Document:

Exhibit
10.5

 

[Execution Version]

 

 

 

 

CREDIT AGREEMENT

 

Dated as of April 12, 2006

 

among

 

FESTIVAL FUN PARKS, LLC,

as Borrower Representative,

 

THE BORROWERS SIGNATORY
HERETO,

 

THE OTHER CREDIT PARTIES
SIGNATORY HERETO,

 

THE LENDERS PARTY HERETO
FROM TIME TO TIME,

 

and

 

GENERAL ELECTRIC CAPITAL
CORPORATION,

as Agent and Lender

 

 

 

 

GE CAPITAL MARKETS, INC.,

as Lead Arranger

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
  1.

  	
  AMOUNT AND
  TERMS OF CREDIT

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Credit Facilities

  	
  2

  
	
   

  	
  1.2.

  	
  Letters of Credit

  	
  5

  
	
   

  	
  1.3.

  	
  Prepayments

  	
  6

  
	
   

  	
  1.4.

  	
  Use of Proceeds

  	
  7

  
	
   

  	
  1.5.

  	
  Interest and Applicable
  Margins

  	
  8

  
	
   

  	
  1.7.

  	
  Fees

  	
  10

  
	
   

  	
  1.8.

  	
  Receipt of Payments

  	
  10

  
	
   

  	
  1.9.

  	
  Application and Allocation of
  Payments

  	
  11

  
	
   

  	
  1.10.

  	
  Loan Account and Accounting

  	
  11

  
	
   

  	
  1.11.

  	
  Indemnity

  	
  12

  
	
   

  	
  1.12.

  	
  Taxes

  	
  13

  
	
   

  	
  1.13.

  	
  Capital Adequacy; Increased
  Costs; Illegality

  	
  14

  
	
   

  	
  1.14.

  	
  Single Loan

  	
  16

  
	
   

  	
  1.15.

  	
  Access

  	
  16

  
	
   

  	
   

  	
   

  
	
  2.

  	
  CONDITIONS
  PRECEDENT

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.1.

  	
  Conditions to the Initial
  Loans

  	
  16

  
	
   

  	
  2.2.

  	
  Further Conditions to Each
  Loan

  	
  18

  
	
   

  	
   

  	
   

  
	
  3.

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Corporate Existence;
  Compliance with Law

  	
  19

  
	
   

  	
  3.2.

  	
  Executive Offices, Collateral
  Locations, FEIN

  	
  19

  
	
   

  	
  3.3.

  	
  Corporate Power,
  Authorization, Enforceable Obligations

  	
  20

  
	
   

  	
  3.4.

  	
  Financial Statements and
  Projections

  	
  20

  
	
   

  	
  3.5.

  	
  Material Adverse Effect

  	
  21

  
	
   

  	
  3.6.

  	
  Ownership of Property; Liens

  	
  21

  
	
   

  	
  3.7.

  	
  Labor Matters

  	
  21

  
	
   

  	
  3.8.

  	
  Ventures, Subsidiaries and
  Affiliates; Outstanding Stock and Indebtedness

  	
  22

  
	
   

  	
  3.9.

  	
  Government Regulation

  	
  22

  
	
   

  	
  3.10.

  	
  Margin Regulations

  	
  22

  
	
   

  	
  3.11.

  	
  Taxes

  	
  22

  
	
   

  	
  3.12.

  	
  ERISA

  	
  23

  
	
   

  	
  3.13.

  	
  No Litigation

  	
  24

  
	
   

  	
  3.14.

  	
  Brokers

  	
  24

  
	
   

  	
  3.15.

  	
  Intellectual Property

  	
  24

  
	
   

  	
  3.16.

  	
  Full Disclosure

  	
  24

  
	
   

  	
  3.17.

  	
  Environmental Matters

  	
  25

  
	
   

  	
  3.18.

  	
  Insurance

  	
  25

  
	
   

  	
  3.19.

  	
  Deposit and Disbursement
  Accounts

  	
  25

  
	
   

  	
  3.20.

  	
  Solvency

  	
  25

  
	
   

  	
  3.21.

  	
  Acquisition Documents

  	
  25

  
	
   

  	
  3.22.

  	
  Status of Holdings and Palace
  Finance

  	
  26

  
	
   

  	
  3.23.

  	
  Senior Unsecured Note
  Documents

  	
  26

  
					

 

i

 

	
   

  	
  3.24.

  	
  Use of Proceeds

  	
  26

  
	
   

  	
  3.25.

  	
  Patriot Act

  	
  26

  
	
   

  	
  3.26.

  	
  OFAC

  	
  26

  
	
   

  	
   

  	
   

  
	
  4.

  	
  FINANCIAL
  STATEMENTS AND INFORMATION

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Reports and Notices

  	
  27

  
	
   

  	
  4.2.

  	
  Communication with
  Accountants

  	
  27

  
	
   

  	
   

  	
   

  
	
  5.

  	
  AFFIRMATIVE
  COVENANTS

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Maintenance of Existence and
  Conduct of Business

  	
  27

  
	
   

  	
  5.2.

  	
  Payment of Charges

  	
  28

  
	
   

  	
  5.3.

  	
  Books and Records; Inspection
  of Property; Lender Meeting

  	
  28

  
	
   

  	
  5.4.

  	
  Insurance; Damage to or
  Destruction of Collateral

  	
  28

  
	
   

  	
  5.5.

  	
  Compliance with Laws

  	
  29

  
	
   

  	
  5.6.

  	
  Supplemental Disclosure

  	
  29

  
	
   

  	
  5.7.

  	
  Intellectual Property

  	
  30

  
	
   

  	
  5.8.

  	
  Environmental Matters

  	
  30

  
	
   

  	
  5.9.

  	
  Landlords’ Agreements;
  Mortgagee Agreements, Etc.

  	
  30

  
	
   

  	
  5.10.

  	
  Certain Post-Closing
  Obligations

  	
  31

  
	
   

  	
  5.12.

  	
  Further Assurances

  	
  33

  
	
   

  	
   

  	
   

  
	
  6.

  	
  NEGATIVE
  COVENANTS

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Mergers, Subsidiaries, Etc.

  	
  33

  
	
   

  	
  6.2.

  	
  Investments; Loans and
  Advances

  	
  36

  
	
   

  	
  6.3.

  	
  Indebtedness

  	
  37

  
	
   

  	
  6.4.

  	
  Affiliate Transactions and
  Employee Loans

  	
  38

  
	
   

  	
  6.5.

  	
  Capital Structure and
  Business

  	
  39

  
	
   

  	
  6.6.

  	
  Guaranteed Indebtedness

  	
  39

  
	
   

  	
  6.7.

  	
  Liens

  	
  39

  
	
   

  	
  6.8.

  	
  Sale of Stock and Assets

  	
  40

  
	
   

  	
  6.9.

  	
  ERISA

  	
  40

  
	
   

  	
  6.10.

  	
  Financial Covenants

  	
  40

  
	
   

  	
  6.11.

  	
  Hazardous Materials

  	
  40

  
	
   

  	
  6.12.

  	
  Sale-Leasebacks

  	
  40

  
	
   

  	
  6.13.

  	
  Restricted Payments

  	
  41

  
	
   

  	
  6.14.

  	
  Change of Corporate Name or
  Location

  	
  41

  
	
   

  	
  6.15.

  	
  Fiscal Year

  	
  42

  
	
   

  	
  6.16.

  	
  No Impairment of Intercompany
  Transfers or Distributions

  	
  42

  
	
   

  	
  6.17.

  	
  Real Estate Purchases

  	
  42

  
	
   

  	
  6.18.

  	
  Changes Relating to Senior
  Unsecured Notes; Material Contracts

  	
  42

  
	
   

  	
  6.19.

  	
  Holdings and Palace Finance
  Covenant

  	
  43

  
	
   

  	
   

  	
   

  
	
  7.

  	
  TERM

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  Termination

  	
  44

  
	
   

  	
  7.2.

  	
  Survival of Obligations Upon
  Termination of Financing Arrangements

  	
  44

  
	
   

  	
   

  	
   

  
	
  8.

