EXHIBIT 10.1
[logo of Merrill Lynch] Merrill Lynch
Confirmation of OTC Variable Forward Sale
Transaction
AMENDED AND RESTATED CONFIRMATION
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Effective as of: April 5, 2002 ML Ref: 0281606
To: Fisher Communications, Inc. ("Counterparty")
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Attention: Warren J. Spector
tel: (206) 404-6789
fax: (206) 404-6766
From: Merrill Lynch International ("MLI")
Ropemaker Place
25 Ropemaker Street
London EC2Y 9L4
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Dear Sir / Madam:
This amended and restated confirmation (this "Confirmation") amends,
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restates and supersedes confirmation dated April 5, 2002 (ML Ref: 0281606)
between Counterparty and MLI. The purpose of this Confirmation is to confirm
the terms and conditions of the above-referenced transaction entered into
between Counterparty and MLI through its agent Merrill Lynch, Pierce, Fenner &
Smith ("MLPFS") on the Trade Date specified below (the "Transaction"). This
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Confirmation constitutes a "Confirmation" as referred to in the Master
Agreement specified below.
The definitions and provisions contained in the 2000 ISDA Definitions
(the "Swap Definitions") and the 1996 ISDA Equity Derivatives Definitions (the
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"Equity Definitions" and, together with the Swap Definitions, the
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"Definitions"), in each case as published by the International Swaps and
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Derivatives Association, Inc., are incorporated into this Confirmation. In the
event of any inconsistency between the Swap Definitions and the Equity
Definitions, the Equity Definitions will govern, and in the event of any
inconsistency between the Definitions and this Confirmation, this Confirmation
will govern.
This Confirmation supplements, forms part of, and is subject to, the
ISDA Master Agreement (including the Schedule thereto) between Counterparty and
MLI dated as of April 5, 2002, as amended and supplemented from time to time
(the "Agreement"). All provisions contained in the Agreement govern this
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Confirmation except as expressly modified below.
The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
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Trade Date: March 21, 2002
Effective Date: April 1, 2002
Termination Date: March 28, 2005
Seller: Counterparty
Buyer: MLI
Shares: The common stock of SAFECO Corporation (Security Symbol
SAFC).
Issuer: SAFECO Corporation, a Washington
corporation.
Number of Shares: 650,000
Multiplier: One (1)
Initial Price: See pricing chart attached hereto on Annex
A ("Annex A")
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Floor Price: Annex A
Cap Price: Annex A
Participation Percentage: 20%
Final Price: The average of the closing prices per Share
on the two (2) Exchange Business Days
immediately prior to, and including, the
Termination Date.
Notional Amount: The USD amount, as determined by the
Calculation Agent, equal to the product
of the Initial Price and the Number of
Shares.
Additional Payments: In the event the Shares begin trading
ex-dividend on any day from but excluding
the Trade Date to and including the
Termination Date (the "Dividend Period"),
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Counterparty shall pay on the third
Business Day following each date that the
respective dividend is paid by the Issuer
to the holders of the Shares (each such
third Business Day, an "Additional
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Payment Amount Payment Date") an amount
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equal to the Additional Payment Amount
(defined below) for such Additional
Payment Amount Payment Date; provided
that Counterparty may elect, on not
fewer than five (5) Business Days' notice
prior to any Additional Payment Amount
Payment Date, that, in lieu of paying the
Additional Payment Amount to MLI on such
Additional Payment Amount Payment Date,
the Calculation Agent shall adjust the Cap
Price in a commercially reasonable manner
to compensate MLI for not receiving such
Additional Payment Amount. The Calculation
Agent shall give Counterparty and MLI notice
of any such adjustment not later than the
respective Additional Payment Amount Payment
Date.
The "Additional Payment Amount" for any
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Additional Payment Amount Payment Date
shall be equal to the product of (i) the
Number of Shares multiplied by (ii) the
Reference Delta (defined below) as of the
ex-dividend date for such Additional
Payment Amount Payment Date multiplied by
(iii) the difference between the per Share
dividend declared by the Issuer and USD
0.185 (assuming a quarterly dividend with
appropriate adjustments to the terms of this
Transaction in the event that the Issuer
pays dividends other than on a quarterly
basis); provided that such difference is a
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positive number; and provided further that,
for the avoidance of doubt, if an
ex-dividend date occurs with respect to the
Shares on or before the Termination Date
and no corresponding payments have been
received by shareholders of record of the
Shares on or before the Termination Date,
then the dividends to which such
ex-dividend date relates shall nonetheless
give rise to an Additional Payment Amount.
