Document:

EMPLOYMENT AGREEMENT

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this “Agreement”), dated effective as of
January 1, 2004, by and between Warren Resources, Inc., a New York corporation
(the “Company”), and Ellis G. Vickers (the “Employee”). This Agreement shall
supercede and replace the prior Employment Agreement dated September 1, 2001
between the Company and the Employee.

WITNESSETH:

     WHEREAS, the Company desires to employ the Employee upon the terms
and conditions set forth in this Agreement; and

     WHEREAS, the Employee desires to accept an offer of employment with
the Company upon the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

     1. EMPLOYMENT. The Company hereby agrees to employ the Employee, and
the Employee hereby agrees to serve the Company, on the terms and conditions
hereinafter set forth in this Agreement.

     2. TERM. This Agreement, and the employment of the Employee by the
Company hereunder, will commence on the date hereof (the “Effective Date”) and
terminate on December 31, 2004 (the “Initial Term”), subject to termination as
set forth herein (the “Employment Period”). As used herein, the term “Employment
Year” shall mean each consecutive twelve (12) month period during the Employment
Period commencing on the Effective Date. Effective on the first anniversary of
the Effective Date, this Agreement shall be automatically extended indefinitely
until the Company or the Employee shall give ninety (90) days prior written
notice to the other party that it or he, as the case may be, in its or his sole
discretion, wishes to terminate this Agreement.

     3. POSITION AND DUTIES. Subject to the provisions of this Section 3,
during the Employment Period, the Employee shall serve as the Senior Vice
President and Associate General Counsel of the Company and Senior Vice President
and General Counsel of Warren E&P, Inc. The Employee shall faithfully perform
the duties and responsibilities normally associated with such positions, subject
to the oversight and direction of the Chief Executive Officer of the Company and
the Board of Directors of the Company.

 

 

     4. PLACE OF EMPLOYMENT. Generally, the Employee will fulfill all
duties and responsibilities to the Company as set forth herein from the office
of Warren Resources, Inc., located at 105 West 3rd Street, Suite 302, Roswell,
New Mexico 88201.

     5. BEST EFFORTS. The Employee shall devote his best efforts and all
of his business time exclusively to the performance of his duties and
responsibilities as set forth in this Agreement, which duties and
responsibilities shall be performed competently, carefully and faithfully.
Except as provided below, the Employee shall not, while an employee of the
Company and without the prior written consent of the Company, engage in any
other gainful occupation or activity which conflicts with or impinges upon the
full and faithful performance of the Employee’s duties, or otherwise violates
any other term or provision of this Agreement.

     6. THE EMPLOYEE’S COMPENSATION.

          (a) SALARY. During the Employment Period, for the services
described herein the Company shall pay to the Employee an annual base salary of
$218,905.00 (as adjusted pursuant to the terms hereof, the “Base Compensation”).
The Base Compensation shall be increased on each anniversary date of this
Agreement by any increases in the cost of living based on the changes in the
“Consumer Price Index” as published from time to time by the U.S. Department of
Commerce for the area of Roswell, New Mexico metropolitan area or Albuquerque,
New Mexico metropolitan area, whichever is applicable. The Base Compensation
will be paid to the Employee in accordance with the normal payroll practices of
the Company in effect from time to time, less all required withholdings for
benefits, federal, state and local taxes, if any. The amount of the Base
Compensation may, in the Company’s discretion, be increased by the Company on an
annual basis during the Employment Period. All increases to the Base
Compensation, if any, shall be based on the condition of the Company’s business
and results of operations and the Company’s evaluation of the Employee’s
individual performance for the relevant period. Any increases made to the Base
Compensation shall be in the discretion of the Company.

          (b) INCENTIVE BONUS COMPENSATION. In addition to the Base
Compensation to which the Employee is entitled under Section 6(a), the Employee
shall be eligible to be awarded incentive bonus compensation (the “Bonus
Compensation”) with respect to each calendar year or portion thereof during
which the Employee was employed by the Company hereunder equal to up to and
including 100% of the Employee’s Base Compensation. The criteria for determining
the amount of the Bonus Compensation shall be determined by mutual agreement
between the Employee and the Chief Executive Officer of the Company and shall by
approved by the Compensation Committee of the Board of Directors. Incentive
Bonus Compensation shall be paid within 90 days following the end of the
calendar year.

          (c) OPTIONS. Employee shall be entitled to participate in the
Company’s Equity Incentive Plan (the “Equity Incentive Plan”), and will be
awarded 20,000 options thereunder, exercisable at the price of $7.00 per share
of common stock for a period ending five years after the date of grant of the
option (the “Options”). The grant

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of such Options shall be documented with a formal award letter from the Company
to the Employee setting forth the terms and conditions of Employee’s Options.

     7. THE EMPLOYEE’S BENEFITS. As an employee of the Company, the
Employee shall be entitled to receive and enjoy the following benefits during
the Employment Period:

          (a) PARTICIPATION IN COMPANY BENEFIT PLANS. The Employee shall
be entitled to participate in and to receive benefits generally available to
senior executives under those certain employee benefit plans and arrangements
which may be offered by the Company from time to time during the Employment
Period, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements by the Company. The
Company shall provide full medical, hospitalization and dental insurance
coverage for the Employee.

          (b) VACATIONS. The Employee shall be entitled to four (4)
weeks of paid vacation per Employment Year, provided that any vacations are to
be taken at times mutually agreeable to the Company and the Employee. In
addition to the foregoing, the Employee shall be entitled to receive all paid
holidays given by the Company to its employees generally. If Employee has not
used his accrued but unused vacation days during an Employment Year, such days
may not be carried over to another and shall be deemed waived by the Employee.
Any accrued but unused vacation days in an Employment Year shall be reimbursed
in cash to Employee upon a termination of his employment Without Cause
hereunder.

          (c) BUSINESS EXPENSE REIMBURSEMENT. The Company shall promptly
reimburse or pay the Employee for all reasonable and necessary business expenses
paid or incurred by the Employee in performing his duties and responsibilities
hereunder; provided, that, the Employee shall have (i) submitted such reasonable
documentation as may be requested by the Company in accordance with the
reimbursement policies of the Company in effect from time to time and (ii)
obtained the prior approval of the Company for all charges in excess of $5,000.

          (d) LIFE INSURANCE. The Company shall provide term life
insurance in the amount of $500,000 on the life of Employee, with Employee’s
spouse, or other Employee designee, as the named beneficiary.

     8. TERMINATION OF EMPLOYMENT. The Employee’s employment with the
Company may be terminated as follows:

          (a) WITH CAUSE. The Employee’s employment with the Company may
be terminated by the Company at any time for “Cause.” As used herein, the term
“Cause” shall refer to the following: (i) theft, fraud, dishonesty, gross
negligence or willful malfeasance by the Employee in connection with the
performance of his duties hereunder (collectively, “Theft Events”); (ii) a
material breach or failure to fulfill and perform the Employee’s duties
hereunder, which breach or failure is not cured to the reasonable satisfaction
of the Company within forty-five (45) days after written demand

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from the Company (if such breach is at all curable during such time in the
reasonable determination of the Company; failing such determination, “Cause”
shall have occurred upon the occurrence of such breach or failure); (iii)
conviction of a felony or a crime involving moral turpitude; (iv) habitual
neglect of duties or misconduct in the performance of the Employee’s duties and
responsibilities hereunder following an initial notice of warning from the
Company with respect thereto; or (v) a repeated or ongoing failure to comply
with the reasonable directions and instructions of management of the Company in
connection with the performance of the Employee’s duties and responsibilities
hereunder following an initial notice of warning from the Company with respect
thereto. Upon termination for Cause, all rights of the Employee under this
Agreement shall immediately terminate and the Company shall have no further
obligations. A termination of the Employee’s employment with the Company by the
Employee upon his voluntary resignation or voluntary retirement shall be treated
as a termination for Cause hereunder. In connection therewith, the Employee
covenants and agrees not to voluntarily resign or voluntarily retire without
providing the Company with ninety (90) days’ prior written notice. Upon a
termination for Cause, Employee shall receive in full satisfaction of all
amounts due to him an amount equal to the remainder of Base Compensation through
date of termination. Notwithstanding any of the foregoing, in the event that the
Company has terminated Employee’s employment on account of a Theft Event, the
Company shall be entitled to withhold from any amounts otherwise due to Employee
under this Subsection 8(a) the amount of monetary damages incurred by the
Company from such Theft Event which shall be quantified and determined in
writing by the Company within 90 days after the date of termination. The
Employee agrees that his eligibility to receive any and all amounts described in
this Section 8(a) shall be subject to and contingent upon the Employee’s
execution of a full and complete general release in favor of the Company and its
affiliated persons and entities, satisfactory to the Company in its sole
discretion.

          (b) WITHOUT CAUSE. The Employee’s employment with the Company
may be terminated by the Company at any time without Cause, but in the event of
any such termination pursuant to this Section 8(b), the Company will pay, in
addition to any other amounts due hereunder, the Employee severance pay in an
amount equal to the greater of (i) the balance of all of Employee’s remaining
and unpaid Base Compensation due for the balance of the then existing term
hereunder, or (ii) 90 days of Base Compensation, payable upon execution and
delivery of the release described below, less all required withholdings and in
accordance with then current payroll practices of the Company and applicable law
or regulation. In addition, Employee shall receive any accrued but unpaid
vacation time for the current Employment Year. The Employee agrees that his
eligibility to receive any and all amounts described in this Section 8(b) shall
be subject to and contingent upon the Employee’s execution of a full and
complete general release in favor of the Company and its affiliated persons and
entities, satisfactory to the Company in its sole discretion.

          (c) TERMINATION FOR DEATH OR DISABILITY. The Employee’s
employment hereunder shall terminate immediately upon the Employee’s death or
Disability. For purposes of the preceding sentence, the term “Disability” shall
mean the Employee’s inability, by reason of physical or mental incapacity
(determined by a licensed physician reasonably acceptable to the Employee and
the Company), to perform the

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essential functions of his job, with or without a reasonable accommodation by
the Company, for an aggregate of ninety (90) days during any twelve (12) month
period, provided further that during any such continuous period, the Employee’s
Base Compensation payable under Section 6(a) shall be reduced by the amount, if
any, of payments to the Employee under any short-term or long-term disability
insurance policy, plan or program maintained by the Company. During any period
when the Employee implicitly or explicitly purports to be unable to perform his
duties hereunder by reason of physical or mental illness, incapacity or
disability, the Employee, at the request and expense of Company, shall submit to
one or more examinations by a physician of the Company’s choice. A termination
of the Employee’s employment with the Company due to any of the foregoing
provisions of this Section 8(c) shall be treated as a termination without Cause
hereunder.