  	
  EVENTS OF
  DEFAULT; RIGHTS AND REMEDIES

  	
  44

  

 

ii

 

	
   

  	
  8.1.

  	
  Events of Default

  	
  44

  
	
   

  	
  8.2.

  	
  Remedies

  	
  46

  
	
   

  	
  8.3.

  	
  Waivers by Credit Parties

  	
  46

  
	
   

  	
   

  	
   

  
	
  9.

  	
  ASSIGNMENT
  AND PARTICIPATIONS; APPOINTMENT OF AGENT

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1.

  	
  Assignment and Participations

  	
  46

  
	
   

  	
  9.2.

  	
  Appointment of Agent

  	
  49

  
	
   

  	
  9.3.

  	
  Agent’s Reliance, Etc.

  	
  49

  
	
   

  	
  9.4.

  	
  GE Capital and Affiliates

  	
  50

  
	
   

  	
  9.5.

  	
  Lender Credit Decision

  	
  50

  
	
   

  	
  9.6.

  	
  Indemnification

  	
  50

  
	
   

  	
  9.7.

  	
  Successor Agent

  	
  50

  
	
   

  	
  9.8.

  	
  Setoff and Sharing of
  Payments

  	
  51

  
	
   

  	
  9.9.

  	
  Advances; Payments;
  Non-Funding Lenders; Information; Actions in Concert

  	
  51

  
	
   

  	
   

  	
   

  
	
  10.

  	
  SUCCESSORS
  AND ASSIGNS

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.1.

  	
  Successors and Assigns

  	
  54

  
	
   

  	
   

  	
   

  
	
  11.

  	
  MISCELLANEOUS

  	
  54

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1.

  	
  Complete Agreement;
  Modification of Agreement

  	
  54

  
	
   

  	
  11.2.

  	
  Amendments and Waivers

  	
  54

  
	
   

  	
  11.3.

  	
  Fees and Expenses

  	
  55

  
	
   

  	
  11.4.

  	
  No Waiver

  	
  56

  
	
   

  	
  11.5.

  	
  Remedies

  	
  57

  
	
   

  	
  11.6.

  	
  Severability

  	
  57

  
	
   

  	
  11.7.

  	
  Conflict of Terms

  	
  57

  
	
   

  	
  11.8.

  	
  Confidentiality

  	
  57

  
	
   

  	
  11.9.

  	
  GOVERNING
  LAW

  	
  57

  
	
   

  	
  11.10.

  	
  Notices

  	
  58

  
	
   

  	
  11.11.

  	
  Section Titles

  	
  59

  
	
   

  	
  11.12.

  	
  Counterparts

  	
  59

  
	
   

  	
  11.13.

  	
  WAIVER
  OF JURY TRIAL

  	
  59

  
	
   

  	
  11.14.

  	
  Press Releases and Related Matters

  	
  59

  
	
   

  	
  11.15.

  	
  Reinstatement

  	
  60

  
	
   

  	
  11.16.

  	
  Advice of Counsel

  	
  60

  
	
   

  	
  11.17.

  	
  No Strict Construction

  	
  60

  
	
   

  	
   

  	
   

  
	
  12.

  	
  CROSS-GUARANTY

  	
  61

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1.

  	
  Cross-Guaranty

  	
  61

  

 

iii

INDEX OF APPENDICES

 

	
  Annex A (Recitals)

  	
   

  	
  -

  	
   

  	
  Definitions

  	
   

  
	
  Annex B (Section 1.2)

  	
   

  	
  -

  	
   

  	
  Letters of Credit

  	
   

  
	
  Annex C (Section 1.6)

  	
   

  	
  -

  	
   

  	
  Cash Management System

  	
   

  
	
  Annex D (Section 2.1(a))

  	
   

  	
  -

  	
   

  	
  Closing Checklist

  	
   

  
	
  Annex E (Section 4.1(a))

  	
   

  	
  -

  	
   

  	
  Financial Statements and Projections -- Reporting

  	
   

  
	
  Annex F (Section 6.10)

  	
   

  	
  -

  	
   

  	
  Financial Covenants

  	
   

  
	
  Annex G (Section 4.1(b))

  	
   

  	
  -

  	
   

  	
  Collateral Reports

  	
   

  
	
  Annex H (Section 9.9(a))

  	
   

  	
  -

  	
   

  	
  Lenders’ Wire Transfer Information

  	
   

  
	
  Annex I (Section 11.10)

  	
   

  	
  -

  	
   

  	
  Notice Addresses

  	
   

  
	
  Annex J (from Annex A-

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Commitments definition)

  	
   

  	
  -

  	
   

  	
  Commitments as of Closing Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit 1.1(a)(i)

  	
   

  	
  -

  	
   

  	
  Form of Notice of Revolving Credit Advance

  	
   

  
	
  Exhibit 1.1(a)(ii)

  	
   

  	
  -

  	
   

  	
  Form of Revolving Note

  	
   

  
	
  Exhibit 1.1(b)(ii)

  	
   

  	
  -

  	
   

  	
  Form of Swing Line Note

  	
   

  
	
  Exhibit 1.5(e)

  	
   

  	
  -

  	
   

  	
  Form of Notice of Conversion/Continuation

  	
   

  
	
  Exhibit 9.1(a)

  	
   

  	
  -

  	
   

  	
  Form of Assignment Agreement

  	
   

  
	
  Exhibit B-1

  	
   

  	
  -

  	
   

  	
  Application for Standby Letter of Credit

  	
   

  
	
  Exhibit B-2

  	
   

  	
  -

  	
   

  	
  Master Agreement for Standby Letter of Credit

  	
   

  
	
  Exhibit B-3

  	
   

  	
  -

  	
   

  	
  Application for Documentary Letter of Credit

  	
   

  
	
  Exhibit B-4

  	
   

  	
  -

  	
   

  	
  Master Agreement for Documentary Letter of Credit

  	
   

  
	
  Exhibit C

  	
   

  	
  -

  	
   

  	
  Cyberbank Agreement

  	
   

  
	
  Schedule 1.1

  	
   

  	
  -

  	
   

  	
  Agent’s Representatives

  	
   

  
	
  Disclosure Schedule 1.4

  	
   

  	
  -

  	
   

  	
  Sources and Uses

  	
   

  
	
  Disclosure Schedule 3.1

  	
   

  	
  -

  	
   

  	
  Type of Entity; State of Organization

  	
   

  
	
  Disclosure Schedule 3.2

  	
   

  	
  -

  	
   

  	
  Executive Offices, Collateral Locations, FEIN

  	
   

  
	
  Disclosure Schedule 3.4(a)

  	
   

  	
  -

  	
   

  	
  Financial Statements

  	
   

  
	
  Disclosure Schedule 3.4(b)

  	
   

  	
  -

  	
   

  	
  Pro Forma

  	
   

  
	
  Disclosure Schedule 3.4(c)

  	
   

  	
  -

  	
   

  	
  Projections

  	
   

  
	
  Disclosure Schedule 3.6

  	
   

  	
  -

  	
   

  	
  Real Estate, Leases and Parks

  	
   

  
	
  Disclosure Schedule 3.7

  	
   

  	
  -

  	
   

  	
  Labor Matters

  	
   

  
	
  Disclosure Schedule 3.8

  	
   

  	
  -

  	
   

  	
  Ventures, Subsidiaries and Affiliates; Outstanding Stock

  	
   

  
	
  Disclosure Schedule 3.11

  	
   

  	
  -

  	
   

  	
  Tax Matters

  	
   

  
	
  Disclosure Schedule 3.12

  	
   

  	
  -

  	
   

  	
  ERISA Plans

  	
   

  
	
  Disclosure Schedule 3.13

  	
   

  	
  -

  	
   

  	
  Litigation

  	
   

  
	
  Disclosure Schedule 3.14

  	
   

  	
  -

  	
   

  	
  Brokers

  	
   

  
	
  Disclosure Schedule 3.15

  	
   

  	
  -

  	
   

  	
  Intellectual Property

  	
   

  
	
