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                                                                     Exhibit 4.2

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                             STOCKHOLDERS' AGREEMENT

                                  BY AND AMONG

                    GENERAL NUTRITION CENTERS HOLDING COMPANY

                                       AND

                                ITS STOCKHOLDERS

                          DATED AS OF DECEMBER 5, 2003

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                    GENERAL NUTRITION CENTERS HOLDING COMPANY

                             STOCKHOLDERS' AGREEMENT

                  THIS STOCKHOLDERS' AGREEMENT (this "Agreement") dated as of
December 5, 2003, by and among General Nutrition Centers Holding Company, a
Delaware corporation (the "Company"), GNC Investors, LLC, a Delaware limited
liability company ("GNC LLC"), Apollo Investment Fund V, L.P., a Delaware
limited partnership ("Apollo LP") and each of the other persons (as defined in
Section 1 and whose names are listed on the Schedule of Stockholders maintained
by the Secretary of the Company) other than GNC LLC and Apollo (the "Co-Investor
Stockholders"). Each of the parties to this Agreement (other than the Company)
and any other person who shall become a party to or agree to be bound by the
terms of this Agreement after the date hereof is sometimes hereinafter referred
to as a "Stockholder." All capitalized terms used but not otherwise defined
herein shall have the meaning ascribed thereto in Section 1 hereto.

                                R E C I T A L S:

         WHEREAS, prior to the execution of this Agreement, General Nutrition
Centers, Inc. (f/k/a Apollo GNC Holding, Inc.), a wholly-owned subsidiary of the
Company ("Centers") and others entered into a Purchase Agreement, dated as of
October 16, 2003, relating to the acquisition by Centers of the business of
General Nutrition Companies, Inc.

         WHEREAS, in connection with the closing under the Purchase Agreement,
the Company and the Management Co-Investors have executed and delivered stock
subscription agreements, each dated as of December 5, 2003 (the "Subscription
Agreements"), pursuant to which, among other things, the Company has agreed to
issue to the Management Co-Investors, and the Management Co-Investors have
agreed to acquire from and/or have been granted by the Company an aggregate of
823,333 shares of Common Stock (as defined below), each allocated as set forth
on Appendix A hereto;

         WHEREAS, in connection with the closing under the Purchase Agreement,
the Company and GNC LLC have entered into a Stock Subscription Agreement (the
"GNC LLC Subscription Agreement") pursuant to which the Company has agreed to
issue to GNC LLC, and GNC LLC has agreed to acquire from the Company, 28,743,333
shares of Common Stock and 100,000 shares of Preferred Stock, in the aggregate;
and

         WHEREAS, the Company and the Stockholders desire to enter into this
Agreement setting forth the rights and obligations with respect to all shares of
Common Stock and Preferred Stock owned and hereafter acquired by them.

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         NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth in this
Agreement, the parties hereto, intending to be legally bound, hereby agree as
follows:

        1.       CERTAIN DEFINITIONS.  As used in this Agreement, the following
terms shall have the following respective meanings:

                  "Affiliate" of a person shall mean any person, controlling,
controlled by, or under common control with such person.

                  "Apollo" means Apollo LP and each of its Affiliates that own
shares of Common Stock or Preferred Stock, which Affiliates shall include GNC
LLC only (i) if Apollo Management V, L.P. or one of its Affiliates is the
manager of GNC LLC and (ii) prior to the occurrence of the events described in
Section 10.3 hereof.

                  "Apollo Minimum" means at least 2,100,000 shares of Common
Stock.

                  "Apollo Shares" means shares of Common Stock, directly or
beneficially owned by Apollo or any Permitted Transferee that is an Affiliate of
Apollo LP, whether owned on the date hereof or hereafter acquired.

                  "Apollo Transfer Minimum" means at least 4,200,000 shares of
Common Stock.

                  "Certificate of Designation" shall mean the Certificate of
Designation, Preferences and Relative, Participation, Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations and Restrictions
thereof of the Company's 12% Series A Cumulative Senior Redeemable Exchangeable
Preferred Stock.

                  "Co-Investor Stockholders" shall mean the Management
Co-Investors and the Institutional Co-Investors.

                  "Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.

                  "Common Stock" shall mean the shares of Common Stock, par
value $.01 per share, of the Company.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Governmental Authority" shall mean any government, court,
administrative agency or commission or other governmental agency, authority or
instrumentality, domestic or foreign, of competent jurisdiction.

                  "Institutional Co-Investor" shall mean the Members (as such
term is defined therein) of GNC LLC, other than Apollo LP and its Affiliates.

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                  "LLC Agreement" means the Limited Liability Company Agreement
of GNC LLC, as such may be amended, modified or supplemented and in effect from
time to time.

                  "Management Co-Investor" shall mean the persons named in
Appendix A, including any person that is added to Appendix A after the date
hereof pursuant to the terms of this Agreement in all cases (other than Apollo,
any Affiliate of Apollo, any holder of Apollo Shares and any Institutional
Co-Investor).

                  "New Securities" shall have the meaning set forth in
Section 3.

                  "New Securities Notice" shall have the meaning set forth in
Section 3.

                  "Non-Apollo Members" shall mean the members of GNC LLC that
are not Apollo LP or an affiliate of Apollo LP. For the avoidance of doubt, any
limited partner of Apollo LP that is a member of GNC LLC shall not constitute
"an affiliate of Apollo LP" for purposes of this definition.

                  "Notice of Election" shall have the meaning set forth in
Section 3.

                  "Permitted Transfer" shall have the meaning set forth in
Section 4.4.

                  "Permitted Transferee" shall mean any stockholders, partners
or members of any Apollo entity and any Affiliate of any Apollo entity.

                  "person" shall mean any individual, firm, corporation,
partnership, limited liability company, trust, joint venture, Governmental
Authority or other entity, and shall include any successor (by merger or
otherwise) of such entity.

                  "Preemptive Rights Offer" shall have the meaning set forth in
Section 3.

                  "Preemptive Rights Offeree" shall have the meaning set forth
in Section 3.

                  "Preferred Stock" shall mean the Company's Series A preferred
stock that is issued and sold on or about the date of this Agreement, as such
may be amended, modified or supplemented from time to time.

                  "Qualified IPO" shall mean a sale by the Company of shares of
Common Stock in an underwritten (firm commitment) public offering registered
under the Securities Act, with gross proceeds to the Company of not less than
$100 million, resulting in the listing of the Common Stock on a nationally
recognized stock exchange, including, without limitation, the Nasdaq National
Market System.

                  "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

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                  "Stockholders" shall mean each person, other than the Company,
who has executed this Agreement and each person who is required to become a
party to this Agreement in the future in accordance with the terms hereof.

                  "Transfer" means a sale, assignment, encumbrance, gift,
pledge, hypothecation or other disposition of Common Stock or any interest
therein.

        2.    VOTING. For so long as Apollo owns the Apollo Minimum, each
Stockholder hereby irrevocably appoints Apollo LP (with full power of
substitution), upon the execution and delivery of this Agreement, as such
Stockholder's proxy and attorney-in-fact (in such capacity, a "Proxy Holder") to
vote and give or withhold consent, with respect to all shares of Common Stock
and Preferred Stock (as applicable) held by such Stockholder at any time, for
all matters subject to the vote of such Stockholder from time to time in such
manner as such Proxy Holder shall determine in its sole and absolute discretion,
whether at any meeting (whether annual or special and whether or not an
adjourned meeting) of the Company or by written consent or otherwise, giving and
granting to the Proxy Holder all powers such Stockholder would possess if
personally present and hereby ratifying and confirming all that said Proxy
Holder shall lawfully do or cause to be done by virtue hereof. The Proxy Holder
shall not have any liability to any Stockholder as a result of any action taken
or failure to take action pursuant to the foregoing proxy except for any action
or failure to take action not taken or omitted in good faith or which involves
intentional misconduct or a knowing violation of applicable law. Each
Stockholder represents that any proxies given by such Stockholder prior to
becoming a party to this Agreement are not irrevocable; any such proxies are
hereby revoked. Each Stockholder hereby affirms that this irrevocable proxy is
given in consideration for the mutual agreements contained in this Agreement and
that this irrevocable proxy is coupled with an interest and may, under no
circumstances, be revoked. The Company hereby acknowledges receipt of and the
validity of the foregoing irrevocable proxy, and agrees to recognize the Proxy
Holder as the sole attorney and proxy for each such Stockholder at all times
prior to the termination date of such irrevocable proxy as hereinafter provided
in this Section 2. Each such Stockholder intends that this irrevocable proxy is
executed and intended to be irrevocable in accordance with the provisions of
Section 212 of the Delaware General Corporation Law. The proxy provided by this
Section 2 shall terminate and be deemed revoked on the date that Apollo no
longer owns the Apollo Minimum or, if earlier, as to any shares owned by a
Co-Investor Stockholder that are (a) Transferred without restriction pursuant to
Rule 144 promulgated under the Securities Act, (b) are sold pursuant to a
registration statement filed with the Commission or (c) are Transferred in
accordance with Section 5 or 6 hereof.

        3.    PREEMPTIVE RIGHTS. In the event that the Company proposes to issue
or sell any New Securities (as defined below) to Apollo LP or any of its
Affiliates (other than GNC LLC), it shall, no later than ten (10) days prior to
the consummation of such transaction, give notice in writing (the "New
Securities Notice") to each Institutional Co-Investor (each, a "Preemptive
Rights Offeree") of such proposed issuance of New Securities. The New Securities
Notice shall describe the proposed issuance of New Securities (including the
amount and price of such New Securities), identify the proposed

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purchaser(s), and contain an offer (the "Preemptive Rights Offer") to sell to
each Preemptive Rights Offeree, at the same price and for the same consideration
to be paid by the proposed purchaser(s), all or part of such Preemptive Rights
Offeree's pro rata portion of the New Securities. Following receipt of such
notice, each Preemptive Rights Offeree shall have ten (10) days during which it
may elect to purchase a pro rata portion of the New Securities determined by
dividing the number of shares of Common Stock held by such Preemptive Rights
Offeree by the aggregate number of shares of Common Stock of the Company
outstanding immediately prior to the proposed issuance of New Securities,
calculated on a fully diluted, as converted basis. Such election shall be made
by delivering written notice to the Company of such election (the "Notice of
Election") specifying the number of shares of Common Stock that it elects to
purchase in an amount up to, but not exceeding, its pro rata portion. A
Preemptive Rights Offeree who fails to give such Notice of Election shall have
no further pre-emptive rights to which the New Securities Notice is related. If
the Company does not effectuate such sale described in the New Securities Notice
within ninety (90) days after the expiration of such ten (10) day period, it
shall be required to again comply with this Section 3 prior to effectuating any
such sale. For purposes of this Section 3, "New Securities" shall mean any
shares of capital stock of the Company and all securities that are convertible
into capital stock; provided, however, that New Securities shall not include
shares of capital stock or convertible securities: (i) issued upon the exercise
of any convertible securities; (ii) issued in connection with payment-in-kind
interest; (iii) issued in connection with dividends payable in kind, if and when
declared; (iv) issued in connection with a stock split or recapitalization; (v)
granted or issued pursuant to the exercise of options or other stock-based
incentive awards granted to consultants, advisors, employees, officers or
directors pursuant to plans approved by the Board of Directors; (vi) issued
pursuant to a merger, consolidation, strategic alliance, acquisition or similar
business combination; (vii) issued pursuant to a registration statement filed
under the Securities Act; or (viii) issued in connection with borrowing or the
issuance of debt securities.

        4.       TRANSFERABILITY.

                 4.1      Restrictions on Transferability.

                         (a)   No Co-Investor Stockholder shall, directly or
indirectly, Transfer any shares of Common Stock or Preferred Stock owned by such
Co-Investor Stockholder, or any interest therein, unless such transfer or
disposition is made upon compliance with the provisions of the Securities Act
and in accordance with the applicable provisions of Sections 4, 5 and 6 hereof;
provided, however, that following the consummation of an initial public offering
that is not a Qualified IPO, unless and until Apollo waives proviso (ii) of
Section 6(c) hereof, each of the Co-Investor Stockholders shall be permitted to
make, subject to Section 4.1(c) below, Transfers of Common Stock permitted
pursuant to Rule 144 promulgated under the Securities Act. Any attempted
Transfer by a Co-Investor Stockholder other than in accordance with the terms
hereof is void ab initio and transfers no right, title or interest in or to such
shares to the purported transferee, buyer, donee, assignee or encumbrance
holder. The restrictions set forth in this Section 4.1(a) shall terminate as
such restrictions relate to the Common Stock after the consummation of a
Qualified IPO.

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                         (b)   Each of the Co-Investor Stockholders agrees that
it will not, directly or indirectly, Transfer any shares of Common Stock or
Preferred Stock without Apollo's prior written consent (except for Transfers
permitted under Section 4.4) which consent shall be in Apollo's sole and
absolute discretion. The restrictions set forth in this Section 4.1(b) shall
terminate as such restrictions relate to the Common Stock after the consummation
of a Qualified IPO.

                         (c)   Notwithstanding anything to the contrary in this
Agreement, and provided that Apollo owns the Apollo Transfer Minimum, no
Management Co-Investor shall Transfer, directly or indirectly, in any 12-month
period following the consummation of a Qualified IPO (or if Transfers under Rule
144 are permitted pursuant to the proviso of Section 4.1(a) hereof, following an
initial public offering that is not a Qualified IPO), a number of shares of
Common Stock that exceeds the number of Shares of Common Stock next to such
Management Co-Investor's name on Schedule 4.1(c) (as such schedule is maintained
by the Secretary of the Company) multiplied by the applicable percentage in the
table below, without Apollo's prior written consent, which consent shall be in
Apollo's sole and absolute discretion:

12-Month Period After Consummation of Qualified IPO           Percentage
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          First 12 months                                         25%
          Second 12 months                                        35%
          Third 12 months                                         40%

                  In the event that a Management Co-Investor does not sell the
percentage specified above during the relevant year, any portion of such
percentage that is not transferred in such relevant year shall roll forward to
subsequent years.