          (d) TERMINATION BY EMPLOYEE FOR GOOD REASON. Employee shall
have the right to terminate this Agreement for “Good Reason”. The following
events affecting Employee shall constitute “Good Reason” within the meaning of
this Agreement: (i) if Employee, at any time during the Employment Period
(except during a period of Disability), has suffered a material change or
diminution in duties and responsibilities from those contemplated herein, or
(ii) if there is a Change of Control Event, as defined below.

     For purposes of this Employment Agreement, a “Change of Control”
shall mean the happening of any of the following:

          (i) the acquisition by any person or group deemed a person under
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934 (the
“Exchange Act”) (other than the Company and its subsidiaries as determined
immediately prior to that date) of beneficial ownership, directly or indirectly
(with beneficial ownership determined as provided in Rule 13d-3, or any
successor rule, under the Exchange Act), of a majority of the total combined
voting power of all classes of stock of the Company having the right under
ordinary circumstances to vote at an election of the Board of Directors of the
Company, if such person or group deemed a person was not a beneficial owner of
at least five percent (5%) of such total combined voting power of the Company on
the date of this Agreement;

          (ii) the election to the Board of Directors of the Company of
members as a result of which a majority of the Board of Directors shall consist
of persons who are not members of the Board of Directors as of the Effective
Date, except in the event that such slate of Directors is proposed by the
management of the Company;

          (iii) the date of approval by the stockholders of the Company of
an agreement providing for the merger or consolidation of the Company with
another corporation or other entity where (x) stockholders of the Company
immediately prior to such merger or consolidation would not beneficially own
following such merger or consolidation shares entitling such stockholders to 50%
or more of all votes (without consolidation of the rights of any class of stock
to elect directors by a separate class vote) to which all stockholders of the
surviving corporation would be entitled in the election of directors, or (y)
where the members of the Board of Directors, immediately prior to such

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merger or consolidation, would not, immediately after such merger or
consolidation, constitute a majority of the board of directors of the surviving
corporation; or

          (iv) the sale of all or substantially all of the assets of the
Company.

               (e) STATUS UPON TERMINATION. The termination of this
Agreement, and the Employee’s employment hereunder, for any reason whatsoever
shall constitute the Employee’s effective termination and resignation from any
other positions or duties with the Company and all of its affiliates.

               (f) EFFECT OF TERMINATION.

               (i) In the event of a termination of the Employee’s
employment with the Company hereunder for any reason, in addition and
subject to the provisions of Sections 8(a), 8(b), 8(c) and 8(d), the
Employee shall be entitled to receive all Base Compensation and accrued
benefits owing through the date of termination in accordance with the
Company’s normal practices then in effect.

               (ii) In the event of a termination of the Employee’s
employment without Cause pursuant to Sections 8(b), 8(c) or 8(d) above,
the Company shall also pay the Employee severance compensation in
accordance with Section 8(b) above. Furthermore, if the Employee is
terminated without Cause, or the employment ceases under Section 8(c) or
8(d), all unvested options granted to the Employee pursuant to the Equity
Incentive Plan shall become fully vested and be kept in effect for 90 days
following the Employee’s termination of employment.

               (iii) In the event of a termination of the Employee’s
employment with the Company hereunder for Cause pursuant to Section 8(a)
above, all rights of the Employee under this Agreement shall immediately
terminate and the Company shall have no further obligations hereunder,
subject to Section 8(f)(i) above and this provision. Furthermore, if the
Employee is terminated for Cause, all unvested options granted to the
Employee pursuant to the Equity Inventive Plan shall terminate.

          9. NONCOMPETITION AND CONFIDENTIALITY.

               (a) NONCOMPETITION. During the Employment Period and, in the
case of a termination of the Employee’s employment for Cause, for a period of
six (6) months following the date of termination of employment, or, in the case
of a termination of the Employee’s employment without Cause, for a period of one
day following the date of termination of employment (the “Covered Period”), the
Employee agrees not to engage in any Competitive Activity within the States of
New York, California, New Mexico, Texas and Wyoming. As used herein, the term
“Competitive Activity” shall mean the following: (i) providing competitive
services, other than on behalf of the Company, to any Customer (as defined
below); (ii) serving as an officer, director, employee, consultant, advisor,
agent

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or representative of, or otherwise associating in any other capacity with, any
person, corporation, partnership, limited liability company, sole
proprietorship, association or other business enterprise, other than the
Company, engaged in the business of oil and gas exploration, drilling and
production or any other business in which the Company is engaged (each, a
“Competitive Enterprise”), or engaging individually in any Competitive
Enterprise; (iii) owning or acquiring, directly or indirectly, any interest in
any Competitive Enterprise (provided, however, the Employee shall be allowed to
passively own for investment purposes, directly or indirectly, no more than ten
percent (10%) of the issued and outstanding publicly traded securities of any
issuer engaged in a Competitive Enterprise); (iv) soliciting or inducing any
partner, stockholder, member, principal, director, officer, employee,
consultant, agent or other representative of the Company or one or more
affiliates to leave the employ or retention of the Company or such affiliate or
hiring away any of the foregoing persons; and/or (v) encouraging, requesting or
advising, explicitly or implicitly, any Customer or supplier of the Company or
one or more of its affiliates to withdraw, curtail or cancel its business
relationships with the Company or any affiliate thereof (unless expressly
requested to do so by the Company as part of the Employee’s employment services
provided hereunder).

     As used in this Section 9, the term “Customer” shall include any
person who is or was a customer of the Company or an affiliate thereof at any
time during the period commencing with the Employment Period through the end of
the Covered Period.

          (b) CONFIDENTIALITY. During the Employment Period and for a
period of three (3) years thereafter, the Employee shall not, except as may
otherwise be required by law, directly or indirectly disclose to any person or
entity, or use or cause to be used in any manner adverse to the interests of the
Company or any affiliate thereof, any Confidential Information (as defined below
in this Section 9(b)). The Employee agrees that, upon the termination of his
employment with the Company for any reason, all Confidential Information (other
than a copy of this Agreement and any other agreements that have been personally
executed by the Employee other than in his capacity as an officer of the
Company) and duplicates thereof in the possession or control of the Employee, in
any form or format, including, without limitation, written, visual, audio,
electronic or magnetic formats, shall forthwith be returned to the Company and
shall not be retained by the Employee or furnished or communicated to any third
party in any form whatsoever.

     As used in this Section 9(b), the term “Confidential Information”
shall mean the following: (i) information disclosed to the Employee or known by
the Employee as a consequence of the Employee’s relationship with the Company or
any Affiliate thereof, as defined below, not generally known in the Company’s
business, about the Company’s or an Affiliate’s employees, customers, directors,
officers, partners, shareholders, advertising methods, public relations methods,
business plans, operations, methods, processes and forecasts, vendors, finances,
trade marks, trade secrets, source code, patent applications, manuals, designs,
technical specifications and other intellectual property; (ii) information
disclosed to the Employee or known by the Employee as a consequence of the
Employee’s relationship with the Company or any Affiliate thereof, not generally
known in the businesses in which the customers of the Company or its affiliates
are or may be engaged, about the products, processes, operations, trade
information and services of any such

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customer; or (iii) information disclosed to the Employee by the Company or any
of its affiliate which is marked as “confidential” or, if communicated verbally,
is followed up by written correspondence designating such information as
“confidential.” Affiliate shall mean any person or entity that directly, or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Company.

          (c) SEVERABILITY. The invalidity or nonenforceability of any
provision of this Section 9 in any respect shall not affect the validity or
enforceability of the other provisions of this Section 9 in any other respect,
or of any other provision of this Agreement. In the event that any provision of
this Section 9 shall be held invalid or unenforceable by a court of competent
jurisdiction by reason of the geographic or business scope or the duration
thereof or for any other reason, such invalidity or unenforceability shall
attach only to the particular aspects of such provision found invalid or
unenforceable as applied and shall not affect or render invalid or unenforceable
any other provision of this Section 9 or the enforcement of such provision in
other circumstances, and this Section 9 shall be construed as if the geographic
or business scope or the duration of such provision or other basis on which such
provision has been challenged had been more narrowly drafted so as not to be
invalid or unenforceable.

     10. BUSINESS OPPORTUNITIES. During the Employment Period, the
Employee agrees to bring all business opportunities to the Company relating to
or otherwise associated with the business or businesses then conducted by the
Company or each affiliate thereof, or business or businesses proposed to be
conducted by the Company.

     11. RIGHTS TO WORK PRODUCT. The Employee agrees that all work
performed by the Employee pursuant hereto shall be the sole and exclusive
property of the Company, in whatever stage of development or completion. With
respect to any copyrightable works prepared in whole or in part by the Employee
pursuant to this Agreement, including compilations of lists or data, the
Employee agrees that all such works will be prepared as “work-for-hire” within
the meaning of the Copyright Act of 1976, as amended (the “Act”), of which the
Company shall be considered the “author” within the meaning of the Act. In the
event (and to the extent) that such works or any part or element thereof is
found as a matter of law not to be a “work-for-hire” within the meaning of the
Act, the Employee hereby assigns to the Company the sole and exclusive right,
title and interest in and to all such works, and all copies of any of them,
without further consideration, and agrees, to the extent reasonable under the
circumstances, to cooperate with the Company to register, and from time to time
to enforce, all patents, copyrights and other rights and protections relating to
such works in any and all countries. To that end, the Employee agrees to execute
and deliver all documents requested by the Company in connection therewith, and
the Employee hereby irrevocably designates and appoints the Company as the
Employee’s agent and attorney-in-fact to act for and on behalf of the Employee
and in the Employee’s stead to execute, register and file any such applications,
and to do all other lawfully permitted acts to further the registration,
protection and issuance of patents, copyrights or similar protections with the
same legal force and effect as if executed by the Employee. The Company shall
reimburse the Employee for all reasonable costs and expenses incurred by the
Employee pursuant to this Section 11.

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     12. NO DISPARAGING STATEMENTS. During the Term of employment and for
one (1) year after termination of this Agreement for any reason whatsoever, the
Employee and the Company agree to refrain from making any disparaging
statements, either orally or in writing, about the other party (and, on the part
of the Employee, about any affiliate of the Company, or any directors, officers,
shareholders, employees, agents or other representatives of the Company or any
affiliate thereof).

     13. SURVIVAL. The provisions of Sections 8(b), 8(c), 8(d), 8(f), 9,
11, 12, 14, 15, 16 and 17 hereof shall survive the termination of this Agreement
for the applicable time period necessary to fully effectuate the provisions of
such sections.

