Exhibit
10.2


 


Execution Version


Goldman
Sachs Credit Partners L.P.


85 Broad
Street


New York,
New York 10004


 


COMMITMENT LETTER


 


PERSONAL AND CONFIDENTIAL


 


April 18, 2006


 


Pogo Producing Company


5 Greenway Plaza


P.O. Box 2504


Houston,
Texas 77252-2504


Attention:            James P. Ulm, II

Senior Vice President and Chief Financial Officer


 


Ladies and Gentlemen:


 


We are pleased to confirm the arrangements under
which Goldman Sachs Credit Partners L.P. (“GSCP”
or the “Administrative Agent”) is exclusively
authorized by Pogo Producing Company (the “Company”) to
act as sole lead arranger, sole bookrunner, sole syndication agent and administrative agent in connection with the
bridge loans described herein, and, together with any other lenders set
forth on Schedule I hereto and any entities that become lenders in accordance
with the syndication arrangements set forth below (collectively with GSCP, the “Lenders”), commits to provide the bridge loans described
herein, in each case, on the terms and
subject to the conditions set forth in this letter, the attached Annex A and
Annex B (collectively, the “Commitment Letter”) and the Fee Letter (as defined below).


 


You have informed GSCP that the Company, a Delaware corporation,
intends to sign an agreement (the “Acquisition 


Agreement”) to acquire by merger
(the “Acquisition”) all of the capital stock of a
private company code-named Lambada (the “Seller”), as
specified in the Acquisition Agreement (the “Acquired Business”).
You have also informed us that the total purchase price for the Acquisition (including the
refinancing of certain debt of the Acquired Business, but excluding the payment of fees,
commissions and expenses in connection with the Acquisition) will be approximately $750.0 million
and that the Acquisition will be financed with (i) the issuance by the Company of up to
$500.0 million in aggregate principal amount of debt, equity or equity-linked
securities (the “Permanent Securities”) or, in the
event the Permanent Securities are not issued at the time the Acquisition is consummated,
borrowings by the Company of up to $500.0 million under senior unsecured increasing rate
bridge loans (the “Bridge Loans”) having the terms of set
forth in Annex B and (ii) borrowings by the Company of up to $375.0
million under its existing credit agreement, dated as of December 16,
2004, as amended on August 31, 2005, among the Company, as borrower,
certain commercial lending institutions, as the lenders, and Bank of Montreal,
acting through its Chicago, Illinois branch, as the administrative agent (the “Credit Facility”). On the Closing Date (as defined below),
neither the
Company nor any of its subsidiaries will have any debt for borrowed money or
equity outstanding,
except for (i) debt and equity outstanding as of the date hereof, (ii) borrowings
not to
exceed an amount to be agreed upon under the Credit Facility, (iii) equity
issued to management
and employees of the Company pursuant to existing equity compensation plans or (iv) as described
in this paragraph. In addition, the Acquired Business will have permanently repaid all of its
indebtedness on or before the Closing Date.


 









 



 


1.  Commitment.    GSCP
is pleased to confirm its commitment to act as sole lead arranger and sole
bookrunner to provide the Company with structuring advice in connection with
the Bridge Loans, to act as sole syndication
agent to provide the Company with syndication advice in connection with the Bridge Loans and to act as
administrative agent for the Bridge Loans. Each of the Lenders is pleased to confirm its commitment (each, a “Commitment” and, collectively,
the “Commitments”), severally and not
jointly, to provide the Bridge Loans having the terms set forth on Annex B, in each case, on the terms and subject
to the conditions contained in this
Commitment Letter and the Fee Letter. The Commitment of each Lender individually
is set forth opposite its name on Schedule 1 hereto; all of the Commitments
together equal up to $500.0 million. The
Company agrees that the Lenders will have the exclusive right during the term
of this Commitment Letter to provide any bridge or interim financing utilized
by the Company or any of its
affiliates to finance any portion of the Acquisition.


 


Each Lender’s commitment is subject, in its discretion, to the
conditions set forth in Annex B hereto and
there not having occurred any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general affairs, management,
financial position, stockholders’ equity or results of operations of the Company
or the Acquired Business and their respective subsidiaries since December 31,
2005 (the date of the most recent audited financial statements for the Company
and the Acquired Business, respectively,
furnished by the Company to GSCP). Each Lender’s commitment is also subject, in its discretion, to the satisfactory
negotiation, execution and delivery of appropriate definitive documentation relating to the Bridge Loans,
including, without limitation, a bridge loan agreement (the “Bridge Loan Agreement”), to be based upon and substantially
consistent with the terms set forth in this
Commitment Letter. Our commitment is also conditioned upon and made subject to
our not becoming aware after the date hereof of any new or inconsistent information or other matter not previously
disclosed to us relating to the Company, the Acquired Business or the
Acquisition or the transactions contemplated by this Commitment Letter, which GSCP,
in its reasonable judgment, deems material and adverse relative to the
information or other matters disclosed to us prior to the date hereof


 


2.  Fees and Expenses.    The fees for these services are set forth
in a separate letter (the “Fee Letter”),
dated as of the date hereof, entered into by the Lenders and the Company. In addition, pursuant to an engagement letter (the “Engagement Letter”), dated as of the date hereof, between the Company and Goldman, Sachs &
Co. (“Goldman Sachs”), the Company has, among other things, offered Goldman Sachs the
right to act (or to have one of its affiliates act) as the sole placement
agent, sole purchaser or sole underwriter in connection with the sale of the
Permanent Securities.


