Exhibit 10.1
EXECUTION COPY
 
 
AMENDED AND RESTATED CREDIT AGREEMENT
among
BALLY TOTAL FITNESS HOLDING CORPORATION,
as Borrower
The Several Banks and other Financial Institutions
Parties Hereto
JPMORGAN CHASE BANK, N.A.,
as Agent
and
MORGAN STANLEY SENIOR FUNDING, INC.,
as Syndication Agent
Dated as of October 16, 2006
 
 
J.P. MORGAN SECURITIES INC.,
as Sole Lead Arranger and Sole Bookrunner

 

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TABLE OF CONTENTS

              Page  
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMINOLOGY
    2  
 
       
1.01 Certain Definitions
    2  
 
       
1.02 Financial Standards
    30  
 
       
1.03 Interpretation
    30  
 
       
ARTICLE II. THE CREDIT
    30  
 
       
2.01 The Revolving Credit
    30  
 
       
2.02 Requests for Revolving Advances
    31  
 
       
2.03 Term Loan Facility
    32  
 
       
2.04 Requests for Term Advances
    33  
 
       
2.05 Repayment of Term Advances
    34  
 
       
2.06 Lending Branch and Evidence of Credit
    35  
 
       
2.07 Conversion and Continuation Options
    36  
 
       
2.08 Computation of and Payment of Interest
    36  
 
       
2.09 Payment of Advances
    38  
 
       
2.10 Payments
    38  
 
       
2.11 Optional Termination or Reduction of Commitment Amounts
    39  
 
       
2.12 Optional Prepayments
    39  
 
       
2.13 Mandatory Prepayments
    40  
 
       
2.14 Fees
    41  
 
       
2.15 Agency Fees
    42  
 
       
2.16 Taxes
    42  
 
       
2.17 Increased Costs; Illegality; Indemnity
    44  
 
       
2.18 Capital Adequacy
    45  

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              Page  
2.19 Letters of Credit
    46  
 
       
ARTICLE III. SECURITY
    53  
 
       
3.01 Security
    53  
 
       
3.02 Collateral Documents
    54  
 
       
3.03 Priority of Security Interest
    54  
 
       
3.04 New Guarantors
    54  
 
       
3.05 Real Property Matters
    55  
 
       
3.06 Exceptions
    56  
 
       
3.07 Pledge of Capital Stock
    56  
 
       
3.08 Collateral Agency Agreement
    56  
 
       
3.09 Amendments of Collateral Documents
    56  
 
       
ARTICLE IV. CONDITIONS PRECEDENT
    57  
 
       
4.01 Conditions Precedent to Closing Date
    57  
 
       
4.02 Conditions Precedent to Each Advance and Letter of Credit
    60  
 
       
ARTICLE V. REPRESENTATIONS AND WARRANTIES
    61  
 
       
5.01 Borrower’s Existence
    61  
 
       
5.02 Subsidiaries’ Existence
    61  
 
       
5.03 Borrower’s and Subsidiaries’ Powers
    61  
 
       
5.04 Power of Officers
    62  
 
       
5.05 Government Approvals
    62  
 
       
5.06 Compliance With Laws
    62  
 
       
5.07 Enforceability of Agreement
    62  
 
       
5.08 Title to Property
    62  
 
       
5.09 Litigation
    62  
 
       
5.10 Events of Default
    62  

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              Page  
5.11 Compliance with Margin Requirements
    63  
 
       
5.12 Subsidiaries
    63  
 
       
5.13 Financial Information
    63  
 
       
5.14 ERISA
    63  
 
       
5.15 Investment Company Act of 1940
    63  
 
       
5.16 No Restrictions on Subsidiaries
    64  
 
       
5.17 Senior Indebtedness
    64  
 
       
5.18 Environmental Matters
    64  
 
       
5.19 Collateral Documents
    65  
 
       
5.20 Copyrights, Patents, Trademarks and Licenses, etc.
    65  
 
       
5.21 Accuracy of Information, etc.
    66  
 
       
5.22 Permitted Indebtedness
    66  
 
       
ARTICLE VI. AFFIRMATIVE COVENANTS
    66  
 
       
6.01 Use of Proceeds and Letters of Credit
    66  
 
       
6.02 Notices
    67  
 
       
6.03 Financial Statements, Reports, Etc.
    68  
 
       
6.04 Further Assurances
    71  
 
       
6.05 Existence, Etc.
    71  
 
       
6.06 Ownership of Stock of Subsidiaries
    71  
 
       
6.07 Payment of Obligations
    71  
 
       
6.08 Compliance with Laws
    71  
 
       
6.09 Insurance and Condemnation
    71  
 
       
6.10 Adequate Books
    74  
 
       
6.11 ERISA
    74  
 
       
6.12 Minimum Liquidity
    75  

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              Page  
6.13 Hazardous Materials
    75  
 
       
6.14 Minimum Consolidated Cash EBITDA
    76  
 
       
6.15 Real Estate Taxes
    77  
 
       
6.16 Real Estate Collateral
    77  
 
       
6.17 Control Agreements
    78  
 
       
6.18 Asset Sales
    78  
 
       
ARTICLE VII. NEGATIVE COVENANTS
    78  
 
       
7.01 Investments and Restricted Payments
    78  
 
       
7.02 Other Obligations
    80  
 
       
7.03 Other Security
    82  
 
       
7.04 Subordinated Debt; Senior Unsecured Notes
    83  
 
       
7.05 Liquidation; Merger
    84  
 
       
7.06 [Reserved.]
    85  
 
       
7.07 Change in Business
    85  
 
       
7.08 Disposal of Assets
    85  
 
       
7.09 Limitation on Optional Payments and Modifications of Debt Instruments
    87  
 
       
7.10 Limitation on Transactions with Affiliates
    88  
 
       
7.11 Limitation on Sales and Leasebacks
    88  
 
       
7.12 Limitation on Changes in Fiscal Year
    88  
 
       
7.13 Unrestricted Subsidiaries
    88  
 
       
7.14 Tax Allocation and Indemnity Agreement
    88  
 
       
7.15 Negative Pledge Clauses
    88  
 
       
ARTICLE VIII. EVENTS OF DEFAULT
    89  
 
       
8.01 Nonpayment
    89  
 
       
8.02 Representation or Warranty
    89  

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              Page  
8.03 Judgments
    89  
 
       
8.04 Voluntary Bankruptcy
    90  
 
       
8.05 Involuntary Bankruptcy
    90  
 
       
8.06 Change of Control Event
    90  
 
       
8.07 Cross Default
    90  
 
       
8.08 ERISA
    90  
 
       
8.09 Specific Defaults
    91  
 
       
8.10 Guarantee and Collateral Agreement; Impairment of Collateral Documents
    91  
 
       
8.11 Condemnation
    91  
 
       
8.12 Public Filings
    92  
 
       
8.13 Actual or Asserted Invalidity
    92  
 
       
8.14 Failure to Constitute Senior Indebtedness
    92  
 
       
8.15 Other Defaults
    92  
 
       
ARTICLE IX. MISCELLANEOUS
    93  
 
       
9.01 Notices
    93  
 
       
9.02 Successors and Assigns
    94  
 
       
9.03 Lenders’ Obligations Several
    94  
 
       
9.04 Assignments; Participations
    94  
 
       
9.05 Delays and Waivers
    97  
 
       
9.06 Costs and Expenses
    97  
 
       
9.07 Telephone Indemnity
    98  
 
       
9.08 Other Indemnity
    98  
 
       
9.09 Choice of Law
    99  
 
       
9.10 Personal Jurisdiction; Waiver
    99  
 
       
9.11 Service of Process
    100  

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              Page  
9.12 Waiver of Jury Trial
    100  
 
       
9.13 Section Headings
    100  
 
       
9.14 Severability
    100  
 
       
9.15 Counterparts
    100  
 
       
9.16 No Reliance by Lenders
    100  
 
       
9.17 Entire Agreement
    101  
 
       
9.18 Confidentiality
    101  
 
       
9.19 Existing Credit Agreement to Remain in Full Force and Effect
    101  
 
       
9.20 Replacement of Lenders
    101  
 
       
ARTICLE X. RELATION OF LENDERS
    102  
 
       
10.01 Agent and Collateral Agent; Enforcement of Guaranties
    102  
 
       
10.02 Pro Rata Sharing
    103  
 
       
10.03 Set-off
    103  
 
       
10.04 Liability of Agent
    104  
 
       
10.05 Reliance by Agent
    105  
 
       
10.06 Approvals; Amendments
    105  
 
       
10.07 Notice of Default
    106  
 
       
10.08 Credit Decision
    106  
 
       
10.09 Lenders’ Indemnity
    107  
 
       
10.10 Agent as Lender
    107  
 
       
10.11 Notice of Transfer
    108  
 
       
10.12 Resignation of Agent
    108  
 
       
10.13 Collateral Matters
    108  
 
       
10.14 Collateral Agent
    112  
 
       
10.15 Documentation Agent and Syndication Agent
    112  

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SCHEDULES

     
Schedule 1.01
  Existing Liens
Schedule 1.01(a)
  Unrestricted Subsidiaries
Schedule 1.01(b)
  GAAP EBITDA Adjustments
Schedule 2.19(b)
  Letters of Credit
Schedule 3.05
  Existing Mortgage Collateral Properties
Schedule 5.09
  Litigation
Schedule 5.14
  ERISA Matters
Schedule 5.16
  Restrictions on Subsidiaries
Schedule 5.18
  Environmental Matters
Schedule 5.20
  Trademark Disputes
Schedule 6.02(a)
  Additional Disclosed Litigation
Schedule 7.01(j)
  Intercompany Loans
Schedule 7.01(k)
  Investments
Schedule 7.02(b)
  Existing Debt
Schedule 7.09(a)
  Prepayable Debt
Schedule 9.01
  Addresses for Notices

EXHIBITS

     
Exhibit A.
  Form of Guarantee and Collateral Agreement
Exhibit B.
  Form of Collateral Agency Agreement
Exhibit C.
  List of Commitment Percentages
Exhibit D.
  List of Subsidiaries
Exhibit E.
  Form of Operating Bank Guaranty
Exhibit F.
  Form of Revolving Note
Exhibit G.
  Form of Tranche B Term Note
Exhibit H.
  Form of Delayed-Draw Term Note
Exhibit I.
  Form of Opinions of Borrower’s Special Counsel
Exhibit J.
  Form of Opinion of General Counsel
Exhibit K.
  Form of Assignment and Acceptance
Exhibit L.
  Form of Subordination Agreement

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CREDIT AGREEMENT
          This Amended and Restated Credit Agreement, dated as of October 16,
2006 (the “Credit Agreement”), among BALLY TOTAL FITNESS HOLDING CORPORATION, a
Delaware corporation (“Borrower”), the banks and other financial institutions
named on the signature pages of this Agreement (collectively, “Lenders” and
individually, a “Lender”), JPMORGAN CHASE BANK, N.A., as agent for Lenders (in
such capacity, “Agent”), and MORGAN STANLEY SENIOR FUNDING, INC., as syndication
agent (in such capacity, the “Syndication Agent”) is entered into with respect
to the following:
          1. The Borrower, certain of the Lenders, certain other lenders and the
Agent are parties to the Credit Agreement dated as of November 18, 1997, as
amended and restated as of November 10, 1999, as further amended and restated as
of December 21, 2001, as further amended and restated as of July 2, 2003, and as
further amended and restated as of October 14, 2004, as amended (as further
amended, modified or supplemented from time to time prior to the date hereof,
the “Existing Credit Agreement”).
          2. The Borrower has requested that the Existing Credit Agreement be
amended and restated (a) to provide for (i) a four-year senior secured revolving
credit facility under this Agreement in an aggregate principal amount of
$44,000,000 (the “Revolving Credit Facility”), (ii) a four-year senior secured
“tranche B” term loan facility under this Agreement in an aggregate principal
amount of $205,900,000 (the “Tranche B Term Loan Facility”) and (iii) a
four-year senior secured delayed-draw term loan facility under this Agreement in
an aggregate principal amount of $34,100,000 (the “Delayed-Draw Term Loan
Facility” and, together with the Tranche B Term Loan Facility, the “Term Loan
Facility”), in order, first, with respect to the Tranche B Term Loan Facility,
to repay certain indebtedness under the Existing Credit Agreement, second, with
respect to the Delayed-Draw Term Loan Facility, to finance or refinance the
purchase price or cost of construction or improvement of certain capital
expenditures, including the acquisition, improvement or development of real or
personal, movable or immovable property, and third, with respect to the Tranche
B Term Loan Facility and the Revolving Credit Facility, for general corporate
and working capital purposes, (b) to amend certain covenants and (c) otherwise
to amend the Existing Credit Agreement and restate it in its entirety as more
fully set forth herein.
          3. Certain of the Lenders party to the Existing Credit Agreement and
the Credit Parties (as herein defined) desire to continue in full force and
effect all of the indebtedness, guarantees, liens and security interests created
under the Existing Credit Agreement and all guarantee and collateral documents
delivered in connection therewith under this Agreement and the other Credit
Documents.
          4. The Lenders and the Agent are willing to so amend and restate the
Existing Credit Agreement, and the Lenders not now parties to the Existing
Credit Agreement are willing to become parties hereto, on the terms and subject
to the conditions set forth herein.
          In consideration of the premises and other valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree that on the

 

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Closing Date (as hereinafter defined) the Existing Credit Agreement shall be
amended and restated in its entirety as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMINOLOGY
          1.01 Certain Definitions. In addition to the terms defined elsewhere
in this Agreement, the following terms have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
     “Advance” means a Revolving Advance or a Term Advance.
     “Advance Maturity Date” means the later of (a) October 1, 2007 and (b) the
date that is 14 days prior to the earliest date on which any Subordinated Notes
are scheduled to mature, if the final maturity date of any Subordinated Notes
(after giving effect to any payments made in accordance with the terms of
Sections 7.04 and 7.09) has been extended (including successive extensions)
pursuant to an amendment, extension, modification or refinancing of the 1997
Indenture, the 1998 Indenture and the Subordinated Notes in accordance with the
terms of Sections 7.04 and 7.09.
     “Affiliate” of any Person means any other Person directly or indirectly
Controlling or Controlled by or under direct or indirect common Control with
such Person.
     “Agreement” shall mean the Existing Credit Agreement, as amended and
restated by this Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.
     “Applicable Margin” means, at any time, (a) with respect to Eurodollar Rate
Advances and Letter of Credit fees, 4.25% and (b) with respect to Reference Rate
Advances and any other payment obligations hereunder bearing interest based on
the Reference Rate, 3.25%.
     “Approved Fund” means any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course and that is administered or managed
by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate
of an entity that administers or manages a Lender.
     “Arranger” means J.P. Morgan Securities Inc.
     “Banking Day” means a day other than Saturday or Sunday on which (i) banks
are open for business in New York City and (ii) for any calculation,
determination or other matter with respect to Eurodollar Rate Advances, dealings
in foreign currencies and exchange between banks may be carried on in London,
England.

2

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     “Borrowing Date” means, with respect to each Advance, the date such Advance
is made.
     “Capitalized Lease” means any lease which is or should be, in accordance
with GAAP, capitalized on the balance sheet of the lessee.
     “Capital Stock” of any Person means any and all shares, interests,
participations or other equivalents (however designated) of such Person’s
capital stock or other equity interests whether now outstanding or issued after
the Closing Date.
     “Cash Equivalents” means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 12 months from the date of acquisition, (ii) Dollar denominated time
deposits, certificates of deposit and bankers acceptances of any Lender or any
bank whose short-term commercial paper rating from Standard & Poor’s Ratings
Group, a division of McGraw-Hill (“S&P”), is at least A-1 or the equivalent
thereof or from Moody’s Investors Service, Inc. (“Moody’s”) is at least P-1 or
the equivalent thereof (any such Lender, an “Approved Lender”), with maturities
of not more than 12 months from the date of acquisition, (iii) repurchase
obligations with a term of not more than seven days for underlying securities of
the type described in clause (i) entered into with an Approved Lender,
(iv) commercial paper issued by, or guaranteed by, any Approved Lender or by the
parent company of any Approved Lender or commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody’s, or issued by, or guaranteed by, any
industrial company with a long term unsecured debt rating of at least A or A2,
or the equivalent of each thereof, from S&P or Moody’s, respectively, and in
each case maturing within 12 months after the date of acquisition and (v) any
fund or funds making substantially all of their investments in investments of
the type described in clauses (i) through (iv) above.
     “Casualty Event” means the damage, destruction or condemnation, as the case
may be, of property of any Person or any of its Subsidiaries.
     “Change of Control Event” means, without limitation, (a) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (excluding any Person or group who as of the Closing Date held five
percent (5%) or more of the Capital Stock of the Borrower) (within the meaning
of the Securities Exchange Act of 1934 and the rules of the Securities and
Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 30% of the aggregate ordinary voting power represented by
the issued and outstanding Capital Stock of the Borrower; (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were not directors as of the Closing Date and who were
neither (i) nominated by the board of directors of the Borrower nor
(ii) appointed by directors so nominated; or (c) a “change of control” (however

3

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denominated) shall occur with respect to any Subordinated Debt or the Senior
Unsecured Notes.
     “Closing Date” means the date on which all of the conditions in
Section 4.01 are satisfied.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.
     “Collateral” means all real, personal and mixed property and interests in
property and proceeds thereof now owned or hereafter acquired by Borrower or any
Guarantor and their respective Subsidiaries in or upon which a security
interest, pledge, lien or mortgage is granted to the Lenders or the Collateral
Agent pursuant to the Collateral Documents for the benefit of the Secured
Creditors whether under this Agreement or under any other documents, instruments
or writings executed by any such Persons in connection with Advances or other
credit extensions made hereunder and delivered to the Collateral Agent or the
Lenders.
     “Collateral Agency Agreement” means the Collateral Agency Agreement between
the Collateral Agent and the Agent in the form of Exhibit B hereto, as amended,
supplemented or otherwise modified.
     “Collateral Agent” means JPMorgan Chase Bank, N.A., or any successor agent
thereto acting as Collateral Agent for the Secured Creditors pursuant to the
Collateral Agency Agreement.
     “Collateral Documents” means, collectively, (i) the Guarantee and
Collateral Agreement, the Collateral Agency Agreement, the Mortgages, the
Mortgage Amendments, the Operating Bank Guaranty, the Control Agreements and all
other security agreements, mortgages, deeds of trust, patent and trademark
assignments, certificates of title, lease assignments, guarantees and other
agreements between Borrower or any Guarantor and their respective Subsidiaries
and any of the Lenders or the Collateral Agent for the benefit of the Lenders or
the Secured Creditors, now or hereafter delivered to any of the Secured
Creditors or the Collateral Agent pursuant to or in connection with the
transactions contemplated hereby, and all financing statements (or comparable
documents) now or hereafter filed in accordance with the Uniform Commercial Code
(or comparable law) against Borrower or any Guarantor or any Subsidiaries in
favor of any of the Lenders or the Collateral Agent for the benefit of the
Lenders or the Secured Creditors and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.
     “Commitment” means, as to any Lender, such Lender’s Revolving Credit
Commitment, L/C Commitment, Tranche B Term Loan Commitment and Delayed-Draw Term
Loan Commitment; collectively, as to all the Lenders, the “Commitments”.

4

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     “Commitment Percentage” means, as to each Lender, its Revolving Credit
Commitment Percentage, its Tranche B Term Loan Commitment Percentage, or its
Delayed-Draw Term Loan Commitment Percentage, as applicable.
     “Commitment Reductions” shall mean the amount of the permanent reductions
of the Revolving Credit Commitment Amount and/or the Delayed-Draw Term Loan
Commitment Amount resulting from the application of Section 2.11, 2.13 or any
other provision contained herein.
     “Conduit Lender” means any special purpose corporation organized and
administered by any Lender for the purpose of making Advances otherwise required
to be made by such Lender and designated by such Lender in a written instrument;
provided, that the designation by any Lender of a Conduit Lender shall not
relieve the designating Lender of any of its obligations to make an Advance
under this Agreement if, for any reason, its Conduit Lender fails to make such
Advance, and the designating Lender (and not the Conduit Lender) shall have the
sole right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender and itself,
and provided, further, that no Conduit Lender shall (a) be entitled to receive
any greater amount pursuant to Section 2.16, 2.17, 2.18 or 9.06 than the
designating Lender would have been entitled to receive in respect of the
extensions of credit made by such Conduit Lender or (b) be deemed to have any
Commitment.
     “Consolidated” or “consolidated” means (i) when used herein with reference
to financial statements, ratios, assets, liabilities, operating accounts or
operations of Borrower and its Subsidiaries, that any calculations have been
made by combining the assets and liabilities of Borrower and its Subsidiaries
after eliminating all intercompany items; and (ii) when used herein with
reference to a Subsidiary, a Subsidiary the financial statements of which have
been presented together with those of Borrower.
     “Consolidated Adjusted EBITDA” means, for any period, GAAP EBITDA of the
Borrower and its Subsidiaries for such period, calculated in accordance with
GAAP as in effect from time to time. If the Borrower or any Subsidiary has
acquired or disposed of any Person, line of business or health and fitness club
within any applicable trailing 12-month period, Consolidated Adjusted EBITDA for
such period shall be calculated on a pro forma basis (and adjusted for cost
savings realizable within twelve months of such acquisitions or dispositions, as
the case may be, provided that any such adjustments for cost saving shall be
reasonably satisfactory to the Agent) as if such acquisition or disposition, as
the case may be, occurred on the first day of such period, as set forth in a
certificate of a duly authorized financial officer of the Borrower.
     “Consolidated Cash EBITDA” means, for any period, Consolidated Adjusted
EBITDA of the Borrower and its Subsidiaries, for such period, plus, to the
extent deducted in calculating Consolidated Net Income and not already added
back in calculating Consolidated Adjusted EBITDA for such period, all non-cash
charges incurred during such period, plus or minus changes in deferred revenue
for such period and minus any cash payments made during such period in respect
of non-cash items previously added back in calculating Consolidated Adjusted
EBITDA.

5

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     “Consolidated Net Income” of the Borrower means, for any period, the
consolidated net income (or loss) of the Borrower and its Subsidiaries for such
period as determined in accordance with GAAP, adjusted, to the extent included
in calculating such net income (or loss), minus (i) all extraordinary gains or
losses (less all fees, costs, and expenses relating thereto), (ii) the portion
of net income (or loss) of the Borrower and its Subsidiaries allocable to
minority interests in unconsolidated Persons to the extent that cash dividends
or distributions have not actually been received by the Borrower or one of its
Subsidiaries, (iii) net income (or loss) of any Person combined with the
Borrower or any of its subsidiaries on a “pooling of interests” basis
attributable to any period prior to the date of combination, (iv) any gain or
loss, net of taxes, realized upon the termination of any Plan, (v) any gains or
losses (less all fees, costs, and expenses relating thereto) in respect of
dispositions of assets other than in the ordinary course of business, and
(vi) the net income of any Subsidiary to the extent that the declaration of the
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulations applicable to that Subsidiary or its stockholders.
     “Control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power or by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
     “Control Agreement” has the meaning assigned in Section 6.17.
     “Converted Existing Revolving Loan” has the meaning set forth in Section
2.01(a).
     “Converted Existing Term Loan” has the meaning set forth in
Section 2.03(a).
     “Credit” means the credit available to Borrower under Article II hereof.
     “Credit Agreement” has the meaning assigned in the recitals hereto.
     “Credit Documents” means, collectively, this Agreement, the Notes and the
Collateral Documents.
     “Credit Parties” means the Borrower and each of its Subsidiaries which is a
party to a Credit Document.
     “Debt” means for any Person (i) all indebtedness of such Person for
borrowed money (including, without limitation, reimbursement and all other
obligations with respect to letters of credit, whether or not matured), (ii) all
obligations of such Person representing the deferred purchase price of real or
personal property or of services (other than trade liabilities incurred in the
ordinary course of business and payable in accordance with customary practices),
(iii) the amount of all obligations of such Person under Capitalized Leases
determined in accordance with GAAP, (iv) the Termination Value of any Interest
Expense Hedging Arrangement, and (v) without duplication of any

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amount of Debt included in clause (i), (ii), (iii) or (iv) of this definition,
all Guaranties made by such Person.
     “Default” shall mean an event which with the giving of notice, passage of
time or both would constitute an Event of Default.
     “Delayed-Draw Term Advance” means a borrowing under the Delayed-Draw Term
Loan Facility pursuant to Section 2.03(b) hereof; collectively, the
“Delayed-Draw Term Advances”.
     “Delayed-Draw Term Loan Commitment” has the meaning ascribed to it in
Section 2.03(b) hereof.
     “Delayed-Draw Term Loan Commitment Amount” means $34,100,000, less any
Delayed-Draw Term Loan Commitment Reductions.
     “Delayed-Draw Term Loan Commitment Percentage” means, as to each Lender,
the percentage set forth opposite such Lender’s name under the column entitled
“Delayed-Draw Term Loan Commitment Percentage” on Exhibit C hereto or, if such
Lender shall have acquired or disposed of any interest in the Delayed-Draw Term
Loan Facility pursuant to Section 9.04(a), on the applicable instrument of
assignment, which is the percentage equivalent of a fraction, the numerator of
which is the amount of such Lender’s Delayed-Draw Term Loan Commitment after
giving effect to such assignment and the denominator of which is the amount of
the Delayed-Draw Term Commitments (or if the Delayed-Draw Term Loan Commitments
have terminated, the sum of its outstanding Delayed-Draw Term Advances as a
percentage of the aggregate amount of Delayed-Draw Term Advances).
     “Delayed-Draw Term Loan Commitment Period” means the period from and
including the Closing Date to and including date which is the earlier of
(a) 18 months after the Closing Date, or if such date is not a Business Day, the
Business Day next succeeding such date and (b) the Term Loan Termination Date.
     “Delayed-Draw Term Loan Commitment Reductions” means the amount of the
permanent reductions of the Delayed-Draw Term Loan Commitment Amount resulting
from the application of Section 2.11, 2.13 or any other provision contained
herein.
     “Delayed-Draw Term Loan Facility” means the credit described in Section
2.03(b).
     “Delayed-Draw Term Lender” means each Lender which has, or has acquired
pursuant to an assignment made in accordance with Section 9.04, a Delayed-Draw
Term Loan Commitment or which has made, or acquired pursuant to an assignment
made in accordance with Section 9.04, a Delayed-Draw Term Advance.
     “Delayed-Draw Term Note” means the master promissory note of the Borrower
payable to the order of a Lender in substantially the form of Exhibit H hereto;
and “Delayed-Draw Term Notes” means all of such Delayed-Draw Term Notes.

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     “Demand Deposit Accounts” means (i) the demand deposit accounts listed on
Annex 1 to the Operating Bank Guaranty maintained by Borrower and/or any of its
Subsidiaries with the respective Revolving Lenders identified on such Annex, and
(ii) other demand deposit accounts established by Borrower or any of its
Subsidiaries on or after the date hereof which shall be promptly identified by
the Borrower in writing to Agent including by delivery of an updated Annex 1.
     “Designated Senior Indebtedness” means Designated Senior Indebtedness of
Borrower as defined in each of the 1997 Indenture and the 1998 Indenture.
     “Determination Period” has the meaning assigned in Section 6.14.
     “DOJ Investigation” shall mean investigations, requests for information and
related matters initiated by the Justice Department in connection with the
previously announced restatements of the Borrower’s financial statements and
related matters.
     “Dollars” and “$” mean United States dollars.
     “Domestic Subsidiary” means any Subsidiary of the Borrower organized under
the laws of any jurisdiction within the United States.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
     “ERISA Affiliate” means any corporation, trade or business that is, along
with Borrower, a member of a controlled group of corporations or a controlled
group of trades or businesses, as described in Section 414 of the Code or
Section 4001 of ERISA.
     “Eurocurrency Reserve Requirements” means, for any day as applied to a
Eurodollar Rate Advance, the aggregate (without duplication) of the rates
(expressed as a decimal) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other governmental authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of such Board)
maintained by a member bank of such System.
     “Eurodollar Base Rate”: with respect to each day during each Interest
Period pertaining to a Eurodollar Rate Advance, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Dow Jones Markets screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event that
such rate does not appear on Page 3750 of the Dow Jones Markets screen (or
otherwise on such screen), the “Eurodollar Base Rate” shall be determined by
reference to such other comparable publicly available service for displaying
eurodollar rates as may be selected by the Agent or, in the absence of such
availability, by reference to the rate at which the Agent is offered Dollar
deposits at or about 11:00 A.M., New York City time, two Banking Days prior to
the beginning of such

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Interest Period in the interbank eurodollar market where its eurodollar and
foreign currency and exchange operations are then being conducted for delivery
on the first day of such Interest Period for the number of days comprised
therein.
     “Eurodollar Rate” means, with respect to each day during each Interest
Period pertaining to a Eurodollar Rate Advance, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the nearest
1/100th of 1%):

              Eurodollar Base Rate        
1.00 - Eurocurrency Reserve Requirements
   

     “Eurodollar Rate Advances” means Advances the rate of interest applicable
to which is based upon the Eurodollar Rate.
     “Event of Default” means any event listed in Article VIII.
     “Excess Cash Flow” means, for any fiscal year of the Borrower, without
duplication:
(a) “Cash provided by operating activities” as reported on the Borrower’s
Consolidated Statement of Cash Flows (adjusted to remove Unrestricted
Subsidiaries) for such fiscal year as provided by the Borrower to the Lenders,
     Plus:
(b) to the extent not included in “Cash provided by operating activities”, net
cash proceeds received by the Borrower or any of its Subsidiaries from the sale,
lease, assignment or other disposition of any asset (excluding proceeds from the
sale of Capital Stock of the Borrower) in such fiscal year;
     Less:
(c) net proceeds from asset sales to the extent (without duplication):

  (i)   constituting Net Cash Proceeds or Net Casualty Proceeds or Reinvestment
Proceeds,     (ii)   derived from any disposition permitted by Section 7.08(a),
(d), (f), (p) or (q),

(d) dividends, distributions, and repayments on Investments to the extent
included in “Cash provided by operating activities”,
(e) the aggregate amount of capital expenditures actually paid by the Borrower
and its Subsidiaries in cash during such fiscal year (excluding the principal
amount of Debt (other than Debt incurred under this Agreement) incurred in
connection with such expenditures),

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(f) Investments to the extent not deducted in calculating “Cash provided by
operating activities” and not included in the amount reported on the line titled
“Cash used in Investing Activities” on such Consolidated Statement of Cash Flows
(adjusted to remove Unrestricted Subsidiaries),
(g) debt issuance costs incurred in such fiscal year, and
(h) the aggregate amount of all regularly scheduled principal payments of the
Borrower and its Subsidiaries in such fiscal year.
     “Excess Cash Flow Application Date” has the meaning set forth in Section
2.13(b).
     “Existing Credit Agreement” has the meaning set forth in the recitals
hereto.
     “Existing Mortgage Collateral Properties” has the meaning set forth in
Section 3.05.
     “Existing Revolving Loan” has the meaning set forth in Section 2.01(a).
     “Existing Term Loan” has the meaning set forth in Section 2.03(a).
     “Facility” means the collective reference to the Tranche B Term Loan
Facility, the Delayed-Draw Term Loan Facility and the Revolving Credit Facility.
     “Fair Market Value” means, with respect to any asset or property, the sale
value that would be obtained in an arm’s-length transaction between a seller
under no compulsion to sell and a willing buyer under no compulsion to buy.
     “Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Banking Day, for the next preceding Banking Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Banking Day, the average of the quotations for such day on such
transactions received by the Agent from three (3) Federal funds brokers of
recognized standing selected by it.
     “Foreign Subsidiaries” means (x) Bally Matrix Fitness Centre Ltd., a
corporation organized under the laws of Ontario, Canada, and (y) any other
Subsidiary of the Borrower organized under the laws of any jurisdiction outside
the United States of America.
     “Franchise Program” means a program under which the Borrower or its
Subsidiaries grant franchises to third parties which require franchisees, among
other things, to pay fees to the Borrower and/or its Subsidiaries, make use of
certain collection and administrative services of the Borrower and its
Subsidiaries and contribute to a national advertising program and which entitle
the franchisees, among other things, to

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receive training from the Borrower and its Subsidiaries, to have nonexclusive
licenses to use on a limited basis certain service marks, trademarks and trade
names and other intellectual property of or licensed to the Borrower and its
Subsidiaries, and to sell memberships to use facilities of the franchisee and
the Borrower and its Subsidiaries. A Franchise Program may include the
conversion of certain facilities owned by the Borrower or its Subsidiaries to
franchised facilities, so long as such conversions are consummated on terms and
conditions permitted under this Agreement.
     “GAAP” means generally accepted accounting principles in the United States
of America as in effect from time to time.
     “GAAP EBITDA” means with respect to the Borrower and its Subsidiaries on a
consolidated basis, without duplication, for any period of determination,
(i) Consolidated Net Income (loss), plus, to the extent deducted in determining
Consolidated Net Income (loss), (ii) provision for taxes, (iii) consolidated
interest expense, determined in accordance with GAAP, (iv) depreciation,
amortization and impairment charges, all calculated in accordance with GAAP,
(v) any non-cash compensation charges, including any such charges related to
stock-based compensation, including, without limitation, stock options,
restricted stock grants or other equity-incentive programs and similar
arrangements (including any repricing, amendment, modification, substitution or
change of any such stock, stock option, stock appreciation rights or similar
arrangements); provided, that, to the extent any non-cash expense under this
clause (v) subsequently requires any cash disbursement, such disbursement
expense will be subtracted from GAAP EBITDA in the applicable period, (vi) the
cumulative non-cash charge resulting from a change in accounting principles
(including, but not limited to, changes in lease accounting), (vii) GAAP rent
expense reflected on the consolidated income statement for the period of
determination in excess of cash rental expense, (viii) with respect to any
discontinued operation, any non-cash loss resulting therefrom, (ix) expenses
incurred by the Borrower or any Subsidiary to the extent reimbursed in cash by a
third party, (x) any financial advisory fees, accounting fees, legal fees and
other similar fees and related costs, charges and expenses in respect of the
financing under this Agreement and certain severance payments made to members of
the Borrower’s senior management in August 2006, (xi) any financial advisory
fees, accounting fees, legal fees and other similar fees and related costs,
charges and expenses in respect of any restructuring transaction, including, but
not limited to, the early retirement of Debt, the extension, refinancing,
restructuring, redemption or exchange of the Subordinated Debt or the Senior
Unsecured Notes, Investments, dispositions permitted hereunder (including,
without limitation, Permitted Asset Sales and Permitted Sale/Leasebacks) and the
issuance of Capital Stock or Debt permitted hereunder to the extent not deferred
and amortized, (xii) certain professional fees and expenses and other charges
consistent with the Borrower’s presentation of cash contribution filed on Form
8-K on August 11, 2006, (xiii) all cash fees and expenses associated with the
Securities Exchange Commission and Department of Justice investigations and
related shareholder litigation; provided, that the aggregate amount added back
to Consolidated Net Income (loss) pursuant to the foregoing clauses (xi) and
(xii) and up to the first $1,000,000 added back under clause (xiii) shall not
exceed the amounts for the relevant determination periods as set forth on
Schedule

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1.01(b); and, minus, cash rental expense in excess of GAAP rent expense
reflected on the consolidated income statement, in each case, for the period of
determination.
     “Guarantee and Collateral Agreement” means the Guarantee and Collateral
Agreement in the form of Exhibit A hereto, as amended, supplemented or otherwise
modified from time to time.
     “Guarantors” means collectively, the Subsidiaries listed on Exhibit D
hereto (other than Unrestricted Subsidiaries, Bally ARA Corporation, Foreign
Subsidiaries and Lincoln Indemnity Company) and any other Subsidiary which
hereafter becomes a Guarantor pursuant to Section 3.04 (each individually a
“Guarantor”).
     “Guaranty” means, as applied to any Debt, (i) a guaranty (other than by
endorsement of negotiable instruments for collection in the ordinary course of
business), direct or indirect, in any manner, of any part or all of such
obligation and (ii) an agreement, direct or indirect, contingent or otherwise,
the practical effect of which is to assure in any way the payment or performance
(or payment of damages in the event of non-performance) of any part or all of
such obligation, including, without limiting the foregoing, the payment of
amounts drawn under letters of credit. The amount of any Guaranty of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Guaranty is made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such
Guaranty.
     “Hazardous Materials” means any (i) “hazardous substance” or “toxic
substances,” as those terms are defined by the Comprehensive Environmental
Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq.
and the Hazardous Materials Transportation Act, 49 U.S.C. § 1802, all as amended
or hereafter amended; (ii) “hazardous waste”, as defined by the Resource
Conservation and Recovery Act (“RCRA”), 42 U.S.C. § 6901 et seq., as amended or
hereafter amended; (iii) pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, or substance within the meaning of any other
applicable federal, state or local law, regulation, ordinance, or requirement
(including consent decrees and administrative orders) relating to protection of
health, safety or the environment, as amended or hereafter amended; (iv) crude
oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute); (v) any radioactive material, including any source, special nuclear
or by-product material as defined at 42 U.S.C. § 2011 et seq., as amended or
hereafter amended; (vi) asbestos or asbestos containing material (“ACM”) in any
form or condition and (vii) polychlorinated biphenyls (“PCBs”) or substances or
compounds containing PCBs.
     “Hazardous Materials Claims” has the meaning ascribed to it in
Section 6.02(f).
     “Hazardous Materials Laws” means any federal, state or local statute,
regulation, ordinance or other legal requirement (including consent decrees and
administrative orders) relating to protection of health, safety or environment,
including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act

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(“CERCLA”), 42 U.S.C. § 9601 et seq.; the Resource Conservation and Recovery Act
(“RCRA”), 42 U.S.C. § 6901 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.;
the Clean Water Act, 33 U.S.C. § 1251 et seq.; the Occupational Safety and
Health Act (“OSHA”), 29 U.S.C. § 651 et seq.; the Toxic Substances Control Act
(“TSCA”), 15 U.S.C. § 2601 et seq.; any similar state or local laws; any
regulations promulgated pursuant to any of the foregoing; and all of the
foregoing as amended or hereafter amended.
     “Hedging Arrangement” means (a) any agreement with respect to any swap,
forward, future or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions and (b) any
agreement with respect to any transactions (together with any related
confirmations) which are subject to the terms and conditions of, or are governed
by, any master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement or any
other similar master agreement.
     “Intangible Asset” means any asset which is treated as an intangible asset
in conformity with GAAP, including, without limitation, leasehold rights,
franchise rights, non-compete agreements, goodwill, unamortized debt discounts,
patents, patent applications, trademarks, trade names, copyrights and licenses.
     “Intellectual Property” has the meaning assigned to such term in the
Guarantee and Collateral Agreement.
     “Interest Expense Hedging Arrangement” means an interest rate swap, cap or
collar agreement or similar arrangement entered into with the intent of
protecting the Borrower or a Guarantor against fluctuations in interest rates or
the exchange of notional interest obligations, either generally or under
specific contingencies.
     “Interest Payment Date” means (a) as to any Reference Rate Advance, the
last Banking Day of each January, April, July and October, (b) as to any
Eurodollar Rate Advance having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Rate Advance having
an Interest Period longer than three months, (i) each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period and
(ii) the last day of such Interest Period, (d) as to any Revolving Advance, the
Revolving Credit Termination Date, (e) as to any Term Advance, the Term Loan
Termination Date and (f) as to any Advance, in addition to any applicable dates
under clauses (a), (b), (c), (d) and (e) above, the date of any repayment or
prepayment (except for any prepayment pursuant to Section 2.12 of any Revolving
Advance that is a Reference Rate Advance) made in respect thereof.
     “Interest Period” means with respect to any Eurodollar Rate Advance:

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     (a) initially, the period commencing on the borrowing or conversion date,
as the case may be, with respect to such Eurodollar Rate Advance and ending one,
two, three or six months thereafter, as selected by the Borrower in its notice
of borrowing or notice of conversion, as the case may be, given with respect
thereto; and
     (b) thereafter, each period commencing on the last day of the next
preceding Interest Period applicable to such Eurodollar Rate Advance and ending
one, two, three or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Banking Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
     (1) if any Interest Period pertaining to a Eurodollar Rate Advance would
otherwise end on a day that is not a Banking Day, such Interest Period shall be
extended to the next succeeding Banking Day unless the result of such extension
would be to carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding Banking Day;
     (2) any Interest Period for any Revolving Advance that would otherwise
extend beyond the Revolving Credit Termination Date shall end on the Revolving
Credit Termination Date;
     (3) any Interest Period for any Term Advance that would otherwise extend
beyond the Term Loan Termination Date shall end on the Term Loan Termination
Date;
     (4) any Interest Period pertaining to a Eurodollar Rate Advance that begins
on the last Banking Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Banking Day of a calendar month; and
     (5) the Borrower shall select Interest Periods in such a way so that no
Eurodollar Rate Advances will be required to be repaid prior to the last day of
an Interest Period therefor.
     “Investment” means any direct or indirect loans, advances, capital
contributions or transfers of assets, and any direct or indirect purchases and
other acquisitions of, or a beneficial interest in, any capital stock or other
securities; provided, however, that the allocation of corporate overhead to
Foreign Subsidiaries shall not constitute an “Investment”. The amount of any
Investment not consisting of cash shall equal the Fair Market Value of such
Investment at the time it is made.
     “Issuing Lender” means JPMorgan Chase Bank, N.A., and other Lenders having
Revolving Credit Commitments acceptable to the Agent and the Borrower.