        4.2    Restrictive Legend. Each certificate representing any portion of
the Common Stock or Preferred Stock that is held by a party hereto shall be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):

         "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE
         STATE SECURITIES LAWS, AND MAY BE OFFERED, PLEDGED, SOLD, ASSIGNED,
         TRANSFERRED OR OTHERWISE DISPOSED OF ONLY IF REGISTERED PURSUANT TO THE
         PROVISIONS OF THE ACT AND SUCH LAWS, OR IN COMPLIANCE WITH AN
         APPLICABLE EXEMPTION FROM REGISTRATION.

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO A
         STOCKHOLDERS' AGREEMENT, DATED AS OF DECEMBER 5, 2003, AS IT MAY BE
         AMENDED FROM TIME TO TIME (THE "AGREEMENT"), WHICH CONTAINS PROVISIONS
         REGARDING (I) CERTAIN RESTRICTIONS ON THE TRANSFER OF SUCH SECURITIES,
         (II) CERTAIN TAG-ALONG RIGHTS AND

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         DRAG-ALONG RIGHTS APPLICABLE TO SUCH SECURITIES, (III) CERTAIN
         RESTRICTIONS ON VOTING AND THE GRANT OF AN IRREVOCABLE PROXY AND (IV)
         CERTAIN OTHER MATTERS. A COPY OF SUCH AGREEMENT IS AVAILABLE FOR
         INSPECTION AT THE PRINCIPAL OFFICE OF THE COMPANY. ANY TRANSFER OF THE
         SECURITIES EVIDENCED BY THIS CERTIFICATE OR ANY INTEREST THEREIN IN
         VIOLATION OF THE AGREEMENT IS NULL AND VOID."

            4.3   Notice of Proposed Transfers; Securities Law Compliance. Prior
to any proposed Transfer of any shares of Common Stock or Preferred Stock by a
Co-Investor Stockholder that has been approved or permitted pursuant to Sections
4.1(a), 4.1(b) or 4.1(c), as applicable, unless there is in effect a
registration statement under the Securities Act covering the proposed Transfer,
the Co-Investor Stockholder intending to Transfer such Common Stock or Preferred
Stock (the "Transferor Stockholder") shall give written notice to the Company of
such Transferor Stockholder's intention to effect such Transfer. Each such
notice shall describe the manner and circumstances of the proposed Transfer in
sufficient detail, and shall be accompanied, unless Apollo or the Board of
Directors of the Company otherwise approves, by either (i) a written opinion of
legal counsel (which may be internal counsel), who shall be reasonably
satisfactory to the Company, addressed to the Company, and reasonably
satisfactory in form and substance to the Company's counsel, to the effect that
the proposed Transfer may be effected without registration under the Securities
Act, (ii) a "no action" letter from the staff of the Commission to the effect
that the Transfer of such Common Stock or Preferred Stock without registration
will not result in a recommendation by the staff of the Commission that action
be taken with respect thereto, or (iii) such other showing that may be
reasonably satisfactory to legal counsel to the Company, whereupon the holder of
such Common Stock or Preferred Stock shall be entitled to Transfer such Common
Stock or Preferred Stock in accordance with the terms of the notice delivered by
the holder to the Company. Notwithstanding the foregoing, any proposed Transfer
shall be null and void unless the proposed transferee becomes a party to this
Agreement (as either a Management Co-Investor or Institutional Co-Investor, in
the same capacity as the transferor) by executing a signature page hereto and
agrees to become legally bound hereby.

            4.4   Permitted Transfers. Subject to compliance with the applicable
provisions of the Securities Act and Section 4.3 of this Agreement, the
following Transfers may be made by Co-Investor Stockholders without complying
with Sections 4.1(a), 4.1(b) or 4.1(c), as applicable, subject to the transferee
executing a signature page hereof and thereby becoming a party hereto (as either
a Management Co-Investor or Institutional Co-Investor, in the same capacity as
the transferor) and agreeing to become legally bound hereby: (i) Transfers upon
death or incompetence of an individual Co-Investor Stockholder or to such
Co-Investor Stockholder's heirs, executors, administrators, testamentary
trustees, legatees or beneficiaries; (ii) Transfers by a Co-Investor Stockholder
to the Company; (iii) Transfers contemplated by, and in conformity with,
Sections 5 and 6 hereof; (iv) Transfers by a Co-Investor Stockholder by gift to
his or her spouse or to the siblings, lineal descendants (including adopted
children), or

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ancestors of such individual or his or her spouse or to a trustee of any trust
of which such person or persons or such Co-Investor Stockholder is or are
beneficiaries or any partnership or corporation wholly owned by such persons,
if, in each case, the Transferor retains voting rights with respect to the
portion of the shares of Common Stock or Preferred Stock, as applicable, being
transferred or, if the Transferor does not retain voting rights, such Transfer
is made with the prior written consent of Apollo, in its sole and absolute
discretion; or (v) Transfers by an Institutional Co-Investor that is a
partnership to its partners on a pro rata basis in accordance with the terms of
the partnership agreement upon the dissolution of such partnership ((i), (ii),
(iii), (iv) and (v) individually referred to herein as a "Permitted Transfer"
and, collectively, as "Permitted Transfers").

        5.       DRAG-ALONG RIGHTS.

                    (a)   The Rights. So long as Apollo owns the Apollo Minimum,
if (i) Apollo proposes a transaction involving the Transfer of Common Stock
representing at least a majority of the outstanding Common Stock of the Company
or a transaction involving the Transfer of a majority of the assets of the
Company (whether through a stock sale, a merger, a recapitalization, a
consolidation transaction, a transaction involving the transfer of the majority
of the assets of the Company or otherwise), or (ii) Apollo proposes to Transfer
any or all of its Preferred Stock, in each case, to any person (a "Prospective
Purchaser"), other than a transfer (A) to a Permitted Transferee, or (B) to the
public by means of a public offering, then Apollo shall have the right (the
"Drag-Along Right") to compel the remaining Stockholders (the "Drag-Along
Stockholders") to sell (x) their shares of Common Stock, in the case of (i)
above, or (y) their shares of Preferred Stock, in the case of (ii) above, in
each case, to the Prospective Purchaser for a consideration per share and on
terms and conditions no less favorable to the Drag-Along Stockholders than those
Apollo is able to obtain (and in the case of a transfer of such shares or a
transfer of assets of the Company, or other transaction requiring the vote of
the Drag-Along Stockholders, this Drag-Along Right would entail the ability to
require the Drag-Along Stockholders to vote their shares in favor of the
transaction and to tender their shares for the transaction consideration) for
its Common Stock or Preferred Stock, as applicable; provided, however, that any
such transfer by a Drag-Along Stockholder does not violate applicable law. The
number of shares subject to the Drag-Along Right shall be, as to each Drag-Along
Stockholder, (x) a number of shares of Common Stock or Preferred Stock, as the
case may be, that represents the same percentage of all shares of Common Stock
or Preferred Stock owned by that Drag-Along Stockholder as the number of shares
of Common Stock or Preferred Stock proposed to be transferred by Apollo
represents as a percentage of all shares of Common Stock or Preferred Stock, as
applicable, owned by Apollo (the "Pro Rata Portion") or (y) in the case of a
Transfer of 80% or more of the outstanding Common Stock, such greater amount as
designated by Apollo, in its sole and absolute discretion. Apollo shall exercise
the Drag-Along Right by giving written notice (the "Drag-Along Notice"), not
less than 15 days prior to consummation of the transfer to the Prospective
Purchaser, to the Company and the Drag-Along Stockholders stating: (i) that they
propose to effect such a transaction; (ii) the name and address of the
Prospective Purchaser; (iii) the proposed purchase price per share of Common
Stock or Preferred

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Stock or for such assets; (iv) the Pro Rata Portion or, in the case of a
Transfer of 80% or more of the outstanding Common Stock, such greater amount as
designated by Apollo; (v) that all the Drag-Along Stockholders shall be
obligated to sell their shares upon terms and conditions (subject to applicable
law) no less favorable to the Drag-Along Stockholders than those Apollo is able
to obtain for its shares, including entering into agreements with other persons
on terms substantially identical to or more favorable to the Drag-Along
Stockholders than those applicable to Apollo and obtaining any required
consents; and (vi) in the case of a transfer, whether through a stock sale, a
merger, a recapitalization, a consolidation transaction, a transaction involving
the transfer of the majority of the assets of the Company or otherwise, of such
shares or of such assets in a transaction requiring the vote of or tenders by
the Drag-Along Stockholders, that all the Drag-Along Stockholders shall be
obligated to vote in favor of such transaction and tender their shares for the
transaction consideration. Each Drag-Along Stockholder affirms that its
agreement to vote for the approval of the transaction with respect to the
transfer of shares or assets to the Prospective Purchaser under this Section 5
is given as a condition of this Agreement and as such is coupled with an
interest and is irrevocable. This voting agreement shall remain in full force
and effect throughout the time that this Section 5 is in effect. It is
understood that this voting agreement relates solely to the transaction with a
Prospective Purchaser as described in this Section 5 and does not constitute the
agreement to vote or consent as to any other matters.

                    (b)   Procedure. Not later than 15 days following the date
of receipt of the Drag-Along Notice, each of the Drag-Along Stockholders shall
deliver to Apollo certificates representing the shares held by such Drag-Along
Stockholder to be transferred, accompanied by duly executed stock powers. If any
Drag-Along Stockholder fails to deliver such certificates to Apollo, the Company
shall cause the books and records of the Company to show that the shares
represented by such certificates of such Drag-Along Stockholder are bound by the
provisions of this Section 5 and are transferable only to the Prospective
Purchaser or an Affiliate of such Prospective Purchaser upon surrender for
transfer by the holder thereof.

        6.       TAG-ALONG RIGHTS.

                    (a)   The Rights. If (i) Apollo (the "Transferring
Stockholder") proposes, in a single transaction or a series of related
transactions, to Transfer any or all of the Apollo Shares, or (ii) Apollo
proposes to Transfer any or all of its Preferred Stock, in each case, to a
Prospective Purchaser, other than to a Permitted Transferee (a "Tag-Along
Sale"), and the Drag-Along Right, if any, has not been exercised with respect to
such Tag-Along Sale, then, prior to proceeding with such Tag-Along Sale, the
Transferring Stockholder shall promptly deliver to each remaining Stockholder
and the Company a written notice (the "Tag-Along Notice") stating that the
Transferring Stockholder desires to enter into the Tag-Along Sale and setting
forth the purchase price per share of Common Stock or Preferred Stock, as
applicable, the number of shares desired to be sold by the Transferring
Stockholder and the total number of shares of Common Stock or Preferred Stock,
as applicable, then owned by the Transferring Stockholder and other material
terms of the Tag-Along Sale, including whether the Prospective Purchaser will
purchase all shares proffered. Each of the remaining

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Stockholders shall have the right (the "Tag-Along Right") to participate in any
such sale of shares of Common Stock, in the case of (i) above, or Preferred
Stock, in the case of (ii) above, by the Transferring Stockholder in accordance
with the procedures set forth in Section 6(b) below; provided, that such
participation shall be on terms and conditions no less favorable to such
remaining Stockholders than those on which the Transferring Stockholder proposes
to transfer its shares.

                    (b)   Procedure. Within 15 days after receipt of the
Tag-Along Notice (the "Tag-Along Option Period"), the remaining Stockholders may
elect to exercise their Tag-Along Right and participate in the Tag-Along Sale.
Any remaining Stockholder electing to participate in the Tag-Along Sale (a
"Tag-Along Stockholder") shall give written notice thereof (the "Election
Notice") to the Transferring Stockholder and the Company within the Tag-Along
Option Period. If the Prospective Purchaser will purchase all shares proffered,
then the Election Notice shall specify the number of shares that such Tag-Along
Stockholder desires to sell to the Prospective Purchaser, which amount may be up
to (or less than) the total number of shares owned by such Tag-Along
Stockholder. If the Prospective Purchaser will not purchase all shares
proffered, then the Election Notice shall specify the number of shares that such
Tag-Along Stockholder desires to sell to the Prospective Purchaser, which amount
may be up to (or less than) the total number of shares to be purchased by the
Prospective Purchaser multiplied by a fraction, the numerator of which is the
total number of shares being sold by the Transferring Stockholder and the
denominator of which is the total number of shares owned by the Transferring
Stockholder. If, at the end of the 15-day notice period, any remaining
Stockholders do not exercise their Tag-Along Right in full (or at all), then the
Transferring Stockholder shall give notice to the Tag-Along Stockholders who
fully exercised their Tag-Along Rights of the number of such unexercised shares
(the "Reallotment Shares"), and these Tag-Along Stockholders shall have 3
business days to notify the Transferring Stockholder of their election to sell
all or a portion of the Reallotment Shares (and indicating the number of such
shares desired to be sold). If the purchase of such unexercised shares is
oversubscribed, the shares will be allocated to electing Stockholders on a pro
rata basis in accordance with their relative ownership of Common Stock or
Preferred Stock, as applicable. Each Tag-Along Stockholder shall deliver to the
Transferring Stockholder, at the same time as and enclosed with its Election
Notice, certificates representing such Tag-Along Stockholder's shares that are
specified in the Election Notice to be transferred, accompanied by duly executed
stock powers (the "Tag-Along Certificates"). The failure of any remaining
Stockholder to submit an Election Notice or deliver its Tag-Along Certificates
within the Tag-Along Option Period shall constitute an election by such
remaining Stockholder not to participate in such Tag-Along Sale, provided,
however, that such Tag-Along Sale is consummated within 120 days of the
expiration of the Tag-Along Option Period. By delivering an Election Notice and
its Tag-Along Certificates to the Transferring Stockholder within the Tag-Along
Option Period, a Tag-Along Stockholder shall have the right and obligation to
sell to the Prospective Purchaser that number of shares specified in the
Election Notice; provided, however, that, to the extent the Prospective
Purchaser is unwilling or unable to purchase all of the shares proposed to be
sold by the Transferring Stockholder and the Tag-Along Stockholders, the number
of shares to be sold by the Transferring Stockholder shall be ratably reduced so
that each Tag-Along Stockholder may sell its proportionate share of

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<PAGE>

Common Stock or Preferred Stock, as applicable, calculated as provided above,
and the number of shares to be sold by the Transferring Stockholder and each of
the Tag-Along Stockholders equals the number of shares that the Prospective
Purchaser is willing or able to purchase.