 


3.  Syndication.    GSCP intends and reserves the right to
syndicate the Commitments and/or the Bridge Loans to other Lenders, commencing
on the earlier of 30 days after the Closing
Date and June 30, 2006 (or at any time during which the Company is not
diligently pursuing the issuance of
Permanent Securities or cooperating with GSCP in accordance with Section 4).
GSCP will select the Lenders after consultation with the Company. GSCP will
lead the syndication, including
determining the timing of all offers to potential Lenders and the acceptance of Commitments, any title of agent or
similar designations or roles awarded to Lenders, the amounts offered and the compensation provided to each
Lender from the amounts to be paid to GSCP pursuant to the terms of this
Commitment Letter and the Fee Letter. GSCP will determine the final Commitment allocations and will notify the
Company of such determinations. The
Company agrees to use all commercially reasonable efforts to ensure that









 



 


GSCP’s syndication efforts benefit from the existing lending
relationships of the Company. To facilitate
an orderly and successful syndication of the Bridge Loans, you agree that,
until the later of the termination of the syndication as determined by
GSCP and 120 days following the date of
initial funding under the Bridge Loans (the “Closing Date”),
the Company will not, and will use commercially reasonable efforts to
cause the Acquired Business to agree that it will not, syndicate or issue,
attempt to syndicate or issue, announce or authorize the announcement of the syndication or issuance of, or engage in
discussions concerning the syndication or issuance of, any debt facility or debt or preferred equity
security of the Company or any of its affiliates (other than the Bridge Loans, any Permanent Securities and other
indebtedness contemplated hereby), including any renewals or
refinancings of any existing debt facility or debt or preferred equity security, without the prior written consent
of GSCP.


 


4. Cooperation.    The Company agrees to cooperate with GSCP,
and to cause the Acquired Business to cooperate with GSCP, in each case
commencing promptly after the Closing Date, in connection with (i) the
preparation of an information package regarding the business, operations,
financial projections and prospects of the Company and the Acquired Business,
including, without limitation, the delivery of all information relating to the
transactions contemplated hereunder prepared by or on behalf of the Company or
the Acquired Business deemed reasonably necessary by GSCP to complete the
syndication of the Commitments and/or the Bridge Loans (including, without
limitation, obtaining and maintaining a credit rating by Moody’s Investor
Services, Inc. (“Moody’s”), and Standard &
Poor’s Ratings Group, a division of The McGraw Hill Corporation (“S&P”)) and (ii) the presentation of an information
package acceptable in format and content to GSCP in meetings and other
communications with prospective Lenders in connection with the syndication of
the Commitments and/or the Bridge Loans (including, without limitation, direct
contact between senior management and representatives of the Company with
prospective Lenders and participation of such persons in meetings). The Company
will be solely responsible for the contents of any such information package and
presentation and acknowledge that GSCP will be using and relying upon the
information contained in such information package and presentation without
independent verification thereof. The Company agrees that information regarding
the Bridge Loans and information provided by the Company, the Acquired Business
or their respective representatives to GSCP in connection with the Bridge Loans
(including, without limitation, draft and execution versions of the Loan
Documents, publicly filed financial statements, and draft or final offering
materials relating to contemporaneous or prior securities issuances by the
Company or the Acquired Business) may be disseminated to potential Lenders and
other persons through one or more internet sites (including an IntraLinks
workspace) created for purposes of syndicating the Bridge Loans or otherwise,
in accordance with GSCP’s standard syndication practices (including hard copy
and via electronic transmissions). Without limiting the foregoing, the Company
authorizes the use of its logos in connection with any such dissemination,


 


At the request of GSCP, the Company
agrees to prepare a version of the information package and presentation
that does not contain material non-public information concerning the Company or
the Acquired Business, their respective affiliates or their securities. In
addition, the Company agrees that unless
specifically labeled “Private—Contains Non-Public Information,” no information, documentation or other data
disseminated to prospective Lenders in connection with the syndication
of the Bridge Loans, whether through an internet site (including, without limitation, an IntraLinks workspace),
electronically, in presentations at meetings or otherwise, will contain any material non-public information
concerning the Company or the Acquired Business, their respective
affiliates or their securities.









 



 


The Company represents and
covenants that (i) all information (other than forward-looking statements
and data, including projections) provided directly or indirectly by the Company
to GSCP or the Lenders in connection with
the transactions contemplated hereunder is and will be, when taken as a whole, complete and correct in
all material respects and does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements contained therein, in light
of the circumstances in which they were made, not misleading and (ii) the
projections that have been or will be made available to GSCP or the Lenders by the Acquired Business or the Company
have been and will be prepared in good faith based upon assumptions that are believed by the preparer thereof to be
reasonable at the time made. You agree that if at any time prior to the
Closing Date, any of the representations in the preceding sentence would be incorrect in any material respect if the
information and projections were being furnished, and such representations were
being made, at such time, then you will promptly supplement, or cause to
be supplemented, the information and projections so that such representations will be correct in all
material respects under those circumstances.