     14. COMPLIANCE WITH OTHER AGREEMENTS. The Employee and the Company
each hereby represent and warrant to the other that the execution and delivery
of this Agreement and the performance of such party’s obligations hereunder will
not, with or without the giving of notice and/or the passage of time, (i)
violate any judgment, writ, injunction or order of any court, arbitrator or
governmental agency applicable to such party, or (ii) conflict with, result in
the breach of any provision of or the termination of, or constitute a default
under, any agreement to which such party is a party or by which such party is or
may be bound. The parties agree to indemnify and hold harmless each other from
any liability, judgment or claim incurred, entered or made against such party
based on its reliance on the representations and warranties made in this Section
14, including all costs and expenses and attorney’s fees incurred or paid by
such party in connection with the foregoing.

     15. INJUNCTIVE RELIEF. The Employee acknowledges and agrees that the
Company and its affiliates are engaged in a highly competitive business and that
the protections of the Company and each such affiliate set forth in Sections 9,
10 and 11 of this Agreement are fair and reasonable and are of vital concern to
the Company and its affiliates. Further, the Employee acknowledges and agrees
that monetary damages for any violation of such Sections will not adequately
compensate the Company and its affiliates with respect to any such violation.
Therefore, in the event of a breach by the Employee of any of the terms and
provisions contained in Sections 9, 10 or 11 hereof, the Company shall be
entitled to institute legal proceedings to enforce the specific performance of
this Agreement by the Employee and to enjoin the Employee from any further
violations. The remedies available to the Company pursuant to this Section 15
may be exercised cumulatively by the Company in conjunction with all other
rights and remedies provided by law.

     16. ARBITRATION OF DISPUTES. If any dispute shall arise between the
Employee and the Company in connection with this Agreement, and such dispute
cannot be resolved amicably by the parties, the same shall be conclusively and
finally resolved by binding arbitration. Any party hereto may commence an
arbitration proceeding by providing written notice to the other party requesting
the arbitration of an unresolved dispute. Each such dispute, if any, shall be
submitted to an arbitrator acceptable to both parties. If either the Employee or
the Company refuses or neglects to agree to appoint an arbitrator within thirty
(30) days after receipt of written notice from the other party requesting the
other party to do so, the American Arbitration Association may appoint such

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arbitrator. The arbitrator shall be experienced in the subject matter of the
dispute. Except as otherwise specifically set forth herein, the arbitrators
shall conduct the arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The decision in writing of the
arbitrator, when filed with the parties hereto, shall be final and binding on
both parties. Judgment may be entered upon the final decision of the arbitrator
in any court having jurisdiction. Such arbitration shall take place in New York,
New York.

     Notwithstanding anything to the contrary contained in this Section
16, nothing shall prohibit the Company or Employee from pursuing all legal and
equitable remedies available to the Company or Employee in order to enforce the
provisions of Sections 9, 10 and 11 of this Agreement. To the extent that any
court action is permitted consistent with or to enforce this Agreement, the
parties hereby consent to the jurisdiction of the federal or state courts
sitting in any state where the Company maintains an office. Accordingly, with
respect to any such court action, all of the parties hereto (a) submit to the
personal jurisdiction of such courts, (b) consent to service of process and (c)
waive any other requirement (whether imposed by statute, rule of court, or
otherwise) with respect to personal jurisdiction or service of process.

     17. AMENDMENT; WAIVER; DISCHARGE. No provision of this Agreement may
be amended, waived or discharged unless such amendment, waiver or discharge is
agreed to in writing and signed by the Employee and a duly authorized
representative of the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.

     18. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

     19. NOTICES. All notices, demands and other communications provided
for in this Agreement shall be in writing and shall be delivered by hand or sent
via fax transmission (with written fax confirmation) or mailed postage prepaid
or by registered, certified or express mail or reputable overnight courier
service, charges prepaid, and shall be deemed given when so delivered, if
delivered by hand, or upon receipt of reasonably adequate fax confirmation, if
faxed, or, if mailed, five (5) business days after mailing (or one (1) business
day in the case of express mail or overnight courier service), addressed as
follows:

	 	 	 
	

	 	If to the Employee:
	 
	 	 
	

	 	Ellis G. Vickers
	

	 	P.O. Box 1952
	

	 	Roswell, NM 88202-1952

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	 	If to the Company:
	 
	 	 
	

	 	Warren Resources, Inc.
	

	 	489 Fifth Avenue
	

	 	32nd Floor
	

	 	New York, NY 10016
	

	 	Attention: Chief Executive Officer
	

	 	(Fax): (212) 697-9466
	

	 	(Tel.): (212) 697-9660

or to such other address or person as any party may have furnished to the other
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.

     20. HEADINGS. All headings contained in this Agreement are for
reference purposes only and shall not in any way effect the meaning or
interpretation of any provision or provisions of this Agreement.

     21. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
of the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, understandings,
arrangements, communications, representations or warranties, whether oral or
written, by any party or representative of any party hereto.

     22. ASSIGNMENT AND TRANSFER. The Employee’s rights and obligations
under this Agreement shall not be transferable by assignment or otherwise, and
any purported assignment, transfer or delegation thereof shall be void. This
Agreement shall inure to the benefit of, and be binding upon and enforceable by,
any purchaser of substantially all of the Company’s assets, any corporate
successor to the Company or any assignee thereof.

     23. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

     24. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to its conflicts of law principles.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date and year first above written.

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	 	WARREN RESOURCES, INC.

 	 
	 	By:  	/s/ Norman F. Swanton
 	 
	 	 	Name:  	Norman F. Swanton 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

	 	 	 	 	 
	 	 	 
	 	                                          /s/ Ellis G. Vickers
 	 
	 	Ellis G. Vickers 	 
	 	 	 
	 

12EX-10.1:

 

EXHIBIT 10.1

EXECUTION COPY

CITICORP NORTH AMERICA, INC.

CITIGROUP GLOBAL MARKETS INC.

390 GREENWICH STREET

NEW YORK, NEW YORK 10013

August 15, 2004

LifePoint Hospitals, Inc.

103 Powell Court, Suite 200

Brentwood, TN 37027

	Attention:	 	Michael J. Culotta

Chief Financial Officer

Senior Secured Credit Facilities

Commitment Letter

Ladies and Gentlemen:

LifePoint Hospitals, Inc. (“Acquiror” or “you”) has advised Citigroup (as
defined below) that Acquiror desires to establish the senior secured credit
facilities described herein (the “Facilities”), the proceeds of which will be
used to finance the transactions described in Exhibit A hereto (the
“Transaction Description”). Capitalized terms used in this letter agreement but
not defined herein shall have the meanings given to them in the Transaction
Description.

Subject to the terms and conditions described in this letter agreement and the
attached Exhibits A, B and C (collectively, the “Exhibits”, and together with
the Fee Letter referred to below, this “Commitment Letter”), Citigroup is
pleased to inform Acquiror of Citigroup’s commitment to provide the entire
principal amount of the Facilities. It is understood and agreed that any
reduction in the cash component of the purchase price for the Acquisition shall
be allocated to a reduction of the Facilities as Citigroup and you mutually
agree.

For purposes of this Commitment Letter, “Citigroup” or “we” or “us” shall mean
Citicorp North America, Inc. and/or any affiliate thereof, including Citigroup
Global Markets Inc. (“CGMI”), as Citigroup shall determine to be appropriate to
provide the services contemplated herein.

1. Conditions Precedent

The commitment of Citigroup hereunder is subject to:

     (a) Citigroup not having discovered or otherwise become aware of any
information not previously disclosed to or publicly available to Citigroup
that is inconsistent in a material and adverse manner with Citigroup’s
understanding, based on the information provided to or publicly available to
Citigroup prior to the date hereof, of the information or projections of
Acquiror and its subsidiaries (after giving effect to the Transactions).

     (b) The preparation, execution and delivery of definitive documentation
with respect to the Facilities, including credit agreements, security
agreements and guarantees incorporating substantially the terms and
conditions outlined in this Commitment Letter and otherwise reasonably
satisfactory to Citigroup and its counsel (the “Operative Documents”). The
Acquisition Agreement shall have

 

 

been executed and delivered by each of Acquiror, Acquisition Sub and Target
in a form that is consistent in all material respects with the last draft
supplied to Citigroup prior to the date hereof.

     (c) The absence of any event or occurrence which has resulted in or
could reasonably be expected to result in any material adverse change in the
business, assets, results of operations or financial condition of Acquiror,
its subsidiaries and the Acquired
Business, taken as a whole, since December 31, 2003.

     (d) The representations and warranties of the Acquiror set forth in
Section 8 hereof, and the representations and warranties set forth in the
Operative Documents, shall be true and correct in all material respects as of
the Closing Date.

     (e) The payment in full of all fees, expenses and other amounts payable
under this Commitment Letter and the Fee Letter.

Please note that the terms and conditions of Citigroup’s commitment hereunder
(other than the conditions precedent to closing) are not limited to those set
forth in this Commitment Letter and that those matters that are not covered or
made clear in this Commitment Letter shall be consistent with those set forth
in this Commitment Letter and otherwise shall be customary for financings of
this type and shall be subject to mutual agreement of the parties.

2. Commitment
Termination

Citigroup’s commitment set forth in this Commitment Letter will terminate on
the earlier of March 31, 2005 and the date the Operative Documents become
effective; provided that March 31, 2005 shall be subject to extension to the
date specified by Section 10.1(g) of the Acquisition Agreement, as in effect on
the date hereof, but in no event later than May 31, 2005. Before such date,
Citigroup may terminate its commitment hereunder upon the termination of the
Acquisition Agreement.

3. Syndication

Citigroup reserves the right, in consultation with you, before or after the
execution of the Operative Documents, to syndicate all or a portion of its
commitment to one or more other financial institutions reasonably acceptable to
Citigroup that will become parties to the Operative Documents pursuant to
syndications to be managed by Citigroup (the financial institutions becoming
parties to the Operative Documents being collectively referred to herein as the
“Lenders”). You understand that Citigroup intends to commence syndication
efforts with respect to the Facilities promptly and it may elect to appoint one
or more agents to assist in such syndication efforts.

Citigroup will act as the sole Lead Arranger, sole Book Runner and
Administrative Agent with respect to the Facilities and will manage all aspects
of the syndication in consultation with Acquiror, including the timing of all
offers to potential Lenders, the determination of all amounts offered to
potential Lenders, the selection of Lenders, the allocation of commitments
among the Lenders, the assignment of any titles and the compensation to be
provided to the Lenders.