                    (c) The provisions of this Section 6 shall not pertain or
apply to (i) any Transfer by Apollo to a Permitted Transferee, (ii) any Transfer
pursuant to Rule 144 promulgated under the Securities Act or (iii) any Transfer
pursuant to a registration statement filed with the Commission.

        7.       BOARD OF DIRECTORS.

                 7.1   Apollo Nominees. So long as Apollo owns the Apollo
Minimum and subject to the terms of the Certificate of Designation, Apollo LP
shall have the right to nominate, on Apollo's behalf, all of the members of the
Company's Board of Directors (the "Apollo Nominees").

                 7.2   Election of Apollo Nominees. The Stockholders shall vote
all of the shares of Common Stock owned or held of record by them at all regular
and special meetings of the stockholders of the Company called or held for the
purpose of filling positions on the Board and in each written consent executed
in lieu of such a meeting of stockholders, and each party hereto shall take all
actions otherwise necessary to ensure (to the extent within the parties'
collective control) the election to the Board of the Apollo Nominees.

                 7.3   Vacancies.

                       (a)   Each Apollo Nominee will hold his or her office as
a director of the Company for such term as is provided in the Certificate of
Incorporation and Bylaws of the Company (the "Charter Documents") or until his
or her death, resignation or removal from the Board or until his or her
successor has been duly elected and qualified in accordance with the provisions
of this Agreement, the Charter Documents and applicable law. If any Apollo
Nominee ceases to serve as a director of the Company for any reason during his
or her term (a "Terminating Nominee"), a nominee for the vacancy resulting
therefrom will be designated by Apollo LP.

                       (b)   If Apollo LP fails at any time to nominate the
maximum number of persons for election to the Board that Apollo LP is entitled
to nominate pursuant to this Agreement, each directorship in respect of which
Apollo LP so failed to make a nomination will remain vacant unless such vacancy
results in there being fewer than the minimum number of directors required by
law or the Charter Documents, in which case such vacancy or vacancies will be
filled by a person or persons selected by a majority of the directors of the
Company then in office.

                 7.4   Removal of Apollo Nominees.

                       (a)   The Stockholders shall use their respective best
efforts to call, or cause the appropriate officers and directors of the Company
to call, a special

                                       11
<PAGE>

meeting of stockholders of the Company and to vote all of the shares of Common
Stock owned or held of record by them for, or to take all actions by written
consent in lieu of any such meeting necessary to cause, the removal (with or
without cause) of any director, if Apollo LP requests such director's removal in
writing for any reason. Apollo LP shall have the right to designate a new
nominee in the event any director shall be so removed under this Section 7.4(a)
or shall vacate his directorship for any other reason.

                       (b)   Subject to the foregoing, no Stockholder shall vote
or cause to be voted any securities that such Stockholder has the power to vote
(or in respect of which such Stockholder has the power to direct the vote) for
the removal of any Apollo Nominee nominated by Apollo LP without the prior
written consent of Apollo LP.

        8.       REGISTRATION RIGHTS.

                 8.1   Company Registration.

                       (a)   Following a Qualified IPO, but not in connection
with any initial public offering, if the Company shall determine to register its
Common Stock either for its own account or for the account of another
Stockholder, other than a registration relating solely to employee benefit plans
or a registration relating solely to a Rule 145 transaction or a registration on
any registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Common Stock, the Company will:

                 (i)   promptly give to each Stockholder written notice thereof;
                       and

                 (ii)  subject to Section 4.1(c) above, include in such
                       registration, and in any underwriting involved therein,
                       all of the Common Stock specified in a written request or
                       requests made by any Stockholder within ten (10) days
                       after receipt of the written notice from the Company
                       described in clause (i) above, except as set forth in
                       Section 8.2 below. Such written request may specify all
                       or a part of a Stockholder's Common Stock.

                 8.2   Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Stockholders as a part of the written notice given
pursuant to Section 8(a)(i). In such event the right of any Stockholder to
registration pursuant to Section 8 shall be conditioned upon such Stockholder's
participation in such underwriting and the inclusion of such Stockholder's
Common Stock in the underwriting to the extent provided herein. All Stockholders
proposing to distribute their securities through such underwriting shall
(together with the Company and any other stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter selected for underwriting by the Company.
Notwithstanding any other provision of this Section 8, if the underwriter
determines that marketing factors require a limitation on the number of shares
to be underwritten, the underwriter may (subject to the

                                       12
<PAGE>

allocation priority set forth below) exclude from such registration and
underwriting some or all of the Stockholder's Common Stock which would otherwise
be underwritten pursuant hereto. The Company shall so advise all holders of
securities requesting registration, and the number of shares of securities that
are entitled to be included in the following priority: first, among shares of
Common Stock owned by Apollo (if any) and the Co-Investor Stockholders (and pro
rata, if necessary, and subject to Section 4.1(c) hereof, among such
Stockholders on the basis of all Common Stock then held by such holders),
second, among shareholders with registration rights exercising a "demand
registration," and third, among any other stockholders in proportion, as nearly
as practicable, to the amounts of securities which they had requested to be
included in such registration at the time of filing the registration statement;
provided, however, that if the underwriter determines that marketing factors
require the exclusion of particular Stockholder(s) from participating in such
offering (i.e., the exclusion of members of management), the Company shall so
advise such Stockholder(s) and such Stockholder's Common Stock shall be excluded
from such registration. If any Stockholder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Common Stock or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.

                 8.3   Expenses of Registration. All expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Section 8 (collectively, "Registration Expenses") shall be borne by the Company,
and all underwriting discounts and selling commissions applicable to the sale of
Common Stock and the fees and expenses of counsel for the selling Stockholders
shall be borne by the Stockholders so registered pro rata on the basis of the
number of their shares so registered.

                 8.4   Indemnification.

                       (a)   The Company will indemnify and hold harmless each
Stockholder, each of its officers, directors, partners and members and each
person controlling such Stockholder, if Common Stock held by such Stockholder
are included in the securities with respect to which registration, qualification
or compliance has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls any underwriter, against all
claims, losses, damages and liabilities (or actions in respect thereof), whether
joint or several, arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document (including any related registration statement)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
applicable state securities law or any rule or regulation thereunder relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each such
Stockholder, each of its officers, directors, partners and members and each
person controlling such Stockholder, each such underwriter and each person who
controls any such underwriter,

                                       13
<PAGE>

for any legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
as such expenses are incurred; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement (or
alleged untrue statement) or omission (or alleged omission) based upon written
information furnished to the Company by such Stockholder or underwriter and
stated to be specifically for use therein.

                       (b)   Each Stockholder will, if Common Stock is included
in the securities as to which such registration, qualification or compliance is
being effected, indemnify and hold harmless the Company, each of its directors,
officers and agents and each underwriter, if any, against all claims, losses,
damages and liabilities (or actions in respect thereof), whether joint or
several, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, and will reimburse the Company and such
directors, officers, agents, partners, members, persons, underwriters or control
persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, as such expenses are incurred, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration statement, prospectus,
offering circular or other document in reliance upon and in conformity with
written information furnished to the Company by such Stockholder and stated to
be specifically for use therein. In no event shall the liability of a
Stockholder for indemnification under this Section 8 exceed the proceeds
received by such Stockholder in the offering.

                       (c)   Each party entitled to indemnification under this
Section 8 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom; provided, however, that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Agreement
except to the extent the Indemnifying Party is materially prejudiced thereby,
and provided further, however, that an indemnified party (together with all
other indemnified parties) shall have the right to retain one separate counsel,
with the reasonable fees and expenses of such counsel to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. No Indemnifying Party in the
defense of any such claim or litigation shall, except with the consent of each
Indemnified Party,

                                       14
<PAGE>

consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting therefrom.

                       (d)   If the indemnification provided for in this
Section 8 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

                       (e)   Notwithstanding the foregoing provisions of this
Section 8, to the extent that any provision contained in the underwriting
agreement entered into in connection with the underwritten public offering
related to any such claim for indemnification or contribution are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.

                       (f)   The obligations of the Company and the Stockholders
under this Section 8 shall survive the completion of any offering of Common
Stock pursuant to this Agreement, and otherwise.

                 8.5   Information by Stockholder. Each Stockholder holding
securities included in any registration shall furnish to the Company such
information regarding such Stockholder as the Company may reasonably request and
as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement.

        9.       INFORMATION RIGHTS. Stockholders holding at least two and
one-half percent (2 1/2%) of the issued and outstanding Common Stock shall each
be provided with: (i) unaudited quarterly financial statements within forty-five
(45) days after the end of each fiscal quarter of the Company, and (ii) audited
annual financial statements within ninety (90) days after the end of each fiscal
year of the Company. Such right shall be subject to the Co-Investor Stockholders
(and their advisors, if applicable) executing customary confidentiality
agreements.

                                       15
<PAGE>

        10.      MISCELLANEOUS.

                 10.1  Governing Law.  This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to its principles of conflict of laws.

                 10.2  Certain Adjustments. The provisions of this Agreement
shall apply to the full extent set forth herein with respect to any and all
shares of capital stock of the Company or any successor or assign of the Company
(whether by merger, consolidation, sale of assets or otherwise) which may be
issued in respect of, in exchange for, or in substitution for the shares of
Common Stock, by combination, recapitalization, reclassification, merger,
consolidation or otherwise and the term "Common Stock" shall include all such
other securities; provided, however, that the provisions of Section 8 hereof
shall only apply to common equity securities of the Company registered in a
Qualified IPO. In the event of any change in the capitalization of the Company,
as a result of any stock split, stock dividend or stock combination or
otherwise, the provisions of this Agreement shall be appropriately adjusted.

                 10.3  Additional Parties. Upon the dissolution of GNC LLC and
the distribution of any Common Stock or Preferred Stock to Members, each such
Members holding Common Stock or Preferred Stock shall execute a signature page
to this Agreement and become parties to and agree to be bound by this Agreement,
as Apollo, in the case of Members (as defined in the LLC Agreement) who are
Apollo and its Affiliates, or as Institutional Co-Investors, in the case of all
other Members.

                 10.4  Enforcement. The parties expressly agree that the
provisions of this Agreement may be specifically enforced against each of the
parties hereto in any court of competent jurisdiction.

                 10.5  Successors and Assigns. Except as otherwise provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto.

                 10.6  Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof and supersedes all prior oral or written (and all
contemporaneous oral) agreements or understandings with respect to the subject
matter hereof.

                 10.7  Notices, etc. All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
registered or certified mail, return receipt requested, postage prepaid or
otherwise delivered by hand, messenger or facsimile transmission, addressed: (a)
if to a party listed on Appendix A or a transferee of such party, at such
party's address as set forth on Appendix A, or at such other address as such
party or its transferee shall have furnished to the Company in writing, (b) if
to Apollo, c/o Apollo Management V, L.P., 10250 Constellation Blvd., Suite 2900,
Los Angeles, California 90067 Attention: Michael D. Weiner with a copy (which
shall not constitute notice) to Skadden, Arps, Slate, Meagher & Flom LLP, 300
South Grand

                                       16
<PAGE>

Avenue, Suite 3400, Los Angeles, California 90071, Attention: Jeffrey H. Cohen,
or (c) if to the Company, at 300 Sixth Avenue, Pittsburgh, Pennsylvania 15222,
Attention: General Counsel, with a copy to Apollo, or at such other address as
the Company shall have furnished to Apollo and the parties listed on Appendix A
in writing.

                  Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or as having been received when
delivered, if delivered by hand or by messenger (or overnight courier), 24 hours
after confirmed receipt if sent by facsimile transmission or at the earlier of
its receipt or on the fifth day after mailing, if mailed, as aforesaid.

                 10.8   Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party hereto upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such holder nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of or in any similar breach or
default thereunder occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default therefore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or by law or otherwise afforded to any party, shall be
cumulative and not alternative.

                 10.9   Counterparts. This Agreement may be executed in any
number of counterparts, each of which may be executed by less than all of the
parties hereto, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.

                 10.10  Severability. If any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

                 10.11  Amendments and Waivers.

                        (a)  The provisions of this Agreement may be amended at
any time and from time to time, and particular provisions of this Agreement may
be waived or modified, with and only with an agreement or consent in writing
signed by the Company, Apollo and Co-Investor Stockholders holding a majority of
the shares of Common Stock held by the Co-Investor Stockholders; provided,
however, that any amendments or modifications to add additional Co-Investor
Stockholders or amendments or modifications that do not adversely affect the
rights of Co-Investor Stockholders shall not require the consent of the
Co-Investor Stockholders.

                        (b)  Notwithstanding anything to the contrary in this
Agreement, any amendments or modifications to the provisions of Sections 5, 6 or
8 hereof or this Section 10.11(b) in a manner adverse to the Co-Investor
Stockholders shall

                                       17
<PAGE>

require the consent of a majority of the shares of Common Stock owned by the
Management Co-Investors and the Non-Apollo Members, voting together as a single
class. For the purposes of this Section 10.13(b) only, each of the Non-Apollo
Members shall be entitled to vote their pro rata portion of the Common Stock
held by GNC LLC, as determined by the aggregate amount of Common Stock held by
GNC LLC multiplied by such Non-Apollo Member's percentage interest in GNC LLC.

                        (c)   Notwithstanding anything to the contrary in this
Agreement, in connection with any sale of Preferred Stock to persons other than
Apollo, Apollo may amend this Agreement unilaterally to remove the Preferred
Stock and all provisions relating thereto.

                 10.12  Jurisdiction. The parties hereto irrevocably submit, in
any legal action or proceeding relating to this Agreement, to the jurisdiction
of the courts of the United States located in the State of Delaware or in any
Delaware state court and consent that any such action or proceeding may be
brought in such courts and waive any objection that they may now or hereafter
have to the venue of such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient forum.