 


5.  Annex A.    In connection with arrangements such as
this, it is our firm’s policy to receive indemnification. The Company agrees to
the provisions with respect to our indemnity and other matters set forth in
Annex A, which is incorporated by reference into this Commitment Letter,


 


This Commitment Letter may not be assigned by you
without the prior written consent of GSCP (and any purported assignment
without such consent will be null and void), is intended to be solely for the
benefit of the parties hereto and is not intended to confer any benefits upon,
or create any rights in favor of, any person
other than the parties hereto. GSCP may assign its Commitment hereunder,
in whole or in part, to any of its affiliates or to any Lender, and upon such assignment, GSCP will be released from the
portion of its Commitment hereunder that has been assigned. This Commitment Letter (including the Annexes hereto)
may not be amended or any term or
provision hereof or thereof waived or modified, except by an instrument in
writing signed by each of the parties
hereto, and any term or provision hereof or thereof may be amended or waived only by a written agreement
executed and delivered by all parties hereto.


 


GSCP hereby notifies the Company
and the Acquired Business that pursuant to the requirements of the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”)
it and each Lender may be required to obtain, verify and record information that identifies the Company and the Acquired
Business, which information includes the name and address of the Company
and the Acquired Business and other information that will allow GSCP and each Lender to identify the Company and
the Acquired Business in accordance with the Act. This notice is given
in accordance with the requirements of the Act and is effective for GSCP and each Lender.


 


6.  Confidentiality.    Please note that this Commitment Letter,
the Fee Letter and any written or oral advice provided by GSCP in connection
with this arrangement are exclusively for the information
of the Company and may not be disclosed to any third party or circulated or
referred to publicly without our
prior written consent, except, after providing written notice to GSCP, pursuant
to a subpoena or order issued by a court of competent jurisdiction or by a
judicial, administrative or
legislative body or committee. In addition, we hereby consent to your disclosure of (i) this Commitment Letter, the
Fee Letter and such advice to the Company’s officers, directors, agents and advisors who are directly involved in
the consideration of the Bridge Loans
to the extent such persons agree to hold the same in confidence, (ii) this
Commitment Letter or the information
contained herein (but not the Fee Letter or the information









 



 


contained therein) to the Acquired Business and the Seller to the
extent you notify such persons of their
obligations to keep such material confidential, and to the Acquired Business’s
and the Seller’s respective
officers, directors, agents and advisors who are directly involved in the consideration of the Bridge Loans; provided that you use commercially
reasonable efforts to cause such
persons to agree to hold the same in confidence, (iii) this Commitment
Letter and the Fee Letter as required
by applicable law (including regulations promulgated by the Securities and
Exchange Commission and rules of the New York Stock Exchange) or compulsory legal process (in which case you agree
to inform us promptly thereof) and (iv) the information contained in this Commitment Letter in any prospectus or
other offering memorandum relating to the Permanent Securities, The
provisions of this paragraph shall survive
any termination or completion of the arrangement provided by this Commitment
Letter.


 


7.  Additional Matters.    As you
know, GSCP may from time to time effect transactions, for its own
account or the account of customers, and hold positions in loans or options on
loans of the Company, the Acquired Business and other companies that may be the
subject of this arrangement. In addition,
Goldman Sachs is a full service securities firm and as such may from time
to time effect transactions, for its own account or the account of customers,
and hold positions in securities or options
on securities of the Company, the Acquired Business and other companies that may be the subject of this
arrangement. Each of GSCP and Goldman Sachs may have economic interests that
conflict with those of the Company. You acknowledge that the
transactions contemplated by this Commitment Letter and the Fee Letter are
arms-length commercial transactions and that each of GSCP and Goldman Sachs is
acting as principal and in its own best
interests. The Company is relying on its own experts and advisors to determine whether the transactions contemplated by this
Commitment Letter and the Fee Letter are in the Company’s best
interests. You agree that each of GSCP and Goldman Sachs will act under this Commitment Letter and the Fee Letter as an
independent contractor and that nothing in this Commitment Letter, the Fee
Letter, the nature of our services, or in any prior relationship will be deemed to create an advisory, fiduciary or agency
relationship between GSCP or Goldman Sachs,
on the one hand, and the Company, its stockholders or its affiliates, on the
other hand. In addition, GSCP may
employ the services of its affiliates in providing certain services hereunder and may exchange with such affiliates
information concerning the Company, the Acquired Business and other
companies that may be the subject of this arrangement, and such affiliates
shall be entitled to the benefits afforded to GSCP hereunder.


 


The Commitments hereunder will terminate upon the
first to occur of (i) the consummation of the Acquisition, (ii) the abandonment or termination of the Acquisition
Agreement, (iii) a material breach
by the Company under this Commitment Letter, the Fee Letter or the Engagement
Letter and (iv) June 30,
2006, unless the closing of the Bridge Loans, on the terms and subject to the
conditions contained herein, shall have been consummated prior to such date. In
addition, the Commitment hereunder will terminate upon the closing of the sale
of the Permanent Securities,


 


In addition, please note that
GSCP, Goldman Sachs and their affiliates do not provide accounting, tax
or legal advice. Notwithstanding anything herein to the contrary, the Company (and each employee, representative or other agent
of the Company) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure of the offering and all materials of any kind (including opinions or other
tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain
subject to the confidentiality provisions hereof (and the foregoing sentence
shall not apply) to the extent reasonably necessary to enable the









 



 


parties hereto, their respective
affiliates, and their and their respective affiliates’ directors and employees
to comply with applicable securities laws. For this purpose, “tax treatment”
means US federal or state income tax treatment, and “tax structure” is limited
to any facts relevant to the US federal income tax treatment of the transactions
contemplated by this Commitment Letter but
does not include information relating to the identity of the parties hereto or
any of their respective affiliates.


