Exhibit 10.40
January 14, 1997
CMG Information Services, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx X000
Xxxxxxxxxx, XX 00000-0000
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 14, 1997 (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 14, 1997 (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) The First National Bank of Boston ("Bank")
Office through which this Transaction is booked and address for
notices:
The First National Bank of Boston
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 Xxxxxxxxxxx Xxxxxx
Xxxxx X000
Xxxxxxxxxx, XX 00000-0000
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 $10,000,000;
(ii) "Floating Rate Option" means USD-LIBOR-BBA;
(iii) "Designated Maturity" means 3 month;
(iv) "Spread" means plus 1.75% per annum;
(v) "Reset Date" means the first day of each Calculation Period;
and
(vi) "Floating Rate Day Count Fraction" means Actual/365.
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(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 an aggregate amount equal to any
payments in respect of dividends with respect to the Underlying Shares.
(d) Upon the occurrence of an Event of Default or a Termination Event
relating to the Counterparty and the exercise by the Bank of its right to
terminate this 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)
1/365 payable for each calendar day elapsed from (and including) the Early
Termination Date to (but excluding) the Termination 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 17, 1997.
"Final Payment Amount" means an amount equal to USD 10,000,000.
"Issuer" means Lycos, Inc., a Delaware corporation.
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"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 17, July 17, October 17 and January
17 commencing on April 17 1997 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 14, 1997, among CMG @ Ventures L.P., the Counterparty, and Long
Lane Master Trust relating to the repurchase of the Underlying Shares.
"Termination Date" means January 17, 1998.
"Underlying Shares" means the shares of common stock, par value of USD
$.01, of the Issuer, with an aggregate market value of $10,000,000.
4. Other Provisions
----------------
(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
--------------------
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,
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxx Kautin
-----------------------------
Name:
Title:
Accepted and confirmed as of
the date first above written
CMG INFORMATION SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name:
Title:
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SCHEDULE
to the
Master Agreement
dated as of January 14, 1997
between
The First National and CMG Information Services, Inc.
Bank of Boston (the "Counterparty")
("Bank")
Part 1
------
Termination Provisions
----------------------
In this Agreement:
(1) "Specified Entity":
(a) means, in relation to Bank, none, and
(b) means, in relation to the Counterparty, all affiliates of the
Counterparty, including, without limitation, Direct Interactive Inc., Saleslink
Corporation, and Pacific Direct Marketing Corp.
(2) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(3) The "Cross Default" provisions of Section 5(a)(vi) will apply to Bank and
the Counterparty, and for such purpose:
(a) "Specified Indebtedness" means (i) with respect to either party
hereto, any obligation (whether present or future, contingent or
otherwise, as principal or surety or otherwise) in respect of borrowed
money and (ii) with respect to the Counterparty, the Revolving Credit
and Term Loan Agreement, dated as of October 24, 1996 among the Bank,
the Counterparty, Saleslink Corporation, Pacific Direct Marketing
Corp., and the other lending institutions set forth on Schedule I
thereto.
6
(b) "Threshold Amount" means (i) in relation to Bank, an amount equal to 3
percent of the total stockholders' equity of Bank and (ii) in relation
to the Counterparty, U.S. $500,000.
(4) "Termination Currency" means United States Dollars.
(5) The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of the
Agreement will apply to Bank and the Counterparty.
(6) "Additional Termination Event" means for purposes of Section 5(c), any
termination by the Counterparty, at its sole discretion, upon delivery of
written notice to the Bank five Business Days prior to such termination.
(7) The "Automatic Early Termination" provisions of Section 6(a) will not apply
to either party.
(8) For purposes of computing amounts payable on early termination:
(a) Market Quotation will apply to this Agreement, and
(b) The Second Method will apply to this Agreement.
Part 2
------
Agreement to Deliver Documents
------------------------------
For the purpose of Section 4(a), each party agrees to deliver the following
documents, as applicable.
Party required to Form/Document Certificate Date by which to Covered by
deliver document be delivered Section 3(d)
---------------- ------------------------- ---------------- Representation
---------------
Counterparty An executed United States Upon execution of this
Internal Revenue Service Agreement
form W-9 (or any successor
thereto).