"Reference Delta" means, for any date during
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the Term of this Transaction, the hedge
ratio for this Transaction (expressed in
percentage terms, provided such
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percentage shall not exceed 100%) as
determined by MLI in its good faith
discretion.
Notwithstanding the foregoing, no
Additional Payment Amount shall be payable
in respect of, and the foregoing provisions
shall not apply to, any extraordinary
dividend (or other event) that gives rise
to an Adjustment (as provided below).
Settlement Currency: USD
Exchange: Nasdaq National Market
Related Exchange: Any exchange(s) on which options contracts
related to the Shares are principally
traded.
Business Day: New York
Payment Terms:
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Initial Proceeds: USD 16,471,000
Payment Period: The period commencing on the date three
(3) Exchange Business Days after the
Effective Date and ending on the
Termination Date.
Payments: Counterparty may from time to time during
the Payment Period designate a date on
which a "Payment Amount" (as defined
below) will be paid as described
herein. Such designation will be made by
providing MLI with (i) at least seven
(7) Currency Business Days' prior
written notice of the Currency Business
Day during the Payment Period (a "Payment
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Amount Date") on which such payment is to
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be made, and (ii) notice of the portion
expressed as a USD amount of the
Outstanding Notional Payment Amount for
such Payment Amount Date (a "Payment
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Amount Portion").
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Unless the Payment Amount Portion is equal
to the entire Outstanding Notional Payment
Amount on such Payment Amount Date, such
Payment Amount Portion shall be equal to
at least 20% of the Initial Notional
Payment Amount.
On each Payment Amount Date, MLI shall pay
to Counterparty the Payment Amount.
"Payment Amount" means an amount in USD
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equal to the present value on a Payment
Amount Date of the related Payment Amount
Portion (such present value to be
determined by the Calculation Agent using
a discount rate equal to the Rate for the
period from, and including, such Payment
Amount Date to, but excluding, the
Settlement Date (the "Payment Calculation
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Period"), plus Spread).
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Notwithstanding any provision in this
Agreement to the contrary, if at any time
during the Term of this Transaction any
obligation (whether present or future,
contingent or otherwise) is owed by
Counterparty to Merrill Lynch, Pierce,
Fenner & Smith, Incorporated ("MLPFS")
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(such obligation, a "Loan Obligation") in
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respect of borrowed money ("Counterparty
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Loan"), Counterparty shall be deemed to
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have requested at such time a Payment
Amount Portion equal to the entire
Outstanding Notional Payment Amount, or if
the related Payment Amount of the
Outstanding Notional Payment Amount is
greater than the Loan Obligation, a
Payment Amount Portion with a related
Payment Amount equal to the Loan
Obligation. Such Payment Amount will not be
paid to Counterparty on the related
Payment Date, but instead shall be
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paid to MLPFS in satisfaction of all or
part of such Loan Obligation.
Counterparty hereby irrevocably
authorizes and instructs MLI to use any
such Payment Amount solely to satisfy, in
whole or in part, on behalf of
Counterparty, any Loan Obligation.
Initial Notional Payment The Number of Shares * Floor Price
Amount:
Outstanding Notional Payment As of any date during the term of this
Amount: Transaction, an amount in USD equal to the
excess, if any, of (i) the Initial Notional
Payment Amount over (ii) (a) the sum of
the Payment Amount Portions for all
Payment Amount Dates occurring prior to
such date (the "Prepaid Notional Amount")
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less (b) the sum of all prior Repayment
Amounts.
Repayments: Counterparty may from time to time during
the Payment Period designate a date on
which all or a portion of the Prepaid
Notional Amount will be re-paid to MLI as
described herein. Such designation will be
made by providing MLI with (i) at least
seven (7) Currency Business Days' prior
written notice of the Currency Business
Day during the Payment Period (a "Repayment
---------
Date") on which such payment is to be made,
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and (ii) notice of the portion expressed as
a USD amount of the Prepaid Notional
Amount to be repaid on such Repayment Date
(a "Repayment Amount"). Unless the
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Repayment Amount is equal to the entire
Outstanding Notional Payment Amount on such
Repayment Date, such Repayment Amount shall
be equal to at least 20% of the Initial
Notional Payment Amount.