                 10.13  Further Assurances. The parties agree to use their best
efforts and act in good faith in carrying out their obligations under this
Agreement. The parties also agree, without further consideration, to execute
such further instruments and to take such further actions as may be necessary or
desirable to carry out the purposes and intent of this Agreement.

                 10.14  Termination. This Agreement shall terminate upon the
earlier of: (i) the written agreement between the Company, Apollo and
Co-Investor Stockholders holding a majority of the shares of Common Stock held
by the Co-Investor Stockholders, and (ii) the consummation of a transaction
pursuant to which Apollo was entitled to exercise a Drag-Along Right with
respect to the Common Stock pursuant to Section 5 above; provided, however, that
the provisions of Sections 3 and 9, and the provisions of Sections 5 and 6, as
such provisions relate to the Common Stock, shall terminate after the
consummation of a Qualified IPO.

                                       18
<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       GENERAL NUTRITION
                                       CENTERS HOLDING COMPANY

                                       By: /s/ James M. Sander
                                           -------------------------------------
                                           Name:   James M. Sander
                                           Title:  Senior Vice President, Chief
                                                   Legal Officer and Secretary

                                       GNC INVESTORS, LLC

                                       By: Apollo Management V, L.P.
                                           Its Manager

                                       By: AIF V Management, Inc.
                                           Its General Partner

                                       By: /s/ Andrew S. Jhawar
                                           -------------------------------------
                                           Name:   Andrew S. Jhawar
                                           Title:  Vice President

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Joseph Bresse
                                           -------------------------------------
                                           Name:   Joseph Bresse

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Betsy Burton
                                           -------------------------------------
                                           Name: Betsy Burton
                                                 BB Capital, Inc.

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Vince Cacace
                                           -------------------------------------
                                           Name: Vince Cacace

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Charles Chiaverini
                                           -------------------------------------
                                           Name: Charles Chiaverini

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Robert J. DiNicola
                                           -------------------------------------
                                           Name: Robert J. DiNicola

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Tom Dowd
                                           -------------------------------------
                                           Name: Tom Dowd

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Joseph M. Fortunato
                                           -------------------------------------
                                           Name: Joseph M. Fortunato

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ George Golleher
                                           -------------------------------------
                                           Name: George Golleher

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Darryl Green
                                           -------------------------------------
                                           Name: Darryl Green

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Ron Hallock
                                           -------------------------------------
                                           Name: Ron Hallock

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ David Heilman
                                           -------------------------------------
                                           Name: David Heilman

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Gilles Houde
                                           -------------------------------------
                                           Name: Gilles Houde

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Lee Karayusuf
                                           -------------------------------------
                                           Name: Lee Karayusuf

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Curtis J. Larrimer
                                           -------------------------------------
                                           Name: Curtis J. Larrimer

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Louis Mancini
                                           -------------------------------------
                                           Name: Louis Mancini

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Edgardo Mercadante
                                           -------------------------------------
                                           Name: Edgardo Mercadante
                                                 MM Investments Associates
                                                 General Partner

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Steven C. Nelson
                                           -------------------------------------
                                           Name: Steven C. Nelson

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ James M. Sander
                                           -------------------------------------
                                           Name: James M. Sander

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Eileen Scott
                                           -------------------------------------
                                           Name: Eileen Scott

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Julie Shoptaugh
                                           -------------------------------------
                                           Name: Julie Shoptaugh

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Thomas R. Smith
                                           -------------------------------------
                                           Name: Thomas R. Smith

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ J.J. Sorrenti
                                           -------------------------------------
                                           Name: J.J. Sorrenti

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Reginald N. Steele
                                           -------------------------------------
                                           Name: Reginald N. Steele

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Susan Trimbo
                                           -------------------------------------
                                           Name: Susan Trimbo

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Michael Venditti
                                           -------------------------------------
                                           Name: Michael Venditti

<PAGE>

     The foregoing Stockholders' Agreement is hereby executed as of the date
first above written.

                                       Co-Investor Stockholders:

                                       By: /s/ Joe Weiss
                                           -------------------------------------
                                           Name: Joe Weissexv10w1

 

EXHIBIT 10.1

SECOND AMENDED AND RESTATED OPERATING AGREEMENT

OF

ISLE OF CAPRI BLACK HAWK L.L.C.

     This SECOND AMENDED AND RESTATED OPERATING AGREEMENT (the “Agreement”) is
made as of this 22nd day of April, 2003, by Casino America of Colorado, Inc.
(“Casino America of Colorado”) and Blackhawk Gold, Ltd. (“Blackhawk Gold”) and
those other persons, if any, who from time to time become parties to or are
otherwise bound by this Agreement as provided herein.

     The parties hereto are parties to an Operating Agreement, dated April 25,
1997 (the “Original Operating Agreement”), and an Amended and Restated
Operating Agreement, dated July 29, 1997 (the “First Amended Operating
Agreement”). The parties wish to amend and restate the First Amended Operating
Agreement, pursuant to this Agreement, which hereby supersedes and replaces
the Original Operating Agreement and the First Amended Operating Agreement in
their entirety. The parties therefore agree as follows:

ARTICLE 1: ORGANIZATION AND DEFINITIONS

1.1 Company Name. The business of the Company will be conducted under the name
“Isle of Capri Black Hawk L.L.C.” or any other name determined by the Company in
accordance with governing law.

1.2 Ownership. The Ownership Interests of the Members shall be adjusted from time to
time in accordance with the provisions of this Agreement. The Ownership
Interests of the Members shall at all times be maintained on Appendix I hereto, which shall be
amended chronologically from time to time as necessary. As of the date of this
Agreement, the Ownership Interests in the Company are as set forth below:

	 	 	 	 	 
	Member
	 	Ownership
Interest

	Blackhawk Gold, Ltd.

	 	 	43	%
	Casino America of Colorado, Inc.

	 	 	57	%

1.3 Colorado Office and Agent. The initial registered office of the Company in
Colorado is located at 1675 Broadway, Suite 1200, Denver, Colorado 8002, and
its initial registered agent at such address is CT Corporation. The Company
may subsequently change its registered office or registered agent in Colorado
in accordance with the Act. The Company’s principal place of business is 401
Main Street, Black Hawk, Colorado.

 

 

1.4 Term. The Company began on the date its Articles of Organization were
filed with the
Colorado Secretary of State and continues until December 31, 2096, or such
earlier date as a
Dissolution may occur.

1.5 Foreign Qualification. After formation of the Company under the Act, the
Company will apply for any required certificate of authority to do business in any
other state or jurisdiction where it conducts business, as appropriate.

1.6 Definitions. Terms used with initial capital letters will have the
meanings specified in Exhibit “A,” applicable to both singular and plural forms, for all purposes of
this Agreement.

ARTICLE 2: PURPOSES AND POWERS

2.1 Principal Purpose. The business and principal purpose of the Company
is to investigate, seek, acquire and engage in casino gaming in the Black
Hawk/Central City, Colorado and Cripple Creek, Colorado areas, and to engage in all activities
related thereto, including, without limitation, the operation of restaurants, gift shops and/or
hotels.

2.2 Powers. The Company has all of the powers granted to a limited liability
company under the Act, as well as all powers necessary or convenient to achieve its purposes
and to further its business.

ARTICLE 3: CAPITAL CONTRIBUTIONS

3.1 No Additional Capital Contributions. Except as agreed by the Members in
the Members Agreement, no Member shall be required to make an additional Capital
Contribution to the Company.

3.2 No Withdrawal. Except as specifically provided in this Agreement, no Member
will be entitled to withdraw all or any part of such Member’s capital from the Company
or, when such withdrawal of capital is permitted, to demand a distribution of property other than cash.

3.3 No Interest on Capital. No Member will be entitled to receive interest on such
Member’s Capital Contribution or Capital Account.

3.4 Loans by Members. The Company may borrow money from any Member or
Affiliate for Company purposes on such terms as the Company and such Member or Affiliate
may agree. Any such advance or loan will be treated as indebtedness of the Company, and
will not be treated as a Capital Contribution by a Member.

3.5 Capital Accounts. A Capital Account will be maintained for each Member. Each
Member’s Capital Account will be:

	(a)	 	Credited with (i) the capital contributions (net of liabilities secured
by such property that the Company takes subject to or assumes), (ii) the
Member’s allocable share of Profits and (iii) all other items properly
credited to the Member’s Capital Account; and

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	(b)	 	Charged with (i) the amount of cash distributed to the Member by the
Company, (ii) the Fair Market Value of property distributed to the Member
by the Company (net of liabilities secured by such property that the
Member takes subject to or assumes), (iii) the Member’s allocable share of
Losses and (iv) all other items properly charged to the Member’s Capital
Account.

     Any unrealized appreciation or depreciation with respect to any asset
distributed in kind will be allocated among the Members in accordance with the
provisions of Article 5 as though such asset had been sold for its Fair Market
Value on the date of Distribution, and each Member’s Capital Account will be
adjusted to reflect both the deemed realization of such appreciation or
depreciation and the Distribution of such property. In determining the Fair
Market Value of any asset of the Company for purposes of any Distribution, the
Company may obtain the written report of any one or more independent qualified
appraisers (or appraisal firms). If more than one appraisal report is obtained
by the Company, Fair Market Value will be determined as the average of such
appraised values. The Company will select each such appraiser (or appraisal
firm), and bear the cost of any such appraisal.

     The Capital Account of each Member shall be determined and maintained in
accordance with Code Section 704(b) and the regulations promulgated
thereunder.

3.6 Transfer. If all or any part of an Ownership Interest is transferred in
accordance with this Agreement, the Capital Account and Ownership Interest of the Transferor
(including a pro-rata share of Capital Contributions) that is attributable to the transferred
interest will carry over to the Transferee.

3.7 Certificates for Units Representing Ownership Interests. Ownership
Interests in the Company shall be represented by Units and a Person’s Ownership Interest shall
equal the number of Units owned by such Person divided by the total number of Units
issued and outstanding. The Units shall be represented by Certificates, which shall be in
such form as may be determined by the Managers. Certificates shall be signed by a majority of
the Managers. All Certificates shall be consecutively numbered or otherwise identified. The name
of the Person to whom the Units are issued, with the number of Units and the date of issue,
shall be entered on the books of the Company. All Certificates surrendered to the Company for
transfer shall be canceled and no new Certificate shall be issued until the former Certificate
for a like number of Units shall have been surrendered and canceled, except that in the case of a
lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and
indemnity to the Company as the Managers may prescribe. Transfers of Units of the Company
shall be made
only on the books of the Company by the holder of record thereof or by his
legal representative,
who shall furnish proper evidence of authority to transfer, or by his attorney
thereunto authorized
by power of attorney duly executed and filed with the Company, and, on
surrender for
cancellation of the Certificate for such Units. The Person in whose name a Unit
or Units stands
on the books of the Company shall be deemed the owner thereof for all purposes
as regards the
Company.

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ARTICLE 4: MEMBERS AND MANAGERS

4.1 Management by Managers. Except as to matters expressly reserved to the
Members by
statute or by this Operating Agreement, the business and affairs of the Company
shall be
managed by the Managers set forth below, as such Managers may be changed from
time to time
as set forth herein. As of the date of this Agreement, the Managers of the
Company are John M.
Gallaway, whose address is 1642 Popps Ferry Road, Biloxi, Mississippi, Allan B.
Solomon, at
the same address, and H. Thomas Winn, whose address is 3040 Post Oak Boulevard,
Suite 675,
Houston, Texas. Each Member shall have the right to elect one Manager, except
that so long as
Casino America of Colorado or its Affiliates own a Majority In Interest of the
Company, Casino
America of Colorado or its Affiliates shall be entitled to elect a majority of
the Managers, which
initially shall be two Managers, and Blackhawk Gold shall be entitled to elect
one Manager.
Each Member shall have the right to remove, replace, fill a vacancy or
designate a temporary
replacement for the Manager or Managers elected by it.

     Managers shall hold office for a term of one year from election, or until
the next Annual Meeting of Members. Any action provided for in this Agreement
that may be taken by the Company may, except as otherwise provided in this
Agreement, only be taken with the consent of a majority of the Managers or by
the officers of the Company to the extent a majority of the Managers have
delegated authority with respect to such actions to such officers. Except as
provided in Section 4.9 below or as to any other matter the Members agree
shall require a unanimous vote, actions taken by Managers shall be by majority
vote at meetings duly called for purposes of taking action at which a quorum
is present. A quorum at any meeting of the Managers shall consist of a
majority of the Managers then appointed. The Managers may also act by
unanimous written consent in lieu of a meeting.

     Meetings of the Managers shall be held no less often than quarterly (one
of which shall be in conjunction with the Annual Meeting of the Members) on
dates established therefor at each preceding Annual Meeting of the Managers.
Special meetings of the Managers shall be held from time to time as called by
any of the Managers on no less than five (5) days’ advance notice given in
writing by the Manager calling such meeting, which notice may be given by
facsimile, Federal Express or similar courier service, certified mail or
personal delivery. Notices of meetings shall be effective when sent, if sent by
facsimile, or upon receipt, if given by certified mail, overnight courier or
personal delivery, in each case at the address of each of the Managers on the
books and records of the Company. The Managers may participate in a meeting by
means of conference telephone or similar communications equipment by which all
the Managers participating in the meeting can hear each other at the same time.
Such participation will constitute presence in person at the meeting and waiver
of any required notice.

4.2 Member’s Representative. Each Member which is not an individual will
designate one
or more individuals to act as such Member’s duly authorized representative and
agent for
purposes of exercising such Member’s vote on any matter involving the Company
requiring the
approval or action of the Members. Each Member which is not an individual may
also designate
one or more individuals as an alternate in the event that the primary
representative is unavailable
to act for any reason. A Member may change any such designation at any time
upon similar

4

 

notice. The representatives of a Member will cast the vote of each Member in
accordance with such Member’s Ownership Interest, as provided in this Article.

