to
the Accounts.

               Section 28. Statement of Intent. It is the intention of the
parties hereto that, for purposes of federal income taxes, state and local
income and franchise taxes and any other taxes imposed upon, measured by or
based upon gross or net income, the Trust shall be treated as a grantor trust,
but failing that, as a partnership (other than a publicly traded partnership
taxable as a corporation) and, in any event, shall not be classified as a
corporation. The parties hereto agree that, unless otherwise required by
appropriate tax authorities, the Trustee shall file or cause to be filed
annual or other necessary returns, reports and other forms consistent with
such intended characterization. In the event that the Trust is characterized
by appropriate tax authorities as a partnership for federal income tax
purposes, each Certificateholder, by its acceptance of its Certificate, agrees
to report its respective share of the items of income, deductions, and credits
of the Trust on its respective returns. As further consideration for each
Certificateholder's purchase of a Certificate, each such Certificateholder is
deemed to agree not to irrevocably delegate to any person (for a period of
more than one year) authority to purchase, sell or exchange its Certificates.

               Each Certificateholder (and each beneficial owner of a
Certificate) by acceptance of its Certificate (or its beneficial interest
therein) agrees, unless otherwise required by appropriate tax authorities, to
file its own tax returns and reports in a manner consistent with the
characterization indicated above.

               Section 29. Filing of Partnership Returns. In the event that
the Trust is characterized (by appropriate tax authorities) as a partnership
for United States federal income tax purposes the Trustor agrees to reimburse
the Trust for any expenses associated with the filing of partnership returns
(or returns related thereto).

               Section 30. "Financial Assets" Election. The Securities
Intermediary hereby agrees that the Underlying Securities credited to the
Certificate Account and any Posted Collateral credited to the Collateral
Account shall be treated as a "financial asset" within the meaning of Section
8-102(a)(9) of the UCC.

                                      15
<PAGE>

               Section 31. Trustee's Entitlement Orders. If at any time the
Securities Intermediary shall receive any order from the Trustee directing the
transfer or redemption of any Underlying Securities credited to the Accounts,
the Securities Intermediary shall comply with such entitlement order without
further consent by the Trustor or any other Person. The Securities
Intermediary shall take all instructions (including without limitation all
notifications and entitlement orders) with respect to the Accounts solely from
the Trustee.

               Section 32. Conflict with Other Agreements. The Securities
Intermediary hereby confirms and agrees that:

               (a) There are no other agreements entered into between the
Securities Intermediary and the Trustor with respect to the Accounts. Each
Account and all property credited to the Account is not subject to, and the
Securities Intermediary hereby waives, any lien, security interest, right of
set off, or encumbrance in favor of the Securities Intermediary or any Person
claiming through the Securities Intermediary (other than the Trustee);

               (b) It has not entered into, and until the termination of the
Agreement will not enter into, any agreement with any other Person relating to
the Accounts and/or any financial assets credited thereto pursuant to which it
has agreed to comply with entitlement orders of any Person other than the
Trustee; and

               (c) It has not entered into, and until the termination of the
Agreement will not enter into, any agreement with any Person purporting to
limit or condition the obligation of the Securities Intermediary to comply
with entitlement orders as set forth in Section 31 hereof.

               Section 33. Additional Trustee and Securities Intermediary
Representations. The Trustee and the Securities Intermediary each hereby
represents and warrants as follows:

               (a) The Trustee and the Securities Intermediary each maintains
its books and records with respect to its securities accounts in the State of
New York;

               (b) The Trustee and the Securities Intermediary each has not
granted any lien on the Underlying Securities nor are the Underlying
Securities subject to any lien on properties of the Trustee or the Securities
Intermediary in its individual capacity; the Trustee and the Securities
Intermediary each has no actual knowledge and has not received actual notice
of any lien on the Underlying Securities (other than any liens of the Trustee
in favor of the beneficiaries of the Trust Agreement); other than the
interests of the Trustee, the Certificateholders and the Swap Counterparty,
the books and records of the Trustee and the Securities Intermediary each do
not identify any Person as having an interest in the Underlying Securities;
and

               (c) The Trustee and the Securities Intermediary each makes no
representation as to (i) the validity, legality, sufficiency or enforceability
of any of the Underlying Securities or (ii) the collectability, insurability,
effectiveness or suitability of any of the Underlying Securities.

               Section 34. Additional Trustor Representations. The Trustor
hereby represents and warrants to the Trustee as follows:

                                      16
<PAGE>

               (a) Immediately prior to the sale of the Underlying Securities
to the Trustee, the Trustor, as Depositor, owned and had good and marketable
title to the Underlying Securities free and clear of any lien, claim or
encumbrance of any Person;

               (b) The Trustor, as Depositor, has received all consents and
approvals required by the terms of the Underlying Securities to the sale to
the Trustee of its interest and rights in the Underlying Securities as
contemplated by the Agreement; and

               (c) The Trustor 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), except such interests sold pursuant to the
Agreement. The Trustor has not authorized the filing of and is not aware of
any financing statements against the Trustor that includes a description of
the Underlying Securities, other than any such filings pursuant to the
Agreement. The Trustor is not aware of any judgment or tax lien filings
against Trustor.

               Section 35. Certification Requirements. The Trustee agrees to
obtain, at the Trustor's direction and expense, a report of an independent
public accountant sufficient for the Trustor on behalf of the Trust to satisfy
its obligations with respect to certification requirements under Rules 13a-14
and 15d-14 of the Exchange Act.

               Section 36. Additional Rights of the Swap Counterparty. Section
10.8 of the Base Trust Agreement is hereby modified for purposes of this
Series Supplement to provide that the security interest referred to and
created pursuant thereto in the Trust assets shall, in addition to the
obligations provided for under Section 10.8(b)(3), secure all of the
obligations of the Trustor and the Trust to the Swap Counterparty under the
Swap Agreement and this Agreement. The Swap Counterparty shall have the rights
of a third party beneficiary with respect to this Agreement.

               Section 37. Modification of Certain Provisions of Base Trust
Agreement. The provisions of the Base Trust Agreement shall be modified as
they are applied with respect to this Series of Certificates to provide that
(i) notwithstanding Section 3.9 of the Base Trust Agreement, the Certificate
Account shall be held for the benefit of Certificateholders and the Swap
Counterparty and amounts in the Certificate Account shall be used to make
distributions to the Swap Counterparty as and when required under this Series
Supplement, (ii) the appointment of any successor of the Trustee under Section
8.7 of the Base Trust Agreement shall be subject to the prior approval of the
Swap Counterparty and (iii) notwithstanding Section 9.1(a) of the Base Trust
Agreement and subject to the proviso therein, the respective obligations and
responsibilities under this Agreement of the Trustor and the Trustee shall
terminate upon the distribution to Certificateholders and the Swap
Counterparty of all amounts held in all the Accounts and required to be paid
to such Holders or the Swap Counterparty pursuant to this Agreement and the
Swap Agreement on the Distribution Date coinciding with or following the final
payment on or other liquidation of the Underlying Securities and the
disposition of all amounts acquired therefrom in accordance with this
Agreement and the Swap Agreement and the disposition of the final payments
received under the Swap Agreement.

                                      17
<PAGE>

               Section 38. Evidence of Integration for Tax Purposes. The
Trustee retains Exhibit E on behalf of each Certificateholder.

               Section 39. Optional Exchange.

               (a) On any Business Day occurring on or after February 1, 2005,
subject to satisfaction of all of the conditions set forth in clause (b), the
Depositor may exchange Certificates held by it for a distribution of
Underlying Securities representing the same percentage of the Underlying
Securities as such Certificates represent of all outstanding Certificates.

               (b) The following conditions shall apply to any Optional
Exchange.

               (A) 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.

               (B) Certificates shall be surrendered to the trustee no later
          than 10:00 a.m. (New York City time) on the optional exchange date.

               (C) The Trustee shall have received an opinion of counsel
          stating that the Optional Exchange would not cause the Trust to be
          classified as a corporation or publicly traded partnership taxable
          as a corporation for federal income tax purposes.

               (D) No more than one (1) Optional Exchange shall occur in any
          Collection Period.

               (E) 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.

               (F) The provisions of Section 4.5 of the Base Trust Agreement
          shall not apply to an Optional Exchange pursuant to this Section 39.
          This Section 39 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 39 shall entitle the Depositor to a
          distribution thereof.

               (G) The aggregate principal balance of Certificates exchanged
          in connection with any Optional Exchange pursuant to this Section 39
          shall be in an amount that results in a distribution of Underlying
          Securities in an even multiple of the minimum denomination of the
          Underlying Securities.

               (H) No Swap Agreement Termination Event shall have occurred as
          a result of the Optional Exchange except to the extent of a
          termination resulting from the reduction in the Hedge Notional
          Amount (as defined in the Swap Agreement) to an amount equal to

                                      18
<PAGE>

          the principal amount of the Underlying Securities after giving
          effect to the Optional Exchange.

               (I) Any payments due under the Swap Agreement as a result of
          the reduction in such Hedge Notional Amount and any such Swap
          Agreement Termination Event (x) that are due to the Swap
          Counterparty (including but not limited to Unpaid Amounts) shall
          have been paid to the Swap Counterparty by the Depositor and (y)
          that are payable by the Swap Counterparty, shall be payable for the
          account of the Depositor.

               Section 40. ERISA Restrictions. Certificates may not be
acquired by or for the account of any employee benefit plan, trust or account,
including an individual retirement account, that is subject to the
requirements of Title I of the Employee Retirement Income Security Act of
1974, as amended, or that is described in Section 4975(e)(1) of the Code, or
by or for the account of any entity whose underlying assets include any assets
subject to these laws by reason of investment in that entity by such plans,
trusts or accounts. By accepting and holding any Certificate, the holder of
the Certificate will be deemed to have represented and warranted that it is
not a plan or entity described above, and that its acquisition and holding of
the Certificate are in compliance with the foregoing restrictions.

                                      19
<PAGE>

               IN WITNESS WHEREOF, the parties hereto have caused this Series
Trust Agreement to be executed by their respective duly authorized officers as
of the date first above written.

                                       SYNTHETIC FIXED-INCOME SECURITIES,
                                       INC.

                                       By:
                                       ---------------------------------------
                                                  Authorized Signatory

                                       U.S. BANK TRUST NATIONAL ASSOCIATION,
                                       as Trustee and Securities Intermediary

                                       By:
                                       ---------------------------------------
                                                  Responsible Officer

<PAGE>
                                                                    EXHIBIT A

        IDENTIFICATION OF THE UNDERLYING SECURITIES AS OF CLOSING DATE

Underlying Securities Issuer:                  Morgan Stanley

Underlying Securities:                         $15,000,000 of 4.75%
                                               Subordinated Notes due 2014.

Maturity Date/Final Distribution Date:         April 1, 2014.

Original Principal Amount Issued:              $4,000,000,000.

CUSIP No.:                                     61748AAE6

Stated Interest Rate:                          4.75% per annum.

Interest Payment Dates:                        April 1 and October 1

Principal Amount of Underlying                 $15,000,000.
Securities Deposited Under Trust
Agreement:

The Underlying Securities will be held by the Trustee as securities entitlements
credited to an account of the Trustee or its agent at the Depositary.

                                     A-1
<PAGE>
                                                                    EXHIBIT B

                  TERMS OF THE CERTIFICATES AS OF CLOSING DATE

Maximum Number of STRATS(SM)              15,000
Certificates, Series 2004-16:

Aggregate Stated Amount of STRATS(SM)     $15,000,000
Certificates, Series 2004-16:

Authorized Denomination:                  $1,000 and integral multiples thereof.

Rating Agency:                            S&P.

Closing Date:                             December 22, 2004.

Record Date:                              With respect to any Distribution
                                          Date, the day immediately preceding
                                          such Distribution Date.

Trustee's Fees:                           The Trustee's fees shall be payable
                                          by the Trustor pursuant to a separate
                                          fee agreement between the Trustee and
                                          the Trustor.

Initial Certificate Registrar:            U.S. Bank Trust National Association

Corporate Trust Office:                   U.S. Bank Trust National Association
                                          100 Wall Street, Suite 1600 New York,
                                          New York 10005 Attention: Corporate
                                          Trust Department, Regarding
                                          STRATS(SM) Trust For Morgan Stanley
                                          Securities, Series 2004-16

                                     B-1
<PAGE>
                                                                    EXHIBIT C

                               FORM OF CERTIFICATE

THIS CERTIFICATE REPRESENTS AN UNDIVIDED INTEREST IN THE TRUST AND DOES NOT
EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY THE
TRUSTOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS
CERTIFICATE NOR THE DEPOSITED ASSETS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR ANY OTHER PERSON.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY 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 THE DEPOSITARY (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.

CERTIFICATE NUMBER:  1                   $15,000,000 Certificate Stated Amount
CUSIP:  86311VAC8                                          15,000 Certificates
CERTIFICATE INTEREST RATE:                              Variable Floating Rate

                      STRATS(SM) CERTIFICATES, SERIES 2004-16

evidencing an undivided interest in the Trust, as defined below, the assets of
which include $15,000,000 of 4.75% Notes due 2014 issued by the Underlying
Securities Issuer.

This Certificate does not represent an interest in or obligation of the Trustor
or any of its affiliates.

        THIS CERTIFIES THAT Cede & Co. is the registered owner of a
nonassessable, fully-paid, fractional undivided interest in STRATS(SM) Trust For
Morgan Stanley Securities, Series 2004-16 (the "Trust") formed by SYNTHETIC
FIXED-INCOME SECURITIES, INC., as Trustor (the "Trustor") evidenced by
Certificates in the number and the Stated Amount set forth above.

        The Trust was created pursuant to a Base Trust Agreement, dated as of
September 26, 2003 (as amended and supplemented, the "Agreement"), between the
Trustor 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 STRATS(SM) Certificates Series

                                     C-1
<PAGE>

Supplement 2004-16, dated as of December 22, 2004 (the "Series Supplement"
and, together with the Agreement, the "Trust Agreement"), between the Trustor
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 "STRATS(SM) Certificates, Series 2004-16 (herein called the "Certificate" or
"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 assets of the Trust include the Underlying
Securities, all proceeds of the Underlying Securities and the Trust's rights
under the Swap Agreement.

        Under the Trust Agreement, there shall be distributed on the dates
specified in the Trust Agreement (a "Distribution Date"), to the person in whose
name this Certificate is registered at the close of business on the related
Record Date, such Certificateholder's fractional undivided interest in the
amount of distributions of the Underlying Securities to be distributed to
Certificateholders on such Distribution Date and distributions to the Trust
under the Swap Agreement. The Underlying Securities will pay interest on April 1
and October 1 of each year. The principal of the Underlying Securities is
scheduled to be paid on April 1, 2014. The Swap Agreement provides for payments
on the 1st calendar day of each month, commencing on January 1, 2005.

        The distributions in respect of this Certificate are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts as set forth in the Series
Trust Agreement.

        The Underlying Securities held by the Trust are subject to the rights of
the Swap Counterparty, as provided for in the Series Supplement and the Swap
Agreement, and each Certificateholder, by accepting its Certificate,
acknowledges such rights in accordance with the terms of the Series Supplement
and the Swap Agreement.

        It is the intent of the Trustor and the Certificateholders that the
Trust will be classified as a grantor trust under subpart E, Part I of
subchapter J of the Internal Revenue Code of 1986, as amended. Except as
otherwise required by appropriate taxing authorities, the Trustor and the
Trustee, by executing the Trust Agreement, and each Certificateholder, by
acceptance of a Certificate, agrees to treat, and to take no action inconsistent
with the treatment of, the Certificates for such tax purposes as interests in a
grantor trust and the provisions of the Trust Agreement shall be interpreted to
further this intention of the parties.

        By acceptance of a Certificate, each Certificateholder (1) elects to
integrate the Underlying Securities and the Swap Agreement for United States
federal income tax purposes, (2) authorizes and directs the trustee (or the
trustee's agent) to retain, as part of the Certificateholder's books and
records, information that (a) describes the Underlying Securities

                                     C-2
<PAGE>

and the Swap Agreement, (b) identifies the two positions as integrated for
federal income tax purposes and (c) describes the features of the resulting
"synthetic" debt instrument and (3) agrees to retain copies of such
information as provided to the Certificateholder by the Trust.

        Each Certificateholder, by its acceptance of a Certificate, covenants
and agrees that such Certificateholder shall not, prior to the date which is one
year and one day after the termination of the Trust Agreement, acquiesce,
petition or otherwise invoke or cause the Trustor to invoke the process of any
court or governmental authority for the purpose of commencing or sustaining a
case against the Trustor under any federal or state bankruptcy, insolvency,
reorganization or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trustor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Trustor.

        Certificates may not be acquired by or for the account of any employee
benefit plan, trust or account, including an individual retirement account, that
is subject to the requirements of Title I of the Employee Retirement Income
Security Act of 1974, as amended, or that is described in Section 4975(e)(1) of
the Code, or by or for the account of any entity whose underlying assets include
any assets subject to these laws by reason of investment in that entity by such
plans, trusts or accounts. By accepting and holding this Certificate, the holder
of this Certificate will be deemed to have represented and warranted that it is
not a plan or entity described above, and that its acquisition and holding of
this Certificate are in compliance with the foregoing restrictions.

        The Trust Agreement permits the amendment thereof, in certain
circumstances, without the consent of the Holders of any of the Certificates.

        Unless the certificate of authentication hereon shall have been executed
by an authorized officer 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.

        A copy of the Trust Agreement is available upon request and all of its
terms and conditions are hereby incorporated by reference and made a part
hereof.

        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 PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.

                                     C-3
<PAGE>

IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
as of the date set forth below.

                                   STRATS(SM) TRUST FOR MORGAN
                                   STANLEY SECURITIES, SERIES 2004-16

                                   By:  U.S. BANK TRUST NATIONAL
                                   ASSOCIATION, not in its individual capacity
                                   but solely as Trustee

                                   By:
                                      -----------------------------------------
                                         Authorized Signatory

Dated:  December 22, 2004

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the STRATS(SM) Certificates, Series 2004-16, 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

                                     C-4
<PAGE>

                                   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:

                                                                         *
                                          --------------------------------

*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.

                                     C-5
<PAGE>
                                                                  Exhibit D-1

(Multicurrency - Cross Border)

                                    ISDA(R)

                 International Swap Dealers Association, Inc.

                               MASTER AGREEMENT

                         dated as of December 22, 2004

WACHOVIA BANK, NATIONAL    and  STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES,
ASSOCIATION                      SERIES 2004-16

have entered and/or anticipate entering into one of 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

                                    D-1-1
<PAGE>

         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 ft 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

                                    D-1-2
<PAGE>

                         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.

         (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

                                    D-1-3
<PAGE>

         (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)).

(b)      Absence of Certain Events. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has
occurred and is continuing and no such event or circumstance would occur as a
result of its entering into or performing its obligations under this Agreement
or any Credit Support Document to which it is a party.