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     “JPMorgan Chase Bank” means JPMorgan Chase Bank, N.A., a New York banking
corporation.
     “Lenders” shall have the meaning set forth in the recitals hereto;
provided, that unless the context otherwise requires, each reference herein to
the Lenders shall be deemed to include any Conduit Lender.
     “Lending Branch” means with respect to each Lender the branches or offices
specified on the signature pages hereto or such other of its branches or offices
as such Lender may from time to time designate in writing to Agent and Borrower.
     “Letter of Credit” means any letter of credit issued by an Issuing Lender
pursuant to Section 2.19.
     “L/C Commitments” means the commitments of Lenders to issue or participate
in Letters of Credit and to make L/C Advances pursuant to Section 2.19 in the
aggregate maximum amount specified in Section 2.19(a)(i), as such amount may be
reduced or terminated from time to time hereunder.
     “L/C Commitment Amount” means, at any time, an amount equal to the
Revolving Credit Commitment Amount at such time.
     “Lien” means a mortgage, security interest, pledge, deed of trust,
encumbrance, lien, option, tax lien, mechanics’ lien, materialmen’s lien or
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and any financing statement under the Uniform
Commercial Code (other than precautionary financing statements)).
     “Liquidity” means, as of any date of determination, an amount equal to the
sum of (a) cash and Cash Equivalents held by the Borrower and its Subsidiaries
in (i) the concentration account held with JPMorgan Chase Bank, N.A., (ii) any
account held with any Lender, or until the date which is three months after the
Closing Date, any account held with LaSalle Bank National Association, or
(iii) any account subject to a Control Agreement, plus, (b) the unutilized
amount of Revolving Credit Commitments available to be drawn on such date by the
Borrower (with satisfaction of the applicable conditions precedent to such
extension of credit to be tested as of such date); provided that amounts held in
payroll, tax, trust and similar accounts or amounts pledged to Persons on a
first priority basis other than the Secured Parties shall be excluded in
calculating Liquidity.
     “Majority Lenders” means at any time Lenders holding more than 51% of the
sum of (i) the aggregate unpaid principal amount of Tranche B Term Advances then
outstanding, (ii) the Delayed-Draw Term Loan Commitments then in effect or, if
the Delayed-Draw Term Loan Commitments have been terminated, the Delayed-Draw
Term Advances then outstanding, and (iii) the Revolving Credit Commitments then
in effect or, if the Revolving Credit Commitments have been terminated, the
Revolving Advances and participating interests in Letters of Credit and
unreimbursed drawings in respect of Letters of Credit then outstanding.

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     “Margin Regulations” means Regulations T, U and X of the Board of Governors
of the Federal Reserve System, as amended from time to time.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, property, or financial condition of the Borrower and its
Subsidiaries taken as whole, (b) the validity or enforceability of (i) this
Agreement, any of the Notes or any of the other Credit Documents or (ii) the
rights or remedies of the Agent and the Lenders hereunder or thereunder or
(c) the ability of the Borrower and its Subsidiaries taken as a whole to perform
when due their respective obligations under the Credit Documents. The Lenders
acknowledge that the events, developments and circumstances expressly described
in the Public Filings and, with respect to the legal proceedings and related
matters described therein, the consequences thereof as reasonably foreseeable by
the Agent and the Syndication Agent, do not constitute a Material Adverse
Effect.
     “Membership Receivables” means all right, title and interest of the
Borrower and its Domestic Subsidiaries in payment obligations (however
characterized), including accounts and receivables, owed to or owned by the
Borrower and its Domestic Subsidiaries in connection with membership in and the
right to use the facilities at, and obtain products and services from, one or
more fitness centers and health clubs owned or operated by the Borrower and its
Subsidiaries, including, without limitation, (a) the right to payment of amounts
in respect of the membership fee (including any sales tax thereon) and finance
charges relating thereto under an agreement made by the Borrower or any Domestic
Subsidiary of the Borrower, in the form of a written retail installment sale
contract, for membership in and the right to use facilities at, and obtain
products and services from, the Borrower and its Domestic Subsidiaries or one or
more health clubs owned or operated by the Borrower or any Domestic Subsidiary
of the Borrower, (b) all amounts paid from time to time in connection with the
foregoing, including pursuant to such written retail installment sale contract
in respect of monthly dues, nsf fees, late payment fees, cancellation fees for
relocation cancellations, transfer fees to transfer a membership, lost
membership card replacement fees, or other payments and proceeds thereof.
     “Mortgage Amendment” means each of the Amendments to Mortgages in the form
reasonably requested by the Agent, to be executed by the Borrower or the various
Guarantors in order to continue for the benefit of the Collateral Agent, on
behalf of the Secured Creditors, the Liens created by the Mortgages delivered
under the Existing Credit Agreement.
     “Mortgages” means all fee mortgages, leasehold mortgages, assignments of
leases, mortgage deeds, deeds of trust, deeds to secure debt, security
agreements, and other similar instruments, executed or to be executed by the
Borrower or the various Guarantors (i) which provide the Collateral Agent, for
the benefit of the Secured Creditors, a Lien on or other interest in Existing
Mortgage Collateral Properties and (ii) pursuant to Section 3.05(b) or (c), as
amended, restated, modified, extended or supplemented from time to time.
     “Multiemployer Plan” has the meaning ascribed to it in Section 3(37) of
ERISA.

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     “Net Cash Proceeds” means (a) in connection with any issuance or incurrence
of Prepayment Debt, the cash proceeds received from such issuance or incurrence,
net of attorneys’ fees, investment banking fees, accountants’ fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith and (b) in connection with the sale, lease,
assignment or other disposition of any asset (other than sales by the Borrower
or a Subsidiary of the Borrower of Capital Stock of the Borrower) or any
Casualty Event, cash proceeds (including any cash received by way of deferred
payments, purchase price adjustments or otherwise, but only as and when so
received) received by the Borrower or any of its Subsidiaries from the sale,
lease, assignment or other disposition (but excluding any such disposition
permitted by Sections 7.08(a), (e), (h), (i), (j) and (k)) of any asset or
property of such Person or any insurance proceeds or condemnation awards net of
(i) the reasonable and customary costs directly incurred in connection with such
transaction, (ii) taxes actually paid or in good faith estimated to be payable
as a result thereof, (iii) amounts applied to the repayment of other Debt
secured by a Permitted Lien on the asset disposed of or subject to such Casualty
Event and (iv) reasonable expenses directly incurred in connection with the
collection of such insurance proceeds or condemnation awards; provided, that
“Net Cash Proceeds” shall exclude (A) cash proceeds from the sale of written-off
receivables to a collection agency or similar organization pursuant to
Section 7.08(g); (B) cash received by the Borrower or its Subsidiaries related
to membership contracts receivables originated for the account of franchisees or
other third parties (and not constituting assets of the Borrower or its
Subsidiaries); (C) at the Borrower’s option, to be exercised by no later than
December 31, 2006 (provided, that the Borrower shall be deemed to have elected
option (y) below in the event it shall not have made such election by such date
or it and/or any of its Subsidiaries shall on or prior to such date have
received in excess of $25,000,000 in the aggregate of any such proceeds from
Permitted Sale/Leasebacks or in excess of $25,000,000 in the aggregate of any
such proceeds from Permitted Asset Sales), either (x) up to $25,000,000 of any
such proceeds from Permitted Sale/Leasebacks and up to $25,000,0000 of any such
proceeds from Permitted Asset Sales and, thereafter, 50% of any such incremental
proceeds from Permitted Sale/Leasebacks and Permitted Asset Sales up to an
aggregate amount of such incremental proceeds from Permitted Sale/Leasebacks
and/or Permitted Asset Sales of $25,000,000 or (y) up to $50,000,000 of such
proceeds from Permitted Sale/Leasebacks and/or Permitted Asset Sales and
(D) Reinvestment Proceeds. If in determining “Net Cash Proceeds”, amounts are
deducted for estimated taxes payable, and such amounts are not actually paid
when due by the Borrower in cash in accordance with all applicable laws, then
such deducted amounts shall constitute “Net Cash Proceeds”.
     “New Ventures” means the collective reference to each Person (other than
Subsidiaries and Unrestricted Subsidiaries) in which the Borrower or any
Subsidiary makes its initial Investment after the date hereof.
     “1998 Indenture” means that certain Indenture dated as of December 16, 1998
between Borrower and U.S. Bank National Association, as trustee (and any
successor trustee thereto) relating to the 1998 Subordinated Notes.
     “1998 Subordinated Notes” has the meaning ascribed to it in the definition
of Subordinated Debt.

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     “1997 Indenture” means that certain Indenture, dated as of October 7, 1997,
between Borrower and First Trust National Association, as trustee (and any
successor trustee thereto) relating to the 1997 Subordinated Notes.
     “1997 Subordinated Notes” has the meaning ascribed to it in the definition
of Subordinated Debt.
     “Notes” means the collective reference to the Revolving Notes and the Term
Notes.
     “Obligations” means all loans, advances, debts, liabilities, obligations,
covenants and duties owing to Agent, the Collateral Agent, any Lender (or in the
case of any Interest Expense Hedging Arrangement referred to below, any Person
that is a Lender (or any Affiliate thereof) at the time such Interest Rate
Hedging Arrangement was entered into), any Issuing Lender or any of them or any
of their respective successors and assigns, of any kind or nature, present or
future, arising under this Agreement or under the Notes or under any Collateral
Document or under any Interest Expense Hedging Agreement with any Person that is
a Lender (or any Affiliate thereof) at the time such Interest Rate Hedging
Arrangement was entered into, whether or not for the payment of money, whether
arising by reason of an extension of credit, opening or amendment of a letter of
credit (or payment of any draft drawn thereunder), loan, guaranty,
indemnification, or in any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired. The term includes, without
limitation, all interest (whether or not such interest would be an allowed claim
in a bankruptcy or similar proceeding against the Borrower or any Guarantor),
charges, expenses, fees, reasonable attorneys’ fees and disbursements and
paralegals’ fees, and any other sums chargeable to Borrower or any Guarantor
under this Agreement or any other Collateral Document.
     “Operating Bank Guaranty” means the Guaranty Agreement in the form of
Exhibit E hereto, as amended, supplemented or otherwise modified, pursuant to
which each of the Guarantors shall guaranty the payment of the Operating Bank
Obligations to the extent set forth therein.
     “Operating Bank Obligations” means, collectively at any time, up to Ten
Million Dollars ($10,000,000) in the aggregate (including, without limitation,
principal, interest, fees, costs and expenses) of the obligations of Borrower
and/or any of its Subsidiaries to one or more of the Operating Banks (including,
without limitation, JPMorgan Chase Bank, N.A., in its individual capacity) at
such time under or by reason of any customary banking deposit or disbursement
transaction or service performed for Borrower or any of its Subsidiaries in
connection with the Demand Deposit Accounts.
     “Operating Banks” means the Lenders (and their Affiliates or financing
institutions that were Lenders) listed on Annex 1 to the Operating Bank Guaranty
and other Lenders (and their Affiliates or financing institutions that were
Lenders) at which Borrower or any of its Subsidiaries may from time to time
establish Demand Deposit Accounts.

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     “PBGC” means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
     “Permitted Asset Sales” means assets sales permitted by Section 7.08(o).
     “Permitted Leasehold Liens” means liens on leasehold interests and
leasehold improvements of the types permitted by clauses (i), (ii), (iii), (iv)
(to the extent such lien permitted by clause (iv) is on property acquired after
the Closing Date), (vi) or (vii) of the definition of “Permitted Liens”.
     “Permitted Liens” means any one or more of the following:
     (i) Liens for taxes, assessments, governmental charges or levies either not
yet delinquent (or, if delinquent, in an aggregate amount not in excess of
$500,000) or the validity of which is being contested in good faith in an
appropriate manner diligently pursued and as to which adequate reserves for the
unpaid amount shall have been set aside in conformity with GAAP;
     (ii) Deposits or pledges to secure the payment of, or to secure the
Borrower’s obligations with respect to letters of credit that secure the payment
of, workers’ compensation, unemployment insurance or social security or other
retirement benefits or obligations (exclusive of liens arising under ERISA), or
to secure the performance of bids, trade contracts, leases, public or statutory
obligations, surety or appeal bonds and other obligations of a like nature
incurred in the ordinary course of business;
     (iii) Materialmen’s, mechanics’, landlords’, workmen’s, repairmen’s,
employees’, suppliers’ (including sellers of goods pursuant to customary
reservations or retentions of title) or other like liens arising in the ordinary
course of business to secure obligations not yet delinquent or being contested
in good faith and as to which adequate reserves for the unpaid amount shall have
been set aside in conformity with GAAP or as to which adequate bonds shall have
been obtained;
     (iv) Purchase money liens, purchase money security interests, mortgages or
title retention arrangements upon or in any property (real or personal) acquired
by Borrower or its Subsidiaries in the ordinary course of business to secure
Debt (including, without limitation, Capitalized Leases) permitted hereunder
(provided that the security agreement or conditional sales or other title
retention contract pursuant to which the Lien on such property is created shall
be entered into within 180 days (except as otherwise permitted by
Section 7.03(b)) after the purchase or substantial completion of the
construction of such property) and incurred solely for the purpose of financing
the acquisition of such property or improvements upon such property, or
renewals, extensions or refinancing thereof; provided, that such Liens do not
extend to any property of Borrower or any Subsidiary other than the property
acquired with the original purchase money Debt;

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     (v) Other Liens, so long as the aggregate amount of all such other Liens
does not exceed at any time an aggregate amount of Two Million Dollars
($2,000,000);
     (vi) Other non-monetary Liens which do not have a material adverse effect
on the value or use of the property subject to such Liens (including licenses,
sublicenses, leases and subleases in the ordinary course of business consistent
with past practices);
     (vii) Precautionary UCC filings (or similar filings), in the ordinary
course of business, on equipment, leasehold improvements and furnishings;
     (viii) Liens under the Collateral Documents;
     (ix) Liens related to (A) credit card processing agreements or
(B) agreements with any Lender or Affiliate of a Lender relating to the issuance
of corporate credit cards to employees of the Borrower and its Subsidiaries, so
long as the aggregate amount secured by the Liens described in clauses (A) and
(B) above does not exceed at any time an aggregate amount of Five Million
Dollars ($5,000,000);
     (x) Other existing Liens listed on Schedule 1.01 (as updated pursuant to
Section 6.16) and refinancings, refundings, renewals or extensions of such
Liens; provided, (A) that no such Lien is spread to cover any additional
property after the Closing Date and that the amount secured thereby is not
increased and (B) the refinancing, refunding, renewal or extension of the
obligations secured by such Liens is permitted by this Agreement;
     (xi) Liens created after the Closing Date securing Debt of the Borrower or
any Subsidiary of the type described in clause (iii) of the definition of
“Debt”, which Debt is incurred in the ordinary course of business of the
Borrower or such Subsidiary in connection with the acquisition of property (real
or personal) by the Borrower or its Subsidiaries, and any renewals, extensions
or refinancings of such Debt permitted hereunder, provided that such Liens shall
not extend to or encumber any property other than the property acquired by such
Debt;
     (xii) Liens that are contractual rights of set-off (i) relating to the
establishment of depository relations with banks not given in connection with
the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or
sweep accounts of any Borrower or any Subsidiary to permit satisfaction of
overdraft or similar obligations incurred in the ordinary course of business of
the Borrower and its Subsidiaries or (iii) relating to purchase orders and other
agreements entered into with customers or suppliers of any Borrower or any
Subsidiary in the ordinary course of business;
     (xiii) easements, leases, subleases, ground leases, zoning restrictions,
building codes, rights-of-way, minor defects, survey defects, or irregularities
in title and similar encumbrances on real property imposed by law or arising in
the

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ordinary course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or interfere with
the ordinary conduct of business of the Borrower or any Subsidiary;
     (xiv) Liens arising by operation of law under Article 2 of the Uniform
Commercial Code in favor of a reclaiming seller of goods or buyer of goods;
     (xv) Liens on (i) incurred premiums, dividends and rebates which may become
payable under insurance policies and loss payments which reduce the incurred
premiums on such insurance policies and (ii) rights which may arise under State
insurance guarantee funds relating to any such insurance policy, in each case to
secure Indebtedness permitted under Section 7.02(e);
     (xvi) security given to a public or private utility or any Governmental
Authority as required in the ordinary course of business;
     (xvii) Liens (i) of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on items in the course of collection, or (ii) in favor
of a banking institution arising as a matter of law encumbering deposits
(including the right of set-off) and which are within the general parameters
customary in the banking industry;
     (xviii) Liens securing judgments, decrees or attachments not constituting
an Event of Default;
     (xix) Liens on assets of Foreign Subsidiaries securing Debt of such Foreign
Subsidiaries permitted hereunder; and
     (xx) Deposits or pledges of cash or Cash Equivalents to secure the payment
of, or to secure the Borrower’s or any of its Subsidiaries’ obligations with
respect to letters of credit issued for the credit of the Borrower or one of its
Subsidiaries, so long as the obligations so secured are permitted hereunder and
the aggregate amount of such cash or Cash Equivalents does not exceed
$4,200,000; provided, that the Borrower and its Subsidiaries shall, following
the Closing Date, have received Net Cash Proceeds (determined without giving
effect to the proviso of the definition thereof) from Permitted Sale/Leasebacks
and/or Permitted Asset Sales in an aggregate amount equal to at least the face
amount of such letter(s) of credit.
     “Permitted Sale/Leaseback” means Sale/Leasebacks in respect of the assets
comprising one or more fitness centers (excluding, for the avoidance of doubt,
any Intellectual Property material to the business of the Borrower or any of its
Subsidiaries) on terms reasonably satisfactory to the Agent; provided, that such
assets are sold at no less than Fair Market Value, and provided, further, that
upon request by the Agent, the Borrower shall have provided the Agent with
documentation (including legal opinions) reasonably satisfactory to the Agent
that such Sale/Leaseback is permitted under the terms of the Subordinated Notes
Indenture and the Senior Unsecured Notes Indenture.

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     “Permitted Subordinated Indenture Amendment” means any amendment,
modification or other change of the terms of the 1997 Indenture, the 1998
Indenture, any Subordinated Notes or other documents governing Subordinated
Debt, which amendment, modification, or other change (a) permits the issuance by
the Borrower of its Capital Stock to holders of Subordinated Debt as
consideration for such amendments, modifications, or extensions, (b) permits an
increase in the interest rates applicable to Subordinated Notes which increases
are payable in kind at the Borrower’s option, (c) does not require cash payments
and which is not materially adverse to the Lenders, or (d) permits the
reimbursement of out-of-pocket expenses of the holders of the Subordinated Debt.
     “Permitted Subordinated Notes Refinancing” means the repayment in full of
the Subordinated Notes from the proceeds of common equity of the Borrower or of
other Subordinated Debt of the Borrower requiring no principal payments on or
prior to October 31, 2011, which, in each case, is issued contemporaneously with
the repayment of the Subordinated Notes and, in the case of an issuance of
Subordinated Debt, (i) the terms of such Subordinated Debt are at least as
favorable to the Credit Parties and the Secured Parties as in the 1998 Indenture
or (ii) such Subordinated Debt contains terms reasonably satisfactory to the
Agent.
     “Person” means an individual, a corporation, a partnership, limited
liability company, a joint venture, an association, a trust or any other entity
or organization, including a governmental or political subdivision or an agent
or instrumentality thereof.
     “Plan” means, at any date, any employee pension benefit plan (as defined in
Section 3(2) of ERISA) which is subject to Title IV of ERISA (other than a
Multiemployer Plan) and to which Borrower or any ERISA Affiliate may have any
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing sponsor
under Section 4069 of ERISA.
     “Prepayment Debt” means any Debt incurred after the Closing Date other than
as expressly permitted under this Agreement in accordance with Section 7.02 or
as consented to by the Lenders.
     “Properties” means all real properties owned in fee by Borrower or its
Subsidiaries and all real properties in which Borrower or its Subsidiaries hold
a leasehold interest.
     “Public Filings” means the Borrower’s reports filed with the SEC on Form
10-K for its fiscal year ended December 31, 2005, on Form 10-Q filed for its
fiscal quarters ended March 31, 2006 and June 30, 2006 and on Form 8-K in the
calendar year 2006 prior to the date hereof.
     “Real Estate Financing Subsidiary” means each of Bally Real Estate I, LLC,
Bally Real Estate II, LLC, Bally Real Estate III, LLC and Bally Real Estate IV,
LLC.

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     “Reference Rate” means, for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly
announced from time to time by JPMorgan Chase Bank, N.A. as its prime rate (the
Prime Rate not being intended to be the lowest rate of interest charged by the
JPMorgan Chase Bank, N.A. in connection with extensions of credit to debtors) in
effect at its principal office in New York City (each change in the Prime Rate
to be effective on the date such change is publicly announced); “Base CD Rate”
shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate
and (ii) a fraction, the numerator of which is one and the denominator of which
is one minus the C/D Reserve Percentage and (b) the C/D Assessment Rate;
“Three-Month Secondary CD Rate” shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board of Governors of the Federal Reserve System (the “Board”)
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Board, be published in
Federal Reserve Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day or such next
preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such day (or, if
such day shall not be a Business Day, on the next preceding Business Day) by the
Agent from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it; “C/D Assessment Rate”: for any day as
applied to any Reference Rate Advance, the annual assessment rate in effect on
such day that is payable by a member of the Bank Insurance Fund maintained by
the Federal Deposit Insurance Corporation (the “FDIC”) classified as
well-capitalized and within supervisory subgroup “B” (or a comparable successor
assessment risk classification) within the meaning of 12 C.F.R. § 327.4 (or any
successor provision) to the FDIC (or any successor) for the FDIC’s (or such
successor’s) insuring time deposits at offices of such institution in the United
States; “C/D Reserve Percentage”: for any day as applied to any Reference Rate
Advance, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve requirement
for a Depositary Institution (as defined in Regulation D of the Board as in
effect from time to time) in respect of new non-personal time deposits in
Dollars having a maturity of 30 days or more; and “Federal Funds Effective Rate”
shall mean, for any day, the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms thereof, the Reference
Rate

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shall be determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances giving rise
to such inability no longer exist. Any change in the Reference Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds
Effective Rate shall be effective on the effective day of such change in the
Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective
Rate, respectively.
     “Reference Rate Advance” means an Advance the rate of interest applicable
to which is based upon the Reference Rate.
     “Register” has the meaning ascribed to it in Section 9.04(e).
     “Reinvestment Proceeds” means, at any time, all net proceeds of
dispositions of assets permitted by Sections 7.08(d), (f), (g), (l), (m) and
(n) or of any insurance proceeds or condemnation awards received in connection
with any Casualty Event, to the extent, without duplication, that (i) such net
proceeds have not yet been applied to the acquisition of properties and other
assets that replace the properties and assets that were the subject of such
disposition or Casualty Event or properties and assets that will be used in the
businesses of the Borrower or its Subsidiaries existing on the Closing Date (or
in businesses reasonably related or complementary thereto), and with respect to
which less than 360 days has elapsed since the disposition or Casualty Event
giving rise to such proceeds, or (ii) an amount equal to or greater than such
net proceeds has been applied to the acquisition of properties and other assets
that (as determined by the Borrower) replace the properties and assets that were
the subject of such disposition or Casualty Event or properties and assets that
will be used in the businesses of the Borrower or its Subsidiaries existing on
the Closing Date (or in businesses reasonably related or complementary thereto)
within 180 days prior to the disposition or Casualty Event giving rise to such
proceeds, provided that, to the extent that the Borrower and its Subsidiaries
receive in excess of $10,000,000 of Net Cash Proceeds from dispositions but not
Casualty Events (determined without giving effect to clause (C) of the proviso
to the definition of Net Cash Proceeds and excluding any such dispositions
permitted by Sections 7.08(l)) in any fiscal year of the Borrower, such excess
shall not be Reinvestment Proceeds.
     “Replaced Lender” has the meaning ascribed to it in Section 9.20 hereof.
     “Replacement Lender” has the meaning ascribed to it in Section 9.20 hereof.
     “Reportable Event” shall be as defined in Section 4043 of ERISA.
     “Restricted Payment” means with respect to any Person (a) any dividend or
other distribution of assets, properties, cash, rights, obligations or
securities, direct or indirect, on account of any shares of any class of the
capital stock or other equity interests of such Person; or (b) any amount paid
in redemption, retirement, repurchase, direct or indirect, of (x) any shares of
any class of capital stock or other equity interests or (y) any warrants,
options or other rights to acquire any shares of any class of capital stock or
other equity interests of such Person.

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     “Revolving Advance” means a borrowing under the Revolving Credit pursuant
to Section 2.01 or 2.19(e)(ii) hereof; collectively, the “Revolving Advances”.
     “Revolving Credit” means the credit described in Section 2.01.
     “Revolving Credit Commitment” has the meaning ascribed to it in
Section 2.01(a) hereof.
     “Revolving Credit Commitment Amount” means $44,000,000, less any Revolving
Credit Commitment Reductions.
     “Revolving Credit Commitment Percentage” means, as to each Lender, the
percentage set forth opposite such Lender’s name under the column entitled
“Commitment Percentage” on Exhibit C hereto or, if such Lender shall have
acquired or disposed of any interest in the Revolving Credit pursuant to
Section 9.04(a), on the applicable instrument of assignment, which is the
percentage equivalent of a fraction, the numerator of which is the amount of
such Lender’s Revolving Credit Commitment and the denominator of which is the
Revolving Credit Commitment Amount (or, if the Revolving Credit Commitments have
been terminated, the sum of its outstanding Revolving Advances, participating
interests in Letters of Credit and unreimbursed drawings in respect of Letters
of Credit as a percentage of the aggregate amount of outstanding Revolving
Advances, participating interests in Letters of Credit and unreimbursed drawings
in respect of Letters of Credit).
     “Revolving Credit Commitment Period” means the period from and including
the date of this Agreement to but excluding the Revolving Credit Termination
Date.
     “Revolving Credit Commitment Reductions” means the amount of the permanent
reductions of the Revolving Credit Commitment Amount resulting from the
application of Sections 2.11, 2.13 or any other provision contained herein.
     “Revolving Credit Lender” means each Lender which has, or has acquired
pursuant to an assignment made in accordance with Section 9.04, a Revolving
Credit Commitment or which has made, or acquired pursuant to an assignment made
in accordance with Section 9.04, a Revolving Advance or a participation in a
Letter of Credit.
     “Revolving Credit Termination Date” means the earliest to occur of:
     (a) the date the Revolving Credit Commitment Amount is terminated by the
Borrower pursuant to Section 2.11 or is otherwise terminated or reduced to zero
pursuant to the terms of this Agreement, provided that all amounts payable under
this Agreement in respect of the Revolving Credit and the Revolving Notes are
fully repaid on or prior to such date,
     (b) the date the Revolving Credit hereunder is terminated or accelerated
pursuant to Article VIII,

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     (c) October 1, 2010, and
     (d) the Advance Maturity Date.
     “Revolving Note” means the master promissory note of Borrower payable to
the order of a Lender in substantially the form of Exhibit F hereto; and
“Revolving Notes” means all of such Notes.
     “Sale/Leaseback” means any transaction or series of related transactions
pursuant to which the Borrower or any of its Subsidiaries sells or transfer any
property or asset in connection with the leasing or the resale against
installment payments of such property or asset to the seller or transferor.
     “SEC” means the Securities and Exchange Commission, as from time
constituted, created under the Securities Exchange Act of 1934, as amended from
time to time, or any successor thereto.
     “Secured Creditors” means, collectively, JPMorgan Chase Bank, N.A. and the
Operating Banks in their separate financial arrangements with the Borrower, and
the Agent, the Collateral Agent, the Lenders and the Issuing Lenders (and any
Person that is a Lender (or any Affiliate thereof) at the time an Interest
Expense Hedging Arrangement was entered into), each in connection with the
Secured Obligations.
     “Secured Obligations” means, collectively, the Obligations and the
Operating Bank Obligations.
     “Senior Indebtedness” means Senior Indebtedness of the Borrower as defined
in each of the 1997 Indenture and the 1998 Indenture.
     “Senior Unsecured Notes” means the Borrower’s 10.5% Senior Notes due 2011,
issued under and pursuant to the Senior Unsecured Notes Indenture
     “Senior Unsecured Notes Indenture” means that certain Indenture dated as of
July 2, 2003 among the Borrower, the Subsidiaries party thereto and U.S. Bank
National Association, as trustee (and any successor trustee thereto) relating to
the Senior Unsecured Notes.
     “Subordinated Debt” means (a) Borrower’s 9-7/8% Senior Subordinated Notes
due 2007, issued under and pursuant to the 1997 Indenture (“1997 Subordinated
Notes”), (b) Borrower’s 9-7/8% Senior Subordinated Notes due 2007, issued under
and pursuant to the 1998 Indenture (together with any of Borrower’s 9-7/8%
Senior Subordinated Notes due 2007 issued under the 1998 Indenture in exchange
therefor, the “1998 Subordinated Notes” and together with the 1997 Subordinated
Notes, the “Subordinated Notes”), and (c) any other Debt of Borrower which is
subordinated to the Secured Obligations (i) in a manner and containing terms and
provisions satisfactory to Majority Lenders or (ii) on terms at least as
favorable to the Secured Creditors as the subordination provisions in the
Subordinated Notes Indenture and which does not require any principal payments
on or prior to October 31, 2010.

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     “Subordinated Notes” has the meaning ascribed to it in the definition of
Subordinated Debt.
     “Subordinated Notes Indenture” means the collective reference to the 1997
Indenture and the 1998 Indenture.
     “Subsidiary” means any corporation, association or other business entity of
which a Person owns, directly or indirectly, more than fifty percent (50%) of
the voting securities thereof or which such Person otherwise controls; provided
that, other than for purposes of Sections 5.12, 6.08 and 7.14, the definition of
“Subsidiary” shall not include any Unrestricted Subsidiary; provided however,
that for purposes of the definitions of “Consolidated Adjusted EBITDA”,
“Consolidated Cash EBITDA”, “Consolidated Net Income” and “GAAP EBITDA”, the
definition of “Subsidiary” shall include BTF Canada Corporation. Unless the
reference is specifically otherwise, “Subsidiary” shall refer to a Subsidiary of
Borrower.
     “Substantial Subsidiary” means any Subsidiary of Borrower with respect to
which (a) the aggregate book value of its assets, determined in accordance with
GAAP at such time, is greater than 1% of the aggregate book value of the assets
of Borrower and its Subsidiaries taken as a whole or (b) the aggregate gross
revenues of such Subsidiary, determined in accordance with GAAP for the
immediately preceding fiscal quarter, is greater than 1% of the aggregate gross
revenues of Borrower and its Subsidiaries taken as a whole, for such period.
     “Tax Allocation and Indemnity Agreement” means the Tax Allocation and
Indemnity Agreement, dated as of January 9, 1996, among Bally Entertainment
Corporation, a Delaware corporation, the Borrower and their respective direct
and indirect subsidiaries.
     “Term Advance” means a Tranche B Term Advance or a Delayed-Draw Term
Advance; collectively, the “Term Advances”.
     “Term Loan Commitment” has the meaning ascribed to it in Section 2.03(b)
hereof.
     “Term Loan Facility” means the Tranche B Term Loan Facility and the
Delayed-Draw Term Loan Facility.
     “Term Loan Termination Date” means the earliest to occur of (a) the date
the Tranche B Term Advances and Delayed-Draw Term Advances are accelerated
pursuant to Article VIII, (b) October 1, 2010 and (c) the Advance Maturity Date.
     “Term Notes” means collectively, the Tranche B Term Notes and the
Delayed-Draw Term Notes.
     “Termination Date” means the Revolving Credit Termination Date or the Term
Loan Termination Date, as applicable.

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     “Termination Event” means (i) the institution of steps by Borrower, an
ERISA Affiliate, PBGC or any other Person under Section 4041 or 4042, as
applicable, of ERISA to terminate a Plan, (ii) the occurrence of a Reportable
Event which is a basis under Section 4042 of ERISA for PBGC to institute steps
to terminate a Plan, (iii) the occurrence of a contribution failure with respect
to a Plan sufficient to give rise to a lien under Section 302(f) of ERISA,
(iv) the withdrawal by Borrower or any ERISA Affiliate from a Plan as to which
it is a substantial employer under Sections 4062(e) and 4063 of ERISA or (v) the
withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan under
Section 4203 or 4205 of ERISA.
     “Termination Value” means on any date in respect of any Hedging
Arrangement, after taking into account the effect of any legally enforceable
netting agreement relating to such Hedging Arrangement, (a) if such Hedging
Arrangement has been terminated as of such date, an amount equal to the
termination value determined in accordance with such Hedging Arrangement and
(b) if such Hedging Arrangement has not been terminated as of such date, an
amount equal to the mark-to-market value for such Hedging Arrangement, which
mark-to-market value shall be determined by reference to one or more mid-market
or other readily available quotations provided by any recognized dealer
(including any Lender or an Affiliate of any Lender) of such Hedging
Arrangement.
     “Tranche B Term Advance” means a borrowing under the Tranche B Term Loan
Facility pursuant to Section 2.03(a) hereof; collectively, the “Tranche B Term
Advances”.
     “Tranche B Term Lender” means each Lender which has a Tranche B Term Loan
Commitment or which has made, or acquired pursuant to an assignment made in
accordance with Section 9.04, a Tranche B Term Advance.
     “Tranche B Term Loan Commitment” has the meaning ascribed to it in Section
2.03(a) hereof.
     “Tranche B Term Loan Commitment Amount” means $205,900,000.
     “Tranche B Term Loan Commitment Percentage” means, as to each Lender, the
percentage set forth opposite such Lender’s name under the column entitled
“Tranche B Term Loan Commitment Percentage” on Exhibit C hereto or, if such
Lender shall have acquired or disposed of any amount of Tranche B Term Advances
pursuant to Section 9.04(a), on the applicable instrument of assignment, which
is the percentage equivalent of a fraction, the numerator of which is the amount
of such Lender’s Tranche B Term Advances and the denominator of which is the
amount of the aggregate Tranche B Term Advances then outstanding.
     “Tranche B Term Loan Facility” means the credit described in
Section 2.03(a).
     “Tranche B Term Note” means the master promissory note of the Borrower
payable to the order of a Lender in substantially the form of Exhibit G hereto;
and “Tranche B Term Notes” means all of such Tranche B Term Notes.