  Disclosure Schedule 3.16

  	
   

  	
  -

  	
   

  	
  Hazardous Materials

  	
   

  
	
  Disclosure Schedule 3.18

  	
   

  	
  -

  	
   

  	
  Insurance

  	
   

  
	
  Disclosure Schedule 5.1

  	
   

  	
  -

  	
   

  	
  Trade Names

  	
   

  
	
  Disclosure Schedule 5.10

  	
   

  	
  -

  	
   

  	
  First Tier Parks

  	
   

  
	
  Disclosure Schedule 6.3

  	
   

  	
  -

  	
   

  	
  Indebtedness

  	
   

  
	
  Disclosure Schedule 6.4(a)

  	
   

  	
  -

  	
   

  	
  Transactions with Affiliates

  	
   

  
	
  Disclosure Schedule 6.7

  	
   

  	
  -

  	
   

  	
  Existing Liens

  	
   

  

 

iv

 

This CREDIT AGREEMENT (this “Agreement”)
dated as of April 12, 2006, among PALACE ENTERTAINMENT HOLDINGS, INC., a
Delaware corporation (“Holdings”), FESTIVAL FUN PARKS, LLC, a Delaware
limited liability company (“Festival”), SPLISH SPLASH AT ADVENTURELAND,
INC., a New York corporation (“Splish Splash”), FAMILY FUN CENTER HOLDINGS, LLC, a Delaware limited liability company (“Family
Fun Center”), SMARTPARKS — SAN JOSE, INC., a Delaware corporation (“Smartparks
San Jose”), SMARTPARKS — RIVERSIDE, INC., a Delaware corporation (“Smartparks
Riverside”), SMARTPARKS — SAN DIMAS, INC., a Delaware corporation (“Smartparks
San Dimas”), RAGING WATERS GROUP, INC., a California corporation (“Raging
Waters”), SMARTPARKS — CAROLINA, INC., a Delaware corporation (“Smartparks
Carolina”), SMARTPARKS — FLORIDA, INC., a Delaware corporation (“Smartparks
Florida”), SMARTPARKS — SILVER SPRINGS, INC., a Delaware corporation (“Smartparks
Silver Springs”), PALACE MANAGEMENT COMPANY, LLC, a Delaware limited
liability company (“Palace Management”) (Festival, Splish Splash, Family
Fun Center, Smartparks San Jose, Smartparks Riverside, Smartparks San Dimas,
Raging Waters, Smartparks Carolina, Smartparks Florida, Smartparks Silver
Springs and Palace Management are sometimes referred to herein collectively as
the “Borrowers” and individually as a “Borrower”), the other Credit
Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (in its individual capacity, “GE Capital”), for itself, as
Lender, and as Agent for Lenders, and the other Lenders signatory hereto from
time to time.

 

RECITALS

 

WHEREAS, Borrowers have requested that Lenders
extend a revolving credit facility to Borrowers of up to $40,000,000 to provide
(a) working capital financing for Borrowers and their Subsidiaries,
(b) funds for other general corporate purposes (including to provide
financing for Permitted Acquisitions) of Borrowers and their Subsidiaries, (c)
to issue back-up Letters of Credit in connection with the termination of Prior
Lender Obligations, (d) to fund purchase price adjustments or working capital
adjustments, in each case to the extent required under the Acquisition
Agreement, (e) to fund up to $12,000,000 in the aggregate in fees, commissions
and expenses incurred in connection with the Related Transactions, and
(f) funds for other purposes expressly permitted hereunder; and for these
purposes, Lenders are willing to make certain loans and other extensions of
credit to Borrowers of up to such amount upon the terms and conditions set
forth herein; and

 

WHEREAS, Borrowers have agreed to secure all of
their obligations under the Loan Documents by granting to Agent, for the
benefit of Agent and Lenders, a security interest in and lien upon all or
substantially all of their existing and after-acquired personal and real
property; and

 

WHEREAS, Holdings and each of the other Credit
Parties (other than the Borrowers) is willing to guarantee all of the
obligations of Borrowers to Agent and Lenders under the Loan Documents and to
pledge to Agent, for the benefit of Agent and Lenders, a security interest in
and lien upon all or substantially all of their respective existing and
after-acquired personal and real property to secure such guarantee; and

 

WHEREAS, capitalized terms used in this Agreement
shall have the meanings ascribed to them in Annex A and, for purposes of
this Agreement and the other Loan Documents, the rules of construction set
forth in Annex A shall govern. 
All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, “Appendices”) hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with this
Agreement, shall constitute but a single agreement.  These Recitals shall be construed as part of
this Agreement.

 

 

NOW, THEREFORE, in consideration of the premises and
the mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:

 

1.                                       AMOUNT AND TERMS OF CREDIT

 

1.1.          Credit Facilities.

 

(a)           Revolving Credit Facility.

 

(i)            Subject to the terms and conditions
hereof, each Lender agrees to make available to Borrowers from time to time
until the Commitment Termination Date its Pro Rata Share of advances (each, a “Revolving
Credit Advance”).  The Pro Rata Share
of the Revolving Loan of any Lender shall not at any time exceed its separate
Revolving Loan Commitment.  The
obligations of each Lender hereunder shall be several and not joint.  Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1; provided that, the aggregate principal amount of all Revolving
Credit Advances at any time shall not exceed the Maximum Amount less the
aggregate principal balance of the Swing Line Loan and the Letter of Credit
Obligations at such time.  Each Revolving
Credit Advance shall be made on notice by Borrower Representative on behalf of
the applicable Borrower to one of the representatives of Agent identified in Schedule
1.1 at the address specified therein. 
Any such notice must be given no later than (1) 1:00 p.m. (New York
time) on the Business Day which is one (1) Business Day prior to the date of
the proposed Revolving Credit Advance, in the case of an Index Rate Loan, or
(2) 1:00 p.m. (New York time) on the date which is three (3) Business Days
prior to the proposed Revolving Credit Advance, in the case of a LIBOR
Loan.  Each such notice (a “Notice of
Revolving Credit Advance”) must be given in writing (which may be by
telecopy) substantially in the form of Exhibit 1.1(a)(i), and shall
include the information required in such Exhibit. If any Borrower desires to
have the Revolving Credit Advances bear interest by reference to a LIBOR Rate,
Borrower Representative must comply with Section 1.5(e).

 

(ii)           Each Borrower shall execute and
deliver to each Lender a note to evidence the Revolving Loan Commitment of that
Lender.  Each note shall be in the
principal amount of the Revolving Loan Commitment of the applicable Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(a)(ii)  (each a “Revolving Note” and,
collectively, the “Revolving Notes”). 
Each Revolving Note shall represent the obligation of the applicable
Borrower to pay the amount of such Lender’s Revolving Loan Commitment or, if
less, such Lender’s Pro Rata Share of the aggregate unpaid principal amount of
all Revolving Credit Advances to such Borrower together with interest thereon
as prescribed in Section 1.5.  The
entire unpaid balance of the Revolving Loan and all other non-contingent
Obligations shall be immediately due and payable in full in immediately
available funds on the Commitment Termination Date.