(c)      Absence of Litigation. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding
at law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator that is likely to affect the legality, validity
or enforceability against it of this Agreement or any Credit Support Document
to which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.

(d)      Accuracy of Specified Information. All applicable information that is
furnished in writing by or on behalf of it to the other party and is
identified for the purpose of this Section 3(d) in the Schedule is, as of the
date of the information, true, accurate and complete in every material
respect.

(e)      Payer Tax Representation. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(e) is accurate
and true.

(f)      Payee Tax Representations. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.

4.       Agreements

Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party: --

(a)      Furnish Specified Information. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs: --

         (i) any forms, documents or certificates relating to taxation
         specified in the Schedule or any Confirmation;

         (ii) any other documents specified in the Schedule of 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.

                                    D-1-4
<PAGE>

(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,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 or Default and Termination Events

(a)      Events of Default. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party: --

         (i) Failure to Pay or Deliver. Failure by the party to make, when
         due, any payment under this Agreement or delivery under Section
         2(a)(i) or 2(e) required to be made by it if such failure is not
         remedied on or before the third Local Business Day after notice of
         such failure is given to the party;

         (ii) Breach of Agreement. Failure by the party to comply with or
         perform any agreement or obligation (other than an obligation to make
         any payment under this Agreement or delivery under Section 2(a)(i) or
         2(e) or to give notice of a Termination Event or any agreement or
         obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied
         with or performed by the party in accordance with this Agreement if
         such failure is not remedied on or before the thirtieth day after
         notice of such failure is given to the party;

         (iii) Credit Support Default.

                (1) Failure by the party or any Credit Support Provider of
                such party to comply with or perform any agreement or
                obligation to be complied with or performed by it in
                accordance with any Credit Support Document if such failure is
                continuing after any applicable grace period has elapsed;

                (2) the expiration or termination of such Credit Support
                Document or the failing or ceasing of such Credit Support
                Document to be in full force and effect for the purpose of
                this Agreement (in either case other than in accordance with
                its terms) prior to the satisfaction of all obligations of
                such party under each Transaction to which such Credit Support
                Document relates without the written consent of the other
                party; or

                (3) the party or such Credit Support Provider disaffirms,
                disclaims, repudiates or rejects, in whole or in part, or
                challenges the validity of, such Credit Support Document;

         (iv) Misrepresentation. A representation (other than a representation
         under Section 3(e) or (f)) made or repeated or deemed to have been
         made or repeated by the party or any Credit Support Provider of such
         party in this Agreement or any Credit Support Document proves to have
         been incorrect or misleading in any material respect when made or
         repeated or deemed to have been made or repeated;

         (v) Default under Specified Transaction. The party, any Credit
         Support Provider of such party or any applicable Specified Entity of
         such party (1) defaults under a Specified Transaction and, after
         giving effect to any applicable notice requirement or grace period,
         there occurs a liquidation of, an acceleration of obligations under,
         or an early termination of, that Specified Transaction, (2) defaults,
         after giving effect to any applicable notice requirement or grace
         period, in making any payment or delivery due on the last payment,
         delivery or exchange date of, or any payment on early termination of,
         a Specified Transaction (or such default continues for at least three
         Local Business Days if there is no applicable notice requirement or
         grace period) or (3) disaffirms, disclaims, repudiates or rejects, in
         whole or in part, a Specified Transaction (or such action is taken by
         any person or entity appointed or empowered to operate it or act on
         its behalf);

         (vi) Cross Default. If "Cross Default" is specified in the Schedule
         as applying to the party, the occurrence or existence of (1) a
         default, event of default or other similar condition or event
         (however

                                    D-1-5
<PAGE>

         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

                                    D-1-6
<PAGE>

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).

(j)      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.

                                    D-1-7
<PAGE>

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)(l), (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

                                    D-1-8
<PAGE>

         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

                                    D-1-9
<PAGE>

               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.

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:--

                                    D-1-10
<PAGE>

(a)      a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to
any other right or remedy under this Agreement); and

(b)      a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).

Any purported transfer that is not in compliance with this Section will be
void.

8.       Contractual Currency

(a)      Payment in the Contractual Currency. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency
other than the Contractual Currency, except to the extent such tender results
in the actual receipt by the party to which payment is owed, acting in a
reasonable manner and in good faith in converting the currency so tendered
into the Contractual Currency, of the full amount in the Contractual Currency
of all amounts payable in respect of this Agreement. If for any reason the
amount in the Contractual Currency so received falls short of the amount in
the Contractual Currency payable in respect of this Agreement, the party
required to make the payment will, to the extent permitted by applicable law,
immediately pay such additional amount in the Contractual Currency as may be
necessary to compensate for the shortfall. If for any reason the amount in the
Contractual Currency so received exceeds the amount in the Contractual
Currency payable in respect of this Agreement, the party receiving the payment
will refund promptly the amount of such excess.

(b)      Judgments. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party
is entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency and will refund promptly to the other party any excess of
the Contractual Currency received by such party as a consequence of sums paid
in such other currency if such shortfall or such excess arises or results from
any variation between the rate of exchange at which the Contractual Currency
is converted into the currency of the judgment or order for the purposes of
such judgment or order and the rate of exchange at which such party is able,
acting in a reasonable manner and in good faith in converting the currency
received into the Contractual Currency, to purchase the Contractual Currency
with the amount of the currency of the judgment or order actually received by
such party. The term "rate of exchange" includes, without limitation, any
premiums and costs of exchange payable in connection with the purchase of or
conversion into the Contractual Currency.

(c)      Separate Indemnities. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the
party to which any payment is owed and will not be affected by judgment being
obtained or claim or proof being made for any other sums payable in respect of
this Agreement.

(d)      Evidence of Loss. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.

                                    D-1-11
<PAGE>

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

                                    D-1-12
<PAGE>

to which the Defaulting Party is a party or by reason of the early
termination of any Transaction, including, but not limited to, costs of
collection.

12.      Notices

(a)      Effectiveness. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:--

         (i) if in writing and delivered in person or by courier, on the date
         it is delivered;

         (ii) if sent by telex, on the date the recipient's answerback is
         received;

         (iii) if sent by facsimile transmission, on the date that
         transmission is received by a responsible employee of the recipient
         in legible form (it being agreed that the burden of proving receipt
         will be on the sender and will not be met by a transmission report
         generated by the sender's facsimile machine);

         (iv) if sent by certified or registered mail (airmail, if overseas)
         or the equivalent (return receipt requested), on the date that mail
         is delivered or its delivery is attempted; or

         (v) if sent by electronic messaging system, on the date that
         electronic message is received,

unless the date of that delivery (or attempted delivery) or that receipt as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.

(b)      Change of Addresses. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.

13.      Governing Law and Jurisdiction

(a)      Governing Law. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.

(b)      Jurisdiction. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:--

         (i) submits to the jurisdiction of the English courts, if this
         Agreement is expressed to be governed by English law, or to the
         non-exclusive jurisdiction of the courts of the State of New York and
         the United States District Court located in the Borough of Manhattan
         in New York City, if this Agreement is expressed to be governed by
         the laws of the State of New York; and

         (ii) waives any objection which it may have at any time to the laying
         of venue of any Proceedings brought in any such court, waives any
         claim that such Proceedings have been brought in an inconvenient
         forum and further waives the right to object, with respect to such
         Proceedings, that such court does not have any jurisdiction over such
         party.

Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the
Civil Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.

                                    D-1-13
<PAGE>

(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 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.

                                    D-1-14
<PAGE>

"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.

"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

                                    D-1-15
<PAGE>

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 been required after that date. For this purpose,
Unpaid Amounts in respect of the Terminated Transaction or group of Terminated
Transactions are to be excluded but, without limitation, any payment or
delivery that would, but for the relevant Early Termination Date, have been
required (assuming satisfaction of each applicable condition precedent) after
that Early Termination Date is to be included. The Replacement Transaction
would be subject to such documentation as such party and the Reference
Market-maker may, in good faith, agree. The party making the determination (or
its agent) will request each Reference Market-maker to provide its quotation
to the extent reasonably practicable as of the same day and time (without
regard to different time zones) on or as soon as reasonably practicable after
the relevant Early Termination Date. The day and time as of which those
quotations are to be obtained will be selected in good faith by the party
obliged to make a determination under Section 6(e), and, if each party is so
obliged, after consultation with the other. If more than three quotations are
provided, the Market Quotation will be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values, If
exactly three such quotations are provided, the Market Quotation will be the
quotation remaining after disregarding the highest and lowest quotations. For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded. If fewer than three
quotations are provided, it will be deemed that the Market Quotation in
respect of such Terminated Transaction or group of Terminated Transactions
cannot be determined.

"Non-default Rate" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it)
if it were to fund the relevant amount.

"Non-defaulting Party" has the meaning specified in Section 6(a).

"Office" means a branch or office of a party, which may be such party's head
or home office.

"Potential Event of Default" means any event which, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.

"Reference Market-makers" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding whether to offer or
to make an extension of credit and (b) to the extent practicable, from among
such dealers having an office in the same city.

"Relevant Jurisdiction" means, with respect to a party, the jurisdictions (a)
in which the party is incorporated, organised, managed and controlled or
considered to have its seat, (b) where an Office through which the party is
acting for purposes of this Agreement is located, (c) in which the party
executes this Agreement and (d) in relation to any payment, from or through
which such payment is made.

"Scheduled Payment Date" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.

"Set-off" means set-off, offset, combination of accounts, right of retention
or withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or
imposed on, such payer.

"Settlement Amount" means, with respect to a party and any Early Termination
Date, the sum of.-

(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and

(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not
(in the reasonable belief of the party making the determination) produce a
commercially reasonable result.

"Specified Entity" has the meaning specified in the Schedule.

                                    D-1-16
<PAGE>

"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 value of that which was
(or would have been) required to be delivered

                                    D-1-17
<PAGE>

as of the originally scheduled date for delivery, in each case together with
(to the extent permitted under applicable law) interest, in the currency of
such amounts, from (and including) the date such amounts or obligations were
or would have been required to have been paid or performed to (but excluding)
such Early Termination Date, at the Applicable Rate. Such amounts of interest
will be calculated on the basis of daily compounding and the actual number of
days elapsed. The fair market value of any obligation referred to in clause
(b) above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.

IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.

WACHOVIA BANK, NATIONAL ASSOCIATION         STRATS(SM) TRUST FOR MORGAN STANLEY
         (Name of Party)                     SECURITIES, SERIES 2004-16
                                                           (Name of Party)

By: -------------------------------
    Name:                                   By: ------------------------------
    Title:                                      Name:
    Date:                                       Title:
                                                Date:

                                    D-1-18
<PAGE>

                                                                   Exhibit D-2

                                   SCHEDULE
                                    to the
                               MASTER AGREEMENT
                     dated as of December 22, 2004 between
                WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
                                      and
  STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES, SERIES 2004-16 ("Party B")

Part 1.  Termination Provisions

(a)   "Specified Entity" means, with respect to Party A for all purposes of
      this Agreement, none specified, and with respect to Party B for all
      purposes of this Agreement, none specified.

(b)   "Specified Transaction" has its meaning as defined in Section 14 of this
      Agreement.

(c)   "Cross Default" does not apply to Party A or Party B.

(d)   "Credit Event Upon Merger" does not apply to Party A or Party B.

(e)   "Automatic Early Termination" does not apply to Party A or Party B.

(f)   Payments on Early Termination. Except as otherwise provided in this
      Schedule, "Market Quotation" and the "Second Method" apply. In the case
      of any Terminated Transaction that is, or is subject to, any unexercised
      option, the words "economic equivalent of any payment or delivery"
      appearing in the definition of "Market Quotation" shall be construed to
      take into account the economic equivalent of the option. Additionally,
      in the event an Early Termination Date is designated by Party B in
      connection with an Event of Default or Termination Event with respect to
      which Party A is the Defaulting Party or sole Affected Party, then in no
      event shall any Settlement Amount be payable under Section 6(e) of the
      Agreement by either Party A or Party B.

(g)   "Termination Currency" means United States Dollars.

(h)   Limitation on Defaults by Party B. The Events of Default specified in
      Section 5 of this Agreement shall not apply to Party B except for the
      following:

      (i) Section 5(a)(i) of this Agreement (Failure to Pay or Deliver);

      (ii) Section 5(a)(vii) of this Agreement (Bankruptcy), provided that,
      the failure to make any payment of interest on or principal of the
      Certificates which does not give rise to an event of default pursuant to
      the terms of the Trust Agreement shall not be deemed to constitute a
      Bankruptcy within the meaning of clause (2) thereof with respect to
      Party B; and

      (iii) Section 5(a)(viii) of this Agreement (Merger Without Assumption).

(i)   Additional Termination Events.

      (i) The occurrence of any of the following events shall be an Additional
      Termination Event:

                                    D-2-1
<PAGE>

       (A)        the unsecured and unsubordinated debt, deposit or letter of
                  credit obligations of Party A or its Credit Support
                  Provider, as applicable, are assigned a rating by S&P below
                  the Hedge Counterparty Required Rating ("S&P Required Rating
                  Downgrade Event"), and Party A fails to make a Permitted
                  Transfer in accordance with the provisions of Part 6(a)(ii)
                  of this Schedule within seven (7) days of such S&P Required
                  Rating Downgrade Event, provided, however, that termination
                  due to any such S&P Required Rating Downgrade Event shall
                  not be permitted if S&P agrees in writing that it will not
                  downgrade, reduce, suspend or withdraw S&P's then-current
                  rating on the Certificates if this Agreement remains in full
                  force and effect with respect to each transaction hereunder.
                  Party A shall notify Party B within one (1) Business Day of
                  the occurrence of a S&P Required Rating Downgrade Event;

       (B)        the unsecured and unsubordinated debt, deposit or letter of
                  credit obligations of Party A or its Credit Support
                  Provider, as applicable, are assigned a rating by S&P below
                  the Hedge Counterparty Collateral Threshold Rating
                  ("Collateral Rating Downgrade Event"), unless Party A either
                  (i) transfers to Party B's Custodian under the Credit
                  Support Annex an amount of Eligible Collateral equal to the
                  Delivery Amount required to be transferred with respect to
                  the Affected Transactions on that Credit Support
                  Commencement Date (as defined in the Credit Support Annex)
                  or (ii) makes a Permitted Transfer with respect to the
                  Affected Transactions or (iii) provides Alternative Credit
                  Support (as defined below) with respect to the Affected
                  Transactions on or before the Credit Support Commencement
                  Date. Party A shall notify Party B within five (5) Business
                  Days of the occurrence of a Collateral Rating Downgrade
                  Event;

       (C)        The Certificates become due and payable prior to their final
                  scheduled maturity date for any reason;

       (D)        Party B fails to comply with sub-paragraph (e)(i) of Part 6
                  of this Schedule; any prepayment, redemption, retirement,
                  liquidation or distribution of the Underlying Securities
                  (including as a result of a Payment Default, an Acceleration
                  or an SEC Reporting Failure) or other prepayment in full of
                  all Certificates outstanding occurs under the Trust
                  Agreement (or any notice is given to that effect and such
                  prepayment, redemption, retirement, liquidation or
                  distribution of the Underlying Securities is not capable of
                  being rescinded); any Trust Termination Event (as defined in
                  the Trust Agreement) occurs under the Trust Agreement (or
                  any notice is given by the Trustee or any other authorized
                  party to that effect) and the Trustee, the
                  Certificateholders or any other authorized party thereunder
                  takes any action or exercises any rights or remedies under
                  the Trust Agreement or under law that would result in (1)
                  the appropriation of all right, title and interest in and to
                  the assets under the Trust Agreement in satisfaction, in
                  whole or in part, of the obligations secured thereby, (2)
                  the sale, liquidation or disposition of the assets under the
                  Trust Agreement and the application of the proceeds thereof,
                  in whole or in part, to the obligations secured thereby, or
                  (3) the release of the security interest in the assets
                  granted under the Trust Agreement in exchange for receiving
                  either the payment, in whole or in part, of the obligations
                  secured thereby or substitute collateral or credit support;
                  or

       (E)        Party B fails to comply with sub-paragraph (j)(i) of Part 1
                  of this Schedule, or any Additional Termination Event occurs
                  under paragraph (j) of Part 1 of this Schedule in either
                  event to the extent of the applicable Affected Notional
                  Amount as described in that paragraph.

                                    D-2-2
<PAGE>

      (ii) For purposes of the right to terminate under Section 6(b)(iv),
      Party A will be the sole Affected Party for any Additional Termination
      Event described in clause (A) or (B) of sub-paragraph (i) above, and
      Party B will be the sole Affected Party for any other Additional
      Termination Event.

      (iii) Notwithstanding which party is the Affected Party for any
      Additional Termination Event, upon the occurrence of an Early
      Termination Date for any Additional Termination Event under this Part
      1(i), Party A shall make the calculations under Section 6(e) of this
      Agreement as though it were the non-Affected Party for purposes of
      Section 6(e)(ii)(1) of this Agreement.

      (iv) "Hedge Counterparty Required Rating" means, as applicable, at any
      time that any Certificates are outstanding under the Trust Agreement and
      have a long-term rating of at least A by S&P, with respect to a Person
      as an issuer or with respect to long-term senior unsecured debt of such
      Person, BBB- by S&P (for so long as any Certificates are outstanding
      under the Trust Agreement and are rated by S&P); provided that should
      S&P effect an overall downward adjustment of its short-term or long-term
      ratings, then the applicable Hedge Counterparty Required Rating shall be
      downwardly adjusted accordingly; provided further, that any adjustment
      to a rating shall be subject to the prior written consent of S&P.

      (v) "Hedge Counterparty Collateral Threshold Rating" means, so long as
      any Certificates are outstanding under the Trust Agreement and are rated
      by S&P:

       (A)        if the actual long-term rating assigned by S&P with respect
                  to the Certificates outstanding under the Trust Agreement
                  (in the event S&P has assigned more than one long-term
                  rating with respect to the Certificates, then the applicable
                  long-term rating shall be the highest of such long-term
                  ratings) (the "Actual Certificate Rating") is "AA-" or
                  above, "A" with respect to the long-term senior unsecured
                  debt of Party A (so long as the short-term debt of Party A
                  is rated at least "A-1") or "A+" with respect to the
                  long-term senior unsecured debt of Party A (if Party A has a
                  short-term debt rating below "A-1" or does not have a
                  short-term debt rating) in each case, by S&P;

       (B)        if the Actual Certificate Rating is "A+" or "A", "A-" with
                  respect to the long-term senior unsecured debt of Party A
                  and "A-2" with respect to the short-term debt of Party A, in
                  each case, by S&P; and

       (C)        if the Actual Certificate Rating is "A-" or below, then the
                  Hedge Counterparty Collateral Threshold Rating shall be the
                  Actual Certificate Rating;

                  provided that should S&P effect an overall downward
                  adjustment of its short-term or long-term ratings, then the
                  applicable Hedge Counterparty Collateral Threshold Rating
                  shall be downwardly adjusted accordingly; provided further,
                  that any adjustment to a rating shall be subject to the
                  prior written consent of S&P.

