EXHIBIT 10.3
[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: 0281652
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: 0281652)
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 4, 2002
Termination Date: September 29, 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: See Annex A
Cap Price: See Annex A
Participation Percentage: 20%
Final Price: See Annex A
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
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Period"), Counterparty shall pay on the
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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 Payment Amount Payment Date")
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an amount 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 percentage
shall not exceed 100%) as determined by MLI
in its good faith discretion.
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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 16,024,024
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
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payment is to 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 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 paid to
MLPFS in satisfaction of all or part of
such Loan Obligation. Counterparty hereby
irrevocably authorizes and instructs MLI
to use any such
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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") less (b) the
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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
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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 Repayment
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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
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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:
"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.
6
(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
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Agent 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
in the Collateral, will defend MLI's right,
title, lien, and security interest
8
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
9
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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