 

(iii)          Borrowers may at any time or from time
to time after the Closing Date, and prior to the Commitment Termination Date,
with the consent of the Requisite Lenders, request one or more increases in the
amount of the Revolving Loan Commitments (each such increase, a “Revolving
Commitment Increase”), provided that (A) both at the time of
any such request and upon the effectiveness of any Incremental Amendment
referred to below, no Default or Event of Default shall exist,
(B) Borrower shall be in compliance with each of the Financial Covenants
determined on a pro  forma trailing twelve month basis as of the
date of any such Revolving Commitment Increase and the last day of the most
recent Fiscal Quarter for which financial statements have been delivered
pursuant to Section 4.1, as if such Revolving Commitment Increase had
been outstanding on the last day of such Fiscal Quarter of such Borrower for
testing compliance therewith, (C) the aggregate principal amount of all
Revolving Commitment Increases shall not at any time exceed $30,000,000, (D)
the stated maturity date of the Revolving Credit Advances made pursuant to any
such Revolving Commitment Increase shall be a date

 

2

 

not prior to the Stated
Maturity Date, (E) the Revolving
Credit Advances and other Obligations in respect of any such Revolving
Commitment Increase shall rank pari passu in right of payment and of security
with the Loans and other Obligations, (F) the Applicable Margins in respect of
the Revolving Credit Advances made pursuant to any such Revolving Commitment
Increase shall be no more than 50 basis points higher than the comparably respective
applicable margins on any Loans prior to such Revolving Commitment
Increase, (G) the proceeds of the Revolving Credit Advances made pursuant
to any such Revolving Commitment Increase shall be used solely to finance
acquisitions which are approved by the Requisite Lenders in their sole
discretion, and (H) to the extent any Senior Unsecured Notes remain outstanding
or the Senior Unsecured Note Indenture has not been terminated, the Revolving
Credit Advances made pursuant to any such Revolving Commitment Increase must be
permitted to be incurred under the Senior Unsecured Note Indenture, and
Borrower Representative shall have furnished to Agent a certificate in form and
substance reasonably satisfactory to Agent certifying and providing reasonable
detail of the calculations demonstrating that the incurrence of Indebtedness in
connection with the making of any such Revolving Credit Advances is permitted
under the Senior Unsecured Note Indenture.  
Each request from Borrower Representative pursuant to this Section
1.1(a)(iii) shall set forth the requested amount and proposed terms of each
Revolving Commitment Increase.  Revolving
Commitment Increases may be provided by any existing Lender (and each existing
Lender will have the right, but shall be under no obligation, to provide a
portion of any Revolving Commitment Increase on terms permitted in this Section 1.1(a)(iii))
or by any other bank or other financial institution (any such other bank or
other financial institution being called an “Additional Lender”),
provided that in the case of any Additional Lender that is not an existing
Lender, Agent shall have consented to such Additional Lender’s providing such
Revolving Commitment Increases (such consent not to be unreasonably withheld or
delayed) and such Additional Lender shall meet all of the requirements under Section 10.1
for an assignment of Loans or Revolving Loan Commitments, assuming for purposes
thereof that such Additional Lender was an assignee Lender hereunder.  Commitments in respect of Revolving
Commitment Increases shall become Revolving Loan Commitments (or in the case of
a Revolving Commitment Increase to be provided by an existing Lender, an
increase in such Lender’s applicable Revolving Loan Commitment) under this
Agreement pursuant to an amendment (an “Incremental Amendment”) to this
Agreement and, as appropriate, the other Loan Documents, executed by Borrowers
and each other Credit Party hereto, each Lender agreeing to provide such
Revolving Loan Commitment, if any, each Additional Lender, if any, and
Agent.  The effectiveness of any
Incremental Amendment shall be subject to the satisfaction on the date thereof
of each of the conditions set forth in Section 2.2 and such other
conditions as the parties thereto shall agree. 
No Lender shall be obligated to provide any Revolving Commitment
Increases unless it so agrees.  Upon each
increase in the Revolving Loan Commitments pursuant to this Section
1.1(a)(iii), (a) each Lender immediately prior to such increase will
automatically and without further act be deemed to have assigned to each Lender
providing a portion of the Revolving Commitment Increase (each a “Revolving
Commitment Increase Lender”) in respect of such increase, and each such
Revolving Commitment Increase Lender will automatically and without further act
be deemed to have assumed, a portion of such Lender’s participations hereunder
in outstanding Letters of Credit and Swing Line Loans such that, after giving
effect to each such deemed assignment and assumption of participations, the percentage
of the aggregate outstanding (i) participations hereunder in Letters of
Credit and (ii) participations hereunder in Swing Line Loans held by each
Lender (including each such Revolving Commitment Increase Lender) will equal
the percentage of the aggregate Revolving Loan Commitments of all Lenders
represented by such Lender’s Revolving Loan Commitment and (b) if, on the date
of such increase, there are any Revolving Credit Advances outstanding, such
Revolving Credit Advances shall on or prior to the effectiveness of such
Revolving Commitment Increase be prepaid from the proceeds of additional
Revolving Credit Advances made hereunder (reflecting such increase in Revolving
Loan Commitments) if such repayment is deemed advisable in the judgment of the Agent
in order to properly reflect the Revolving Loan Commitments of each Lender
after giving effect to such Revolving Commitment Increase, which prepayment
shall be accompanied by accrued interest on the Revolving Credit Advances being
prepaid and any costs incurred by any Lender in accordance with Section 1.11(b).

 

3

 

(b)           Swing Line Facility.

 

(i)            Agent shall notify the Swing Line
Lender upon Agent’s receipt of any Notice of Revolving Credit Advance.  Subject to the terms and conditions hereof,
the Swing Line Lender may, in its discretion, make available from time to time
until the Commitment Termination Date advances (each, a “Swing Line Advance”)
in accordance with any such notice.  The
provisions of this Section 1.1(b) shall not relieve Lenders of their
obligations to make Revolving Credit Advances under Section 1.1(a);
provided that if the Swing Line Lender makes a Swing Line Advance pursuant to
any such notice, such Swing Line Advance shall be in lieu of any Revolving
Credit Advance that otherwise may be made by Revolving Credit Lenders pursuant
to such notice.  The aggregate amount of
Swing Line Advances outstanding shall not exceed at any time the lesser of (A)
the Swing Line Commitment and (B) the Maximum Amount, less the outstanding
balance of the Revolving Loan at such time (“Swing Line Availability”).  Until the Commitment Termination Date,
Borrowers may from time to time borrow, repay and reborrow under this Section
1.1(b).  Each Swing Line Advance shall
be made pursuant to a Notice of Revolving Credit advance delivered by Borrower
Representative on behalf of the applicable Borrower to Agent in accordance with
Section 1.1(a).  Any such notice
must be given no later than 1:00 p.m. (New York time) on the Business Day of
the proposed Swing Line Advance.  Unless
the Swing Line Lender has received at least one Business Day’s prior written
notice from Requisite Lenders instructing it not to make a Swing Line Advance,
the Swing Line Lender shall, notwithstanding the failure of any condition
precedent set forth in Sections 2.2, be entitled to fund that Swing Line
Advance, and to have such Lender make Revolving Credit Advances in accordance
with Section 1.1(b)(iii) or purchase participating interests in accordance
with Section 1.1(b)(iv). 
Notwithstanding any other provision of this Agreement or the other Loan
Documents, the Swing Line Loan shall constitute an Index Rate Loan.  Borrowers shall repay the aggregate
outstanding principal amount of the Swing Line Loan upon demand therefor by
Agent.

 

(ii)           Each Borrower shall execute and
deliver to the Swing Line Lender a promissory note to evidence the Swing Line
Commitment.  Each note shall be in the
principal amount of the Swing Line Commitment of the Swing Line Lender, dated
the Closing Date and substantially in the form of Exhibit 1.1(b)(ii)
(each a “Swing Line Note” and collectively, the “Swing Line Note”).  Each Swing Line Note shall represent the
obligation of such Borrower to pay the amount of the Swing Line Commitment or,
if less, the aggregate unpaid principal amount of all Swing Line Advances made
to such Borrower together with interest thereon as prescribed in Section 1.5.  The entire unpaid balance of the Swing Line
Loan and all other noncontingent Obligations shall be immediately due and
payable in full in immediately available funds on the Commitment Termination
Date if not sooner paid in full.

 

(iii)          The Swing Line Lender, at any time and
from time to time no less frequently than once weekly, shall on behalf of any
Borrower (and each Borrower hereby irrevocably authorizes the Swing Line Lender
to so act on its behalf) request each Lender (including the Swing Line Lender)
to make a Revolving Credit Advance to each Borrower (which shall be an Index
Rate Loan) in an amount equal to that Lender’s Pro Rata Share of the principal
amount of the applicable Borrower’s Swing Line Loan (the “Refunded Swing
Line Loan”) outstanding on the date such notice is given.  Unless any of the events described in Sections
8.1(h) or 8.1(i) has occurred (in which event the procedures of Section
1.1(b)(iv) shall apply) and regardless of whether the conditions precedent
set forth in this Agreement to the making of a Revolving Credit Advance are
then satisfied, each Lender shall disburse directly to Agent, its Pro Rata
Share of a Revolving Credit Advance on behalf of the Swing Line Lender, prior
to 3:00 p.m. (New York time), in immediately available funds on the Business
Day next succeeding the date that notice is given.  The proceeds of those Revolving Credit
Advances shall be immediately paid to the Swing Line Lender and applied to
repay the Refunded Swing Line Loan of the applicable Borrower.