 


All payments under this
Commitment Letter (including Annex A and Annex B) and the Fee Letter
will be made in U.S. dollars and without withholding or deduction of any tax,
assessment or other governmental charge
(collectively, “Tax”) unless required by law; and
if the Company will be required to
deduct or withhold any Tax, or if any Tax is required to be paid by any Lender solely on account of services performed hereunder
or under the Fee Letter, the Company will pay to such Lender such
additional amounts as will be required so that the net amount received by such
Lender from the Company after such deduction, withholding or payment will equal
the amounts otherwise due to such Lender hereunder or under the Fee Letter, as
applicable.


 


This Commitment Letter may be executed in any number
of counterparts, each of which when executed
will be an original, and all of which, when taken together, will constitute one
agreement. Delivery of an executed counterpart of a signature page of
this Commitment Letter by facsimile
transmission will be effective as delivery of a manually executed counterpart
hereof. This Commitment Letter, the
Fee Letter and the Engagement Letter are the only agreements that have been entered into among the parties
hereto with respect to the Bridge Loans and set forth the entire understanding of the parties with respect thereto and
supersede any prior written or oral
agreements among the parties hereto with respect to the Bridge Loans.


 


[Remainder
of page intentionally left blank]









 



 


Please confirm that the foregoing is in accordance
with your understanding by signing and returning to GSCP the enclosed copies of
this Commitment Letter, together, if not previously executed and delivered,
with the Fee Letter and the Engagement Letter on or before the close of
business on the date hereof, whereupon this Commitment Letter, the Fee Letter
and the Engagement Letter shall become binding agreements between us. If not
signed and returned by that time, this offer will terminate at that time. We
look forward to working with you on this transaction.


 


 


Very truly yours,


 


	
  GOLDMAN SACHS CREDIT
  PARTNERS L.P.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ William W. Archer

  	
   

  
	
   

  	
  Authorized
  Signatory

  	
   

  



 


 


	
  

  	
  Confirmed as of the
  date above:

  
	
   

  	
   

  
	
   

  	
  POGO PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Ulm, II

  
	
   

  	
   

  	
  Name:

  	
  James P. Ulm, II

  
	
   

  	
   

  	
  Title:

  	
  SVP & CFO

  










 



 


SCHEDULE 1


 


(in millions)


 


	
  Lender

  	
   

  	
  Commitment

  	
   

  
	
  Goldman Sachs
  Credit Partners L.P.

  	
   

  	
  $

  	
  500.0

  	
   

  
	
  Total

  	
   

  	
  $

  	
  500.0

  	
   

  



 















 


Annex A


In the event that any of the Lenders or the Administrative
Agent (each, an “Indemnified Party”) becomes
involved in any capacity in any action, proceeding or investigation brought by
or against any person, including stockholders, partners or
other equity holders of the Company or the Acquired Business, in
connection with or as a result of either this arrangement or any matter referred to in this
Commitment Letter or the Fee Letter (together, the “Letters”),
the Company periodically will reimburse such
Indemnified Party for its reasonable legal and other expenses (including the
cost of any investigation and preparation) incurred in connection therewith.  The Company
also will indemnify and hold each Indemnified Party harmless against any and
all losses, claims, damages or
liabilities to any such person in connection with or as a result of either this arrangement or any matter referred to
in the Letters and without regard to the exclusive or contributory negligence of any of the Indemnified Parties,
except to the extent that such have been found by a final, non-appealable
judgment of a court that any such loss, claim, damage or liability results from the gross negligence, willful misconduct
or bad faith of such Indemnified
Party in performing the services
that are the subject of the Letters. If for any reason the
foregoing indemnification is unavailable to any Indemnified Party or
insufficient to hold it harmless, then the Company shall
contribute to the amount paid or payable by such Indemnified Party as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect the relative economic interests of the
Company and the Acquired Business and their respective affiliates, stockholders, partners or other equity holders,
on the one hand, and such Indemnified
Party, on the other hand, in the matters contemplated by the Letters as well as
the relative fault of the Company and
the Acquired Business and their respective affiliates, stockholders, partners or other equity holders, on
the one hand, and such Indemnified Party, on the other hand, with respect to such loss, claim, damage or liability
and any other relevant equitable considerations.  The reimbursement, indemnity and contribution
obligations of the Company under this paragraph
shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any affiliate of any Indemnified
Party and the partners, directors, agents, employees and controlling persons
(if any), as the case may be, of such
Indemnified Party and any such affiliate, and shall be binding upon and inure
to the benefit of any successors, assigns, heirs and personal representatives
of the Company, such Indemnified
Party, any such affiliate and any such person.  The Company also agrees that neither any Indemnified Party nor any of such
affiliates, partners, directors, agents,
employees or controlling persons shall have any liability based on its or their
exclusive or contributory negligence or otherwise to the Company, the Acquired
Business or any person asserting
claims on behalf of or in right of the Company, the Acquired Business or any
other person in connection with or as a result of either this
arrangement or any matter referred to in the
Letters, except in the case of the Company, to the extent that any losses,
claims, damages, liabilities or
expenses incurred by the Company or its affiliates, stockholders, partners or
other equity holders have resulted from the gross negligence, willful
misconduct or bad faith of such Indemnified
Party in performing the services that are the subject of the Letters; provided,
however, that in no event shall such
Indemnified Party or such other parties have any liability for any indirect, consequential or punitive damages in
connection with or as a result of such Indemnified
Party’s or such other parties’ activities related to the Letters,  Any right
to trial by jury with respect to any action or proceeding arising in connection
with or as a result of either
this arrangement or any matter referred to in the Letters is hereby waived by
the parties hereto. The Company agrees that
any suit or proceeding arising in respect to this agreement or our
engagement will be tried exclusively in the U.S. District Court for the Southern District of New York or, if that court
does not have subject matter jurisdiction, in any state court located in the
City of New York, and the Company agrees to submit to the jurisdiction of, and to venue in, such courts.
 The provisions of this Annex A shall