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     “Transferee” has the meaning ascribed to it in Section 9.04(c).
     “Type” means, as to any Advance, its nature as a Reference Rate Advance or
a Eurodollar Rate Advance.
     “Unrestricted Subsidiary” means (i) any Subsidiary of the Borrower that
exists on the Closing Date and is so designated as an Unrestricted Subsidiary on
Schedule 1.01(b), (ii) any subsidiary of the Borrower that at the time of
determination shall be an Unrestricted Subsidiary (as designated by the Board of
Directors of the Borrower, as provided below), and (iii) any subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any subsidiary of
the Borrower (including any newly acquired or newly formed subsidiary) to be an
Unrestricted Subsidiary if all of the following conditions apply: (a) neither
the Borrower nor any of its Subsidiaries provides guarantees or other credit
support for Debt or other obligations of such Unrestricted Subsidiary (including
any undertaking, agreement or instrument evidencing such Debt or obligations),
(b) such Unrestricted Subsidiary is not liable, directly or indirectly, with
respect to any Debt other than Unrestricted Subsidiary Indebtedness, (c) any
Investment by the Borrower in such Unrestricted Subsidiary made as a result of
designating such subsidiary an Unrestricted Subsidiary shall not violate the
provisions described under Section 7.01 and such Unrestricted Subsidiary is not
party to any agreement, contract, arrangement or understanding at such time with
the Borrower or any other Subsidiary of the Borrower unless the terms of any
such agreement, contract, arrangement or understanding are no less favorable to
the Borrower or such other Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Borrower or, in the event such
condition is not satisfied, the value of such agreement, contract, arrangement
or understanding to such Unrestricted Subsidiary shall be deemed an Investment,
and (d) such Unrestricted Subsidiary does not own any Capital Stock in any
Subsidiary of the Borrower which is not simultaneously being designated an
Unrestricted Subsidiary. Any such designation by the Board of Directors shall be
evidenced to the Agent by filing with the Agent a resolution of the Board of
Directors of the Borrower giving effect to such designation and an officer’s
certificate certifying that such designation complies with the foregoing
conditions and any Investment by the Borrower in such Unrestricted Subsidiary
shall be deemed the making of an Investment on the date of designation in an
amount equal to the greater of (1) the net book value of such Investment or
(2) the Fair Market Value of such Investment as determined in good faith by the
Board of Directors. The Board of Directors may designate any Unrestricted
Subsidiary as a Subsidiary; provided (i) that, if such Unrestricted Subsidiary
has any Debt, immediately after giving effect to such designation, no Default or
Event of Default would result, and (ii) that all Debt of such Subsidiary shall
be deemed to be incurred on the date such Unrestricted Subsidiary becomes a
Subsidiary.
     “Unrestricted Subsidiary Indebtedness” of any Unrestricted Subsidiary means
Debt of such Unrestricted Subsidiary (a) as to which neither the Borrower nor
any Subsidiary is directly or indirectly liable (by virtue of the Borrower or
any such Subsidiary being the primary obligor on, guarantor of, or otherwise
liable in any respect to, such Debt), and (b) which, upon the occurrence of a
default with respect thereto, does not result in, or permit any holder of any
Debt of the Borrower or any Subsidiary to

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declare, a default on such Debt of the Borrower or any Subsidiary or cause the
payment thereof to be accelerated or payable prior to its stated maturity.
          1.02 Financial Standards. All accounting terms not expressly defined
herein shall be construed, except where the context otherwise requires or if it
has otherwise been indicated herein, in accordance with GAAP. If any changes in
accounting principles are hereafter occasioned by promulgation of rules,
regulations, pronouncements or opinions by or are otherwise required by the
Securities and Exchange Commission, the Financial Accounting Standards Board or
the American Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions), and any of such changes result in a change in
the method of calculation, or affect the results of such calculation, of any of
the financial covenants and the definitions relating to such financial
covenants, then the parties hereto agree to enter into and diligently pursue
negotiations in order to amend such financial covenants or terms in accordance
with Section 10.06 hereof so as to equitably reflect such changes, with the
desired result that the criteria for evaluating Borrower’s financial condition
and results of operations shall be the same after such changes as if such
changes had not been made. Notwithstanding anything to the contrary in the
foregoing, the definitions set forth in the Credit Documents and any financial
calculations required by the Credit Documents shall be computed to exclude
(a) the application of FAS 150 with respect to the accounting treatment of any
preferred stock issued by the Borrower and (b) any mark-to-market adjustments to
any derivatives (including embedded derivatives contained in other debt or
equity instruments under FAS 133).
          1.03 Interpretation. References to Exhibits and Schedules are to those
to this Agreement, unless otherwise indicated. References to agreements and
other contractual instruments shall be deemed to include all exhibits and
appendices attached thereto and all amendments, supplements and other
modifications to such instruments, but only to the extent such amendments,
supplements and other modifications are not prohibited by the terms of this
Agreement; and references to Persons include their respective permitted
successors and assigns and, in the case of governmental authorities, Persons
succeeding to their respective functions and capacities.
ARTICLE II.
THE CREDIT
          2.01 The Revolving Credit. (a) From time to time during the Revolving
Credit Commitment Period and subject to the terms and conditions of this
Agreement, each Lender severally agrees to lend to Borrower sums at any one time
outstanding not in excess of an aggregate amount equal to such Lender’s
Revolving Credit Commitment Percentage of the Revolving Credit Commitment Amount
(as to each Lender; its “Revolving Credit Commitment”) (or, pursuant to the
immediately succeeding sentence, agrees to convert all or a portion of such
Lender’s revolving credit loans held under the Existing Credit Agreement (each
an “Existing Revolving Loan”) into a Revolving Advance hereunder) provided, that
no Lender shall make any Advance if, after giving effect to such Revolving
Advance, the aggregate outstanding principal amount of all Revolving Advances
plus the aggregate undrawn amount of all Letters of Credit then outstanding plus
the aggregate amount of all unreimbursed drawings under Letters of Credit

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would exceed the Revolving Credit Commitment Amount. In connection with the
making of Revolving Advances on the Closing Date pursuant to the immediately
preceding sentence, any Lender that is a Lender under the Existing Credit
Agreement shall make all or any portion of such Lender’s Revolving Advance by
converting a portion of the outstanding principal amount of the Existing
Revolving Loan held by such Lender into a Revolving Advance (each such Existing
Revolving Loan, a “Converted Existing Revolving Loan”) in a principal amount
equal to such Lender’s pro rata share of the Revolving Advances made on the
Closing Date, such amount to be determined based on such Lender’s Revolving
Credit Commitment Percentage and, in the case of an Existing Revolving Loan
bearing interest based on the Eurodollar Rate, such Converted Existing Revolving
Loan bearing interest based on the Eurodollar Rate, consisting of a Eurodollar
Rate Advance with an Interest Period ending on the same date as which the
interest period applicable to such Existing Term Loan is scheduled to end. On
the Closing Date, the amount of Converted Existing Revolving Loans equal to the
amount of Revolving Advances to be made on the Closing Date shall be converted
for all purposes of this Agreement into Revolving Advances, and the Agent shall
record in the Register the aggregate amounts of Converted Existing Revolving
Loans into Revolving Advances. Each Lender’s maximum obligation under the
Revolving Credit at any time is the amount derived by multiplying its Revolving
Credit Commitment Percentage by the Revolving Credit Commitment Amount.
Revolving Advances made under the Existing Credit Agreement and outstanding and
not repaid on the Closing Date shall continue outstanding under this Agreement
and be deemed to be Advances made by the Lenders pursuant to this Agreement.
          (b) The Revolving Credit is a revolving credit and Borrower may, prior
to the Revolving Credit Termination Date, borrow, repay and reborrow amounts
repaid up to the maximum amount available under Section 2.01(a), subject to the
reductions required by Section 2.13 hereof and the reductions permitted by
Section 2.11 hereof.
          (c) The Revolving Credit may from time to time consist of
(i) Eurodollar Rate Advances, (ii) Reference Rate Advances or (iii) a
combination thereof, as determined by the Borrower and notified to the Agent in
accordance with Section 2.02, provided that no Advance shall be made as a
Eurodollar Rate Advance after the day that is one month prior to the Revolving
Credit Termination Date.
          2.02 Requests for Revolving Advances. (a) Each Revolving Advance shall
be made upon the irrevocable request of the Borrower received by Agent by
12:00 p.m. noon, New York time, on the Borrowing Date therefor in the case of
Reference Rate Advances and three (3) Banking Days prior to the Borrowing Date
therefor in the case of Eurodollar Rate Advances, specifying: (i) the Borrowing
Date for such Revolving Advance, which shall be a Banking Day; (ii) the amount
of such Revolving Advance; (iii) whether the Revolving Advance is to be of
Reference Rate Advances, Eurodollar Rate Advances or a combination thereof;
(iv) if the Revolving Advance is to consist entirely or partly of Eurodollar
Rate Advances, the amount of such Eurodollar Rate Advances and the length of the
initial Interest Period therefor; and (v) the account of Borrower with Agent for
the deposit of the proceeds of such Revolving Advance. Notwithstanding the
foregoing, all Revolving Advances to be made on the Closing Date shall be
Reference Rate Advances.

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          (b) Each request for a Revolving Advance may be made in writing or by
telephone, provided, however, that any such telephonic request shall be
confirmed immediately by telecopier and also in writing delivered to Agent by
Borrower not more than three (3) Banking Days after the date such telephonic
request is made, provided, however, that telephonic requests shall be subject to
the indemnity provisions set forth in Section 9.07 hereof.
          (c) Upon receipt of such borrowing request, Agent shall promptly
notify Lenders thereof.
          (d) Each Reference Rate Advance hereunder shall be in the minimum
aggregate amount of One Million Dollars ($1,000,000) or in integral multiples of
Five Hundred Thousand Dollars ($500,000) in excess thereof (or, if the excess of
the Revolving Credit Commitments then in effect over the aggregate principal
amount of all Revolving Advances then outstanding is less than $1,000,000, such
lesser amount). Each Eurodollar Rate Advance shall be in the minimum aggregate
amount of Five Million Dollars ($5,000,000) or in integral multiples of One
Million Dollars ($1,000,000) in excess thereof.
          (e) Each Revolving Advance shall be made on a pro rata basis by all
Lenders having Revolving Credit Commitments, and each Lender’s portion of each
Revolving Advance shall be equal to its Commitment Percentage of such Revolving
Advance.
          2.03 Term Loan Facility
          (a) Tranche B Term Loan Facility:
     (i) Subject to the terms and conditions of this Agreement, each Lender
severally agrees to make a term loan (a “Tranche B Term Advance”) to the
Borrower (or pursuant to the immediately succeeding sentence, agrees to convert
all or a portion of such Lender’s term loans held under the Existing Credit
Agreement (an “Existing Term Loan”) into a Tranche B Term Advance hereunder) on
the Closing Date in an amount equal to such Lender’s Tranche B Term Loan
Commitment Percentage of the Tranche B Term Loan Commitment Amount (as to each
Lender, its “Tranche B Term Loan Commitment”). In connection with the making of
Tranche B Term Advances on the Closing Date pursuant to the immediately
preceding sentence, upon the Agent’s request, any Lender that is a Lender under
the Existing Credit Agreement shall make all or any portion of such Lender’s
Tranche B Term Advance by converting all of the outstanding principal amount of
each Existing Term Loan held by such Lender into a Tranche B Term Advance in a
principal amount equal to the aggregate principal amount of such Existing Term
Loan and, in the case of an Existing Term Loan bearing interest based on the
Eurodollar Rate, consisting of a Eurodollar Rate Advance with an Interest Period
ending on the same date as which the interest period applicable to such Existing
Term Loan is scheduled to end, (each such Existing Term Loan, a “Converted
Existing Term Loan”). On the Closing Date, the Converted Existing Term Loans
shall be converted for all purposes of this Agreement into Tranche B Term
Advances, and the Agent shall record in the Register the aggregate amounts

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of Converted Existing Term Loans into Tranche B Term Advances. Amounts of
Tranche B Term Advances repaid or prepaid may not be reborrowed.
     (ii) The Tranche B Term Advances may from time to time consist of (a)
Eurodollar Rate Advances, (b) Reference Rate Advances or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with Sections 2.04 and 2.06 (and subject to clause (i) above with respect to
Converted Existing Term Loans.)
          (b) Delayed-Draw Term Loan Facility:
     (i) From time to time during the Delayed-Draw Term Loan Commitment Period
and subject to the terms and conditions of this Agreement, each Lender severally
agrees to lend to Borrower sums at any one time outstanding not in excess of an
aggregate amount equal to such Lender’s Delayed-Draw Term Loan Commitment
Percentage of the Delayed-Draw Term Loan Commitment Amount (as to each Lender,
its “Delayed-Draw Term Loan Commitment” and, together with its Tranche B Term
Loan Commitment, its “Term Loan Commitment”) provided, that no Lender shall make
any Delayed-Draw Term Advance if, after giving effect to such Delayed-Draw Term
Advance, the aggregate outstanding principal amount of all Delayed-Draw Term
Advances would exceed the Delayed-Draw Term Loan Commitment Amount. Amounts of
Delayed-Draw Term Advances repaid or prepaid may not be reborrowed.
     (ii) The Delayed-Draw Term Advances may from time to time consist of (a)
Eurodollar Rate Advances, (b) Reference Rate Advances or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with Sections 2.04 and 2.06.
     (iii) Borrowings of Delayed-Draw Term Advances pursuant to the Delayed-Draw
Term Loan Commitments (x) shall be made no more frequently than one time each
calendar month, (y) shall be in an aggregate principal amount of a whole
multiple of $1,000,000, and (z) shall be available only during the Delayed-Draw
Term Loan Commitment Period.
          2.04 Requests for Term Advances. (a) (i) Except as specified in
Section 2.03(a)(i) with respect to Converted Existing Term Loans, each Tranche B
Term Advance shall be made upon the irrevocable request of the Borrower received
by the Agent by 12:00 p.m. noon, New York time, one (1) Banking Day prior to the
Closing Date in the case of Reference Rate Advances and three (3) Banking Days
prior to the Closing Date in the case of Eurodollar Rate Advances, specifying
(i) the amount of such Tranche B Term Advances; (ii) whether the Tranche B Term
Advances are to be Reference Rate Advances, Eurodollar Rate Advances or a
combination thereof; (iii) if the Tranche B Term Advances are to consist
entirely or partly of Eurodollar Rate Advances, the amount of such Eurodollar
Rate Advances and the length of the initial Interest Period therefor; and (iv)
the account of the Borrower with Agent for the deposit of the proceeds of such
Tranche B Term Advances. Notwithstanding the foregoing, and subject to

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Section 2.03(a)(i), any Term Advances to be made on the Closing Date shall be
Reference Rate Advances, unless otherwise agreed by the Agent.
          (ii) Each Delayed-Draw Term Advance shall be made upon the irrevocable
request of the Borrower received by Agent by 12:00 p.m. noon, New York time, one
Banking Day prior to the Borrowing Date therefor in the case of Reference Rate
Advances and three (3) Banking Days prior to the Borrowing Date therefor in the
case of Eurodollar Rate Advances, specifying: (i) the Borrowing Date for such
Delayed-Draw Term Advance, which shall be a Banking Day; (ii) the amount of such
Delayed-Draw Term Advance; (iii) whether the Delayed-Draw Term Advance is to be
of Reference Rate Advances, Eurodollar Rate Advances or a combination thereof;
(iv) if the Delayed-Draw Term Advance is to consist entirely or partly of
Eurodollar Rate Advances, the amount of such Eurodollar Rate Advances and the
length of the initial Interest Period therefor; and (v) the account of Borrower
with Agent for the deposit of the proceeds of such Delayed-Draw Term Advance.
Notwithstanding the foregoing, all Delayed-Draw Term Advances to be made on the
Closing Date shall be Reference Rate Advances unless otherwise agreed by the
Agent.
          (b) Each request for Term Advances may be made in writing or by
telephone, provided, however, that any such telephonic request shall be
confirmed immediately by telecopier and also in writing delivered to Agent by
Borrower not more than three (3) Banking Days after the date such telephonic
request is made, provided, however, that telephonic requests shall be subject to
the indemnity provisions set forth in Section 9.07 hereof.
          (c) Upon receipt of such borrowing request, the Agent shall promptly
notify the applicable Lenders thereof.
          (d) Except as otherwise provided in Section 2.3(b)(iii) with respect
to Delayed-Draw Term Advances, each Reference Rate Advance hereunder shall be in
the minimum aggregate amount of One Million Dollars ($1,000,000) or in integral
multiples of One Hundred Thousand Dollars ($100,000) in excess thereof. Each
Eurodollar Rate Advance shall be in the minimum aggregate amount of Five Million
Dollars ($5,000,000) or in integral multiples of One Million Dollars
($1,000,000) in excess thereof.
          (e) Each Tranche B Term Advance shall be made on a pro rata basis by
all Tranche B Term Lenders having Tranche B Term Loan Commitments, and each
Tranche B Term Lender’s portion of the Tranche B Term Advances shall be equal to
its Tranche B Term Loan Commitment Percentage of such Tranche B Term Advances.
          (f) Each Delayed-Draw Term Advance shall be made on a pro rata basis
by all Delayed-Draw Term Lenders having Delayed-Draw Term Loan Commitments, and
each Delayed-Draw Term Lender’s portion of the Delayed-Draw Term Advances shall
be equal to its Delayed-Draw Term Loan Commitment Percentage of such
Delayed-Draw Term Advances.
          2.05 Repayment of Term Advances . (a) The Tranche B Term Advances of
each Tranche B Term Lender shall mature in 13 consecutive installments on each
of January 31, April 28, July 31, and October 31, commencing on October 31,
2007, each of which shall equal such Tranche B Term Lender’s Tranche B Term Loan
Commitment Percentage multiplied by

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$514,750, except for the final installment which shall be payable on October 1,
2010 and shall equal such Tranche B Term Lender’s Tranche B Term Loan Commitment
Percentage multiplied by $199,723,000. In any event, all Tranche B Term Advances
will mature on or before the Term Loan Termination Date.
          (b)   The Delayed-Draw Term Advances of each Delayed-Draw Term Lender
shall mature in full in a single installment on the Term Loan Termination Date.
          2.06   Lending Branch and Evidence of Credit. (a) The Borrower hereby
unconditionally promises to pay to the Agent for the account of each Lender
(i) the then unpaid principal amount of each Revolving Advance made by such
Lender on the Revolving Credit Termination Date (or such earlier date on which
the Advances become due and payable pursuant to Article VIII) and (ii) the then
unpaid principal amount of each Term Advance made by such Lender in accordance
with Section 2.05 or, if earlier, on the Term Loan Termination Date. The
Borrower hereby further agrees to pay interest on the unpaid principal amount of
the Advances made to it from time to time outstanding from the Closing Date
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.08.
          (b)   Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Advance made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
          (c)   The Agent shall maintain the Register pursuant to
Section 9.04(e), and a subaccount therein for each Lender in which shall be
recorded (i) the amount of each Revolving Advance and Term Advance made
hereunder, the Type thereof and each Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable from the Borrower to each Lender hereunder and (iii) both the amount
of any sum received by the Agent hereunder from the Borrower and each Lender’s
share thereof.
          (d)   The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.06(c) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of any
Borrower to repay (with applicable interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.
          (e)   The Borrower agrees that, upon the request to the Agent by any
Lender, the Borrower will execute and deliver to such Lender (i) a Revolving
Note with appropriate insertions as to date and principal amount, and/or (ii) a
Term Note for each Term Loan Facility with appropriate insertions as to date and
principal amount.
          (f)   Each Lender’s proportionate interest in each Advance and each
payment to such Lender under this Agreement and the Notes shall be made for the
account of such Lender’s Lending Branch.

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          2.07   Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Rate Advances to Reference Rate Advances
by giving the Agent at least two Banking Days’ prior irrevocable notice of such
election, provided that any such conversion of Eurodollar Rate Advances may only
be made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Reference Rate Advances to Eurodollar
Rate Advances by giving the Agent at least three Banking Days’ prior irrevocable
notice of such election. Any such notice of conversion to Eurodollar Rate
Advances shall specify the length of the initial Interest Period or Interest
Periods therefor. Upon receipt of any such notice the Agent shall promptly
notify each Lender thereof. All or any part of outstanding Eurodollar Rate
Advances or Reference Rate Advances may be converted as provided herein,
provided that (i) no Advance may be converted into a Eurodollar Rate Advance
when any Default or Event of Default has occurred and is continuing and the
Agent or the Majority Lenders have determined that such a conversion is not
appropriate, and (ii) no Advance may be converted into a Eurodollar Rate Advance
after the date that is one month prior to the relevant Termination Date.
          (b)   Any Eurodollar Rate Advances may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Borrower’s giving notice to the Agent, in accordance with the applicable
provisions of the term “Interest Period” set forth in Section 1.01, of the
length of the next Interest Period to be applicable to such Advance, provided
that no Eurodollar Rate Advance may be continued as such (i) when any Default or
Event of Default has occurred and is continuing and the Agent or the Majority
Lenders have determined that such a continuation of a Eurodollar Rate Advance is
not appropriate, or (ii) after the date that is one month prior to the relevant
Termination Date and provided, further, that if the Borrower shall fail to give
any required notice as described above in this paragraph or if such continuation
is not permitted pursuant to the preceding proviso such Advances shall be
automatically converted to Reference Rate Advances on the last day of such then
expiring Interest Period.
          2.08   Computation of and Payment of Interest. (a) From and including
the relevant Borrowing Date to the payment in full of all Obligations, the
outstanding principal balance of each Advance hereunder, subject to
Section 2.08(d) hereof, shall bear interest until paid in full at a rate per
annum equal to:
     (i)   with respect to Reference Rate Advances, at the Reference Rate for
each day plus the Applicable Margin; and
     (ii)   with respect to Eurodollar Rate Advances, for each day during an
Interest Period therefor, at the Eurodollar Rate for such day plus the
Applicable Margin.
          (b)   Interest on each Advance shall be paid in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Advances pursuant to Section 2.12 or 2.13 (except for any
prepayment pursuant to Section 2.12 of any Advance that is a Reference Rate
Advance) for the portion of the Advances so prepaid and upon payment (including
prepayment, except for any prepayment pursuant to Section 2.12 of any Advance
that is a Reference Rate Advance) in full thereof and, after the occurrence and
during the continuance of any Event of Default, interest shall be payable on
demand.

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          (c)   Interest on Reference Rate Advances calculated on the basis of
the Prime Rate shall be computed on the basis of a year of three hundred
sixty-five (365) or three hundred sixty-six (366) days, as the case may be;
otherwise, interest and fees payable hereunder shall be computed on the basis of
a year of three hundred sixty (360) days, in each case for actual days elapsed,
including the first day and excluding the last day.
          (d)   During the period (i) from and including the stated due date for
payment of any amount under this Agreement or the date of acceleration of any
amount pursuant to Article VIII which Borrower fails to pay on such due date or
date of acceleration and (ii) to but excluding the date on which such amount is
paid in full, Borrower shall, on demand and to the extent permitted by
applicable law, pay interest on such unpaid amount at a rate per annum equal to
(A) in the case of overdue principal of any Advance, the sum of the rate of
interest otherwise applicable to such unpaid amount plus two percent (2%) or
(B) in the case of any other overdue amount, the Reference Rate plus the
Applicable Margin plus 2%; provided, however, that upon the occurrence and
during the continuation of an Event of Default under Section 8.01(a), the entire
principal amount of the Advances outstanding hereunder and under the Notes shall
bear interest as provided in this Section 2.08(d). Interest under this
Section 2.08(d) shall be computed on the basis of a three hundred sixty
(360) day year and actual days elapsed.
          (e)   Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the Borrower
and the Lenders in the absence of manifest error. The Agent shall, at the
request of the Borrower, deliver to the Borrower a statement showing the
quotations used by the Agent in determining any interest rate pursuant to
Section 2.08(a).
          (f)   If prior to the first day of any Interest Period:
     (i)   the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
     (ii)   the Agent shall have received notice from the Majority Lenders that
the Eurodollar Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Advances
during such Interest Period,
then the Agent shall give telecopy or telephonic notice thereof to the Borrower
and the Lenders as soon as practicable thereafter. If such notice is given
(x) any Eurodollar Rate Advances requested to be made on the first day of such
Interest Period shall be made as Reference Rate Advances, (y) any Advances that
were to have been converted on the first day of such Interest Period to
Eurodollar Rate Advances shall be converted to or continued as Reference Rate
Advances and (z) any outstanding Eurodollar Rate Advances shall be converted, on
the first day of such requested Interest Period, to Reference Rate Advances.
Until such notice has been withdrawn by the Agent, no further Eurodollar Rate
Advances shall be made or continued as such, nor shall the Borrower have the
right to convert Advances to Eurodollar Rate Advances.

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The Agent shall give telecopy or telephonic notice of such withdrawal to the
Borrower and the Lenders as soon as practicable thereafter.
          2.09   Payment of Advances. Borrower shall repay the outstanding
amount of (a) all Revolving Advances on the Revolving Credit Termination Date
and (b) all Term Advances on the dates set forth in Section 2.05, or if earlier,
on the Term Loan Termination Date.
          2.10   Payments. (a) Each payment to Borrower hereunder, and each
payment of principal, interest and other sums due from Borrower under this
Agreement shall be made in immediately available funds at Agent’s address for
payments indicated on the signature page of this Agreement.
          (b)   Each Lender agrees that upon receipt of notice from Agent, it
will make the funds which it is to advance hereunder available to Agent at
Agent’s address for payments indicated on the signature page of this Agreement
not later than 1:00 p.m., New York time, on the date of disbursement, and Agent
will thereupon advance to Borrower the amount so received from Lenders.
          (c)   Payment of all sums under this Agreement shall be made by
Borrower to Agent for the account of Lenders, and the Agent shall promptly
distribute to each Lender its share of such payments by wire transfer of
immediately available funds. Each payment by Borrower shall be made without
setoff, deduction or counterclaim not later than 1:00 p.m., New York time, on
the day such payment is due. All sums received after such time shall be deemed
received on the next Banking Day and such extension of time shall be included in
the computation of payment of interest, fees or other sums, as the case may be.
          (d)   Unless Agent shall have been notified by telephone (confirmed in
writing), by any Lender prior to a Borrowing Date, that such Lender will not
make available to Agent the amount which would constitute its applicable
Commitment Percentage of the Advances to be made on such date, Agent may assume
that such Lender has made such amount available to Agent and, in reliance
thereon, may (but shall not be required to) make available to Borrower a
corresponding amount. If such Lender makes its applicable Commitment Percentage
of an Advance available to Agent after a borrowing date, such Lender shall pay
to Agent on demand an amount equal to the product of (i) the daily average
Federal Funds Rate from and including the borrowing date to but excluding the
date the applicable Commitment Percentage of such Advance was made available to
Agent (the “Out of Funds Period”) multiplied by (ii) an amount equal to its
applicable Commitment Percentage of such Advance multiplied by (iii) the
quotient of the number of days in the Out of Funds Period divided by 365 or 366,
as the case may be. A certificate from Agent submitted to any Lender with
respect to any amounts owing under this paragraph (d) shall be conclusive in the
absence of manifest error. If any Lender’s applicable Commitment Percentage of
an Advance is not in fact made available to Agent by such Lender within one
(1) Banking Day after a Borrowing Date, Agent shall be entitled to recover such
amount, with interest thereon at the rate per annum then applicable to the
Advances hereunder, on demand from Borrower, without prejudice to Agent’s and
Borrower’s rights against such defaulting Lender.

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          (e)   Unless Agent shall have been notified by telephone (confirmed in
writing), by Borrower, prior to any date on which a payment is due hereunder,
that Borrower will not make the required payment on such date, Agent may assume
that Borrower will make such payment to Agent and, in reliance upon such
assumption, may (but shall not be required to) make available to each Lender the
amount due to it on such date. If such amount is not in fact paid to Agent by
Borrower within one (1) Banking Day after such payment is due, Agent shall be
entitled to recover from each Lender the amount paid to it by Agent, together
with interest thereon in the amount equal to the product of (i) the daily
average Federal Funds Rate from and including the payment date to but excluding
the date the payment was made available to Agent (the “Out of Funds Interval”)
multiplied by (ii) an amount equal to the amount received by such Lender
multiplied by (iii) the quotient of the number of days in the Out of Funds
Interval divided by 365 or 366, as the case may be. A certificate from Agent
submitted to any Lender with respect to any amounts owing under this paragraph
(e) shall be conclusive in the absence of manifest error.
          2.11   Optional Termination or Reduction of Commitment Amounts.
          (a)   The Borrower shall have the right, upon not less than five
Banking Days’ notice to the Agent, to terminate the Revolving Credit Commitments
and the L/C Commitments or, from time to time, to reduce the Revolving Credit
Commitment Amount. Any such reduction shall be in an amount equal to $2,000,000
or a whole multiple thereof and shall reduce permanently the Revolving Credit
Commitment Amount then in effect; provided, however, that the Revolving Credit
Commitment Amount may not at any time be reduced (after giving effect to any
prepayments made on the date of such reduction pursuant to Section 2.13(c))
below the sum of (i) the principal amount of the outstanding Revolving Advances,
(ii) the undrawn amount of all outstanding Letters of Credit and (iii) the
aggregate amount of all unreimbursed drawings under Letters of Credit on the
date of reduction or termination. Any Revolving Credit Commitment Reduction
pursuant to this Section 2.11 shall be permanent.
          (b)   The Borrower shall have the right, upon not less than five
Banking Days’ notice to the Agent, to terminate the Delayed-Draw Term Loan
Commitments or, from time to time, to reduce the unutilized amount of
Delayed-Draw Term Loan Commitments. Any such reduction shall be in an amount
equal to $2,000,000 or a whole multiple thereof and shall reduce permanently the
Term Loan Commitment Amount then in effect; provided, however, that the Term
Loan Commitment Amount may not at any time be reduced below the principal amount
of the outstanding Term Advances. Any Term Loan Commitment Reduction pursuant to
this Section 2.11 shall be permanent.
          2.12   Optional Prepayments. (a) Upon written notice (or telephone
notice confirmed promptly in writing) received by Agent not later than 12:00
noon, New York City time, on the date thereof, Borrower may at any time prepay
any Reference Rate Advance in full or in part, without premium or penalty
(except as provided in paragraph (b) below), in the amount of One Million
Dollars ($1,000,000) or an integral multiple of Five Hundred Thousand Dollars
($500,000) in excess thereof (or, if the outstanding principal amount of all
Reference Rate Advances is less than $1,000,000, such lesser amount). Upon
written notice (or telephone notice confirmed promptly in writing) received by
Agent not later than 12:00 noon, New York time, received at least three (3)
Banking Days prior to the date of prepayment, which notice shall specify the
date and amount of prepayment and the amount of Eurodollar Rate Advances being

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prepaid, Borrower may on the last day of any Interest Period with respect
thereto prepay any Eurodollar Rate Advance in full or in part, without premium
or penalty (other than costs required to be paid pursuant to Section 2.17(d)),
in the amount of Five Million Dollars ($5,000,000) or an integral multiple of
One Million Dollars ($1,000,000) in excess thereof. Each such prepayment of
Revolving Advances made pursuant to this Section 2.12 may be reborrowed subject
to the terms and conditions of this Agreement. Prepayments of Term Advances may
not be reborrowed. Any prepayments of Revolving Advances or Term Advances, as
the case may be, made pursuant to this Section 2.12 shall be applied first to
Reference Rate Advances then outstanding and then to Eurodollar Rate Advances
then outstanding, subject to Section 2.17(d). Any prepayments of Term Advances
made pursuant to this Section 2.12 shall be applied to Delayed-Draw Term Loans
and Tranche B Term Loans ratably and to the remaining installments of each
thereof in direct order of maturity.
          (b)   Any optional prepayments of the Term Advances pursuant to
Section 2.12(a) and any mandatory prepayment of the Term Advances pursuant to
Section 2.13(a) (and any permanent reduction of Delayed-Draw Term Loan
Commitments pursuant to Section 2.12(a) or 2.13(a)) (in each case other than in
respect of up to $25,000,000 of Net Cash Proceeds from Permitted Asset Sales
and/or Permitted Sale/Leasebacks to the extent the Borrower has elected its
ability to retain proceeds under option (x) set forth in clause (C) of the
proviso to the definition of “Net Cash Proceeds”) by the Borrower or any of its
Subsidiaries made on or prior to the first anniversary of the Closing Date shall
be accompanied by a prepayment premium of 1% on the amount of Term Advances so
prepaid (and on the amount by which the Delayed-Draw Term Loan Commitments are
so reduced).
          2.13   Mandatory Prepayments. (a) (i) Within ten (10) days of the date
of receipt by Borrower or any of its Subsidiaries of any Net Cash Proceeds,
Borrower shall apply an amount equal to 100% of such Net Cash Proceeds, without
premium or penalty (other than costs required to be paid pursuant to
Section 2.17(d) and except as provided in Section 2.12(b) above), first, to make
a mandatory prepayment of the Term Advances, second, after payment in full of
the Term Advances, to permanently reduce the Delayed-Draw Term Loan Commitment
Amount, and third, after reduction of the Delayed-Draw Term Loan Commitment
Amount to zero, to make a mandatory prepayment of the outstanding Revolving
Advances or, to the extent that at such time no Revolving Advances are
outstanding, to cash collateralize any outstanding Letter of Credit, in an
amount equal to 100% of such Net Cash Proceeds.
          (b)   If, for any fiscal year of the Borrower commencing with the
fiscal year ending December 31, 2006, there shall be Excess Cash Flow in excess
of $5,000,000, the Borrower shall, on the relevant Excess Cash Flow Application
Date, apply 50% of such Excess Cash Flow minus (without duplication) any
permanent prepayments of Debt (including any prepayments under Section 2.12 of
the Term Advances and Revolving Advances to the extent accompanying permanent
reductions in the Revolving Credit Commitment Amount), without premium or
penalty (other than costs required to be paid pursuant to Section 2.17(d),
first, to make a mandatory prepayment of the Term Advances, second, after
payment in full of the Term Advances, to permanently reduce the Delayed-Draw
Term Loan Commitment Amount, and third, after reduction of the Delayed-Draw Term
Loan Commitment Amount to zero, to make a mandatory prepayment of the
outstanding Revolving Advances or, to the extent that at such time no Revolving
Advances are outstanding, to cash collateralize any outstanding Letter of Credit

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(without any reduction of the Revolving Credit Commitment Amount). Each such
prepayment shall be made on a date (an “Excess Cash Flow Application Date”) no
later than five days after the earlier of (i) the date on which the financial
statements of the Borrower referred to in Section 6.03(b), for the fiscal year
with respect to which such prepayment is made, are required to be delivered to
the Agent and (ii) the date such financial statements are actually delivered.
          (c)   If at any time (A) the sum of the aggregate principal amount of
the outstanding Revolving Advances plus the aggregate undrawn amount of all
outstanding Letters of Credit plus the aggregate amount of all unreimbursed
drawings under Letters of Credit shall exceed (B) the Revolving Credit
Commitment Amount, Borrower shall, without demand or notice, prepay Revolving
Advances or cash collateralize or replace Letters of Credit in such amount as
may be necessary to eliminate such excess, and Borrower shall take such action
on the Banking Day on which Borrower learns or is notified of the excess, if
Borrower so learns or is so notified prior to 1:00 p.m. (New York City time) on
such day, and otherwise on the immediately succeeding Banking Day.
Notwithstanding any contrary provision contained herein, the prepayment of any
Advance or cash collateralization or replacement of any Letter of Credit
hereunder (except for any prepayment pursuant to Section 2.12 of any Advance
that is a Reference Rate Advance) shall be accompanied by the payment of accrued
interest on the amount prepaid to the date of payment.
          (d)   Any prepayments made pursuant to this Section 2.13 shall be
applied first to Reference Rate Advances to the extent then outstanding and then
to Eurodollar Rate Advances to the extent then outstanding, subject to
Section 2.17(d). Any prepayments of Term Advances pursuant to this Section 2.13
shall be applied to the Delayed-Draw Term Loans and the Tranche B Term Loans
ratably and to the installments of each thereof in direct order of maturity and
may not be reborrowed.
          2.14   Fees. Borrower shall pay to Agent for the ratable benefit of
each relevant Lender (except as otherwise provided):
     (a)   (i) in respect of each Letter of Credit, a commission on the maximum
face amount available for drawing under such Letter of Credit, calculated at the
rate per annum equal to the rate applicable to Letter of Credit fees (as set
forth under the definition of Applicable Margin in Section 1.01), computed for
the period from the date such Letter of Credit is issued to the date upon which
the next payment is due under this subsection (and, thereafter, from the date of
payment under this subsection to the date upon which the next payment is due
under this subsection), and payable quarterly in arrears (calculated on the
basis of a three hundred sixty (360) day year for the actual days elapsed) on
the last Banking Day of each January, April, July and October after the issuance
of such Letter of Credit and on the Revolving Credit Termination Date;
     (ii)   a fronting fee in an amount equal to one-quarter percent (1/4%) of
the face amount of such Letter of Credit, computed for the period from the date
such Letter of Credit is issued to the date upon which the next payment is due
under this subsection (and, thereafter, from the date of payment under this
subsection to the date upon which the next payment is due under this
subsection), and payable quarterly in arrears (calculated on the basis of a
three hundred sixty (360) day year for the actual days