On the Repayment Date, Counterparty shall
pay to MLI an amount in USD equal to (i)
the present value on such Repayment Date
of the related Repayment Amount (such
present value to be determined by the
Calculation Agent using a discount rate
equal to the Rate for the period from, and
including, such Repayment Date, to but
excluding, the Settlement Date (the
"Repayment Calculation Period"), plus
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Spread) plus (ii) any breakage costs.
Rate:
If the Payment Calculation Period or the
Repayment Calculation Period, as
applicable, is (i) equal to or less than
360 calendar days, the rate shall be the
zero coupon rate derived from the
prevailing LIBOR curve that appears on
page IYC1 I5Z of Bloomberg. If such rate
does not appear on page IYC1 I5Z of
Bloomberg, the rate will be determined as
if the parties had specified
"USD-LIBOR-BBA", or (ii) greater than 360
calendar days, the rate shall be the zero
coupon rate derived from the prevailing
rate curve that appears on page IYC1 I5Z
of Bloomberg. If such rate does not appear
on page IYC1 I5Z of Bloomberg, the rate
will be determined as if the parties had
specified "USD-ISDA-Swap Rate", in each
case, (x) on a semi-annual basis, (y) with
a Day Count Fraction (as defined in the
2000 ISDA Definitions) equal to
Actual/360, and (z) interpolated as
necessary to account for the actual number
of calendar days within such Payment
Calculation Period or Repayment
Calculation Period, as reasonably determined
by the Calculation Agent.
Spread:
See Annex A
Valuation:
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Valuation Time: At the close of trading on the Exchange.
Valuation Date: Termination Date
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Settlement Terms: Settlement of this Transaction shall
- ----------------- be either Cash Settlement or Physical
Settlement, as determined by Counterparty in
writing to MLI no less than ten (10)
Business Days prior to the Termination Date.
In the event MLI is not notified, the
settlement method for this Transaction shall
be Cash Settlement.
Physical Settlement Terms:
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Physical Settlement: On the Settlement Date, Counterparty will
deliver the Counterparty Settlement Shares
to MLI, and MLI will pay the MLI Settlement
Obligation to Counterparty.
Settlement Date: Three (3) Exchange Business Days after the
Valuation Date.
A. MLI shall pay to Counterparty an amount
in cash equal to the Outstanding
Notional Payment Amount ("MLI Settlement
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Obligation").
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B. Counterparty shall deliver to MLI a
number of Shares equal to the Number of
Shares multiplied by the Variability
Factor ("Counterparty Settlement
-----------------------
Shares").
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Variability Factor: A factor calculated by the Calculation
Agent on the Valuation Date based on one of
the following three scenarios (as
applicable):
Scenario 1:
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If the Final Price is less than the Floor Price,
then:
One (1)
Scenario 2:
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If the Final Price is greater than the Cap Price,
then:
(Floor Price + ((Final Price - Cap Price) *
(1 - Participation Percentage))) / Final Price
Scenario 3:
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If the Final Price is greater than the Floor Price
and less than the Cap Price, then:
Floor Price / Final Price
Cash Settlement Terms:
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Cash Settlement: If the Cash Settlement Amount is a positive
number, MLI will pay the Cash Settlement
Amount to Counterparty. If the Cash
Settlement Amount is a negative number,
Counterparty will pay the absolute value of
the Cash Settlement Amount to MLI. Such
amounts shall be paid on the Settlement
Date.
Cash Settlement Amount: An amount determined by the Calculation
Agent on the Valuation Date based on the
following formula:
MLI Settlement Obligation - Counterparty
Cash Settlement Amount;
Where:
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"Counterparty Cash Settlement Amount" means:
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Counterparty Settlement Shares * Final
Price
Conditions to Physical
Settlement: Notwithstanding anything contained herein
to the contrary, unless all of the
following conditions are met, Cash
Settlement shall apply to this Transaction:
The Shares are in marketable form without
restrictive legends, and such Shares shall
not be subject to any Transfer Restrictions
(as defined below) in connection with the
delivery of the Shares to MLI hereunder or
the sale or transfer of such Shares by MLI
to a third party, all as determined by MLI
in its sole discretion. "Transfer
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Restriction" means any condition to or
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restriction on the ability of the holder of
the Shares to sell, assign or otherwise
transfer such Shares, including, without
limitation, (i) any registration or
qualification requirement, prospectus
delivery requirement or other similar
requirements (other than any requirements
arising from sales of the Shares by MLI
pursuant to Rule 144), (ii) any requirement
that any sale, assignment or other transfer
or enforcement of such Shares be consented
to or approved by any person, including,
without limitation, the issuer thereof or
any other obligor thereon, (iii) any
limitations on the type or status, financial
or otherwise, of any purchaser, pledgee,
assignee or transferee of such Shares, and
(iv) any requirement to deliver any
certificate, consent, agreement, opinion of
counsel, notice or any other document of any
person to the issuer of, any other obligor
on or any registrar or transfer agent for,
such Shares, prior to the sale, pledge,
assignment or other transfer or enforcement
of such Shares.