Counterparty and A certificate of an Upon execution of this Yes
Bank authorized officer for Agreement and as deemed
such party certifying the necessary for any further
authority, names and true documentation.
signatures of the officers
signing this Agreement and
each Confirmation
reasonably satisfactory in
form and substance to
each party.
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Counterparty Certified copies of Upon execution of this Yes
documents evidencing each Agreement.
action taken by Counter-
party to authorize its
execution of this
Agreement, and each
Confirmation, and the
performance of its
obligations hereunder as
well as its bylaws and
articles of incorporation.
Counterparty Annual audited financial Promptly upon request. Yes
statements prepared in
accordance with generally
accepted accounting
principles in the
United States.
Counterparty Quarterly unaudited Promptly upon request. Yes
financial statements
prepared in accordance
with generally accepted
accounting principles
in the United States.
Counterparty A written opinion of Upon execution of this No
legal counsel to Counter- Agreement if requested and
party reasonably as deemed necessary.
satisfactory in form and
substance to Bank.
Counterparty Such other documents as Promptly upon request. Yes
Bank may reasonably
request in connection
with each transaction.
Part 3
------
Miscellaneous
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(1) Governing Law. This Agreement will be governed by and construed in
-------------
accordance with the laws of the State of New York without reference to
choice of law doctrine.
(2) Notices.
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(a) In connection with Section 10, all notices to Bank shall, with respect
to any particular Transaction, be sent to the address, telex number or
facsimile number specified in the relevant Confirmation, and any
notice for purposes of Sections 5 or 6 shall be sent to the address,
telex number or facsimile number specified below.
First National Bank of Boston
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention:
Telex:
Answerback:
Facsimile No.:
8
(b) In connection with Section 10, all notices to the Counterparty shall,
with respect to any particular Transaction, be sent to the address,
telex number or facsimile number specified in the relevant
Confirmation and any notice for purposes of Section 5 or 6 shall be
sent to the address, telex number or facsimile number specified below:
CMG Information Services, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx X000
Xxxxxxxxxx, XX 00000-0000
Attention:
Telex:
Answerback:
Facsimile No.:
(3) Netting of Payments. Section 2(c)(ii) of this Agreement will apply with
-------------------
respect to all Transactions under this Agreement.
(4) Credit Support Documents
------------------------
With respect to this Agreement, Credit Support Document means the ISDA
Credit Support Annex, dated the date hereof, between the parties hereto,
which shall provide credit support for the obligations of the Counterparty
to the Bank and which shall have an Independent Amount equal to $7,000,000.
(5) Credit Support Provider
-----------------------
None.
Part 4
------
Other Provisions
----------------
(1) ISDA Definitions. Reference is hereby made to the 1991 ISDA Definitions
----------------
(the "ISDA Definitions") each as published by the International Swaps and
Derivatives Association, Inc., which are hereby incorporated by reference
herein. Any terms used and not otherwise defined herein which are contained
in the ISDA Definitions shall have the meaning set forth therein.
(2) Set-off. "Set-off" shall, for purposes of this Agreement and any Credit
-------
Support Document, have the meaning set forth in Section 12 and shall
include without limitation the
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rights in Section 6(f). Section 6 of this Agreement is modified to include
the following additional sub-clause (f):
"(f) Set-off. Any amount (the "Early Termination Amount") payable to one
party (the "Payee") by the other party (the "Payer") under Section
6(e), in circumstances where there is a Defaulting Party or one
Affected Party will, at the option of the party ("X") other than the
Defaulting Party or Affected Party (and without prior notice to same)
be reduced by its set-off against any amount(s) (the "Other Agreement
Amount") payable (whether at such time or in the future or upon the
occurrence of a contingency) by the Payee to the Payer (irrespective
of the place of payment or booking office of such obligation) under
any other agreement(s) between the Payee and the Payer or
instrument(s) or undertaking(s) issued or executed by one party to,
or in favor of, the other party (and the Other Agreement Amount(s)
will be discharged promptly and in all respects to the extent it is
so set-off). X will give notice to the other party of any set-off
effected under this Section 6(f).
If an obligation is unascertained, X may in good faith estimate that
obligation and set-off in respect of the estimate, subject to the
relevant party accounting to the other when the obligation is
ascertained.