 

(iv)          If, prior to refunding a Swing Line
Loan with a Revolving Credit Advance pursuant to Section 1.1(b)(iii),
one of the events described in Sections 8.1(h) or 8.1(i) has

 

4

 

occurred, then, subject to the
provisions of Section 1.1(b)(v) below, each Lender shall, on the date
such Revolving Credit Advance was to have been made for the benefit of the
applicable Borrower, purchase from the Swing Line Lender an undivided
participation interest in the Swing Line Loan to such Borrower in an amount
equal to its Pro Rata Share of such Swing Line Loan.  Upon request, each Lender shall promptly
transfer to the Swing Line Lender, in immediately available funds, the amount
of its participation interest.

 

(v)           Each Lender’s obligation to make
Revolving Credit Advances in accordance with Section 1.1(b)(iii) and to
purchase participation interests in accordance with Section 1.1(b)(iv)
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right that such Lender may have against the Swing Line Lender, any
Borrower or any other Person for any reason whatsoever; (B) the occurrence or
continuance of any Default or Event of Default; (C) any inability of any
Borrower to satisfy the conditions precedent to borrowing set forth in this
Agreement at any time or (D) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.  If any Lender does not make available to
Agent or the Swing Line Lender, as applicable, 
the amount required pursuant to Sections 1.1(b)(iii) or 1.1(b)(iv),
as the case may be, the Swing Line Lender shall be entitled to recover such
amount on demand from such Lender, together with interest thereon for each day
from the date of non-payment until such amount is paid in full at the
Federal Funds Rate for the first two Business Days and at the Index Rate
thereafter.

 

(c)           Reliance on Notices; Appointment
of Borrower Representative.  Agent
shall be entitled to rely upon, and shall be fully protected in relying upon,
any Notice of Revolving Credit Advance, Notice of Conversion/Continuation or
similar notice believed by Agent to be genuine. 
Agent may assume that any Authorized Officer of Borrower Representative
(for which Agent has received from Borrower Representative a secretarial
incumbency certificate, in form and substance reasonably satisfactory to Agent,
certifying as to the incumbency of such officer) executing and delivering any
notice in accordance herewith was duly authorized, unless the responsible
individual acting thereon for Agent has actual knowledge to the contrary.  Each Borrower hereby designates Festival as
its representative and agent on its behalf for the purposes of issuing Notices
of Revolving Credit Advances and Notices of Conversion/Continuation, giving
instructions with respect to the disbursement of the proceeds of the Loans,
selecting interest rate options, requesting Letters of Credit, giving and
receiving all other notices and consents hereunder or under any of the other
Loan Documents and taking all other actions (including in respect of compliance
with covenants) on behalf of any Borrower or Borrowers under the Loan
Documents.  Borrower Representative
hereby accepts such appointment.  Agent
and each Lender may regard any notice or other communication pursuant to any
Loan Document from Borrower Representative as a notice or communication from
all Borrowers, and may give any notice or communication required or permitted
to be given to any Borrower or Borrowers hereunder to Borrower Representative
on behalf of such Borrower or Borrowers. 
Each Borrower agrees that each notice, election, representation and
warranty, covenant, agreement and undertaking made on its behalf by Borrower
Representative shall be deemed for all purposes to have been made by such Borrower
and shall be binding upon and enforceable against such Borrower to the same
extent as if the same had been made directly by such Borrower.

 

1.2.          Letters of Credit.  Subject to and in accordance with the terms
and conditions contained herein and in Annex B, Borrower Representative,
on behalf of the applicable Borrower, shall have the right to request, and
Lenders agree to incur, or purchase participations in, Letter of Credit
Obligations in respect of Borrowers.

 

5

 

1.3.          Prepayments

 

(a)           Voluntary Prepayments; Reductions
in Revolving Loan Commitments. Borrowers may at any time on at least five
(5) days’ prior written notice by Borrower Representative to Agent (i)
voluntarily prepay all or any part of the Loans and/or (ii) permanently reduce
(but not terminate) the Revolving Loan Commitment; provided that (A) any such
prepayments or reductions shall be in a minimum amount of $500,000 and integral
multiples of $100,000 in excess of such amount, (B) the Revolving Loan
Commitment shall not be reduced to an amount less than $1,000,000, and (C)
after giving effect to such reductions, Borrowers shall comply with Section
1.3(b)(i).  In addition, Borrowers may at
any time on at least ten (10) days’ prior written notice by Borrower
Representative to Agent terminate the Revolving Loan Commitment, provided that
upon such termination all Loans and other Obligations shall be immediately due
and payable in full and all Letter of Credit Obligations shall be cash
collateralized or otherwise satisfied in accordance with Annex B hereto.  Any reduction or termination of the Revolving
Loan Commitment must be accompanied by payment of any LIBOR funding breakage
costs in accordance with Section 1.11(b). 
Upon any such reduction or termination of the Revolving Loan Commitment,
Borrowers’ right to request Revolving Credit Advances, or request that Letter
of Credit Obligations be incurred on its behalf, or request Swing Line
Advances, shall simultaneously be permanently reduced or terminated, as the
case may be; provided that a permanent reduction of the Revolving Loan
Commitment shall not require a corresponding pro rata reduction in the L/C
Sublimit or the Swing Line Commitment. 
Each notice of partial prepayment shall designate the Loans or other
Obligations to which such prepayment is to be applied.

 

(b)           Mandatory Prepayments.

 

(i)            If at any time the outstanding
balances of the Revolving Loan and the Swing Line Loan exceed the Maximum
Amount, Borrowers shall immediately repay the aggregate outstanding Revolving
Credit Advances to the extent required to eliminate such excess.  If any such excess remains after repayment in
full of the aggregate outstanding Revolving Credit Advances, Borrowers shall provide
cash collateral for the Letter of Credit Obligations in the manner set forth in
Annex B to the extent required to eliminate such excess.

 

(ii)           Immediately upon receipt by any
Credit Party of any working capital, earnings, balance sheet or similar
adjustment or purchase price reduction payment under the Acquisition Agreement,
or cash proceeds of any asset disposition or Recovery Event, Borrowers shall
prepay the Loans in an amount equal to all such adjustments, payments or
proceeds, net of (A) commissions and other reasonable and customary transaction
costs, fees and expenses properly attributable to such transaction or
adjustment and payable by Borrowers in connection therewith (in each case, paid
to non-Affiliates, except in case of any such payments to Affiliates that are
not otherwise prohibited hereunder and satisfy all of the requirements of Section
6.5), (B) transfer taxes, (C) amounts payable to holders of senior Liens on
such asset (to the extent such Liens constitute Permitted Encumbrances
hereunder), if any, and (D) an appropriate reserve for income taxes in
accordance with GAAP in connection therewith. 
Any such prepayment shall be applied in accordance with Section
1.3(c).  The following shall not be
subject to mandatory prepayment under this clause (ii):  (1) proceeds of sales of Inventory in the
ordinary course of business; (2) asset disposition and Recovery Event proceeds
of less than $500,000 in the
aggregate in any Fiscal Year and (3) asset disposition and Recovery Event
proceeds that Borrowers have committed (pursuant to a written notice delivered
by Borrower Representative to Agent, such notice referred to herein as a “Reinvestment
Notice”)) to reinvest within one year of the receipt thereof and in fact
are reinvested in Equipment, Fixtures or Real Estate used in the business of
Borrowers within eighteen months of the receipt of such proceeds as specified
in the applicable Reinvestment Notice; provided that Borrower
Representative notifies Agent of Borrowers’ intent to reinvest within thirty
(30) days of the time such proceeds are received and within thirty (30) days of
the time such reinvestment

 

6

 

occurs; provided,  further
that in the case of proceeds of type described in the immediately preceding
clause (3) of this Section 1.3(b)(ii), Borrowers shall on the date of
receipt of such proceed apply all such proceeds received from such Recovery
Event or asset disposition to the repayment of the principal amount of all
outstanding Loans, together with any accrued and unpaid interest thereon (with
no commitment reductions in connection with such prepayment) until such time as
such proceeds are reinvested as permitted above under this Agreement.