Failure to Deliver: Not applicable.
Clearance System(s): The principal domestic clearance system
customarily settling trades on a delivery
versus payment basis on the Shares.
Adjustments:
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Method of Adjustment: Calculation Agent Adjustment; provided
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that in the event of the occurrence of a
Potential Adjustment Event, the Calculation
Agent will determine whether such Potential
Adjustment Event has a diluting or
concentrative effect on the theoretical
value of the Shares and, if so, will (i)
make the corresponding adjustment(s), if
any, to the Number of Shares, the Floor
Price and the Cap Price and, in any case,
any other variable relevant to the
settlement or payment terms of this
Transaction as the Calculation Agent
determines (in a commercially reasonable
manner) appropriate to account for that
diluting or concentrative effect and (ii)
determine the effective date(s) of the
adjustment(s).
Extraordinary Events:
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Consequences of Merger Event:
(a) Share-for-Share: Alternative Obligation on
the Exchange Business Day immediately
following the occurrence of a Merger Event
with mutually agreed upon commercially
reasonable adjustments to the terms of the
Transaction to preserve the economics of the
Transaction as originally bargained for
pursuant to the terms stated herein;
provided that after the Merger Event, MLI
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shall be permitted to elect Cancellation and
Payment within three (3) Exchange Business
Days immediately following such Merger
Event.
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(b) Share-for-Other: Cancellation and Payment on the Exchange
Business Day immediately following the
occurrence of a Merger Event.
(c) Share-for-Combined: As soon as practicable
but not to exceed three (3) Exchange
Business Days immediately following the
occurrence of a Merger Event has occurred,
the parties shall mutually agree upon
appropriate adjustments to the terms of the
Transaction, and, if the parties are unable
to so agree, Cancellation and Payment shall
apply.
Nationalization or
Insolvency: Negotiated close out.
Additional Provisions:
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Events of Default: For the sole purpose of this Transaction
and provided that no other transactions
under the Agreement other than this
Transaction or other substantially
similar variable forward sale transactions
shall be outstanding between Counterparty
and MLI, (i) the "Cross Default" provisions
of Section 5(a)(vi) of the Agreement will
not apply to MLI and will apply to
Counterparty, and for such purpose,
"Specified Indebtedness" means solely any
Counterparty Loan and the "Threshold
Amount" means zero and (ii) the "Credit
Event Upon Merger" provisions of Section
5(b)(iv) of the Agreement will not apply to
MLI and will not apply to Counterparty.
Additional Termination Event: The occurrence of a Hedging Disruption Event
shall constitute an Additional Termination
Event with respect to Counterparty, giving
MLI the right to designate an Early
Termination Date in respect of this
Transaction. For this purpose, "Hedging
Disruption Event" means (i) any inability
of MLI due to market illiquidity,
Illegality (as defined in the Agreement,
but with respect to the transaction
hedge) or lack of availability of
third-party institutional stock lenders or
MLI otherwise being unable to borrow the
Shares, to establish, re-establish or
maintain any hedging transaction(s)
necessary in the normal course of MLI's
business of hedging the price and market
risk of entering into and performing under
the Transaction, provided that if MLI is
able to borrow Shares from MLPFS under the
Counterparty Loan or from Counterparty
(including by way of rehypothecation as
contemplated in the Collateral provision
hereunder) this clause (i) shall not apply;
or (ii) an increase in the cost of
borrowing the Shares (from an entity other
than Counterparty) and Counterparty's
failure (within five (5) Business Days of
its receipt of written notice from MLI in
this regard) to agree to adjustments to the
terms of the Transaction as the Calculation
Agent, in its reasonable discretion,
deems necessary to compensate MLI for such
increase in costs, including, without
limitation, any costs incurred by MLI
during such five (5) Business Day period.