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elapsed) on the last Banking Day of each January, April, July and October after
the issuance of such Letter of Credit and on the Revolving Credit Termination
Date; provided that such fee shall be for the Issuing Lender’s sole account; and
     (iii)   all customary and normal costs and expenses as are incurred or
charged by the Issuing Lender in negotiating, issuing, effecting payment under,
amending or otherwise administering any Letter of Credit, provided that payment
of such costs and expenses shall be for the Issuing Lender’s sole account;
          (b)   a commitment fee, at the rate per annum equal to 0.50%, on the
difference between (i) the average daily Revolving Credit Commitment Amount, and
(ii) the average daily principal amount of the outstanding Revolving Advances,
participating interests in Letters of Credit and unreimbursed drawings in
respect of Letters of Credit. The commitment fees under this Section 2.14(b)
shall be payable quarterly in arrears (calculated on the basis of a three
hundred sixty (360) day year for the actual days elapsed) payable on the last
Banking Day of each January, April, July and October and on the Revolving Credit
Termination Date; and
          (c)   a commitment fee, at the rate per annum equal to 1.00%, on the
difference between (i) the average daily Delayed-Draw Term Loan Commitment
Amount, and (ii) the average daily principal amount of the outstanding
Delayed-Draw Term Advances. The commitment fees under this Section 2.14(c) shall
be payable quarterly in arrears (calculated on the basis of a three hundred
sixty (360) day year for the actual days elapsed) payable on the last Banking
Day of each January, April, July and October and on the Term Loan Termination
Date.
          2.15   Agency Fees. The Borrower agrees to pay to the Agent the fees
in the amounts and on the dates as set forth in any fee agreements with the
Agent and to perform any other obligations contained therein.
          2.16   Taxes.
          (a)   All payments or reimbursements under this Agreement and any
instrument or agreement required hereunder shall be made free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding,
     (i)   in the case of each Lender and Agent, taxes imposed on its net
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or Agent (as the case may be) is organized or any political
subdivision thereof,
     (ii)   in the case of each Lender, taxes imposed on its net income, and
franchise taxes imposed on it, by the jurisdiction of such Lender’s Lending
Branch or any political subdivision thereof, and
     (iii)   in the case of each Lender that is not a U.S. person as defined in
Section 7701(a)(30) of the Code (“Non-U.S. Lender”), United States federal
withholding taxes that are (x) attributable to such Bank’s failure to comply
with the requirements of Section 2.16(d), (y) imposed on amounts payable to such
Lender at

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the time the Lender becomes a party to this Agreement, or (z) imposed other than
as a result of a change in treaty, law or regulation or the application or
interpretation thereof, except in the case of (x) or (y), to the extent that
such Bank’s assignor (if any) was entitled, at the time of assignment, to
receive additional amounts from the Borrower with respect to such taxes.
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as “Taxes”). If Borrower or Agent
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or Agent,
     (i) the sum payable by Borrower shall be increased as may be necessary so
that after Borrower or Agent has made all required deductions (including
deductions applicable to additional sums payable under this Section 2.16) such
Lender or Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made,
     (ii) Borrower or Agent shall make such deductions and
     (iii) Borrower or Agent shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
          (b)   In addition, Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made by Borrower or by Agent hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as “Other Taxes”).
          (c)   Borrower will indemnify each Lender and Agent for the full
amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.16) paid by such Lender or Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within 30 days from the
date such Lender or Agent (as the case may be) makes written demand therefor.
Any such demand shall show in reasonable detail the amount payable and the
calculations used to determine such amount and shall provide reasonably
acceptable evidence of payment of such Tax or Other Tax.
          (d)   Each Non-U.S. Lender shall deliver to the Borrower and the Agent
two copies of either U.S. Internal Revenue Service Form W-8 BEN or Form W-8ECI,
or any subsequent versions thereof or successors thereto properly completed and
duly executed by such Non-U.S. Lender claiming complete exemption from, or a
reduced rate of, U.S. federal withholding tax on all payments by the Borrower
under this Agreement. Such forms shall be delivered by each Non-U.S. Lender on
or before the date it becomes a party to this Agreement. In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered
certificate to the Borrower (or any other form of certification adopted by the

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U.S. taxing authorities for such purpose). Notwithstanding any other provision
of this Section 2.16(d), a Non-U.S. Lender shall not be required to deliver any
form pursuant to this Section 2.16(d) that such Non-U.S. Lender is not legally
able to deliver.
          (e)   Any Lender claiming any additional amounts payable pursuant to
this Section 2.16 shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Lending Branch if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the judgment of such Lender, be otherwise disadvantageous to
such Lender.
          (f)   Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.16 shall survive the payment in full of principal and interest
under this Agreement and the Notes and all other Obligations under this
Agreement.
          2.17   Increased Costs; Illegality; Indemnity. (a) Borrower shall
reimburse or compensate each Lender, upon demand by such Lender, for all costs
incurred, losses suffered (including lost profit) or payments made by such
Lender which are applied or allocated by such Lender to the Credit (all as
determined by such Lender in its sole and absolute discretion) by reason of:
           (i)   any Lender’s being subject to any tax of any kind whatsoever
with respect to this Agreement, any Note or any Advance made by it, or change in
the basis of taxation of payments to such Lender in respect thereof (except for
taxes covered by Section 2.16 and changes in the rate of tax on the overall net
income of such Lender);
           (ii)   the imposition, modification or holding applicable of any
reserve, special deposit, compulsory loan or similar requirement against assets
held by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination of
the Eurodollar Rate; or
           (iii)   compliance by such Lender with any direction, requirement or
request from any regulatory authority, whether or not having the force of law.
          (b)   Any Lender seeking (i) reimbursement from Borrower for the costs
incurred, losses suffered or payments made as described in subsection (a) of
this Section 2.17, or (ii) payment from Borrower under Section 2.18 hereof, may
recover such sums from Borrower by delivering to Borrower a statement setting
forth the amount owed to such Lender and showing how such calculation was made,
signed by a duly authorized officer of such Lender, which statement shall be
conclusive evidence of the amount owed absent manifest error; provided, however,
that (A) reimbursement or payment under this subsection (b) shall not be
demanded by any Lender for the period prior to the Closing Date (other than
Lenders party to the Existing Credit Agreement; provided that no claim shall be
made by any Lender pursuant to the Existing

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Credit Agreement that arose during the period prior to the closing date for the
Existing Credit Agreement), and (B) each Lender shall notify Borrower as
promptly as practicable of any event occurring after the date of this Agreement
that would entitle such Lender to reimbursement or payment under this subsection
(b).
          (c)   Notwithstanding any other provision herein, if the adoption of
or any change in any requirement of law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain Eurodollar
Rate Advances as contemplated by this Agreement, (A) the commitment of such
Lender hereunder to make Eurodollar Rate Advances, continue Eurodollar Rate
Advances as such and convert Reference Rate Advances to Eurodollar Rate Advances
shall forthwith be cancelled and (B) such Lender’s Advances then outstanding as
Eurodollar Rate Advances, if any, shall if required by law, be converted
automatically to Reference Rate Advances on the respective last days of the then
current Interest Periods with respect to such Advances or within such earlier
period as required by law. If any such conversion of a Eurodollar Rate Advance
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to paragraph (d) below.
          (d)   The Borrower agrees to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender may sustain or incur
as a consequence of (A) default by the Borrower in payment when due of the
principal amount of or interest on any Eurodollar Rate Advance, (B) default by
the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Rate Advances after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (C) default by the
Borrower in making any prepayment after the Borrower has given a notice thereof
in accordance with the provisions of this Agreement or (D) the making of a
prepayment of Eurodollar Rate Advances on a day which is not the last day of an
Interest Period with respect thereto, including, without limitation, in each
case, any such loss or expense arising from the reemployment of funds obtained
by it or from fees payable to terminate the deposits from which such funds were
obtained. A certificate as to any amounts payable pursuant to this Section
submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. The covenants contained in Subsections (b) and (d) of this
Section 2.17 shall survive the termination of this Agreement and the payment of
the Notes and all other amounts payable hereunder.
          2.18   Capital Adequacy. If any Lender shall have determined that,
after the date hereof, the adoption of any applicable law, rule, regulation or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central Lender or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Lending Branch or
any corporation controlling such Lender) with any direction, requirement or
request regarding capital adequacy (whether or not having the force of law) of
any such authority, central Lender or comparable agency, affects or would affect
the amount of capital required or expected to be maintained by such Lender or
any corporation controlling such Lender and such Lender (taking into
consideration such Lender’s policies with respect to capital adequacy and such
Lender’s targeted return on capital) determines that the amount of such capital
is increased or required to be increased as a consequence of such Lender’s
obligations under this Agreement, then, upon demand by such Lender, Borrower
shall immediately pay to such Lender, from time to time as

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specified by such Lender, additional amounts sufficient to compensate such
Lender for such increase.
          2.19   Letters of Credit. (a) The Letters of Credit. (i) From time to
time during the Revolving Credit Commitment Period, each Issuing Lender agrees
on the terms and conditions set forth herein to issue Letters of Credit for the
account of the Borrower; provided, that no Issuing Lender shall issue any Letter
of Credit if after giving effect to such issuance, the aggregate undrawn amount
of all Letters of Credit then outstanding plus the aggregate amount of all
unreimbursed drawings under Letters of Credit would exceed the L/C Commitment
Amount; provided, further, that no Issuing Lender shall issue any Letters of
Credit if, after giving effect to such issuance, the sum of the aggregate
undrawn amount of all Letters of Credit then outstanding plus the aggregate
outstanding principal amount of all Revolving Advances plus the aggregate amount
of unreimbursed drawings under Letters of Credit would exceed the Revolving
Credit Commitment Amount; provided, further, that no Issuing Lender shall issue
any Letters of Credit subsequent to the date which is 30 days prior to the
Revolving Credit Termination Date.
          (ii)   No Issuing Lender shall be under any obligation to issue any
Letter of Credit if:
     (A)   any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Issuing Lender
from issuing such Letter of Credit or any legal requirement applicable to such
Issuing Lender or any request or directive (whether or not having the force of
law) from any governmental authority with jurisdiction over such Issuing Lender
shall prohibit, or request that such Issuing Lender refrain from the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Lender with respect to such Letter of Credit any
restriction or reserve or capital requirement (for which such Issuing Lender is
not otherwise compensated) not in effect on the Closing Date, or any
unreimbursed loss, cost or expense which was not applicable, in effect or known
to such Issuing Lender on the Closing Date and which such Issuing Lender in good
faith deems material to it; or
     (B)   such Issuing Lender has received notice from Agent, or from Agent at
the request of any Lender, on or prior to the Banking Day immediately prior to
the requested date of issuance of such Letter of Credit that one or more of the
conditions contained in Section 4.02 is not then satisfied; or
     (C)   such requested Letter of Credit has an expiration date which is after
the earlier of (x) five Banking Days prior to the Revolving Credit Termination
Date (without taking into account any Advance Maturity Date) and (y) one year
after the date of issuance (subject to automatic renewals on terms satisfactory
to the Issuing Lenders).

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          (iii)   Subject to Section 2.19(g), Letters of Credit with a one-year
tenor may be by their terms automatically renewable (such automatically
renewable Letters of Credit hereby referred to as “Renewable Letters of Credit”)
for additional one-year periods (which shall in no event extend beyond the date
referred to in clause (x) of the preceding paragraph (a)(ii)(C), as such date is
determined at the time of such renewal or extension). The Issuing Lender shall
notify all beneficiaries of Renewable Letters of Credit that such Letters of
Credit shall not be renewed or extended unless the Agent and the Issuing Lender
shall have received the request from the Borrower required under Section 2.19(g)
and all conditions precedent to the issuance of Letters of Credit set forth in
Section 4.02 are satisfied at the time of such renewal or extension (which time,
for purposes of this Section and Section 4.02, shall be deemed to be the time of
such renewal or extension and not the expiry date of such Letters of Credit).
          (b)   Issuance of Letters of Credit.
          (i)   Each Letter of Credit shall be issued upon the irrevocable
written request of Borrower, received by Agent and the Issuing Lender at least
seven (7) days (or such shorter time as Agent may agree in a particular
instance) prior to the proposed date of issuance. Each Letter of Credit
outstanding under the Existing Credit Agreement which survives the Closing Date
shall be deemed to be reissued under this Agreement on the Closing Date as set
forth on Schedule 2.19(b).
          (ii)   Each request for issuance of a Letter of Credit shall be by
telecopy, confirmed immediately in writing, on the form specified by the Issuing
Lender as being its then customary form for letter of credit applications and
shall specify: (A) the proposed date of issuance (which shall be a Banking Day);
(B) the face amount of the Letter of Credit; (C) the date of expiration of the
Letter of Credit; (D) the purpose of such Letter of Credit, (E) the name and
address of the beneficiary thereof; (F) the documents to be presented by the
beneficiary of the Letter of Credit in case of any drawing thereunder; and
(G) the full text of any certificate to be presented by the beneficiary in case
of any drawing thereunder; provided that in the event that the form specified by
the Issuing Lender conflicts with any provisions of this Agreement, the
provisions in this Agreement shall govern.
          (iii)   No Letter of Credit shall be issued (or renewed or extended)
if such Letter of Credit would thereupon have an expiration date which is after
the date which is five Banking Days prior to the Revolving Credit Termination
Date (without taking into account any Advance Maturity Date).
          (iv)   Unless an Issuing Lender has received notice on or before the
Banking Day immediately preceding the date such Issuing Lender is to issue a
requested Letter of Credit (A) from the Agent directing such Issuing Lender not
to issue such Letter of Credit because the amount specified in
Section 2.19(a)(i) would be exceeded and/or (B) from any Lender that one or more
conditions specified in Section 4.02 are not then satisfied, then subject to the
terms and conditions of this

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Section 2.19 and provided that the applicable conditions set forth in
Section 4.02 hereof have been satisfied, such Issuing Lender shall, subject to
paragraph (a)(ii), on the requested date, issue a Letter of Credit for the
account of Borrower in accordance with the Issuing Lender’s usual and customary
business practices. Prior to issuing any Letter of Credit, the Issuing Lender of
such Letter of Credit will consult with the Agent to confirm that the amount
specified in Section 2.19(a)(i) would not be exceeded, and that the conditions
specified in Section 4.02 have been satisfied.
          (v)   Promptly after issuance of each Letter of Credit, the Issuing
Lender shall deliver to Borrower and Agent a copy of such Letter of Credit.
Agent shall promptly deliver a copy thereof to each other Lender. Each Letter of
Credit shall provide that, except as otherwise determined in the sole discretion
of the Issuing Lender, payment thereunder shall not be made earlier than two
(2) business days after receipt of any requisite documents demanding such
payment.
          (vi)   All Letters of Credit shall be issued only in Dollars.
          (c)   Participations, Drawings and Reimbursements.
          (i)   Immediately upon the issuance of each Letter of Credit, each
Lender (other than the Issuing Lender) shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Lender a participation in such
Letter of Credit and each drawing thereunder in a percentage equal to the
Revolving Credit Commitment Percentage of such Lender. NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT, EACH SUCH LENDER ACKNOWLEDGES AND AGREES THAT
LETTERS OF CREDIT MAY BE ISSUED WITH EXPIRATION DATES AFTER OCTOBER 1, 2007, OR
ANY OTHER ADVANCE MATURITY DATE. EACH SUCH LENDER ACKNOWLEDGES AND IRREVOCABLY
AGREES THAT ITS PARTICIPATING INTEREST APPLIES TO SUCH LETTERS OF CREDIT BOTH
BEFORE AND AFTER THE ADVANCE MATURITY DATE INCLUDING, WITHOUT LIMITATION, DURING
THE PERIOD FOLLOWING THE ADVANCE MATURITY DATE.
          (ii)   The Borrower shall reimburse the Agent for the full amount of
any drawing under the Letter of Credit on the Banking Day immediately succeeding
the date such drawing is honored by the Issuing Lender. The Borrower shall pay
interest to the Issuing Lender from the date such drawing is honored by the
Issuing Lender to the Banking Day immediately succeeding such date at a rate
equal to the Reference Rate plus the Applicable Margin. In the event Borrower
shall fail to reimburse Agent for the full amount of any drawing on the Banking
Day immediately succeeding the date such drawing is honored by the Issuing
Lender under any Letter of Credit, the Issuing Lender shall promptly notify
Agent and Agent shall as promptly as possible notify each Lender with a
Revolving Credit Commitment thereof and Borrower shall be deemed to have
requested that a Reference Rate Advance be made by the Lenders with a Revolving
Credit

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Commitment to be disbursed on the date of payment by the Issuing Lender under
such Letter of Credit, subject to the amount of the unutilized portion of the
Revolving Credit Commitment Amount on such date and subject to the conditions
set forth in Section 4.02. Any notice given by the Issuing Lender or Agent
pursuant hereto may be oral if immediately confirmed in writing (including
telecopy or telex); provided that the lack of such an immediate confirmation
shall not affect the conclusiveness and binding effect of such notice. The
proceeds of such Revolving Advances shall be paid to the Agent which will, in
turn, disburse such proceeds to the Issuing Lender as reimbursement for such
drawings. Notwithstanding the foregoing, if at any time an Event of Default
described in Section 8.05 or 8.06 has occurred and is continuing, such drawings
shall be reimbursed by the Lenders’ purchasing pro rata participation interests
in such Letter of Credit in amounts equal to each Lender’s Revolving Credit
Commitment Percentage of the relevant amounts drawn.
          (iii)   Any unreimbursed Letter of Credit drawing which shall not be
converted into a Revolving Advance pursuant to Section 2.19(c)(ii) in whole or
in part because such conversion would have caused the Revolving Credit
Commitment Amount to be exceeded or because of Borrower’s failure to satisfy the
conditions set forth in Section 4.02, shall become due and payable on the
Banking Day immediately succeeding the date such drawing is paid by the Issuing
Lender. Agent shall promptly notify Borrower and Lenders with a Revolving Credit
Commitment of the occurrence of any unreimbursed drawing under a Letter of
Credit. Any such unreimbursed drawing shall bear interest at a rate per annum
equal to the Reference Rate plus the sum of the Applicable Margin and 2%.
          (iv)   Each Lender will, promptly upon receipt of notice of an
unreimbursed drawing under a Letter of Credit pursuant to Section 2.19(c)(iii),
make available to Agent for the account of the Issuing Lender an amount in
immediately available funds equal to its Revolving Credit Commitment Percentage
of the amount of the such unreimbursed drawing. If any Lender so notified shall
fail to make available to Agent for the account of the Issuing Lender the amount
of its Revolving Credit Commitment Percentage of any such unreimbursed drawing
on the date the relevant Letter of Credit drawing was honored by the Issuing
Lender (the “Participation Date”), then interest shall accrue on such Lender’s
obligation to make such payment, (i) from the Participation Date to but not
including the second Banking Day after the Participation Date at a rate per
annum equal to the Federal Funds Rate, and (ii) from the second Banking Day
after the Participation Date at the same rate specified in Section 2.08(a) for
Reference Rate Advances. Agent will as promptly as practicable (but in no event
later than two (2) Banking Days after the occurrence thereof) give notice of the
occurrence of the Participation Date, but failure of Agent to give any such
notice on the Participation Date or in sufficient time to enable any Lender to
effect such payment on such date shall not relieve such Lender from its
obligations under this Section 2.19(c)(iv).
          (v)   The obligation of each Lender to provide Agent with such
Lender’s Revolving Credit Commitment Percentage of the amount of any payment or

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disbursement made by any Issuing Lender under any outstanding Letter of Credit
shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim or defense to payment which such Lender
may have or have had against such Issuing Lender (or any other Lender),
including, without limitation, that the Revolving Credit Termination Date has
occurred after, on or prior to the date of such payment or disbursement, any
defense based on the failure of the demand for payment under such Letter of
Credit to conform to the terms of such Letter of Credit or the legality,
validity, regularity or enforceability of such Letter of Credit or any defense
based on the identity of the transferee of such Letter of Credit or the
sufficiency of the transfer if such Letter of Credit is transferable; provided,
however, that Lenders shall not be obligated to reimburse such Issuing Lender
for any wrongful payment or disbursement made under any Letter of Credit as a
result of acts or omissions constituting gross negligence or willful misconduct
on the part of such Issuing Lender or any of its officers, employees or agents.
Further, each Lender agrees to perform its obligations under Section 2.19(c)(iv)
despite the occurrence of the Revolving Credit Termination Date, a Default or an
Event of Default or any inability of Borrower to require such Lender to fulfill
its other obligations hereunder including, without limitation, any inability
resulting from the operation of Bankruptcy Code § 365(c)(2) (11 U.S.C. §
365(c)(2)) or otherwise.
          (d)   Repayment of Participations.
          (i)   Upon and only upon receipt by Agent for the account of the
Issuing Lender of funds from Borrower,
          (A)   in reimbursement of any payment made under a Letter of Credit
with respect to which any Lender has theretofore paid Agent for the account of
the Issuing Lender for such Lender’s participation in the Letter of Credit
pursuant to Section 2.19(c)(iv); or
          (B)   in payment of interest thereon;
Agent will pay to each Lender which has funded its participating interest
therein, in the same funds as those received by Agent for the account of the
Issuing Lender, such Lender’s Revolving Credit Commitment Percentage of such
funds.
          (ii)   If Agent or the Issuing Lender is required at any time to
return to Borrower or to a trustee, receiver, liquidator, custodian or other
similar official any portion of the payments made by Borrower to Agent for the
account of the Issuing Lender pursuant to paragraph (i) in reimbursement of
payment made under the Letter of Credit or interest thereon, each Lender shall,
on demand of Agent, forthwith return to Agent or the Issuing Lender its
Revolving Credit Commitment Percentage of any amounts so returned by Agent or
the Issuing Lender plus interest thereon from the date such demand is made to
but not including the date such amounts are returned by such Lender to Agent or
the Issuing Lender, at a rate per annum equal to the Federal Funds Rate.

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          (e) Role of Issuing Lender. (i) Each Issuing Lender will exercise and
give the same care and attention to any Letter of Credit as it gives to its
other letters of credit and similar obligations.
     (ii) Each Lender participating in a Letter of Credit agrees that, in paying
any drawing under any Letter of Credit, the Issuing Lender shall not have any
responsibility to obtain any document (other than the sight draft and
certificates required by the Letter of Credit) or to ascertain or inquire as to
the validity or accuracy of any such document or the authority of the Person
delivering any such document. Neither the Issuing Lender nor any of its
representatives, officers, employees or agents shall be liable to any Lender
for:
     (A) any action taken or omitted in connection herewith at the request or
with the approval of the Majority Lenders;
     (B) any action taken or omitted in the absence of gross negligence or
willful misconduct; or
     (C) the execution, effectiveness, genuineness, validity or enforceability
of any Letter of Credit or any other document contemplated hereby or thereby.
          (f) Obligations Absolute. The obligations of Borrower under this
Agreement and any other agreements or instrument relating to any Letter of
Credit to reimburse each Issuing Lender shall be unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement and
such other agreement or instrument under all circumstances, including, without
limitation, the following circumstances:
     (A) any lack of validity or enforceability of this Agreement, any Letter of
Credit, or any other agreement or instrument relating thereto (collectively, the
“L/C Related Documents”);
     (B) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of Borrower in respect of any Letter of
Credit or any other amendment or waiver of or any consent to departure from all
or any of the L/C Related Documents;
     (C) the existence of any claim, set-off, defense or other right that
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C Related Documents or any unrelated transaction;
     (D) any statement and other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;

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     (E) any payment by the Issuing Lender under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit;
     (F) any exchange, release or non-perfection of any Collateral, or any
release or amendment or waiver of or consent to departure from any Collateral
Document, for all or any of the obligations of Borrower in respect of any Letter
of Credit;
     (G) the occurrence of the Revolving Credit Termination Date at any time
prior to, on, or after the date the payment or disbursement by the Issuing
Lender giving rise to such reimbursement obligation was made;
     (H) any other circumstance or happening whatsoever, whether or not similar
to any of the foregoing, including, without limitation, any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
Borrower or any Guarantor but excluding any action constituting the Issuing
Lender’s gross negligence or willful misconduct; or
     (I) the occurrence of a Default or an Event of Default.
          (g) Requests Regarding Renewals and Extensions of Renewable Letters of
Credit. The Borrower shall deliver to the Agent and the applicable Issuing
Lender, not earlier than thirty (30) days, and not later than fourteen
(14) days, before notice of non-renewal or non-extension is required under the
Renewable Letters of Credit issued by such Issuing Lender, a written request for
renewal or extension of each Renewable Letter of Credit which the Borrower
desires to renew or extend. Such request shall specify the required date for
notice by the Issuing Lender of non-renewal or non-extension under the Renewable
Letters of Credit and include a certification by the Borrower that as of the
date of such request, no Default or Event of Default shall have occurred and be
continuing and all of the representations and warranties contained in this
Agreement and the Collateral Documents are true and correct in all material
respects, except as to representations and warranties contained in Section 5.09
and which expressly relate to an earlier date and for changes which are
contemplated or permitted by this Agreement. No such request shall be made by
the Borrower which would cause the expiry date of such Renewable Letter of
Credit to extend beyond five Banking Days prior to the Revolving Credit
Termination Date. For purposes of this Section 2.19(g), valid delivery by the
Borrower of the required request shall be deemed to have occurred only upon
actual receipt of such notice by the Agent and the Issuing Lender. If the
Borrower fails to deliver such a notice within such period with respect to such
Renewable Letter of Credit, the Issuing Lender of such Renewable Letter of
Credit shall deliver appropriate notices of non-extension or non-renewal with
respect to such Renewable Letter of Credit.
          (h) Increased Costs. If any change in any requirement of law shall
either (i) impose, modify or deem or make applicable any reserve, special
deposit, assessment or similar requirement against Letters of Credit issued by
any Issuing Lender or against a Lender’s participation in such Letter of Credit
or (ii) impose on any Issuing Lender or any Lender

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participating in such Letter of Credit (a “Participating Lender”) any other
condition regarding this Agreement or any Letter of Credit, and the result of
any event referred to in clause (i) or (ii) above shall be to increase the cost
to such Issuing Lender of issuing or maintaining any Letter of Credit, or to
such Participating Lender of purchasing or maintaining such participating
interest in any Letter of Credit (which increase in cost shall be the result of
such Issuing Lender’s, or Participating Lender’s, as the case may be, reasonable
allocation of the aggregate of such cost increases resulting from such events),
then from time to time following notice by such Issuing Lender (or such
Participating Lender, as the case may be) to the Borrower, the Borrower shall
pay to such Person, as specified by such Person, additional amounts which shall
be sufficient to compensate such Person for such increased cost, together with
interest on each such amount from the date demanded until payment in full
thereof at a rate per annum equal to the Reference Rate plus the Applicable
Margin plus 2% per annum. A certificate submitted by such Issuing Lender or
Participating Lender to the Borrower concurrently with any such demand by such
Person, shall be conclusive, absent manifest error, as to the amount thereof.
          (i) Cash Collateralization. If any Letter of Credit shall remain
outstanding on the date that is five Banking Days prior to the Revolving Credit
Termination Date (for the avoidance of doubt, taking into account any Advance
Maturity Date), the Borrower shall deposit in an account with the Agent, in the
name of the Agent and for the benefit of the Lenders, an amount in cash equal to
105% of the aggregate undrawn amount under all such Letters of Credit as of such
date. The obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind. Such deposit shall be held by the Agent as
collateral for the payment and performance of the obligations of the Borrower
hereunder. The Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which types of investments shall be made at
the option and sole discretion of the Agent and at the Borrower’s risk and
expense, such deposits shall not bear interest. Interest or profits, if any, on
such investments shall accumulate in such account. Moneys in such account shall
be applied by the Agent to reimburse the Issuing Lender for the amount of any
drawing under any such Letter of Credit for which it has not been reimbursed
and, to the extent not so applied, shall be held for the satisfaction of the
reimbursement obligations of the Borrower in respect of drawings under such
Letters of Credit at such time.
ARTICLE III.
SECURITY
          3.01 Security.
          (a) As security for the prompt payment and performance of all Secured
Obligations of Borrower, Borrower has heretofore granted and assigned or shall
grant and assign, in accordance with the provisions of the Collateral Documents
applicable to Borrower, to the Collateral Agent for the benefit of the Secured
Creditors all of its right, title and interest in and to all of the Collateral.
Additionally, all Secured Obligations shall be guaranteed by each Guarantor
under the Guarantee and Collateral Agreement and all Operating Bank Obligations

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shall be guaranteed by each Guarantor under the Operating Bank Guaranty, to the
extent provided therein, and the obligations of the Guarantors under the
Guarantee and Collateral Agreement and the Operating Bank Guaranty shall be
secured pursuant to the terms of the Collateral Documents required to be
executed and delivered by them hereunder. Upon the effective date of the sale of
all of the stock owned by Borrower or any Subsidiary of any Guarantor, upon the
dissolution, liquidation or merger out of existence of any Guarantor in
connection with which dissolution, liquidation, or merger, the separate
existence of the Guarantor terminates, or the effective date of the sale of all
of the assets of any Guarantor, in each case to the extent permitted hereunder,
such Guarantor shall be released from all obligations under the Guarantee and
Collateral Agreement.
          (b) Upon the acquisition of any new property or assets by the Borrower
or any Subsidiary, the Borrower or such Subsidiary at its reasonable expense
shall immediately cause such acquired property or assets to become subject to
Liens and security interests in favor of the Collateral Agent to secure the
Secured Obligations except (i) to the extent that this Agreement and the
Collateral Documents do not require such property or assets to become subject to
such Liens and security interests and (ii) in the case of property consisting of
Capital Stock of a Joint Venture or New Venture, if the pledge of such Capital
Stock is prohibited by customary contractual obligations imposed by other
parties to such Joint Venture or New Venture which have not been waived or made
inapplicable with respect to receipt by the Borrower and its Subsidiaries of
such property (with Borrower hereby agreeing to use reasonable efforts to cause
any such restriction to be waived or made inapplicable). Upon any such
acquisition, such acquired property or assets shall be deemed to constitute
Collateral for all purposes of this Agreement and the Collateral Documents, any
collateral documents executed and delivered by the Borrower or any of its
Subsidiaries to grant the liens and security interests required by this Section
shall be deemed to be Collateral Documents for all purposes of this Agreement
and the other Credit Documents, and any such acquisition of such property or
assets shall be deemed a representation and warranty that, as of the date of
such acquisition, all representations and warranties contained in this Agreement
and the Collateral Documents applicable to such Collateral are true and correct
in all material respects.
          3.02 Collateral Documents. The Borrower and the Guarantors have
heretofore executed and delivered or will execute and deliver to the Collateral
Agent certain Collateral Documents, and the Borrower shall execute and deliver
to the Collateral Agent for the benefit of the Secured Creditors (and shall
cause each Guarantor to so execute and deliver) all such further Collateral
Documents and such other collateral documents as may be reasonably requested by
the Collateral Agent in order to perfect and protect Collateral Agent’s security
interest in the Collateral granted pursuant to the Collateral Documents, all in
form and substance reasonably acceptable to the Collateral Agent.
          3.03 Priority of Security Interest. The lien and security interest of
the Collateral Agent in the Collateral shall, to the extent permissible by
applicable law, at all times, be and continue to be a first lien in all
jurisdictions, whether state, federal or foreign, subject to no other Lien of
any kind (except Permitted Liens).
          3.04 New Guarantors. Borrower shall cause each Domestic Subsidiary
which is hereafter created or acquired (but in any event excluding
(i) Unrestricted Subsidiaries, (ii)

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Lincoln Indemnity Company, and (iii) any Subsidiary acquired after the Closing
Date to the extent such Subsidiary is not required to provide a security
interest in its assets or cause its capital stock to be pledged pursuant to
Section 7.01(e)) to promptly execute and deliver a supplement or addendum to
each of the Guarantee and Collateral Agreement and the Operating Bank Guaranty,
in form and substance reasonably satisfactory to the Collateral Agent, pursuant
to which such Subsidiary shall become a party to such agreements as a Grantor
(as defined in the Guarantee and Collateral Agreement) and guarantor, together
with such Collateral Documents and other documents, instruments and opinions
reasonably requested by Agent or the Collateral Agent in order to perfect and
protect the Collateral Agent’s security interest in the Collateral granted
pursuant to such Collateral Documents, all in form and substance reasonably
satisfactory to Agent and the Collateral Agent.
          3.05 Real Property Matters. (a) As security for the Secured
Obligations, the Collateral Agent shall have received, with respect to each
parcel of real property listed on Schedule 3.05 (the “Existing Mortgage
Collateral Properties”), (i) a Mortgage Amendment, executed and delivered by a
duly authorized officer of each party thereto; (ii) an endorsement to each of
the existing title insurance policies updating the effective date and amending
the description of the existing insured mortgage to include the Mortgage
Amendment; and (iii) a no-lien affidavit executed by the president or other
officer of each respective mortgagor, in form satisfactory to the title company.
          (b) As additional security for the Secured Obligations, Borrower
agrees that in the event Borrower or any Guarantor acquires any real property,
then, from time to time, upon request of the Agent, Borrower shall, or shall
cause such Guarantor to, execute, deliver and record any new mortgages, deeds of
trust and similar instruments, or amendments to any existing mortgages, deeds of
trust and similar instruments (collectively, such existing and new instruments
are called the “Real Property Security Documents”) encumbering such owned
property, which Real Property Security Documents shall be substantially in the
same form as the Real Property Security Documents provided on and/or in effect
as of the date hereof. In connection with such hereafter owned or otherwise
acquired real property, Borrower agrees to provide, or cause the applicable
Guarantor to provide, to the Collateral Agent (a) surveys of said real property
in the form described in Section 4.01(o) of the Existing Credit Agreement (as in
effect prior to its amendment and restatement as of October 14, 2004) and
(b) mortgagee title insurance policies in the form and amount described in
Section 4.01(p) of the Existing Credit Agreement (as in effect prior to its
amendment and restatement as of October 14, 2004) covering said real property.
          (c) As additional security for the Secured Obligations, Borrower
agrees that if Borrower or any Guarantor acquires any leasehold interest as
lessee, it shall promptly following such acquisition notify the Agent thereof
and, from time to time, upon request of Agent, Borrower shall, or shall cause
such Guarantor to, execute, deliver and record any new mortgages, deeds of or
trust or similar instruments, or amendments to any existing mortgages, deeds of
trust and similar instruments encumbering such leasehold interest, which
documents shall be substantially similar to the Real Property Security
Documents, in order to create a leasehold mortgage on such leasehold interest.
Notwithstanding the foregoing, the Borrower shall not be required to take any
action described in the preceding sentence to the extent taking such action
(i) violates the applicable lease, (ii) requires the consent of another party to
such lease or (iii) if a

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recorded memorandum with respect to such lease has not been filed in the
relevant real property recording offices. The actions required by this paragraph
with respect to (i) any leasehold interest existing on the Closing Date shall be
completed no later than 60 days after the Closing Date and (ii) any leasehold
interest acquired after the Closing Date shall be completed no later than
60 days of the request for such leasehold mortgage by the Agent in accordance
with the foregoing terms.
          3.06 Exceptions. Notwithstanding the foregoing, the Borrower and its
Subsidiaries shall not be required to (a) execute and deliver Real Property
Security Documents with respect to real property acquired after the Closing Date
that is subject to liens permitted by clause (iv) of the definition of
“Permitted Liens”, or (b) cause any Subsidiary to provide a security interest in
its assets or cause its Capital Stock to be pledged to the extent not required
pursuant to Section 7.01(e).
          3.07 Pledge of Capital Stock. Without limitation of the foregoing, the
Borrower and its Subsidiaries will pledge (a) the Capital Stock, limited
liability interests, or partnership interests, of any entity acquired after the
Closing Date, subject to the provisions of Section 3.06 and (b) all Capital
Stock of each Unrestricted Subsidiary which is owned by any Credit Party to be
pledged as Collateral pursuant to the Collateral Documents. Within seven
(7) Business Days of the Closing Date, or such later date as the Agent may agree
in its reasonable discretion, the Borrower shall provide the stock certificate
or certificates and corresponding stock power or stock powers, each endorsed in
blank, for BTF Europe Corporation to the Collateral Agent; provided, that the
Collateral Agent shall have delivered to the Borrower a loss affidavit,
consistent in form and substance with past practice, in respect of any stock
certificate for BTF Europe Corporation previously delivered to it.
          3.08 Collateral Agency Agreement. Each Lender authorizes and instructs
the Agent and the Collateral Agent to execute and deliver the Collateral Agency
Agreement on behalf of such Lender. Each Lender agrees to be bound by and
perform the obligations set forth for such Lender in the Collateral Agency
Agreement. Each Lender acknowledges and agrees that pursuant to the Collateral
Agency Agreement the Secured Obligations are secured by the Collateral under the
Collateral Documents an a pari passu basis. Each Lender acknowledges that the
Collateral Agent is acting on behalf of the Lenders (and their Affiliates), the
Issuing Lenders, the Agent and the Operating Banks.
          3.09 Amendments of Collateral Documents. The Lenders acknowledge that
certain of the Collateral Documents delivered under the Existing Credit
Agreement are being amended, or amended and restated, in order to secure all
Delayed-Draw Term Advances and the other Secured Obligations and to reflect the
amendment and restatement of the Existing Credit Agreement by this Agreement.