 

(iii)          If any Credit Party incurs
Indebtedness (excluding the Senior Unsecured Notes and other Indebtedness
incurred in accordance with Section 6.3), no later than the Business Day
following the date of receipt of the proceeds thereof, Borrowers shall prepay
the Loans (and cash collateralize Letter of Credit Obligations in the manner
set forth in Annex B) in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates, except in case of any such payments to Affiliates that are not
otherwise prohibited hereunder and satisfy all of the requirements of Section
6.4(a) in connection therewith.  Any
such prepayment shall be applied in accordance with Section 1.3(c).

 

(c)           Application of Certain Mandatory
Prepayments.  Any prepayments made by
any Borrower pursuant to Sections 1.3(b)(ii) or (b)(iii) above shall be
applied as follows: first, to Fees and reimbursable expenses of Agent
then due and payable pursuant to any of the Loan Documents; second, to
interest then due and payable on the Swing Line Loan; third, to the
principal balance of the Swing Line Loan until the same has been repaid in
full; fourth, to interest then due and payable on the Revolving Credit
Advances and the Letter of Credit Obligations; fifth, to the outstanding
principal balance of Revolving Credit Advances until the same has been paid in
full; and sixth, to any Letter of Credit Obligations, including to
provide cash collateral therefor in the manner set forth in Annex B,
until all such Letter of Credit Obligations have been fully cash collateralized
in the manner set forth in Annex B. 
Neither the Revolving Loan Commitment nor the Swing Line Commitment
shall be permanently reduced by the amount of any such prepayments, except to
the extent such commitment reduction is required under paragraph (b) of the
definition of Permitted Prepayments of Senior Unsecured Debt.

 

(d)           No Implied Consent.  Nothing in this Section 1.3 shall be
construed to constitute Agent’s or any Lender’s consent to any transaction that
is not permitted by other provisions of this Agreement or the other Loan
Documents.

 

1.4.          Use of Proceeds.  Borrowers shall utilize the proceeds of the
Loans solely for (a) working capital financing for Borrowers and their
Subsidiaries, (b) funds for other general corporate purposes (including to
provide financing for Permitted Acquisitions) of Borrowers and their
Subsidiaries, (c) to issue back-up L/Cs in connection with termination of Prior
Lender Obligations, (d) to fund purchase price adjustments or working capital
adjustments, in each case to the extent required under the Acquisition
Agreement, (e) to fund up to $12,000,000 in the aggregate in fees, commissions
and expenses incurred in connection with the Related Transactions, and (f)
funds for other purposes expressly permitted hereunder; and for these purposes,
Lenders are willing to make certain loans and other extensions of credit to
Borrowers of up to such amount upon the terms and conditions set forth
herein.   Disclosure Schedule (1.4)
contains a description of Borrower’s sources and uses of funds as of the Closing
Date, including Loans and Letter of Credit Obligations to be made or incurred
on that date and any Loans made to pay any transaction fees and expenses
relating to any of the Related Transactions, to repay any of the Prior Lender
Obligations or for payment of any of the purchase price adjustments under the
Acquisition Agreement, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.

 

7

 

1.5.          Interest and
Applicable Margins.

 

(a)           Borrowers shall pay interest to
Agent, for the ratable benefit of Lenders in accordance with the various Loans
being made by each Lender, in arrears on each applicable Interest Payment Date,
at the following rates:  (i) with respect
to the Revolving Credit Advances, the Index Rate plus the Applicable Revolver
Index Margin per annum or, at the election of Borrower Representative, the
applicable LIBOR Rate plus the Applicable Revolver LIBOR Margin per annum; and
(ii) with respect to the Swing Line Loan, the Index Rate plus the Applicable
Revolver Index Margin per annum.

 

As of the Closing Date, the Applicable Margins are
as follows:

 

	
  Applicable Revolver Index Margin

  	
   

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable Revolver LIBOR Margin

  	
   

  	
  2.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable L/C Margin

  	
   

  	
  2.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Applicable Unused Line Fee Margin

  	
   

  	
  .50

  	
  %

  

 

The Applicable Margins may be adjusted by reference
to the following grids:

 

	
  If Leverage Ratio is:

  	
   

  	
  Level of

  Applicable Margins:

  	
   

  
	
  Less than 3.25 to 1.00

  	
   

  	
  Level I

  	
   

  
	
  Greater than or equal to 3.25 to 1.00, but
  less than 4.00 to 1.00

  	
   

  	
  Level II

  	
   

  
	
  Greater than or equal to 4.00 to 1.00, but
  less than 4.75 to 1.00

  	
   

  	
  Level III

  	
   

  
	
  Greater than or equal to 4.75 to 1.00

  	
   

  	
  Level IV

  	
   

  

 

	
   

  	
   

  	
  Applicable Margins

  	
   

  
	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  
	
  Applicable Revolver Index Margin

  	
   

  	
  1.00

  	
  %

  	
  1.25

  	
  %

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  
	
  Applicable Revolver LIBOR Margin

  	
   

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  	
  2.75

  	
  %

  
	
  Applicable L/C Margin

  	
   

  	
  2.00

  	
  %

  	
  2.25

  	
  %

  	
  2.50

  	
  %

  	
  2.75

  	
  %

  
	
  Applicable Unused Line Fee Margin

  	
   

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  

 

Adjustments in the Applicable Margins commencing
with the Fiscal Quarter ending September 30, 2006, shall be implemented
quarterly on a prospective basis, for each calendar month

 

8

 

commencing at least five (5)
days after the date of delivery to Lenders of the quarterly unaudited or annual
audited (as applicable) Financial Statements evidencing the need for an
adjustment.  Concurrently with the
delivery of those Financial Statements, Borrower Representative shall deliver to Agent and Lenders a
certificate, signed by its chief financial officer, setting forth in reasonable
detail the basis for the continuance of, or any change in, the Applicable
Margins.  Failure to timely deliver such
Financial Statements shall, in addition to any other remedy provided for in
this Agreement, result in an increase in the Applicable Margins to the highest
level set forth in the foregoing grid, until the first day of the first
calendar month following the delivery of those Financial Statements
demonstrating that such an increase is not required.  If an Event of Default has occurred and is
continuing at the time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day of the first
calendar month following the date on which such Event of Default is waived or
cured.

 

(b)           If any payment on any Loan becomes
due and payable on a day other than a Business Day, the maturity thereof will
be extended to the next succeeding Business Day (except as set forth in the
definition of LIBOR Period) and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.

 

(c)           All computations of interest on Index
Rate Loans shall be made by Agent on the basis of the actual number of days
elapsed in a year of 365/366 days.  All
computations of Fees calculated on a per annum basis and interest on LIBOR
Loans shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such interest and
Fees are payable.  The Index Rate is a
floating rate determined for each day. 
Each determination by Agent of interest rates and Fees hereunder shall,
absent manifest error, be presumptive evidence of the correctness of such rates
and Fees.

 

(d)           So long as any Event of Default has
occurred and is continuing under Section 8.1(a), the interest rates
applicable to the overdue Loans and the Letter of Credit Fees shall be
increased by two percentage points (2%) per annum above the rates of interest
or the rate of such Fees otherwise applicable hereunder (the “Default Rate”),
and all outstanding overdue Obligations shall bear interest at the Default Rate
applicable to such Obligations.  Interest
and Letter of Credit Fees at the Default Rate shall accrue from the initial
date of such Event of Default until that Event of Default is cured or waived
and shall be payable upon demand.

