EXHIBIT 10.3
January 15, 1999
CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx XXX
Re: Transaction
-----------
The purpose of this letter is to confirm the terms and conditions of the
Transaction entered into between us as of January 15, 1999 (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 15, 1999 (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
-------
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) CMGI, Inc.
(the "Counterparty")
1
Office through which this Transaction is booked and address for
notices:
CMGI, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telex No.:
Answerback:
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
Account for Payments: [To be advised]
2. Payments
--------
(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 1.750% per annum;
(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.
2
(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 optional right 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 optional
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 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
-----------
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, 1999.
"Final Payment Amount" means an amount equal to USD 20,000,000.
"Issuer" means Lycos, Inc., a Delaware corporation.
"Liquidation Amount" means (i) if the Counterparty has repurchased the
Underlying Shares pursuant to the Repurchase Agreement, an amount
calculated three (3) Business Days prior to the Termination Date equal to
the fair market value at the close of business on such date of the
Underlying Shares as calculated by the Calculation Agent; or, (ii) if the
Counterparty has defaulted on its obligation to repurchase the Underlying
Shares pursuant to the Repurchase Agreement, an amount equal to the highest
bid quotation received by the Calculation Agent on the Underlying Shares
from three (3) registered broker/dealers selected by the Calculation Agent
in its sole discretion.
"Payment Dates" means each April 20, July 20, October 20 and January
20 commencing on April 20, 1999 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.
3
"Repurchase Agreement" means the repurchase agreement, dated as of
January 15, 1999, between CMGI, Inc. and Long Lane Master Trust relating to
the repurchase of the Underlying Shares.
"Termination Date" means January 20, 2000.
"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
----------------
(a) Business Day. As used herein, "Business Day" means a day on which
------------
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
--------------------
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.
(c) Optional Termination Right. For purposes of this Transaction, the
--------------------------
Counterparty shall have the right, at its option and sole discretion, to
terminate this Transaction, in whole only, upon delivery of written notice to
the Bank five Business Days prior to such optional termination. Upon the
exercise of such Optional Termination Right, the Counterparty shall owe the
Bank, in addition to the other amounts due hereunder, the amount set forth in
Section 2(d) of this Confirmation.
(d) Additional Event of Default.
---------------------------
(i) For purposes of this Transaction, it shall constitute an
additional Event of Default of the Counterparty if the Counterparty fails
to contribute an amount which is satisfactory to the Bank but no greater
than $10,000,000 of equity or subordinated debt that is junior to all other
subordinated debt to Saleslink Corporation no later than January 31, 1999.
(ii) Notwithstanding anything to the contrary herein, any Event of
Default which would otherwise exist on the date hereof as a result of a
default by the Counterparty under Specified Indebtedness shall not
constitute an Event of Default hereunder unless either (A) the Counterparty
fails to comply with Section 4(d)(i) of this Confirmation. Nothing herein
shall be deemed to constitute a waiver of any other default or event of
default which occurs with respect to Specified Indebtedness or with respect
to this Agreement after the date hereof. Additionally, the foregoing shall
not constitute a waiver by the Bank of its rights hereunder or under the
agreement set forth in clause (ii) of the definition of Specified
Indebtedness in the Schedule attached hereto.
4
(e) Additional Terms for Credit Support Annex. For purposes of this
-----------------------------------------
Transaction, the Credit Support Annex, dated as of the date hereof, between the
parties hereto, shall have the following additional terms:
(i) Eligible Collateral shall, with the consent of the Bank,
include, shares of Lycos, Inc. (LCOS) and any other publicly traded shares,
up to a limit of 12% of the outstanding shares of such Issuer on the Trade
Date. The Valuation Percentage on any such shares shall be 100%.
(ii) Independent Amount shall mean $25,500,000.
(iii) Valuation Date shall mean every other day that is a Business
Day in New York.
(iv) Posted Collateral shall include the collateral transferred by
Party B to Long Lane Master Trust on or prior to the Effective Date.
Notwithstanding anything herein to the contrary, Party B shall be required
to post additional Eligible Collateral at the times and manner specified
herein for any Valuation Date on which the aggregate market value of the
Posted Collateral is equal to or less than $45,500,000.
(v) Notwithstanding Section 4(b) of the Credit Annex, Transfer of
Eligible Credit Support or Posted Credit Support shall be made not later
than the close of business on the third Local Business Day following a
demand therefor.
(f) Additional Agreement. The Counterparty agrees that until the
--------------------
termination of this Transaction and the satisfaction in full of the
Counterparty's obligations hereunder, the Counterparty shall maintain for the
purpose of making of payments of any indebtedness of cash and/or equity shares
which are freely tradeable without any restrictions (except for restrictions
imposed by Rule 144 of the Securities Act of 1993, as amended (the "1933 Act");
(S)16 of the Securities Exchange Act of 1934, as amended; or, xxxxxxx xxxxxxx
policies promulgated by the Counterparty or affiliates thereof (as defined in
Rule 405 of the 1933 Act) and which are listed on a national stock exchange or
the NASDAQ national market system in an amount at least equal to three times the
Notional Amount of this Transaction. Notwithstanding the foregoing, any equity
shares maintained as set forth in this Section 4(f) shall be free of any liens,
encumbrances, mortgages, pledges, hypothecations, charges or security interests
of any kind of any person or entity (other than the Bank) and shall not be
subject to any lock-up agreements or other type of restriction (other than those
set forth in the preceding sentence) of any kind that would prevent the
immediate sale of such equity shares in the public market. For purposes of this
Section 4(f), Section 5(a)(ii) is hereby amended by deleting the words
"thirtieth day" in the last line thereof and inserting "five Business Days" in
lieu thereof.
5
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 Xxxxxx
__________________________
Name: Xxxx Xxxxxx
Title: Director
Accepted and confirmed as of
the date first above written
CMGI, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
_________________________________
Name:
Title:
6