You shall take all action that Citigroup may reasonably request to assist it in
forming a syndicate acceptable to Citigroup in consultation with you. Your
assistance in forming such syndicate shall include but not be limited to: (i)
making senior management, representatives and advisors of Acquiror and the
Acquired Business available to participate in informational meetings with
potential Lenders at such times and places as Citigroup may reasonably request;
(ii) using your reasonable efforts to ensure that the syndication effort
benefits from Acquiror’s and the Acquired Business’s existing lending
relationships; (iii) assisting (including using your reasonable efforts to
cause your affiliates and advisors to assist) in the preparation of a
confidential information memorandum for the Facilities and other marketing
materials to be used in connection with the syndication; (iv) causing Bor-

-2-

 

rower to provide Citigroup with all projections, including updated projections,
from time to time reasonably requested by Citigroup from the date of this
Commitment Letter through the successful completion of the syndication of the
Facilities; and (v) promptly providing Citigroup with all information
reasonably deemed necessary by it to successfully complete the syndication.

To ensure an orderly and effective syndication of the Facilities, you agree
that, until the termination of the syndication (as determined by Citigroup),
you will not and will not permit any of your subsidiaries or the Acquired
Business to, syndicate or issue, attempt to syndicate or issue, announce or
authorize the announcement of the syndication or issuance of any debt security
or commercial bank or other debt facility (including any renewals thereof),
without the consent of Citigroup (such consent not to be unreasonably
withheld).

You agree that no additional agents, co-agents or lead arrangers will be
appointed, or other titles conferred, without the consent of Citigroup (such
consent not to be unreasonably withheld); provided that you shall have the
right to appoint one or more financial institutions reasonably acceptable to
Citigroup as documentation agent or syndication agent, in each case so long as
such financial institution, together with its affiliates, has committed to
provide a portion of the Revolving Facility in an amount acceptable to
Citigroup. You agree that no Lender will receive any compensation of any kind
for its participation in the Facilities, except as expressly provided in the
Fee Letter or in the Exhibits.

4. Fees

In addition to the fees described in the Exhibits, you will pay (or cause to be
paid) the non-refundable fees set forth in the letter agreement dated the date
hereof (the “Fee Letter”) between you and Citigroup. The terms of the Fee
Letter are an integral part of Citigroup’s commitment hereunder and constitute
part of this Commitment Letter for all purposes hereof, and compliance with the
terms thereof is a condition precedent to Citigroup’s commitment. Each of the
fees described in the Fee Letter and Exhibits B and C shall be nonrefundable
when paid.

5. Indemnification

You agree to indemnify and hold harmless Citigroup, each Lender and each of
their respective affiliates and each of their respective officers, directors,
employees, agents, advisors and representatives (each, an
“Indemnified Person”)
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
joint or several, that may be incurred by or asserted or awarded against any
Indemnified Person (including, without limitation, in connection with, any
investigation, litigation or proceeding or the preparation of any defense in
connection therewith) in each case arising out of or in connection with or
relating to this Commitment Letter or the Operative Documents or the
transactions contemplated hereby or thereby, or any use made or proposed to be
made with the proceeds of the Facilities, except to the extent such claim,
damage, loss, liability or expense is found in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted primarily from such
Indemnified Person’s gross negligence or willful misconduct. In the case of an
investigation, litigation or proceeding to which the indemnity in this
paragraph applies, such indemnity shall be effective, whether or not such
investigation, litigation or proceeding is brought by you, Acquisition Sub,
Borrower, the seller of the Acquired Business, any of your or their respective
securityholders or creditors, an Indemnified Person or any other person, or an
Indemnified Person is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated.

No Indemnified Person shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to you, Acquisition Sub, Borrower, the Acquired
Business or any of your or their securityholders or creditors for or in
connection with the transactions contemplated hereby, except to the extent such
liability is determined in a final, nonappealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Person’s gross
negligence or willful misconduct. In no event, however shall any Indemnified
Party be liable for any spe-

-3-

 

cial, indirect, consequential or punitive damages (including, without
limitation, any loss of profits, business or anticipated savings).

6. Costs and Expenses

You shall pay or reimburse Citigroup upon receipt of a reasonably detailed
invoice for all reasonable costs and expenses incurred by Citigroup (whether
incurred before or after the date hereof) in connection with the Facilities and
the preparation, negotiation, execution and delivery of this Commitment Letter,
the Operative Documents and any security arrangements in connection therewith,
including, without limitation, the reasonable fees and disbursements of
counsel, regardless of whether any of the transactions contemplated hereby are
consummated. You further agree to pay all costs and expenses of Citigroup
(including, without limitation, reasonable fees and disbursements of counsel)
incurred in connection with the enforcement of any of its rights and remedies
hereunder.

7. Confidentiality

By accepting delivery of this Commitment Letter, you agree that this Commitment
Letter is for your confidential use only and that neither its existence nor the
terms hereof will be disclosed by you to any person other than the officers,
directors, employees, accountants, attorneys and other advisors of Acquiror and
Acquisition Sub, and then only on a confidential and “need to know” basis in
connection with the transactions contemplated hereby. Notwithstanding the
foregoing, following your acceptance of the provisions hereof and your return
of an executed counterpart of this Commitment Letter to Citigroup as provided
below, (i) you may disclose this Commitment Letter (and a version of the Fee
Letter redacted in a manner satisfactory to Citigroup) to the Acquired Business
and its officers, directors, employees, accountants, attorneys and other
advisors on a confidential and “need to know” basis in connection with the
Acquisition, (ii) you may file a copy of this Commitment Letter (other than the
Fee Letter) in any public record in which it is required by law to be filed and
(iii) you may make such other public disclosures of the terms and conditions
hereof or thereof as you are required by law, in the opinion of your counsel,
to make.

8. Representations and Warranties

You represent and warrant that (i) all information (other than financial
projections) that has been or will hereafter be made available to Citigroup,
any Lender or any potential Lender by or on behalf of you, Acquisition Sub, or
any of your representatives (and, to the best of your knowledge, all
information (other than financial projections) that has been or will hereafter
be made available to Citigroup, any Lender or any potential Lender by or on
behalf of the Acquired Business or any of their representatives) in connection
with the transactions contemplated hereby taken as a whole is and will be
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 in order to make the statements contained therein not misleading in
light of the circumstances under which such statements were or are made and
(ii) all financial projections, if any, that have been or will be prepared by
or on behalf of you, Acquisition Sub or any of your representatives (and, to
the best of your knowledge, all financial projections that have been or will be
prepared by or on behalf of the Acquired Business or any of their
representatives) and made available to Citigroup, any Lender or any potential
Lender have been or will be prepared in good faith based upon assumptions that
you believe to be reasonable at the time made and at the time the related
financial projections are made available to Citigroup (it being understood that
projections are subject to significant uncertainties and contingencies, many of
which are beyond your control and that no assurance is or can be given that any
projections will be realized). If, at any time from the date hereof until the
execution and delivery of the Operative Documents, any of the representations
and warranties in the preceding sentence would be incorrect if the information
or financial projections were being furnished, and such representations and
warranties were being made, at such time, then you will promptly supplement the
information and the financial projections so that such representations and
warranties will be correct under those circumstances.

-4-

 

In issuing this Commitment Letter and in arranging the Facilities, including
the syndications of the Facilities, Citigroup will be entitled to use, and to
rely on the accuracy of, the information furnished to it by or on behalf of
you, Acquisition Sub, the Acquired Business or any of your or their respective
representatives without responsibility for independent verification thereof.

9. No Third Party Reliance; Sharing Information

The agreements of Citigroup hereunder and of any Lender that issues a
commitment to provide financing under the Facilities are made solely for the
benefit of Acquiror and may not be relied upon or enforced by any other person.
This Commitment Letter is not intended to create a fiduciary relationship among
the parties hereto.

You acknowledge that Citigroup may provide debt financing, equity capital or
other services (including financial advisory services) to parties whose
interests regarding the transactions described herein or otherwise may conflict
with your interests. Consistent with Citigroup’s policy to hold in confidence
the affairs of its clients, Citigroup will not furnish confidential information
obtained from you or your affiliates to any of its other clients. Furthermore,
Citigroup will not use in connection with the transactions contemplated hereby,
or furnish to you, confidential information obtained by Citigroup from any
other person.

10. Assignments

Acquiror may not assign this Commitment Letter or Citigroup’s commitment
hereunder without Citigroup’s prior written consent, and any attempted
assignment without such consent shall be void.

11. Amendments

This Commitment Letter may not be amended or any provision hereof waived or
modified except by an instrument in writing signed by each party hereto.

12. Governing Law, Etc.

This Commitment Letter shall be governed by, and construed in accordance with,
the laws of the State of New York. This Commitment Letter sets forth the entire
agreement among the parties with respect to the matters addressed herein and
supersedes all prior communications, written or oral, with respect hereto. This
Commitment Letter may be executed in any number of counterparts, each of which,
when so executed, shall be deemed to be an original and all of which, taken
together, shall constitute one and the same Commitment Letter. Delivery of an
executed counterpart of a signature page to this Commitment Letter by
telecopier shall be as effective as delivery of a manually executed counterpart
of this Commitment Letter. Sections 5 through 8, 12 and 13 shall survive the
termination of Citigroup’s commitment hereunder. You acknowledge that
information and documents relating to the Facilities may be transmitted through
Intralinks, the internet or similar electronic transmission systems.

13. Waiver of Jury Trial, Etc.

Each party hereto irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Commitment Letter or the transactions
contemplated hereby or the actions of the parties hereto in the negotiation,
performance or enforcement hereof.

With respect to all matters relating to this Commitment Letter, the Term Sheets
and the Fee Letter, you hereby irrevocably (i) submit to the non-exclusive
jurisdiction of any New York State or Federal court sitting in the State of New
York, County of New York, and any appellate court from any thereof, (ii) agree
that all claims related hereto may be heard and determined in such courts,
(iii) waive, to the fullest extent you may effectively do so, the defense of an
inconvenient forum, (iv) agree that a final judgment of such courts shall be
conclusive and

-5-

 

may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law, (v) waive any immunity (sovereign or otherwise) from
jurisdiction of any court or from any legal process or setoff to which you or
your properties or assets may be entitled and (vi) consent to the service of
any and all process with respect to all matters relating to this Commitment
Letter by the mailing of copies of such process to CT Corporation System, 111
8th Avenue, New York, New York 10011, or in any other manner permitted by law.

