Exhibit 10.3
January 13, 1998
CMG Information Services, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx III
Re: Transaction
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The purpose of this letter is to confirm the terms and conditions of the
Transaction entered into between us as of January 13, 1998 (the "Transaction").
This letter constitutes a "Confirmation" as referred to in the Master Agreement
(Local Currency) entered into between us and dated as of January 13, 1998 (the
"Swap Agreement") and incorporates by reference the 1991 ISDA Definitions (as
published by the International Swaps and Derivatives Association, Inc.) (the
"1991 Definitions").
This Confirmation supplements, forms a part of, and is subject to, the Swap
Agreement. All provisions set forth in the 1991 Definitions or contained or
incorporated by reference in the Swap Agreement shall govern this Confirmation
except as expressly modified below. It is our intention to have this
Confirmation serve as the final documentation for this trade and accordingly, no
letter Confirmation will follow.
This Confirmation will be governed by and construed in accordance with the laws
of the State of New York, without reference to choice of law doctrine.
The terms of the Transaction to which this Confirmation relates are as follows:
1. Parties
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The parties are:
(1) BankBoston, N.A. ("Bank")
Office through which this Transaction is booked and address for
notices:
BankBoston, N.A.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention:
Telex:
Answerback:
Telecopy No.:
Account for
Payments: [To Be Advised]
(2) CMG Information Systems Inc.
(the "Counterparty")
Office through which this Transaction is booked and address for
notices:
CMG Information Systems, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention:
Telex No.:
Answerback:
Facsimile No.:
Telephone No.:
Account for Payments: [To be advised]
2. Payments
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(a) On each Payment Date, the Counterparty shall pay to Bank a Floating
Amount in USD (the "Counterparty Note Floating Amount") computed in accordance
with Section 6.1 of the 1991 Definitions as follows:
(i) "Calculation Amount" means USD $20,000,000;
(ii) "Floating Rate Option" means USD-LIBOR-BBA;
(iii) "Designated Maturity" means 3 month;
(iv) "Spread" means plus 1.75% per annum;
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(v) "Reset Date" means the first day of each Calculation Period;
and
(vi) "Floating Rate Day Count Fraction" means Actual/360.
(b) On the Termination Date, the Bank and Counterparty shall pay the
amounts set forth in this paragraph (b). Upon a repurchase of the Underlying
Shares in accordance with the terms of the Repurchase Agreement, (i) the Bank
shall pay or cause to be paid to the Counterparty an amount equal to the
positive difference, if any, between the Liquidation Amount and the Final
Payment Amount and (ii) the Counterparty shall pay to the Bank an amount equal
to the positive difference, if any, between the Final Payment Amount and the
Liquidation Amount. If the Underlying Shares have not been purchased in
accordance with the terms of the Repurchase Agreement, (i) the Bank shall pay or
cause to be paid to the Counterparty an amount in USD equal to the Liquidation
Amount minus any liquidation expenses incurred by the Bank in connection with
such liquidation and (ii) the Counterparty shall pay to the Bank an amount in
USD equal to the Final Payment Amount.
(c) When paid by the Issuer and received by the holders of the Underlying
Shares, Bank shall pay to the Counterparty within two Business Days of actual
receipt by the Bank an aggregate amount equal to any payments in respect of
dividends with respect to the Underlying Shares.
(d) Upon the occurrence of (i) a Termination Event relating to the
Counterparty and the exercise by the Bank of its right to terminate this
Agreement due to such termination Event or (ii) the exercise by the Counterparty
of its rights to terminate the Swap Agreement prior to the Termination Date, the
Counterparty shall pay to the Bank a fee, in addition to the other amounts
payable hereunder, equal to the product of (I) 175 basis points; (II) the
Calculation Amount and (III) 1/360 payable for each calendar day elapsed from
(and including) the Early Termination Date to (but excluding) the Termination
Date. Additionally, if the Counterparty exercises its right to terminate the
Swap Agreement prior to the Termination Date on any day that is not two London
Banking Days prior to each Reset Date, the Counterparty shall pay to the Bank an
additional fee, in addition to the other amounts payable hereunder, equal to the
product of (i) the positive difference, if any, between (A) the Floating Rate
Option for the Designated Maturity in effect during the Calculation Period in
which the early termination date occurs and (B) the rate for deposits of
3
U.S. Dollars for a period of three months which appears on Telerate Page 3750 as
of 11:00 a.m. London time on the Early Termination Date (or if such rate does
not appear on Telerate Page 3750 on such date, the USD-LIBOR-Reference Banks
rate on such date); (ii) the Calculation Amount; and (iii) 1/360 payable for
each calendar day elapsed from (and including) the Early Termination Date to
(but excluding) the next succeeding Payment Date.
3. Definitions
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In this confirmation:
"Calculation Agent" means Bank. All determinations and calculations
by the Calculation Agent shall (a) be made in good faith and in the
exercise of its commercially reasonable judgment and (b) be determined,
where applicable, on the basis of then prevailing market rates or prices.
All such determinations and calculations shall be binding on the
Counterparty in the absence of manifest error.
"Effective Date" means January 20, 1998.
"Final Payment Amount" means an amount equal to USD 20,000,000.
"Issuer" means Lycos, Inc., a Delaware corporation.
"Liquidation Amount" means an amount calculated three (3) Business
Days prior to the Termination Date equal to the fair market value on such
date of the Underlying Shares as calculated by the Calculation Agent.
"Payment Dates" means each April 20, July 20, October 20 and January
20 commencing on January 20, 1998 and ending on the Termination Date (with
the final Payment Date to be the Termination Date), subject to adjustment
in accordance with the Modified Following Business Day Convention.
"Repurchase Agreement" means the repurchase agreement, dated as of
January 13, 1998, among CMG Information Services, Inc., the Counterparty,
and Long Lane Master Trust relating to the repurchase of the Underlying
Shares.
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"Termination Date" means January 20, 1999.
"Underlying Shares" means the shares of common stock, par value of USD
$.01, of the Issuer, with an aggregate market value of $20,000,000.
4. Other Provisions
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(a) Business Day. As used herein, "Business Day" means a day on which
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banks are open for business in Boston, Massachusetts and New York, New York
other than a Saturday or a Sunday.
(b) Adjustment to Shares. In the event of a change affecting the
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Underlying Shares, including without limitation, a capitalization issue, rights
issue, share split, merger, consolidation, amalgamation, sub-division, capital
reduction, recapitalization, reclassification, dissolution, liquidation, winding
up or other similar event, which occurs after the Trade Date but before the
Termination Date, the Calculation Agent shall (after consultation with the
Counterparty), if necessary, (i) adjust the number of Underlying Shares and/or
the Calculation Amount with respect to payments made pursuant to paragraph 2 of
this Confirmation and (ii) determine the effective date of such adjustments, if
any, to achieve as nearly as practicable the economic position the Counterparty
would have been in had it been the holder of the Underlying Shares upon the
occurrence of such event.
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Please confirm your agreement to be bound by the terms of the foregoing by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us.
Very truly yours,
BANKBOSTON, N.A.
By: /s/ Xxxx X. Xxxxxx 1/12/98
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Name: XXXX X. XXXXXX
Title: Director
Accepted and confirmed as of
the date first above written
CMG INFORMATION SERVICES, INC.
By:
------------------------------------
Name:
Title:
Please confirm your agreement to be bound by the terms of the foregoing by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us.
Very truly yours,
BANKBOSTON, N.A.
By:
--------------------------------
Name:
Title:
Accepted and confirmed as of
the date first above written
CMG INFORMATION SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