 A-1
 






 



survive any termination or completion of the
arrangement provided by the Letters, and this Commitment
Letter shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws.



 A-2














 


 


Annex B


Pogo Producing Company Summary of Terms and
Conditions of the Bridge Loans


This Summary of Terms and Conditions outlines certain
terms of the Bridge Loans and the Bridge Loan Agreement referred to in the
Commitment Letter, of which this Annex B is a part. Certain capitalized terms
used herein are defined in the Commitment Letter.


	
  Borrower

  	
   

  	
  The Company.

  
	
   

  	
   

  	
   

  
	
  Guarantors

  	
   

  	
  Each of the Guarantors (if any) under the Credit
  Facility (collectively, the “Guarantors”)
  will guarantee (the “Guarantee”)
  all obligations under the Bridge Loans; provided,
  however, that the
  obligation of any particular subsidiary to issue a Guarantee will be
  suspended so long as that subsidiary has not guaranteed any other
  indebtedness of the Company or any of its subsidiaries (other than
  indebtedness under the Credit Facility).

  
	
   

  	
   

  	
   

  
	
  Ranking

  	
   

  	
  The Bridge Loans and the Guarantees will rank pari passu with all other senior existing and future indebtedness and
  guarantees of indebtedness of the Company and its subsidiaries, as the case
  may be (including, without limitation, the Acquired Business), including,
  without limitation, the indebtedness under the Credit Facility.

  
	
   

  	
   

  	
   

  
	
  Sole
  Lead Arranger, Sole

  Bookrunner, Sole Syndication Agent and Administrative

  	
   

  	
   

  
	
  Agent

  	
   

  	
  Goldman Sachs Credit Partners L.P. (“GSCP”; in its capacities as Sole Lead Arranger, Sole
  Bookrunner and Sole Syndication Agent, the “Arranger”;
  and, in its capacity as Administrative Agent, the “Administrative
  Agent”).

  
	
   

  	
   

  	
   

  
	
  Lenders

  	
   

  	
  GSCP and/or other financial institutions selected by
  GSCP (each, a “Lender” and, collectively, the “Lenders”).

  
	
   

  	
   

  	
   

  
	
  Loans

  	
   

  	
  Up to $500.0 million in aggregate principal amount
  of Senior Increasing Rate Loans due 2012 (the “Bridge
  Loans”); provided that
  the aggregate principal amount of the Bridge Loans will be reduced by an
  amount equal to the aggregate amount of any Permanent Securities sold on or
  before the date on which the Bridge Loans are made (in escrow or otherwise).

  
	
   

  	
   

  	
   

  
	
  Maturity

  	
   

  	
  Six years from the date of the making of the Bridge
  Loans. At any time on or after the first anniversary of the Closing Date, at
  the option of the applicable Lender, the Bridge Loans may be exchanged in
  whole or in part for Senior

  



 



 B-1
 






 



 


	
  

  	
   

  	
  Exchange Notes due 2012
  (the “Exchange Notes”) having an
  equal principal amount.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Exchange Notes will be
  issued pursuant to an Indenture that will have the terms set forth on
  Exhibit 1 to this Annex B.

  
	
   

  	
   

  	
   

  
	
  Interest

  	
   

  	
  The Bridge Loans will
  initially bear interest at a rate per
  annum equal to 6.875%. If the Bridge Loans are not repaid in whole
  within three months following the Closing Date, the interest rate on the
  Bridge Loans will increase by 50 basis points at the end of such three-month
  period and will increase by an additional 50 basis points at the end of each
  three-month period thereafter. Notwithstanding the foregoing, at no time will
  the interest rate in effect on the Bridge Loans be less than the rate in
  effect on the Credit Facility or exceed a per
  annum rate equal to the yield then in effect on United States
  Treasury Notes with a maturity of 10 years plus 600 basis points

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest will be payable
  quarterly in arrears and on the date of any prepayment of the Bridge Loans.

  
	
   

  	
   

  	
   

  
	
  Mandatory

  Repayment

  	
   

  	
  The net proceeds to the
  Company, any parent holding company of the Company or any subsidiary of the
  Company (including, without limitation, the Acquired Business following the
  Closing Date) from (i) any direct or indirect public offering or private
  placement of any debt or equity securities (other than issuances pursuant to
  employee stock plans), (ii) any future bank borrowings other than under
  the Credit Facility (including the increase of commitments permitted
  thereunder) as in effect on the Closing Date and borrowings of up to $100
  million under money market lines and (iii) subject to certain ordinary
  course exceptions (including any required pro rata prepayment of pari passu debt pursuant to the “asset
  sale” covenant contained in the indentures governing the Company’s existing
  senior subordinated notes), any future asset sales or receipt of casualty
  insurance proceeds will be used to redeem the Bridge Loans subject, except in
  the case of a Qualifying Refinancing Transaction (to be defined), to the
  required prior repayment of any amount outstanding under the Credit Facility,
  in each case, at 100% of the principal amount of the Bridge Loans redeemed
  plus accrued interest to the date of the redemption.