Please indicate your acceptance of the provisions hereof by signing the
enclosed copy of this Commitment Letter and the Fee Letter and returning them
to Richard Zogheb, Managing Director, Citigroup Global Markets Inc., 390
Greenwich Street, New York, New York 10013 (facsimile: (212) 723-8958) at or
before 5:00 p.m. (New York City time) on August 18, 2004, the time at which the
commitment of Citigroup set forth above (if not so accepted prior thereto) will
terminate.

[Signature Page Follows]

-6-

 

If you elect to deliver this Commitment Letter by telecopier, please arrange
for the executed original to follow by next-day courier.

	 	 	 	 	 
	 	Very truly yours,

CITICORP NORTH AMERICA, INC.,

 	 
	 	By:  	/s/ Richard C. Zogheb
 	 
	 	 	Name:  	Richard C. Zogheb 	 
	 	 	Title:  	Vice President

	 	 	 	 	 
	 	 

CITIGROUP GLOBAL MARKETS INC.,

 	 
	 	By:  	/s/ Richard C. Zogheb
 	 
	 	 	Name:  	Richard C. Zogheb 	 
	 	 	Title:  	Managing Director

Accepted and agreed to as of the date first written above:

	 	 	 	 	 
	LIFEPOINT HOSPITALS, INC.

 	 
	By:  	/s/
Michael J. Culotta
 	 
	 	 	Name:  Michael J. Culotta 	 
	 	 	Title:    Chief Financial Officer

-7-

 

	 	 	 	 	 

			
	CONFIDENTIAL	 	EXHIBIT A

Transaction Description

All capitalized terms used herein but not defined herein shall have the
meanings provided in the Commitment Letter relating to this Transaction
Description. The following transactions, including the Acquisition and the
Merger, are referred to herein as the “Transactions”.

	1.	 	LifePoint Hospitals, Inc. (“Acquiror”) will combine with Province
Healthcare Company (“Target” and, together with its subsidiaries, the
“Acquired Business”) pursuant to an Agreement and Plan of Merger (together
with all exhibits and disclosure schedules thereto, the “Acquisition
Agreement”). The Acquisition Agreement will provide for three alternative
structures, but in no case will the cash consideration (including with
respect to employee stock options) exceed $622.2 million (the
“Acquisition”):

     A. Acquiror will form a new majority-owned Delaware corporation
(“Holdco”). Holdco will form two new wholly owned Delaware corporations
(“Acquisition Sub 1” and “Acquisition Sub 2” and, collectively with Holdco,
“Acquisition Sub”). Acquisition Sub 1 shall be merged with and into Target,
whereupon the separate existence of Acquisition Sub 1 shall cease and Target
shall be the surviving corporation and a wholly owned subsidiary of Holdco,
and all outstanding shares of common stock of Target (and common
stock-equivalents) will be converted into the right to receive consideration
comprised of cash and common stock of Holdco (other than options, which will
be converted into the right to receive cash consideration). Acquisition Sub 2
shall be merged with and into Acquiror, whereupon the separate existence of
Acquisition Sub 2 shall cease and Acquiror shall be the surviving corporation
and a wholly owned subsidiary of Holdco, and all outstanding shares of common
stock of Acquiror (and common stock-equivalents) will be converted into the
right to receive consideration comprised of common stock (or common
stock-equivalents) of Holdco (collectively, the foregoing is referred to as
the “Double Merger Structure”). After consummation of the Double Merger
Structure, Holdco shall thereafter be deemed to be “Acquiror” for purposes
hereof.

     B. As provided in the Acquisition Agreement, if certain conditions to
consummation of the Double Merger Structure cannot be met, the parties will
implement the following structure: (i) Target shall be merged with and into
Holdco (or another entity formed by Acquiror to effect such transaction) (any
such entity, “Acquisition Sub”), whereupon the separate existence of Target
shall cease and Acquisition Sub shall be the surviving corporation and a
wholly owned subsidiary of Acquiror and (ii) all outstanding shares of common
stock of Target (and common stock-equivalents) will be converted into the
right to receive consideration comprised of cash and common stock of Acquiror
(other than options, which will be converted into the right to receive cash
consideration) (collectively, the foregoing is referred to as the “Forward
Subsidiary Merger Structure”).

     C. As provided in the Acquisition Agreement, if certain conditions to
consummation of the Double Merger Structure and the Forward Subsidiary Merger
Structure cannot be met, the parties will implement the following structure:
(i) Holdco (or another entity formed by Acquiror to effect such transaction)
(any such entity, “Acquisition Sub”) shall be merged with and into Target,
whereupon the separate existence of Acquisition Sub shall cease and Target
shall be the surviving corporation and a wholly owned subsidiary of Acquiror
and (ii) all outstanding shares of common stock of Target (and common
stock-equivalents) will be converted into the right to receive consideration
comprised of cash and common stock of Acquiror (other than options, which
will be converted into the right to receive cash consideration)
(collectively, the foregoing is referred to as the “Reverse Subsidiary Merger
Structure”.

A-1-

 

	2.	 	Borrower will obtain new senior secured credit facilities in an aggregate
principal amount of up to $1,725.0 million (the
“Facilities”).

	3.	 	In connection with the Acquisition, approximately $30.0 million of
indebtedness of Acquiror and its subsidiaries will be repaid and all
outstanding commitments under their existing credit agreement and other
lines of credit will be terminated.

	4.	 	Prior to the Acquisition, but subject to the satisfaction of all
conditions to the closing of the Acquisition, Target (or Acquiror or its
affiliate on behalf of Target) will commence

     (a) a cash tender offer and related consent solicitation (the “Target
2013 Notes Offer”) for any and all of Target’s 7-1/2% Senior Subordinated
Notes due 2013 (the “Target 2013 Notes”), and

     (b) a cash tender offer and related consent solicitation (the “Target
2008 Notes Offer” and, together with the Target 2013 Notes Offer, the “Target
Notes Offers”) for any and all of Target’s 4-1/4% Convertible Subordinated
Notes due 2008 (the “Target 2008 Notes” and, together with the Target 2013
Notes, the “Target Notes”),

in each case, at a purchase price that is not less than the corresponding
amounts assumed as part of costs and expenses in Annex I hereto or otherwise
as is substantially likely to result in satisfaction of the conditions in
paragraph 2 of Exhibit C hereto and as determined after consultation with
Acquiror. Pursuant to the Target 2013 Notes Offer, tendering holders of
Target 2013 Notes will be required to consent to modifications of the
indenture governing the Target 2013 Notes that will eliminate all significant
restrictive covenants, including the obligation to make a change of control
offer for the Target 2013 Notes. Such amendments will become effective
immediately prior to consummation of the Acquisition.

     In addition, in connection with the Acquisition, approximately $151.4 million
of indebtedness of the Acquired Business (other than the Target 2013 Notes
and Target 2008 Notes, but including Target’s 4-1/2% Convertible Subordinated
Notes due 2005) will be repaid or irrevocably called for redemption with
funds deposited, and all outstanding commitments under Target’s existing
credit agreement and other lines of credit will be terminated.
Notwithstanding the foregoing,

in the event there is an insufficient principal amount of Target 2013 Notes
tendered to satisfy the conditions set forth in paragraph 2 of Exhibit C
hereto, Target shall defease the Target 2013 Notes as of the Closing Date
pursuant to the “covenant defeasance” provisions of the indenture governing
the Target 2013 Notes.

     Notwithstanding anything herein to the contrary, in no event will the
successful consummation of the Target 2008 Notes Offer or a redemption or
other repayment of the Target 2008 Notes be a condition to Citigroup’s
commitment under the Commitment Letter or a condition precedent to the
initial borrowing under the Credit Agreement.

	5.	 	Costs and expenses incurred in connection with the foregoing transactions
will be paid in an amount not to exceed the amounts included in Annex I
hereto (subject to variation based on actual tender, redemption or
defeasance costs relating to debt to be repaid) (the “Transaction Costs”).

	6.	 	After giving effect to the Acquisition, 100% of the outstanding capital
stock of Acquiror will be publicly traded and, if Acquiror is not
Borrower, all of the outstanding capital stock of Borrower will be held by
Acquiror and all of the outstanding capital stock of Target (or its
successor) shall be held by Acquiror.

A-2

 

	7.	 	The estimated sources and uses of the funds necessary to consummate the
Acquisition and the other Transactions are set forth on Annex I hereto
(the “Sources and Uses of Funds”).

A-3

 

ANNEX I

to Transaction Description

Sources and Uses of Funds

($ in millions)

	 	 	 	 	 	 	 	 	 	 	 
	Sources	 	 	 	 	 	Uses	 	 	 	 
	
	 	 	 	 	 	 	 	 	 	 
	Term Loan Facility
	 	$	1,325.0	 	 	Cash Purchase Price for Acquired Business	 	$	565.3	 
	 
	 	 	 	 	 	 	 	 	 	 
	Initial Drawing on
	 	 	0	 	 	Equity Issued to Target
Shareholders2	 	 	565.3	 
	Revolving
Facility1
	 	 	 	 	 		 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Equity Issued to
	 	 	565.3	 	 	Indebtedness to be Repaid3	 	 	553.9	 
	Target Shareholders
	 	 	 	 	 		 	 	 	 
	 
	 	 	 	 	 	Transaction costs (including tender premiums)	 	 	104.3	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Severance costs and options 	 	 	96.2	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Excess cash	 	 	5.3	 
	 
	 	 	
 	 	 	 	 	 	
 	 
	TOTAL SOURCES
	 	$	1,890.3	 	 	TOTAL USES	 	$	1,890.3	 
	 
	 	 	
 	 	 	 	 	 	
 	 

	1	 	Total commitments of $400.0 million at closing.
	 
	2	 	Based upon assumed price per share of $22.75.
	 
	3	 	Assumes (1) 100% of Target 2008 Notes and Target 2013 Notes are validly
tendered and purchased pursuant to the Target Notes Offers, and (2) all
other indebtedness of Acquiror and Acquired Business is repaid or redeemed
or irrevocably called for redemption with funds deposited, other than
Acquiror’s 4-1/2% Convertible Subordinated Notes due 2009 (the
“Acquiror
Notes”) and certain limited other indebtedness in respect of capital lease
obligations or as otherwise agreed.

A-I-1

 

			
	CONFIDENTIAL
	 	EXHIBIT B

Senior Secured Credit Facilities

Summary of Principal Terms and Conditions

All capitalized terms used herein but not defined herein shall have the
meanings provided in the Transaction Description relating to this Summary of
Principal Terms and Conditions.