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ARTICLE IV.
CONDITIONS PRECEDENT
          4.01 Conditions Precedent to Closing Date. This Agreement shall become
effective as of the Closing Date, subject to the conditions precedent that on or
prior to the Closing Date (subject to the additional time allotted in
Section 6.16 for certain of such conditions to be satisfied):
          (a) Opinions of Counsel to Borrower, etc. There shall have been
delivered to Agent, in form and substance satisfactory to Agent and its counsel,
an opinion, dated the Closing Date, of (i) Kirkland & Ellis LLP, special counsel
for the Borrower and the Guarantors, substantially in the form of Exhibit I
hereto and (ii) subject to Section 6.16, upon the Agent’s reasonable request,
counsel(s) to the Borrower and the Guarantors in certain jurisdictions in which
Existing Mortgage Collateral Properties are located;
          (b) Other Opinions. There shall have been delivered to Agent, in form
and substance satisfactory to Agent and its counsel, an opinion, dated the
Closing Date, of Marc Bassewitz, Esq., or other acceptable in-house counsel,
substantially in the form of Exhibit J hereto;
          (c) Borrower’s Incorporation Papers. There shall have been delivered
to Agent, in form and substance reasonably satisfactory to Agent and its
counsel, a copy of Borrower’s certificate of incorporation, certified by the
Secretary of State of Delaware, as of a recent date, and a copy of the
Borrower’s by-laws, certified by the Secretary or an Assistant Secretary of
Borrower;
          (d) Borrower’s Corporate Resolution. There shall have been delivered
to Agent, in form and substance reasonably satisfactory to Agent and its
counsel, a copy of a resolution or resolutions passed by the Board of Directors
of Borrower, certified by the Secretary or an Assistant Secretary of Borrower as
being in full force and effect on the Closing Date, authorizing the borrowing
provided for herein and the execution, delivery and performance of this
Agreement, the Notes, the Collateral Documents to which it is a party and any
other instrument or agreement required hereunder;
          (e) Borrower’s Incumbency Certificate. There shall have been delivered
to Agent, in form and substance reasonably satisfactory to Agent and its
counsel, a certificate, signed by the Secretary or an Assistant Secretary of
Borrower and dated the Closing Date, as to the incumbency, and containing the
specimen signature or signatures (not photocopied), of the person or persons
authorized to execute and deliver this Agreement, the Notes, the Collateral
Documents to which it is a party and any other instrument or agreement required
hereunder on behalf of Borrower;
          (f) Guarantors’ Incorporation Papers. There shall have been delivered
to Agent, in form and substance reasonably satisfactory to Agent and its
counsel, with respect to each Guarantor which has not previously delivered such
documents to Agent, a copy of each such Guarantor’s certificate of incorporation
or articles of association and by-laws or partnership

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agreement, as the case may be, certified by the Secretary or an Assistant
Secretary of such Guarantor;
          (g) Guarantors’ Resolutions. There shall have been delivered to Agent,
with respect to each Guarantor which has not previously delivered such documents
to Agent, in form and substance reasonably satisfactory to Agent and its
counsel, a copy of a resolution or resolutions passed by the Board of Directors
(or similar body) of each Guarantor (or, with respect to a Guarantor which is a
partnership, of such Guarantor’s general partner), certified by the Secretary or
an Assistant Secretary of such Guarantor (or general partner) as being in full
force and effect on the Closing Date, authorizing the execution, delivery and
performance of the Collateral Documents to which it is a party;
          (h) Guarantors’ Incumbency Certificates. There shall have been
delivered to Agent, with respect to each Guarantor which has not previously
delivered such documents to Agent, in form and substance reasonably satisfactory
to Agent and its counsel, a certificate, signed by the Secretary or an Assistant
Secretary of each Guarantor (or, with respect to a Guarantor which is a
partnership, of such Guarantor’s general partner) and dated the Closing Date, as
to the incumbency, and containing the specimen signature or signatures (not
photocopied), of the person or persons authorized to execute and deliver the
Collateral Documents to which it is a party on behalf of such Guarantor (or on
behalf of such general partner for such Guarantor);
          (i) Approvals and Consents. There shall have been delivered to Agent,
in form and substance reasonably satisfactory to Agent and its counsel,
certified copies of all material approvals, consents, exemptions and other
actions by, and notices to and filings with, any governmental authority or any
other Person and any trustee or holder of any indebtedness or obligation of
Borrower or of any Guarantor which are required in connection with any
transaction contemplated hereby (other than landlords under leases and first
mortgage holders constituting Permitted Liens, but subject to Section 6.16), all
of which shall be in full force and effect;
          (j) Agreement. There shall have been delivered to Agent, in form and
substance satisfactory to Agent and its counsel, sufficient counterparts of this
Agreement, duly executed by an authorized officer of Borrower;
          (k) Reallocations. The Lenders shall have made such payments as are
directed by the Agent so that, after giving effect thereto, the Advances are
held by the Lenders based on their respective applicable Commitment Percentages.
To the extent invoiced to the Borrower, the Borrower shall have paid all
interest, fees and commissions accrued under the Existing Credit Agreement
through the Closing Date.
          (l) Collateral Documents. There shall have been delivered to Agent, in
form and substance reasonably satisfactory to Agent and its counsel, a
reaffirmation of (i) the Guarantee and Collateral Agreement, and (ii) the other
Collateral Documents, executed by a duly authorized officer of each of the
Borrower and the Guarantors party to such Collateral Documents. In addition, the
Collateral Agent shall have received the documents described in Section 3.05
(subject to the additional time allotted in Section 6.16);

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          (m) Pledge of Shares. The Collateral Agent shall have received (x)
(i) subject to the second sentence of Section 3.07, the certificates
representing the certificated shares of each of the Guarantors listed on
Exhibit D hereto and each first-tier Subsidiary of such Guarantors, in each case
to the extent owned by a Credit Party, and (ii) the certificates representing
65% of the certificated shares of the Foreign Subsidiaries owned directly by the
Borrower or a Guarantor, which certificates are to be pledged pursuant to the
Guarantee and Collateral Agreement, together with (y) an undated stock power for
each such certificate executed in blank by a duly authorized officer of the
pledgor thereof;
          (n) No Litigation. No litigation, inquiry, injunction or restraining
order shall be pending, entered or threatened (including any proposed statute,
rule or regulation) which, in the reasonable opinion of the Majority Lenders,
could have a Material Adverse Effect;
          (o) [Reserved];
          (p) Filings. Subject to Section 6.16, any filings and other actions
required to create, perfect and preserve the priority of the appropriate
security interests in all Collateral (including, without limitation, the filing
of duly executed financing statements on Form UCC-1 in the jurisdictions set
forth in Schedule 3 to the Guarantee and Collateral Agreement and in any other
jurisdiction, in the opinion of the Agent, necessary to perfect the Liens on the
Collateral) shall have been authorized by the Borrower or the applicable
Guarantor (or, in the case of UCC-1s, delivered in proper form for filing), and
all Collateral shall be free and clear of other liens other than Permitted
Liens;
          (q) Good Standing Certificates. There shall have been delivered to
Agent, in form and substance reasonably satisfactory to Agent, good standing
certificates (or bring-down telexes or other evidence of good standing) for
Borrower and for each Guarantor from the Secretary of State of the state of
incorporation of each such Person and good standing certificates (or similar
authorization to conduct business as a foreign corporation) for Borrower and
each Guarantor from the Secretary of State of each state with respect to which
Borrower makes the representations contained in Sections 5.01 and 5.02 hereof;
          (r) Payment of Fees and Expenses. The Agent shall have received, for
the account of the Lenders and for its own account, payment by Borrower of all
fees and expenses (including reasonable legal fees and expenses) required to be
paid hereunder, including without limitation, under Section 9.06, to the extent
invoices therefor have been presented to Borrower prior to the Closing Date;
          (s) Officer’s Certificate. There shall have been delivered to Agent,
in form and substance satisfactory to Agent and its counsel, a certificate
signed by a Senior Vice President of Borrower, dated as of the Closing Date,
certifying that:
     (i) the representations and warranties contained in Article V and in each
Collateral Document are true and correct in all material respects on and as of
such date, as though made on and as of such date;

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     (ii) no event has occurred and is continuing, or would result from the
transactions provided for herein, which has or would constitute an Event of
Default; and
     (iii) there has occurred since October 3, 2006, no development, event or
circumstance which has had or is reasonably likely to have a Material Adverse
Effect;
          (t) Insurance Policies. There shall have been delivered to the Agent a
certificate evidencing the Borrower’s and its Subsidiaries’ insurance coverage
in form and substance reasonably satisfactory to the Agent;
          (u) Projections. The Borrower shall have delivered to the Lenders a
financial forecast, including income statements, balance sheets and cash flow
statements through its fiscal year ending December 31, 2010, in form and
substance reasonably satisfactory to the Agent;
          (v) Senior Debt. The Chief Financial Officer of the Borrower shall
have delivered to the Agent a certificate demonstrating in reasonable detail
that the Borrower and the other Credit Parties have the ability (i) under the
1997 Indenture and the 1998 Indenture to incur the Secured Obligations and that
the Secured Obligations constitute Senior Indebtedness (as defined in the 1997
Indenture and the 1998 Indenture) and (ii) under the Senior Unsecured Notes
Indenture to incur the Secured Obligations and to create Liens on the Collateral
therefor; and
          (w) Other Evidence Agent May Require. There shall have been delivered
to Agent, in form and substance satisfactory to Agent and its counsel, such
other evidence or documents as Agent may reasonably request consistent with the
other terms of this Agreement to establish the consummation of the transactions
contemplated hereby, the taking of all proceedings in connection herewith and
compliance with the conditions set forth in this Agreement.
          4.02 Conditions Precedent to Each Advance and Letter of Credit. The
obligation of each Lender to make any Advance or to issue any Letter of Credit
(or to renew or extend any Letter of Credit) hereunder is subject to the
following conditions precedent:
     (a) No Default or Event of Default has occurred and is continuing on the
date of each Advance or the date of issuance (or the date of renewal or
extension, as the case may be) of each Letter of Credit or would result from the
incurring of obligations by Borrower under this Agreement;
     (b) The representations and warranties contained herein, in the Collateral
Documents and in any guaranty hereafter executed and delivered by a new
Guarantor pursuant to Section 3.04, shall be true and correct in all material
respects on the date of each Advance or the date of issuance (or the date of
renewal or extension, as the case may be) of each Letter of Credit, except as to
representations and warranties which expressly relate to an earlier date and
except for changes which are expressly permitted by this Agreement;

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     (c) There has occurred since the Closing Date, no event, development or
circumstance which has had or is reasonably likely to have a Material Adverse
Effect, and
     (d) with respect to any Delayed-Draw Term Advance, the proceeds of such
Delayed-Draw Term Advance will only be used for purposes described in clause
(vii) of the definition of “Permitted Indebtedness” under the “Subordinated
Notes Indenture.”
Each borrowing by or credit extension to Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of each such borrowing or
credit extension that the conditions in Section 4.02 have been satisfied.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
          Borrower represents and warrants to each Lender that:
          5.01 Borrower’s Existence. Borrower is a corporation duly organized
and validly existing under the laws of the State of Delaware, and is in good
standing and properly licensed to conduct business in every jurisdiction in
which the nature of the business conducted by it makes such license and good
standing necessary and where failure to so comply would have a Material Adverse
Effect.
          5.02 Subsidiaries’ Existence. Each Substantial Subsidiary is duly
organized and validly existing under the laws of the jurisdiction of its
formation, and is in good standing and properly licensed to conduct business in
the State in which its principal operations are located and in every
jurisdiction in which the nature of the business conducted by it makes such
compliance necessary and where failure to comply would have a Material Adverse
Effect. Each Guarantor which is not a Substantial Subsidiary is duly organized
and validly existing under the laws of the jurisdiction of its formation and is
in good standing and properly licensed to conduct business in the State in which
its principal operations are located and in every jurisdiction in which the
nature of the business conducted by it makes such compliance necessary except
where failure to comply with any of the foregoing could not reasonably be
expected to have a Material Adverse Effect.
          5.03 Borrower’s and Subsidiaries’ Powers. The execution, delivery and
performance of this Agreement, the Notes, the other Credit Documents and any
other instrument or agreement required to be executed and delivered by Borrower
hereunder or any of its Subsidiaries are within Borrower’s or such Subsidiary’s
corporate or other appropriate powers, have been duly authorized, and are not in
conflict with the terms of any charter, by-law or other organization papers of
Borrower or such Subsidiary, or any material instrument or agreement to which
Borrower or any Subsidiary is a party or by which Borrower or any Subsidiary is
bound or affected (including, but not limited to, the 1997 Indenture, the 1998
Indenture and the Senior Unsecured Notes Indenture).

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          5.04 Power of Officers. The officers of Borrower and the other Credit
Parties executing this Agreement, the Notes, the other Credit Documents and any
other certificate, instrument or agreement required to be delivered hereunder
are duly authorized to execute same.
          5.05 Government Approvals. No approval, consent, exemption or other
action by, or notice to or filing with, any governmental authority is necessary
in connection with the execution, delivery, performance or enforcement of this
Agreement, the Notes, the other Credit Documents or any other instrument or
agreement required hereunder, except as may have been obtained and certified
copies of which have been delivered to Agent, and consents, authorizations,
filings and notices obtained or made in the ordinary course of business or
except where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
          5.06 Compliance With Laws. There is no law, rule or regulation, nor is
there any judgment, decree or order of any court or governmental authority
binding on Borrower or any Subsidiary, which would be contravened by the
execution, delivery, performance or enforcement of this Agreement, the Notes,
the other Credit Documents or any instrument or agreement required hereunder,
except where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
          5.07 Enforceability of Agreement. Each of this Agreement, the Notes
and each of the other Credit Documents to which the Borrower or any of its
Subsidiaries is a party are legal, valid and binding agreements and obligations
of Borrower, or such Subsidiary, as the case may be, enforceable against
Borrower or such Subsidiary, as the case may be, in accordance with their
respective terms, and any other instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and enforceable,
subject, in each case, to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally and general equitable principles (whether
considered in a proceeding in equity or at law).
          5.08 Title to Property. Borrower and its Subsidiaries have good title
to their respective personal properties and assets, and good and marketable
title to their respective real properties, free and clear of all Liens, except
for Permitted Liens on such properties and assets. The execution, delivery or
performance of this Agreement, the Notes, the other Credit Documents or any
instrument or agreement required hereunder will not result in the creation of
any Lien, other than in favor of the Secured Creditors pursuant to the
Collateral Documents.
          5.09 Litigation. Except as disclosed on Schedule 5.09, there are no
suits, proceedings, claims or disputes pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or any Subsidiary or their respective
property, which could reasonably be expected to have a Material Adverse Effect.
          5.10 Events of Default. No event has occurred and is continuing or
would result from the incurring of obligations by Borrower or its Subsidiaries
under this Agreement and the other Credit Documents which is a Default or an
Event of Default.

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          5.11 Compliance with Margin Requirements. Borrower is not in violation
of any provision of Section 7 of the Securities Exchange Act of 1934 or any
Margin Regulation, nor will Borrower’s activities cause it to violate such
provision or any Margin Regulation.
          5.12 Subsidiaries. All of Borrower’s Subsidiaries are listed on
Exhibit D hereto or on an amendment thereto delivered pursuant to
Section 6.03(d) hereof.
          5.13 Financial Information. The audited consolidated financial
statements of Borrower and its Subsidiaries for the fiscal year ending
December 31, 2005 and the unaudited consolidated financial statements of the
Borrower and its subsidiaries for the fiscal quarter ending June 30, 2006 have
been furnished by Borrower to Lenders. Such financial statements have been
prepared in accordance with GAAP and practices consistently applied and
accurately and fairly present in all material respects the consolidated
financial condition and results of operations of the entities referred to
therein as of such dates. Since October 3, 2006, there has been no change in
Borrower’s consolidated financial condition or results of operations sufficient
to impair Borrower’s ability to repay the Obligations in accordance with the
terms hereof. Neither Borrower nor any Subsidiary has any contingent
obligations, liabilities for taxes or other outstanding financial obligations
which are material in the aggregate, except those for which adequate reserves
are established or as disclosed in such statements or in the statements or
reports delivered or to be delivered for the period in which such obligations
were incurred pursuant to Section 6.03.
          5.14 ERISA. Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and any other applicable federal or
state law, and except as listed on Schedule 5.14 no event or condition is
occurring nor is there any present intent to cause any such event or condition
to occur with respect to any Plan or Multiemployer Plan with respect to which
Borrower would be under an obligation to furnish a report to Lenders in
accordance with Section 6.02(d) hereof and which, taking all such events or
conditions arising within the last twelve-month period, in the aggregate would
result in liability to Borrower or an ERISA Affiliate in excess of One Million
Dollars ($1,000,000). For purposes of this representation and warranty,
Borrower, or any ERISA Affiliate if not the Plan administrator, shall be deemed
to have knowledge of all facts attributable to the Plan administrator designated
pursuant to ERISA; provided, however, that the foregoing representation with
respect to Multiemployer Plans is made with respect to matters of which Borrower
or any ERISA Affiliate has actual knowledge. The aggregate withdrawal liability
under Section 4201 of ERISA which could be incurred by Borrower and each ERISA
Affiliate, collectively, upon a complete withdrawal, within the meaning of
Section 4203 of ERISA, from each and all Multiemployer Plans to which each is
contributing or has contributed within the past five calendar years, plus the
aggregate of the excess of benefit liabilities, within the meaning of
Section 4001(a)(16) of ERISA, of each Plan upon termination of such Plan over
the assets of such Plan, does not exceed Five Million Dollars ($5,000,000).
          5.15 Investment Company Act of 1940. Neither Borrower nor any of its
Subsidiaries is an “investment company” or a company “controlled” by an
“investment company”, within the meaning of the Investment Company Act of 1940,
as amended.

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          5.16 No Restrictions on Subsidiaries. No Subsidiary is prohibited by
the terms of any agreement to which it is a party or by which it is bound or
affected from paying dividends to or making loans or advances to Borrower or any
Subsidiary directly controlling it, except (a) as disclosed in Schedule 5.16;
(b) restrictions imposed by this Agreement or any Collateral Agreement;
(c) customary non-assignment provisions restricting subletting or assignment of
any lease or assignment of any contract of any Subsidiary; customary net worth
provisions contained in leases and other agreements entered into by a Subsidiary
in the ordinary course of business; and customary provisions in instruments or
agreements relating to a Lien created, incurred or assumed in accordance with
this Agreement prohibiting the transfer of the property subject to such Lien, in
each case in existence on the Closing Date; (d) restrictions on Debt secured by
any Permitted Lien limiting the right of such Subsidiaries to dispose of the
assets securing such Debt to the extent that the agreement governing such Debt
prohibits the transfer of such assets as a Restricted Payment; (e) customary
restrictions with respect to a Subsidiary pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
capital stock or assets of such Subsidiary; and (f) any restrictions pursuant to
any agreement that extends, refinances, renews or replaces any agreement
containing any of the restrictions described in the foregoing clauses
(a) through (e), provided that the terms and conditions of any such restrictions
are not less favorable to the Lenders than those under or pursuant to the
agreement extended, refinanced, renewed or replaced.
          5.17 Senior Indebtedness. The Borrower agrees that at all times the
Secured Obligations will constitute Senior Indebtedness and Designated Senior
Indebtedness under the Subordinated Notes Indenture.
          5.18 Environmental Matters. As of the Closing Date:
          (a) except as disclosed on Schedule 5.18, the property, assets and
operations of Borrower and the Subsidiaries comply in all material respects with
all applicable Hazardous Materials Laws and all governmental permits required
thereunder relating to the use and/or operation thereof (except to the extent
that failure to comply with such Hazardous Materials Laws or applicable permits
would not reasonably be expected to have a Material Adverse Effect;
          (b) to the knowledge of Borrower, (i) none of the real property owned
in fee, or the assets or operations of Borrower and the Subsidiaries related
thereto is the subject of federal or state investigation mandating any remedial
action, involving expenditures, which is needed to respond to a release of any
Hazardous Materials into the environment where such expenditures would
reasonably be expected to have a Material Adverse Effect, (ii) there are no
underground storage tanks present on or under the Properties owned in fee the
presence of which would reasonably be expected to have a Material Adverse
Effect, and (iii) there are no pending or threatened: (A) actions or proceedings
from any governmental agency or any other person or entity regarding the
disposal of Hazardous Materials, or regarding any Hazardous Materials Laws or
evaluation, or (B) liens or governmental actions, notices of violations, notices
of noncompliance or other proceedings of any kind relating to any of the
Hazardous Materials Laws with respect to the Properties where such actions,
proceedings or liens would reasonably be expected to have a Material Adverse
Effect; and

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          (c)   neither Borrower nor any Subsidiary has any material liability
(material to the Borrower and its Subsidiaries taken as a whole) in connection
with any release of any Hazardous Materials into the environment.
          5.19   Collateral Documents. (a)  The provisions of each of the
Collateral Documents (other than the Mortgages, subject to (b) below, and the
collateral assignments of tenant’s rights in leases) are effective to create in
favor of the Collateral Agent, for the benefit of the Secured Creditors, a
legal, valid and enforceable security interest in all right, title and interest
of Borrower and its Subsidiaries in the Collateral described therein; and
financing statements have been filed (or, in the case of UCC-1 financing
statements delivered on the Closing Date, delivered in the proper form for
filing) in the offices in all of the jurisdictions listed in the schedules to
the Guarantee and Collateral Agreement.
          (b)   Each Mortgage when delivered will be effective to grant to the
Collateral Agent for the benefit of the Secured Creditors, a legal, valid and
enforceable mortgage lien on all the right, title and interest of the mortgagor
under such Mortgage in the real property and fixtures described therein. When
each such Mortgage is duly recorded in the appropriate land records offices and
the mortgage recording fees and taxes in respect thereof are paid and compliance
is otherwise had with the formal requirements of state law applicable to the
recording of real estate mortgages generally, each such Mortgage shall
constitute a perfected first priority mortgage lien on such mortgaged property,
subject to the encumbrances and exceptions to title set forth therein and except
as noted in the title policies and title endorsements thereto delivered to the
Collateral Agent, and such Mortgage also creates a legal, valid, enforceable and
perfected first lien on, and security interest in, all right, title and interest
of Borrower or such Subsidiary under such Mortgage in all fixtures which are
covered by such Mortgage, subject to no other Liens, except the encumbrances and
exceptions to title set forth therein and except as noted in the title policies
and title endorsements thereto delivered to the Collateral Agent and Permitted
Liens.
          (c)   The provisions of the Guarantee and Collateral Agreement, after
giving effect to the filing of UCC-1 financing statements in the offices set
forth on the schedules to the Guarantee and Collateral Agreement and completion
of the filings and other actions described in Schedule 3 to the Guarantee and
Collateral Agreement, shall be effective to create, in favor of the Collateral
Agent, for the ratable benefit of the Secured Creditors, a fully perfected first
Lien on, and security interest in, all right, title and interest of Borrower and
the Guarantors in the “Collateral”, as defined in the Guarantee and Collateral
Agreement (except for Permitted Liens).
          5.20   Copyrights, Patents, Trademarks and Licenses, etc. Except as
disclosed in Schedule 5.20, Borrower and its Subsidiaries own or are licensed or
otherwise have the right to use all of the Intellectual Property that is
reasonably necessary for the operations of their respective businesses as
currently conducted, without material conflict with the rights of any other
Person with respect thereto, except where the failure to be in compliance with
this sentence would not have a Material Adverse Effect. To the best knowledge of
Borrower, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed by Borrower or any of its Subsidiaries infringes upon any rights
obtained by any other Person, except where the failure to be in compliance with
this sentence would not have a Material Adverse Effect, and no claim or
litigation regarding any of the foregoing is pending or threatened.

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          5.21   Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Credit Document, the “private”
Confidential Information Memorandum dated October 2006 or any other document.
certificate or statement (other than Schedule 1.01 until such time Schedule 1.01
shall have been updated pursuant to Section 6.16) furnished by or on behalf of
any Credit Party to the Agent or the Lenders, or any of them, for use in
connection with the transactions contemplated by this Agreement or the other
Credit Documents, contained as of the date such statement, information, document
or certificate was so furnished (or, in the case of the Confidential Information
Memorandum, as of the date of this Agreement), any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements contained herein or therein (taken as a whole and as of the date
furnished) not materially misleading in light of the circumstances under which
such statements are made. The projections and pro forma financial information
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact, no assurances are given
that such projections will be attained and that actual results during the period
or periods covered by such financial information may differ from the projected
results set forth therein by a material amount.
          5.22   Permitted Indebtedness. All Indebtedness (as defined in the
Senior Unsecured Notes Indenture) outstanding in respect of the Secured
Obligations is and will be permitted by Sections 1.1 and 10.8 of the Senior
Unsecured Notes Indenture. All Secured Obligations are and will be permitted
under the Senior Unsecured Notes Indenture. All Liens on the Collateral are and
will be permitted by Sections 1.1 and 10.11 of the Senior Unsecured Notes
Indenture.
ARTICLE VI.
AFFIRMATIVE COVENANTS
          Borrower covenants and agrees that so long as the Credit shall remain
available, and until the full and final payment of all Obligations (other than
contingent indemnification obligations for which no claim has been asserted), it
will, and with respect to Sections 6.01, 6.04, 6.05, 6.06, 6.07, 6.08, 6.09,
6.10, 6.11, 6.14, 6.15, 6.16 and 6.17, it will cause each Subsidiary to, unless
Majority Lenders waive compliance in writing:
          6.01   Use of Proceeds and Letters of Credit. Use (a) the proceeds of
the Revolving Advances solely (i) to refinance and continue indebtedness under
the Existing Credit Agreement, (ii) for general corporate purposes, including to
finance expansions and investments permitted hereunder and (iii) for working
capital purposes in the ordinary course of business; (b) the Letters of Credit
(i) to provide security as required under applicable state consumer protection
statutes and for utility deposits, (ii) to provide credit support for insurance,
construction bonds, rent deposits and utility bonds, (iii) to secure the payment
of workers’ compensation benefits and obligations, (iv) for the purposes
described in clause (ii) of the definition of “Permitted Liens” and to provide
credit support for the obligations described therein, and (v) for the general
corporate purposes of the Borrower and its Subsidiaries in the

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ordinary course of business; (c) the proceeds of the Tranche B Term Advances in
the following order of priority: (i) first, subject to Section 2.03(a), to
refinance all Term Advances outstanding under the Existing Credit Agreement,
(ii) second, to refinance all Revolving Advances outstanding under the Existing
Credit Agreement, (iii) third, to pay fees and expenses related to the
foregoing, (iv) fourth, for general corporate purposes, including to finance
expansions and investments permitted hereunder and (v) fifth, for working
capital purposes in the ordinary course of business; and (d) the proceeds of the
Delayed-Draw Term Advances solely to finance or refinance the purchase price or
cost of construction or improvement of certain capital expenditures, including
the acquisition, improvement or development of real or personal, movable or
immovable property of the Borrower or any of its Restricted Subsidiaries after
the Closing Date. For purposes of this Section 6.01, a “hostile takeover” of
another entity or a “tender offer” in furtherance of same is not a proper
purpose.
          6.02   Notices. Promptly, but within five (5) Banking Days, unless
otherwise provided below, give written notice to Agent of:
     (a)   except for matters previously disclosed on Schedule 5.09,
Schedule 6.02(a), and the Public Filings (unless there is a significant
development with respect to these matters), any litigation affecting Borrower or
any Subsidiary, the adverse determination of which could materially and
adversely affect the financial condition or business of Borrower and its
Subsidiaries taken as a whole, or where the amount Borrower or such Subsidiary
expects to pay the other parties to the litigation is more than Five Million
Dollars ($5,000,000) except to the extent covered by written, legally
enforceable third party insurance or other indemnity;
     (b)   (i) any dispute which may exist between Borrower or any Subsidiary
and any governmental regulatory body or law enforcement authority which has not
been previously disclosed and could reasonably be expected to have a Material
Adverse Effect, and (ii) any lien for taxes (other than taxes unless such taxes
are due), assessments, governmental charges, or levies, in each case in excess
of One Million Dollars ($1,000,000), immediately upon the filing thereof or the
attachment thereof to any property of Borrower or any of its Subsidiaries;
     (c)   any labor controversy resulting in or reasonably likely to result in
a strike against Borrower or any Subsidiary which could reasonably be expected
to have a Material Adverse Effect;
     (d)   the occurrence of a Reportable Event with respect to any Plan which
could result in the incurrence by Borrower or any ERISA Affiliate of any
liability, fine or penalty; the institution of any steps to terminate any Plan
(together with copies of any communication between the PBGC and Borrower or any
ERISA Affiliate related to such termination); the institution of any steps to
withdraw from any Plan, within the meaning of Section 4062(e) or 4063 of ERISA,
or any Multiemployer Plan, within the meaning of Section 4203 or 4205 of ERISA;
the incurrence of any material increase in the contingent liability of Borrower
or any ERISA Affiliate with respect to any post-retirement welfare benefits; the
failure of Borrower or any other Person to make a required contribution to a
Plan if such failure is sufficient to give rise to a lien under Section 302(f)
of ERISA; or

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the adoption of an amendment to any Plan that pursuant to Section 401(a)(29) of
the Code or Section 307 of ERISA would require Borrower or an ERISA Affiliate to
provide security to the Plan in accordance with the provisions of such Sections;
     (e)   any Default or Event of Default, specifying the nature and the period
of existence thereof and what action Borrower has taken or proposes to take with
respect thereto;
     (f)   upon, but in no event later than thirty (30) days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against Borrower or any
Subsidiary or any of their properties pursuant to any applicable Hazardous
Materials Laws which has the reasonable likelihood of subjecting Borrower or any
Subsidiary to environmental liability of Five Million Dollars ($5,000,000) or
more (to the extent not covered by written, legally enforceable third party
insurance or other indemnity), (ii) all claims made or threatened by any third
party against Borrower or any Subsidiary with respect to or because of its or
their property relating to damage, responsibility, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials which has
the reasonable likelihood of subjecting Borrower or any Subsidiary to
environmental liability of Five Million Dollars ($5,000,000) or more (to the
extent not covered by written, legally enforceable third party insurance or
other indemnity) (the matters set forth in clauses (i) and (ii) above are
hereinafter referred to as “Hazardous Materials Claims”), and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the property of Borrower or any Subsidiary that could reasonably be
anticipated to cause the property owned by Borrower or any Subsidiary or any
part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Hazardous Materials Laws which
has the reasonable likelihood of subjecting Borrower or any Subsidiary to
liability of Five Million Dollars ($5,000,000) or more (to the extent not
covered by written, legally enforceable third party insurance or other
indemnity), together with copies of all inquiries, reports or notices relating
to the matters set forth in clauses (i), (ii) and (iii);
     (g)   following receipt by Borrower of a material notice from any holder or
representative of Subordinated Debt or any Senior Unsecured Notes, a copy of
such notice and, concurrently with the sending of any notice by Borrower to the
holder or representative of any Subordinated Debt or any Senior Unsecured Notes,
a copy of such notice; and
     (h)   any other matter which has resulted or is reasonably likely to result
in a Material Adverse Effect.
          6.03   Financial Statements, Reports, Etc. Deliver or cause to be
delivered to the Agent, with copies for each of the Lenders:
     (a)   As soon as available but no later than forty-five (45) days after the
close of each of the first three fiscal quarters of each of Borrower’s fiscal
years, Borrower’s unaudited consolidated statement of income and retained
earnings as of the close of such

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quarter, its consolidated balance sheet and statement of income and retained
earnings for that portion of the fiscal year ending with such quarter, and its
unaudited consolidated statement of cash flows for that portion of the fiscal
year ending with such quarter. Each of such financial statements shall be
certified by a responsible officer of Borrower as being prepared in accordance
with then applicable GAAP; provided, that the delivery to each Lender of a Form
10-Q Quarterly Report of the Borrower within the time period set forth above
shall satisfy the Borrower’s obligations pursuant to this paragraph (a);
     (b)   As soon as available but no later than ninety (90) days after the
close of each of its fiscal years, a copy of the unqualified, audited financial
statements of Borrower and such other audited financial statements of
Subsidiaries of Borrower that have been prepared (if any). Such financial
statements shall include at least the balance sheet of Borrower as of the close
of such year and statements of income and retained earnings and of changes in
financial position and cash flows for such year, prepared (in the case of
Borrower) on a consolidated basis, and such consolidated financial statements
shall be certified by KPMG LLC or by other independent public accountants of
national reputation selected by Borrower and reasonably satisfactory to Lenders.
The delivery to each Lender of a Form 10-K Annual Report within the time period
set forth above shall satisfy the Borrower’s obligations pursuant to the
preceding portion of this Section 6.03(b); provided that the consolidated
financial statements included in such Form 10-K shall be certified by KPMG LLC
or by other independent public accountants of national reputation selected by
Borrower and reasonably satisfactory to Lenders. The accountants’ certification
shall not be qualified or limited because of restricted or limited examination
by such accountants of any material portion of the records of Borrower or any
such Subsidiary for which audited financial statements have been prepared;
provided, however, it being understood a “going concern” qualification or
exception, or any exception or identified weakness regarding compliance with the
Sarbanes-Oxley Act of 2002 shall not in and of itself constitute a Default or an
Event of Default under the Credit Documents. Such accountants for Borrower shall
state in a letter to Lenders that in the course of their examination such
accountants, without undertaking any special procedures for the purpose of such
certificate, have obtained no knowledge of the occurrence of any condition,
event or act which would constitute a Default or an Event of Default with
respect to financial covenants and certain computations, or, if such accountants
shall have obtained knowledge of any such violation, condition, event or act,
they shall specify in such letter all such violations, conditions, events and
acts and the nature and status thereof. If any of the materials required to be
delivered pursuant to paragraph (c) of this Section 6.03 are delivered in
connection with the delivery of the financial statements pursuant to this
Section 6.03(b), the Borrower shall not be required to deliver separately such
statements pursuant to such paragraph (c). Borrower shall promptly deliver to
Agent a copy of any management letters from such accountants to Borrower;
     (c)   promptly after filing with the Securities and Exchange Commission, a
copy of each Form 8-K Current Report, Form 10-K Annual Report, Form 10-Q
Quarterly Report and Form 11-K Annual Report, Annual Report to Shareholders,
Proxy Statement and Registration Statement of (i) Borrower and (ii) Borrower’s
Subsidiaries;

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     (d)   not later than forty (40) days after the end of each fiscal month
(other than the last month in each fiscal quarter), Borrower’s unaudited
consolidated statements of income and cash flows for that portion of the fiscal
year ending with such month and its unaudited consolidated balance sheet as of
the last day of such fiscal month, certified by a responsible officer of
Borrower as being complete and correct in all material respects and fairly
presenting in all material respects its results of operations and cash flows and
financial condition and including a comparison to the same period (or date, in
the case of balance sheets) for the prior fiscal year;
     (e)   (A) contemporaneous with the delivery of the financial statements set
forth in Section 6.03(d), a certificate executed by any of the chief financial
officer, vice president, treasurer or controller of Borrower, stating that such
officer is familiar with this Agreement and the business and operations of
Borrower and showing Borrower’s compliance with Sections 6.12 and 6.14 and
(B) contemporaneous with the delivery of the financial statements set forth in
Section 6.03(a) or (b), as applicable, a certificate executed by any of the
chief financial officer, vice president, treasurer or controller of Borrower,
stating that such officer is familiar with this Agreement and the business and
operations of Borrower and (i) showing Borrower’s compliance with Sections 6.18,
7.01, 7.02, 7.07 and 7.10, (ii) if Borrower or any Subsidiary is not in
compliance therewith, showing such failure to comply, the amount thereof and
explaining the reason therefor, (iii) specifying changes during such month in
the list of Subsidiaries previously delivered by the Borrower to the Lenders,
other than changes previously reported to the Agent during such month, (iv)
stating that Borrower has performed all its obligations hereunder and under any
judgment, decree or order of any court or governmental authority binding on
Borrower except as may be contested in good faith upon advice of counsel and for
the possible payment of which adequate reserves are being maintained,
(v) stating that no event has occurred which constitutes a Default or an Event
of Default, or, if such event has occurred, the nature and status thereof and
the steps that Borrower is taking or has taken to cure the same and (vi) stating
the name and jurisdiction of organization of each Subsidiary and Unrestricted
Subsidiary created during such month;
     (f)   commencing March 31, 2007, on such date and on the last day of each
March thereafter, updated projections through its fiscal year ending
December 31, 2010 which are similar in form and substance to the projections
delivered pursuant to Section 4.01(u);
     (g)   such other statements, lists of property and accounts, budgets,
forecasts or reports as Agent or any Lender may reasonably request;
     (h)   at each time financial statements of the Borrower are required to be
delivered pursuant to paragraph (a), (b) or (d) above, copies of the combined
balance sheet of the Unrestricted Subsidiaries as of the close of the applicable
fiscal month and combined statements of income and retained earnings of the
Unrestricted Subsidiaries for the portion of the fiscal year ending with such
month, all set forth in a format which reconciles such financial statements of
the Unrestricted Subsidiaries to the corresponding financial statements
delivered pursuant to paragraphs (d);