4.3 Majority Voting. All decisions reserved by the Act or this Operating
Agreement to the
Members will be made by the affirmative vote of Members owning more than 50% of
the
Ownership Interests held by all Members, without regard to quorum requirements,
unless the
unanimous vote (under Section 4.9) provisions apply or except as to any other
matter the
Members agree shall require a unanimous vote or as otherwise specifically
provided in this
Agreement. Any determination to be made by the Members will be made in each
Member’s sole
and absolute discretion.

4.4 No Resignation or Retirement. Each Member agrees not to voluntarily resign
or retire
as a Member in the Company. However, if such voluntary resignation or
retirement occurs in
contravention of this Agreement, the withdrawing Member will, without further
act, become a
Transferee of its Ownership Interest (with the limited rights of a Transferee
as set forth in
Section 13.6). Any Member who resigns or retires from the Company in
contravention of this
Agreement will be liable to the Company and the other Members for proven
monetary damages
(but any such action or proposed action to resign or retire will not be subject
to any equitable
action for injunctive relief or specific performance).

4.5 Powers. Each Manager is an agent of the Company for the purpose of
conducting its
business and affairs. The act of any Manager for the apparent carrying on in
the usual way of the
Company’s business or affairs binds the Company unless the Manager so acting
has, in fact, no
authority to act for the Company in the particular matter and the person with
whom such
Member is dealing has knowledge of such lack of authority. The act of any
Manager which is
not apparently for the carrying on in the usual way of the Company’s business
or affairs does not
bind the Company unless authorized in accordance with this Agreement. Each
Manager agrees
to act on behalf of the Company only in compliance with this Agreement, and
agrees that any act
in contravention of this Agreement renders such Manager liable to the Company
and other
Members for monetary damages and other relief.

4.6 Substitute Members. A Transferee may be admitted as a substitute Member
of the
Company only upon the affirmative written agreement of all of the Members
(excluding the
Transferor Member), effective upon a date specified (which must be on or after
the effective date
of the Transfer, as determined under Section 13.5).

4.7 Additional Members. Subject to Section 4.9, additional Members of the
Company may
be admitted incident to the contribution of money or other property to the
Company (or
otherwise) only upon the affirmative written agreement of all Members,
effective upon a date
specified by all the Members.

4.8 Officers. The Company, acting through the Managers, may appoint and
remove such
officers as it determines to be necessary or desirable to carry out the
day-to-day management of
the Company. The Company’s officers may include a president, one or more vice
presidents, a
secretary and a treasurer, as well as one or more assistant vice presidents,
secretaries and
treasurers. Such officers may also include a chief executive officer, chief
operating officer and
chief financial officer. Appointment as an officer or agent of the Company
will not, of itself,

5

 

create any contract rights. The officers of the Company, acting in their
capacity as such, will be agents acting on behalf of the Company as principal.
No officer of the Company has the continuing exclusive authority to make
independent business decisions on behalf of the Company without the approval
of the Managers as set forth in this Article.

4.9 Unanimous Vote. The following actions by the Company will require the
affirmative vote of all the Managers and the Members, without regard to quorum
requirements:

(a) The admission of an additional Member under Section 4.7;

(b) Any non-pro-rata distribution, including the non-pro-rata distribution of
assets in kind in
Liquidation under Section 12.3;

(c) The amendment of this Agreement, except as provided in Section 14.1 of this
Agreement;

(d) The merger of the Company with any other business entity as provided by
governing law;
or

(e) The sale of substantially all of the Company’s assets.

ARTICLE 5: ALLOCATION OF PROFITS AND LOSSES

5.1 Profits and Losses. For each Fiscal Year, Profits or Losses of the Company
will be an
amount equal to the Company’s taxable income or taxable loss determined in
accordance with
federal income tax principles, adjusted to the extent the Managers determine
that such
adjustment is necessary to comply with the requirements of Section 704(b) of
the Code.

5.2 General Allocation Rule. Except as otherwise provided in (or until
changed pursuant
to) this Agreement, the Profits or Losses of the Company, including items of
income, gain, loss
and deduction for each Fiscal Year, will be allocated to the Members in
proportion to their
respective Ownership Interests as defined herein. For any Fiscal Year in which
there is a change
in Ownership Interests, allocations will be determined in accordance with
Section 706 of the
Code and the regulations thereunder to take into account the varying interests
of the Members in
the Company during such Fiscal Year, in the manner determined by the Managers.

5.3 Exception. Notwithstanding the general rule on allocation and for tax accounting
purposes only and not for financial statement purposes or any other provision
of this Operating
Agreement, no cash shall be distributed to any Member if the effect thereof
would be to create a
deficit in his Capital Account balance or increase the deficit in his Capital
Account below the
sum of (1) the amount (if any) which he is required to contribute to the
Company and (2) said
Member’s share of gain which the Company would recognize upon a sale of its
property for an
amount equal to the balance of the non-recourse debt encumbering it (the
“Company’s Minimum
Gain”), and such cash shall be retained by the Company and shall be distributed
to the Member
at the earliest time or times possible when such distributions will not cause
such a deficit or
increase such a deficit in the distributee’s Capital Account balance.
Notwithstanding the

6

 

provisions of Section 5.2, the following allocations of net profits and net
losses and items thereof shall be made:

	 	(a)	 	If in any taxable year there is a net decrease in the amount of the
Company’s Minimum
Gain, each Member shall be allocated items of the Company’s net profits
for that year
(and, if necessary, subsequent years) equal to that Member’s share of the
net decrease in
the Company’s Minimum Gain (within the meaning of Treasury Regulation
Section
1.704-2(g)(2)). The items to be so allocated shall be determined in
accordance with
Treasury Regulation Section 1.704-2(j). This Section 5.3 is intended to
comply with the
Minimum Gain Chargeback requirement in Treasury Regulation Section
1.704-2 and
shall be interpreted consistently therewith.
	 
	 	(b)	 	If during any taxable year a Member unexpectedly receives any
adjustments, allocations
or distributions described in Treasury Regulation Section
1.704-l(b)(2)(ii)(d)(4), (5), or
(6), then items of net profits shall be specially allocated to each
Member in an amount
and manner sufficient to eliminate, to the extent required by Treasury
Regulation Section
1.704-(l)(b)(2)(ii)(d), the deficit in the Capital Account of such Member
as quickly as
possible, provided that an allocation pursuant to this Section 5.3(b)
shall be made only if
and to the extent that such Member has an adjusted Capital Account
deficit after all other
allocations provided for in this Article 5 have been tentatively made and
as if this Section
5.3(b) were not in this Agreement. This Section 5.3(b) is intended to
comply with the
Qualified Income Offset requirements in Treasury Regulation
Section 1.704-
l(b)(2)(ii)(d) and shall be interpreted consistently therewith.

     It is the intent of the Members that the allocations provided for in this
Operating Agreement have “substantial economic effect,” as that term is
defined in Section 704(b) of the Code. Notwithstanding anything in this
Section 5.3 to the contrary, nothing contained in this Section 5.3 shall serve
to restrict any distribution by the Company to any Member.

5.4 Tax Allocations. Subject to Section 5.6, items of income, gain, loss and
deduction of the
Company will be allocated for federal income tax purposes for each Fiscal Year,
as nearly as is
practicable, in accordance with the manner in which corresponding items of
Profits and Losses
were allocated among the Members for such Fiscal Year. To the extent
possible, principles
identical to those that apply to allocations for federal income tax purposes
will apply for state
and local income tax purposes.

5.5 Transfer. Except as otherwise provided in Section 5.2, if an Ownership Interest is
transferred during any Fiscal Year (whether by Transfer or liquidation of an
Ownership Interest,
or otherwise), the books of the Company will be closed as of the effective date
of Transfer. The
Profits or Losses attributed to the period from the first day of such Fiscal
Year through the
effective date of Transfer will be allocated to the Transferor, and the Profits
or Losses attributed
to the period commencing on the effective date of Transfer will be allocated to
the Transferee.
In lieu of an interim closing of the books of the Company and with the
agreement of the
Transferor and Transferee, the Company may agree to allocate Profits and Losses
for such Fiscal
Year between the Transferor and Transferee based on a daily proration of items
for such Fiscal
Year or any other reasonable method of allocation (including an allocation of
extraordinary

7

 

Company items, as determined by the Company, based on when such items are
recognized for federal income tax purposes).

5.6 Contributed Property. All items of income, gain, loss and deduction with
respect to property contributed (or deemed contributed) to the Company will,
solely for tax purposes, be allocated among the Members as required by Section
704(c) of the Code so as to take into account the variation between the tax
basis of the property and its Fair Market Value at the time of contribution.
For example, if there is built-in gain with respect to contributed property,
upon the Company’s sale of that property the pre-contribution taxable gain (as
subsequently adjusted under the Section 704(c) Regulations during the period
such property was held by the Company) would be allocated to the contributing
Member (and such pre-contribution gain would not again create a Capital Account
adjustment since the property was credited to the Capital Account upon
contribution at its Fair Market Value). Except as limited by the following
sentence, the allocation of tax items with respect to Section 704(c) property
to Members not contributing such property will, to the extent possible, be
equal to the allocation of the corresponding book items made to such
noncontributing Members with respect to such property. If book allocations of
cost recovery deductions (such as depreciation or amortization) exceed the tax
allocations of those items so that the ceiling rule of the Section 704(c)
Regulations applies, any curative or remedial allocations of tax items will be
made as the Company may determine. All tax allocations made under this
provision will be made in accordance with Section 704(c) of the Code and the
Section 704(c) Regulations.

5.7 Tax Credits. Any tax credit, and any tax credit recapture, will be allocated
to the Members in the same ratio that the federal income tax basis of the asset
(to which such tax credit relates) is allocated to the Members under the
Section 46 Regulations, and if no basis is allocated, in the same manner as
Profits are allocated to the Members under Section 5.2.

ARTICLE 6: DISTRIBUTIONS

6.1 Pro-rata Distributions. The Company will make distributions to the Members
in proportion to their Ownership Interests. Any Net Sales Cash that is realized
incident to the Dissolution and Liquidation of the Company will be distributed
as provided in Article 12, with any Net Sales Cash that is realized other than
incident to the Dissolution and Liquidation of the Company to be distributed in
accordance with this Section 6.1.

6.2 Non-Pro-rata Distributions. Unless the Members otherwise unanimously agree,
the Members intend that all Distributions will be made to the Members in
proportion to their Ownership Interests. In the event any Distribution is not
made in proportion to their Ownership Interests without the unanimous consent
of the Members, any excess Distribution to a Member will be treated as an
advance or loan made by the Company to such Member, payable to the Company with
interest and on demand.

6.3 Payment. Any Distribution will be made to a Member only if such Person owns
an Ownership Interest on the date of Distribution, as reflected on the books of
the Company.

8

 

6.4 Withholding. If required by the Code or by state or local law, the
Company will withhold any required amount from Distributions to a Member for payment to the
appropriate taxing authority. Any amount so withheld from a Member will be treated as a
Distribution by
the Company to such Person. Each Member agrees to timely file any agreement
that is required
by any taxing authority in order to avoid any withholding obligation that would
otherwise be
imposed on the Company.

6.5 Distributions and Limitation. Unless the Members unanimously agree
otherwise, the
Company will make distributions to its Members no later than forty five (45)
days after the end
of each fiscal quarter of (a) amounts necessary to pay income tax at a rate of
40% of taxable
income allocated to each Member for each fiscal quarter and (b) 100% of Excess
Cash Flow (as
defined below), determined on a fiscal quarter basis. Notwithstanding the
foregoing, the
distributions to Members shall not be in excess of that entitled to be made
pursuant to any
currently existing indenture or credit facility entered into by the Company,
provided that each
Member has agreed in writing to enter into such facility. As used herein,
“Excess Cash Flow”
means EBITDA less (i) management fees, (ii) capital expenditures approved by
the Managers
and actually paid, (iii) interest, (iv) tax distributions actually paid to
Members within forty five
(45) days after the end of each fiscal quarter, (v) scheduled principal
payments and (vi) required
offers to repurchase notes pursuant to any currently existing credit facility
entered into by the
Company.

ARTICLE 7: MEETINGS OF MEMBERS

7.1 Annual Meeting. Unless the Company determines (whether by vote or
otherwise) that
an annual meeting is not necessary or desirable, the annual meeting of the
Members will be held
on the second Tuesday of April in each year at 9:00 a.m. (local time) by Notice
to all Members.
The purpose of the annual meeting is to review the Company’s operations for the
preceding
Fiscal Year and to transact such business as may come before the meeting. The
failure to hold
any annual meeting has no adverse effect on the continuance of the Company.

7.2 Special Meetings. Special meetings of the Members, for any purpose or
purposes, may
be called by any Member or Members owning at least ten percent (10%) of the Ownership
Interests held by all Members by notice to all other Members.

7.3 Place. The Members calling the meeting may designate any place as the place of
meeting for any meeting of the Members. If no designation is made, or if a
special meeting is
otherwise called, the place of meeting will be the Company’s executive offices
in Colorado.

7.4 Notice. Notice of any annual meeting determined by resolution of the
Members or of any
special meeting must be given not less than 5 days nor more than 30 days before
the date of the
meeting. Such notice must state the place, day, and hour of the meeting and,
in the case of a
special meeting, the purpose for which the meeting is called.

9

 

7.5 Waiver of Notice. Any Member may waive, in writing, any notice required to
be given
to such Member, whether before or after the time stated in such notice. Any
Member who signs
minutes of action (or written consent or agreement) will be deemed to have
waived any required
notice with respect to such action.

7.6 Record Date. For the purpose of determining Members entitled to notice of
or to vote at
any meeting of Members, the date on which notice of the meeting is first given
will be the record
date for the determination of Members. Any such determination of Members
entitled to vote at
any meeting of Members will apply to any adjournment of a meeting.

7.7 Quorum. A quorum at any meeting of Members shall consist of Members
owning at
least 50% of the Ownership Interests held by all Members. Any meeting at which
a quorum is
not present may adjourn the meeting to another place, day and hour without
further notice.

7.8 Manner of Acting. If a quorum is present, the affirmative vote of Members
as set forth
in Article 4 will be the act of the Company.