	 	 	 	 	 
	Co-Borrowers:

	 	If the Double Merger Structure is consummated, Holdco,
Acquisition Sub 1 and Acquisition Sub 2 shall be co-borrowers
(individually or
collectively, “Borrower”). If the Forward Subsidiary Merger
Structure or the Reverse Subsidiary Merger Structure is
consummated, Acquisition Sub and Acquiror shall be
co-borrowers (individually or collectively, “Borrower”).
Citigroup shall be entitled, in its discretion, to add
additional co-borrowers that would otherwise be Guarantors.
	 
	Acquisition:

	 	As described in the Transaction Description.
	 
	Administrative Agent:

	 	Citicorp North America, Inc. (in its capacity as
Administrative Agent, the “Agent”).
	 
	Sole Lead Arranger and Sole Book-Runner:

	 	Citigroup Global Markets Inc. (“CGMI” or the “Lead Arranger”).
	 
	Senior Lenders:

	 	A syndicate of financial institutions arranged
by CGMI (the “Lenders”).
	 
	Senior Secured Credit Facilities:

	 	(A)	 	A Senior Term Loan “B” Facility in an aggregate principal
amount of $1,325.0 million (the “Term Facility”). The Term
Facility will be subject to reduction as set forth below
under “Purpose and Availability”.
	 
	

	 	(B)	 	A Senior Revolving Credit Facility in an aggregate
principal amount of $400.0 million (the “Revolving Facility”
and, together with the Term Facility, the “Facilities”).
	 
	Purpose and Availability:

	 	(A)	 	Term Facility
	 
	

	 	The full amount of the Term Facility must be drawn in a
single drawing on the date on which the Acquisition is
consummated (the “Closing Date”) and applied to consummate
the Acquisition and the other Transactions as set forth in
the Transaction Description; provided, however, that a
portion of the Term Facility shall remain
available following the Closing Date on the limited basis
described in the following sentence. Notwithstanding the
foregoing, (1) the Term Facility shall not be available on
the Closing Date in an amount equal to the principal amount
of Target Notes (plus the associated premium offered therefor
assumed as part of costs and expenses in Annex I hereto as
part of the Target Notes Offers) not validly tendered and
accepted for purchase pursuant to the Target
Notes

B-1

 

	 	 	 
	

	 	Offers (or effectively redeemed or defeased) on the Closing Date (the
“Reduction Amount”), (2) to the extent that no change of control offer is
required to be made following the Closing Date under the indentures governing
the Target Notes (as modified by the consent solicitations that are a part of
the Target Notes Offers) (as so modified, the “Target Notes Indentures”), the
portion of the Reduction Amount (including related premium) attributable to
such principal amount of Target Notes which are not subject to a change of
control offer following the Closing Date shall cease to be available under the
Term Facility on the Closing Date, and (3) to the extent that a change of
control offer is required to be made following the Closing Date under the
Target Notes Indentures, only that portion of the Reduction Amount equal to the
principal amount of such Target Notes as may be subject to a change of control
offer following the Closing Date shall remain available following the Closing
Date and
will be solely available on the date of expiration of the applicable change of
control offer(s) for the purpose of purchasing all Target
Notes validly tendered pursuant thereto. Any remaining unutilized amount of the
Term Facility shall thereafter cease to be available. Amounts borrowed under
the Term Facility that are repaid or prepaid may not be reborrowed.
	 
	

	 	The Operative Documents will permit Borrower to incur up to an amount to be
agreed of additional term loans under the Term Facility (or under a new tranche
thereof) having the same guarantee as, and secured on a pari
passu basis by the
same collateral securing, the Facilities (the “Additional Term Loans”);
provided that (i) n default or event of default shall exist or would exist
after giving effect thereto, (ii) all financial covenants would be satisfied on
a pro forma basis on such date and for the most recent fiscal quarter for which
financial statements have been delivered in accordance with the Operative
Documents after giving effect to the incurrence of such Additional Term Loans
and other customary and appropriate pro forma adjustment events, including any
acquisitions or dispositions after the beginning of the relevant calculation
period but prior to or simultaneous with the borrowing of such Additional Term
Loans,
(iii) the maturity date of the Additional Term Loans shall not be prior to the
scheduled maturity date of any of the Facilities, and the weighted average life
to maturity shall be no less than that of the Term Facility, (iv) if any
interest rate or applicable margin for any
Additional Term Loan results in a rate higher than that applicable to the Term
Facility, then the Applicable Margin with respect to the Term Facility shall be
automatically increased to result in the same or higher applicable rate, and
(v) the terms and documentation thereof shall otherwise be satisfactory to the
Agent and the Lead Arranger. The Operative Documents shall be amended to give
effect to the Additional Term Loans by documentation executed by the Lender or
Lenders making the commitments with respect to the Additional Term Loans, the
Agent, Borrower and the Guarantors.
	 
	

	 	(B) Revolving Facility

B-2

 

	 	 	 
	

	 	The proceeds of loans under the Revolving
Facility will be used by Borrower for
general corporate purposes. Loans under
the Revolving Facility will be available
on and after the Closing Date and at any
time before the final maturity of the
Revolving Facility, in minimum
principal amounts to be agreed; provided,
however, that (1) loans may be drawn
under the Revolving Facility on the
Closing Date only to
the extent set forth in the Sources and
Uses of Funds or otherwise as agreed to
by CGMI and (2) unless cash on hand and
undrawn and available commitments under
the Revolving Facility together exceed an
amount to be agreed on a pro forma basis,
no drawings under the Revolving Facility
will be available to fund the redemption
of the Acquiror Notes. Amounts repaid
under the Revolving Facility may be
reborrowed.
	 
	

	 	A portion of the Revolving Facility not
in excess of an amount to be agreed upon
shall be available for the issuance of
letters of credit (the
“Letters of Credit”) by Lenders to be
agreed upon (collectively in such
capacity, the “Issuing Lender”). No
Letter of Credit shall have an
expiration date after the earlier of (a)
one year after the date of issuance and
(b) five business days prior to the
Revolving Termination Date (as
defined below); provided that any Letter
of Credit with a one-year tenor may
provide for the renewal thereof for
additional one-year periods
(which shall in no event extend beyond
the date referred to in clause (b)
above).
	 
	

	 	Drawings under any Letter of Credit shall
be reimbursed by the Borrower (whether
with its own funds or with the proceeds
of Revolving Loans) within one business
day. To the extent that Borrower does not
so reimburse the Issuing Lender within
one business day, the Lenders under the
Revolving Facility shall be irrevocably
and unconditionally obligated to
reimburse the Issuing Lender on a pro
rata basis.
	 
	

	 	A portion of the Revolving Facility not
in excess of an amount to be agreed upon
shall be available for swingline loans
(the “Swingline Loans”) from one or more
Lenders to be agreed upon (collectively
in such capacity, the “Swingline Lender”)
on same-day notice. Any such Swingline
Loans will reduce availability under the
Revolving Facility on a dollar-for-dollar
basis. Each Lender under the Revolving
Facility shall
acquire, under certain circumstances, an
irrevocable and unconditional pro rata participation in each Swingline Loan.
	 
	Final Maturity and Amortization:

	 	(A) Term Facility
	 
	

	 	The Term Facility will mature on the date
that is seven years after the Closing
Date, and will amortize in quarterly
installments over such
period in an amount equal to 1% per annum for the first six years with the balance
in year seven in four equal payments.
	 
	

	 	(B) Revolving Facility

B-3

 

	 	 	 
	

	 	The Revolving Facility will mature on the date
that is five years after the Closing Date (the
“Revolving Termination Date”).
	 
	Interest Rates and Fees:

	 	As set forth on Annex I hereto and in the
Fee Letter.
	 
	Guarantors:

	 	Acquiror and each of Borrower’s direct and
indirect domestic subsidiaries (in each case to
the extent such entity is not the borrower
thereof) existing on the Closing Date or
thereafter created or acquired (other than
certain subsidiaries to be mutually agreed and
other than non-wholly-owned subsidiaries) shall
unconditionally guarantee, on a joint and
several basis, all obligations of Borrower
under the Facilities and (to the extent
relating to the Loans) under each interest rate
protection agreement entered into with a Lender
or an affiliate of a Lender. Each guarantor of
any of the Facilities is herein referred to as a
“Guarantor” and its guarantee is referred to
herein as a “Guarantee”; Borrower and the
Guarantors are herein referred to as the
“Credit Parties.”
	 
	Collateral:

	 	The Facilities, the Guarantees and (to the
extent relating to the Loans) the obligations
of Borrower under each interest rate protection
agreement entered into with a Lender or any
affiliate of a Lender will be secured by a
perfected lien on, and pledge of, all of the
capital stock and intercompany notes of
Borrower and each of the direct and indirect
subsidiaries of Borrower existing on the
Closing Date or thereafter created or acquired,
other than subsidiaries as mutually agreed by
the Agent in its sole discretion and other than
capital stock of non-wholly-owned subsidiaries
(to the extent not owned by Borrower and its
subsidiaries), and except that with respect to
non-U.S. subsidiaries
such lien and pledge shall be limited to 65% of
the capital stock of “first-tier” non-U.S.
subsidiaries (collectively, the “Collateral”).
	 
	

	 	All such security interests will be created
pursuant to documentation reasonably
satisfactory in all respects to the Agent, and
on the Closing
Date, such security interests shall have become
perfected (or arrangements for the perfection
thereof reasonably satisfactory to the Agent
shall have been made) and the Agent shall have
received reasonably satisfactory evidence as to
the enforceability and priority thereof.
	 
	Optional Prepayments and
Reductions in Commitments:

	 	Optional prepayments of borrowings under the
Facilities, and optional reductions of the
unutilized portion of the Revolving Facility
commitments, will be permitted at any time, in
minimum principal amounts to be agreed, without
premium or penalty, subject to reimbursement of
the Lenders’ redeployment costs in the case of
a prepayment of LIBOR borrowings other than on
the last day of the relevant interest period.
	 
	Mandatory Prepayments:

	 	Subject to the next paragraph, Loans under the
Facilities shall be prepaid with (a) 50% of
Excess Cash Flow (to be defined and to exclude
an annual basket for acquisitions and an annual
basket for capital expenditures in amounts to
be agreed), such 50% reducing to

B-4

 

	 	 	 	 	 
	

	 	zero for any fiscal year for which the Senior Leverage Ratio (to be defined as all indebtedness of
Acquiror and its subsidiaries other than
subordinated indebtedness and indebtedness solely of Acquiror) is less than 2.0:1.0, (b) 100% of the
net cash proceeds of all non-ordinary-course
asset sales or other dispositions of property by Acquiror and its subsidiaries (including issuances
of equity by subsidiaries of Acquiror,
insurance and condemnation proceeds in excess of an agreed amount), subject to the right of Acquiror
to reinvest or deposit in trust for reinvestment, in each case within periods to be agreed, and
subject to limited exceptions to be agreed (including an annual exception to be
agreed), (c) 100% of the net proceeds of issuances of debt obligations of Acquiror and its
subsidiaries, and (d) 50% of the net proceeds of issuances of equity of Acquiror, such 50% reducing
to zero if the Senior Leverage Ratio is less than 2.0:1.0, in each case subject to limited
exceptions to be agreed.
	 