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     (i)   upon request of the Agent, a description of the business and
activities of each Unrestricted Subsidiary created after the Closing Date and
the Borrower’s reason for designation of such entity as an Unrestricted
Subsidiary; and
     (j)   no later than the first Monday of each calendar month, a forecast of
the sources and uses of cash by the Borrower and its Subsidiaries (including
Unrestricted Subsidiaries) on a weekly basis for the succeeding thirteen
(13) calendar weeks, together with a report describing variances of sources and
uses from previously delivered forecasts, all in form and substance reasonably
satisfactory to the Agent [and its financial advisor, if any].
Information required to be delivered pursuant to Section 6.03(a), (b) and
(c) shall be deemed to have been delivered to the Agent on the date on which the
Borrower provides written notice to the Agent that such information is available
on the Internet via the EDGAR system of the SEC (to the extent such information
is so available on such date).
          6.04   Further Assurances. Borrower shall execute and deliver, or
cause to be executed and delivered, to Lenders, Agent or the Collateral Agent,
such documents and agreements, and shall take or cause to be taken such actions,
as Agent, the Collateral Agent or the Majority Lenders may from time to time
reasonably request to carry out the terms and conditions of this Agreement and
all of the Collateral Documents.
          6.05   Existence, Etc. Subject to Section 7.05, maintain and preserve
its existence and all rights, privileges and franchises now enjoyed and
necessary for use in its business, and keep all its properties material to its
operations consistent with industry practice in good working order and
condition.
          6.06   Ownership of Stock of Subsidiaries. Subject to
Sections 7.01(g), 7.05 and 7.07, maintain at least the same ownership of the
capital stock or other equity interests of each of its Subsidiaries as in effect
on the Closing Date or, if such Subsidiary is acquired after the Closing Date,
the same ownership of Capital Stock or other equity interests of such Subsidiary
as existed on the date of acquisition.
          6.07   Payment of Obligations. Pay all material obligations, including
tax claims, when due, except such as may be diligently contested in good faith
and by appropriate proceedings or as to which a bona fide dispute may exist and
for which adequate reserves are being maintained.
          6.08   Compliance with Laws. At all times comply with all laws, rules,
regulations, orders and directions of any governmental authority applicable to
or having jurisdiction over it or its business, the violation of which could
reasonably be expected to have a Material Adverse Effect.
          6.09   Insurance and Condemnation. Maintain at all times substantially
the same type of insurance coverage in respect of its properties and assets as
that maintained in respect thereof immediately prior to the execution of this
Agreement:

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     (a)   in amounts not less than the amount of the coverage immediately prior
to the execution of this Agreement for all insurance other than that described
in clause (b) below including, without limitation, fire and extended coverage
insurance for the full and insurable replacement value of all buildings and
other improvements located on its properties and business interruption and
workmen’s compensation insurance. All such insurance (other than workmen’s
compensation insurance and directors’ and officers’ insurance) relating to
assets of Borrower or its Subsidiaries shall name the Collateral Agent as loss
payee (and in the case of each item of real property on which the Collateral
Agent has a security interest, mortgage loss payee) and an additional insured
for the interests relating to the assets of Borrower and its Subsidiaries, for
the benefit of the Collateral Agent and each Secured Creditor, as their
interests may appear, and shall not be modified, reduced or cancelled in the
absence of thirty (30) days prior written notice to the Collateral Agent.
Borrower shall promptly notify Agent of any loss, damage, or destruction to the
Collateral in excess of $2,000,000 for each such casualty, whether or not
covered by insurance. The Collateral Agent is hereby authorized to collect all
insurance proceeds directly. With respect to insurance proceeds arising from
loss, damage or other casualty to any of the Collateral or any part thereof,
such proceeds shall be applied as hereinafter provided. Destruction or damage to
any real or personal property of Borrower or any Subsidiary which gives rise to
insurance proceeds shall be deemed to be a disposition of such property for
purposes of Section 7.08(d); provided, however, that if the total amount of the
proceeds from such casualty is reasonably expected to be less than $5,000,000
and neither an Event of Default nor a Default shall have occurred and be
continuing, Borrower shall have the exclusive right to negotiate a settlement
regarding such proceeds with the applicable insurance company and the Collateral
Agent shall promptly forward such proceeds to Borrower and the Borrower shall
use such proceeds to pay for the repair or replacement (it being agreed that a
destroyed or damaged fitness center may be replaced at any site within five
miles of the site of such fitness center) of the Collateral subject to such
casualty; provided, further, however, that if an Event of Default or a Default
shall have occurred and be continuing, or the proceeds of insurance from such
casualty are reasonably expected to be equal to or greater than $5,000,000,
Borrower shall not enter into any settlement agreement with the applicable
insurance company without the prior written consent of Agent, which consent
shall not be unreasonably withheld, and if a determination has been made by
Borrower, with the prior written consent of Agent, to utilize such proceeds to
replace or rebuild the Collateral affected by such casualty, the Collateral
Agent shall release such proceeds to Borrower from time to time during the
course of said reconstruction, repair or restoration, but not more often than
once each thirty (30) day interval, in accordance with the Collateral Agent’s
customary practices for disbursements of construction loans, including, without
limitation, customary conditions precedent to disbursement, provided that:
     (i)   at the time of any requested release of funds, no Event of Default or
Default shall have occurred and be continuing (to the extent such Event of
Default or Default is cured or waived, Borrower may again request the release of
such funds);

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     (ii)   if at the time of any such request by Borrower the cost of
completing the repair, replacement or reconstruction, lien-free and ready for
use, is in excess of insurance proceeds and other sums then in the Collateral
Agent’s hand pursuant to this Section 6.09, funds to cover such excess shall
either (x) be promptly deposited by Borrower with the Collateral Agent and shall
be disbursed under this Section 6.09 in the same manner as insurance proceeds or
(y) to the extent some or all of such amount is available to be borrowed
pursuant to Section 2.01(a) hereof, Borrower may, in lieu of the deposit set
forth in subsection (x) above, elect to borrow such amounts as an Advance in
accordance with the terms of Article II hereof when and as needed to complete
the repair;
     (iii)   costs of administering this disbursement procedure shall be paid by
Borrower out of funds on deposit with the Collateral Agent or otherwise;
     (iv)   when repair, replacement or reconstruction has been completed and
paid for, all insurance proceeds then remaining in the Collateral Agent’s hands
shall be applied, first, to the payment of the Term Advances in accordance with
Section 2.13(a) and, second, to the payment of the other Obligations in
accordance with Section 2.13(a);
     (v)   the Collateral Agent shall be satisfied that, upon release of such
proceeds, it shall have for the ratable benefit of the Secured Creditors, a
first priority perfected security interest on all property acquired (or to be
acquired), but subject to Permitted Liens, with such proceeds; and
     (vi)   each release of funds shall be conditioned upon receipt by Agent of
such documentation as Agent may reasonably require such as bills of sale, other
evidences of ownership by the Borrower (or a Subsidiary) of property acquired
with such proceeds, completion certificates, waivers of mechanic’s liens, etc.
The Collateral Agent shall, pending disbursement or application of funds in
accordance with the terms of this Section 6.09, hold any insurance proceeds (and
other funds deposited with it pursuant to clause (ii) above) deposited with it
in an interest bearing account as to which the Collateral Agent shall not be
liable in any respect to Borrower for any investment results. Interest thereon
shall be held and disposed of in the same manner as other monies held by the
Collateral Agent under this Section 6.09. On each anniversary date of this
Agreement, Borrower shall provide Agent with a summary of each insurance policy
satisfactory to Agent reflecting the insurance coverage required under this
Section 6.09 (together with complete copies of any insurance policies which
Agent may request promptly after such request but not later than six months
after such request). In the event of foreclosure of any mortgage or deed of
trust in favor of Collateral Agent encumbering the Properties or transfer of
title to the Properties in lieu of foreclosure, all right, title and interest of
Borrower in and to any insurance policies then in force with respect to the
Properties (other than liability policies of Borrower) shall pass to the
purchaser, grantee or assignee. In the event of any taking of any portion of any
of the Properties by condemnation, seizure or appropriation by any governmental
authority which does not constitute an Event of Default hereunder, all awards or
proceeds on

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account of said taking shall be collected and applied in the same manner and
shall be subject to the same conditions precedent to the disbursement thereof as
applicable to insurance proceeds under this Section 6.09. Notwithstanding the
foregoing, the rights of the Agent and the Lenders under this paragraph (a) with
respect to property and casualty insurance proceeds relating to loss,
destruction or damage, or a taking of, real property (x) leased by the Borrower
or any of its Subsidiaries or (y) which is subject to a mortgage lien which is
prior to the lien of any Mortgage in favor of the Collateral Agent thereon, and
for which in either case the Collateral Agent is named as loss payee, shall be
subordinate to the rights, if any, of the owner of such real property or the
holder of such prior mortgage lien to the extent such owner or holder is also
named as loss payee; and
     (b)   in an amount not less than Fifty Million Dollars ($50,000,000) for
general liability coverage, including both bodily injury and property damage, on
a per occurrence basis (the “Minimum Liability Coverage”), provided, however,
that the Minimum Liability Coverage may be reduced from time to time to a
coverage limit of not less than Twenty-Five Million Dollars ($25,000,000) on a
per occurrence basis (the “Lowered Coverage”) if, within thirty (30) days prior
to the expiration of any Minimum Liability Coverage policy, and thereafter
within thirty (30) days after the end of each fiscal year of Borrower until the
Minimum Liability Coverage is reinstated, Borrower delivers to Agent a
certificate signed by the chief operating officer of Borrower stating that
Borrower has obtained a lesser amount of coverage, setting forth the amount
thereof, and that Borrower was unable to obtain Minimum Liability Coverage and
was able to obtain general liability coverage only in the amount set forth in
the Borrower’s certificate; provided, further, however, that the Lowered
Coverage may be reduced from time to time to a coverage limit of not less than
Twenty-Five Million Dollars ($25,000,000) on a “claims made” basis if, within
thirty (30) days prior to the expiration of any Lowered Coverage policy and
thereafter within thirty (30) days after the end of each fiscal year of Borrower
until the Minimum Liability Coverage is reinstated, Borrower delivers to Agent a
certificate signed by the chief operating officer of Borrower stating that
Borrower has obtained a lesser amount of coverage, setting forth the amount
thereof, and that Borrower was unable to obtain Minimum Liability Coverage or
Lowered Coverage and was able to obtain general liability coverage only in the
amount set forth in the Borrower’s certificate.
          6.10   Adequate Books. Maintain adequate books, accounts and records
in accordance with then applicable GAAP, and at any reasonable time upon
reasonable notice, during normal business hours, permit employees or agents of
each Lender at any reasonable time to inspect its properties and examine or
audit its books, accounts and records and make copies and memoranda thereof;
provided, that, so long as no Event of Default has occurred and is continuing,
the Borrower shall only be required to reimburse the reasonable out-of-pocket
costs and expenses of the Agent incurred in connection with any such inspection;
and provided, further, that the Borrower shall also be required to reimburse
such reasonable out-of-pocket costs and expenses incurred by any Lender while an
Event of Default shall have occurred and be continuing.
          6.11   ERISA. Make prompt payment contributions required to meet the
minimum funding standards of ERISA (including any funding waivers granted
thereunder) or as

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required pursuant to a collective bargaining agreement and to maintain, and
cause each of its ERISA Affiliates to maintain, each employee benefit plan (as
defined in Section 3(3) of ERISA) as to which it may have any liability in
material compliance with all applicable requirements of law and regulations.
          6.12   Minimum Liquidity. On the last day of any fiscal month of the
Borrower, maintain Liquidity equal to or greater than the amount set forth below
opposite the period during which such day occurs:

          Month Ending   Minimum Allowed  
November 30, 2006
  $ 15,000,000  
December 1, 2006 through October 31, 2007
  $ 25,000,000  
November 1, 2007 and thereafter
  $ 30,000,000  

          6.13   Hazardous Materials. (a)  Conduct, and cause each Subsidiary to
conduct, its operations and keep and maintain its property in compliance with
all Hazardous Materials Laws (except to the extent that failure to comply with
such Hazardous Materials Laws would not have a Material Adverse Effect.
     (b)   Conduct, and cause to be conducted, the ongoing operations of
Borrower and its Subsidiaries in a manner that will not give rise to the
imposition of liability, or require expenditures, under or in connection with
any Hazardous Materials Law (except for any liabilities or expenditure which, in
the aggregate, would not have a material adverse effect on the business,
operations, properties, assets or financial condition of Borrower and its
Subsidiaries taken as a whole.
     (c)   Agent and its agents and representatives shall have the right at any
reasonable time to enter and visit the property (whether owned or leased) of
Borrower or any of its Subsidiaries for the purpose of observing such property.
Agent is under no duty, however, to visit or observe any such property, and any
such acts by Agent shall be solely for the purposes of protecting Lenders’
security and preserving Lenders’ rights under the Collateral Documents. No site
visit or observation by Agent shall result in a waiver of any default of
Borrower or any Subsidiary or impose any liability on Agent or Lenders. In no
event shall any site visit or observation by Agent be a representation that
Hazardous Materials are or are not present in, on, or under such property, or
that there has been or shall be compliance with any Hazardous Materials Laws.
Neither the Borrower nor any other party is entitled to rely on any site visit
or observation by Agent. Agent owes no duty to inform Borrower or any other
party of any Hazardous Materials or any other adverse condition affecting any
such property. Agent shall not be obligated to disclose to Borrower or any other
party any report or findings made as a result of, or in connection with, any
site visit or observation by Agent. In each instance, Agent shall give Borrower
reasonable notice before entering any such property. Agent shall make reasonable
efforts

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to avoid interfering with the use of any such property in exercising any rights
provided in this Section 6.13.
     (d)   At the Collateral Agent’s reasonable request, which the Collateral
Agent may make at all reasonable times and from time to time, Borrower shall
cause Phase I environmental assessments of the Properties on which the
Collateral Agent has Liens to be conducted by technical consultants reasonably
acceptable to the Collateral Agent and detailed written reports thereof to be
furnished to the Collateral Agent, for its benefit, all in a form reasonably
acceptable to the Collateral Agent, provided that no more than one such audit
may be required for any property unless at any time the Collateral Agent
reasonably determines that a breach of Section 5.18 has occurred. In the event
said Phase I environmental audits disclose any environmental condition of any of
the Properties which could cause a material violation of the Hazardous Materials
Laws, Borrower shall cause an assessment of the applicable Property to be
conducted by said technical consultant reasonably acceptable to the Collateral
Agent and a detailed written report thereof to be furnished to the Collateral
Agent concerning the subject of such violation, including, where appropriate, a
Phase II environmental assessment. Where applicable, Borrower shall take all
reasonable remedial measures indicated in said Phase II environmental assessment
or other report necessary to be in compliance with law. If Borrower fails to
obtain said environmental assessments as aforesaid, the Collateral Agent may,
but shall not be obligated to, cause said Phase I or Phase II environmental
audits to be conducted at Borrower’s sole cost.
     (e)   Borrower hereby acknowledges that nothing in this Section is either
intended to or actually does give Collateral Agent or the Lenders control of
Borrower’s or its Subsidiaries’ Properties or business or any of its or their
business decisions.
          6.14   Minimum Consolidated Cash EBITDA. On the last day of any fiscal
month of the Borrower, cause Consolidated Cash EBITDA for the period (the
“Determination Period”) of 12 consecutive fiscal months ending on such day to be
equal to or greater than the amount set forth below opposite the period during
which such day occurs; provided, that with respect to any fiscal month ending
prior to August 1, 2007, the Determination Period shall commerce on August 1,
2006 and end on the last day of such fiscal month:

          Month Ending   Minimum Allowed  
November 30, 2006
  $ 25,000,000  
December 31, 2006
  $ 35,000,000  
January 31, 2007
  $ 40,000,000  
February 28, 2007
  $ 45,000,000  
March 31, 2007
  $ 50,000,000  
April 30, 2007
  $ 55,000,000  
May 31, 2007
  $ 60,000,000  
June 30, 2007
  $ 65,000,000  
July 31, 2007 through June 30, 2008
  $ 70,000,000  
July 1, 2008 through December 31, 2008
  $ 75,000,000  
January 1, 2009 through June 30, 2009
  $ 80,000,000  
July 1, 2009 and thereafter
  $ 90,000,000  

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          6.15   Real Estate Taxes. Borrower shall pay and discharge, and shall
cause its Subsidiaries to pay and discharge, as and when due and payable, before
any penalty attaches, all charges, impositions, levies, assessments and taxes
(whether general, special or otherwise), water charges, sewer service charges
and all other municipal or governmental charges, impositions, levies,
assessments and taxes of any kind or nature that may be at any time levied,
assessed or imposed upon or against any real property owned in fee by any
Subsidiary or in which any Subsidiary has a leasehold interest (but only to the
extent Borrower or any Subsidiary is required to pay such taxes in accordance
with the terms of the lease), and shall promptly deliver to Collateral Agent
upon Collateral Agent’s request therefor, duplicate receipts evidencing payment
thereof prior to delinquency. Notwithstanding anything to the contrary in the
foregoing, Borrower may contest any tax imposed, assessed, levied or due with
respect to or from said real property, by instituting and diligently and in good
faith prosecuting by appropriate judicial proceedings the validity or amount of
a tax, charge, imposition or assessment (said tax, charge, imposition or
assessment being hereinafter referred to in this Section as “impositions”) if
(i) the contest or decision relating thereto will not and cannot result in the
forfeiture of said real property or the Subsidiary’s leasehold interest therein
prior to or pending resolution of such contest and the invalidity, forfeiture,
loss of priority or unenforceability of Collateral Agent’s mortgage lien on said
real property or the Subsidiary’s leasehold interest therein will not and cannot
result from such contest or failure to pay such impositions, (ii) no Event of
Default shall exist hereunder, and (iii) prior to commencement and during the
duration of such proceeding, Borrower shall maintain adequate reserves on
account of the failure to pay such imposition and/or the contest of the amount
and/or validity thereof in accordance with GAAP. Upon resolution of such
contest, Borrower shall promptly pay the impositions then due. If, at any time
during the continuance of the contest described in the preceding sentence, said
real property or the Subsidiary’s leasehold interest therein is, in Collateral
Agent’s reasonable determination, in imminent danger of being forfeited, lost or
rendered invalid or unenforceable, then, in any of said events, Borrower shall,
at Collateral Agent’s demand, use the aforesaid reserve to pay such impositions
and if such reserve is insufficient to pay in full the required payment,
Borrower promptly shall pay the amount of such insufficiency.
          6.16   Real Estate Collateral. Notwithstanding the provisions of
Section 3.05, Borrower and the Subsidiaries shall have met each of the
requirements set forth in Section 3.05 in connection with, and shall have
delivered such opinions of counsel as the Agent shall reasonably request with
respect to, the real property set forth on Schedule 3.05 no later than 60 days
following the Closing Date, as such date may be extended from time to time in
the sole reasonable discretion of the Agent. Upon Borrower’s receipt of
endorsements to the existing title insurance policies, the Borrower shall
promptly and in any event no later than 60 days following the Closing Date
deliver an updated Schedule 1.01, which will only add valid Liens on

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the Existing Mortgage Collateral Properties noted in such endorsements that were
permitted under the Existing Credit Agreement prior to the Closing Date and
permitted hereunder following the Closing Date and secure obligations permitted
under the Existing Credit Agreement prior to the Closing Date and permitted
hereunder following the Closing Date.
          6.17   Control Agreements. The Borrower and its Subsidiaries will not
open or create a Demand Deposit Account or deposit account after the Closing
Date unless such Account or account is maintained with a Lender and is subject
to written control agreements (each such agreement, together with any agreement
that constituted a “Control Agreement” under the Existing Credit Agreement, a
“Control Agreement”) with the applicable depository banks and the Collateral
Agent on terms reasonably satisfactory to the Agent in order to perfect a Lien
on such Accounts and accounts in favor of the Secured Parties (“Controlled
Accounts”). Notwithstanding the foregoing, the Borrower and its Subsidiaries
shall not be required to enter into such control arrangements with respect to
any Demand Deposit Account or deposit account if the balance from time to time
is, or is expected to be, less than $250,000. The Borrower and its Subsidiaries
(except those Subsidiaries identified in clauses (i) through (iii) of the
immediately following sentence) shall hold at least 80% of all cash, cash
equivalents and similar items in Controlled Accounts. Notwithstanding anything
in this Section 6.17 to the contrary, the requirements of this Section 6.17
shall not apply in respect of deposit accounts of (i) Lincoln Indemnity Company,
(ii) any Subsidiary acquired after the Closing Date to the extent such
Subsidiary is not required to provide a security interest in its assets or cause
its capital stock to be pledged pursuant to Section 7.01(e) and (iii) Foreign
Subsidiaries.
          6.18   Asset Sales. The Borrower and its Subsidiaries shall, during
the period following the Closing Date and ending on December 31, 2006, have
received Net Cash Proceeds (determined without giving effect to the proviso of
the definition thereof describing exclusions) from Permitted Sale/Leasebacks,
Permitted Asset Sales, and/or proceeds of issuances of Capital Stock of the
Borrower in an aggregate amount equal to at least $20,000,000.
ARTICLE VII.
NEGATIVE COVENANTS
          Borrower covenants and agrees that so long as the Credit shall remain
available, and until full and final payment of all Obligations (other than
contingent indemnification obligations for which no claim has been asserted), it
will not, and with respect to Sections 7.01, 7.02, 7.03, 7.04, 7.05, 7.07, 7.08,
7.09, 7.10, 7.12, 7.13 and 7.15, it will not permit any Subsidiary to, unless
Majority Lenders waive compliance in writing:
          7.01   Investments and Restricted Payments. Except as otherwise
permitted herein, make any Investments in any Person or any Restricted Payments
except:
     (a)   Borrower or any Subsidiary may make Investments in any Guarantor or
in the Borrower;
     (b)   Any Subsidiary may make Restricted Payments to Borrower or any
Guarantor;

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     (c)   Borrower may make Investments in cash or Cash Equivalents;
     (d)   Investments may be made in the ordinary course of business related to
employees, such as payments in respect of relocation, entertainment, travel
advances, and loans to employees to exercise stock options, all of which
Investments do not exceed in the aggregate at any one time One Million Dollars
($1,000,000) or Investments made in the ordinary course of business related to
leases such as security deposits or similar items;
     (e)   Borrower or any Subsidiary may acquire on a friendly basis at least
51% of the Capital Stock, membership interests or partnership interests, of any
fitness center located in the United States, provided that such fitness center
shall immediately become a Guarantor and shall comply with Section 3.04 hereof.
As used in this Section 7.01(e), “fitness center” means any corporation, limited
liability company or partnership whose business is comparable to any of the
businesses currently operated by Borrower or any of its Subsidiaries (other than
a finance company);
     (f)   [Reserved];
     (g)   Investments by the Borrower and its Subsidiaries in New Ventures,
Joint Ventures, Foreign Subsidiaries, Lincoln Indemnity Company, and
non-Consolidated Subsidiaries, and Unrestricted Subsidiaries (i) existing on the
Closing Date and (ii) made after the Closing Date; provided that (A) the
aggregate amount of such Investments made after the Closing Date (valued at the
time of the making thereof, and after taking into account any return after the
Closing Date from dividends, distributions and repayments in respect of such
Investments) does not exceed, at any one time outstanding, $15,000,000 (plus any
dividends, distributions and repayments in respect of Investments existing on
the Closing Date), (B) the aggregate amount of such investments made after the
Closing Date (valued at the time of the making thereof, and after taking into
account any return after the Closing Date from dividends, distributions and
repayments in respect of such Investments) does not exceed $5,000,000 in any
fiscal year (except (i) that any portion of such permitted amount not used in
any fiscal year may be carried forward to subsequent fiscal years and (ii) for
any fiscal year, the amount that would otherwise be permitted to be so invested
in such fiscal year (including as a result of the carry-forward described in the
preceding clause (i)) may be increased by pulling forward to such fiscal year
the amount that would be permitted to be so invested in the immediately
succeeding fiscal year; provided, however, that the actual amount so pulled
forward in respect of any fiscal year shall reduce, on a dollar-for-dollar
basis, the amount that would otherwise be permitted to be so invested in the
succeeding fiscal year; and provided, further, that the aggregate amount
permitted to be so invested may in no event exceed $10,000,000 in any fiscal
year) and (C) the cumulative outstanding Investment in any Subsidiary on the
date that such Subsidiary is converted to an Unrestricted Subsidiary in
accordance with the terms hereof shall be deemed an Investment made on such
conversion date in an Unrestricted Subsidiary for purposes of determining
compliance with this Section 7.01(h);
     (h)   Investments to the extent funded by Capital Stock of the Borrower
issued after the Closing Date or the cash proceeds thereof received after the
Closing Date (and

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Investments of such cash proceeds), provided that such proceeds from issuances
of Capital Stock may only be used for Investments if used within nine months of
the issuance of such stock;
     (i)   [Reserved];
     (j)   Investments resulting from (i) the write-off of intercompany loans in
connection with the liquidation or dissolution of any Subsidiary permitted
hereunder and (ii) the forgiveness of intercompany loans existing as of the
Closing Date set forth on Schedule 7.01(j);
     (k)   Investments existing as of the Closing Date as set forth on
Schedule 7.01(k) and any modification, replacement, renewal or extension thereof
provided that the original amount of each such Investment is not increased
except as otherwise permitted by this Section 7.01;
     (l)   Investments resulting from entering into Hedging Arrangements;
     (m)   Investments received in connection with the bankruptcy or
reorganization of any Person or in settlement of obligations of, or disputes
with, any Person arising in the ordinary course of business and upon foreclosure
with respect to any secured Investment or other transfer of title with respect
to any secured Investment; and
     (n)   Investments arising out of the receipt by the Borrower or any of its
Subsidiaries of promissory notes and non-cash consideration for Permitted Asset
Sales, provided that the non-cash consideration for any such asset sale shall
not exceed 25% of the total consideration therefore.
Notwithstanding the foregoing, Investments made pursuant to the preceding
paragraph (g) shall be subject to the following restrictions: (x) Collateral
(other than cash and Cash Equivalents) having an aggregate value in excess of
$5,000,000 may not be transferred or invested in any one-year period,
(y) Investment in Joint Ventures and New Ventures shall be limited to assets
consisting of health and fitness clubs, cash and Cash Equivalents and
(z) intellectual property may not be so transferred or invested (other than
non-exclusive immaterial Intellectual Property). In addition, other than as
permitted by Sections 7.04 and 7.09, the Borrower and its Subsidiaries shall not
be permitted to make Investments (including in Unrestricted Subsidiaries) which
have the effect of paying, purchasing, redeeming or defeasing the Senior
Unsecured Notes or the Subordinated Notes or paying dividends on or purchasing
or redeeming Capital Stock of the Borrower. For the avoidance of doubt, the
Borrower and its Subsidiaries shall not provide Guarantees or other credit
support with respect to Unrestricted Subsidiaries after the Closing Date.
          7.02   Other Obligations. Except as provided in this Agreement,
create, incur, assume or permit to exist any Debt, or create, incur or enter
into any Guaranty of any Debt of any other Person, other than:
     (a)   the Secured Obligations;

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     (b)   Any Debt existing on the Closing Date listed on Schedule 7.02(b)
hereto, and any renewal, extension or refinancing thereof that does not consist
of any capitalization of interest on the original Debt; provided, that the
principal amount of such renewal, extension or refinancing Debt (the
“Refinancing Debt”) shall not exceed the principal amount of the Debt on the
Closing Date listed on such Schedule, the maturity date of each installment or
principal of such Refinancing Debt shall not be earlier than the maturity date
of the corresponding installment of the original Debt, the Liens securing the
Refinancing Debt constitute “Permitted Liens” and the only obligor(s) of the
Refinancing Debt shall be the obligor(s) of the Debt on the Closing Date listed
on such Schedule;
     (c)   Standby letters of credit obtained in the ordinary course of
business;
     (d)   Debt of the Borrower to any of its Subsidiaries and of any Guarantor
to Borrower or any other Guarantor;
     (e)   Debt of the Borrower or any of its Subsidiaries incurred to finance
insurance premiums in the ordinary course of business;
     (f)   additional Debt (including Guarantees of Debt permitted under
paragraph (g) of Section 7.02 to the extent such Guarantee would be in excess of
the amount permitted by paragraph (g) hereof) incurred or assumed by the
Borrower and its Subsidiaries in an aggregate principal amount not to exceed
$10,000,000; provided that (i) such Debt is not secured by any property
constituting Collateral under the Collateral Documents (except to the extent
that such Debt may be secured by Liens described under clause (iv) of the
definition of “Permitted Liens”), (ii) any unsecured purchase money seller Debt
is subordinated to the Obligations on terms reasonably satisfactory to the Agent
and (iii) before and after giving effect to the incurrence of such Debt, no
Default or Event of Default shall have occurred and be continuing and provided,
further, that (to avoid double counting) Guarantees of such Debt shall not be
considered Debt for the purposes of this paragraph (f) of this Section 7.02;
     (g)   Guarantees of Debt permitted under paragraph (b) of this Section 7.02
in an aggregate amount not to exceed $7,000,000;
     (h)   Debt incurred as an Investment permitted by Section 7.01;
     (i)   without duplication of Debt permitted by Section 7.02(b) above, Debt
of the Borrower consisting of the 1997 Subordinated Notes and the 1998
Subordinated Notes, or Debt of the Borrower qualifying as a Permitted
Subordinated Notes Refinancing;
     (j)   Debt of the Borrower consisting of the Senior Unsecured Notes and
guarantees of the Senior Unsecured Notes by Subsidiaries to the extent such
Subsidiaries are Guarantors and pledge their assets as grantors under the
Collateral Documents;
     (k)   [Reserved]
     (l)   Debt of the Borrower consisting of (x) repurchase obligations with
respect to Capital Stock of the Borrower issued to directors, consultants,
managers, officers and

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employees of the Borrower and its Subsidiaries arising upon the death,
disability or termination of employment of such director, consultant, manager,
officer or employee to the extent such repurchase is permitted hereunder and
(y) promissory notes issued by the Borrower to directors, consultants, managers,
officers and employees (or their spouses or estates) of the Borrower and its
Subsidiaries to purchase or redeem Capital Stock of the Borrower issued to such
director, consultant, manager, officer or employee to the extent such purchase
or redemption is permitted hereunder;
     (m)   Debt arising out of the issuance of surety, stay, customs or appeal
bonds, performance bonds and performance bonds and performance and completion
guarantees, in each case incurred in the ordinary course of business;
     (n)   Indebtedness in respect of Hedging Arrangements entered into in the
ordinary course of business to hedge against actual exposure risk not for
speculative purpose;
     (o)   Debt incurred in the ordinary course of business in connection with
cash pooling, netting and cash management arrangements consisting of overdrafts
or similar arrangements; provided that any such Debt does not consist of Debt
for borrowed money and is owed to the financial institutions providing such
arrangements and such Debt is extinguished in accordance with customary
practices with respect thereto; and
     (p)   Debt of the Borrower or any of its Subsidiaries incurred in respect
of letters of credit issued for the account of the Borrower or any of its
Subsidiaries in an aggregate principal amount not to exceed $4,000,000 (plus any
interest, fees and expenses related thereto).
Notwithstanding the foregoing, (x) the Borrower will not permit any Subsidiary
or Unrestricted Subsidiary to Guaranty or provide credit support for any
Subordinated Debt and (y) the Borrower will not and will not permit any
Subsidiary or Unrestricted Subsidiary to Guaranty or provide credit support in
respect of any Unrestricted Subsidiary.
          7.03   Other Security. (a) Other than as expressly permitted under
Section 7.08, create, assume or suffer to exist any Lien on any of its or its
Subsidiaries’ property, real or personal or mixed (including without limitation,
any leasehold interests), whether now owned or hereafter acquired, except
Permitted Liens and licenses of intellectual property pursuant to a Franchise
Program.
          (b)   [RESERVED]
          (c)   Notwithstanding the foregoing, the Borrower and its Subsidiaries
shall not be permitted to create, assume or suffer to exist Liens (except
pursuant to the Collateral Documents) on any Membership Receivables (other than
for Liens existing on the Closing Date of approximately $400,000 of Membership
Receivables arising in connection with the acquisition of Planet Fitness fitness
centers and other Liens existing on the Closing Date securing approximately
$1,700,000 of Debt), Intellectual Property (other than as permitted by
Section 7.08(e) and clause (vi) of the definition of Permitted Liens)),
leasehold interests (other than Permitted Leasehold Liens) or leasehold
improvements (other than Permitted Leasehold Liens).

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          7.04   Subordinated Debt; Senior Unsecured Notes. (a) Pay interest,
principal, or premium on any Subordinated Debt (other than the Subordinated
Notes) if at the time of such payment or proposed payment there has occurred and
is continuing under this Agreement, or if as a result of any such payment or
proposed payment there would occur, a Default or an Event of Default;
     (b)   Pay interest, principal or premium on the 1997 Subordinated Notes in
violation of Article Thirteen of the 1997 Indenture, or make any payment
thereunder or with respect to any other Subordinated Debt to any holder or the
trustee named therein prior to one (1) Banking Day preceding the times set forth
therein for the payment of same, or make any payment, purchase or redemption of
the 1997 Subordinated Notes pursuant to Article Four, Five, Ten, Eleven, Twelve
or Thirteen of the 1997 Indenture or deliver any notice to the trustee under the
Indenture or the holders of the 1997 Subordinated Notes of its intention to make
any such payment, purchase or redemption, or make any “Company Request” under
Section 12.1 of the 1997 Indenture;
     (c)   Except for Permitted Subordinated Indenture Amendments, amend or
waive any provision of the 1997 Indenture, the 1998 Indenture, the Subordinated
Notes or any other agreement relating to Subordinated Debt without first
obtaining the consent of the Agent or Majority Lenders;
     (d)   Prepay, redeem, defease, purchase or repurchase all or any part of
any Subordinated Debt including, but not limited to, the Subordinated Notes
(other than as permitted by Section 7.09(a) hereof), or take any action to
effect the foregoing without first obtaining the consent of Majority Lenders;
provided that the foregoing shall not restrict the Borrower or any Subsidiary’s
ability to issue Capital Stock in accordance with the other provisions of this
Agreement, and provided further that the Borrower shall be permitted to make
cash payments up to an aggregate amount of $5,000,000 to the holders of 1997
Subordinated Notes and 1998 Subordinated Notes to the extent necessary (as
determined by the Borrower in the reasonable exercise of its judgment) to obtain
the consent of such holders or to redeem the Subordinated Notes of such holders
if, after giving effect to such consent or redemption, the scheduled maturity
date of the 1997 Subordinated Notes or the 1998 Subordinated Notes (as
applicable) will be extended, or the 1997 Subordinated Notes or the 1998
Subordinated Notes (as applicable) will be refinanced, in a transaction
otherwise permitted under this Agreement;
     (e)   Pay interest, principal or premium on the 1998 Subordinated Notes in
violation of Article Thirteen (or the comparable provisions of a successor
indenture) of the 1998 Indenture, or make any payment thereunder to any holder
or the trustee named therein prior to one (1) Banking Day preceding the times
set forth therein for the payment of same, or make any payment, purchase or
redemption of the 1998 Subordinated Notes pursuant to Article Four, Five, Ten,
Eleven, Twelve or Thirteen (or the comparable provisions of a successor
indenture) of the 1998 Indenture or deliver any notice to the trustee under the
1998 Indenture or the holders of the 1998 Subordinated Notes of its intention to
make any such payment, purchase or redemption, or make any “Company Request”
under Section 12.1 (or the comparable provisions of a successor indenture) of
the 1998 Indenture;

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     (f)   Make any payment with respect to any Senior Unsecured Notes to any
holder or the trustee named therein prior to one (1) Banking Day preceding the
times set forth therein for the payment of same, or make any payment, purchase
or redemption of the Senior Unsecured Notes pursuant to Article Four, Five, Ten,
Eleven, Twelve or Thirteen of the Senior Unsecured Notes Indenture or deliver
any notice to the trustee under the Senior Unsecured Notes Indenture or the
holders of the Senior Unsecured Notes of its intention to make any such payment,
purchase or redemption, or make any “Company Request” under Section 12.1 of the
Senior Unsecured Notes Indenture;
     (g)   Amend or waive any provision of the Senior Unsecured Notes Indenture,
the Senior Unsecured Notes or any other agreement relating thereto without first
obtaining the consent of the Agent or Majority Lenders; or
     (h)   Prepay, redeem, defease, purchase or repurchase all or any part of
the Senior Unsecured Notes (other than as permitted by Section 7.09(a) hereof),
or take any action to effect the foregoing without first obtaining the consent
of Majority Lenders.
     (i)   Notwithstanding the provisions of Section 7.04 and Section 7.09, the
Borrower may purchase or redeem the 1997 Subordinated Notes at an aggregate
price not in excess of $350,000 or, upon the date the redemption prices provided
in the 1997 Indenture are applicable, such redemption prices plus accrued
interest; provided that the terms on which such purchase or redemption is made
shall be reasonably satisfactory to the Agent and immediately after giving
effect thereto, no Default or Event of Default shall have resulted.
In addition to the payments expressly permitted under the preceding paragraphs
of this Section 7.04, the only additional payments that the Borrower and its
Subsidiaries (including Unrestricted Subsidiaries) may make in respect of the
Subordinated Debt and the Senior Unsecured Notes are (i) scheduled payments of
interest, (ii) payments permitted by clauses (i), (iii) and (iv) of the second
proviso of Section 7.09(a), (iii) the issuance of Capital Stock of the Borrower
to holders of Subordinated Notes as consideration for amendments, modifications
or maturity extensions under the 1997 Indenture, the 1998 Indenture, the
Subordinated Notes and/or other Subordinated Debt which amendments,
modifications or maturity extensions are otherwise permitted under this
Agreement and (iv) reimbursement of out-of-pocket expenses of the holders of
Subordinated Notes. Notwithstanding the foregoing the Credit Parties may make
payments of the type contemplated by clause (ii) of Section 8.12 as long as no
Event of Default exists under Section 8.12.
          7.05   Liquidation; Merger. Liquidate or dissolve, or enter into any
consolidation, merger, partnership, joint venture or other combination, or sell,
lease or dispose of its business or assets as a whole or in an amount which
constitutes a substantial portion thereof; provided, however, that (a) any
Subsidiary may merge into, consolidate with or transfer its business or assets
to Borrower (if the purpose of such merger, consolidation or combination is a
legitimate tax planning purpose of the Borrower) or any other Subsidiary (so
long as such acquiring Subsidiary is a Guarantor) pro rata, to the extent owned
by Borrower or such Subsidiary, (b) Borrower may merge, consolidate or combine
(including through liquidation or dissolution into the Borrower) with any other
corporation so long as Borrower is the surviving corporation, no