      (vi) "Alternative Credit Support" means an absolute and unconditional
      guarantee, credit intermediation arrangement, letter of credit or other
      additional credit support or collateral, in a form which meets S&P's
      then current criteria with respect to such types of credit support
      reasonably acceptable to S&P and for which S&P confirms in writing that
      such support will not cause the reduction or withdrawal of its then
      current rating of any outstanding class of Certificates under the Trust
      Agreement with respect to which it has previously issued a rating.

                                    D-2-3
<PAGE>

      (vii) "S&P" means, Standard & Poor's Ratings Services, a division of The
      McGraw-Hill Companies ("S&P") (so long as any Certificates deemed
      outstanding under the Trust Agreement are rated by S&P).

(j)   Mandatory Reduction Events. To protect Party A's interest in the Trust
      Agreement as a source of payment for Party B's obligations hereunder,
      including the priority of those payments under the Trust Agreement, the
      following provisions shall apply with respect to all Transactions
      hereunder:

      (i) If either (x) without the prior written consent of Party A, Party B
      enters into any "Hedge Agreement" (as defined in the Trust Agreement) on
      any date (a "Principal Payment Date") with any person or entity that
      would result in the Hedge Notional Amount exceeding the remaining
      Principal Balance on any date or (y) as the result of any payment,
      repayment, retirement or redemption of any amount of the Principal
      Balance under the Trust Agreement on any date (a "Principal Payment
      Date"), (A) the Principal Balance would be reduced to zero, or (B) the
      Hedge Notional Amount would exceed the remaining Principal Balance
      (after giving effect to that repayment), (each, a "Mandatory Reduction
      Event"), then not later than 1:00 p.m. (New York City time) on the date
      ("Mandatory Reduction Date") which is the second New York Business Day
      prior to that Principal Payment Date, Party B shall:

                  (1)      notify Party A of that Mandatory Reduction Event,
                           including the amount to be repaid and the
                           outstanding Hedge Notional Amount; and

                  (2)      specify in that notice each outstanding Transaction
                           hereunder and the corresponding amount by which the
                           Transactional Notional Amount of that Transaction
                           is to be reduced for that Mandatory Reduction Event
                           ("Affected Notional Amount") so that the Hedge
                           Notional Amount for any date (after giving effect
                           to all such reductions) would not exceed the
                           Principal Balance for that date (after giving
                           effect to any repayment) (except that if the
                           Principal Balance is reduced to zero, the Hedge
                           Notional Amount shall be reduced to zero).

         "Hedge Notional Amount" means, as of the date of determination, an
         amount equal to the aggregate Notional Amount outstanding on that
         date and for the then current Calculation Period of all Transactions
         outstanding under any Hedge Agreement (as defined in the Trust
         Agreement) then in effect.

         "Principal Balance" means, on any date, the aggregate principal
         amount of the Certificates, outstanding under the Trust Agreement on
         that date, after giving effect to all repayments, redemptions,
         advances or distributions of principal thereon on that date.

      (ii) For each Transaction for which a corresponding Affected Notional
      Amount is specified ("Affected Transaction") pursuant to sub-paragraph
      (i) above, the Notional Amount of that Affected Transaction shall be
      reduced as of the Mandatory Reduction Date by an amount equal to the
      Affected Notional Amount (and, if the Notional Amount otherwise accretes
      or amortizes after the Mandatory Reduction Date, the effect of that
      reduction shall be to reduce proportionately the Notional Amount of each
      future Calculation Period remaining under the Transaction), and an
      Additional Termination Event and Early Termination Date shall be deemed
      to have occurred on the Mandatory Reduction Date for that Transaction
      and Party B will be the sole Affected Party. For purposes of such Early
      Termination Date, the term "Terminated Transaction" as used in Section
      6(e) of this Agreement shall be only that part of the Affected
      Transaction relating to the Affected Notional Amount, and the remainder
      of the Affected Transaction shall continue in full force and effect as a
      Transaction hereunder subject to the terms of this Agreement. The amount
      payable under

                                    D-2-4
<PAGE>

      Section 6(e) of this Agreement with respect to any such Early Termination
      Date shall be due and payable in accordance with such Section 6(e),
      provided that such payment shall be made no later than the next
      "Distribution Date" under the Trust Agreement to occur after the
      Mandatory Reduction Date, and provided further that the Market Quotation
      with respect to any Terminated Transaction under this sub-paragraph (ii)
      shall be determined on the basis of the quotation of one Reference
      Market-maker selected by Party A, which may be Party A to the extent its
      quotation is reasonably determined in good faith.

(k)   Events of Default. An Event of Default shall not occur with respect to
      Party A under Section 5(a)(v)(1) or (2) or Section 5(a)(vi) when the
      failure to pay or deliver, or the default, event of default or other
      similar condition or event, as the case may be, arises solely (i) out of
      a wire transfer problem or an operational or administrative error or
      omission (so long as the required funds or property required to make
      that payment or delivery were otherwise available to Party A), or (ii)
      from the general unavailability of the relevant currency due to exchange
      controls or other similar governmental action, but in either case only
      if the payment or delivery is made within three Local Business Days
      after the problem has been corrected, the error or omission has been
      discovered or the currency becomes generally available.

(l)   Modification of Section 5(a)(i) - Failure to Pay or Deliver. Section
      5(a)(i) is hereby amended to add the following language immediately
      after the word "party" at the end of the third line of such subsection
      "provided, however, such cure period shall not apply with respect to any
      amounts payable on the Termination Date".

(m)   Reports. For purposes hereof, Party B shall cause to be delivered to
      Party A within 10 days of the end of each calendar month a statement
      ("Reporting Statement") showing the Stated Amount of all Outstanding
      Certificates as of the end of such month and the Hedge Notional Amount
      as of the end of such month and each following month during the term of
      this Agreement for all outstanding Transactions under all Hedge
      Agreements which Party B has entered into, whether the same have already
      commenced or are scheduled to commence on a future date.

Part 2.  Tax Provisions

(a)   Payer Tax Representations. For the purpose of Section 3(e) of this
      Agreement, each party makes the following representation:

         It is not required by any applicable law, as modified by the practice
         of any relevant governmental revenue authority, of any Relevant
         Jurisdiction to make any deduction or withholding for or on account
         of any Tax from any payment (other than interest under Section 2(e),
         6(d)(ii) or 6(e) of this Agreement) to be made by it to the other
         party under this Agreement.

         In making this representation, a party may rely on (i) the accuracy
         of any representations made by the other party pursuant to Section
         3(f) of this Agreement, (ii) the satisfaction of the agreement
         contained in Section 4(a)(i) or 4(a)(iii) of this Agreement, and the
         accuracy and effectiveness of any document provided by the other
         party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement, and
         (iii) the satisfaction of the agreement of the other party contained
         in Section 4(d) of this Agreement, provided that it shall not be a
         breach of this representation where reliance is placed on clause (ii)
         above and the other party does not deliver a form or document under
         Section 4(a)(iii) by reason of material prejudice to its legal or
         commercial position.

                                    D-2-5
<PAGE>

(b) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement:

      (i)   Party A makes the following representation(s):

       (A)        It is a national banking association organized or formed
                  under the laws of the United States and is a United States
                  resident for United States federal income tax purposes.

       (B)        Party A makes no other Payee Tax Representations.

      (ii)  Party B makes the following representation(s):

       (A)        It is a common law trust organized or formed under the laws
                  of New York.

(c)   Tax Forms.

      (i) Delivery of Tax Forms. For the purpose of Section 4(a)(i), and
      without limiting Section 4(a)(iii), each party agrees to duly complete,
      execute and deliver to the other party the tax forms specified below
      with respect to it (A) before the first Payment Date under this
      Agreement, (B) promptly upon reasonable demand by the other party and
      (C) promptly upon learning that any such form previously provided by the
      party has become obsolete or incorrect.

                  In addition, in the case of any tax form that is a Periodic
                  Tax Form required to be delivered by Party B under this
                  Agreement, Party B agrees to renew such tax form prior to
                  its expiration by completing, executing and delivering to
                  Party A that tax form ("Renewal Tax Form") in each
                  succeeding third year following the year of execution of any
                  such tax form or Renewal Tax Form delivered by Party B to
                  Party A under this Agreement so that Party A receives each
                  Renewal Tax Form not later than December 31 of the relevant
                  year. "Periodic Tax Form" means any IRS Form W-9 that is
                  delivered by Party B to Party A without a U.S. Taxpayer
                  Identification Number.

      (ii) Tax Forms to be Delivered by Party A:

                           Party A will deliver a correct, complete and duly
                  executed U.S. Internal Revenue Service Form W-9 (or
                  successor thereto), together with appropriate attachments,
                  that eliminates U.S. federal withholding and backup
                  withholding tax on payments to Party A under this Agreement.

      (iii) Tax forms to be Delivered by Party B:

                           Party B will deliver a correct, complete and duly
                  executed U.S. Internal Revenue Service Form W-9 (or
                  successor thereto), together with appropriate attachments,
                  that eliminates U.S. federal withholding and backup
                  withholding tax on payments to Party B under this Agreement.

                                    D-2-6
<PAGE>

Part 3.  Documents

(a)   Delivery of Documents. When it delivers this Agreement, each party shall
      also deliver its Closing Documents to the other party in form and
      substance reasonably satisfactory to the other party. For each
      Transaction, a party shall deliver, promptly upon request, a duly
      executed incumbency certificate for the person(s) executing the
      Confirmation for that Transaction on behalf of that party.

(b)   Closing Documents.

      (i) For Party A, "Closing Documents" mean:

       (A)        an opinion of Party A's counsel addressed to Party B in form
                  and substance acceptable to Party B;

       (B)        a duly executed incumbency certificate for each person
                  executing this Agreement for Party A, or in lieu thereof, a
                  copy of the relevant pages of its official signature book;
                  and

       (C)        each Credit Support Document (if any) specified for Party A
                  in this Schedule, together with a duly executed incumbency
                  certificate for the person(s) executing that Credit Support
                  Document, or in lieu thereof, a copy of the relevant pages
                  of its official signature book.

      (ii) For Party B, "Closing Documents" mean:

       (A)        an opinion of Party B's counsel addressed to Party A in form
                  and substance acceptable to Party A;

       (B)        a duly executed copy of the Trust Agreement and the other
                  operative documents relating thereto and referred to
                  therein, executed and delivered by the parties thereto.

       (C)        a copy, certified by the secretary or assistant secretary of
                  Party B, of the resolutions of the board of directors or
                  extracts from the bylaws of Party B authorizing the
                  execution, delivery and performance by Party B of this
                  Agreement and authorizing Party B to enter into Transactions
                  hereunder; and

       (D)        a duly executed certificate of the secretary or assistant
                  secretary of Party B certifying the name and true signature
                  of each person authorized to execute this Agreement and
                  enter into Transactions for Party B.

Part 4.  Miscellaneous

(a)   Addresses for Notices. For purposes of Section 12(a) of this Agreement,
      all notices to a party shall, with respect to any particular
      Transaction, be sent to its address, telex number or facsimile number
      specified in the relevant Confirmation, provided that any notice under
      Section 5 or 6 of this Agreement, and any notice under this Agreement
      not related to a particular Transaction, shall be sent to a party at its
      address, telex number or facsimile number specified below; provided
      further that any notice under the Credit Support Annex shall be sent to
      a party at its address, telex number or facsimile number specified in
      the Credit Support Annex.

                                    D-2-7
<PAGE>

         To Party A:

         WACHOVIA BANK, NATIONAL ASSOCIATION
         301 South College, DC-8
         Charlotte, NC 28202-0600
         Attention: Bruce M. Young
         Senior Vice President, Risk Management

         Fax: (704) 383-0575
         Phone: (704) 383-8778

         To Party B:

         STRATS(SM) Trust for Morgan Stanley Securities, Series 2004-16
         U.S. Bank Trust National Association
         100 Wall Street, Suite 1600
         New York, New York 10005
         Attention: Corporate Trust
         Fax: (212)809-5459

(b)   Process Agent. Not applicable.

(c)   Offices. Section 10(a) applies.

(d)   Multibranch Party. Neither party is a Multibranch Party.

(e)   "Calculation Agent" means Party A.

(f)   Credit Support Document.

      (i) For Party A, the following is a Credit Support Document: a Credit
      Support Annex dated the date hereof and duly executed and delivered by
      Party A and Party B and any applicable document governing Alternative
      Credit Support beginning on the effective date of such document.

      (ii) For Party B, the following is a Credit Support Document: none
      specified.

(g)   Credit Support Provider.

      (i) For Party A, Credit Support Provider means: none specified; provided
      that such party (other than Party A) executing a document governing
      Alternative Credit Support shall be a Credit Support Provider hereunder
      beginning on the effective date of such document.

      (ii) For Party B, Credit Support Provider means: none specified.

(h)   Governing Law. This Agreement will be governed by and construed in
      accordance with the law (and not the law of conflicts except with
      respect to ss.ss. 5-1401 and 5-1402 of the New York General Obligations
      Law) of the State of New York.

                                    D-2-8
<PAGE>

(i)   Waiver of Jury Trial. To the extent permitted by applicable law, each
      party irrevocably waives any and all right to trial by jury in any legal
      proceeding in connection with this Agreement, any Credit Support
      Document to which it is a party, or any Transaction.

(j)   Netting of Payments. Section 2(c)(ii) of this Agreement will apply.

(k)   "Affiliate" has its meaning as defined in Section 14 of this Agreement.

Part 5.  Other Provisions

(a)   ISDA Publications.

      (i) 2000 ISDA Definitions. This Agreement and each Transaction are
      subject to the 2000 ISDA Definitions (including its Annex) published by
      the International Swaps and Derivatives Association, Inc. (together, the
      "2000 ISDA Definitions") and will be governed by the provisions of the
      2000 ISDA Definitions. The provisions of the 2000 ISDA Definitions are
      incorporated by reference in, and shall form part of, this Agreement and
      each Confirmation. Any reference to a "Swap Transaction" in the 2000
      ISDA Definitions is deemed to be a reference to a "Transaction" for
      purposes of this Agreement or any Confirmation, and any reference to a
      "Transaction" in this Agreement or any Confirmation is deemed to be a
      reference to a "Swap Transaction" for purposes of the 2000 ISDA
      Definitions. The provisions of this Agreement (exclusive of the 2000
      ISDA Definitions) shall prevail in the event of any conflict between
      such provisions and the 2000 ISDA Definitions.

(b)   Additional Representations.  Section 3 is amended by adding the following
      Sections 3(g), (h), (i) and (j):

         "(g) Non-Reliance. For any Relevant Agreement: (i) it acts as
         principal and not as agent; (ii) it acknowledges that the other party
         acts only at arm's length and is not its agent, broker, advisor or
         fiduciary in any respect, and any agency, brokerage, advisory or
         fiduciary services that the other party (or any of its affiliates)
         may otherwise provide to the party (or to any of its affiliates)
         excludes the Relevant Agreement; (iii) with respect to Party A, it
         understands the Relevant Agreement and those risks, has determined
         they are appropriate for it, and willingly assumes those risks, and
         with respect to Party B, it has been directed to execute the Relevant
         Agreement and it understands the Relevant Agreement and those risks
         and willingly assumes those risks; (iv) it has not relied and will
         not be relying upon any evaluation or advice (including any
         recommendation, opinion, or representation) from the other party, or
         the representatives or advisors of the other party (except
         representations expressly made in the Relevant Agreement or an
         opinion of counsel required thereunder); and (vi) if a party is
         acting as a Calculation Agent or Valuation Agent, it does so not as
         the other party's agent or fiduciary, but on an arm's length basis
         for the purpose of performing an administrative function in good
         faith.

         "Relevant Agreement" means this Agreement, each Transaction, each
         Confirmation, any Credit Support Document, and any agreement
         (including any amendment, modification, transfer or early
         termination) between the parties relating thereto or to any
         Transaction.

         (h) Eligibility. It is an "eligible contract participant" within the
         meaning of the Commodity Exchange Act (as amended by the Commodity
         Futures Modernization Act of 2000).

         (i) FDIC Requirements. If it is a bank subject to the requirements of
         12 U.S.C. ss. 1823(e), its execution, delivery and performance of
         this Agreement (including the Credit Support Annex and each

                                    D-2-9
<PAGE>

         Confirmation) have been approved by its board of directors or its
         loan committee, such approval is reflected in the minutes of said
         board of directors or loan committee, and this Agreement (including
         the Credit Support Annex and each Confirmation) will be maintained as
         one of its official records continuously from the time of its
         execution (or in the case of any Confirmation, continuously until
         such time as the relevant Transaction matures and the obligations
         therefor are satisfied in full).

         (j) ERISA. It is not (i) an employee benefit plan as defined in
         Section 3(3) of the Employee Retirement Income Security Act of 1974,
         as amended ("ERISA") or a plan as defined in Section 4975(e) of the
         Internal Revenue Code of 1986, as amended (the "Code"), subject to
         Title I of ERISA or Section 4975 of the Code, or a plan as so defined
         but which is not subject to Title I of ERISA or Section 4975 of the
         Code (each, an "ERISA Plan"), (ii) a person or entity acting on
         behalf of an ERISA Plan, or (iii) a person or entity the assets of
         which constitute assets of an ERISA Plan.

(c)   Recorded Conversations. Each party and any of its Affiliates may
      electronically record any of its telephone conversations with the other
      party or with any of the other party's Affiliates in connection with
      this Agreement or any Transaction, and any such recordings may be
      submitted in evidence in any proceeding to establish any matters
      pertinent to this Agreement or any Transaction.

(d)   Confirmation Procedures. Upon receipt thereof, Party B shall examine the
      terms of each Confirmation sent by Party A, and unless Party B objects
      to the terms within three New York business days after receipt of that
      Confirmation, those terms shall be deemed accepted and correct absent
      manifest error, in which case that Confirmation will be sufficient to
      form a binding supplement to this Agreement notwithstanding Section
      9(e)(ii) of this Agreement.

Part 6.  Additional Terms Relating to the Trust Agreement

(a)   Permitted Transfers.

      (i) Notwithstanding Section 7 of this Agreement, Party A may make a
      Permitted Transfer without the prior written consent of Party B, and at
      Party A's own cost and expense, if either of the following events
      occurs:

       (A)        the unsecured and unsubordinated debt, deposit or letter of
                  credit obligations of Party A are rated below the Hedge
                  Counterparty Required Rating or the Hedge Counterparty
                  Collateral Threshold Rating by S&P at the time of the
                  transfer; or

       (B)        any Tax Event or Tax Event Upon Merger exists with respect
                  to Party A at the time of the transfer.