7.9 Proxies. At a meeting of the Members, a Member may vote in person or by
written
proxy given to another Member. Such proxy must be signed by the Member or by
a duly
authorized attorney-in-fact and filed with the Company before or at the time of
the meeting. No
proxy will be valid after eleven months from the date of its signing unless
otherwise provided in
the proxy. Attendance at the meeting by the Member giving the proxy will
revoke the proxy
during the period of attendance.

7.10 Meetings by Telephone. The Members may participate in a meeting by means of
conference telephone or similar communications equipment by which all Members
participating
in the meeting can hear each other at the same time. Such participation will
constitute presence
in person at the meeting and waiver of any required notice.

7.11 Action Without a Meeting. Any action required or permitted to be taken at
a meeting of
Members under this Article 7 may be taken without a meeting if the action is
evidenced by one
or more written consents describing the action taken, signed by Members owning
total
Ownership Interests sufficient for the particular action as set forth in
Article 4. Action so taken
is effective when sufficient Members approving the action have signed the
consent, unless the
consent specifies a later effective date. Notice of the action must be provided
to all members.

ARTICLE 8: LIABILITY OF A MEMBER

8.1 Limited Liability. Unless otherwise provided in the Act, the Articles or
an agreement
signed by the Member to be subjected to any individual liability, no Member of
the Company is
individually liable for the debts or liabilities of the Company.

8.2 Liability to Company. Each Member is liable to the Company for any Capital
Contribution or Distribution that has been wrongfully or erroneously returned
or paid to such
Person in violation of the Act, the Articles or this Agreement.

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ARTICLE 9: INDEMNIFICATION

9.1 Indemnification. Except with respect to any actions or omissions
described in Section
14.10 and the last sentence of Sections 4.4 and 4.5, the Company will
indemnify, defend and
hold harmless any Person who was or is a party (or is threatened to be made a
party) to any
Proceeding by reason of the fact that such Person was a Member, or agent or
representative
thereof, a Manager, employee or agent of the Company to the fullest extent
permitted by the Act.
Any such indemnification will apply to any Liability actually and reasonably
incurred in
connection with the defense or settlement of the Proceeding.

9.2 Expense Advancement. With respect to the expenses actually and reasonably
incurred
by a Member or Manager who is a party to a Proceeding, the Company shall
provide funds to
such Person in advance of the final disposition of the Proceeding if the Person
furnishes the
Company with such Person’s written affirmation of a good-faith belief that such
Person has met
the standard of conduct described in the Act, and such Person agrees in writing
to repay the
advance if it is subsequently determined that such Person has not met such
standard of conduct.

9.3 Insurance. The indemnification provisions of this Article do not limit a
Member’s or
Manager’s right to recover under any insurance policy or other financial
arrangement by the
Company (including any self-insurance, trust fund, letter of credit, guaranty
or surety). If, with
respect to any Liability, any Member or Manager receives an insurance or other
indemnification
payment which, together with any indemnification payment made by the Company,
exceeds the
amount of such Liability, then such Member or Manager will immediately repay
such excess to
the Company.

ARTICLE 10: ACCOUNTING AND REPORTING

10.1 Fiscal Year. For income tax and accounting purposes, the Fiscal Year of
the Company
will end on the last Sunday in April of each year (unless otherwise required by the Code).

10.2 Accounting Method. For accounting purposes, the Company will use generally
accepted accounting principles.

10.3 Tax Elections. The Company will have the authority to make such tax
elections, and to
revoke any such election, as the Managers may from time to time determine.

10.4 Returns. The Company will cause the preparation and timely filing of all
tax returns
required to be filed by the Company pursuant to the Code, as well as all other
tax returns
required in each jurisdiction in which the Company does business.

10.5 Reports. The Company will furnish a Profit or Loss statement and a
balance sheet to
each Member within a reasonable time after the end of each fiscal quarter. The
Company books
will be closed at the end of each Fiscal Year and audited financial statements
prepared showing
the financial condition of the Company and its Profits or Loses from
operations. Copies of these
statements will be given to each Member. In addition, as soon as is practicable
after the close of

11

 

each Fiscal Year (and in any event within 90 days following the end of each
Fiscal Year), the Company will provide each Member with all necessary tax
reporting information.

10.6 Books and Records. The records of the Company will be kept at the
Company’s
business office in Colorado, and will be available for inspection and coping by
any Member at
such Person’s expense, during ordinary business hours.

10.7 Information. Any Member has the right to inspect and copy the Company
books and
records as provided in Section 10.6 and to have a formal accounting of Company
affairs
whenever circumstances render it just and reasonable. In addition, subject
to reasonable
standards as established by the Company from time to time, and upon reasonable
demand for any
purpose reasonably related to the Member’s interest as a Member, any Member has
the right to
obtain from the Company correct and complete information relating to the state
of the
Company’s business and financial condition.

10.8 Banking. The Company may establish one or more bank or financial accounts
and safe
deposit boxes. The Company may authorize one or more individuals to sign
checks on and
withdraw funds from such bank or financial accounts and to have access to such
safe deposit
boxes, and may place such limitations and restrictions on such authority as the
Company deems
advisable.

10.9 Tax Matters Partner. Until further action by the Company, Casino America of
Colorado is designated as the tax matters partner under Section 6231(a)(7) of
the Code. The tax
matters partner will be responsible for notifying all Members of ongoing
proceedings, both
administrative and judicial, and will represent the Company throughout any such
proceeding.
The Members will furnish the tax matters partner with such information as it
may reasonably
request to provide the Internal Revenue Service with sufficient information to
allow proper
notice to the Members. If an administrative proceeding with respect to a
partnership item under
the Code has begun, and the tax matters partner so requests, each Member will
notify the tax
matters partner of its treatment of any partnership item on its federal income
tax return, if any,
which is inconsistent with the treatment of that item on the partnership return
for the Company.
Any settlement agreement with the Internal Revenue Service will be binding upon
the Members
only as provided in the Code. The tax matters partner will not bind any other
Member to any
extension of the statute of limitations or to a settlement agreement without
such Member’s
written consent. Any Member who enters into a settlement agreement with
respect to any
partnership item will notify the other Members of such settlement agreement and
its terms within
30 days from the date of settlement If the tax matters partner does not file
a petition for
readjustment of the partnership items in the Tax Court, Federal District Court
or Claims Court
within the 90-day period following a notice of a final partnership
administrative adjustment, any
notice partner or 5-percent group (as such terms are defined in the Code) may
institute such
action within the following 60 days. The tax matters partner will timely
notify the other
Members in writing of its decision. Any notice partner or 5-percent group will
notify any other
Member of its filing of any petition for readjustment.

12

 

10.10 No Partnership. The classification of the Company as a partnership will
apply only for federal (and, as appropriate, state and local) income tax
purposes. This characterization, solely, for tax purposes, does not create or
imply a general partnership between the Members for state law or any other
purpose. Instead, the Members acknowledge the status of the Company as a
limited liability company formed under the Act.

ARTICLE 11: DISSOLUTION OF THE COMPANY

11.1 Dissolution. Dissolution of the Company will occur only upon the
happening of any of
the following events:

	(a)	 	An event of Withdrawal (as defined in Section 11.2) of a Member, unless
there is at least
one remaining Member (including any Transferee admitted as a substitute
Member);
	 
	(b)	 	By unanimous agreement of the Members; or
	 
	(c)	 	December 31,2096.

11.2 Events of Withdrawal. An event of Withdrawal of a Member occurs when any
of the
following occurs:

	(a)	 	With respect to any Member, upon the Transfer of all of such Member’s
Ownership
Interest not approved by a majority of the Members (which Transfer is
treated as a
resignation);
	 
	(b)	 	With respect to any Member, upon the voluntary withdrawal (including any
resignation
or retirement in contravention of Section 4.4) of the Member by notice to
all other
Members;
	 
	(c)	 	With respect to any Member that is a corporation, upon filing of articles
of dissolution of
the corporation;
	 
	(d)	 	With respect to any Member that is a partnership or a limited liability
company, upon
dissolution of such entity;
	 
	(e)	 	With respect to any Member who is an individual, upon either the death or
retirement of
the individual, or upon such Person’s insanity or the entry by a court of
competent
jurisdiction of an order adjudicating the individual to be incompetent to
manage such
individual’s person or estate;
	 
	(f)	 	With respect to any Member that is a trust, upon termination of the trust;
	 
	(g)	 	With respect to any Member that is an estate, upon final distribution of
the estate’s
Ownership Interest;
	 
	(h)	 	Any other event which terminates the continued membership of a
Member in the Company;

13

 

	(i)	 	With respect to any Member, the bankruptcy of the Member, so long
as there is one or more remaining Members.

     Within 30 days following the happening of any event of Withdrawal with
respect to a Member, such Member must give notice of the date and the nature of
such event to the Company. Any Member failing to give such notice will be
liable in damages for the consequences of such failure as otherwise provided in
this Agreement. Upon the occurrence of an event of Withdrawal with respect to a
Member, such Member will cease to have voting rights under Article 4, and such
Member’s Ownership Interest will be deemed transferred to such Member’s
Transferee or other successor in interest (which Person, unless already a
Member in such capacity, will have only the limited rights of a Transferee as
set forth in Section 13.6, unless and until admitted as a substitute Member).

11.3 Bankruptcy. Notwithstanding anything else to the contrary contained
herein or in Section 7-80-801(l)(c) of the Act, the bankruptcy of a Member
will not dissolve the Company. The bankruptcy of a Member will be deemed to
occur when such Person: (a) files a voluntary petition in bankruptcy, (b) is
adjudged a bankrupt or insolvent, or has entered against such Person an order
for relief in any bankruptcy or insolvency proceeding, (c) files a petition or
answer seeking for such Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation, (d) files an answer or other pleading admitting or failing
to contest the material allegations of a petition filed against such Person in
any proceeding of this nature, or (e) seeks, consents to or acquiesces in the
appointment of a trustee, receiver or liquidator of all or any substantial
part of such Person’s properties. In addition, the bankruptcy of a Member will
be deemed to occur if any proceeding filed against a Member seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation is not
dismissed within 120 days or if the appointment without the Member’s consent
(or acquiescence of a trustee, receiver or liquidator of the Member or of all
or any substantial part of such Person’s properties) is not vacated or stayed
within 90 days (or if after the expiration of any stay, if the appointment is
not vacated within 90 days).

ARTICLE 12: LIQUIDATION

12.1 Liquidation. Upon Dissolution of the Company, the Company will
immediately proceed to wind up its affairs and liquidate. The Managers will
appoint a liquidating trustee. The winding up and Liquidation of the Company
will be accomplished in a businesslike manner as determined by the liquidating
trustee and this Article 12. A reasonable time will be allowed for the orderly
Liquidation of the Company and the discharge of liabilities to creditors so as
to enable the Company to provide for any losses attendant upon Liquidation.
Any gain or loss on disposition of any Company assets in Liquidation will be
allocated to Members and credited or charged to Capital Accounts in accordance
with the provisions of Articles 3 and 5. Any liquidating trustee is entitled
to reasonable compensation for services actually performed, and may contract
for such assistance in the liquidation process as such Person deems necessary.
Until the filing of articles of dissolution as provided in Section 12.6, the
liquidating trustee may settle and close the Company’s business, prosecute and
defend suits, dispose of its property,

14

 

discharge or make provision for its liabilities, and make distributions in
accordance with the priorities set forth in Section 12.2.

12.2 Priority of Payment. The assets of the Company will be distributed in
Liquidation of
the Company in the following order:

	(a)	 	First, to non-Member creditors of the Company in order of priority as
provided by law in
payment of unpaid liabilities of the Company to the extent required by
law or under
agreements with such creditors;
	 
	(b)	 	Second, to the setting of any reserves which the Members reasonably deem
necessary for
any anticipated, contingent or unforeseen liabilities or obligations of
the Company arising out of or in connection with the conduct of the Company’s business. At
the expiration of
such period as the Members reasonably deem advisable, the balance thereof
shall be
distributed in accordance with this Section 12.2;
	 
	(c)	 	Third, to any Member for any other loans or debts owing to such Member by
the
Company;
	 
	(d)	 	Fourth, to all Members in proportion to their Capital Account balances to
the extent
allowable under Section 5.3 until their Capital Account balances are
reduced to zero; and
	 
	(e)	 	Fifth, the balance, if any, to all Members in proportion to their
Ownership Interest
percentages under Section 5.2.

12.3 Distribution to Members. Distributions in Liquidation due to the Members
may be
made by either or a combination of the following methods: selling the Company
assets and
distributing the net proceeds, or by distributing the Company assets to the
Members at their net
Fair Market Value in kind. Any liquidating Distribution in kind to the Members
may be made
either by a pro-rata Distribution of undivided interests or, upon the
affirmative Vote of all
Members, by non pro-rata Distribution of specific assets at Fair Market Value
on the effective date of Distribution. Any Distribution in kind may be made subject to, or
require assumption of, liabilities to which such property may be subject, but in the case of any non
pro-rata Distribution only upon the express written agreement of the Member receiving the
Distribution. Each Member hereby agrees to save and hold harmless the other Members from such
Member’s share of any and all such liabilities which are taken subject to or assumed.
Appropriate and customary prorations and adjustments shall be made incident to any Distribution in kind.
The Members will look solely to the assets of the Company for the return of their Capital
Contributions, and if the assets of the Company remaining after the payment or discharge of the debts and
liabilities of the Company are insufficient to return such contributions, they will have no
recourse against any
other Member.

12.4 No Restoration Obligation. Except as otherwise specifically provided in
Article 8,
nothing contained in this Agreement imposes on any Member an obligation to make
a Capital
Contribution in order to restore a deficit Capital Account upon Liquidation of
the Company.
Furthermore, each Member will look solely to the assets of the Company for the
return of such
Member’s Capital Contribution and Capital Account.

15

 

12.5 Liquidating Reports. A report will be submitted with each liquidating
distribution to
Members, showing the collections, disbursements and distributions during the
period which is
subsequent to any previous report. A final report, showing
cumulative collections,
disbursements and distributions, will be submitted upon completion of the
liquidation process.