	Application of Prepayments:

	 	All optional prepayments applicable to the Term Facilities shall be applied as elected by Borrower
and, subject to the provisions of “Special Application Provisions” below, all mandatory prepayments
applicable to the Term Facility shall be applied pro rata to the remaining amortization payments
thereunder.
	 
	

	 	Amounts prepaid in respect of the Term Loans may not be reborrowed. When there are no longer
outstanding loans under the Term Facilities,
mandatory prepayments will be applied to permanently reduce commitments under the Revolving Facility
(with corresponding
prepayments of outstanding obligations under the Revolving Facility, if necessary).
	 
	

	 	The above-described mandatory prepayments shall be applied first, to the scheduled installments of
principal due within 12 months of the
prepayment in chronological order and then pro rata to the remaining amortization payments under the
Term Loan Facility.
	 
	Special Application Provisions:

	 	Each holder of Term Loans shall have the right to refuse any mandatory prepayments allocable to its
Term Loans, and the amounts so refused may be retained by Borrower.
	 
	Representations and Warranties:

	 	Usual for facilities and transactions of this type, including, without limitation:
	 
	

	 	1.	 	Corporate status and authority.
	 
	

	 	2.	 	Execution, delivery, and performance of loan documents do not violate law or other agreements.
	 
	

	 	3.	 	No government or regulatory approvals required, other than approvals in effect.
	 
	

	 	4.	 	No litigation which would have a material adverse effect on the business, assets, results of
operations, or financial condition of Acquiror, its subsidiaries and the Acquired Business, taken as
a

B-5

 

	 	 	 	 	 
	

	 	 	 	whole, or which would affect the legality, validity and enforceability of
the loan documents.
	 
	

	 	5.	 	No material adverse change in the business, assets, results of
operations, or financial condition of Borrower and its subsidiaries and
the Acquired Business, taken as a whole, since December 31, 2003.
	 
	

	 	6.	 	Accuracy in all material respects of financial statements and other
information.
	 
	

	 	7.	 	Material compliance with laws and regulations, including health and
safety, ERISA, margin regulations and environmental laws and regulations;
possession of all necessary licenses, permits, franchises and
certificates (other than immaterial licenses, permits, franchises and
certificates) and rights to participate in Medicare, Medicaid and
material third party payor programs; and possession of all material
accreditation.
	 
	

	 	8.	 	Legality, validity, binding effect and enforceability of the loan
documents.
	 
	

	 	9.	 	Inapplicability of the Investment Company Act and Public Utility
Holding Company Act.
	 
	

	 	10.	 	Solvency.
	 
	

	 	11.	 	Payment of taxes.
	 
	

	 	12.	 	Validity, priority and perfection of security interests in collateral.
	 
	Conditions Precedent to Initial Borrowing:

	 	Those specified in the Summary of Additional Conditions Precedent as
described in Exhibit C.
	 
	Conditions Precedent to Each Borrowing:

	 	Conditions precedent to each borrowing or issuance under the Facilities
will be customary documentary requirements and (1) the absence of
any continuing default or event of default an (2) the accuracy of all
representations and warranties.
	 
	Affirmative Covenants:

	 	Usual for facilities and transactions of this type (to be applicable to
Acquiror and Acquiror’s subsidiaries), including, without limitation, and
subject, in each case, to customary exceptions to be agreed:
	 
	

	 	1.	 	Preservation of corporate existence.
	 
	

	 	2.	 	Material compliance with laws (including health and safety, ERISA and
environmental laws).
	 
	

	 	3.	 	Payment of taxes.

B-6

 

	 	 	 	 	 
	

	 	4.	 	Payment and/or performance of obligations.
	 
	

	 	5.	 	Delivery of audited annual consolidated financial statements and
unaudited quarterly consolidated financial statements.
	 
	

	 	6.	 	Other reporting requirements and notices of default and litigation.
	 
	

	 	7.	 	Maintenance of books and records.
	 
	

	 	8.	 	Maintenance of properties.
	 
	

	 	9.	 	Maintenance of insurance with customary self-insurance.
	 
	

	 	10.	 	Use of proceeds.
	 
	

	 	11.	 	Further assurances.
	 
	Negative Covenants:

	 	Usual for facilities and transactions of this type (to be applicable
to Acquiror and Acquiror’s subsidiaries), including, without
limitation,
subject in each case to customary exceptions to be agreed:
	 
	

	 	1.	 	Limitations on liens.
	 
	

	 	2.	 	Limitations on debt (including debt incurred by direct or indirect
subsidiaries and obligations in respect of foreign currency exchange
and other hedging arrangements).
	 
	

	 	3.	 	Limitations on dividends, redemptions and repurchases with respect
to capital stock.
	 
	

	 	4.	 	Limitations on prepayments, redemptions and repurchases of debt
(other than loans under the Facilities), including limitations on
prepayments or repurchases of Acquiror Notes with unsubordinated debt
unless the Senior Leverage Ratio is less than 3.5:1.0 or unless
financed with Borrower’s portion of Excess Cash Flow.
	 
	

	 	5.	 	Limitations on loans and investments (exceptions to include 10% of
total assets).
	 
	

	 	6.	 	Limitations on capital expenditures (with annual amounts to be
agreed).
	 
	

	 	7.	 	Limitations on mergers, consolidations, acquisitions, asset
dispositions and sale/leaseback transactions (with annual amounts to
be agreed).
	 
	

	 	8.	 	Limitations on transactions with affiliates.
	 
	

	 	9.	 	Limitations on changes in business conducted by Borrower and its
subsidiaries.

B-7

 

	 	 	 	 	 
	

	 	10.	 	Limitations on amendment of debt and other material agreements.
	 
	

	 	11.	 	Limitations on restrictions on distributions from subsidiaries.
	 
	

	 	12.	 	Limitations on the issuance and sale of capital stock of subsidiaries.
Acquiror shall engage in no activities other than (1) continuing to own
all of the capital stock of Borrower and (2) certain activities reasonably incidental thereto.
	 
	Selected Financial Covenants:

	 	Each of the following (in each case with definitions and levels to be
agreed) to be tested on the Closing Date and quarterly thereafter:
	 
	

	 	1.	 	A maximum ratio (the “Total
Leverage Ratio”) of Total Debt (to be
defined) of Acquiror and its subsidiaries to trailing four quarter EBITDA
(to be defined and to include one-time addbacks to be agreed for
adjustments related to the Acquisition) of Acquiror and its subsidiaries
with stepdowns to be agreed.
	 
	

	 	2.	 	A minimum ratio of trailing four quarter EBITDA of Acquiror and its
subsidiaries to cash interest expense of Acquiror and its subsidiaries
for the same period with stepups to be agreed.
	 
	Interest Rate Management:

	 	An amount to be determined of the total debt capitalization of Acquiror
and its subsidiaries must be hedged on terms and for a period of time
satisfactory to the Agent with a counterparty acceptable to the Agent.
	 
	Events of Default:

	 	Usual for facilities and transactions of this type (to be applicable to
Acquiror and Acquiror’s subsidiaries), including, without limitation:
	 
	

	 	1.	 	Failure to pay principal or, after cure period, interest or any other
amount when due.
	 
	

	 	2.	 	Representations or warranties materially incorrect when given.
	 
	

	 	3.	 	Failure to comply with covenants (with notice and cure periods as
applicable).
	 
	

	 	4.	 	Cross-default and cross-acceleration to debt aggregating an amount to
be agreed or more.
	 
	

	 	5.	 	Unsatisfied judgment or order in excess of an amount to be agreed
individually or in the aggregate.

B-8

 

	 	 	 	 	 
	

	 	6.	 	Bankruptcy or insolvency.
	 
	

	 	7.	 	ERISA events.
	 
	

	 	8.	 	Change of control (to be defined).
	 
	

	 	9.	 	Actual or asserted invalidity of
any material collateral or Guarantee
or other Operative Document.
	 
	Voting:

	 	Amendments and waivers of the
Operative Documents will require the
approval of Lenders holding more than
50% of the aggregate amount of the
loans and commitments under the
Facilities, except that in certain
circumstances the consent of a
greater percentage (or of all) the
Lenders (or a class thereof) may be required.
	 
	Assignment and Participation:

	 	The Lenders will have the right to
assign loans and commitments to their
affiliates and to other Lenders or to
any Federal Reserve Bank without
restriction or to other financial
institutions, with the consent, not
to be unreasonably withheld, of the
Agent and (in the case of the
Revolving Facility only) Borrower
(except that no such consent of
Borrower need be obtained in
connection with the primary
syndication or if any default then
exists). Minimum aggregate assignment
level (except to other Lenders) of
$5,000,000 ($1,000,000 for the Term
Facility) and increments of
$1,000,000 in excess thereof. The
parties to the assignment (other than
Borrower) shall pay to the Agent an
administrative fee of $3,500.
	 
	

	 	Each Lender will have the right to
sell participations in its rights and
obligations under the loan documents,
subject to customary restrictions on the participants’ voting rights.
	 
	Yield Protection, Taxes and
Other Deductions:

	 	The loan documents will contain yield
protection provisions, customary for
facilities of this nature, protecting
the Lenders in the event of
unavailability of funding, funding
losses, reserve and capital adequacy
requirements.
	 
	

	 	All payments to be free and clear of
any present or future taxes,
withholdings or other deductions
whatsoever (other than income taxes
in the jurisdiction of the Lender’s
applicable lending office).
	 
	Expenses:

	 	Customary provisions regarding expense
reimbursement by Borrower.
	 
	Governing Law and Forum:

	 	New York.
	 
	Counsel to Citigroup:

	 	Cahill Gordon & Reindel LLP.

B-9

 

ANNEX I

TO EXHIBIT B

Senior Secured Credit Facilities

Interest Rates and Fees

	 	 	 
	Interest Rates:

	 	Borrower will be entitled to make
borrowings based on ABR plus the
Applicable Margin or LIBOR plus the
Applicable Margin. The “Applicable
Margin” shall be for (A) LIBOR Loans
under the Term Facility, 2.25% per
annum, and (B) ABR Loans under the Term
Facility, 1.25% per annum. The
Applicable Margin for the Revolving
Facility shall be determined in
accordance with the grid set forth
below based on the Total Leverage Ratio
as of the last day of the most recent
fiscal quarter for which financial
statements have been delivered in
accordance with the Operative
Documents.