      (ii) "Permitted Transfer" means a transfer, in whole but not in part, of
      all of Party A's rights and obligations under this Agreement and which
      meets all of the following requirements:

       (A)        the transferee is a "Qualified Hedge Party " (as defined in
                  the Trust Agreement) or a recognized dealer in interest rate
                  swaps organized under the laws of the United States of
                  America or a jurisdiction located in the United States of
                  America (or another jurisdiction reasonably acceptable to
                  Party B and the Trustee under the Trust Agreement) that, at
                  the time of the transfer, maintains (or its proposed
                  guarantor maintains) the Hedge Counterparty Required Rating
                  from S&P on its unsecured and unsubordinated debt, deposit
                  or letter of credit obligations;

                                    D-2-10
<PAGE>

       (B)        S&P confirms in writing that such transfer will not result
                  in a reduction or withdrawal of its then current rating of
                  the Certificates under the Trust Agreement with respect to
                  which it has previously issued a rating;

       (C)        neither an Event of Default with respect to the transferee
                  nor a Termination Event would exist immediately after that
                  transfer;

       (D)        the transferee executes and delivers a written agreement
                  reasonably satisfactory to Party B and the Trustee under the
                  Trust Agreement in which the transferee, among other things,
                  legally and effectively accepts all the rights and assumes
                  all the obligations of Party A under this Agreement; and

       (E)        such transfer otherwise complies with the terms of the Trust
                  Agreement.

(b)   Transfer. No Party to this Agreement may transfer its obligations under
      this Agreement pursuant to Section 7(a) of this Agreement except upon
      written confirmation from S&P that, any such reduction would not cause
      S&P's then-current rating on the Certificates to be adversely qualified,
      reduced, suspended or withdrawn.

(c)   Payments. All payments to Party B under this Agreement or any
      Transaction shall be made to the Certificate Account created under the
      Trust Agreement.

(d)   Set-off. Party A and Party B hereby waive any and all right of set-off
      with respect to any amounts due under this Agreement or any Transaction,
      provided that nothing herein shall be construed to waive or otherwise
      limit the netting provisions contained in Sections 2(c) and 6(e) of this
      Agreement or the setoff rights contained in the Credit Support Annex.

(e)   Trust Agreement

      (i) Party B hereby acknowledges that Party A is a secured party under
      the Trust Agreement with respect to this Agreement and a third-party
      beneficiary under the Trust Agreement and Party B agrees for the benefit
      of Party A that neither it nor any other Person will take any action
      (whether in the form of an amendment, a modification, waiver, approval,
      consent or otherwise) which may have a material adverse effect with
      respect to the rights, interest or benefits granted to Party A under the
      Trust Agreement with respect to this Agreement, whether or not this
      Agreement is specifically referred to or identified therein.

      (ii) On the date Party B executes and delivers this Agreement and on
      each date on which a Transaction is entered into, Party B hereby
      represents and warrants to Party A: that the Trust Agreement is in full
      force and effect; that Party B is not party to any separate agreement
      with any of the parties to the Trust Agreement that would have the
      effect of diminishing or impairing the rights, interests or benefits
      that have been granted to Party A under, and which are expressly set
      forth in, the Trust Agreement; that Party B's obligations under this
      Agreement are secured under the Trust Agreement; and that nothing herein
      violates or conflicts with any of the provisions of the Trust Agreement
      or any other documents executed in connection therewith.

(f)   Consent to Notice & Communications. Party B hereby consents to the
      giving to the Trustee of notice by Party A of Party A's address and
      telecopy and telephone numbers for all purposes of the Trust Agreement,
      and in addition, Party A shall also be entitled at any time to provide
      the Trustee with copies of this

                                    D-2-11
<PAGE>

      Agreement, including all Confirmations. In addition, Party A shall not
      be precluded from communicating with the Trustee or any party to, or any
      third party beneficiary under, the Trust Agreement for the purpose of
      exercising, enforcing or protecting any of Party A's rights or remedies
      under this Agreement or any rights, interests or benefits granted to
      Party A under the Trust Agreement.

(g)   No Bankruptcy Petition. Party A agrees that, prior to the date which is
      at least one year and one day after all Rated Indebtedness (as
      hereinafter defined) has been paid in full, it will not institute
      against, or join any other person or entity in instituting against,
      Party B any bankruptcy, reorganization, arrangement, insolvency,
      moratorium or liquidation proceedings, or other proceedings under
      federal or State bankruptcy or similar laws, provided that nothing
      herein shall preclude, or be deemed to estop, Party A from taking any
      action in any case or proceeding voluntarily filed or commenced by or on
      behalf of Party B or in any involuntary case or proceeding after it has
      commenced.

(h)   Limitation of Liability. Notwithstanding anything contained herein to
      the contrary, in executing this Agreement (including the Schedule,
      Credit Support Annex and each Confirmation) on behalf of Party B, the
      Trustee is acting solely in its capacity as trustee of Party B and not
      in its individual capacity, and in no event shall the Trustee, in its
      individual capacity or as beneficial owner of Party B, have any
      liability for the representations, warranties, covenants, agreements or
      other obligations of Party B hereunder, for which recourse shall be had
      solely to the assets of Party B.

(i)   Party A Rights Solely Against Collateral. The liability of Party B to
      Party A hereunder is limited in recourse to the assets of Party B and to
      the extent that the proceeds of such assets, when applied in accordance
      with the Trust Agreement, are insufficient to meet the obligations of
      Party B hereunder in full, Party B shall have no further liability in
      respect of any such outstanding obligations and any obligations of Party
      B which remain outstanding shall be extinguished. Party A further agrees
      that it shall not take any action against the directors, shareholders,
      administrator or officers of Party B to recover any amounts due
      hereunder (absent fraud or willful misconduct by any such person). This
      clause shall survive the termination of this agreement for any reason.

Part 7.  Definitions:

         All capitalized terms used herein and not defined, shall have the
         definition ascribed to them in the Trust Agreement.

         "Rated Indebtedness," means the Certificates issued under the Trust
         Agreement.

         "Securities Intermediary" means U.S. Bank Trust, National Association
         or any successor, acting as Securities Intermediary pursuant to the
         Trust Agreement.

         "Trust Agreement" means that certain STRATS(SM) Certificates Series
         Supplement 2004-16 between Synthetic Fixed-Income Securities, Inc.,
         as trustor (the "Trustor") and the Trustee and Securities
         Intermediary, dated as of December 22, 2004, which was entered into
         pursuant to, and as a supplement to, that certain Base Trust
         Agreement, dated as of September 26, 2003 by and between the Trustor
         and the Trustee.

         "Trustee" means U.S. Bank Trust, National Association or any
         successor, acting as Trustee pursuant to the Trust Agreement.

                                    D-2-12
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Schedule by their duly
authorized signatories as of the date hereof.

WACHOVIA BANK, NATIONAL ASSOCIATION

By:  __________________________________
     Name:
     Title:

STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES, SERIES 2004-16

By:  U.S. Bank Trust National Association, as Trustee

By:  __________________________________
Name:
Title:

                                    D-2-13
<PAGE>
                                                                Exhibit D-3

                                    ISDA(R)
             International Swaps and Derivatives Association, Inc.

                             CREDIT SUPPORT ANNEX
                            to the Schedule to the
                             ISDA MASTER AGREEMENT
                         dated as of December 22, 2004
                                    between
                WACHOVIA BANK, NATIONAL ASSOCIATION ("Party A")
                                      and
        STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES, SERIES 2004-16
                                  ("Party B")

This Annex supplements, forms part of, and is subject to, the ISDA Master
Agreement referred to above (this "Agreement"), is part of its Schedule and is
a Credit Support Document under this Agreement with respect to Party A.

At any time a Collateral Event has occurred and is continuing with respect to
Party A, Party A shall be obligated to transfer Eligible Collateral in
accordance with the terms of this Annex commencing on the applicable Credit
Support Commencement Date. If a Collateral Event occurs and thereafter ceases
to be continuing (and provided that no Event of Default or Potential Event of
Default exists with respect to Party A) or Party A has made a Permitted
Transfer under this Agreement, then Party A's obligations to transfer Eligible
Collateral under this Annex will immediately cease with respect to that
Collateral Event, and Party B will, upon demand by Party A, return to Party A,
or cause its Custodian to return, all Collateral held under this Annex.

"Collateral Event" means that the unsecured and unsubordinated debt, deposit
or letter of credit obligations of Party A carry an assigned rating by S&P
that is below the Hedge Counterparty Collateral Threshold Rating. The "Credit
Support Commencement Date" is in connection with a Collateral Rating Downgrade
Event, the first Business Day following the 30-day period after the occurrence
of the Collateral Rating Downgrade Event. "Credit Support Commencement Date"
means (A) in connection with a Collateral Rating Downgrade Event, the first
Business Day following the 30 day period after the occurrence of the
Collateral Rating Downgrade Event and (B) in connection with a S&P Required
Rating Downgrade Event, the first Business Day following the 7 day period
after the occurrence of the S&P Required Rating Downgrade Event.

Accordingly, the parties agree as follows:

Paragraphs 1 - 12.  Incorporation

Paragraphs 1 through 12 inclusive of the ISDA Credit Support Annex (Bilateral
Form) (ISDA Agreements Subject to New York Law Only) published in 1994 by the
International Swaps and Derivatives Association, Inc. are incorporated herein
by reference and made a part hereof, except that Paragraph 1(b) is hereby
amended in its entirety to read as follows:

         "(b)     Secured Party and Pledgor. Notwithstanding anything
                  contained in this Annex to the contrary, (i) all references
                  in this Annex to the "Secured Party" and all references to
                  "other party" in Paragraphs 2, 9 and 11(b) of this Annex,
                  will be to Party B exclusively, and (iii) all references in
                  this Annex to the "Pledgor" and all references to "Each
                  party" or "a party" in Paragraphs 2, 9 and 11(b) of this
                  Annex, will be to Party A exclusively."

                                    D-3-1
<PAGE>

Paragraph 13.  Elections and Variables

(a)      Security Interest for "Obligations". The term "Obligations" as used
         in this Annex includes no obligations of Secured Party and, for
         purposes of the definition of Obligations in Paragraph 12, includes
         no additional obligations of Pledgor.

(b)      Credit Support Obligations.

         (i)      Delivery Amount, Return Amount and Credit Support Amount.

         (A)      "Delivery Amount" has the meaning specified in Paragraph
                  3(a).

         (B)      "Return Amount" has the meaning specified in Paragraph 3(b).

         (C)      "Credit Support Amount" means (x) on and after a Credit
                  Support Commencement Date and during the continuance of the
                  related Collateral Event the amount specified in Paragraph
                  3(b); provided, however, if on or after such Credit Support
                  Commencement Date Party A's ratings from S&P are below the
                  Hedge Counterparty Collateral Threshold Rating for S&P, then
                  it shall mean the S&P Credit Support Amount (as defined in
                  Schedule 1 hereof).

                  "Transaction Notional Amount" shall mean, as of the date of
                  determination, an amount equal to the aggregate Notional
                  Amount outstanding at the beginning of the related
                  Calculation Period under the applicable Affected
                  Transactions.

         (ii)     Eligible Collateral. The following items will qualify as
                  "Eligible Collateral":

                                    D-3-2
<PAGE>

                                                               Valuation
                                                            Percentage (S&P):
    (A)      U.S. Cash:  U.S.  Dollars in  depositary                100%
             account form.

    (B)      U.S.  Treasury  Securities:  negotiable  debt          98.60%
             obligations   issued  by  the  U.S.  Treasury
             Department  ("Treasuries") having a remaining
             maturity of up to and not more than 1 year.

    (C)      Treasuries  having a  remaining  maturity  of          94.10%
             greater  than  1 year  but  not  more  than 5
             years.

    (D)      Treasuries  having a  remaining  maturity  of          90.70%
             greater  than 5 years  but not  more  than 10
             years.

    (E)      Treasuries  having a  remaining  maturity  of          85.30%
             greater  than 10 years  but not more  than 20
             years.

    (F)      Treasuries having a remaining maturity of              85.30%
             greater than 20 years not more than 30 years.

    (G)      Agency Securities:  negotiable debt                    98.20%
             obligations of the Federal National Mortgage
             Association (FNMA), Federal Home Loan
             Mortgage Corporation (FHLMC), Federal Home
             Loan Banks (FHLB), Federal Farm Credit Banks
             (FFCB), Student Loan Marketing Association
             (SLMA), Tennessee Valley Authority (TVA)
             (collectively, "Agency Securities") having a
             remaining maturity of not more than 1 year.

    (H)      Agency Securities having a remaining                   93.30%
             maturity of greater  than 1 year but not more
             than 5 years.

    (I)      Agency Securities having a remaining                   88.60%
             maturity of greater than 5 years but not
             more than 10 years.

    (J)      Agency Securities having a remaining                   80.80%
             maturity of greater than 10 years but not
             more than 20 years.

                                    D-3-3
<PAGE>

    (K)      Agency Securities having a remaining                   80.80%
             maturity of greater than 20 years  but not
             more than 30 years.

    (L)      FHLMC Certificates.  Mortgage participation             93%
             certificates issued by FHLMC evidencing
             undivided interests or participations in
             pools of first lien conventional or FHA/VA
             residential mortgages or deeds of trust,
             guaranteed by FHLMC, and having a remaining
             maturity of not more than 30 years.

    (M)      FNMA Certificates.  Mortgage-backed                     90%
             pass-through certificates issued by FNMA
             evidencing undivided interests in pools of
             first lien mortgages or deeds of trust on
             residential properties, guaranteed by FNMA,
             having a remaining maturity of not more than
             30 years.

    (N)      GNMA Certificates.  Mortgage-backed                    90.60%
             pass-through  certificates  issued by private
             entities,  evidencing  undivided interests in
             pools of  first  lien  mortgages  or deeds of
             trust on single family residences, guaranteed
             by the Government National Mortgage
             Association  (GNMA)  with  the full faith
             and  credit of the United  States, and
             having a remaining  maturity of not more than
             30 years.

    (O)      Commercial Paper.  Commercial Paper with a              98%
             rating of at least P-1 by Moody's and at
             least A-1 by S&P and having a remaining
             maturity of not more than 30 days.

    (P)      Other Items of Credit Support approved by % to be determined the
             S&P to the extent any Certificates are rated by S&P.

                                    D-3-4
<PAGE>

         (iii)    Other Eligible Support. Not applicable.

         (iv)     Thresholds.

                  "Independent Amount" means for Pledgor:  zero.

                  "Independent Amount" means for Secured Party:  zero

         (B)      "Threshold" means for Pledgor: at any time prior to a Credit
                  Support Commencement Date, infinite; and thereafter, zero.

         (C)      "Minimum Transfer Amount" is $100,000.00 for any Delivery
                  Amount of Pledgor, and zero for any Return Amount of Secured
                  Party.

         (D)      Rounding: The Delivery Amount and the Return Amount will be
                  rounded down to the nearest integral multiple of $10,000.

(c)      Valuation and Timing.

         (i)      "Valuation Agent" means, for purposes of Paragraphs 3,
                  4(d)(ii), 5 and 6(d), the Pledgor.

         (ii)     "Valuation Date" means, for any Collateral Event, the second
                  New York Business Day prior to the Credit Support
                  Commencement Date and thereafter any Local Business Day
                  while the Collateral Event is continuing, provided that
                  there shall be one Valuation Date per week on a date
                  selected by the Valuation Agent, which shall be the same
                  calendar day each week to the extent practicable, on a
                  reasonably consistent basis. If the Delivery Amount for the
                  Valuation Date associated with the Credit Support
                  Commencement Date or a weekly Valuation Date equals or
                  exceeds the Pledgor's Minimum Transfer Amount, then the
                  demand by the Secured Party referred to in Paragraph 3(a) of
                  this Annex shall be deemed to have been given (A) with
                  respect to a Credit Support Commencement Date, on the first
                  New York Business Day preceding the Credit Support
                  Commencement Date, prior to the Notification Time and (B)
                  with respect to a weekly Valuation Date, on that weekly
                  Valuation Date, prior to the Notification Time, and subject
                  to the terms and conditions of this Annex, the Pledgor will
                  transfer to the Secured Party the amount of Eligible
                  Collateral it is required to Transfer with respect to that
                  Valuation Date in accordance with Paragraph 3(a) of this
                  Annex.

         (iii)    "Valuation Time" means the close of business in New York
                  City on the Local Business Day before the Valuation Date or
                  date of calculation, as applicable; provided that the
                  calculations of Value and Exposure will be made as of
                  approximately the same time on the same date.

         (iv)     "Notification Time" means 11:00 a.m., New York time, on a
                  Local Business Day.

                                    D-3-5
<PAGE>

(d)      Conditions Precedent and Secured Party's Rights and Remedies. No
         Specified Conditions apply.

(e)      Substitution.

         (i)      "Substitution Date" has the meaning specified in Paragraph
                  4(d)(ii).

         (ii)     Consent. The Pledgor is not required to obtain the Secured
                  Party's consent for any substitution pursuant to Paragraph
                  4(d).

(f)      Dispute Resolution.

         (i)      "Resolution Time" means 1:00 p.m., New York time, on the
                  Local Business Day following the date on which the notice is
                  given that gives rise to a dispute under Paragraph 5.

         (ii)     Value. For the purpose of Paragraphs 5(i)(C) and 5(ii), the
                  Value of Posted Credit Support other than Cash will be
                  calculated based upon the mid-point between the bid and
                  offered purchase rates or prices for that Posted Credit
                  Support as reported on the Bloomberg electronic service as
                  of the Resolution Time, of if unavailable, as quoted to the
                  Valuation Agent as of the Resolution Time by a dealer in
                  that Posted Credit Support of recognized standing selected
                  in good faith by the Valuation Agent, which calculation
                  shall include any unpaid interest on that Posted Credit
                  Support.

         (iii)    Alternative. The provisions of Paragraph 5 will apply.

(g)      Holding and Using Posted Collateral.

         (i)      Eligibility to Hold Posted Collateral; Custodians. Secured
                  Party will not be entitled to hold Posted Collateral itself,
                  and instead the Secured Party will be entitled to hold
                  Posted Collateral through a Custodian pursuant to Paragraph
                  6(b), provided that (1) Posted Collateral may be held in New
                  York or an alternative jurisdiction acceptable to Party A,
                  (2) the Custodian shall at all times be a bank or trust
                  company with total assets in excess of $10 billion and
                  having a rating assigned to its unsecured and unsubordinated
                  long-term debt or deposit obligations of at least BBB+ from
                  S&P and (3) Posted Collateral may be held by the Trustee.
                  Initially the Custodian will be U.S. Bank Trust National
                  Association.

         (ii)     Use of Posted Collateral. The provisions of Paragraph 6(c)
                  will not apply to Secured Party and without prejudice to
                  Secured Party's rights under Paragraph 8 of the Credit
                  Support Annex, Secured Party will not take any action
                  specified in such Section 6(c).

(h)      Interest Amount.

         (i)      Interest Rate. The "Interest Rate" will be the rate actually
                  earned by the Custodian on the Posted Collateral as from
                  time to time in effect and the

                                    D-3-6
<PAGE>

                  Custodian shall hold all Posted Collateral in the form of
                  Cash in Eligible Investments (as defined in the Trust
                  Agreement) at the direction of the Pledgor. Custodian will
                  provide details concerning such earnings upon Party A's
                  request.