Absence of Certain Events
Representation: Section 3(b) of the Agreement is hereby
amended by adding the following clause at
the beginning of the first line thereof:
"Except as previously disclosed in writing
by Counterparty to MLI,".
Calculation Agent: MLI; provided that the Calculation Agent
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shall make all calculations and
determinations in connection with this
Transaction in good faith and in a
commercially reasonable manner.
Non-Reliance: Each party represents to the other party
that it is acting for its own account, and
has made its own independent decisions to
enter into this Transaction and as to
whether this Transaction is appropriate or
proper for it based on its own
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judgment and upon advice from such advisors
as it has deemed necessary. It is not
relying on any communication (written or
oral) of the other party as investment
advice or as a recommendation to enter into
this Transaction, it being understood that
information and explanations related to the
terms and conditions of this Transaction
shall not be considered investment advice
or a recommendation to enter into this
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 this
Transaction.
Governing Law: The laws of the State of New York,
including, without limitation, Sections
5-1401 and 5-1402 of the New York General
Obligations Law.
Collateral: On or prior to the Trade Date, Counterparty
shall have delivered and shall thereafter
continually maintain with MLI or its
custodian ("Custodian") during the Term of
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this Transaction, 650,000 Shares and a stock
transfer power related thereto (such Shares,
the "Collateral").
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Counterparty represents that (i) it is the
legal and record owner of all Collateral
free of all liens, claims, equities, and
encumbrances, (ii) it has the power and has
obtained all of the necessary consents and
approvals to grant to MLI a legal, valid,
binding and enforceable first priority
security interest in, and lien on, the
Collateral, and (iii) the pledge of the
Collateral shall not breach any covenant in
any agreement or contract entered into by
Counterparty or any Affiliate thereof.
Counterparty represents that on the Trade
Date it granted, and will grant throughout
the Term of this Transaction, MLI a
first-priority security interest in, and a
first-priority lien on, the Collateral for
its obligations under this Transaction and
the Agreement; provided, however, that if
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any Counterparty Loan is outstanding at any
time from and including the Trade Date to
but excluding the third Exchange Business
Day immediately following the Effective
Date, MLI's security interest will be
subordinate to any security interest and/or
lien on the Collateral granted in favor of
MLPFS in connection with such Counterparty
Loan.
Notwithstanding Section 9-207 of the New
York Uniform Commerical Code, MLI will have
the right to (i) sell, pledge,
rehypothecate, assign, invest, use,
commingle or otherwise dispose of, or
otherwise use in its business, any
Collateral it holds free from any claim or
right of any nature whatsoever of
Counterparty, including any equity or right
of redemption by Counterparty ("Use of
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Collateral"), provided that MLI shall not
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have Use of Collateral five Exchange
Business Days following the effectiveness of
notice from Counterparty to MLI restricting
MLI's Use of Collateral, and (ii) register
any Collateral in the name of MLI, its
Custodian or a nominee for either. For the
avoidance of doubt, nothing in the foregoing
is intended to restrict or impede in any way
MLI's ability to foreclose, sell, dispose
of, or otherwise exercise its rights and
remedies with respect to the Collateral upon
a Counterparty Event of Default or
Termination Event.
Upon the occurrence of an Event of Default
or Termination Event under the Agreement,
MLI or its Custodian shall have all of the
rights with respect to the Collateral of a
secured party under the New York Uniform
Commercial Code ("UCC"). MLI or its
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Custodian shall not be liable for any loss
or damages occasioned by any sale or
disposal of the Collateral.
Counterparty will use its best efforts to
preserve and protect MLI's security interest
8
in the Collateral, will defend MLI's right,
title, lien, and security interest in and to
the Collateral against the claims and
demands of all persons whomsoever, and will
do all such acts and things and deliver all
such documents and instruments, including
without limitation further pledges,
assignments, financing statements, and
continuation statements, as MLI and its
Custodian may reasonably deem necessary or
advisable from time to time in order to
preserve, protect, and perfect such security
interest or to enable MLI or its Custodian
to exercise or enforce its rights with
respect to any Collateral.
Counterparty will not permit any lien,
security interest, adverse claim,
restriction on transfer or, other
encumbrance, other than the lien and
security interest Counterparty created
hereby in favor of MLI, to exist upon any of
the Collateral.