  
	
   

  	
   

  	
   

  
	
  Change of

  Control

  	
   

  	
  Each holder of Bridge
  Loans will be entitled to require the Company, and the Company must offer, to
  repay the

  



 



 B-2
 






 



 


	
  

  	
   

  	
  Bridge Loans held by such holder at a price of 100%
  of principal amount, plus accrued interest, upon the occurrence of a Change
  of Control (as defined in the indenture governing the Company’s 6.875% Senior
  Subordinated Notes due 2017 (the “2005 Indenture”)).
  Prior to making the repayment offer, the Company will, within 30 days of the
  Change of Control, repay all obligations under the Credit Facility or obtain
  any required consent of the lenders under the Credit Facility to make such
  repayment of the Bridge Loans.

  
	
   

  	
   

  	
   

  
	
  Optional

  Repayment

  	
   

  	
  The Bridge Loans may be prepaid, in whole or in
  part, at the option of the Company at any time upon three business days’
  written notice at a price equal to 100% of the principal amount thereof plus
  accrued interest to the date of redemption.

  
	
   

  	
   

  	
   

  
	
  Payments

  	
   

  	
  Payments by the Company will be made by wire
  transfer of immediately available funds.

  
	
   

  	
   

  	
   

  
	
  Representations

  and Warranties

  	
   

  	
  The Bridge Loan Agreement will contain such
  representations and warranties by the Company (with respect to the Company
  and the Acquired Business) as are usual and customary for financings of this
  kind or as are otherwise deemed appropriate by the Arranger for this transaction
  in particular (in its sole discretion).

  
	
   

  	
   

  	
   

  
	
  Covenants

  	
   

  	
  The Bridge Loan Agreement will contain such
  covenants by the Company (with respect to the Company and its subsidiaries)
  as are usual and customary for financings of this kind or as are otherwise
  deemed appropriate by the Arranger for this transaction in particular (in its
  sole discretion), based upon (and substantially identical to) the covenants
  in the 2005 Indenture. In addition, the Bridge Loan Agreement will contain a
  covenant that prohibits the Company from consummating any acquisition of
  assets or businesses for a purchase price that, individually or in the
  aggregate, exceeds $100.0 million (excluding like-kind exchanges or asset
  swaps).

  



 



 B-3
 






 



 


	
  Events of

  Default

  	
   

  	
  The Bridge Loan Agreement
  will include such events of default (and, as appropriate, grace periods) as are
  usual and customary for financings of this kind or as are otherwise deemed
  appropriate by the Arranger for this transaction in particular (in its sole
  discretion), based upon (and substantially identical to) the events of
  default in the 2005 Indenture.

  
	
   

  	
   

  	
   

  
	
  Conditions Precedent

  	
   

  	
  The several obligations of the Lenders to make, or
  cause one of their respective affiliates to make, the Bridge Loans will be
  subject to closing conditions deemed appropriate by the Arranger for
  financings of this kind generally and for this transaction in particular,
  including, without limitation, the following closing conditions:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.                                       Concurrent
  Transactions.  The Acquisition shall
  have been consummated pursuant to the Acquisition Agreement and all
  conditions precedent to the consummation of the Acquisition shall have been
  satisfied or, with the prior approval of the Arranger, waived. The terms of
  the Acquisition Agreement and the Bridge Loan Agreement shall be satisfactory
  in all respects to the Arranger and its counsel. The pro forma capitalization of the Company
  shall be as described in the Commitment Letter. There shall not exist (pro forma for the Acquisition and the
  financing thereof) any default or event of default under the Credit Facility,
  the Bridge Loans, the Bridge Loan Agreement or any of the other Loan
  Documents (as defined), or under any other material indebtedness of the
  Company or its subsidiaries.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.                                       Confirmatory
  Due Diligence.  The Arranger shall
  not have become aware of any information relating to conditions or events not
  previously described to the Arranger or constituting new information or
  additional developments concerning conditions or events previously disclosed
  to the Arranger which it, in its judgment, believe may have a material
  adverse effect on the condition (financial or otherwise), assets, liabilities
  (contingent or otherwise), properties, solvency. business, management or
  prospects of the Company or the Acquired Business.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.                                       Financial Statements. At least five days prior to the Closing
  Date, the Arranger shall have received audited financial statements of the
  Company for

  



 



 B-4
 






 



 


	
  