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Default or Event of Default would exist under this Agreement after giving effect
to such merger, consolidation or combination and the reason for such merger,
consolidation or combination is either (i) legitimate tax planning purposes of
the Borrower or (ii) to consummate an acquisition permitted by Section 7.01(e),
(c) any Subsidiary may liquidate or dissolve if upon such liquidation or
dissolution all or substantially all of the business or assets of such
Subsidiary are distributed to Borrower or any other Subsidiary (so long as such
transferee Subsidiary is also a Guarantor) pro rata, to the extent owned by
Borrower or such Subsidiary, (d) in the event that a Subsidiary has distributed
its business or assets to Borrower or any Subsidiary pursuant to Section
7.05(c), neither Borrower nor any Subsidiary shall be required to preserve any
right, license, or franchise of such Subsidiary or the corporate existence of
such Subsidiary if the Board of Directors of Borrower or the Subsidiary to which
the business or assets of such Subsidiary were distributed shall determine that
the preservation thereof is no longer desirable and that the loss thereof is not
adverse in any material respect to Lenders and (e) any Joint Venture, to the
extent required by, or made pursuant to buy/sell arrangements between the joint
venture parties forth in, joint venture arrangements and similar arrangements or
otherwise required by the organizational documents or joint venture documents,
may dissolve, liquidate, sell, lease or dispose of its business or assets, in
whole or part.
          7.06   [Reserved.]
          7.07   Change in Business. Engage in any business activities or
operations substantially and materially different from or unrelated to business
activities existing on the Closing Date; provided, however, that this
Section 7.07 shall not prohibit the Borrower or its Subsidiaries from managing
non-owned fitness centers or providing payment, processing and collection
services for non-owned fitness centers, or from commencing and operating a
Franchise Program, or from operating a captive insurance company and, provided,
further, the Borrower and its Subsidiaries may elect to cease originating for
their own account and/or servicing all or a portion of membership contracts
receivable and have third parties perform all or some of such functions.
          7.08   Disposal of Assets. Dispose of any accounts receivable, any
fixed or capital assets (including, without limitation, the entering into of any
sale and leaseback agreement covering any of its fixed or capital assets), any
Capital Stock of Subsidiaries or any Intangible Assets, or enter into any
license, franchise or sublease arrangements; provided, however, that:
     (a)   dispositions of assets among and between Borrower and the Guarantors
shall not be prohibited hereunder;
     (b)   [Reserved.]
     (c)   [Reserved];
     (d)   (i) Borrower or any Subsidiary may dispose of surplus, uneconomic,
obsolete, no longer used or useful equipment or fixtures in the ordinary course
of business and (ii) Borrower and its Subsidiaries may license certain rights
with respect to

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its trade name or other Intellectual Property pursuant to franchising and other
arrangements permitted by Section 7.08(f);
     (e)   Borrower and its Subsidiaries may license certain rights with respect
to its trade name and other Intellectual Property (i) to franchisees and joint
ventures for the operation of health clubs pursuant to a Franchise Program or
otherwise in respect of joint ventures and (ii) for other purposes intended to
generate proceeds to the Borrower in the ordinary course of business consistent
with past practice;
     (f)   Borrower and its Subsidiaries may sell assets (and related
liabilities) consisting of health and fitness clubs to Persons which
simultaneously become franchisees pursuant to a Franchise Program; provided that
(i) such assets are sold at their net fair market value (taking into account the
amount of such liabilities) and (ii) the aggregate net cash proceeds arising
from such sales since the Closing Date do not exceed $5,000,000;
     (g)   the Borrower and its Subsidiaries may sell written off receivables to
a collection or similar agency in lieu of in-house collection in the ordinary
course of business and other dispositions of accounts receivable in connection
with compromise, writedown or collection thereof;
     (h)   the Borrower and its Subsidiaries may enter into outsourcing
arrangements with respect to the processing of Membership Receivables as long as
(i) such Membership Receivables remain assets of the Borrower and its
Subsidiaries and (ii) payment of such Membership Receivables is made to Demand
Deposit Accounts;
     (i)   the Borrower and its Subsidiaries may enter into leases, subleases,
licenses or sublicenses in the ordinary course of business consistent with past
practices;
     (j)   dispositions of equipment to the extent that (i) such equipment is
exchanged for credit against the purchase price of similar replacement equipment
or (ii) the proceeds of such disposition are promptly applied to the purchase
price of such replacement equipment;
     (k)   disposition of Cash Equivalents;
     (l)   transfer of property subject to a Casualty Event (i) upon receipt of
Net Casualty Proceeds of such Casualty Event or (ii) to a Governmental Authority
as a result of condemnation;
     (m)   dispositions of Investments in Joint Ventures, to the extent required
by, or made pursuant to buy/sell arrangements between the joint venture parties
forth in, joint venture arrangements and similar arrangements;
     (n)   disposition of assets not otherwise permitted under this Section 7.08
for Fair Market Value and the consideration received consists entirely of cash
and/or Cash Equivalents and the total Fair Market Value of all assets sold
pursuant to this clause does not exceed (individually or in the aggregate)
$2,000,000 per fiscal year;

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     (o)   the Borrower and its Subsidiaries may dispose of assets consisting of
health and fitness clubs (and related liabilities) for Fair Market Value
(“Permitted Asset Sales”); provided that the aggregate amount of all purchase
price consideration of dispositions under this clause (o) when combined with the
aggregate amount of all purchase price consideration of dispositions made under
Section 7.08(p) shall not exceed $100,000,000 after the Closing Date; and,
provided, further, that such assets shall not include any Intellectual Property
material to the business of the Borrower or any of its Subsidiaries; and
     (p)   the Borrower and its Subsidiaries may dispose of assets pursuant to
Permitted Sale/Leasebacks; provided that the aggregate amount of all purchase
price consideration of dispositions under this clause (p) when combined with the
aggregate amount of purchase price consideration of all dispositions made under
Section 7.08(o), shall not exceed $100,000,000 after the Closing Date.
For purposes of this Section 7.08, dispositions of assets shall not include
sales by the Borrower or any Subsidiary of the Borrower of Capital Stock (or
Capital Stock equivalents) of the Borrower.
          7.09   Limitation on Optional Payments and Modifications of Debt
Instruments. Without limitation of any obligation under Section 7.04 or the last
sentence of 7.01:
     (a)   make any optional payment or prepayment on or redemption or purchase
or defeasance of any Debt or make or set aside any sinking fund payments with
respect to any Debt (other than the Advances and reimbursement obligations in
respect of any Letter of Credit); provided, however, Borrower or its
Subsidiaries may prepay or make optional payments on any purchase money Debt or
Capitalized Leases where the Agent, for the benefit of the Lenders, is granted a
Lien in the relevant asset of the Borrower or its Subsidiary, as the case may
be, in the amount of such prepayment or optional payment; provided further,
however, the Borrower shall be permitted to redeem or prepay (i) the
Subordinated Notes (x) in the manner allowed under Section 7.04 or (y) from the
proceeds of a public offering of the Borrower’s common stock after the Closing
Date, to the extent permitted by the “equity clawback” provision set forth in
Section 11.1(b) of the 1997 Indenture and the 1998 Indenture, (ii) Debt existing
on the Closing Date and identified on Schedule 7.09(a), (iii) the Senior
Unsecured Notes from the proceeds of a public offering of the Borrower’s common
stock after the Closing Date, to the extent permitted by the “equity clawback”
provision set forth in Section 11.1(b) of the Senior Unsecured Notes Indenture
and (iv) the Subordinated Notes pursuant to a Permitted Subordinated Notes
Refinancing; or
     (b)   amend, modify or change in any material respect, or consent or agree
to any such amendment, modification or change to, any of the terms of any such
Debt (other than any Permitted Subordinated Indenture Amendments and any such
amendment, modification or change to the terms of any Debt which would extend
the maturity or reduce the amount of any payment of principal thereof or which
would reduce the rate or extend the date for payment of interest thereon without
the consent of the Agent).

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          7.10   Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (other
than a Subsidiary) unless such transaction is (a) otherwise permitted under this
Agreement, and (b) upon fair and reasonable terms no less favorable to the
Borrower or such Subsidiary, as the case may be, than it would obtain in a
comparable arm’s length transaction with a Person which is not an Affiliate.
          7.11   Limitation on Sales and Leasebacks. Enter into any
Sale/Leaseback after the Closing Date unless such transaction constitutes a
Permitted Sale/Leaseback; provided that the Borrower and its Subsidiaries may
not enter into any Sale/Leaseback with an Unrestricted Subsidiary.
          7.12   Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than December 31.
          7.13   Unrestricted Subsidiaries. (a) Create or otherwise designate
any Subsidiary as an Unrestricted Subsidiary unless the terms set forth in the
definition of Unrestricted Subsidiary are complied with respect to such
Subsidiary and no Default or Event of Default then exists (unless the creation
or designation of the Unrestricted Subsidiary would cure the Default or Event of
Default) or would result from the designation, creation and operation of such
Unrestricted Subsidiary.
          (b)   Without the prior written consent of the Majority Lenders,
change the characterization of a Subsidiary from a Subsidiary to an Unrestricted
Subsidiary or an Unrestricted Subsidiary to a Subsidiary; provided however, the
prior written consent of the Majority Lenders shall not be required if (A) no
Default or Event of Default shall have occurred and be continuing at such time
or would result therefrom, (B) after giving effect to such re-characterization,
each of the representations and warranties made by in the Borrower in or
pursuant to this Agreement or the Collateral Documents shall be true and correct
in all material respects as of the date of such re-characterization, (C) if
re-characterized as a Subsidiary, such Subsidiary shall have complied with the
provisions of Article III as if it were a new Subsidiary and (D) the Borrower
provides the Agent five Banking Days advance written notice of its intent to
re-characterize such Subsidiary.
          (c)   Permit any Unrestricted Subsidiary to fail to comply with the
requirements set forth in the definition of “Unrestricted Subsidiary.”
          7.14   Tax Allocation and Indemnity Agreement. Amend, modify or
change, or consent or agree to any amendment, modification or change to the Tax
Allocation and Indemnity Agreement in any manner which is materially adverse to
the Lenders.
          7.15   Negative Pledge Clauses. Enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of the
Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist
any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure the Obligations other than pursuant to (a) this Agreement
and the other Credit Documents, (b) any agreements governing any purchase money
Liens or obligations under Capitalized Leases otherwise permitted hereby (in
which case, any

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prohibition or limitation shall only be effective against the assets financed
thereby), (c) the Subordinated Notes Indentures and the Senior Unsecured Notes
Indenture, (d) any arrangement or agreement arising in connection with a
disposition permitted under this Agreement so long as such restrictions apply
only to the asset to be disposed of pending completion of such disposition, (e)
any agreement with respect to the Debt of any Person existing at the time such
Person becomes a Subsidiary after the date hereof so long as such prohibitions
or limitations apply only with respect to the properties and revenues of such
Subsidiary, (f) customary restrictions in leases, subleases, licenses and
sublicenses, (g) any agreement with respect to any Real Estate Financing
Subsidiary so long as such prohibitions or limitations apply only with respect
to the properties and revenues of such Real Estate Financing Subsidiary,
(h) restrictions applicable to any Joint Venture pursuant to the applicable
joint venture agreement so long as such restrictions apply only to the
properties and revenues of such Joint Venture or the Capital Stock of such Joint
Venture (and the Borrower hereby agrees to use reasonable efforts to cause any
such restriction in respect of the Capital Stock of such Joint Venture to be
waived or made inapplicable with respect to a Lien and security interest on such
Capital Stock in favor of the Collateral Agent to secure the Secured
Obligations) and (i) any restrictions existing as of the Closing Date.
ARTICLE VIII.
EVENTS OF DEFAULT
          If one or more of the following events (herein called “Events of
Default”) shall occur and be continuing:
          8.01   Nonpayment. Borrower shall fail to pay (i) when due, any
portion of principal hereunder or under the Notes in accordance with the terms
hereof or thereof, (ii) when due any interest hereunder or under the Notes and
such failure shall continue unremedied for a period of three Banking Days after
such interest was due, or (iii) when due any fee or others sums hereunder and
such failure shall continue unremedied for a period of five Banking Days after
such amounts are due.
          8.02   Representation or Warranty. Any representation or warranty made
by Borrower or any Subsidiary herein or in any other Credit Document or in any
agreement, instrument or certificate executed or delivered to Lenders, Agent or
the Collateral Agent pursuant hereto or in connection with any transaction
contemplated here shall prove to have been false or misleading in any material
respect when made or when deemed to have been made;
          8.03   Judgments. There shall be entered against Borrower or any of
its Subsidiaries one or more judgments (or any judgment against an ERISA
Affiliate, if such judgment is in favor of a Multiemployer Plan) in excess of
Five Million Dollars ($5,000,000) in the aggregate at any one time outstanding
excluding those judgments (i) that have been outstanding less than thirty (30)
calendar days from the entry thereof or (ii) during the time which a stay of
enforcement of such judgment is in effect by reason of a pending appeal or
otherwise or (iii) for and to the extent which Borrower or such Subsidiary is
insured and with respect to which the insurer has accepted coverage in writing.

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          8.04   Voluntary Bankruptcy. Borrower or any Guarantor shall fail to
pay, or admit in writing its inability to pay, its debts generally as they come
due, or shall file any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for the
relief of, or relating to, debtors, or Borrower or any Guarantor shall take any
corporate action to authorize, or in furtherance of, any of the foregoing.
          8.05   Involuntary Bankruptcy. Involuntary petition shall be filed
under any bankruptcy statute against Borrower or any Guarantor, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) shall be appointed to take possession, custody or control of the
properties of Borrower or any Guarantor, unless such petition or appointment is
set aside or withdrawn or ceases to be in effect within sixty (60) days from the
date of said filing or appointment.
          8.06   Change of Control Event. A Change of Control Event shall occur.
          8.07   Cross Default. Any breach or default shall occur with respect
to any Debt or any operating lease agreement in excess of Five Million Dollars
($5,000,000) (except with respect to Debt under this Agreement) individually or
in the aggregate, under which Borrower or any of its Subsidiaries may be
obligated as borrower or guarantor, if such breach or default consists of the
failure to pay any such indebtedness when due whether by acceleration or
otherwise (and remains uncured or continues beyond any applicable grace period)
or if such breach or default results in or permits (or, with the passage of
time, the giving of notice or both, may permit) the acceleration of any such
indebtedness of or the termination of any commitment to lend to Borrower or any
such Subsidiary. The Lenders acknowledge that any breach of Section 10.17 of the
Senior Unsecured Notes Indenture or Section 10.17 of the Subordinated Notes
Indenture as a result of the failure of the Borrower to timely deliver the
financial statements required by such Section shall not in and of itself
constitute a Default or an Event of Default under this Agreement until the day
which is 2 Banking Days before the day which is 30 days after a notice of
default of the type described in Section 5.1(c) of the Senior Unsecured Notes
Indenture or Section 5.1(c) of the Subordinated Notes Indenture, as applicable,
has been delivered. The Borrower acknowledges that the foregoing
acknowledgements and agreements by the Lenders under this Agreement do not apply
when holders of Debt obligations of the Borrower and its Subsidiaries exercise
their remedies against the Borrower and its Subsidiaries on the basis of an
applicable cross default clause.
          8.08   ERISA. (a)  The occurrence of a Termination Event with respect
to one or more Plans and/or one or more Multiemployer Plans if Borrower’s
maximum liability (as measured, (A) in the case of a Termination Event described
in clauses (i) through (iii) of the definition of “Termination Event”, by the
amount by which plan assets are insufficient to satisfy benefit liabilities upon
termination under ERISA with respect to each Plan as to which such Termination
Event has occurred, (B) in the case of a Termination Event described in clause
(iv) of said definition, by the withdrawal liability under Section 4063 of ERISA
with respect to each Plan as to which such Termination Event has occurred, and
(C) in the case of a Termination Event described in clause (v) of the definition
of “Termination Event”, by the excess, if any of (i) the aggregate of annual
contributions due or paid during a plan year plus payments and interest due or
paid pursuant to Section 4219 of ERISA during the same plan year, with respect
to each Multiemployer Plan as to which a Termination Event has occurred, over
(ii) the annual

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contribution amount due or paid for such Multiemployer Plan for the plan year
preceding the plan year in which such Termination Event occurred) which could
arise upon the occurrence of all such Termination Events that occur within a
twelve consecutive month period exceeds One Million Dollars ($1,000,000); or
          (b)   The aggregate withdrawal liability which could be incurred under
Section 4201 of ERISA of Borrower and all ERISA Affiliates, collectively, upon a
complete withdrawal, within the meaning of Section 4203 of ERISA, from each and
all Multiemployer Plans to which each is or has contributed within the past five
calendar years, plus the aggregate of the excess of benefit liabilities, within
the meaning of Section 4001(a)(16) of ERISA, of each Plan upon termination of
such Plan over the assets of such Plan, exceeds Five Million Dollars
($5,000,000).
          8.09   Specific Defaults. (i) Borrower shall fail duly and promptly to
perform or observe any term or provision specified in any of Sections 6.01,
6.02(e), 6.05, 6.06, 6.13 or 6.14 or Article VII hereof, (ii) Borrower shall
fail duly and promptly to perform or observe any term or provision specified in
Section 6.12 or 6.18 and shall not remedy such failure to perform or observe
such term or provision within five Banking Days or (iii) Borrower shall fail to
perform or observe any term or provision specified in Section 6.09 and shall not
remedy such failure to perform or observe any term or provision specified in
such Section 6.09 within 10 calendar days.
          8.10   Guarantee and Collateral Agreement; Impairment of Collateral
Documents. (a)   Any breach or default shall occur under the Guarantee and
Collateral Agreement or the Guarantee and Collateral Agreement shall be revoked
by, or become ineffective as to, the Borrower or any Guarantor; provided,
however, that any merger, liquidation, consolidation or transfer of any
Guarantor with any other Guarantor or Borrower in accordance with
Section 7.05(c) or Section 7.05(d) shall not constitute an Event of Default
under this Agreement;
          (b)   (i)  any provision of any Collateral Document (other than the
collateral assignments of tenant’s rights in leases) necessary for the practical
realization of the substantial benefits thereof shall for any reason cease to be
valid and binding on or enforceable against Borrower (other than pursuant to a
failure of the Agent, any Collateral Agent or the Lenders to take any action
within the sole control of such Person) or any Subsidiary or Borrower or any
Subsidiary shall so state in writing or bring an action to limit its obligations
or liabilities thereunder; or
                  (ii)   any of the Collateral Documents shall for any reason
(other than pursuant to the terms thereof) cease to create a valid security
interest in the Collateral purported to be covered thereby or such security
interest shall for any reason cease to be a perfected security interest having
the priority purported to be created by such Collateral Document (other than by
or as a result of any action by the Collateral Agent).
          8.11   Condemnation. Any governmental authority shall condemn, seize
or appropriate any property of Borrower or any Subsidiary if the fair market
value of the property prior to being condemned, seized or taken is equal to or
greater than Five Million Dollars ($5,000,000) and if such governmental
authority fails to compensate such entity for such taking within one (1) year
after such entity loses quiet enjoyment of such property due to such taking in
an amount at least equal to the fair market value as a going concern of the
property taken.

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          8.12   Public Filings. The Borrower and its Subsidiaries shall pay or
agree in writing to pay fines or penalties in excess of $10,000,000 in the
aggregate (other than from insurance proceeds or from amounts otherwise
reimbursed to the Borrower by third parties to whom the Borrower and its
Subsidiaries are not providing credit or similar support) in connection with
(i) SEC investigations in connection with the matters described in the Public
Filings, (ii) the DOJ Investigation or (iii) other matters disclosed in the
Public Filings.
          8.13   Actual or Asserted Invalidity. (i) This Agreement, any Note,
any Collateral Document or any instrument or certificate executed or delivered
to Lenders, the Agent or the Collateral Agent pursuant to this Agreement or in
connection with any transaction contemplated herewith shall cease, for any
reason (other than solely as a result of any action or inaction on the part of
the Agent or any of the Lenders), to be in full force and effect, or the
Borrower or any of its Affiliates shall so assert or (ii) any Lien created
thereby or subordination provision therein shall cease to be enforceable and of
the same effect and priority purported to be created thereby as a result of any
action or inaction on the part of the Borrower or any of its Affiliates.
          8.14   Failure to Constitute Senior Indebtedness. Any Secured
Obligation shall fail to constitute Senior Indebtedness and Designated Senior
Indebtedness under the Subordinated Notes Indenture.
          8.15   Other Defaults. Borrower or any Subsidiary shall breach, or
default under, any term, condition, provision, covenant, representation or
warranty contained in this Agreement not specifically referred to in this
Article or in any Collateral Document, if such breach or default shall continue
for thirty (30) days after notice from Agent as required by Majority Lenders;
THEN:
     (a)   In the case of an Event of Default other than one referred to in
Section 8.04 or 8.05 of this Article VIII, upon request of Majority Lenders to
Agent, any obligation on the part of Lenders to make or continue the Credit or
any obligation on the part of any Issuing Lender to issue or amend any Letter of
Credit shall terminate and, at the further option of Majority Lenders, Agent
shall declare all sums of principal and interest outstanding on the Credit and
all other sums outstanding under or in respect of this Agreement and the Notes
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character (other than as stated in any of the foregoing
sections of this Article VIII), all of which are hereby expressly waived by
Borrower; and
     (b)   in the case of an Event of Default referred to in Section 8.04 or
8.05 of this Article VIII, Lenders’ obligations to make or continue the Credit
and the Issuing Lenders’ obligations to issue or amend any Letter of Credit
shall be automatically cancelled and all sums of principal and interest on the
Credit and all other sums outstanding under or in respect of this Agreement and
the Notes shall automatically become immediately due and payable without notice
of default, presentment or demand for payment, protest or notice of nonpayment
or dishonor, all of which are hereby expressly waived by Borrower.

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Agent shall promptly advise Borrower of any declaration under clause (a), above,
but failure to do so shall not impair the effectiveness of such declaration.
Additionally, upon the occurrence of any Event of Default, Agent, at the request
of the Majority Lenders, shall require Borrower to deposit immediately with
Agent cash collateral pursuant to documentation reasonably acceptable to the
Agent, for application against drawings under any Letter of Credit issued for
Borrower’s account hereunder, in an amount equal to the undrawn amount of such
Letter of Credit. Any amount so deposited that is not applied to satisfy
drawings under such Letter of Credit will be repaid with interest (at Agent’s
applicable certificate of deposit rate in effect on the date of such deposit) to
Borrower, provided that Lenders have received all other amounts due to them
under this Agreement and the Notes. Borrower shall not make (or declare) any
Restricted Payments otherwise permitted under Section 7.01 if a Default or an
Event of Default has occurred and is continuing on the date of such payment (or
declaration), or would result from such payment (or declaration).
ARTICLE IX.
MISCELLANEOUS
          9.01   Notices. Except as otherwise provided herein, any notice
required hereunder shall be in writing, and shall be deemed to have been validly
served, given or delivered (i) four (4) Banking Days following deposit in the
United States mails, with proper postage prepaid, and addressed to the party to
be notified; (ii) upon delivery thereof if delivered by hand to the party to be
notified; (iii) on the Banking Day after delivery to a reputable overnight
courier, with all charges prepaid, and addressed to the party to be notified; or
(iv) upon acknowledgment of receipt thereof if transmitted by telecopy to a
valid telecopier number for the party to be notified; in each case such
notification shall be addressed to Borrower at:
Bally Total Fitness Holding Corporation
8700 West Bryn Mawr, 2nd Floor
Chicago, Illinois 60631
Attention: General Counsel
Telecopy: 773-399-0126
Phone: 773-380-3000
and shall be addressed to Agent at:
JPMorgan Chase Bank, N.A.
270 Park Avenue, 15th Floor
New York, New York 10017
Attention: Ruby Tulloch
Telecopy: 212-270-6937
Phone: 212-270-1467
and with respect to the other parties hereto, as set forth on Schedule 9.01
hereof, or to such other address as each party may designate for itself by like
notice. Notices to Agent shall not be effective until received by Agent.

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          Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Agent; provided that the foregoing shall not apply to notices
pursuant to Section 2 unless otherwise agreed by the Agent and the applicable
Lender. The Agent or the Borrower may, in its discretion, agree to accept
notices and other communications to it hereunder by electronic communications
pursuant to procedures approved by it; provided that approval of such procedures
may be limited to particular notices or communications.
          If the time period provided for delivery of documents or notices
required under any provision of the Credit Documents would end on a day which is
not a Banking Day, such time period shall be extended to the next Banking Day.
          9.02   Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that Borrower shall not assign this Agreement or any of the
rights of Borrower hereunder without the prior written consent of each Lender.
Any purported assignment in contravention of the foregoing shall be null and
void.
          9.03   Lenders’ Obligations Several. The obligations of each Lender
under this Agreement are several. Neither Agent, Collateral Agent nor any Lender
shall be liable for the failure of any other Lender to perform its obligations
under this Agreement.
          9.04   Assignments; Participations. (a)  Any Lender other than any
Conduit Lender (each an “Assignor”) may, with the consent of Agent, each Issuing
Lender to whom obligations are owed in respect of Letters of Credit issued by it
and (unless a Default or Event of Default has occurred and is continuing)
Borrower, which consent of Agent, such Issuing Lenders and the Borrower shall
not be unreasonably withheld or delayed, at any time assign and delegate to one
or more banks or other entities and may, with notice to Borrower, Agent and each
Issuing Lender, and with consent of Agent and such Issuing Lenders, but without
the consent of Borrower, assign to any Affiliate of a Lender, an Approved Fund
or any other Lender (each an “Assignee”), all or any part of the Advances, the
Delayed-Draw Term Loan Commitment, the Revolving Credit Commitment (including
the L/C Commitment), any Letter of Credit participations, reimbursement
obligations in respect of any Letter of Credit or any other rights or
obligations of such Lender hereunder; provided, however, that except in the case
of an assignment to a Lender, any Lender Affiliate or an Approved Fund, such
assignment must be in a minimum amount (unless otherwise agreed in writing by
the Borrower, Agent and each Issuing Lender) of One Million Dollars ($1,000,000)
(or, if less, the full amount of such Assignor’s Advances, Letter of Credit
Participations, reimbursement obligations in respect of any Letter of Credit or
any other rights and obligations of such Lender hereunder); provided, further,
that any assignment of Term Advances or Delayed-Draw Term Loan Commitments shall
not require the consent of the Issuing Lender or, with respect to such
assignment to any Affiliate of any Lender, an Approved Fund or any other Lender,
the Agent and provided, further that (i) Borrower shall not be required to pay
any increased costs or taxes pursuant to Section 2.16 or 2.17 by reason of any
such assignment; (ii) Borrower and Agent shall be entitled to continue to deal
solely and directly with such Assignor in connection with the interests so
assigned to the Assignee until written notice of such assignment, together with
payment instructions, addresses and related information with respect to the
Assignee shall have been given to Borrower, Agent and each

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Issuing Lender by such Assignor and the Assignee; and (iii) such Assignor shall
not be released from its obligations hereunder with respect to the assigned
portion of any such rights or obligations until the Assignee shall have
delivered to Borrower and Agent an agreement to be bound by the terms and
conditions of this Agreement, which agreement shall be substantially in the form
of Exhibit K (an “Assignment and Acceptance”), and the Assignor shall have paid
a processing fee to Agent for each assignment hereunder (provided, that
concurrent assignments by any Lender to two or more Approved Funds shall be
counted as one assignment for purposes of assessing assignment fees) in the
amount of Three Thousand Five Hundred Dollars $3,500, and thereupon shall be
released from its obligations with respect to the assigned portion.
Notwithstanding the foregoing, any Conduit Lender may assign at any time to its
designating Lender hereunder without the consent of the Borrower or the Agent
any or all of the Advances it may have made hereunder and pursuant to its
designation agreement and without regard to the limitations set forth in the
first sentence of this Section 9.04(a).
          (b)   Any Lender other than any Conduit Lender may, without the
consent of Agent, any other Lender to whom obligations are owed in respect of
Letters of Credit issued by it or Borrower, at any time sell to one or more
Lenders or other entities (a “Participant”) participating interests in any
Advances, any Delayed-Draw Term Loan Commitment, any Revolving Credit
Commitment, any Letter of Credit participations or any reimbursement obligations
of such Lender in respect of any Letter of Credit hereunder; provided, however,
that such participation shall not increase the amount payable by Borrower in
respect of taxes pursuant to Section 2.16 and, provided further that (i) such
Lender’s obligations under this Agreement shall remain unchanged; (ii) such
Lender shall remain solely responsible for the performance of its obligations
hereunder; (iii) Borrower and Agent shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement; (iv) no Lender shall transfer, grant or assign any participation
under which the Participant shall have rights to approve any amendment or waiver
of this Agreement except to the extent such amendment or waiver would (A) extend
the Revolving Credit Termination Date or the Term Loan Termination Date beyond
October 1, 2010, or the scheduled date for the payment of any installment of
principal or interest of the Advances in which such Participant is
participating, (B) reduce the amount of any scheduled installment of principal
of the Advances hereunder in which such Participant is participating, (C) reduce
the interest rate applicable to Advances hereunder in which such Participant is
participating, (D) reduce any fees or other amounts payable hereunder in which
such Participant is participating; and (v) such Lender shall require its
Participants to comply with the provisions of Section 10.03(b). In the case of
any such participation, the Participant shall not have any rights under this
Agreement or any of the other documents in connection herewith and all amounts
payable by Borrower hereunder shall be determined as if such Lender had not sold
such participation, except that Borrower agrees that if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement and the Notes to
the same extent as if the amount of its participating interest were owing
directly to it as a lender under this Agreement. The Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18
with respect to its participation in the Commitments and the Advances and
Letters of Credit outstanding from time to time as if it was a Lender; provided
that, in the case of Sections 2.16, 2.17 and 2.18, such Participant shall have
complied with the requirements of said Section and provided, further, that

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no Participant shall be entitled to receive any greater amount pursuant to any
such Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.
          (c)   Borrower authorizes each Lender to disclose to any Participant
or Assignee (each, a “Transferee”) and any prospective Transferee such financial
and other information in such Lender’s possession concerning Borrower or its
Subsidiaries which has been delivered to Lenders pursuant to this Agreement or
which has been delivered to Lenders by Borrower in connection with Lenders’
credit evaluation of Borrower prior to entering into this Agreement.
          (d)   Nothing herein shall prohibit any Lender from pledging or
assigning any Note in accordance with applicable law, including to any Federal
Reserve Bank. In the case of any Lender that is a fund that invests in bank
loans, such Lender may, without the consent of Borrower or the Agent,
collaterally assign or pledge all or any portion of its rights under this
Agreement, including the Term Advances and Term Notes or any other instrument
evidencing its rights as a Lender under this Agreement, to any holder of,
trustee for, or any other representative of holders of, obligations owed or
securities issued, by such fund, as security for such obligations or securities.
          (e)   The Agent shall, on behalf of the Borrower, maintain at its
address referred to in Section 9.01 a copy of each Assignment and Acceptance
delivered to it and a register (the “Register”) for the recordation of the names
and addresses of the Lenders and the Commitments of, and the principal amount of
the Advances owing to, each Lender from time to time. The entries in the
Register shall constitute prima facie evidence of the foregoing information, in
the absence of manifest error, and the Borrower, each other Credit Party, the
Agent and the Lenders shall treat each Person whose name is recorded in the
Register as the owner of the Advances and any Notes evidencing the Advances
recorded therein for all purposes of this Agreement. Any assignment of any
Advance, whether or not evidenced by a Note, shall be effective only upon
appropriate entries with respect thereto being made in the Register (and each
Note shall expressly so provide). Any assignment or transfer of all or part of
an Advance evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Advance, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes shall be issued to the designated Assignee.
          (f)   Upon its receipt of an Assignment and Acceptance executed by an
Assignor, an Assignee and any other Person whose consent is required by this
Section 9.04, together with payment to the Agent of the registration and
processing fee referred to in paragraph (a) of this Section 9.04, the Agent
shall (i) promptly accept such Assignment and Acceptance and (ii) record the
information contained therein in the Register on the effective date determined
pursuant thereto.
          (g)   Each of the Borrower, each Lender and the Agent hereby confirms
that it will not institute against a Conduit Lender or join any other Person in
instituting against a Conduit Lender any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding under any state bankruptcy or
similar law, for one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Conduit Lender; provided, however,
that

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each Lender designating any Conduit Lender hereby agrees to indemnify, save and
hold harmless each other party hereto for any loss, cost, damage or expense
arising out of its inability to institute such a proceeding against such Conduit
Lender during such period of forbearance.
          9.05   Delays and Waivers. No delay or omission by Agent, Collateral
Agent, Arranger or Lenders to exercise any right under this Agreement, the
Collateral Documents or any instrument or agreement contemplated hereunder or
thereunder shall impair any such right, nor shall it be construed to be a waiver
thereof. No waiver of any single breach or default under this Agreement shall be
deemed a waiver of any other breach or default. Any waiver, consent or approval
under this Agreement must be in writing to be effective.
          9.06   Costs and Expenses. Borrower agrees:
     (a)   to pay or reimburse Agent, the Collateral Agent, the Arranger and the
Issuing Lenders within thirty days of written demand (together with backup
documentation supporting such reimbursement request) for all reasonable
out-of-pocket costs and expenses incurred by them in connection with the
development, preparation, delivery, administration and execution of, and any
amendment, supplement or modification to, this Agreement, any Collateral
Document and any other documents or instruments prepared in connection herewith
or therewith, the consummation of the transactions contemplated hereby and
thereby, and the consummation of the transactions to occur on the Closing Date,
including, without limitation, (i) the reasonable fees and out-of-pocket
expenses of outside and local counsel and special tax counsel to Agent and the
Collateral Agent with respect thereto and (ii) the reasonable fees and
reasonable out-of-pocket expenses of Agent’s outside accounting consultant;
     (b)   to pay or reimburse each Lender, the Collateral Agent, the Agent, the
Arranger and the Issuing Lenders within thirty days of written demand (together
with backup documentation supporting such reimbursement request) for all
reasonable costs and expenses incurred by any of them in connection with the
enforcement or preservation of any rights under this Agreement, the Notes, any
Collateral Document, and any other documents or instruments prepared in
connection herewith or therewith and in connection with any refinancing or
restructuring of the Credit in the nature of a “work-out”, including, without
limitation, reasonable fees and out-of-pocket expenses of one outside counsel
and local counsel in each appropriate jurisdiction (and the allocated cost of
staff counsel) to Agent, the Collateral Agent and to each of the several Lenders
(unless there is an actual conflict of interest in which case each such party
with such conflict shall be entitled to retain separate outside counsel and
local counsel in each appropriate jurisdiction); and
     (c)   to pay or reimburse Agent, the Arranger or the Collateral Agent
within thirty days of written demand (together with backup documentation
supporting such reimbursement request) for all reasonable appraisal, accounting,
audit, search, recordation and filing fees, incurred or sustained by them in
connection with the matters referred to under paragraphs (a) and (b) above.