Counterparty will not take any action that
could in any way limit or adversely affect
the ability of MLI to realize upon its
rights in the Collateral.
Each of Counterparty and MLI shall perform
its obligations and exercise its rights
hereunder, as applicable, in compliance with
the terms of the UCC.
Representations
and Covenants of
Counterparty: Counterparty (i) has such knowledge and
experience in financial and business
affairs as to be capable of evaluating the
merits and risks of entering into the
Transaction; (ii) has consulted with its
own legal, financial, accounting and tax
advisors in connection with the
Transaction; (iii) is entering into the
Transaction for a bona fide business
purpose to hedge an existing position; and
(iv) acknowledges that in return for
downside protection against a decline in
the market price of the Shares below the
Floor Price, Counterparty is foregoing,
in part, the upside value of an increase in
the market price of the Shares above the
Cap Price.
Neither Counterparty nor any person who
would be considered to be the same "person"
(as such term is used in Rule 144(a)(2)
under the Securities Act of 1933, as amended
(the "Securities Act")), has sold any Shares
--------------
(or security entitlements in respect
thereof) or hedged (through swaps, options,
short sales or otherwise) any long position
in the Shares (or security entitlements in
respect thereof), including, without
limitation, any sales pursuant to an
agreement by any such persons to act in
concert for the purpose of selling such
Shares, during the preceding three (3)
months prior to the Trade Date of this
Transaction. Counterparty covenants and
agrees that until the Effective Date, it
will not sell, nor will it permit any person
to sell, Shares without the prior written
consent of MLI. For the purposes of this
paragraph, Shares shall be deemed to include
securities convertible into or exchangeable
or exercisable for Shares and any other
security or instrument that would be subject
to aggregation under Rule 144(e) under the
Securities Act. As of the Trade Date,
Counterparty owns 3,002,376 Shares.
Counterparty does not know or have any
reason to believe that the Issuer has not
complied with the reporting requirements
contained in Rule 144(c)(1) under the
Securities Act.
Counterparty acknowledges and agrees that
(i) it has not taken and will not take any
action that would cause any sale deemed to
be made under the Interpretive Letter (as
defined below) to exceed the volume
limitation of Rule 144(e), (ii) it has not
taken and will not take any action that
could cause any sale deemed to be made under
the Interpretive Letter to fail to meet all
applicable requirements of
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Rule 144 and (iii) on the Trade Date of
this Transaction it has transmitted a Form
144 for filing with the Securities and
Exchange Commission. Counterparty covenants
that it will send to MLI via facsimile a
copy of each Form 144 and each filing under
Section 13 or 16 of the Securities and
Exchange Act relating to this Transaction
concurrently with filing or transmission
for filing, as the case may be, of such
form to or with the SEC.
As of the Trade Date of this Transaction,
the Shares are eligible for resale under
Rule 144. Counterparty shall comply with the
terms of the interpretive letter from the
SEC to Goldman, Sachs & Co. dated December
20, 1999 (the "Interpretive Letter").
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The directors, officers and/or employees of
Counterparty ("Contract Persons") who are
----------------
directly or indirectly involved with the
negotiation, execution and delivery of this
Agreement and the performance of the
transactions contemplated by this Agreement
have no material, nonpublic information in
respect of the Issuer and had no such
information on each day from and including
the Trade Date to and including the
Effective Date. Counterparty further
represents that (1) as of the Trade Date it
had established and implemented written
policies and procedures to ensure that no
Contract Person will violate federal and
state securities laws prohibiting the
purchase or sale of securities on the basis
of material nonpublic information in
connection with this Agreement and this
Transaction and (2) if any third-party cause
of action asserts that Counterparty has
violated such federal and state securities
laws, Counterparty may duly and in good
faith assert in its responsive pleading an
affirmative defense under Rule 10b5-1 of the
Securities Exchange Act of 1934, as amended.
Counterparty represents that all proceeds
from the Counterparty Loan and any other
credit facility entered into by Counterparty
as of the date hereof through and including
March 31, 2002 shall be used to satisfy in
full all outstanding payment obligations
(principal, interest or otherwise) of
Counterparty pursuant to (i) the Credit
Agreement dated as of May 26, 1998 among
Counterparty, Bank of America, N.A., and
U.S. Bank National Association, as lenders,
and Bank of America, N.A., as administrative
agent, as amended; and (ii) the Credit
Agreement dated as of June 24, 1999 among
Counterparty, the various lenders thereto,
Bank of America, N.A., as administrative
agent, and Credit Suisse First Boston, as
syndication agent, as amended. A breach of
this representation shall constitute an
Additional Termination Event with respect to
Counterparty with Counterparty as the
Affected Party, giving MLI a right to
designate an Early Termination Date (as
defined in the ISDA Master Agreement).