	>=4.0:1.0
	2.25%
	>=3.5:1.0 and
<4.0:1.0
	2.00%
	>=3.0:1.0 and
<3.5:1.0
	1.75%
	>=2.0:1 and
<2.0:1.0
	1.50%
	<2.0:1.0
	1.25%

	 	 	 
	

	 	Borrower may elect interest periods of 1, 2, 3 or 6 months (or
if available to all Lenders, 9 or 12 months) for LIBOR
borrowings.
	 
	

	 	Calculation of interest shall be on the basis of actual days
elapsed in a year of 360 days (or 365 or 366 days, as the case
may be, in the case of ABR loans, except where ABR is
determined pursuant to clause (iii) of the definition
thereof).
	 
	

	 	Interest will be payable in arrears (a) for loans accruing
interest at a rate based on LIBOR, at the end of each interest
period (or every 90 days for interest periods greater than 90
days) and on the applicable maturity date, (b) for loans
accruing interest based on the ABR, quarterly in arrears and
on the applicable maturity date.
	 
	

	 	“ABR” means the highest of (i) Citibank, N.A.’s base rate;
(ii) the three-month certificate of deposit rate plus 1/2 of
1%, and (iii) the Federal Funds Effective Rate plus 1/2 of 1%.
LIBOR will at all times include statutory reserves.

B-I-1

 

	 	 	 
	Default Rate:

	 	The applicable interest rate plus
2% per annum payable upon demand.
	 
	Commitment Fees:

	 	A per annum commitment fee on the undrawn portion of the
commitments in respect of the Facilities shall accrue from the
date of execution and delivery of the Operative Documents at a
rate per annum equal to 0.50% (or 0.375% per annum at any time
that the Total Leverage Ratio for the most recent fiscal quarter
for which financial statements have been delivered in accordance
with the Operative Documents is less than 3.5:1.0), in each case
payable quarterly in arrears.
	 
	

	 	Borrower shall pay a fee on all outstanding Letters of Credit at a
per annum rate equal to the Applicable Margin then in effect with
respect to LIBOR Loans under the Revolving Facility on the face
amount of each such Letter of Credit. Such fee shall be shared
ratably among the Lenders participating in the Revolving Facility
and shall be payable quarterly in arrears.
	 
	

	 	A fronting fee not to exceed a rate per annum to be agreed upon on
the face amount of each Letter of Credit shall be payable
quarterly in arrears to the Issuing Lender for its own account. In
addition, customary administrative, issuance, amendment, payment
and negotiation charges shall be payable to the Issuing Lender for
its own account.

B-I-2

 

			
	CONFIDENTIAL
	 	EXHIBIT C

Summary of Additional Conditions Precedent

All capitalized terms used herein but not defined herein shall have the
meanings provided in the Transaction Description relating to this Summary of
Additional Conditions Precedent.

The initial borrowing under the Facilities shall be subject to the following
additional conditions precedent

     1. Consummation of Acquisition. The Acquisition shall have been
consummated or shall be consummated simultaneously with the closing under the
Facilities in accordance with the Acquisition Agreement and all other related
documentation (without amendment, modification or waiver thereof which is
adverse in any material respect to the Lenders (as reasonably determined by the
Lead Arranger) without the prior consent of the Lead Arranger). Immediately
following the Acquisition, Acquiror and the Borrower shall have no outstanding
indebtedness outstanding other than the Facilities, the Acquiror Notes, any
Target Notes that have not been validly tendered pursuant to the Notes Offers,
redeemed or defeased as contemplated hereby and those capital lease obligations
outstanding as of June 30, 2004 and such other immaterial items of indebtedness
as are reasonably acceptable to the Lenders. Sources and uses of funds shall be
substantially as set forth in Exhibit A.

     2. Debt Repayment. Target shall have commenced the Target Notes Offers and
(A) all outstanding Target 2008 Notes validly tendered pursuant to the Target
2008 Notes Offer shall have been accepted for payment and (B) either (x) not
less than 50.1% of the outstanding Target 2013 Notes shall have been validly
tendered pursuant to the Target 2013 Notes Offer and Target shall have accepted
for payment all Target 2013 Notes validly tendered pursuant thereto and a
supplemental indenture in form and substance reasonably satisfactory to CGMI
reflecting the consent solicitation shall have been executed and delivered by
the applicable trustee and Target or (y) simultaneously with the initial
borrowing, sufficient funds shall have been deposited with the trustee under
the indenture governing the Target 2013 Notes to satisfy the “covenant
defeasance” provisions of such indenture as of such deposit. Simultaneously
with the initial borrowing, sufficient funds shall be deposited with the
trustee under the indenture governing the Target’s 4-1/2% Subordinated Notes
due 2005 (the “Target 2005 Notes”) to effect a redemption thereof in accordance
with its terms not later than 45 days following the Closing Date and an
irrevocable notice of redemption for a redemption date not later than 45 days
following the Closing Date shall have been given to the trustee thereunder and
the holders of the Target 2005 Notes. All pay-off letters, UCC termination
statements and other release documentation reasonably requested by the Lead
Arranger to evidence the repayment of any other indebtedness of Acquiror and
its subsidiaries and the Acquired Business shall have been received.
Notwithstanding anything herein to the contrary, in no event will the
successful consummation of the Target 2008 Notes Offer or a redemption or other
repayment of the Target 2008 Notes be a condition to Citigroup’s commitment
under the Commitment Letter or a condition precedent to the initial borrowing
under the Credit Agreement.

     3. Financial Statements. The Lead Arranger shall have received, to the
extent not previously available, unaudited consolidated balance sheets and
related statements of income, stockholders’ equity and cash flows of each of
Acquiror and the Acquired Business for each fiscal quarter since the date of
such audited financial statements within 45 days after such fiscal quarter has
been completed.

     4. Pro Forma Financial Statements; Projections. The Lenders shall have
received a pro forma consolidated balance sheet of Acquiror as of the Closing
Date, after giving effect to the Transactions, together with a certificate of
the chief financial officer of Acquiror to the effect that such statements
accurately present the pro forma financial position of Acquiror and its
subsidiaries in accordance with generally accepted accounting principles, and
such balance sheets are not materially inconsistent with the forecasts
previously provided to

C-1

 

the Lenders. Acquiror shall have delivered its then most recent projections
through the 2011 fiscal year, prepared on a quarterly basis through the end of
2006, which shall not be materially inconsistent with the projections provided
to the Lead Arranger prior to the date of the Commitment Letter.

     5. Maximum Leverage Ratios. The Agent shall have received reasonably
satisfactory evidence (including an officers’ certificate accompanied by
satisfactory supporting schedules and other data) that the ratio of pro forma
consolidated debt to pro forma EBITDA (to be defined to include adjustments
required or permitted by Regulation S-X of the Securities Act of 1933, as
amended, and such other adjustments as shall be reasonably acceptable to the
Lead Arranger) of Acquiror and its subsidiaries calculated in a manner
reasonably acceptable to the Agent and after giving effect to the Transactions
for the trailing four quarters ended immediately prior to the Closing Date was
not greater than 4.35:1.

     6. Litigation, Regulatory, Environmental and Employee Health and Safety.
There shall be no litigation, administrative or regulatory proceeding that
could reasonably be expected to have a material adverse effect on the financial
condition, business or properties of Acquiror and its subsidiaries and the
Acquired Business, taken as a whole (except, without limiting clause (c) of
Section 1 of the Commitment Letter, to the extent of the information disclosed,
whether through public filings or otherwise, to Citigroup prior to the date
hereof), or on the ability of the parties to consummate the Acquisition or the
other transactions contemplated hereby. The Lenders shall be reasonably
satisfied that the amount and nature of any regulatory-based, environmental,
employee, health and safety liabilities to which Acquiror, Borrower and their
subsidiaries may be subject after giving effect to the Transactions (other than
those liabilities of general applicability to persons in the business in which
Acquiror and Target are engaged) would not have a material adverse effect on
the business, assets, results of operations, or financial condition of
Acquiror, its subsidiaries and the Acquired Business, taken as a whole.

     7. Solvency. The Lenders shall have received a solvency certificate from
the Chief Financial Officer of Acquiror, in form and substance reasonably
satisfactory to the Lead Arranger, together with such other evidence reasonably
requested by the Lenders, confirming the solvency of Acquiror and its
subsidiaries on a consolidated basis after giving effect to the Transactions.

     8. No Conflicts. The consummation of the Transactions shall not (a)
violate any applicable law, statute, rule or regulation or (b) conflict with,
or result in a default or event of default or an acceleration of any rights or
benefits under, any material agreement of Acquiror, the Acquired Business or
any of their respective subsidiaries, and the Agent shall have received one or
more legal opinions to such effect, reasonably satisfactory to the Agent, from
counsel to Acquiror reasonably satisfactory to the Agent.

     9. Consents. All requisite material governmental authorities and third
parties shall have approved or consented to the Transactions to the extent
required, all applicable appeal periods shall have expired and there shall be
no governmental or judicial action, actual or threatened, that could reasonably
be expected to materially restrain, prevent or impose materially burdensome
conditions on the Transactions or the other transactions contemplated hereby.

     10. Confidential Information Memorandum. The Lead Arranger shall have
received, not later than 30 days prior to the Closing Date, the complete
printed Confidential Information Memorandum relating to the Facilities suitable
for use in a customary syndication of bank financing, with all financial
statements (both audited and unaudited), information and projections relating
to Acquiror, Acquisition Co., Borrower, the Acquired Business and their
respective subsidiaries as deemed desirable to be included therein by the Lead
Arranger. Acquiror shall have obtained, at least 30 days prior to the Closing
Date, ratings from Standard & Poor’s Rating Services (“S&P”) and Moody’s
Investors Service, Inc. (“Moody’s”) for the Facilities.

C-2

 

     11. Miscellaneous Closing Conditions. Other customary closing conditions,
including delivery of reasonably satisfactory legal opinions (including
regulatory opinions) of Borrower’s counsel; other financial information to be
agreed; accuracy of representations and warranties in all material respects
(without duplicating materiality concepts); absence of defaults, prepayment
events or creation of liens under debt instruments or other agreements as a
result of the transactions contemplated hereby; evidence of authority; material
compliance with applicable laws and regulations (including but not limited to
ERISA, margin regulations and environmental laws); payment of fees and
expenses; and reasonably satisfactory insurance.

C-3

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