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          9.07   Telephone Indemnity. Borrower shall protect Lenders and Agent
and hold them harmless from and not liable for any and all loss, damage, claim
or expense (including, without limitation, reasonable attorneys’ fees and the
allocated costs of any Lender’s in-house legal counsel) incurred by Agent or
Lenders in connection with or in relation to any act or any failure to act upon
telephone instructions received by Lenders or Agent from Borrower or any Person
who has identified himself as an authorized officer of Borrower, whether or not
the instructions are actually given by an authorized officer of Borrower.
          9.08   Other Indemnity. (a)  Borrower agrees to indemnify and hold
harmless Agent, the Collateral Agent, each Lender and each of their respective
officers, directors, agents and employees, and trustees and advisors of an
Approved Fund, from and against any and all claims, damages, liabilities, costs
and expenses (including, without limitation, reasonable fees, expenses and
disbursements of counsel) which may be incurred by or asserted against Agent,
the Collateral Agent, the Arranger, the Syndication Agent, any Lender, any
Issuing Lender or any such other indemnified Person in connection with or
arising out of any investigation, litigation or proceeding related to this
Agreement, the Advances, the Term Loan Commitments, the Revolving Credit
Commitments, the Letters of Credit, the use of proceeds of the Advances or
Letters of Credit or the negotiation and preparation of documentation in
connection herewith or therewith, whether or not Agent, the Collateral Agent,
the Arranger, the Syndication Agent, any Issuing Lender or such Lender is a
party thereto; provided, however, that Borrower shall not be required to
indemnify any such indemnified Person from or against any portion of such
claims, damages, liabilities or expenses arising out of gross negligence,
willful misconduct or bad faith of such indemnified Person. The foregoing
indemnification shall be binding on the Borrower forever, and shall survive
repayment of the Obligations and the release of any liens under the Collateral
Documents.
          (b)   Borrower hereby agrees to indemnify, defend and hold harmless
Agent, the Collateral Agent, the Issuing Lenders and each Lender, and each of
their respective officers, directors, employees and agents, and trustees and
advisors of an Approved Fund, from and against any and all claims, losses,
liabilities, damages and expenses (including, without limitation, reasonable
attorneys’ fees), which may be incurred by or asserted against Agent, the
Collateral Agent, the Issuing Lenders or any Lender or any such indemnified
Person in connection with or arising out of any investigation, litigation or
proceeding, or any action taken by any Person, with respect to any Hazardous
Materials Claim arising out of or related to any of the Properties which are
subject to a Lien in favor of the Collateral Agent as contemplated hereunder
(including, without limitation, any Hazardous Materials Claim arising out of or
relating to any (i) release of Hazardous Materials on, upon, under or into any
such Properties or (ii) damage to real or personal property or natural resources
and/or harm or injury to Persons alleged to have resulted from such release of
Hazardous Materials on, upon or into any such Properties); provided, however,
that Borrower shall not be required to indemnify, defend or hold harmless any
such indemnified Person from or against any portion of such loss, liability,
damage or expense arising out of the gross negligence, willful misconduct or bad
faith of such indemnified Person. The foregoing indemnification is the personal
obligation of Borrower, binding on Borrower forever, and shall survive repayment
of the Obligations and release of record of the mortgages or deeds of trust in
favor of Collateral Agent encumbering the Properties and any transfer of the
Properties by foreclosure or by deed in lieu of foreclosure. The foregoing
indemnification shall not be affected or negated by any exculpatory clause that
may be contained

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in any of the Collateral Documents. It is expressly understood and agreed that
to the extent that Collateral Agent and/or Lenders are strictly liable under any
such law, regulation, ordinance or requirement, Borrower’s obligation to
Collateral Agent and Lenders under this indemnity shall likewise be without
regard to fault on the part of Borrower or its Subsidiaries with respect to the
violation or condition which results in liability to Collateral Agent and/or
Lenders; provided, however, that Borrower shall not be required to indemnify,
defend or hold harmless any such indemnified Person from or against any portion
of such loss, liability, damage or expense arising after the Collateral Agent
shall have foreclosed or otherwise taken possession of such property which is
caused by any action or inaction of the Collateral Agent after such time.
          (c)   Agent, the Collateral Agent and each Lender agree that in the
event that any such investigation, litigation or proceeding is asserted or
threatened in writing or instituted against it or any of its officers,
directors, agents and employees, or trustees and advisors of an Approved Fund,
or any remedial, removal or response action is requested of it or any of its
officers, directors, agents and employees, or trustees and advisors of an
Approved Fund, for which Agent, the Collateral Agent or any Lender may desire
indemnity or defense hereunder, Agent, the Collateral Agent or such Lender shall
promptly notify Borrower in writing.
          (d)   Borrower at the request of Agent, the Collateral Agent or any
Lender, shall have the obligation to defend against such investigation,
litigation or proceeding or requested remedial, removal or response action, and
Agent, in any event, may participate in the defense thereof with legal counsel
of Agent’s choice if Agent asserts defenses that raise potential conflicts of
interest with Borrower. No action taken by legal counsel chosen by Agent or any
Lender in defending against any such investigation, litigation or proceeding or
requested remedial, removal or response action shall vitiate or in any way
impair Borrower’s obligation and duty hereunder to indemnify and hold harmless
Agent, the Collateral Agent and each Lender (unless such action is grossly
negligent).
          9.09   Choice of Law. EXCEPT FOR COLLATERAL DOCUMENTS GOVERNED BY THE
LAWS OF ANOTHER STATE OR COUNTRY, AGENT, SYNDICATION AGENT, COLLATERAL AGENT AND
LENDERS AND BORROWER AGREE THAT THIS AGREEMENT AND ANY DISPUTE ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT, THE NOTES AND ALL OTHER
DOCUMENTS EXECUTED IN CONNECTION HEREWITH, AND WHETHER ARISING IN CONTRACT,
TORT, EQUITY, OR OTHERWISE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
          9.10   Personal Jurisdiction; Waiver. AGENT, COLLATERAL AGENT AND
LENDERS MAY ENFORCE ANY CLAIM ARISING UNDER THIS AGREEMENT, THE NOTES, OR ANY
COLLATERAL DOCUMENT IN ANY STATE OR FEDERAL COURT HAVING SUBJECT MATTER
JURISDICTION AND LOCATED IN CHICAGO, ILLINOIS OR NEW YORK, NEW YORK. FOR THE
PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED WITH RESPECT TO ANY SUCH CLAIM,
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH
COURTS. EACH OF THE BORROWER AND ITS SUBSIDIARIES HEREBY

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IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
REFERRED TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES.
          9.11   Service of Process. THE PARTIES HERETO IRREVOCABLY CONSENT TO
THE SERVICE OF PROCESS OF ANY OF THE AFORESAID COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PARTY AT ITS ADDRESS PROVIDED HEREIN NOT LESS THAN FIVE
(5) DAYS AFTER THE APPLICABLE SUMMONS IS ISSUED AND SHALL BECOME EFFECTIVE UPON
MAILING. NOTHING CONTAINED IN THIS SECTION 9.11 SHALL AFFECT THE RIGHT OF AGENT,
SYNDICATION AGENT, COLLATERAL AGENT, ANY LENDER OR ANY HOLDER OF A NOTE TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST BORROWER OR ANY GUARANTOR IN ANY OTHER JURISDICTION.
          9.12   Waiver of Jury Trial. EACH OF AGENT, COLLATERAL AGENT,
SYNDICATION AGENT, LENDERS AND BORROWER WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN AGENT, COLLATERAL AGENT, SYNDICATION AGENT, LENDERS AND/OR
BORROWER ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
          9.13   Section Headings. Section headings are for reference only, and
shall not affect the interpretation or meaning of any provision of this
Agreement.
          9.14   Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
          9.15   Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts (provided that Borrower shall execute
each counterpart), each of which, when so executed, shall be deemed an original,
but all such counterparts shall constitute but one and the same agreement.
          9.16   No Reliance by Lenders. Lenders hereby acknowledge that they
have not, in good faith, relied upon any margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) as
collateral in extending or maintaining the loans under this Agreement.

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          9.17   Entire Agreement. This Agreement, any writing referred to in
Section 2.15 and any agreement, document or instrument attached hereto or
referred to herein (i) integrate all the terms and conditions mentioned herein
or incidental hereto, (ii) supersede all oral negotiations and prior writings in
respect to the subject matter hereof, and (iii) are intended by the parties as
the final expression of the agreement with respect to the terms and conditions
set forth in this Agreement and any such agreement, document or instrument
(including such letter agreement) and as the complete and exclusive statement of
the terms agreed to by the parties.
          9.18   Confidentiality. Each Lender and Agent agree to keep
information obtained by it pursuant hereto and the other Collateral Documents
confidential in accordance with such Lender’s or Agent’s, as the case may be,
customary practices and agrees that it will only use such information in
connection with the transactions contemplated by this Agreement and not disclose
any of such information other than (i) to such Lender’s or Agent’s, as the case
may be, employees, representatives, agents or affiliates who are advised of the
confidential nature of such information, (ii) to the extent such information
presently is or hereafter becomes available to such Lender or Agent, as the case
may be, on a non-confidential basis from a source other than Borrower or such
information that is in the public domain at the time of disclosure, (iii) to the
extent disclosure is required by law, regulation, subpoena or judicial order or
process (which requirement or order shall be promptly notified to Borrower
unless such notice is legally prohibited) or requested or required by bank
regulators or auditors or any administrative body or commission to whose
jurisdiction such Lender or Agent, as the case may be, may be subject, (iv) to
assignees or participants or potential assignees or participants who agree to be
bound by the provisions of this Section 9.18, (v) to the extent required in
connection with any litigation between Borrower and/or any Guarantor and any
Lender, Syndication Agent, Collateral Agent or Agent, (vi) following an Event of
Default, in connection with the sale or other realization on any Collateral
under any Collateral Document, or (vii) with Borrower’s prior written consent.
          9.19   Existing Credit Agreement to Remain in Full Force and Effect.
This Agreement shall be deemed to be an amendment to and restatement of the
Existing Credit Agreement and the Existing Credit Agreement as amended and
restated hereby shall remain in full force and effect and is hereby ratified and
confirmed in all respects. All references to the Existing Credit Agreement in
any other agreement or document shall, on and after the Closing Date, be deemed
to refer to the Existing Credit Agreement as amended and restated hereby, and
all references to “Bank” or “Banks” in any other agreement or document shall, on
and after the Closing Date, be deemed to be references to “Lender” and
“Lenders”, respectively. The Borrower agrees, acknowledges and affirms that (i)
each of the Collateral Documents to which it is a party shall remain in full
force and effect and shall constitute security for all extensions of credit
pursuant to the Existing Credit Agreement as amended and restated hereby and
(ii) any reference to the Existing Credit Agreement appearing in any such
Collateral Document shall on and after the Closing Date be deemed to refer to
the Existing Credit Agreement as amended and restated hereby.
          9.20   Replacement of Lenders. If any Lender does not consent to any
proposed amendment, modification, waiver or termination of the Credit Documents
pursuant to Section 10.06 requiring the consent of all affected Lenders in
respect of which the consent of the Majority Lenders is obtained (any such
Lender, a “Non-Consenting Lender”), then the Borrower shall have the right to
replace in its entirety such Lender (the “Replaced Lender”), on five

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Banking Days’ prior written notice to the Agent and such Replaced Lender, with
one or more other Persons (collectively, the “Replacement Lender”) reasonably
acceptable to the Agent, the Borrower and, in the event such Replaced Lender is
a Revolving Credit Lender, the Issuing Lender (which acceptance in any case
shall not be unreasonably withheld); provided, that: (i) at the time of any
replacement pursuant to this Section 9.20, the Replaced Lender and the
Replacement Lender shall enter into one or more Assignment and Acceptance,
substantially in the form of Exhibit K (appropriately completed), pursuant to
which the Replacement Lender shall acquire all of the Commitments, participating
interests in Letters of Credit, and outstanding Advances of the Replaced Lender
and, in connection therewith, shall pay to the Replaced Lender in respect
thereof an amount equal to the sum of (a) an amount equal to the principal of,
and all accrued but unpaid interest on, all outstanding Advances of the Replaced
Lender and (b) an amount equal to all accrued, but theretofore unpaid fees owing
to the Replaced Lender and (c) any other amounts payable to the Replaced Lender
under this Agreement. Upon the execution of the respective assignment
documentation, the making of the appropriate entries in the Register, the
payment of amounts referred to in the preceding sentence and, if so requested by
the Replacement Lender, delivery to the Replacement Lender of appropriate Notes
executed by the Borrower, the Replacement Lender shall become a Lender
hereunder, and the Replaced Lender shall cease to constitute a Lender hereunder,
except with respect to indemnification provisions under this Agreement, which
shall survive as to such Replaced Lender. For the avoidance of doubt, it is
understood that neither the Agent nor the Syndication Agent nor any Lender shall
be obligated to be or to find any Replacement Lender.
ARTICLE X.
RELATION OF LENDERS
          10.01   Agent and Collateral Agent; Enforcement of Guaranties.
(a)  Each Lender hereby irrevocably appoints, designates and authorizes Agent to
take such action on its behalf under the provisions of this Agreement and each
other instrument or agreement contemplated hereunder and to exercise such powers
and perform such duties as are expressly delegated to it by the terms of this
Agreement or such other instrument or agreement, together with such powers as
are reasonably incidental thereto. Each Lender agrees that no Lender shall have
the right individually to enforce the Guarantee and Collateral Agreement, the
Mortgages or other Collateral Documents and hereby appoints Agent to act upon
the direction of the Majority Lenders to enforce each such Agreement. JPMorgan
Chase Bank, N.A. and the Operating Banks agree that none of such Lenders shall
take any action to enforce the Operating Bank Guaranty, respectively, until
Agent has commenced to enforce the Guarantee and Collateral Agreement upon the
direction of the Majority Lenders pursuant to the preceding sentence.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in such other instrument or agreement, Agent shall not have any
duties or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any such other instrument or agreement or otherwise exist
against the Agent. Agent may execute any of its duties under this Agreement by
or through agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. Agent shall
not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.

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          (b)   Each Lender hereby authorizes the Collateral Agent to enter into
the Collateral Documents to which it is a party and to take all action
contemplated by the Collateral Agency Agreement; provided that the Collateral
Agent shall not enter into or consent to any amendment, modification,
termination or waiver of any provision contained in any Collateral Document or
take any action thereunder without the direction of Agent. Except as permitted
by Section 10.13, the Agent shall not direct the Collateral Agent to enter into
or consent to any amendment, modification, termination or waiver of any
provision of any Collateral Document or direct the Collateral Agent to take any
action thereunder without the prior consent of the Majority Lenders. Each Lender
agrees that no Lender shall have any right individually to seek or to enforce or
to realize upon the security granted to the Collateral Agent under the
Collateral Documents, it being understood and agreed that such rights and
remedies may be exercised by the Collateral Agent for the benefit of all of the
Secured Creditors upon the terms of the Collateral Documents and the Collateral
Agreement.
          10.02   Pro Rata Sharing. All principal, interest and fee payments on
the Revolving Credit (other than sums under Sections 2.14(a)(ii), 2.14(a)(iii)
and 2.15 or other provisions which provide for payments to specific Lenders)
shall be divided pro rata among Lenders according to their respective Revolving
Credit Commitment Percentages, all principal, interest and fee payments on the
Delayed-Draw Term Loan Facility (other than sums under Section 2.15 or other
provisions which provide for payments to specific Lenders) shall be divided pro
rata among the Lenders according to their respective Delayed-Draw Term Loan
Percentages and all principal, interest and fee payments on the Tranche B Term
Loan Facility (other than sums under Section 2.15 or other provisions which
provide for payments to specific Lenders) shall be divided pro rata among
Lenders according to their respective Tranche B Term Advances. All sums realized
under the Guarantee and Collateral Agreement (or any guaranty executed and
delivered pursuant to Section 3.04) and all proceeds of Collateral distributed
to Lenders under the Collateral Agency Agreement (subject to Section 10.13(f))
shall be allocated as set forth in the Collateral Agency Agreement.
          10.03   Set-off. (a)  Subject to the rights of the Secured Creditors
with respect to any Collateral and in addition to any Liens granted by Borrower
or any of its Subsidiaries to the Collateral Agent and any rights now or
hereafter granted under applicable law and not by way of limitation of any such
Lien or rights, upon the occurrence and during the continuance of an Event of
Default, each Secured Creditor is hereby authorized by Borrower at any time and
from time to time with the prior consent of the Agent, without notice to
Borrower, or to any other Person (any such notice being hereby expressly waived)
to set-off all deposits (excluding payroll, tax, and trust accounts) of Borrower
and any other Debt at any time held or owing by such Secured Creditor to or for
the credit of Borrower against and on account of the Secured Obligations owing
to such Secured Creditor irrespective of whether or not Agent or such Secured
Creditor shall have made demand under this Agreement or any Collateral Document
and although the Secured Obligations may be unmatured. Each of the Lenders
agrees that it shall not, without the express consent of Agent, set-off against
the Obligations or any other amounts owing to such Lender any accounts of
Borrower now or hereafter maintained with such Lender. Each Lender further
agrees that it shall not, unless specifically requested to do so by Agent, take
or cause to be taken any action, including, without limitation, the commencement
of any legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any

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of the Collateral for the purpose of which is, or could be, to give such Lender
any preference or priority against any other Secured Creditor with respect to
the Collateral.
          (b)   If at any time or times any Lender shall receive by payment,
foreclosure, set-off or otherwise, any proceeds of any Collateral or any
payments with respect to the Secured Obligations arising under, or relating to,
this Agreement or the Collateral Documents, except for any such proceeds or
payments received by such Lender or any Issuing Lender from Agent or Collateral
Agent pursuant to the terms of this Agreement or the Collateral Agency
Agreement, such Lender shall promptly purchase, without recourse or warranty, an
undivided interest and participation in the Secured Obligations owed to the
other Lenders (or, after an Event of Default, the other Secured Creditors) so
that such excess payment received shall be applied ratably as among Lenders in
accordance with their respective Commitment Percentages (or, after an Event of
Default among the Secured Creditors as provided for in the Collateral Agency
Agreement); provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall
be returned to such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in connection with the
recovery of the excess payment. Notwithstanding any contrary provision contained
herein, the proceeds of any drawing under any Letter of Credit issued hereunder
in favor of JPMorgan Chase Bank, N.A. in its individual capacity (without
affecting JPMorgan Chase Bank, N.A.’s obligation to purchase a participation in
any such Letter of Credit in accordance with Section 2.19(c)(i)) shall be for
JPMorgan Chase Bank N.A.’s sole benefit.
          (c)   Each Secured Creditor other than in its capacity as a Lender
shall be entitled to any rights conferred upon it under this Agreement or any of
the Collateral Documents only on the condition and understanding that it shall
be bound by the terms of this Section 10.03 to the same extent as Lenders.
          10.04   Liability of Agent. Neither Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement (except for its or such Person’s own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recital, statement, representation or warranty made by
Borrower or any Subsidiary or any officer thereof contained in this Agreement or
in any other instrument or agreement contemplated hereunder or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any other
instrument or agreement contemplated hereunder or for the value of any
Collateral or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other instrument or agreement contemplated
hereunder or for any failure of Borrower or any Subsidiary to perform its
obligations hereunder or thereunder. Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of agreements contained in, or conditions of, this Agreement or any other
instrument or agreement contemplated hereunder, or to inspect the properties,
books or records of Borrower or any Subsidiary.

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          10.05   Reliance by Agent. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
electronic message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including
counsel to Borrower or any Guarantor), independent accountants and other experts
selected by Agent. Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other instruction or agreement
contemplated hereunder unless it shall first receive such advice or concurrence
of the Majority Lenders as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other
instrument or agreement contemplated hereunder in accordance with a request or
consent of the Majority Lenders and such request and any action taken or failure
to act pursuant thereto shall be binding upon all Lenders.
          10.06   Approvals; Amendments. This Agreement and the Collateral
Documents may be amended or waived only upon the prior express written consent
of Borrower or Guarantors, as the case may be, party thereto and the Majority
Lenders (provided that any Control Agreement may be amended or waived with the
consent of the respective parties thereto). Upon any occasion requiring or
permitting an approval, consent, waiver, election or other action on the part of
Majority Lenders, action shall be taken by Agent for and on behalf or for the
benefit of all Lenders upon the direction of Majority Lenders, and any such
action shall be binding on all Lenders; provided, however, that unless each
Lender directly and adversely affected thereby (it being understood that, for
the purposes of Section 10.06 (d), (e) and (g), all Lenders shall be deemed to
be directly affected thereby) agree in writing, no amendment, modification,
consent or waiver shall be effective which:
     (a)   increases the amount of any Commitment of any Lender or extends the
expiry date thereof,
     (b)   reduces interest, principal, prepayment premium (if any, owed
pursuant to Section 2.12(b)), commissions or fees owing hereunder,
     (c)   extends the scheduled date on which any sum is due hereunder,
     (d)   releases all or substantially all of the Guarantors from their
obligations under the Guarantee and Collateral Agreement or, subject to the
proviso in Section 10.13(c), releases all or substantially all of the Collateral
(except (i) in connection with dispositions thereof permitted under this
Agreement, (ii) as permitted by subsection 10.13(b), (iii) any Guarantor may be
released from its obligations under the Credit Documents if all of the Capital
Stock of, or substantially all of the assets of, such Guarantor are disposed of
in a transaction permitted by this Agreement or (iv) as otherwise expressly
permitted by this Agreement),
     (e)   reduces the percentage specified in the definition of “Majority
Lenders”,

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     (f)   amends or waives the provisions of this Section 10.06, or
     (g)   amends or waives any provision requiring consent of a specified
percentage of Lenders without consent of such percentage of Lenders.
          Notwithstanding the foregoing, (i) the Agent and the Collateral Agent
may enter into technical amendments to the Collateral Agency Agreement without
the consent of the Lenders, (ii) the Agent and the Collateral Agent may enter
into amendments to the Operating Bank Guaranty replacing Annex I thereto without
the consent of the Lenders and (iii) no amendment, modification, consent or
waiver shall be effective which reduces the amount of any mandatory prepayment
under Section 2.13 without the consent of the holders of at least a majority in
interest of each Facility.
          Further, notwithstanding anything to the contrary contained in
Section 10.6, if within sixty days following the Closing Date, the Agent and the
Borrower shall have jointly identified an obvious error or any error or omission
of a technical or immaterial nature, in each case, in any provision of the Loan
Documents, then the Agent and the Borrower shall be permitted to amend such
provision and such amendment shall become effective without any further action
or consent of any other party to any Credit Document if the same is not objected
to in writing by the Majority Lenders within five Business Days following
receipt of notice thereof.
          10.07   Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default, except with respect to
defaults in the payment of principal, interest, commissions and fees payable to
Agent hereunder for the account of Lenders, unless Agent shall have received
notice from a Lender or Borrower referring to this Agreement, describing such
Event of Default and stating that such notice is a “notice of default”. In the
event that Agent receives such a notice, Agent shall give prompt notice thereof
to Lenders. Agent shall take such action with respect to such Event of Default
as shall be requested by the Majority Lenders in accordance with Article VIII;
provided, however, that unless and until Agent shall have received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Event of Default as it shall deem
advisable in the best interests of Lenders.
          10.08   Credit Decision. Each Lender expressly acknowledges that
neither Agent nor any other Lender nor any of their Affiliates nor any officer,
director, employee, agent or attorney-in-fact of any of them has made any
representation or warranty to it and that no act by Agent or any other Lender
hereafter taken, including any review of the affairs of Borrower and its
Subsidiaries and their Affiliates, shall be deemed to constitute any
representation or warranty by Agent or any other Lender to such Lender. Each
Lender represents to Agent and to each other Lender that it has, independently
and without reliance upon Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of Borrower and Guarantors and made its own
decision to enter into this Agreement and extend credit to Borrower hereunder
(without reliance on the Agent or any other Lender). Each Lender also represents
that it will, independently and without reliance upon Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in

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taking or not taking action under this Agreement, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower and Guarantors (without reliance on the Agent or
any other Lender). Except for notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder, Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower or any Guarantor which may
come into the possession of Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.
          10.09   Lenders’ Indemnity. Each Lender agrees to indemnify Agent (to
the extent not reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), ratably, according to the sum of (i) its
Revolving Credit Commitments (or, if the Revolving Credit Commitments have been
terminated, the sum of its outstanding Revolving Advances, participating
interests in Letters of Credit and unreimbursed drawings in respect of Letters
of Credit), (ii) its Delayed-Draw Term Loan Commitments (or if the Delayed-Draw
Term Loan Commitments shall have been terminated, the sum of the outstanding
Delayed-Draw Term Advances) and (iii) its outstanding Tranche B Term Advances,
in each case determined in effect on the date on which indemnification is sought
under this Section (or, if indemnification is sought after the date upon which
the Commitments shall have terminated and the Advances shall have been paid in
full, ratably in accordance with such sum immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Advances or the Letters of Credit) be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing; provided however, that no Lender shall
be liable for the payment to Agent of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from Agent’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable fees and expenses of counsel and the allocated
cost of in-house counsel) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
Collateral Document, or any document contemplated by or referred to herein to
the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrower.
          10.10   Agent as Lender. JPMorgan Chase Bank, N.A. shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not Agent; and the term “Lenders” shall include JPMorgan Chase
Bank, N.A. in its individual capacity. JPMorgan Chase Bank, N.A. and its
subsidiaries and affiliates may accept deposits from, lend money to, act as
agent or trustee for other lenders to, and generally engage in any kind of
banking, trust or other business with Borrower or any of its Subsidiaries or
Affiliates as if it were not Agent.

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          10.11   Notice of Transfer. Subject to Section 9.04(a), Agent may deem
and treat a Lender party to this Agreement as the owner of such Lender’s portion
of the Credit for all purposes hereof unless and until a written notice of the
assignment or transfer thereof executed by such Lender shall have been received
by Agent.
          10.12   Resignation of Agent. Agent may resign upon 30 days’ written
notice to Lenders and Borrower. Upon any such resignation, Majority Lenders
shall have the right to appoint a successor Agent (which shall be either a
Lender or a commercial bank with capital and surplus in excess of One Hundred
Million Dollars ($100,000,000) and which successor Agent, unless a Default or an
Event of Default has occurred and is continuing, shall be reasonably acceptable
to Borrower). If no successor Agent shall have accepted such appointment within
thirty (30) days after the retiring Agent’s giving of notice of resignation, the
retiring Agent may, on behalf of Lenders, appoint a successor Agent. Upon the
acceptance by the successor Agent of its appointment hereunder, the successor
Agent shall succeed to and become vested with all the rights and obligations of
the retiring Agent, and the retiring Agent shall be discharged from its
obligations under this Agreement. The provisions of this Article X and
Sections 9.06, 9.07 and 9.08 shall inure to the benefit of the retiring Agent as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
          10.13   Collateral Matters. (a)  Agent may from time to time, before
or after the occurrence of an Event of Default, make such disbursements and
advances to the Collateral Agent (“Agent Advances”) which Agent, in its sole
discretion, deems necessary or desirable to preserve or protect the Collateral
or any portion thereof, to enhance the likelihood or maximize the amount of
repayment of the Obligations or to pay any other amount chargeable to Borrower
or any Guarantor pursuant to the terms of this Agreement or any Collateral
Document, including, without limitation, costs, fees and expenses as described
in Section 9.06; provided, however, that the Agent Advances shall not exceed Two
Hundred Fifty Thousand Dollars ($250,000) without the prior written consent of
Majority Lenders. The Agent Advances shall be repayable on demand and be secured
by the Collateral. The Agent Advances shall not constitute Advances but shall
otherwise constitute Obligations hereunder. Agent shall notify each Lender in
writing of each such Agent Advance, which notice shall include a description of
the purpose of such Agent Advance. Without limitation to its obligations
pursuant to Section 10.09, each Lender agrees that it shall make available to
Agent, upon Agent’s demand, in immediately available funds, the amount equal to
such Lender’s Commitment Percentage of each such Agent Advance. If such funds
are not made available to Agent by such Lender within one (1) Banking Day after
Agent’s demand therefor, Agent will be entitled to recover any such amount from
such Lender together with interest thereon at the Federal Funds Rate for each
day during the period commencing the date of such demand and ending on the date
such amount is received.
          (b)   Lenders acknowledge that the Borrower and its Subsidiaries have
created and will create Liens permitted by this Agreement on a substantial
portion of their property, including Collateral, to secure obligations owed to
Persons other than the Secured Creditors and that the Borrower and its
Subsidiaries from time to time have requested and will request the Agent and
Collateral Agent to execute and deliver releases and subordinations with respect
to Liens on the Collateral created by the Collateral Documents in connection
with transactions permitted by this Agreement (such as the Borrower and its
Subsidiaries obtaining financing on equipment and other property secured by
Liens described in clauses (iv) and (xiii) of the

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definition of “Permitted Liens”). Lenders hereby irrevocably authorize Agent, at
its option and in its discretion, to direct the Collateral Agent to release or
subordinate on terms satisfactory to the Collateral Agent any Lien granted to or
held by the Collateral Agent upon any Collateral (i) upon termination of the
Revolving Credit Commitments and Term Loan Commitments and indefeasible payment
in full and satisfaction of all of the Obligations; or (ii) constituting
property being sold or disposed of if the sale or disposition is permitted
hereunder; or (iii) constituting property in which neither Borrower nor any
Guarantor owned an interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to Borrower or any Guarantor;
or (v) if approved, authorized or ratified in writing by the Majority Lenders
(subject to Section 10.06(d)); or (vi) subject to a Permitted Lien or other Lien
permitted by Section 7.03; or (vii) not owned by the Borrower or any Guarantor.
Upon request by Agent at any time, Lenders will confirm in writing Agent’s
authority to so direct the release of particular types or items of Collateral
pursuant to this Section 10.13(b). Without limitation of the foregoing, the
Lenders approve the form of, and authorize the Agent and the Collateral Agent to
enter into at the request of the Borrower, subordination agreements
substantially in the form of Exhibit L hereto. The Lenders hereby irrevocably
authorize Agent, at its option and discretion (1) to direct the Collateral Agent
to release and subordinate, on terms satisfactory to the Collateral Agent, Liens
on Collateral which is also subject to Permitted Liens, (2) to execute any
release, subordination or acknowledgement documents requested by the Borrower in
order to effect any release or subordination described in this paragraph (b) and
(3) to execute acknowledgements with respect to leases to the effect that the
Property subject to such leases is not subject to the Liens created by the
Credit Documents or Collateral, and the Agent and the Collateral Agent shall
have no liability to the Secured Creditors for actions taken pursuant to this
paragraph (b). This paragraph (b) is intended as an authorization by the Lenders
to permit the Agent and the Collateral Agent to take the actions described
herein and neither the Borrower nor any of its Subsidiaries or any other Person
shall be entitled to the benefits hereof. In reliance on and pursuant to the
foregoing authority the Agent and the Collateral Agent may enter into
subordination agreements and take other actions requested by the Borrower in
order to provide assurance to purchase money financing sources and their
assignees and successors of their priority in particular items of Collateral,
notwithstanding that such financing sources and their assignees and successors
may have failed to maintain perfected first priority security interests thereon.
          (c)   Without in any manner limiting Agent’s authority to act without
any specific or further authorization or consent by the Majority Lenders (as set
forth in Section 10.13(b) above), each Lender agrees to confirm in writing, upon
request by Borrower, the authority to direct the release of Collateral conferred
upon the Agent under clauses (i) through (vii) of Section 10.13(b) above. Upon
receipt by Agent of confirmation from the Majority Lenders of its authority to
direct the release of any particular item or types of Collateral, Agent shall
(and is hereby irrevocably authorized by Lenders to) direct the Collateral Agent
to execute such documents as may be necessary to evidence the release of the
Liens granted to the Collateral Agent for the benefit of the Secured Creditors
herein or pursuant hereto upon such Collateral; provided, however, that
(i) Agent shall not be required to direct the Collateral Agent to execute any
such document on terms which, in Agent’s opinion, would expose Agent or the
Collateral Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of Borrower and its

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Subsidiaries in respect of) all interests retained by Borrower and its
Subsidiaries, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
          (d) Neither Agent nor Collateral Agent shall have any obligation
whatsoever to any Lender to assure that the Collateral exists or is owned by
Borrower or any of its Subsidiaries or is cared for, protected or insured or has
been encumbered or that the Liens granted to the Agent or the Collateral Agent
pursuant to any Collateral Document have been properly or sufficiently or
lawfully created, perfected, protected or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Agent or Collateral Agent
in this Section 10.13 or in any of the Collateral Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission or event
related thereto, each of Agent and Collateral Agent may act in any manner it may
deem appropriate, in its sole discretion, given Agent’s and Collateral Agent’s
own interest in the Collateral as one of the Lenders and that Agent and
Collateral Agent shall have no duty or liability whatsoever to any Lender
(except as specifically provided in this Agreement and the Collateral
Documents).
          EACH LENDER FURTHER ACKNOWLEDGES AND AGREES THAT AGENT AND COLLATERAL
AGENT SHALL NOT BE RESPONSIBLE FOR, AND SHALL HAVE NO LIABILITY OR OBLIGATION
WITH RESPECT TO, THE VALIDITY, EFFECTIVENESS, GENUINENESS, ENFORCEABILITY OR
SUFFICIENCY OF THIS AGREEMENT, THE NOTES, THE COLLATERAL DOCUMENTS, ANY OTHER
INSTRUMENT OR AGREEMENT CONTEMPLATED HEREUNDER OR THEREUNDER, ANY ACTION TAKEN
OR NOT TAKEN OR ANY DECISION MADE BY ANY PERSON (OTHER THAN AGENT, OR COLLATERAL
AGENT, AS THE CASE MAY BE) WITH RESPECT TO ANY THEREOF OR WITH RESPECT TO THE
COLLATERAL, THE FAILURE OF THE BORROWER OR ANY SUBSIDIARY TO PERFORM ITS
OBLIGATIONS HEREUNDER OR THEREUNDER, ANY MISREPRESENTATION BY BORROWER OR ANY
SUBSIDIARY HEREUNDER OR THEREUNDER, OR THE VALUE OF ANY COLLATERAL OR THE
CREATION, ATTACHMENT, PERFECTION OR PRIORITY OF ANY SECURITY INTEREST OR LIEN
PURPORTED TO BE CREATED BY THE COLLATERAL DOCUMENTS, THIS AGREEMENT OR SUCH
OTHER INSTRUMENTS OR AGREEMENTS AND THAT AGENT, AS COLLATERAL AGENT AND AGENT,
HAS UNDERTAKEN NO INDEPENDENT REVIEW OR ANALYSIS WITH RESPECT TO ANY OF THE
FOREGOING.
          (e) The benefit of the Collateral Documents and of the provisions of
this Agreement relating to the Collateral shall extend to and be available in
respect of the Secured Obligations (as defined in the Collateral Agency
Agreement) solely on the condition and understanding, as among Agent and
Lenders, that (i) the Secured Obligations shall be entitled to the benefit of
the Collateral to the extent expressly set forth in the Collateral Documents,
and to such extent the Collateral Agent shall hold, and have the right and power
to act with respect to, the Collateral on behalf of and as agent for the holders
of the Secured Obligations; but Agent in its separate capacity as agent
hereunder is acting solely as agent for the Lenders and shall have no separate
fiduciary duty, duty of loyalty, duty of care, duty of disclosure or other
obligations whatsoever to any holder of Secured Obligations; and (ii) all
matters, acts and omissions relating

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in any manner to the Collateral, or the omission, creation, perfection,
priority, abandonment or release of any Lien, shall be governed solely by the
provisions of this Agreement and the Collateral Documents, and no separate Lien,
right, power or remedy shall arise or exist in favor of any Lender under any
separate instrument or agreement or in respect of any Secured Obligations; and
(iii) each Lender shall be bound by all actions taken or omitted, in accordance
with the provisions of this Agreement or the Collateral Documents, by the
Collateral Agent, at the direction of Agent on behalf of the Lenders; and
(iv) no holder of Secured Obligations shall exercise any right of setoff, bank’s
lien or similar right except as expressly provided in Section 10.03.
          (f) Any Collateral proceeds received by Agent from the Collateral
Agent pursuant to Section 4(b) clause Third of the Collateral Agency Agreement
shall be applied and paid to the Obligations as follows (unless Agent and
Majority Lenders otherwise agree):
     First: To Agent and the Collateral Agent in an amount equal to all costs
and expenses (other than principal and interest) incurred in connection with
performing their respective duties hereunder and under the Collateral Documents,
including, without limitation, those related to or in connection with the
administration of this Agreement or the enforcement of their respective rights
under the Collateral Documents;
     Second: To the Lenders and the Issuing Lenders in an amount equal to all
accrued and unpaid interest and accrued and unpaid fees and commissions payable
pursuant to Section 2.14 outstanding hereunder or under the Notes and, if such
proceeds shall be insufficient to pay such amounts in full, then ratably
(without priority of any one over any other) to the Lenders and the Issuing
Lenders in proportion to the unpaid amounts of such accrued and unpaid interest,
fees and commissions owed to the respective Lender or Issuing Lender, as the
case may be;
     Third: To the Lenders in an amount equal to all unpaid principal of the
outstanding Advances, to the Issuing Lenders in the amount of any unreimbursed
Letter of Credit drawings (to the extent they have not been converted into a
Revolving Advance) and to Agent for deposit as cash collateral, for application
against drawings under any Letters of Credit, up to an amount equal to the
undrawn amount of such Letters of Credit and, if such proceeds shall be
insufficient to pay such amounts in full, then ratably (without priority of any
one over any other) to the Lenders, the Issuing Lenders and the Agent in
proportion of such amounts owed under this clause Third to the respective
Lender, Issuing Lender or Agent, as the case may be;
     Fourth: To any accrued and unpaid fees, commissions and other sums payable
pursuant to this Agreement and not paid pursuant to clause Second of this
provision and, if such proceeds shall be insufficient to make such payments in
full, then ratably (without priority of any one obligation over any other) in
proportion to the unpaid amounts of accrued and unpaid fees, commissions and
other sums so owed; and
     Fifth: Any surplus then remaining shall be paid to Borrower or its
successors or assigns, or to whomever may be lawfully entitled to receive the
same, or as a court of competent jurisdiction may direct.

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          10.14 Collateral Agent. The Collateral Agent shall be entitled to the
standards of care, indemnities and other rights set forth in this Article Ten as
are set forth for the Agent, mutatis mutandis, except as may be expressly
provided otherwise hereunder, or in the Collateral Documents.
          10.15 Documentation Agent and Syndication Agent. Neither the
Documentation Agent nor the Syndication Agent shall have any rights, duties or
responsibilities hereunder in its capacity as such.

112

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.

              BALLY TOTAL FITNESS HOLDING CORPORATION
 
       
 
  By:   /s/ Ronald Eidell
 
       
 
      Name: Ronald Eidell
 
      Title: Chief Financial Officer

113

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              JPMORGAN CHASE BANK, N.A., as Agent and as a Lender
 
       
 
  By:   /s/ Barry Bergman
 
       
 
      Name: Barry Bergman
 
      Title: Managing Director

114

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              MORGAN STANLEY SENIOR FUNDING, INC., as     Syndication Agent and
as a Lender
 
       
 
  By:   /s/ Jason Colodell
 
       
 
      Name: Jason Colodell
 
      Title: Vice President

115

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              GOLDMAN SACHS CREDIT PARTNERS L.P., as a Lender
 
       
 
  By:   /s/ John Friedman
 
       
 
      Name: John Friedman
 
      Title: Managing Director

116

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              CANYON CAPITAL ADVISORS LLC, as a Lender
 
       
 
  By:   /s/ Richard Katz
 
       
 
      Name: Richard Katz
 
      Title: Authorized Signatory

117

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Schedule 1.01(b)
GAAP EBITDA ADJUSTMENTS

          determination period     (month ending)   Maximum Allowed
November 30, 2006 through August 31, 2007
  $ 13,000,000  
September 30, 2007
  $ 10,000,000  
October 31, 2007
  $ 8,000,000  
November 30, 2007
  $ 6,000,000  
December 31, 2007 and thereafter
  $ 4,000,000