12.6 Articles of Dissolution. Upon Dissolution of the Company and the
completion of the winding up of its business, the Company will file articles of dissolution (to
cancel its Articles of
Organization) with the Colorado Secretary of State pursuant to the Act. At
such time, the
Company will also file an application for withdrawal of its certificate of
authority in any
jurisdiction where it is then qualified to do business.

ARTICLE 13: TRANSFER RESTRICTIONS

13.1 General Restriction. No Member may Transfer all or any part of its
Ownership Interest
in any manner whatsoever except: (a) to a Permitted Transferee as set forth in
Section 13.3 or (b)
after full compliance with the right of first refusal set forth in Section
13.4, and in either case
only if the requirements of Section 13.5 have also been satisfied. Any other
Transfer of all or
any part of an Ownership Interest is null and void, and of no effect. Any
Member who makes a
Transfer of all of such Member’s Ownership Interest will be treated as
resigning from the
Company on the effective date of such Transfer. Any Member who makes a
Transfer of part
(but not all) of such Member’s Ownership Interest will continue as a Member
(with respect to the
interest retained), and such partial Transfer will not constitute an event of
Withdrawal of such
Member. The rights and obligations of any resigning Member or of any
Transferee of an Ownership Interest will be governed by the other provisions of this Agreement.

13.2 No Member Rights. No Member has the right or power to confer upon any
Transferee
the attributes of a Member in the Company. The Transferee of all or any part of
an Ownership
Interest by operation of law does not, by virtue of such Transfer, succeed to
any rights as a
Member in the Company.

13.3 Permitted Transferee. Subject to the requirements set forth in Section
13.5, a Person
may Transfer all or any part of such Person’s Ownership Interest:

	(a)	 	To an Affiliate of such Person;
	 
	(b)	 	To another Member;
	 
	(c)	 	To the Company;
	 
	(d)	 	To a Person approved by all the Members;
	 
	(e)	 	To another Person as part of a merger, reorganization, consolidation or
sale of all or
substantially all of the assets of a Person that controls any Member; or

16

 

	(f)	 	In the form of a pledge or the granting of a security interest to another
Person or a foreclosure or sale in lieu of foreclosure in connection with
the granting of any such pledge or security interest as described in
Section 13.7.

13.4 Right of First Refusal. Prior to any proposed Transfer of all or any
part of an
Ownership Interest, other than to a Permitted Transferee pursuant to Section
13.3, the Transferor
must obtain a Third Party Offer. For purposes of this Section 13.4, a Transfer
of an Ownership
Interest of a Member shall be deemed to occur upon any change in control of
such Member other
than to a Permitted Transferee pursuant to Section 13.3. The Third Party
Offer must not be
subject to unstated conditions or contingencies or be part of a larger
transaction such that the
price for the Ownership Interest stated in such Third Party Offer does not
accurately reflect the
Fair Market Value (reduced by the amount of associated liabilities) of such
Ownership Interest.
The Third Party Offer must contain a description of all of the consideration,
material terms and
conditions of the proposed Transfer. The Transferor will give notice of the
Third Party Offer to
the Company and all the Members exclusive of Transferees who have not been
admitted as
substitute Members pursuant to Section 4.6 (the “Other Members”) other than the
Transferor,
together with a written offer to sell the Ownership Interest (which is the
subject of the Third
Party Offer) to the Company and the other Members on the same price and terms
as the Third
Party Offer as provided herein. The Company may accept such offer by the
Transferor, in whole
but not in part, by giving notice to the Transferor within 30 days after notice
of such offer.
Unless otherwise agreed, the closing of such sale will be held at the Company’s
registered office
in Colorado on a date to be specified by the Company which is not later than 60
days after the
date of the Company’s notice of acceptance. At the closing, the Company will
deliver the
consideration in accordance with the terms of the Third Party Offer, and the
Transferor will by
appropriate documents assign to the Company the Ownership Interest to be sold,
free and clear
of all liens, claims and encumbrances. Subject to Section 13.5, if the Company
has not accepted
the Third Party Offer and closed the purchase in accordance with this Section
13.4, the Other
Members shall have the right, on a pro rata basis in accordance with the ratio
of their Percentage
Ownership Interests, to purchase, in whole but not in part, the Ownership
Interest of the
Transferor in accordance with the terms of the Third Party Offer by written
notice to the
Transferor within 30 days after the expiration of the thirty-day period for the
Company’s
acceptance. If all of the other Members reject the offer or if the offer is not
closed in accordance
with this Section 13.4, the Transferor will be free for a period of 60 days
after the last day for
such acceptance to sell all, but not less than all, of such Ownership Interest
so offered, but only
to the Third Party for a price and on terms no more favorable to the Third
Party than the Third
Party Offer. If such Ownership Interest is not so sold within such 60-day
period (or within any
extensions of such period agreed to in writing by the Company), all rights to
sell such Ownership
Interest pursuant to such Third Party Offer (without making another offer to
the Company
pursuant to this Section 13.4) will terminate and the provisions of this
Article will continue to
apply to any proposed future Transfer.

13.5 General Conditions on Transfers. No Transfer of an Ownership Interest
after the date
of this Agreement will be effective unless all of the conditions set forth
below are satisfied:

	(a)	 	Unless waived by the Company, the Transferor signs and delivers to the
Company an undertaking in form and substance satisfactory to the Company
to pay all reasonable

17

 

	 	 	expenses incurred by the Company in connection with the Transfer
(including, but not limited to, reasonable fees of counsel and
accountants and the costs to be incurred with any additional accounting
required in connection with the Transfer, and the cost and fees
attributable to preparing, filing and recording such amendments to the
organizational documents or filings as may be required by law);
	 
	(b)	 	Such transfer does not require the registration of such transferred
interest pursuant to any
applicable federal or state securities laws, and the Transferor delivers
to the Company an opinion of counsel for the Transferor satisfactory in form and substance
to the Company
to the effect that the Transfer of the Ownership Interest is in
compliance with the
applicable federal and state securities laws, and a statement of the
Transferee in form and
substance satisfactory to the Company making appropriate representations
and warranties
in respect to compliance with the applicable federal and state securities
laws and as to
any other matter reasonably required by the Company;
	 
	(c)	 	The Company receives an opinion from its counsel that (i) the Transfer
does not cause the Company to lose its classification as a partnership for federal or
state income tax
purposes, and (ii) the Transfer, together with all other Transfers within
the preceding
twelve months, does not cause a termination of the Company for federal or
state income
tax purposes;
	 
	(d)	 	The Transferor signs and delivers to the Company a copy of the assignment
of the
Ownership Interest to the Transferee, together with the Certificates for
Units representing
such Ownership Interest, duly executed for assignment;
	 
	(e)	 	The Transferee signs and delivers to the Company its agreement to be
bound by this
Agreement;
	 
	(f)	 	Such Transfer does not cause the Company to become a “Publicly Traded
Partnership,”
as such term is defined in Sections 469(k)(2) or 7704(b) of the Code;
	 
	(g)	 	Such Transfer does not subject the Company to regulation under the
Investment
Company Act of 1940, the Investment Advisers Act of 1940 or the Employee
Retirement
Income Security Act of 1974, each as amended;
	 
	(h)	 	Such Transfer is in compliance with the Colorado Limited Gaming Act;
	 
	(i)	 	Such Transfer is not made to any Person who lacks the legal
right, power or capacity to own such Interest; and
	 
	(j)	 	The Transfer is in compliance with the other provisions of this
Article.

     Except as the Company and the Transferee may otherwise agree, the
Transfer of an Ownership Interest will be effective as of 12:01 a.m. (Mountain
Time) on the first day of the month following

18

 

     Notwithstanding anything to the contrary expressed or implied in this
Agreement, the sale, assignment, transfer, pledge or other disposition of any
direct or indirect interest in the Company is subject to the laws of the State
of Colorado and the requirements, limitations and decisions of the Colorado
Division of Gaming and the Colorado Limited Gaming Control Commission.

13.6 Rights of Transferees. Any Transferee of an Ownership Interest will on
the effective
date of the Transfer, have only those rights of an assignee as specified in the
Act and this
Agreement unless and until such Transferee is admitted as a substitute Member.
This provision
limiting the rights of a Transferee will not apply if such Transferee is
already a Member;
provided that, any Member who resigns or retires from the Company in
contravention of Section
4.4 will have only the rights of an assignee as specified in the Act and this
Agreement. Any
Transferee of all or any part of an Ownership Interest who is not admitted as a
substitute
Member in accordance with this Agreement has no right (a) to participate or
interfere in the
management or administration of the Company’s business or affairs, (b) to vote
or agree on any
matter affecting the Company or any Member, (c) to require any information on
account of
Company transactions, or (d) to inspect the Company’s books and records. The
only right of a
Transferee of all or any part of an Ownership Interest who is not admitted as a
substitute
Member in accordance with this Agreement is to receive the allocations and
Distributions to
which the Transferor was entitled (to the extent of the Ownership Interest
transferred) and to
receive required tax reporting information. However, each Transferee of all or
any part of an
Ownership Interest (including both immediate and remote Transferees) will be
subject to all of
the obligations, restrictions and other terms contained in the Agreement as if
such Transferee
were a Member. To the extent of any Ownership Interest transferred, the
Transferee or Member
does not possess any right or power as a Member and may not exercise any such
right or power
directly or indirectly on behalf of the Transferee. The Members acknowledge
that these
provisions may differ from the rights of an assignee as set forth in the Act,
and the Members
agree that they intend, to that extent, to vary those provisions by this Agreement.

13.7 Security Interest. The pledge or granting of a security interest, lien or other
encumbrance in or against all or any part of a Member’s Ownership Interest does
not cause the
Member to cease to be a Member or constitute an event of Withdrawal. Upon
foreclosure or sale
in lieu of foreclosure of any such secured interest, the secured party will be
entitled to receive the
allocations and Distributions as to which a security interest has been granted
by such Member.
In no event will any secured party be entitled to exercise any rights under
this Agreement, and
such secured party may look only to such Member for the enforcement of any of
its rights as a
creditor. In no event will the Company have any liability or obligation to any
Person by reason
of the Company’s payment of a Distribution to any secured party as long as the
Company makes
such payment in reliance upon written instructions from the Member to whom such
Distributions
would be payable. Any secured party will be entitled, with respect to the
security interest
granted, only if, the Distributions to which the assigning Member would be
entitled under this
Agreement, and only if, as and when such Distribution is made by the Company.
Neither the
Company nor any Member will owe any fiduciary duty of any nature to a secured
party.
Reference to any secured party includes any assignee or successor-in-interest
of such Person.

19

 

13.8 Regulatory Compliance Restrictions. Notwithstanding anything to the
contrary in this Agreement or elsewhere, the following provisions shall apply.

     The Company shall not issue any voting securities or other voting
interests, except in accordance with the provisions of the Colorado Limited
Gaming Act and the regulations promulgated thereunder. The issuance of any
voting securities or other voting interests shall be deemed not to be issued
and outstanding until (a) the Company shall cease to be subject to the
jurisdiction of the Colorado Limited Gaming Control Commission, or (b) the
Colorado Limited Gaming Control Commission shall, by affirmative action,
validate said issuance or waive any defect in issuance.

     No voting securities or other voting interests issued by the Company and
no interests, claim or charge therein or thereto shall be transferred in any
manner whatsoever except in accordance with the provisions of the Colorado
Limited Gaming Act and the regulations promulgated thereunder. Any transfer in
violation thereof shall be void until (a) the Company shall cease to be
subject to the jurisdiction of the Colorado Limited Gaming Control Commission,
or (b) the Colorado Limited Gaming Control Commission shall, by affirmative
action, validate said transfer or waive any defect in said transfer.

     If the Colorado Limited Gaming Control Commission at any time determines
that a holder of voting securities or other voting interests of this Company
is unsuitable to hold such securities or other voting interests, then the
Company may, within sixty (60) days after the findings of unsuitability,
purchase such voting securities or other voting interests of such unsuitable
Person at the lesser of (i) the cash equivalent of such Person’s investment in
the Company, or (ii) the current market price as of the date of the finding of
unsuitability, unless such voting securities or other voting interests are
transferred to a suitable person (as determined by the Commission) within
sixty (60) days after the finding of unsuitability. Until such voting
securities or other voting interests are owned by Persons found by the
Commission to be suitable to own them, (a) the Company shall not be required
or permitted to pay any dividend or interest with regard to the voting
securities or other voting interests, (b) the holder of such voting securities
or other voting interests shall not be entitled to vote on any matter as the
holder of the voting securities shall not for any purposes be included in the
voting securities or other voting interests of the Company entitled to vote,
and (c) the Company shall not pay any remuneration in any form to the holder
of the voting securities or other voting interests except in exchange for such
voting securities or other voting interests as provided in this paragraph.

ARTICLE 14: GENERAL PROVISIONS

14.1 Amendment. This Agreement may be amended by the unanimous written
agreement of the Members. Any amendment will become effective upon such
approval, unless otherwise provided. Notice of any proposed amendment must be
given at least 5 days in advance of the meeting at which the amendment will be
considered (unless the approval is evidenced by duly signed minutes of action).
Any duly adopted amendment to this Agreement is binding upon, and inures to the
benefit of, each Person who holds an Ownership Interest at the time of such
amendment. Notwithstanding any other provision of this Agreement, with respect
to any Transferee not admitted as a substitute Member, no amendment to Section
5.2 (relating to the

20

 

general allocation rule for allocation of Profits or Losses), Section 6.1
(relating to pro-rata Distributions), Section 12.2 (relating to Distributions
in Liquidation) and Section 14.1 (relating to amendment of this Agreement)
will be effective, nor will such Person be required to make any Capital
Contribution, without such Person’s written consent. Non-Material amendments
relating to this Agreement or that are necessary for compliance with
applicable law may be made by the Managers.