  	
   

  	
  each
  of the three fiscal years immediately preceding the Acquisition and any
  appropriate available unaudited financial statements for any interim period
  or periods of the Company and all other recent, probable or pending
  acquisitions.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.                                       Approvals
  and Consents. All necessary governmental, shareholder and third-party approvals and consents necessary or
  desirable in connection with the Acquisition and the financing thereof and
  the transactions contemplated thereby and otherwise referred to herein shall
  have been received and shall be in full force and effect, and all applicable
  waiting periods shall have expired without any action being taken by any
  applicable authority. The Arranger, in its sole discretion, shall be
  satisfied that the borrowings under the Bridge Loans and the performance by
  the Company of the transactions contemplated by the Commitment Letter, the
  Fee Letter and the Engagement Letter, including, but not limited to, the
  issuance of the Permanent Securities and the repayment of the Bridge Loans at
  maturity or upon a mandatory repayment event, will not conflict with, result
  in a breach or violation of any of the terms or provisions of, require a
  waiver or amendment to, or constitute a default under the Credit Facility,
  the indentures governing the Company’s senior subordinated notes or any other
  agreement governing material indebtedness of the Company or its subsidiaries.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.                                       Litigation, etc. There shall not exist any action, suit,
  investigation, litigation or proceeding pending or threatened in any court or
  before any arbitrator or governmental authority that, in the opinion of the
  Arranger, materially affects the Acquisition, the financing thereof or any of
  the other transactions contemplated hereby, or that has had or could have a
  material adverse effect on the Company or the Acquired Business or their
  respective subsidiaries, the Acquisition, the financing thereof, or any of
  the transactions contemplated hereby.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.                                       Availability under Credit Facility. After giving effect to the consummation
  of the Acquisition, the Company shall have availability under the Credit
  Facility in an amount to be agreed upon.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.                                       Performance of Obligations. All costs, fees, expenses (including,
  without limitation, legal fees and expenses) and other compensation

  



 



 B-5
 






 



 


	
  

  	
   

  	
  contemplated
  by the Commitment Letter, the Fee Letter and the Engagement Letter payable to
  GSCP, Goldman Sachs, the Arranger, the Administrative Agent or the Lenders
  shall have been paid to the extent due and the Company shall have complied in
  all material respects with all of its other obligations under the Commitment
  Letter, the Fee Letter and the Engagement Letter.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.                                       Funding Notice. The Lenders shall have received not less
  than three business days’ prior written notice of the Closing Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.                                       Corporate Structure: Organizational
  Documents. All agreements
  relating to, and the corporate structure and management of, the Company and
  its subsidiaries (including,    without
  limitation, the Acquired Business), and all organizational documents of such
  entities, shall be satisfactory to the Arranger.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.                                 Environmental Matters. 
  The Lenders shall have received reports and other information in form,
  scope and substance satisfactory to the Arranger concerning any environmental
  liabilities.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  11.                                 Customary Closing Documents. All documents required to be delivered
  under the definitive financing documents, including customary legal opinions,
  corporate records and documents from public officials and officers’
  certificates shall have been delivered. The Arranger shall have received all
  documentation and other information required by bank regulatory authorities
  under applicable “know-your-customer” and anti-money laundering rules and
  regulations, including the U.S.A. Patriot Act.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  12.                                 Solvency.  The Lenders shall have
  received a certificate from the chief financial officer of the Company, in
  form and substance satisfactory to the Arranger, supporting the conclusions
  that after giving effect to the Acquisition and the related transactions
  contemplated hereby, the Company will not be insolvent or be rendered
  insolvent by the indebtedness incurred in connection therewith, or be left
  with unreasonably small capital with which to engage in its businesses, or
  have incurred debts beyond its ability to pay such debts as they mature.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  13.                                 Satisfactory Documentation. 
  The definitive documentation evidencing the Bridge Loans shall

  



 



 B-6
 






 



 


	
  

  	
   

  	
  be prepared by counsel
  to the Arranger and shall be in form and substance satisfactory to the
  Arranger and the Lenders.

  
	
   

  	
   

  	
   

  
	
  Transferability
  and

  Participations

  	
   

  	
  Each of the Lenders will be free to sell or transfer
  all or any part of or any participation in any of the Bridge Loans to any
  third party with the consent of the Arranger and to pledge any or all of the
  Bridge Loans to any commercial bank or other institutional lender, to the
  extent permitted by law.

  
	
   

  	
   

  	
   

  
	
  Modification
  of the Bridge Loans

  	
   

  	
  Modification of the Bridge Loans may be made with
  the consent of Lenders holding greater than 50% of the Bridge Loans then
  outstanding, except that no modification or change may extend the maturity of
  any Bridge Loan or change the time of payment of interest on any Bridge Loan,
  reduce the rate of interest or the principal amount of any Bridge Loan, alter
  the redemption provisions of any Bridge Loan or reduce the percentage of
  holders necessary to modify or change the Bridge Loans, without the consent
  of Lenders holding 100% of the Bridge Loans affected thereby.

  
	
   

  	
   

  	
   

  
	
  Taxes,
  Reserve Requirements and Indemnities

  	
   

  	
  The Bridge Loan Agreement will provide that all
  payments will be made free and clear of any taxes (other than franchise taxes
  and taxes on overall net income), imposts, assessments, withholdings or other
  deductions whatsoever. Any foreign lenders will be required to furnish to the
  Arranger appropriate certificates or other evidence of exemption from U.S.
  federal tax withholding.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Company will indemnify the Lenders against all increased
  costs of capital resulting from reserve requirements or otherwise imposed, in
  each case subject to customary increased costs, capital adequacy and similar
  provisions to the extent not taken into account in the calculation of the
  Base Rate or the reserve adjusted Eurodollar Rate.

  
	
   

  	
   

  	
   

  
	
  Indemnity

  	
   

  	
  The Bridge Loan Agreement will contain customary and
  appropriate provisions relating to indemnity and related matters in a form
  reasonably satisfactory to the Arranger.