         (ii)     Transfer of Interest Amount. The Transfer of the Interest
                  Amount will be made on the first Local Business Day of each
                  calendar month and on any Local Business Day that Posted
                  Collateral in the form of Cash is Transferred to the Pledgor
                  pursuant to Paragraph 3(b).

         (iii)    Alternative to Interest Amount. The provisions of Paragraph
                  6(d)(ii) will apply.

(i)      Additional Representation(s). Not applicable.

(j)      Other Eligible Support and Other Posted Support. Not applicable.

(k)      Demands and Notices. All demands, specifications and notices under
         this Annex will be made to a party as follows unless otherwise
         specified from time to time by that party for purposes of this Annex
         in a written notice given to the other party:

         To Pledgor:
         WACHOVIA BANK, NATIONAL ASSOCIATION
         201 South College Street, 6th Floor
         Charlotte, NC 28288-0601

         Attention:  Collateral Management Group

         Fax:      (704) 383-3194
         Phone:    (704) 383-9529

         To Secured Party:
         STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES, SERIES 2004-16
         U.S. Bank Trust National Association
         100 Wall Street, Suite 1600
         New York, New York 10005
         Attention: Corporation Trust
         Fax: (212) 809-5459

(l)      Addresses for Transfers.

         (i)      For each Transfer hereunder to Pledgor, instructions will be
                  provided by Pledgor for that specific Transfer.

         (ii)     For each Transfer hereunder to Secured Party, instructions
                  will be provided by Secured Party for that specific
                  Transfer.

                                    D-3-7
<PAGE>

IN WITNESS WHEREOF the parties have executed this Credit Support Annex as of
the date hereof.

WACHOVIA BANK, NATIONAL ASSOCIATION

By:  __________________________________
     Name:
     Title:

STRATS(SM) TRUST FOR MORGAN STANLEY SECURITIES, SERIES 2004-16

By:  U.S. Bank Trust National Association, as Trustee

By:  __________________________________
     Name:
     Title:

                                    D-3-8
<PAGE>
                                                                EXHIBIT D-4

                                  Schedule 1
                                  ----------

                           S&P Credit Support Amount

         The term "S&P Credit Support Amount" shall mean for any Valuation
Date (i) Party B's Exposure for that Valuation Date plus (ii) the product of
the applicable S&P Volatility Buffer (as determined by reference to the
applicable provisions below) times the Transaction Notional Amount, minus
(iii) Party A's Threshold; provided, however the S&P Credit Support Amount
shall be zero if (x) S&P is no longer rating any of the Certificates, or (y)
Party A's ratings from S&P are not below the Hedge Counterparty Collateral
Threshold Rating for S&P.

                            S&P Volatility Buffers

         If, on the related Valuation Date, the highest rated Certificates are
rated "AA-" or higher by S&P, then the Volatility Buffer will be determined
using the following table:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
Party A Rating (as                              Remaining Maturity of the Highest Rated Certificates:
hereinafter defined)*
---------------------------------------------------------------------------------------------------------------------
                                       Up to 5 years               Up to 10 years               Up to 30 years
---------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                          <C>                          <C>
A-2                                                   3.25%                        4.00%                        4.75%
---------------------------------------------------------------------------------------------------------------------
A-3                                                   4.00%                        5.00%                        6.25%
---------------------------------------------------------------------------------------------------------------------
BB+ or lower                                          4.50%                        6.75%                        7.50%
---------------------------------------------------------------------------------------------------------------------

         If, on the related Valuation Date, the highest rated Certificates are
rated "A" or "A+" by S&P, then the Volatility Buffer will be determined using
the following table:

---------------------------------------------------------------------------------------------------------------------
Party A Rating (as                              Remaining Maturity of the Highest Rated Certificates:
hereinafter defined)*
---------------------------------------------------------------------------------------------------------------------
                                       Up to 5 years               Up to 10 years               Up to 30 years
---------------------------------------------------------------------------------------------------------------------
BBB+/BBB/BBB-                                         3.25%                        4.00%                        4.50%
---------------------------------------------------------------------------------------------------------------------
A-2                                                   3.25%                        4.00%                        4.50%
---------------------------------------------------------------------------------------------------------------------
A-3                                                   3.50%                        4.50%                        6.00%
---------------------------------------------------------------------------------------------------------------------
BB+ or lower                                          4.00%                        5.25%                        7.00%
---------------------------------------------------------------------------------------------------------------------

</TABLE>

         If, on the related Valuation Date, the highest rated Certificates are
rated "A-" or below by S&P, then the Volatility Buffer will be determined in
consultation with S&P and will be at such levels as may be required in order
for S&P to agree in writing that it will not downgrade, reduce, suspend or
withdraw S&P's then-current rating on the Certificates; provided, however, in
no event shall such Volatility Buffer levels exceed the levels set forth in
the table set forth

-------------------------
*  If Party A has a long-term or short-term rating from S&P which is not
   expressly set forth in the applicable table above, then the S&P Volatility
   Buffer shall be deemed to be 0.0%.

                                    D-4-1

<PAGE>

immediately above which would have applied had the highest rated Certificates
been rated "A" or "A+" by S&P.

"Party A Rating" means, Party A's rating with respect to its long-term senior
unsecured debt or its short-term debt, as applicable, by S&P on the related
Valuation Date; provided, however, if both Party A's long-term debt and
short-term debt are rated by S&P on such Valuation Date, then Party A Rating
shall mean the higher of the two ratings by S&P.

                                    D-4-2
<PAGE>
                                                                 EXHIBIT D-5

WACHOVIA
                         SWAP TRANSACTION CONFIRMATION
-------------------------------------------------------------------------------

Date:               December 8, 2004
To:                 STRATS(SM) Trust for Morgan Stanley Securities,
                    Series 2004-16 ("Counterparty")
Address:            U.S. Bank Trust National Association
                    100 Wall Street, Suite 1600
                    New York, NY 10005  USA

Fax:                212-809-5459

Attention:          Corporate Trust

From:               Wachovia Bank, N.A. ("Wachovia")

Ref. No.:           1043897, 1043896

Dear Sir or Madam:

This confirms the terms of the Transaction described below between
Counterparty and Wachovia. The definitions and provisions contained in the
2000 ISDA Definitions, as published by the International Swaps and Derivatives
Association, Inc., are incorporated into this Confirmation. In the event of
any inconsistency between those definitions and provisions and this
Confirmation, this Confirmation will govern.
<TABLE>
<CAPTION>

1. The terms of the particular Transaction to which the Confirmation relates
are as follows:

<S>                                     <C>
Transaction Type:                       Interest Rate Swap
-----------------
Currency for Payments:                  U.S. Dollars
----------------------
Notional Amount:                        USD 15,000,000.00
----------------
Term:
-----
        Trade Date:                     December 01, 2004

        Effective Date:                 December 22, 2004.  The Effective Date is the first day of the first
                                        Calculation Period.  However, the rights and obligations of both parties
                                        under this Transaction are in effect as of the Trade Date.

        Termination Date:               April 01, 2014

Fixed Amounts:
--------------
        Fixed Rate Payer:               Counterparty
        Period End Dates:               Semi-annually on the 1st of each April and October commencing April 01,
                                        2005, through and including the Termination Date; No Adjustment.
        Payment Dates:                  Semi-annually on the 1st of each April and October commencing April 01,
                                        2005, through and including the Termination Date.
        Business Day Convention:        Following
        Business Day:                   New York
        Fixed Rate:                     4.75%
        Fixed Rate Day Count
        Fraction:                       30/360

Additional Fixed Amount:
------------------------
        Fixed Amount Payer:             Counterparty
        Fixed Amount:                   USD 28,000.00

                                    D-5-1
<PAGE>

        Fixed Amount Payment Date:      December 22, 2004

Floating Amounts:
-----------------
        Floating Rate Payer:            Wachovia
        Period End Dates:               Monthly on the 1st of each month, commencing January 01, 2005, through and
                                        including the Termination Date; No Adjustment.
        Payment Dates:                  Monthly on the 1st of each month, commencing January 03, 2005, through and
                                        including the Termination Date.
        Business Day Convention:        Following
        Business Day:                   New York
        Floating Rate for initial
        Calculation Period:             Determined two New York Banking Days prior to the Effective Date.
        Floating Rate Option:           80% of USD-CMT-T7051
        Designated Maturity:            10 Years
        Spread:                         None
        Floating Rate Day Count
        Fraction:                       30/360
        Floating Rate determined:       Two New York Banking Days prior to each Reset Date.
        Reset Dates:                    The first day of each Calculation Period.
        Compounding:                    Inapplicable
        Rounding convention:            5 decimal places per the ISDA Definitions.

Interest Rate Floor:
--------------------
        Floor Buyer:                    Counterparty
        Floor Rate:                     3.50%
        Period End Dates:               Monthly on the 1st of each month, commencing January 01, 2005, through and
                                        including the Termination Date; No Adjustment.
        Payment Dates:                  Monthly on the 1st of each month, commencing January 03, 2005, through and
                                        including the Termination Date.
        Business Day Convention:        Following
        Business Day:                   New York
        Floating Rate for initial
        Calculation Period:             Determined two New York Banking Days prior to the Effective Date.
        Floating Rate Option:           80% of USD-CMT-T7051
        Designated Maturity:            10 Years
        Spread:                         None
        Floating Rate Day Count
        Fraction:                       30/360
        Floating Rate determined:       Two New York Banking Days prior to each Reset Date.
        Reset Dates:                    The first day of each Calculation Period.
        Compounding:                    Inapplicable
        Rounding convention:            5 decimal places per the ISDA Definitions.

2. The additional provisions of this Confirmation are as follows:

Calculation Agent:                      Wachovia
------------------
Payment Instructions:                   Wachovia/Charlotte
---------------------
                                        CIB Group
                                        ABA 053000219
                                        Ref: Derivative Desk (Trade No: 1043897, 1043896)
                                        Account #: 04659360006116

                                    D-5-2
<PAGE>

Wachovia Contacts:                      Settlements and/or Rate Resets:
                                        Tel: (800) 249-3865
                                        Fax: (704) 383-9139

                                        Documentation:
                                        Tel: (704) 383-4599
                                        Fax: (704) 383-9139

                                        Collateral:
                                        Tel: (704) 383-9529

                                        Please quote transaction reference number.

Payments to Counterparty:               US Bank Trust, N.A.
-------------------------
                                        ABA 091000022
                                        BBK= U.S. Bank National Association, Minneapolis, MN.
                                        Account number: 180121167365
                                        BNF= U.S. Bank Trust NA
                                        For Account of: STRATS (SM) Trust for Morgan Stanley Securities,
                                        Series 2004-16
                                        F/F/C: Securities 2004-16, A/C 787971000
Documentation
-------------

</TABLE>

This Confirmation supplements, forms part of, and is subject to, the ISDA
Master Agreement between Wachovia and Counterparty dated as of December 22,
2004, as amended and supplemented from time to time (the "Master Agreement").
All provisions contained or incorporated by reference in the Master Agreement
will govern this Confirmation except as expressly modified herein.

                                    D-5-3
<PAGE>

Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation and returning it to us at
fax number (704) 383-9139.

                                                     Very truly yours,
                                                     Wachovia Bank, N.A.

                                                     By:______________________
                                                     Name:
                                                     Title:

                                                     Ref. No. 1043897, 1043896

Accepted and confirmed as of date first above written:
STRATS (SM) Trust for Morgan Stanley Securities, Series 2004-16
By:  U.S. Bank Trust National Association, not in its individual capacity but
solely as Trustee

By:_____________________________
Name:
Title:

                                    D-5-4

<PAGE>
                                                                    EXHIBIT E

                    EVIDENCE OF INTEGRATION FOR TAX PURPOSES

This information is retained on behalf of each Certificateholder and is intended
to comply with requirements imposed by Section 1.1275-6(e) of the United States
Treasury Regulations.

        (1) The date the qualifying debt instrument was issued or acquired (or
        is expected to be issued or acquired) by the taxpayer and the date the
        Section 1.1275-6 hedge was entered into by the taxpayer.

        The Trust acquired the qualifying debt instrument on December 22, 2004
        and entered into the Section 1.1275-6 hedge on the same date. Each
        Certificateholder simultaneously acquires its interest in the qualifying
        debt instrument and enters into the Section 1.1275-6 hedge on the trade
        date identified in the trade confirmation for the purchase of
        Certificates.

        (2) A description of the qualifying debt instrument and the Section
        1.1275-6 hedge.

        The qualifying debt instrument is $15,000,000 in aggregate principal
        amount of 4.75% Notes due 2014 issued by Morgan Stanley The Section
        1.1275-6 hedge is a swap agreement between the Trust and Wachovia Bank,
        N.A, as evidenced by an ISDA Master Agreement (including a schedule and
        credit support annex thereto) dated as of December 22, 2004 and as
        supplemented by a confirmation number 1043897, 1043896 in the form
        attached to this series supplement as Exhibit D.

        (3) A summary of the cash flows and accruals resulting from treating the
        qualifying debt instrument and the Section 1.1275-6 hedge as an
        integrated transaction (that is, the cash flows and accruals on the
        synthetic debt instrument).

        A single principal payment of $15,000,000 is payable on the maturity
date of April 1, 2014. Interest at 80% of the ten year Constant Maturity
Treasury rate (but no less than 3.50% per annum) is payable on the 1st day of
each calendar month (or if the 1st calendar day is not a business day, on the
next succeeding business day).

                      For any interest period (with respect to the first
distribution date, the period from and including the original issue date of
the Certificates to, but excluding, January 1, 2005, and thereafter, with
respect to each distribution date, the period from and including the 1st day
of the preceding calendar month to, but excluding, the 1st day of the current
calendar month), the ten year Constant Maturity Treasury rate will be the
USD-CMT-T7051 rate (as hereinafter defined) as determined on each Reset Date
(as hereinafter defined) during the applicable Interest Period. For purposes
hereof, the term "USD-CMT-T7051 rate" shall mean that the rate for a Reset
Date will be a percentage equal to the yield for United States Treasury
securities at "constant maturity" for a period of ten years (such period being
referred to as the "Designated Maturity") and for that Reset Date as set forth
in H.15(519) under the caption

                                     E-1
<PAGE>

"Treasury constant maturities" as such yield is displayed on the Telerate page
7051 for the Reset Date on the day that is two U.S. Government Securities
Business Days prior to that Reset Date. If such rate does not appear on the
Telerate page 7051, the rate for that Reset Date will be a percentage equal to
the yield for United States Treasury securities at "constant maturity" for a
period of the Designated Maturity and for that Reset Date as set forth in
H.15(519) under the caption "Treasury constant maturities". If such rate does
not appear in H.15(519), the rate for that Reset Date will be the rate for a
period of the Designated Maturity as my then be published by either the
Federal Reserve System Board of Governors or the United States Department of
the Treasury that the Calculation Agent determines to be comparable to the
rate which would otherwise have been published in H.15(519).

               If on the day that is two U.S. Government Securities Business
Days preceding a Reset Date the Federal Reserve System Board of Governors or the
United States Department of the Treasury does not publish a yield on United
States Treasury securities at "constant maturity" for a period of the Designated
Maturity, the rate for that Reset Date will be calculated by the Calculation
Agent and will be a yield-to-maturity based on the arithmetic mean of the
secondary market bid prices at approximately 3:30 p.m., New York City time, on
the day that is two U.S. Government Securities Business Days preceding that
Reset Date, of three leading primary United States government securities dealers
in New York City selected by the Calculation Agent (from five such dealers and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)) for United States Treasury securities with an original maturity equal
to the Designated Maturity, a remaining term to maturity no more than one year
shorter than the Designated Maturity and in a Representative Amount. If fewer
than five but more than two such prices are provided as requested, the rate for
that Reset Date will be based on the arithmetic mean of the bid prices obtained
and neither the highest nor lowest of such quotations will be eliminated. If
fewer than three prices are provided as requested, the rate for that Reset Date
will be calculated by the Calculation Agent and will be a yield-to-maturity
based on the arithmetic mean of the secondary market bid prices as of
approximately 3:30 p.m., New York City time, on the day that is two U.S.
Government Securities Business Days preceding that Reset Date of three leading
primary United States government securities dealers in New York City selected by
the Calculation Agent (from five such dealers and eliminating the highest
quotation (or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest)) for United States
Treasury securities with an original maturity greater than the Designated
Maturity, a remaining term to maturity closest to the Designated Maturity and in
a Representative amount. If fewer than five but more than two such prices are
provided, the rate for that Reset Date will be based on the arithmetic mean of
the bid prices obtained and neither the highest nor lowest of such quotations
will be eliminated. If two United States Treasury securities with an original
maturity greater than the Designated Maturity have remaining terms to maturity
equally close to the Designated Maturity, the quotes for the Treasury security
with the shorter original term to maturity will be used.

               "Reset Date" means the 1st day of each applicable Interest
Period, provided, however, if the 1st day of such Interest Period is not a
Business Day, then the Reset Date shall be deemed to be the next succeeding
Business Day.

                                     E-2
<PAGE>

               "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Federal Reserve System
Board of Governors available through the world-wide-web site of the Board of
Governors of the Federal Reserve System at http://www.federalreserve.gov/
releases/h15/Current/, or any successor site or publication.

               "Telerate Page 7051" means the display page so designated on
Moneyline's Telerate Service (or such other page as may replace that page on
that service, or such other service as may be nominated as the information
vendor, for the purpose of displaying the ten year Constant Treasury Maturity
Rate).

               "Representative Amount" means an amount that is representative of
a single transaction in the relevant market at the relevant time.

               "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 income departments of its members be closed for the entire day
for purposes of trading in U.S. government securities.

                                     E-3<PAGE>
                           FIRST ALBANY COMPANIES INC.

                         2005 DEFERRED COMPENSATION PLAN

                                FOR KEY EMPLOYEES

                            EFFECTIVE JANUARY 1, 2005
<PAGE>
                           FIRST ALBANY COMPANIES INC.
                         2005 DEFERRED COMPENSATION PLAN
                                FOR KEY EMPLOYEES

                            Effective January 1, 2005

                                     Purpose

            The purpose of this Plan is to provide specified benefits to a
select group of management or highly compensated Employees who contribute
materially to the continued growth, development and future business success of
First Albany Companies Inc. and its subsidiaries, if any, that sponsor this
Plan. This Plan shall be unfunded for tax purposes and for purposes of Title I
of ERISA.

                                    Article 1

                                   Definitions

            For purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the meanings indicated:

1.1     "Aggregate Vested Balance" or "Aggregate Vested Benefit" shall mean,
        with respect to the Plan Accounts of any Participant as of a given date,
        the sum of the amounts that have become vested under all of the
        Participant's Plan Accounts, as adjusted to reflect all applicable
        Investment Adjustments and all prior withdrawals and distributions, in
        accordance with Article 3 of the Plan and the provisions of the
        applicable Enrollment Forms.

1.2     "Amended Annual Election Form" shall mean the Amended Annual Election
        Form required by the Committee to be signed and submitted by a
        Participant to effect a permitted change in the elections previously
        made by the Participant under any Annual Election Form.