14.2 Unregistered Interests. Each Member (a) acknowledges that the Ownership
Interests
are being offered and sold without registration under The Securities Act of
1933, as amended, or
under similar provisions of state law, (b) represents and warrants that such
Person is an
accredited investor as defined for federal securities laws purposes, (c)
represents and warrants
that it is acquiring an Ownership Interest for such Person’s own account, for
investment, and
with no view to the distribution of the Ownership Interest, and (d) agrees not
to Transfer, or to
attempt to Transfer, all or any part of its Ownership Interest without
registration under the
Securities Act of 1933, as amended, and any applicable state securities laws,
unless the Transfer
is exempt from such registration requirements.

14.3 Waiver of Partition Right. Each Member waives and renounces any right
that such
Person may have prior to Dissolution and Liquidation to institute or maintain
any action for
partition with respect to any real property owned by the Company.

14.4 Waivers Generally. No course of dealing will be deemed to amend or
discharge any
provision of this Agreement. No delay in the exercise of any right will
operate as a waiver of
such right. No single or partial exercise of any right will preclude its
further exercise. A waiver
of any right on any one occasion will not be construed as a bar to, or waiver
of, any such right on
any other occasion.

14.5 Equitable Relief. If any Person proposes to Transfer all or any part of
such Person’s
Ownership Interest in violation of the terms of this Agreement, the Company or
any Member
may apply to any court of competent jurisdiction for an injunctive order
prohibiting such
proposed Transfer except upon compliance with the terms of this Agreement, and
the Company
or any Member may institute and maintain any action or proceeding against the
Person proposing
to make such Transfer to compel the specific performance of this Agreement.
Any attempted
Transfer in violation of this Agreement is null and void, and of no force and
effect. The Person
against whom such action or proceeding is brought waives the claim or defense
that an adequate
remedy at law exists, and such Person will not urge in any such action or
proceeding the claim or
defense that such remedy at law exists.

14.6 Remedies for Breach. The rights and remedies of the Members set forth in this
Agreement are neither mutually exclusive nor exclusive of any right or remedy
provided by law,
in equity or otherwise. The Members agree that all legal remedies (such as
monetary damages)
as well as all equitable remedies (such as specific performance) will be
available for any breach or threatened breach of any provision of this Agreement.

21

 

14.7 Original. This Agreement is signed in two original documents that are to
be delivered to
each initial Member. A photocopy of this Agreement, as signed, will be
delivered to each
substitute or additional Member, and each such photocopy will be deemed to be
an original
document.

14.8 Notices. Any notices (including any communication or delivery) required
or permitted under this Agreement will be in writing and will be addressed to the Members at
their respective addresses, as set forth on the Register of Members maintained by the Company.
All notices may be made by mail, personal delivery, courier service or facsimile machine, and
will be effective upon delivery. Any Member may change such Person’s address by notice to the
Company and each other Member.

14.9 Costs. If the Company or any Member retains counsel for the purpose of
enforcing or preventing the breach or any threatened breach of any provision of this
Agreement or for any other remedy relating to it, then the prevailing party will be entitled to be
reimbursed by the non- prevailing party for all costs and expenses so incurred (including reasonable
attorneys’ fees, costs of bonds, and fees and expenses for expert witnesses) unless the
arbitrator or other trier of fact determined otherwise in the interest of fairness.

14.10 Indemnification. Each Member hereby indemnifies and agrees to hold
harmless the Company and each other Member from any liability, cost or expense arising from
or related to any act or failure to act of such Member which is in violation of this Agreement.

14.11 Partial Invalidity. Wherever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law.
However, if for any reason any one or more of the provisions of this Agreement are held to be
invalid, illegal or unenforceable in any respect, such action will not affect any other provision
of this Agreement.
In such event, this Agreement will be construed as if such invalid, illegal or
unenforceable provision had never been contained in it.

14.12 Entire Agreement. This Agreement, together with the Members Agreement,
contains the entire agreement and understanding of the Members with respect to its
subject matter, and it supersedes all prior written and oral agreements. No amendment of this
Agreement will be effective for any purpose unless it is made in accordance with Section 14.1.

14.13 Benefit. The contribution obligations of each Member will inure solely
to the benefit of the other Members and the Company, without conferring on any other Person any rights of
enforcement or other rights.

14.14 Binding Effect. This Agreement is binding upon, and inures to the benefit of, the
Members and their permitted successors and assigns; provided that, any Transferee will have
only the rights specified in Section 13.6 unless admitted as a substitute
Member in accordance with this Agreement.

14.15 Further Assurances. Each Member agrees, without further consideration,
to sign and deliver such other documents of further assurance as may reasonably be
necessary to effectuate the provisions of this Agreement.

22

 

14.16 Headings. Article and section titles have been inserted for convenience
of reference only. They are not intended to affect the meaning or interpretation of this Agreement.

14.17 Terms. Terms used with initial capital letters will have the meanings specified,
applicable to both singular and plural forms, for all purposes of this
Agreement. All pronouns (and any variation) will be deemed to refer to the masculine, feminine or
neuter, as the identity of the Person may require. The singular or plural include the other, as the
context requires or permits. The word include (and any variation) is used in an illustrative
sense rather than a limiting sense.

14.18 Governing Law; Conflicts. This Agreement will be governed by, and
construed in accordance with, the laws of the State of Colorado (except to the extent
preempted by any federal law or the gaming laws of any state or governmental agency having
jurisdiction over the affairs of any Member). Any conflict or apparent conflict between this
Agreement and the Act will be resolved in favor of this Agreement except as otherwise required by the
Act. The Members have entered into a Members Agreement, dated as of the date of this
Agreement, which Members Agreement contains certain provisions as to the affairs of the Company
and the conduct of its business and which, for purposes of the Act, shall be
considered, together with this Agreement, as an “operating agreement” of the Company.

14.19 Effectiveness. This Agreement shall automatically, without further
action by any of the parties, become effective and enforceable according to its terms, and shall
supersede and replace the First Amended Operating Agreement immediately upon execution hereof.

23

 

         IN WITNESS WHEREOF, the Members have signed this Second Amended and
Restated Operating Agreement of Isle of Capri Black Hawk, L.L.C. as of the
date first set forth above.

	 	 	 
	

	 	CASINO AMERICA OF COLORADO, INC.,
	

	 	a Colorado corporation
	 
	 	 
	

	 	By:  -s- Allan B. Solomon
	

	 	Name: Allan B. Solomon
	

	 	Title: Executive Vice President
	 
	 	 
	

	 	BLACKHAWK GOLD, LTD.,
	

	 	a Nevada corporation
	 
	 	 
	

	 	By:  -s- H. THOMAS WINN
	

	 	Name:  H. THOMAS WINN
	

	 	Title:   PRESIDENT

24

 

APPENDIX I

Ownership Interests

	 	 	 	 	 	 	 
	 	 	Date
	 	Ownership Interests

	1.

	 	April 25, 1997
	 	Casino America of Colorado, Inc.

Blackhawk Gold, Ltd.
	 	51.6%

48.4%
	 
	 	 	 	 	 	 
	2.

	 	July, 1997
	 	Casino America of Colorado, Inc.

Blackhawk Gold, Ltd.
	 	55% 
45%
	 
	 	 	 	 	 	 
	3.

	 	August, 1997
	 	Casino America of Colorado, Inc.

Blackhawk Gold, Ltd.
	 	59.20%

40.80%
	 
	 	 	 	 	 	 
	4.

	 	April, 2003
	 	Casino America of Colorado, Inc.

Blackhawk Gold, Ltd.
	 	57.00%

43.00%
	 
	 	 	 	 	 	 
	5.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	6.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	7.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	8.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	9.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	10.
	 	 	 	 	 	 
	 
	 	 	 	 	 	 

 

 

EXHIBIT “A”

Definitions

	 	 	 
	Act:

	 	The Colorado Limited Liability Company
Act, as amended from time to time.
	 
	 	 
	Affiliate:

	 	An “Affiliate” of a Person means a
Person directly or indirectly
controlling, controlled by or under
common control with such Person. For
this purpose and for purposes of the use
of the term “control” in this Agreement,
control means the possession, direct or
indirect, of the power to direct or
cause the direction of the management
and policies of a Person, whether
through the ownership of voting
securities, by contract or otherwise.
	 
	 	 
	Agreement:

	 	This Second Amended and Restated
Operating Agreement, as amended from
time to time.
	 
	 	 
	Articles:

	 	The Articles of Organization of the
Company as filed under the Act, as
amended from time to time.
	 
	 	 
	Blackhawk Gold:

	 	Blackhawk Gold, Ltd., a Nevada
corporation, and its Permitted
Transferees (provided that any
Transferee will become a substitute
Member only in accordance with the
Agreement).
	 
	 	 
	Capital Account:

	 	The capital account maintained for each
Member under Section 3.5.
	 
	 	 
	Capital Contribution:

	 	Any contribution by a
Member to the Company.
	 
	 	 
	Capital Transaction:

	 	Any sale, exchange, condemnation
(including any eminent domain or similar
transaction), casualty, financing,
refinancing or other disposition with
respect to any real or personal property
owned by the Company which is not in the
ordinary course of business.
	 
	 	 
	Casino America of Colorado:

	 	Casino America of Colorado, Inc., a
Colorado corporation, and its Permitted
Transferees (provided that any
Transferee will become a substitute
Member only in accordance with the
Agreement).
	 
	 	 
	Code:

	 	The Internal Revenue Code of 1986, as
amended from time to time (including
corresponding provisions of subsequent
revenue laws).
	 
	 	 
	Company:

	 	Isle of Capri Black Hawk, L.L.C., as formed under the Articles
and as operating under this Agreement.
	 
	 	 

A-1

 

	 	 	 
	Dissolution:

	 	The dissolution of the Company as
provided in Section 11.1.
	 
	 	 
	Distribution:

	 	A distribution of money or other
property made by the Company with
respect to an Ownership Interest.
	 
	 	 
	Fair Market Value:

	 	As to any property, the price at which a
willing seller would sell and a willing
buyer would buy such property having
full knowledge of the relevant facts, in
an arm’s-length transaction without time
constraints, and without being under any
compulsion to buy or sell, or the value
otherwise agreed by the Members to be
the Fair Market Value.
	 
	 	 
	Fiscal Year:

	 	The fiscal and taxable year of the
Company as determined under this
Agreement, including both 12-month and
short taxable years.
	 
	 	 
	Initial Ownership:

	 	The relative Ownership Interest of the
Members existing upon the execution of
this Agreement entitling the holders
thereof to all the benefits of ownership
in the Company, but which Ownership
Interests may be changed from time to
time as set forth in this Agreement.
	 
	 	 
	Liability:

	 	The obligation to pay any judgment,
settlement, penalty, fine or reasonable
expense (including attorneys’ fees)
incurred with respect to any Proceeding.
	 
	 	 
	Liquidation:

	 	The process of terminating the Company
and winding up its business under
Article 12 after its Dissolution.
	 
	 	 
	Losses:

	 	The Company’s net loss (including
deductions) for any Fiscal Year,
determined under Section 5.1.
	 
	 	 
	Majority In Interest:

	 	More than 50% of the Ownership
Interests.
	 
	 	 
	Member:

	 	A person who is an initial Member of the
Company, or who is subsequently admitted
as a substitute or an additional Member
as provided in this Agreement.
	 
	 	 
	Members Agreement:

	 	The Amended and Restated Members
Agreement, of even date with this
Agreement, between the Company,
Blackhawk Gold, Casino America of
Colorado, Isle of Capri Casinos, Inc.,
and Nevada Gold & Casinos, Inc.
	 
	 	 
	Net Sales Cash:

	 	Cash receipts of the Company from a
Capital Transaction, less payment of
fees or expenses related to the Capital
Transaction.
	 
	 	 
	Notice: 

	 	Written notice (including any
communication or delivery), actually
given pursuant to Section 14.8.

A-2

 

	 	 	 
	Ownership Interest:

	 	With respect to each Person owning an
interest is the Company, all of the
interests of such Person in the Company
(including, without limitation, an
interest in Profits and Losses of the
Company, a Capital Account interest, and
all other rights and obligations of such
Person under this Agreement), expressed
as a percentage (carried to the nearest
one-thousandth of a percent, if other
than an even percentage), as initially
set forth in Section 1.2 and as
subsequently changed in accordance with
this Agreement.
	 
	 	 
	Permitted Transferee:

	 	A person described in Section 13.3 to
whom an Ownership Interest may be
transferred without compliance with a
right of first refusal.
	 
	 	 
	Person:

	 	An individual, corporation, trust,
partnership, limited liability company,
limited liability association,
unincorporated organization, association
or other entity.
	 
	 	 
	Proceeding:

	 	Any threatened, pending or completed
claim, action, suit or proceeding,
whether formal or informal, and whether
civil, administrative, investigative or
criminal.
	 
	 	 
	Profits:

	 	The Company’s net profit (including
income and gains) for any Fiscal Year,
determined under Section 5.1.
	 
	 	 
	Profits Interest:

	 	Each Member’s (or Transferee’s)
percentage interest (carried to the
nearest one-thousandth of a percent, if
other than an even percentage), in the
Profits of the Company, determined under
Section 5.2.
	 
	 	 
	Regulations:

	 	The Treasury Regulations (including
temporary regulations) promulgated under
the Code, as amended from time to time
(including corresponding provisions of
succeeding regulations).
	 
	 	 
	Third Party:

	 	With respect to any Member, a Person
other than an Affiliate.
	 
	 	 
	Third Party Offer:

	 	A bona  fide, non-collusive, binding,
arm’s-length written offer from a Third
Party stated in terms of U.S. dollars.
	 
	 	 
	Transfer:

	 	A sale, exchange, assignment or other
disposition of Ownership Interest,
whether voluntary or by operation of
law.
	 
	 	 
	Transferee:

	 	A person to whom an Ownership Interest
is transferred in compliance with this
Agreement.
	 
	 	 
	Transferor:

	 	A person who transfers an Ownership
Interest in compliance with this
Agreement.
	 
	 	 

A-3

 

	 	 	 
	Withdrawal:

	 	The occurrence of an event with respect
to a Member which terminates membership
in the Company, as provided in Section
11.2.

A-4

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