 

(e)           Borrower Representative shall have
the option to (i) subject to the conditions precedent set forth in Section
2.2, request that any Revolving Credit Advance be made as a LIBOR Loan,
(ii) convert at any time all or any part of outstanding Loans (other than the
Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR
Loan to an Index Rate Loan upon payment of an administrative fee of $250 and
subject to payment of LIBOR breakage costs in accordance with Section
1.13(b) if such conversion is made prior to the expiration of the LIBOR
Period applicable thereto, or (iv) continue all or any portion of any Loan
(other than the Swing Line Loan) as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued Loan
shall commence on the first day after the last day of the LIBOR Period of the
Loan to be continued; provided, however, that if a Event of Default exists
Borrowers may not convert any Index Rate Loan to a LIBOR Loan or continue any
LIBOR Loan as a LIBOR Loan.  Any Loan or
group of Loans having the same proposed LIBOR Period to be made or continued
as, or converted into, a LIBOR Loan must be in a minimum amount of $500,000 and
integral multiples of $100,000 in excess of such amount.  Any such election must be made by 1:00 p.m.
(New York time) on the third Business Day prior to (1) the date of any
proposed Advance which is to bear interest at the LIBOR Rate, (2) the end of
each LIBOR Period with respect to any LIBOR Loans to be continued as such, or
(3) the date on which Borrower Representative wishes to convert any Index
Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower
Representative in such election.  If no
election is received with respect to a LIBOR Loan by

 

9

 

11:00 a.m. (New York time) on
the third Business Day prior to the end of the LIBOR Period with respect
thereto (or if a Default or an Event of Default has occurred and is continuing
or the additional conditions precedent set forth in Section 2.2 shall
not have been satisfied), that LIBOR Loan shall be converted to an Index Rate
Loan at the end of its LIBOR Period. 
Borrower Representative must make such election by notice to Agent in
writing (which may be by telecopy).  In
the case of any conversion or continuation, such election must be made pursuant
to a written notice (a “Notice of Conversion/Continuation”) in the form
of Exhibit 1.5(e).

 

(f)            Notwithstanding anything to the
contrary set forth in this Section 1.4, if a court of competent
jurisdiction determines in a final order that the rate of interest payable
hereunder exceeds the highest rate of interest permissible under law (the “Maximum
Lawful Rate”), then so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to the Maximum
Lawful Rate; provided, however, that if at any time thereafter
the rate of interest payable hereunder is less than the Maximum Lawful Rate,
Borrowers shall continue to pay interest hereunder at the Maximum Lawful Rate
until such time as the total interest received by Agent, on behalf of Lenders,
is equal to the total interest that would have been received had the interest
rate payable hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided in this
Agreement.  In no event shall the total
interest received by any Lender pursuant to the terms hereof exceed the amount
that such Lender could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate.

 

1.6.          Cash
Management Systems.  On or prior to
the Closing Date, Borrowers will establish and will maintain until the
Termination Date, the cash management systems described in Annex C (the “Cash
Management Systems”).

 

1.7.          Fees.  

 

(a)           Borrowers shall pay to GE Capital,
individually, the Fees specified in the GE Capital Fee Letter.

 

(b)           As additional compensation for the
Lenders, Borrowers shall pay to Agent, for the ratable benefit of such Lenders,
in arrears, on the first Business Day of each month prior to the Commitment
Termination Date and on the Commitment Termination Date, a Fee for Borrowers’
non-use of available funds in an amount equal to the Applicable Unused Line Fee
Margin per annum (calculated on the basis of a 360-day year for actual days
elapsed) multiplied by the difference between (x) the Maximum Amount (as it may
be reduced from time to time) and (y) the average for the period of the sum of
the daily closing balances of the aggregate Revolving Loan and the Swing Line
Loan outstanding during the period for which the such Fee is due.

 

(c)           Borrowers shall pay to Agent, for the
ratable benefit of Lenders, the Letter of Credit Fee as provided in Annex B.

 

1.8.          Receipt of Payments.  Borrowers shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account.  Payments received after 2:00 p.m. (New York
time), but on or prior to 4:00 p.m. (new York time), on any Business Day or on
a day that is not a Business Day shall be deemed to have been received on the
following Business Day solely for purposes of determining interest which is due
hereunder, and payments received after 4:00 p.m. (New York time) on any
Business Day or on a day that is not a Business Day shall be deemed to have
been received on the following Business Day for all purposes hereunder.

 

10

 

1.9.          Application and Allocation of
Payments.  (a)  So long as no Event of Default has occurred
and is continuing, (i) voluntary prepayments shall be applied in accordance
with the provisions of Section 1.3(a), and (ii) mandatory prepayments
shall be applied as set forth in Section 1.3(c).  All payments and prepayments applied to a particular
Loan shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share.  As to
any other payment, and as to all payments made when an Event of Default has
occurred and is continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the application of any
and all payments received from or on behalf of such Borrower, and each Borrower
hereby irrevocably agrees that Agent shall have the continuing exclusive right
to apply any and all such payments against the Obligations of Borrowers as
Agent may deem advisable notwithstanding any previous entry by Agent in the
Loan Account or any other books and records. 
In the absence of a specific determination by Agent with respect
thereto, payments shall be applied to amounts then due and payable in the
following order: (1) to Fees and Agent’s expenses reimbursable hereunder; (2)
to interest on the Swing Line Loan; (3) to principal payments on the Swing Line
Loan; (4) to interest on the Revolving Loan, ratably in proportion to the
interest accrued thereon; (5) to principal payments on the Revolving Loan and
to provide cash collateral for Letter of Credit Obligations in the manner
described in Annex B, ratably to the aggregate, combined principal
balance of the Revolving Loan and outstanding Letter of Credit Obligations; and
(6) to all other Obligations including expenses of Lenders to the extent
reimbursable under Section 11.3.

 

(b)           Agent is authorized to, and at its
sole election may, charge to the Revolving Loan balance on behalf of each
Borrower and cause to be paid all Fees, expenses, Charges, costs (including
insurance premiums in accordance with Section 5.4(a)) and interest owing
by Borrowers under this Agreement or any of the other Loan Documents if and to
the extent Borrowers fail to pay promptly any such amounts as and when
due.  At Agent’s option and to the extent
permitted by law, any charges so made shall constitute part of the Revolving
Loan hereunder.

 

1.10.        Loan Account and Accounting.  Agent shall maintain a loan account (the “Loan
Account”) on its books to record: all Advances and Letter of Credit
Obligations, all payments made by Borrowers, and all other debits and credits
as provided in this Agreement with respect to the Loans or any other
Obligations.  All entries in the Loan
Account shall be made in accordance with Agent’s customary accounting practices
as in effect from time to time.  The
balance in the Loan Account, as recorded on Agent’s most recent printout or
other written statement, shall, absent manifest error, be presumptive evidence
of the amounts due and owing to Agent and Lenders by each Borrower; provided
that any failure to so record or any error in so recording shall not limit or
otherwise affect any Borrower’s duty to pay the Obligations.  Agent shall render to Borrowers a monthly
accounting of transactions with respect to the Loans setting forth the balance
of the Loan Account as to each Borrower for the immediately preceding
month.  Unless Borrower Representative
notifies Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within thirty (30) days after the
date of delivery of such notice, each and every such accounting shall be presumptive
evidence of all matters reflected therein. 
Only those items expressly objected to in such notice shall be deemed to
be disputed by Borrowers. 
Notwithstanding any provision herein contained to the contrary, any
Lender may elect (which election may be revoked) to dispense with the issuance
of Notes to that Lender and may rely on the Loan Account as evidence of the
amount of Obligations from time to time owing to it.