1.3     "Amended Distribution Election Form" shall mean the Amended Distribution
        Election Form required by the Committee to be signed and submitted by a
        Participant to effect a permitted change in the Distribution Election
        previously made by the Participant under any Distribution Election Form.

1.4     "Annual Company Match" shall mean the aggregate amount credited by the
        Company to a Participant in respect of a particular Plan Year under
        Section 3.02.
<PAGE>
1.5     "Annual Company Match Account" shall mean a Participant's Annual Company
        Match for a Plan Year, as adjusted to reflect all applicable Investment
        Adjustments and all prior distributions and withdrawals.

1.6     "Annual Deferral Account" shall mean a Participant's Annual Participant
        Deferral for a Plan Year, as adjusted to reflect all applicable
        Investment Adjustments and all prior distributions and withdrawals.

1.7     "Annual Deferral Agreement" shall mean the Annual Deferral Agreement
        required by the Committee to be signed and submitted by a Participant in
        connection with the Participant's deferral election with respect to a
        given Plan Year.

1.8     "Annual Discretionary Allocation" shall mean the aggregate amount
        credited by the Company to a Participant in respect of a particular Plan
        Year under Section 3.03.

1.9     "Annual Discretionary Allocation Account" shall mean a Participant's
        Annual Discretionary Allocation for a Plan Year, as adjusted to reflect
        all applicable Investment Adjustments and all prior distributions and
        withdrawals.

1.10    "Annual Election Form" shall mean the Annual Election Form required by
        the Committee to be signed and submitted by a Participant in connection
        with the Participant's deferral election with respect to a given Plan
        Year.

1.11    "Annual Participant Deferral" shall mean the aggregate amount deferred
        by a Participant in respect of a particular Plan Year under Section
        3.01.

1.12    "Base Annual Salary" shall mean the annual base salary payable to a
        Participant by an Employer in cash in respect of services rendered
        during a Plan Year, including any Elective Deductions, but excluding
        Bonus Amounts, Commission Payouts or other additional incentives or
        awards payable to the Participant.

1.13    "Beneficiary" shall mean one or more persons, trusts, estates or other
        entities, designated in accordance with Article 10, that are entitled to
        receive a Participant's Aggregate Account Balance under this Plan in the
        event of the Participant's death.

1.14    "Beneficiary Designation Form" shall mean the Beneficiary Designation
        Form or Amended Beneficiary Designation Form last signed and submitted
        by a Participant and accepted by the Committee.

1.15    "Board" shall mean the board of directors of the Company.

1.16    "Bonus Amounts" shall mean Discretionary Bonus Amounts and Guaranteed
        Bonus Amounts.

1.17    "Change in Control" shall mean the earliest to occur of the following
        events:

        (a)   The consummation of any transaction or series of transactions as a
              result of which any "Person" (as the term person is used for
              purposes of Section 13(d) or

                                       2
<PAGE>
              14(d) of the Securities Exchange Act of 1934, as amended (the
              "Exchange Act")) other than an "Excluded Person" (as hereinafter
              defined) has or obtains ownership or control, directly or
              indirectly, of fifty percent (50%) or more of the combined voting
              power of all securities of the Company or any successor or
              surviving corporation of any merger, consolidation or
              reorganization involving the Company (the "Voting Securities").
              The term "Excluded Person" means any one or more of the following:
              (i) the Company or any majority-owned subsidiary of the Company,
              (ii) an employee benefit plan (or a trust forming a part thereof)
              maintained by (A) the Company or (B) any majority-owned subsidiary
              of the Company, (iii) any Person who as of the initial effective
              date of this Plan owned or controlled, directly or indirectly, ten
              percent (10%) or more of the then outstanding Voting Securities,
              or any individual, entity or group that was part of such a Person;

        (b)   A merger, consolidation or reorganization involving the Company as
              a result of which the holders of Voting Securities immediately
              before such merger, consolidation or reorganization do not
              immediately following such merger, consolidation or reorganization
              own or control, directly or indirectly, at least fifty percent
              (50%) of the Voting Securities in substantially the same
              proportion as their ownership or control of the Voting Securities
              immediately before such merger, consolidation or reorganization;
              or

        (c)   The sale or other disposition of all or substantially all of the
              assets of the Company to any Person (other than a transfer to a
              majority-owned subsidiary of the Company).

1.18    "Claimant" shall have the meaning set forth in Section 13.1.

1.19    "Code" shall mean the Internal Revenue Code of 1986, as it may be
        amended from time to time.

1.20    "Commission Payouts" shall mean the amounts payable to a Participant by
        an Employer in cash in respect of services rendered during a Plan Year
        under any commission scheme or commission draw arrangement, including
        any Elective Deductions, but excluding Bonus Amounts, stock-related
        awards and other non-monetary incentives.

1.21    "Committee" shall mean the committee described in Article 11.

1.22    "Company" shall mean First Albany Companies Inc., a New York
        corporation, and any successor to all or substantially all of its assets
        or business.

1.23    "Company Stock" shall mean the common stock, par value $.01 per share,
        of the Company.

1.24    "Covered Termination" shall mean the Participant's Termination of
        Employment within two (2) years following a Change in Control as a
        result of the Participant's resignation for good reason or a termination
        by the Participant's Employer without

                                       3
<PAGE>
        cause. For these purposes a Participant's resignation for good reason
        shall mean a Participant's resignation following (i) a diminution in the
        Participant's status, title, position or responsibilities, or an
        assignment to the Participant of duties inconsistent with the
        Participant's status, title or position other than for cause or (ii) a
        reduction of more than ten percent (10%) in the Participant's aggregate
        annualized compensation rate solely as a result of a change adopted
        unilaterally by the Company. A Participant's resignation shall not be
        treated as a resignation for good reason unless it occurs after one of
        the foregoing events and the Participant provides the Employer with
        written notice of the event within six (6) months of the occurrence of
        the event and within seven (7) days before the effective date of the
        Participant's resignation and the Employer shall not have cured such
        event prior to such resignation. A termination by the Participant's
        Employer without cause shall mean an involuntary termination of the
        Participant's employment by Participant's Employer other than a
        termination for cause. For this purpose, a termination for cause
        includes any termination by reason of the Participant's (i) willful and
        continued failure to perform the duties of his or her position after
        receiving notice of such failure and being given reasonable opportunity
        to cure such failure; (ii) willful misconduct which is demonstrably and
        materially injurious to the Employer; (iii) conviction of a felony; or
        (iv) material breach of applicable federal or state securities laws,
        regulations or licensing requirements or the applicable rules or
        regulations of any self-regulatory body. No act or failure to act on the
        part of a Participant shall be considered "willful" unless it is done or
        omitted to be done in bad faith or without reasonable belief that the
        action or omission was in the best interest of the Employer. No
        termination shall be considered a termination for cause unless it is
        effected by a written notice to the Participant stating in detail the
        grounds constituting cause.

1.25    "Disability" shall mean a period of disability during which a
        Participant (i) is unable to engage in any substantial gainful activity
        by reason or any medically determinable physical or mental impairment
        which can be expected to result in death or can be expected to last for
        a continuous period of not less than 12 months or (ii) is, by reason of
        any medically determinable physical or mental impairment which can be
        expected to last for a continuous period of not less than 12 months,
        receiving income replacement benefits for a period of not less than 3
        months under an accident and health plan covering employees of the
        Participant's Employer, all as determined in the sole discretion of the
        Committee.

1.26    "Disability Benefit" shall mean the benefit set forth in Article 9.

1.27    "Discretionary Bonus Amounts" shall mean such amounts that are
        determined in the sole discretion of an Employer and are payable in cash
        to a Participant in respect of services rendered during a Plan Year
        under any bonus or incentive plan or arrangement of an Employer,
        including any Elective Deductions, but excluding Commission Payouts,
        stock-related awards and other non-monetary incentives.

1.28    "Distribution Election" shall mean an election made in accordance with
        Section 5.01.

                                       4
<PAGE>
1.29    "Distribution Election Form" shall mean the Distribution Election Form
        required by the Committee to be signed and submitted by a Participant
        with respect to a Distribution Election.

1.30    "Election Form" shall mean, with respect to any Plan Account, the Annual
        Election Form or the Amended Annual Election Form last signed and
        submitted by the Participant and accepted by the Committee with respect
        to that Plan Account.

1.31    "Elective Deductions" shall mean deductions made from a Participant's
        Base Annual Salary, Bonus Amounts and Commission Payouts for amounts
        voluntarily deferred or contributed by the Participant pursuant to all
        qualified and non-qualified compensation deferral plans, including,
        without limitation, amounts not included in the Participant's gross
        income under Code Sections 125, 132(f)(4), 402(e)(3) and 402(h),
        provided, however, that all such amounts would have been payable in cash
        to the Employee had there been no such plan.

1.32    "Employee" shall mean a person who is an employee of any Employer.

1.33    "Employer" shall mean the Company and/or any of its subsidiaries (now in
        existence or hereafter formed or acquired) that have been selected by
        the Board to participate in the Plan and have adopted the Plan as a
        sponsor.

1.34    "Enrollment Forms" shall mean, for any Plan Year, the Annual Deferral
        Agreement, the Annual Election Form, the Distribution Election Form, the
        Beneficiary Designation Form, the Subordination Agreement and any other
        forms or documents which may be required of a Participant by the
        Committee, in its sole discretion.

1.35    "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
        as it may be amended from time to time.

1.36    "Guaranteed Bonus Amounts" shall mean predetermined amounts that are not
        subject to Employer discretion and are payable in cash to a Participant
        in respect of services rendered during a Plan Year under any bonus or
        incentive plan or arrangement of an Employer, including any Elective
        Deductions, but excluding Commission Payouts, stock-related awards and
        other non-monetary incentives.

1.37    "Investment Adjustment" shall mean an adjustment made to the balance of
        any Plan Account in accordance with Section 3.05 to reflect the
        performance of an Investment Benchmark pursuant to which the value of
        the Plan Account is measured.

1.38    "Investment Benchmark" shall mean a benchmark made available under the
        Plan from time to time by the Committee for purposes of valuing Plan
        Accounts.

1.39    "Participant" shall mean any eligible Employee (i) who is selected to
        participate in the Plan, (ii) who elects to participate in the Plan,
        (iii) who signs the applicable Enrollment Forms (and other forms
        required by the Committee), (iv) whose signed Enrollment Forms (and
        other required forms) are accepted by the Committee, (v) who commences
        participation in the Plan, and (vi) whose participation has not
        terminated. A spouse or

                                       5
<PAGE>
        former spouse of a Participant shall not be treated as a Participant in
        the Plan or have an account balance under the Plan, even if he or she
        has an interest in the Participant's benefits under the Plan as a result
        of applicable law or property settlements resulting from legal
        separation or divorce.

1.40    "Plan" shall mean the First Albany Companies Inc. 2005 Deferred
        Compensation Plan For Key Employees, which shall be evidenced by this
        instrument and by each Enrollment Form, as they may be amended from time
        to time.

1.41    "Plan Accounts" shall mean the Annual Deferral Accounts, Annual Company
        Match Accounts and Annual Discretionary Allocation Accounts established
        under the Plan.

1.42    "Plan Year" shall mean the period beginning on January 1 of each year
        and ending December 31.

1.43    "Reporting Person" shall mean an Employee who is subject to the
        reporting requirements of Section 16(a) of the Securities Exchange Act
        of 1934, as amended.

1.44    "Restricted Investment Benchmark" means an Investment Benchmark which is
        designated as a Restricted Investment Benchmark by the Committee at the
        time such Investment Benchmark is initially made available under the
        Plan.

1.45    "Specified Employee" shall mean a key employee (as defined in Code
        Section 416(i) without regard to paragraph (5) thereof) of the Company.

1.46    "Subordinated Amount" shall mean, with respect to a Plan Year, that
        portion of a Participant's Annual Participant Deferral, Annual
        Discretionary Allocation and Annual Company Match that are subject to
        the restrictions and limitations set forth in the Subordination
        Agreement executed by the Participant in respect of such Plan Year. A
        Participant's Subordinated Amount shall not include (i) any portion of
        the Participant's Annual Participant Deferral, Annual Discretionary
        Allocation and Annual Company Match that is allocated to an Investment
        Benchmark that tracks the performance of First Albany Companies Inc.
        Common Stock or that is otherwise payable in shares of First Albany
        Companies Inc. Common Stock or (ii) any earnings credited to a
        Participant's Annual Participant Deferral Account, Annual Discretionary
        Allocation Account or Annual Company Match Account. Subordinated Amounts
        shall be determined based on a Participant's Information. Subordinated
        Amounts shall be determined based on the Investment Benchmark election
        made by a Participant at the time of annual enrollment." For each
        Participant that is a party to a Subordination Agreement for a given
        Plan Year, the Company shall, as soon as practicable after the end of
        such Plan Year, notify the New York Stock Exchange of the Subordinated
        Amount that was credited to the Participant's Plan Accounts in respect
        of such Plan Year.

1.47    "Subordination Agreement" means the New York Stock Exchange
        Subordination Agreement required by the Committee to be signed and
        submitted by a Participant in connection with the Participant's deferral
        election with respect to a given Plan Year.

                                       6
<PAGE>
1.48    "Survivor Benefit" shall mean the benefit set forth in Article 6.

1.49    "Termination of Employment" shall mean the severing of employment with
        all Employers, voluntarily or involuntarily, for any reason.

1.50    "Trust" shall mean the trust established in accordance with Article 14.

1.51    "Unforeseeable Financial Emergency" shall mean a severe financial
        hardship to the Participant resulting from (i) an illness or accident of
        the Participant, the Participant's spouse or a dependent (as defined in
        section 152(a) of the Code) of the Participant, (ii) loss of the
        Participant's property due to casualty, or (iii) such other similar
        extraordinary and unforeseeable circumstances arising as a result of
        events beyond the control of the Participant, all as determined in the
        sole discretion of the Committee. In making its determination the
        Committee shall be guided by the prevailing authorities applicable under
        the Code.

1.52    "Vested Account Balance" shall mean, with respect to any Plan Account as
        of a given date, the sum of the amounts that have become vested, as
        adjusted to reflect all applicable Investment Adjustments and all prior
        withdrawals and distributions, in accordance with Article 3 of the Plan
        and the provisions of applicable Enrollment Forms.

1.53    "Years of Service" shall mean the total number of full Plan Years during
        which a Participant has been continuously employed by one or more
        Employers. Any partial Plan Year during which a Participant has been
        employed by an Employer shall not be counted.

                                    Article 2

                       Eligibility, Selection, Enrollment

        2.01 Selection by Committee. Participation in the Plan shall be limited
to a select group of management or highly compensated Employees of the
Employers, as determined by the Committee in its sole discretion. From that
group, the Committee shall select, in its sole discretion, the Employees who
shall be eligible to make an Annual Participant Deferral and/or receive an
Annual Discretionary Allocation in respect of each Plan Year. The Committee's
selection of an Employee to make an Annual Participant Deferral and/or receive
an Annual Discretionary Allocation in respect of a particular Plan Year will not
entitle that Employee to make an Annual Participant Deferral or receive an
Annual Discretionary Allocation for any subsequent Plan Year, unless the
Employee is again selected by the Committee to make an Annual Participant
Deferral and/or receive an Annual Discretionary Allocation for such subsequent
Plan Year.

        2.02 Enrollment Requirements. As a condition to being eligible to make
an Annual Participant Deferral for any Plan Year, each selected Employee shall
complete, execute and return to the Committee each of the required Enrollment
Forms (including without limitation, the Subordination Agreement) no later than
the last day of the immediately preceding Plan Year (or such earlier date as the
Committee may establish from time to time). Notwithstanding the

                                       7
<PAGE>
foregoing, (i) in the case of an Employee who first becomes eligible to
participate in the Plan during any Plan Year, such Employee shall complete,
execute and return to the Committee each of the required Enrollment Forms
(including without limitation, the Subordination Agreement) no later than 30
days following the date on which such Employee first becomes eligible to
participate in the Plan (or such earlier date as the Committee may establish
from time to time) provided that such Annual Participant Deferral shall apply
only with respect to services performed subsequent to the time such Enrollment
Forms are filed with the Committee and (ii) in the case of any performance-based
compensation (as such term is used in Section 409A of the Code) based on
services performed over a period of at least 12 months, the Enrollment Forms
with respect to such performance-based compensation must be filed no later than
6 months before the end of the performance period (or such earlier date as the
Committee may establish from time to time). In addition, each selected Employee
shall have on file with the Committee a completed Beneficiary Designation Form
prior to the date specified by the Committee, and the Committee shall establish
from time to time such other enrollment requirements as it determines necessary,
in its sole discretion.

        2.03 Commencement of Participation. Provided an Employee selected to
make an Annual Participant Deferral in respect of a particular Plan Year has met
all enrollment requirements set forth in this Plan and required by the
Committee, including returning all required documents to the Committee within
the specified time period, the Employee's designated deferrals shall commence as
of the date established by the Committee in its sole discretion. In addition, an
Employee's eligibility to make deferrals for a Plan Year is expressly
conditioned on the approval by the New York Stock Exchange of the Subordination
Agreement executed by the Employee in respect of such Plan Year. If an Employee
fails to meet all such requirements within the specified time period with
respect to any Plan Year, the Employee shall not be eligible to make any
deferrals for that Plan Year.

        2.04 Subsequent Elections. The Enrollment Forms submitted by a
Participant in respect of a particular Plan Year will not be effective with
respect to any subsequent Plan Year, except that the Beneficiary Designation
Form on file with the Committee will remain effective for all subsequent Plan
Years unless and until an Amended Beneficiary Designation Form is submitted. If
an Employee is selected to participate in the Plan for a subsequent Plan Year
and the required Enrollment Forms are not timely delivered for the subsequent
Plan Year, the Participant shall not be eligible to make any deferrals with
respect to such subsequent Plan Year.

        2.05 Termination of Participation and/or Deferrals. If the Committee
determines in good faith that a Participant no longer qualifies as a member of a
select group of management or highly compensated employees, as membership in
such group is determined in accordance with Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA, the Committee shall have the right, in its sole discretion,
to (i) terminate any Annual Participant Deferral, Annual Company Match and
Annual Discretionary Allocation not yet credited to the Participant's Plan
Accounts and/or (ii) immediately distribute the Participant's then Aggregate
Vested Balance as a Termination Benefit and terminate the Participant's
participation in the Plan. Any Annual Company Match and/or Annual Discretionary
Allocation credited on behalf of the Participant that is not vested prior to the
date of the Committee's determination shall be forfeited by the Participant. If
the Committee chooses to terminate the Participant's participation in the Plan,
the Committee may, in its sole discretion, select the Participant to participate
in the Plan at such time in the future as

                                       8
<PAGE>
the Participant again becomes a member of the select group described above. If a
Participant's Employer terminates the Participant's employment for cause (as
described in Section 1.24), then, (i) the Participant's participation in the
Plan shall automatically terminate, (ii) the Committee shall distribute to the
Participant, in a single lump sum, the remainder of the Participant's Annual
Participant Deferrals that were credited to the Participant's Plan Accounts
prior to the date of termination after adjustment for all prior withdrawals and
distributions within ninety days of such termination, or, in the case of a
Specified Employee, 6 months after the date of such termination and (iii) all
other amounts in any of the Participant's Plan Accounts shall be forfeited by
the Participant. In addition, if an Employee's eligibility to make deferrals for
a Plan Year is expressly conditioned on the approval by the New York Stock
Exchange of a Subordination Agreement executed by the Employee in respect of
such Plan Year and the New York Stock Exchange declines to issue such approval,
the Committee shall have the right, in its sole discretion, to (i) terminate any
Annual Participant Deferral and Annual Company Match in respect of such Plan
Year and (ii) immediately distribute to the Participant any Subordinated Amounts
that have already been credited to the Participant's Plan Accounts in respect of
such Plan Year. Any distribution made pursuant to this Section 2.05 may be
subject to deferred distribution pursuant to Section 5.03.