Nothing in this Section 6(f) shall be effective to create a charge or
other security interest. This Section 6(f) shall be without prejudice
and in addition to any right of set-off otherwise available to a
party (whether by operation of law, contract, or otherwise)."
(3) Calculation Agent. The Calculation Agent will be Bank.
-----------------
(4) Severability. In the event any one or more of the provisions contained in
------------
this Agreement should be held invalid, illegal, or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor, in good faith negotiations, to
replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
(5) Non-Reliance. In connection with the negotiation of the entering into, and
------------
the confirming of the execution of this Agreement, each Transaction, and
any other documentation
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relating to this Agreement to which the Counterparty is a party or that the
Counterparty is required by this Agreement to deliver:
(i) the Counterparty is acting for its own account, and it has made its
own independent decisions to enter into that Transaction and as to
whether that Transaction is appropriate or proper for it based upon
its own judgment and upon advice from such advisors as it has deemed
necessary;
(ii) the Counterparty is not relying (for purposes of making any
investment decision or otherwise) upon any advice, counsel, or
representations (whether written or oral) of the other party to this
Agreement, each Transaction or such other documentation other than
the representations expressly set forth in this Agreement, and in
any Confirmation; it being understood that information and
explanations related to the terms and conditions of a Transaction
shall not be considered investment advice or a recommendation to
enter into that Transaction. No communication (written or oral)
received from the other party shall be deemed to be an assurance or
guarantee as to the expected results of that Transaction;
(iii) the Counterparty has consulted with its own legal, regulatory, tax,
business, investment, financial and accounting advisors to the
extent it has deemed necessary, and it has made its own investment,
hedging and trading decisions (including decisions regarding the
suitability of any Transaction pursuant to this Agreement) based
upon any advice from such advisors as it has deemed necessary and
not upon any view expressed by the other party to this Agreement,
each Transaction or such other documentation;
(iv) the Counterparty is capable of assessing the merits of and
evaluating and understanding (on its own behalf or through
independent professional advice), and it has a full understanding of
all the terms, conditions, and risks (economic and otherwise) of the
Agreement, each Transaction, and such other documentation and is
capable of assuming and willing to assume (financially and
otherwise) those risks;
(v) the Counterparty is entering into this Agreement, each Transaction,
and such other documentation for
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the purposes of managing its borrowings or investments, hedging its
underlying assets or liabilities or in connection with a line of
business and not for purposes of speculation;
(vi) the Counterparty is entering into this Agreement, each Transaction,
and such other documentation as principal, and not as agent or in
any other capacity, fiduciary or otherwise; and
(vii) the Bank (a) is not acting as a fiduciary or financial, investment
or commodity trading advisor for it; (b) has not given to the
Counterparty (directly or indirectly through any other person) any
assurance, guaranty or representation whatsoever as to the merits
(either legal, regulatory, tax, financial, accounting or otherwise)
of this Agreement, each Transaction, and such other documentation;
and (c) has not committed to unwind the Transactions.
(6) Waiver of Jury Trial. Each party hereby irrevocably waives any and all
--------------------
right to trial by jury in any proceedings arising out of or relating to
this Agreement or any transaction contemplated hereby.
(7) Confidentiality. The existence of this Agreement, its contents and the
---------------
existence of and contents and all other instruments and documents relating
to this Agreement, and any information made available by one party to the
other party with respect to this Agreement or any Transaction hereunder is
confidential and shall not be discussed with or disclosed to any third
party (nor shall any public announcement or press release relating to this
Agreement or any Transaction hereunder be made by either party, except with
the prior written consent of the other party hereto), except for such
information (i) as may become generally available to the public, (ii) as
may be required or appropriate in response to any summons, or otherwise in
connection with any litigation or to comply with any applicable law, order,
regulation, ruling, or accounting disclosure rule or standard (iii) as may
be obtained from a non-confidential source that disclosed such information
in a manner that did not violate its obligations to the other party in
making such disclosure, or (iv) as may be furnished to that party's
auditors, attorneys, advisors, or financial institutions with which the
party has a written agreement or which are otherwise required to keep the
information that is disclosed in confidence.
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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,
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Xxxxx Kautin
------------------------------
Name: Xxxxx Kautin
Title:
Accepted and confirmed as of
the date first above written
CMG INFORMATION SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name:
Title:
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