Counterparty is not and has not been the
subject of any civil proceeding of a
judicial or administrative body of competent
jurisdiction that could reasonably be
expected to impair materially Counterparty's
ability to perform its obligations
hereunder.
Counterparty will by the next succeeding
Business Day notify MLI upon obtaining
knowledge of the occurrence of any event
that would constitute an Event of Default, a
Potential Event of Default or a Potential
Adjustment Event.
As of the Effective Date, Counterparty is
not insolvent.
Representation of MLI: MLI hereby represents and warrants to, and
agrees with, Counterparty that it shall
comply with (i) the terms of the
Interpretive Letter and (ii) the manner of
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sale requirements of Rule 144 (f) and (g)
in connection with the sale of Shares
during the hedge period.
Acknowledgements: (1) The parties acknowledge and agree that
there are no other representations,
agreements or other undertakings of the
parties in relation to this Transaction,
except as set forth in this Confirmation
or in the Agreement.
(2) The parties hereto intend for:
(a) this Transaction to be a "securities
contract" as defined in Section 741(7)
of Title 11 of the United States Code
(the "Bankruptcy Code"), qualifying for
---------------
the protections under Section 555 of the
Bankruptcy Code;
(b) a party's right to liquidate this
Transaction and to exercise any other
remedies upon the occurrence of any
Event of Default under the Agreement
with respect to the other party to
constitute a "contractual right" as
defined in the Bankruptcy Code;
(c) any cash, securities or other
property provided as performance
assurance, credit, support or collateral
with respect to this Transaction to
constitute "margin payments" as defined
in the Bankruptcy Code; and
(d) all payments for, under or in
connection with this Transaction, all
payments for the Shares and the transfer
of such Shares to constitute "settlement
payments" as defined in the Bankruptcy
Code.
(3) The parties acknowledge and agree that
in the event of an Early Termination Date as
a result of an Event of Default, the amount
payable under the Agreement will be a cash
amount calculated as described therein and
that the deliveries specified in this
Transaction will no longer be required.
(4) Upon the execution of this Confirmation,
the Agreement shall constitute a "Final
Agreement" within the meaning of the
Interpretive Letter.
Interpretation: For purposes of the Equity Definitions, this
Transaction will be deemed to be a
Physically-settled Share Option Transaction
if Physical Settlement applies and a
Cash-settled Share Option Transaction if
Cash Settlement applies, in either case with
an Exercise Date equal to the Valuation
Date.
Indemnity: Counterparty agrees to indemnify MLI and
its Affiliates and their respective
directors, officers, agents and
controlling parties (MLI and each such
person being an "Indemnified Party") from
-----------------
and against any and all losses, claims,
damages and liabilities, joint and
several, to which such Indemnified Party
may become subject under, in connection
with, relating to, or arising out of, this
Agreement or Transaction with respect to
any applicable securities laws and will
reimburse any Indemnified Party for all
reasonable expenses (including reasonable
legal fees and reasonable expenses) as
they are incurred in connection with the
investigation of, preparation for, or
defense of any pending or threatened claim
or any action or proceeding arising
therefrom, whether or not such Indemnified
Party is a party thereto. Counterparty
will not be liable under this Indemnity
paragraph to the extent that any loss,
claim, damage, liability or expense is
found in a final judgment by a court to
have resulted from MLI's gross negligence,
fraud, bad faith and/or willful misconduct.
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Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us by facsimile transmission to the attention of:
Peter Barna (Telecopier No. 212-738-1069).
Very truly yours,
MERRILL LYNCH INTERNATIONAL
By: /s/ Cheryl Dennerlien
-----------------------------------
Name:
Title:
Confirmed as of the date first above written:
FISHER COMMUNICATIONS, INC.
By: /s/ Warren Spector
-----------------------------------
Name:
Title:
Acknowledged and agreed as to matters relating to the Agent:
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
solely in its capacity as Agent hereunder
By: /s/ Vivian Jackson
-----------------------------------
Name:
Title:
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