                                    Article 3

                   Participant Deferrals, Commitments, Company
                Match, Investment Adjustments, Taxes and Vesting

3.01    Participant Deferrals.

        (a) Deferral Election. A Participant may make an election to defer the
receipt of amounts payable to the Participant in the form of Base Annual Salary,
Bonus Amounts and Commission Payouts for services rendered during a Plan Year.
The Participant's election shall be evidenced by an Annual Deferral Agreement
and Annual Election Form completed and submitted to the Committee in accordance
with such procedures and time frames as may be established by the Committee in
its sole discretion. Amounts deferred by a Participant in respect of services
rendered during a Plan Year shall be referred to collectively as an Annual
Participant Deferral and shall be credited to an Annual Deferral Account
established in the name of the Participant. A separate Annual Deferral Account
shall be established and maintained for each Annual Participant Deferral. The
Committee shall have sole discretion to determine in respect of each Plan Year:
(i) whether a Participant shall be eligible to make an Annual Participant
Deferral; (ii) the form(s) of compensation which may be the subject of any
Annual Participant Deferral; and (iii) any other terms and conditions applicable
to the Annual Participant Deferral.

                                       9
<PAGE>
      (b)   Minimum Deferral. (i) Minimum. For each Plan Year the Committee may
            permit a Participant to elect to defer, as his or her Annual
            Participant Deferral, one or more of the following forms of
            compensation, payable to the Participant with respect to the Plan
            Year but not yet received, in the following minimum amounts:

<TABLE>
<CAPTION>
                                                       Minimum
                       Deferral                        Amount
<S>                                                    <C>
                  Base Annual Salary                   $3,000
                  Guaranteed Bonus Amounts             $3,000
                  Discretionary Bonus Amounts          $3,000
                  Commission Payouts                   $3,000
</TABLE>

            If an election is made for less than stated minimum amounts, or if
            no election is made, the amount deferred shall be zero.

                              (ii) Short Plan Year. If a Participant first
            becomes a Participant after the first day of a Plan Year, the
            minimum deferral of each of the Participant's Base Annual Salary,
            Bonus Amounts and Commission Payouts shall be an amount equal to the
            minimum set forth above, multiplied by a fraction, the numerator of
            which is the number of complete months remaining in the Plan Year
            and the denominator of which is 12.

      (c)   Maximum Deferral. (i) The Committee may permit a Participant to
            elect to defer, as his or her Annual Participant Deferral, one or
            more of the following forms of compensation, payable to the
            Participant with respect to the Plan Year but not yet received, up
            to the following maximum percentages:

<TABLE>
<CAPTION>
                                                 Maximum
                  Deferral                      Percentage
<S>                                             <C>
                  Base Annual Salary                50%
                  Guaranteed Bonus Amounts          50%
                  Discretionary Bonus Amounts       50%
                  Commission Payouts                50%
</TABLE>

      (d)   Deferral Designations. (i) Base Annual Salary. A Participant may
            designate the amount of the Annual Participant Deferral to be
            deducted from his or her Base Annual Salary as either a percentage
            of his or her Base Annual Salary, a fixed dollar amount or a
            percentage of base salary up to a fixed dollar amount. Such amount
            shall be withheld from each regularly scheduled Base Annual Salary
            payment in equal amounts.

                        (ii) Bonus Amounts. A Participant may designate the
            amount of the Annual Participant Deferral to be deducted from his or
            her Bonus Amounts as either a percentage or a fixed dollar amount of
            specified Bonus Amounts

                                       10
<PAGE>
            expected by the Participant. If a Participant designates the Annual
            Participant Deferral to be deducted from any Bonus Amount as a fixed
            dollar amount and such fixed dollar amount exceeds the Bonus Amount
            actually payable to the Participant, the entire amount of such Bonus
            Amount shall be withheld.

                        (iii) Commission Payouts. A Participant may designate
            the amount of the Annual Participant Deferral to be deducted from
            his or her Commission Payouts as either a percentage of his or her
            Commission Payouts, a fixed dollar amount or a percentage of
            commission Payouts up to fixed dollar amount. Such amount shall be
            withheld from the Commission Payout portion of each regularly
            scheduled Commission Payout payment in equal amounts.

      (e) Reporting Persons. Notwithstanding anything in this Section 3.01 to
the contrary, a Participant who is a Reporting Person shall not be permitted to
elect to defer receipt of amounts payable to such Reporting Person in the form
of Base Annual Salary or Commission Payouts, but shall continue to be permitted
to defer receipt of amounts payable in the form of Bonus Amounts, in accordance
with Paragraph (d)(ii) above.

      3.02 Annual Company Match. A Participant may be credited with one or more
Company matches in respect of any Plan Year, expressed as a percentage of the
amount of Base Annual Salary, Bonus Amounts, Commission Payouts or any
combination of the foregoing deferred by the Participant pursuant to the
Participant's Annual Participant Deferral for the Plan Year. Such Company
matches credited to a Participant in respect of a Plan Year shall be referred to
collectively as the Annual Company Match for that Plan Year and shall be
credited to an Annual Company Match Account in the name of the Participant. A
separate Annual Company Match Account shall be established and maintained for
each Annual Company Match. The Board shall have sole discretion to determine in
respect of each Plan Year and each Participant: (i) whether any Annual Company
Match shall be made; (ii) the Participant(s) who shall be entitled to such
Annual Company Match; (iii) the amount of such Annual Company Match; (iv) the
date(s) on which any portion of such Annual Company Match shall be credited to
each Participant's Annual Company Match Account; (v) the Investment Benchmark(s)
that shall apply to such Annual Company Match; and (v) any other terms and
conditions applicable to such Annual Company Match.

            (a) Special Rule For Reporting Persons. The Annual Company Match, if
      any, shall be credited to the Annual Company Match Account of a
      Participant who is a Reporting Person at the same time that the amounts
      giving rise to such Annual Company Match are credited to such Reporting
      Person's Annual Deferral Account.

      3.03 Annual Discretionary Allocation. A Participant may be credited with
one or more discretionary allocations in respect of any Plan Year, expressed as
either a flat dollar amount or as a percentage of the Participant's Base Annual
Salary, Bonus Amounts, Commission Payouts or any combination of the foregoing.
Such discretionary allocations credited to a Participant in respect of a Plan
Year shall be referred to collectively as the Annual Discretionary Allocation
for that Plan Year and shall be credited to an Annual Discretionary Allocation
Account in the name of the Participant. A separate Annual Discretionary
Allocation Account shall be established and maintained for each Annual
Discretionary Allocation. The Board shall have sole discretion to

                                       11
<PAGE>
determine in respect of each Plan Year and each Participant: (i) whether any
Annual Discretionary Allocation shall be made; (ii) the Participant(s) who shall
be entitled to such Annual Discretionary Allocation; (iii) the amount of such
Annual Discretionary Allocation; (iv) the date(s) on which any portion of such
Annual Discretionary Allocation shall be credited to each Participant's Annual
Discretionary Allocation Account; (v) the Investment Benchmark(s) that shall
apply to such Annual Discretionary Allocation; and (v) any other terms and
conditions applicable to such Annual Discretionary Allocation.

      3.04 Selection of Investment Benchmarks. In connection with a
Participant's election to make an Annual Participant Deferral in respect of a
Plan Year, the Participant shall select one or more Investment Benchmarks and
the percentage of the Participant's Annual Deferral Account, Annual Company
Match Account (if any) and Annual Discretionary Allocation Account (if any) for
such Plan Year to be adjusted to reflect the performance of each selected
Investment Benchmark; provided, however, that a Participant's ability to select
Investment Benchmarks with respect to his or her Annual Company Match Account
and/or Annual Discretionary Allocation Account is subject to, and may be limited
by, the Board's discretion under Sections 3.02 and 3.03 to designate the
Investment Benchmarks that shall apply to all or a portion of such Annual
Company Match Account and/or Annual Discretionary Allocation Account. All
selections of Investment Benchmarks shall be in multiples of 10% unless the
Committee determines that lower increments are acceptable. A Participant may
make changes in his or her selected Investment Benchmarks with respect to any
Plan Account at such times as the Committee may designate by completing and
submitting to the Committee an Amended Election Form in accordance with such
procedures and time frames as may be established from time to time at the sole
discretion of the Committee; provided, however, that in no event shall the
Committee permit a Participant to reallocate any Subordinated Amounts to an
Investment Benchmark that tracks the performance of First Albany Companies Inc.
Common Stock nor shall the Committee permit a Participant to reallocate any
portion of his Plan Account from an Investment Benchmark that tracks the
performance of First Albany Companies Inc. Common Stock to another Investment
Benchmark offered under the Plan. The Committee, in its sole discretion, may
place additional limits on a Participant's ability to make changes with respect
to certain Investment Benchmarks.

      Notwithstanding the foregoing, in no event shall a Participant who is a
Reporting Person be permitted to elect to have an Investment Benchmark that
tracks the performance of First Albany Companies Inc. Common Stock apply to any
portion of his or her Annual Deferral Accounts.

      3.05 Adjustment of Plan Accounts. While a Participant's Plan Accounts do
not represent the Participant's ownership of, or any ownership interest in, any
particular assets, the Participant's Plan Accounts shall be adjusted in
accordance with the Investment Benchmark(s), subject to the conditions and
procedures set forth herein or established by the Committee from time to time.
Any cash earnings generated under an Investment Benchmark (such as interest and
cash dividends and distributions) shall, at the Committee's sole discretion,
either be deemed to be reinvested in that Investment Benchmark or reinvested in
one or more other Investment Benchmark(s) designated by the Committee. All
notional acquisitions and dispositions of Investment Benchmarks under a
Participant's Plan Accounts shall be deemed to occur at such times as the
Committee shall determine to be administratively feasible in its sole discretion
and

                                       12
<PAGE>
the Participant's Plan Accounts shall be adjusted accordingly. In addition, a
Participant's Plan Accounts may be adjusted from time to time, in accordance
with procedures and practices established by the Committee, in its sole
discretion, to reflect any notional transactional costs and other fees and
expenses relating to the deemed investment, disposition or carrying of any
Investment Benchmark for the Participant's Plan Accounts. Adjustments made in
accordance herewith shall be referred to as Investment Adjustments.
Notwithstanding anything to the contrary, any Investment Adjustments made to any
Plan Account following a Change in Control shall be made in a manner no less
favorable to Participants than the practices and procedures employed under the
Plan, or as otherwise in effect, as of the date of the Change in Control.

3.06    FICA and Other Taxes.

      (a) Annual Deferral Amounts. For each Plan Year in which an Annual
Participant Deferral is being withheld from a Participant, the Participant's
Employer(s) shall withhold from that portion of the Participant's Base Annual
Salary, Bonus Amounts, and/or Commission Payouts that is not being deferred, in
a manner determined by the Employer(s), the Participant's share of FICA and
other employment taxes; provided, however, that the Committee may reduce the
Annual Participant Deferral if necessary to comply with applicable withholding
requirements.

      (b) Distributions. The Participant's Employer(s), or the trustee of the
Trust, shall withhold from any payments made to a Participant under this Plan
all federal, state and local income, employment and other taxes required to be
withheld by the Employer(s), or the trustee of the Trust, in connection with
such payments, in amounts and in a manner to be determined in the sole
discretion of the Employer(s) and the trustee of the Trust.

        3.07 Vesting. (a) Forfeiture of Unvested Amounts. As of the date of a
Participant's Termination of Employment, Disability or death, the amounts
credited to each of the Participant's Plan Accounts shall be reduced by the
amount which has not become vested in accordance with the vesting provisions set
forth below and in the Annual Deferral Agreement and/or the document announcing
an Annual Discretionary Allocation (if any) applicable to such Plan Account, and
such unvested amounts shall be forfeited by the Participant.

      (b) Vesting of Amounts. The Participant shall be vested in the amounts
credited to his or her Annual Deferral Account and Annual Company Match Account
in respect of each given Plan Year as set forth in the Annual Deferral Agreement
pertaining to such Plan Year. The Participant shall be vested in the amounts
credited to his or her Annual Discretionary Allocation Account in respect of
each given Plan Year as set forth in the document announcing the Annual
Discretionary Allocation for such Plan Year. The vesting terms set forth in each
Annual Deferral Agreement and Annual Discretionary Allocation announcement shall
be established by the Committee in its sole discretion and may vary for each
Participant and each Plan Year. Such vesting terms may, in the Committee's
discretion, provide for acceleration of vesting upon a Change in Control.

      (c) Vesting After Covered Termination. Unless otherwise specifically
provided under the terms of a particular Annual Deferral Agreement and/or the
document announcing an Annual Discretionary Allocation (if any), in the event of
a Participant's Covered Termination,

                                       13
<PAGE>
such Participant, as of the effective date of such Covered Termination, shall be
100% vested in all amounts credited to each of the Participant's Plan Accounts,
as adjusted for the applicable Investment Adjustments and all prior withdrawals
and distributions.

      (d) Vesting Upon Plan Termination. In the event of a termination of the
Plan as it relates to any Participant, all amounts credited to any and all Plan
Accounts of such Participant as of the effective date of such termination shall
be 100% vested.

      (e) Acceleration of Vesting by Committee. Notwithstanding anything to the
contrary contained in the Plan, any Annual Deferral Agreement and/or any
document announcing an Annual Discretionary Allocation, the Committee shall have
the authority, exercisable in its sole discretion, to accelerate the vesting of
any amounts credited to any Plan Account of any Participant and any such
acceleration shall be evidenced by a written notice to the Participant setting
forth in detail the Plan Account(s) and the amounts affected by the Committee's
decision to accelerate vesting and the terms of the new vesting schedule
applicable to such amounts.

                                    Article 4

                             Suspension of Deferrals

      4.01 Unforeseeable Financial Emergencies. If a Participant experiences an
Unforeseeable Financial Emergency, the Participant may petition the Committee to
suspend any deferrals required to be made by the Participant. The Committee
shall determine, in its sole discretion, whether to approve the Participant's
petition. If the petition for a suspension is approved, suspension shall take
effect upon the date of approval.

      4.02 Disability. From and after the date that a Participant is deemed have
suffered a Disability, any standing deferral election of the Participant shall
automatically be suspended and no further deferrals shall be made with respect
to the Participant.

      4.03 Resumption of Deferrals. If deferrals by a Participant have been
suspended during a Plan Year due to an Unforeseeable Financial Emergency or a
Disability, the Participant will not be eligible to make any further deferrals
in respect of that Plan Year. The Participant may be eligible to make deferrals
for subsequent Plan Years provided the Participant is selected to make deferrals
for such subsequent Plan Years and the Participant complies with the election
requirements under the Plan.

                                    Article 5

                          Distribution of Plan Accounts

      5.01 Distribution Elections. (a) Initial Elections. The Participant shall
make a Distribution Election at the time he or she makes an Annual Deferral
Election with respect to a given Plan Year and/or at the time an Annual
Discretionary Allocation (if any) is credited to the Participant's Annual
Discretionary Allocation Account for a given Plan Year, to have the Vested

                                       14
<PAGE>
Account Balance of the Participant's respective Plan Accounts for that Plan Year
distributed in either

            (i)   A single lump sum as of the first April 15 after the end of
                  either the third (3rd), fourth (4th), fifth (5th), sixth (6th)
                  seventh (7th) eighth (8th), ninth (9th) or tenth (10th) Plan
                  Year following the Plan Year in respect of which the Annual
                  Deferral Election was made and/or the Annual Discretionary
                  Allocation (if any) was credited; or

            (ii)  Substantially equal annual installments commencing no earlier
                  than the first April 15 after the end of the third (3rd) Plan
                  Year following the Plan Year in respect of which the Annual
                  Deferral Election was made and ending no later than the first
                  April 15 after the end of the tenth (10th) Plan Year following
                  the Plan Year in respect of which the Annual Deferral Election
                  was made and/or the Annual Discretionary Allocation (if any)
                  was credited.

      (b) Subsequent Elections. Subject to any restrictions that may be imposed
by the Committee, a Participant may amend his or her Distribution Election with
respect to any Plan Account by completing and submitting to the Committee within
such time frame as the Committee may designate, an Amended Distribution Election
Form; provided, however, that such Amended Election Form (i) is submitted no
later than April 15 of the Plan Year prior to the Plan Year in which
distribution of the Vested Account Balance of such Plan Account was scheduled to
be made in accordance with the Participant's original Distribution Election,
(ii) shall not take effect until 12 months after the date on which such Amended
Election Form is filed, (iii) specifies a new distribution date (or a new
initial distribution date in the case of installment distributions) that is no
less than the April 15th that is five (5) years after the original distribution
date (or the original initial distribution date in the case of installment
distributions) and (iv) such Amended Election Form is approved and accepted by
the Committee in its sole discretion. A Participant may amend his or her
Distribution Election to change the distribution method from a lump sum to
installments, but not from installments to a lump sum, and may not choose a
distribution date that is later than April 15 of the tenth (10th) Plan Year
following the end of the Plan Year in respect of which the Annual Deferral
Election was made. Notwithstanding a Participant's Distribution Election with
respect to the Vested Account Balance of any Plan Account, some or all of such
Vested Account Balance may be subject to deferred distribution pursuant to
Section 5.03.

      5.02 Withdrawal in the Event of an Unforeseeable Financial Emergency.
Subject to Section 5.03 in the event that a Participant or (after a
Participant's death) a Participant's Beneficiary experiences an Unforeseeable
Financial Emergency, the Participant or Beneficiary may petition the Committee
to receive a partial or full payout of amounts credited to one or more of the
Participant's Plan Accounts. The Committee shall determine, in its sole
discretion, whether the requested payout shall be made, the amount of the payout
and the Plan Accounts from which the payout will be made; provided, however,
that the payout shall not exceed the lesser of the Participant's Aggregate
Vested Benefit or the amount reasonably needed to satisfy the Unforeseeable
Financial Emergency plus amounts necessary to pay taxes reasonably anticipated
as a result of the distribution. In making any determinations under this Section
5.02,

                                       15
<PAGE>
the Committee shall be guided by the prevailing authorities under the Code and
shall take into account the extent to which such Unforeseeable Financial
Emergency is or may be relieved through reimbursement or compensation by
insurance or otherwise or by liquidation of the participant's assets (to the
extent the liquidation of such assets would not itself cause severe financial
hardship). If, subject to the sole discretion of the Committee, the petition for
a payout is approved, the payout shall be made within ninety (90) days of the
date of approval.