  
	
   

  	
   

  	
   

  
	
  Governing Law and

  Jurisdiction

  	
   

  	
  The Bridge Loan Agreement will provide that the
  Company will submit to the non-exclusive jurisdiction and venue of the
  federal and state courts of the State of New York and

  



 



 B-7
 






 



 


	
  

  	
   

  	
  will waive any right to
  trial by jury. New York law will govern the Loan Documents.

  
	
   

  	
   

  	
   

  
	
  Counsel
  to the Arranger and

  Administrative
  Agent

  	
   

  	
  Latham & Watkins
  LLP.

  



 


The foregoing is intended to summarize certain basic
terms of the Bridge Loans. It is not intended to be a definitive list of all of
the requirements of the Lenders in connection with the Bridge Loans.



 B-8














 


 


Exhibit 1
to Annex B


Summary of Terms and Conditions
of Exchange Notes


This Summary of
Terms and Conditions of Exchange Notes outlines certain terms of the Exchange Notes referred to in Annex B to the
Commitment Letter, of which this Exhibit 1 is a part. Capitalized terms used herein have the
meanings assigned to them in Annex B to the Commitment Letter.


At any time on or after the
first anniversary of the Closing Date, upon five or more business days prior notice, the Bridge Loans may, at the
option of a Lender, be exchanged for a principal amount of Exchange
Notes equal to 100% of the aggregate principal amount of the Bridge Loans so exchanged. No Exchange Notes will be
issued until the Company receives requests to issue at least $50.0 million in aggregate principal amount of
Exchange Notes. The Company will issue Exchange Notes under an indenture (the “Indenture”) that complies with the Trust Indenture Act of
1939, as amended. The Company will appoint a trustee reasonably acceptable to the Lenders.


	
  Maturity

  	
   

  	
  The Exchange Notes will mature on the sixth
  anniversary of the Closing Date.

  
	
   

  	
   

  	
   

  
	
  Interest Rate

  	
   

  	
  Each Exchange Note will bear interest at a fixed
  rate equal to the interest rate on the
  Bridge Loan surrendered in exchange
  for such Exchange Note as of the date of such exchange. Interest will be
  payable in arrears at the end of each fiscal quarter of the Company.

  
	
   

  	
   

  	
   

  
	
  Optional Redemption

  	
   

  	
  Exchange Notes will be non-callable until the fourth
  anniversary of the Closing Date. Thereafter,
  each Exchange Note will be callable
  at par plus accrued interest plus a premium equal to (i) one half of the
  coupon on such Exchange Note
  commencing on the fourth anniversary of the Closing Date and (ii) one quarter of the coupon on such Exchange Note commencing on the fifth
  anniversary of the Closing Date. In
  addition, prior to the third anniversary
  of the Closing Date, up to 35% of the original principal amount of each series of the Exchange Notes may be redeemed from the proceeds of a
  qualifying equity offer by the
  Company at a redemption price equal to par plus the coupon and accrued interest.

  
	
   

  	
   

  	
   

  
	
  Defeasance Provisions
  of Exchange Notes

  	
   

  	
  Customary.

  
	
   

  	
   

  	
   

  
	
  Modification

  	
   

  	
  Customary.

  
	
   

  	
   

  	
   

  
	
  Change of Control

  	
   

  	
  Customary at 101%.

  




 1
 






 



 


	
  Registration Rights

  	
   

  	
  The Company will file within 30 days after the first
  anniversary of the Closing Date and will use its best efforts to cause to
  become effective as soon thereafter as practicable, a shelf registration
  statement with respect to the Exchange Notes (a “Shelf
  Registration Statement”). If a Shelf Registration Statement is
  filed, the Company will keep such registration statement effective and
  available (subject to customary exceptions) until it is no longer needed to
  permit unrestricted resales of all of the Exchange Notes. If within 90 days
  from such first anniversary of the Closing Date (the “Effectiveness
  Date”) a Shelf Registration Statement for the Exchange Notes has
  not been declared effective, then the Company will pay liquidated damages in
  the form of increased interest of 50 basis points per annum
  on the principal amount of Exchange Notes and Bridge Loans outstanding to
  holders of such Exchange Notes and Bridge Loans who are unable freely to
  transfer Exchange Notes from and including the 91st day after such first
  anniversary of the Closing Date to but excluding the effective date of such
  Shelf Registration Statement. On the 90th day after the Effectiveness Date,
  the liquidated damages shall increase by 50 basis points per annum,
  and on each 90 day anniversary of the Effectiveness Date thereafter, shall
  increase by 50 basis points per annum, to
  a maximum increase in interest of 200 basis points per annum.
  The Company will also pay such liquidated damages for any period of time
  (subject to customary exceptions) following the effectiveness of a Shelf
  Registration Statement that such Shelf Registration Statement is not
  available for sales thereunder. All accrued liquidated damages will be paid
  on each quarterly interest payment date.

  
	
   

  	
   

  	
   

  
	
  Covenants

  	
   

  	
  The indenture relating to the
  Exchange Notes will contain covenants
  substantially identical to those contained in the 2005 Indenture.

  
	
   

  	
   

  	
   

  
	
  Events
  of Default

  	
   

  	
  The indenture relating to the
  Exchange Notes will provide for
  Events of Default substantially identical to those contained in the 2005 Indenture.

  



 


The foregoing is intended to summarize certain basic terms of the
Exchange Notes. It is not intended to be a definitive list of all of the
requirements of the Lenders in connection with the Exchange Notes.



 2