      5.03 Distribution Restrictions.

      (a) Restricted Investment Benchmarks. Notwithstanding anything to the
contrary contained in this Plan or in any Enrollment Form, Amended Distribution
Election Form or any other document, the Committee may impose limitations and
restrictions on the payment of amounts allocated by a Participant to any
Restricted Investment Benchmark(s) and may defer payment of those amounts for
such time periods as the Committee determines, in its good faith judgment, to be
consistent with the nature of the investment on which such Restricted Investment
Benchmark is based. The Committee shall determine the amounts affected, the
nature of the limitations and restrictions on benefit payments, and the length
of deferral and time of payment of such amounts.

      (b) Subordinated Amounts. Notwithstanding anything to the contrary
contained in this Plan or in any Enrollment Form, Amended Distribution Election
Form or any other document, distributions of Subordinated Amounts under the Plan
shall be subject to any constraints, restrictions and limitations imposed under
the applicable Subordination Agreement(s) executed by the Participant in
accordance with Section 2.02, including without limitation, the restriction on
distribution of such Subordinated Amounts prior to the twelve (12)-month
anniversary of the date of allocation. For this purpose, the date of allocation
shall be deemed to be the last day of the Plan Year in which a Subordinated
Amount is credited to a Participant's Plan Accounts. Such Subordination
Agreement(s) shall be incorporated into and become a part of the Plan.

      5.04 Valuation of Plan Accounts Pending Distribution. To the extent that
the distribution of any portion of any Plan Account is deferred, whether
pursuant to the limitations imposed under this Article 5 or for any other
reason, any amounts remaining to the credit of the Plan Account shall continue
to be adjusted by the applicable Investment Adjustments in accordance with
Article 3.

      5.05 Form of Payment. Distributions under the Plan shall be paid in cash
in a single lump sum; except, however, that the Committee may provide, in its
discretion, that any distribution attributable to the portion of a Plan Account
that is deemed invested in an Investment Benchmark that tracks that value of
Company Stock shall be paid in shares of Company Stock.

                                       16
<PAGE>
                                    Article 6

                                Survivor Benefit

      6.01 Survivor Benefit. Subject to Article 5, a Participant's Beneficiary
shall receive a Survivor Benefit equal to the Participant's Aggregate Vested
Balance, if the Participant dies before he or she has received a complete
distribution of his or her Aggregate Vested Benefit.

      6.02 Payment of Survivor Benefit. The Survivor Benefit shall be payable to
the Beneficiary indicated on the Participant's Beneficiary Designation Form in a
lump sum payment, provided, however that if the Participant's Aggregate Vested
Balance at the time of his or her death is greater than $25,000, payment may be
made, in the sole discretion of the Committee, in a lump sum or in annual
installment payments that do not exceed five (5) years in duration. Subject to
Article 5, the lump sum payment shall be made, or installment payments shall
commence, no later than ninety (90) days after the date the Committee is
provided with proof that is satisfactory to the Committee of the Participant's
death.

                                    Article 7

                               Disability Benefit

      7.01 Disability Benefit. Notwithstanding any Distribution Election under
Article 5, a Participant suffering a Disability shall receive a Disability
Benefit equal to his or her Aggregate Vested Balance. Subject to Article 5, the
Disability Benefit shall be paid in a lump sum within ninety (90) days of the
Committee's determination of Disability.

                                    Article 8

                             Beneficiary Designation

      8.01 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of an Employer
in which the Participant participates.

      8.02 Beneficiary Designation; Change; Spousal Consent. A Participant shall
designate his or her Beneficiary by completing and signing a Beneficiary
Designation Form, and returning it to the Committee or its designated agent. A
Participant shall have the right to change a Beneficiary by completing, signing
and submitting to the Committee an Amended Beneficiary Designation Form in
accordance with the Committee's rules and procedures, as in effect from time to
time. If the Participant names someone other than his or her spouse as a
Beneficiary, a spousal consent, in the form designated by the Committee, must be
signed by that Participant's

                                       17
<PAGE>
spouse and returned to the Committee. Upon the acceptance by the Committee of an
Amended Beneficiary Designation Form, all Beneficiary designations previously
filed shall be canceled. The Committee shall be entitled to rely on the last
Beneficiary Designation Form filed by the Participant and accepted by the
Committee prior to his or her death.

      8.03 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and acknowledged in
writing by the Committee or its designated agent.

      8.04 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided above or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the Participant's Aggregate
Vested Benefit, then the Participant's designated Beneficiary shall be deemed to
be his or her surviving spouse. If the Participant has no surviving spouse, the
benefits remaining under the Plan to be paid to a Beneficiary shall be payable
to the executor or personal representative of the Participant's estate.

      8.05 Doubt as to Beneficiary. If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its discretion, to cause the Participant's
Employer to withhold such payments until this matter is resolved to the
Committee's satisfaction.

      8.06 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the Committee
from all further obligations under this Plan with respect to the Participant,
and each of the Participant's Annual Deferral Agreements shall terminate upon
such full payment of benefits.

                                    Article 9

                                Leave of Absence

      9.01 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of absence from the
employment of the Employer, the Participant shall continue to be considered
employed by the Employer and the appropriate amounts shall continue to be
withheld from the Participant's compensation pursuant to the Participant's then
current Annual Election Form.

      9.02 Unpaid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take an unpaid leave of absence from
the employment of the Employer, the Participant shall continue to be considered
employed by the Employer and the Participant shall be excused from making
deferrals until the earlier of the date the leave of absence expires or the
Participant returns to a paid employment status. Upon such expiration or return,
deferrals shall resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any, made for
that Plan Year. If no election was made for that Plan Year, no deferral shall be
withheld.

                                       18
<PAGE>
                                   Article 10

                     Termination, Amendment or Modification

      10.01 Termination. Although the Employers anticipate that they will
continue the Plan for an indefinite period of time, there is no guarantee that
any Employer will continue the Plan or will not terminate the Plan at any time
in the future. Accordingly, each Employer reserves the right to discontinue its
sponsorship of the Plan and to terminate the Plan, at any time, with respect to
its participating Employees by action of its board of directors. Upon the
termination of the Plan with respect to any Employer, subject to Section 5.03,
all amounts credited to each of the Plan Accounts of each affected Participant
shall be 100% vested and shall be paid to the Participant or, in the case of the
Participant's death, to the Participant's Beneficiary, in a lump sum
notwithstanding any elections made by the Participant, and the Annual Deferral
Agreements relating to each of the Participant's Plan Accounts shall terminate
upon full payment of such Aggregate Vested Balance.

      10.02 Amendment. The Company may, at any time, amend or modify the Plan in
whole or in part with respect to any or all Employers by the actions of the
Committee; provided, however, that (i) no amendment or modification shall be
effective to decrease or restrict the value of a Participant's Aggregate Vested
Balance in existence at the time the amendment or modification is made,
calculated as if the Participant had experienced a Termination of Employment as
of the effective date of the amendment or modification and (ii) except as
specifically provided in Section 10.01, no amendment or modification shall be
made after a Change in Control which adversely affects the vesting, calculation
or payment of benefits hereunder or diminishes any other rights or protections
any Participant or Beneficiary would have had but for such amendment or
modification, unless each affected Participant or Beneficiary consents in
writing to such amendment.

      10.03 Effect of Payment. The full payment of the applicable benefit under
the provisions of the Plan shall completely discharge all obligations to a
Participant and his or her designated Beneficiaries under this Plan and each of
the Participant's Annual Deferral Agreements shall terminate.

                                   Article 11

                                 Administration

      11.01 Committee Duties. This Plan shall be administered by a Committee
which shall consist of the Board, or such committee as the Board shall appoint.
Members of the Committee may be Participants under this Plan. The Committee
shall also have the discretion and authority to (i) make, amend, interpret, and
enforce all appropriate rules and regulations for the administration of this
Plan and (ii) decide or resolve any and all questions including interpretations
of this Plan, as may arise in connection with the Plan. Any individual serving
on

                                       19
<PAGE>
the Committee who is a Participant shall not vote or act on any matter relating
solely to himself or herself. When making a determination or calculation, the
Committee shall be entitled to rely on information furnished by a Participant or
the Company.

      11.02 Agents. In the administration of this Plan, the Committee may, from
time to time, employ agents and delegate to them such administrative duties as
it sees fit (including acting through a duly appointed representative) and may
from time to time consult with counsel who may be counsel to any Employer.

      11.03 Binding Effect of Decisions. The decision or action of the Committee
with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan.

      11.04 Indemnity of Committee. All Employers shall indemnify and hold
harmless the members of the Committee, and any Employee to whom duties of the
Committee may be delegated, against any and all claims, losses, damages,
expenses or liabilities arising from any action or failure to act with respect
to this Plan, except in the case of willful misconduct by the Committee or any
of its members or any such Employee.

      11.05 Employer Information. To enable the Committee to perform its
functions, each Employer shall supply full and timely information to the
Committee on all matters relating to the compensation of its Participants, the
date and circumstances of the Retirement, Disability, death or Termination of
Employment of its Participants, and such other pertinent information as the
Committee may reasonably require.

                                   Article 12

                          Other Benefits and Agreements

            The benefits provided for a Participant and Participant's
Beneficiary under the Plan are in addition to any other benefits available to
such Participant under any other plan or program for employees of the
Participant's Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may otherwise be
expressly provided.

                                   Article 13

                                Claims Procedures

      13.01 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
"Claimant") may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan. If
such a claim relates to the contents of a notice received by the

                                       20
<PAGE>
Claimant, the claim must be made within 60 days after such notice was received
by the Claimant. The claim must state with particularity the determination
desired by the Claimant. All other claims must be made within 180 days of the
date on which the event that caused the claim to arise occurred. The claim must
state with particularity the determination desired by the Claimant.

      13.02 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in writing:

      (a)   that the Claimant's requested determination has been made, and that
            the claim has been allowed in full; or

      (b)   that the Committee has reached a conclusion contrary, in whole or in
            part, to the Claimant's requested determination, and such notice
            must set forth in a manner calculated to be understood by the
            Claimant:

            (i)   the specific reason(s) for the denial of the claim, or any
                  part of it;

            (ii)  specific reference(s) to pertinent provisions of the Plan upon
                  which such denial was based;

            (iii) a description of any additional material or information
                  necessary for the Claimant to perfect the claim, and an
                  explanation of why such material or information is necessary;
                  and

            (iv)  an explanation of the claim review procedure set forth in
                  Section 13.03 below.

      13.03 Review of a Denied Claim. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a Claimant
(or the Claimant's duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim. Thereafter, but not
later than 30 days after the review procedure began, the Claimant (or the
Claimant's duly authorized representative):

      (a)   may review pertinent documents;

      (b)   may submit written comments or other documents; and/or

      (c)   may request a hearing, which the Committee, in its sole discretion,
            may grant.

      13.04 Decision on Review. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee's decision
must be rendered within 120 days after such date. Such decision must be written
in a manner calculated to be understood by the Claimant, and it must contain:

      (a)   specific reasons for the decision;

                                       21
<PAGE>
      (b)   specific reference(s) to the pertinent Plan provisions upon which
            the decision was based; and

      (c)   such other matters as the Committee deems relevant.

      13.05 Arbitration. A Claimant's compliance with the foregoing provisions
of this Article 13 is a mandatory prerequisite to a Claimant's right to commence
any arbitration with respect to any claim for benefits under this Plan. Any and
all claims that are not resolved to the satisfaction of a Claimant under the
above provisions of this Article 13 shall be subject to arbitration conducted in
Albany, New York before a panel of three (3) arbitrators pursuant to rules of
the National Association of Securities Dealers. Unless otherwise provided herein
each party shall bear its own costs and expenses in connection with such
arbitration and the parties shall contribute equally the arbitrator's fees. The
arbitrator's decision in any dispute shall be final and binding and shall not be
subject to appeal or judicial review.

                                   Article 14

                                      Trust

      14.01 Establishment of the Trust. The Company may establish one or more
Trusts to which the Employers may transfer such assets as the Employers
determine in their sole discretion to assist in meeting their obligations under
the Plan; provided, however, that in no event may Trust assets be used to
satisfy any obligations arising in connection with Subordinated Amounts.

      14.02 Interrelationship of the Plan and the Trust. The provisions of the
Plan and the relevant Annual Deferral Agreements shall govern the rights of a
Participant to receive distributions pursuant to the Plan. The provisions of the
Trust shall govern the rights of the Employers, Participants and the creditors
of the Employers to the assets transferred to the Trust.

      14.03 Distributions From the Trust. Each Employer's obligations under the
Plan may be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employer's obligations under
this Agreement.

                                   Article 15

                                  Miscellaneous

      15.01 Status of Plan. The Plan is intended to be (i) a "nonqualified
deferred compensation plan" within the meaning of Code Section 409A, (ii) a plan
that is not qualified within the meaning of Code Section 401(a) and (iii) a plan
that "is unfunded and is maintained by an employer primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employee" within the meaning of ERISA Sections 201(2), 301(a)(3) and
401(a)(1). The Plan shall be administered and interpreted to the extent

                                       22
<PAGE>
possible in a manner consistent with that intent. All Plan Accounts and all
credits and other adjustments to such Plan Accounts shall be bookkeeping entries
only and shall be utilized solely as a device for the measurement and
determination of amounts to be paid under the Plan. No Plan Accounts, credits or
other adjustments under the Plan shall be interpreted as an indication that any
benefits under the Plan are in any way funded.

      15.02 Unsecured General Creditor. Participants and their Beneficiaries,
heirs, successors and assigns shall have no legal or equitable rights, interests
or claims in any property or assets of an Employer. For purposes of the payment
of benefits under this Plan, any and all of an Employer's, assets, shall be, and
remain, the general, unpledged unrestricted assets of the Employer. An
Employer's obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

      15.03 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Annual Deferral Agreement, as
entered into between the Employer and a Participant. An Employer shall have no
obligation to a Participant under the Plan except as expressly provided in the
Plan and his or her Annual Deferral Agreement.

      15.04 Nonassignability. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.

      15.05 Not a Contract of Employment. The terms and conditions of this Plan
and the Annual Deferral Agreements under this Plan shall not be deemed to
constitute a contract of employment between any Employer and the Participant.
Such employment is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason, or no reason,
with or without cause, and with or without notice, except as otherwise provided
in a written employment agreement. Nothing in this Plan or any Annual Deferral
Agreement shall be deemed to give a Participant the right to be retained in the
service of any Employer as an Employee or to interfere with the right of any
Employer to discipline or discharge the Participant at any time.

      15.06 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as the
Committee may deem necessary.

      15.07 Terms. Whenever any words are used herein in the masculine, they
shall be construed as though they were in the feminine in all cases where they
would so apply; and whenever any words are used herein in the singular or in the
plural, they shall be construed as

                                       23
<PAGE>
though they were used in the plural or the singular, as the case may be, in all
cases where they would so apply.

      15.08 Captions. The captions of the articles, sections and paragraphs of
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.

      15.09 Governing Law. Subject to ERISA, the provisions of this Plan shall
be construed and interpreted according to the internal laws of the State of New
York without regard to its conflicts of laws principles.

      15.10 Notice. Any notice or filing required or permitted to be given to
the Committee under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:

                        First Albany Companies Inc.
                        30 South Pearl Street
                        Albany, New York  12207
                        Attn:  General Counsel

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark or the receipt for
registration or certification.

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

      15.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant's Employer and its successors and assigns and the
Participant and the Participant's designated Beneficiaries.

      15.12 Spouse's Interest. The interest in the benefits hereunder of a
spouse of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in any
manner, including but not limited to such spouse's will, nor shall such interest
pass under the laws of intestate succession.

      15.13 Validity. In case any provision of this Plan shall be illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted herein.

      15.14 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared incompetent
or to a person incapable of handling the disposition of that person's property,
the Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any

                                       24
<PAGE>
payment of a benefit shall be a payment for the account of the Participant and
the Participant's Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Plan for such payment amount.

      15.15 Distribution in the Event of Taxation. If, for any reason, all or
any portion of a Participant's benefit under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the Committee before a
Change in Control, or the trustee of the Trust after a Change in Control, for a
distribution of that portion of his or her benefit that has become taxable. Upon
the grant of such a petition, which grant shall not be unreasonably withheld, a
Participant's Employer shall, subject to Section 5.03, distribute to the
Participant immediately available funds in an amount equal to the taxable
portion of his or her benefit (which amount shall not exceed a Participant's
unpaid Aggregate Vested Balance under the Plan). If the petition is granted, the
tax liability distribution shall be made within 90 days of the date when the
Participant's petition is granted. Such a distribution shall affect and reduce
the benefits to be paid under this Plan.

      15.16 Insurance. The Employers, on their own behalf or on behalf of the
trustee of the Trust, and, in their sole discretion, may apply for and procure
insurance on the life of the Participant, in such amounts and in such forms as
the Trust may choose. The Employers or the trustee of the Trust, as the case may
be, shall be the sole owner and beneficiary of any such insurance. The
Participant shall have no interest whatsoever in any such policy or policies,
and at the request of the Employers shall submit to medical examinations and
supply such information and execute such documents as may be required by the
insurance company or companies to whom the Employers have applied for insurance.

      15.17 Legal Fees To Enforce Rights After Change in Control. The Company
and each Employer is aware that upon the occurrence of a Change in Control, the
Board or the board of directors of the Participant's Employer (which might then
be composed of new members) or a shareholder of the Company or the Participant's
Employer, or of any successor corporation might then cause or attempt to cause
the Company or the Participant's Employer or such successor to refuse to comply
with its obligations under the Plan and might cause or attempt to cause the
Company or the Participant's Employer to institute, or may institute,
arbitration or litigation seeking to deny Participants the benefits intended
under the Plan. In these circumstances, the purpose of the Plan could be
frustrated. Accordingly, if, following a Change in Control, it should appear to
any Participant that the Company, the Participant's Employer or any successor
corporation has failed to comply with any of its obligations under the Plan or
any agreement thereunder or, if the Company, such Employer or any other person
takes any action to declare the Plan void or unenforceable or institutes any
arbitration, litigation or other legal action designed to deny, diminish or to
recover from any Participant the benefits intended to be provided, then the
Company and the Participant's Employer irrevocably authorize such Participant to
retain counsel of his or her choice at the expense of the Company and the
Employer (who shall be jointly and severally liable) to represent such
Participant in connection with the initiation or defense of any arbitration,
litigation or other legal action, whether by or against the Company, the
Participant's Employer or any director, officer, shareholder or other person
affiliated with the Company, the Participant's Employer or any successor thereto
in any jurisdiction.

                                       25

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