 

11

 

1.11.        Indemnity.  (a) 
Each Credit Party that is a signatory hereto shall jointly and severally
indemnify and hold harmless each of Agent, Lenders and their respective
Affiliates, and each such Person’s respective officers, directors, employees,
attorneys, agents and representatives (each, an “Indemnified Person”),
from and against any and all suits, actions, proceedings, claims, damages,
losses, liabilities and expenses (including reasonable out-of-pocket attorneys’
fees and disbursements and other costs of investigation or defense, including
those incurred upon any appeal) that may be instituted or asserted against or
incurred by any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other Loan
Documents and the administration of such credit, and in connection with or
arising out of the transactions contemplated hereunder and thereunder and any
actions or failures to act in connection therewith, including any and all
Environmental Liabilities and legal costs and expenses arising out of or
incurred in connection with disputes between or among any parties to any of the
Loan Documents (collectively, “Indemnified Liabilities”); provided,
that no such Credit Party shall be liable for any indemnification to an
Indemnified Person to the extent that any such suit, action, proceeding, claim,
damage, loss, liability or expense is finally found by a court of competent
jurisdiction to have resulted from that Indemnified Person’s (or such
Indemnified Person’s officers, directors, employees, advisors or agents) gross
negligence or willful misconduct.  NO
INDEMNIFIED PERSON NOR ANY CREDIT PARTY OR ANY AFFILIATE THEREOF SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A
RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.

 

(b)           To induce Lenders to provide the
LIBOR Rate option on the terms provided herein, if (i) any LIBOR Loans are
repaid in whole or in part prior to the last day of any applicable LIBOR Period
(whether that repayment is made pursuant to any provision of this Agreement or
any other Loan Document or occurs as a result of acceleration, by operation of
law or otherwise); (ii) any Borrower shall default in payment when due of the
principal amount of or interest on any LIBOR Loan; (iii) any Borrower shall
refuse to accept any borrowing of, or shall request a termination of any
borrowing, conversion into or continuation of LIBOR Loans after Borrower
Representative has given notice requesting the same in accordance herewith; or
(iv) any Borrower shall fail to make any prepayment of a LIBOR Loan after
Borrower Representative has given a notice thereof in accordance herewith, then
Borrowers shall jointly and severally indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising from
any of the foregoing.  Such
indemnification shall cover any loss (excluding any loss of Applicable Margin)
or expense arising from the reemployment of funds obtained by it or from fees
payable to terminate deposits from which such funds were obtained.  For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be deemed to have actually
funded its relevant LIBOR Loan through the purchase of a deposit bearing
interest at the LIBOR Rate in an amount equal to the amount of that LIBOR Loan
and having a maturity comparable to the relevant LIBOR Period; provided,
that each Lender may fund each of its LIBOR Loans in any manner it sees fit,
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this subsection. 
This covenant shall survive the termination of this Agreement and the
payment of the Notes and all other amounts payable hereunder.  As promptly as practicable under the
circumstances, each Lender shall provide Borrower Representative with its
written calculation of all amounts payable pursuant to this Section 1.11(b),
and such calculation shall be binding on the parties hereto unless Borrower
Representative shall object in writing within ten (10) Business Days of receipt
thereof, specifying the basis for such objection in detail.

 

12

 

1.12.        Taxes.

 

(d)           Any and all payments by each Borrower
hereunder or under the Notes shall be made, in accordance with this Section
1.12, free and clear of and without deduction for any and all present or future
Taxes.  If any Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder or
under the Notes, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 1.12) Agent or Lenders,
as applicable, receive an amount equal to the sum they would have received had
no such deductions been made, (ii) such Borrower shall make such deductions,
and (iii) such Borrower shall pay the full amount deducted to the relevant
taxing or other authority in accordance with applicable law.  Within thirty (30) days after the date of any
payment of Taxes, Borrower Representative shall furnish to Agent the original
or a certified copy of a receipt evidencing payment thereof.

 

(e)           Subject to Section 1.13(d),
each Credit Party that is a signatory hereto shall jointly and severally
indemnify and, within ten (10) days of demand therefor, pay Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.12) paid by Agent
or such Lender, as appropriate, and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or
not such Taxes were correctly or legally asserted; provided that the Borrowers
shall not be required to compensate Agent or any Lender, as the case may be,
pursuant to this Section 1.12 for any amounts incurred more than six months
prior to the date such Agent or Lender, as the case may be, notifies the
Borrower Representative of such Agent’s or Lender’s intention to claim
compensation therefor; provided further, that if the circumstances giving rise
to such claim have a retroactive effect, then such six month period shall be
extended to include such period of retroactive effect; provided further that if
a Borrower Representative reasonably believes that such taxes were not
correctly or legally asserted, the Agent or such Lender, as the case may be,
will use reasonable efforts to cooperate with the Borrower Representative to
obtain a refund of such taxes so long as such efforts would not, in the sole
determination of the Agent or such Lender, as the case may be, result in any
additional costs, expenses or risks or be otherwise disadvantageous to it.  Nothing in this subsection shall require
Agent or any Lender to make available to any Borrower or any other Person any
tax returns or other information Agent or such Lender deems to be confidential
or proprietary.

 

(f)            Each of the Agent and the Lenders
agree that if it subsequently recovers, or receives a permanent net tax benefit
with respect to, any amount of taxes (i) previously paid by it and as to which
it has been indemnified by or on behalf of any of the Borrowers or (ii)
previously deducted by any of the Borrower (including, without limitation, any
taxes deducted from any additional sums payable under subsection (a) above),
the Agent or such Lender, as the case may be, shall reimburse such Borrower to
the extent of the amount of any such recovery or permanent net tax benefit (but
only to the extent of indemnity payments made, or additional amounts paid, by
or on behalf of such Borrower under this Section 1.12); provided, however, that
the Borrowers jointly and severally, upon the request of the Agent or such
Lender made to Borrower Representative, agree to repay to the Agent or such
Lender, as the case may be, the amount paid over to any Borrower (together with
any penalties, interest or other charges), in the event the Agent or such
Lender is required to repay such amount to the relevant taxing authority.
Nothing in this subsection shall require Agent or any Lender to make available
to any Borrower or any other Person any tax returns or other information Agent
or such Lender deems to be confidential or proprietary.

 

(g)           Each Lender organized under the laws
of a jurisdiction outside the United States (a “Foreign Lender”) as to
which payments to be made under this Agreement or under the Notes are exempt
from United States withholding tax under an applicable statute or tax treaty
shall provide to Borrower Representative and Agent a properly completed and
executed IRS Form W-8ECI or Form W-8BEN or other applicable form,
certificate or document prescribed by the IRS or the United States certifying
as to such Foreign Lender’s entitlement to such exemption (a “Certificate of
Exemption”).  Any

 

13

 

foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption
to Borrower Representative and Agent prior to becoming a Lender hereunder.  No foreign Person may become a Lender
hereunder if such Person fails to deliver a Certificate of Exemption in advance
of becoming a Lender.  Each Lender that
is not a Foreign Lender (other than any such Lender which is taxed as a
corporation for U.S. federal income tax purposes) shall provide two properly
completed and duly executed copies of IRS Form W-9 (or any successor or other
applicable form) to the Borrower certifying that such Lender is exempt from
United States backup withholding tax.

 

(h)           The Borrowers shall not be required
to pay additional amounts to Agent or a any Lender, or indemnify any Agent or
Lender, under this Section 1.12 to the extent and only to the extent that such
obligations would not have arisen but for the failure of Agent or such Lender,
as the case may be, to comply with any obligations expressly applicable to it
under this Section 1.12.

 

(i)            If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Borrower Representative or an Agent any form or certificate that such
Lender is obligated to submit pursuant to Section 1.12(d) or that such
Lender is required to withdraw or cancel any such form or certificate
previously submitted or any such form or certificate otherwise becomes
ineffective or inaccurate, such Lender shall promptly notify the Borrower
Representative and the Agent of such fact and the Lender shall to that extent
not be obligated to provide any such form or certificate and will be entitled
to withdraw or cancel any affected form or certificate, as applicable.

 

(j)            If any of the forms or other
documentation required under this Section 1.12(d) are not delivered to
the Borrower Representative as required by Agent or any Lender, then the
applicable Borrower may withhold from any interest payment to such Agent or
Lender, as the case may be, not providing such forms or other documentation an
amount equivalent to the applicable withholding tax.

 

(k)           If any Agent or Lender, as the case
may be, is entitled to a reduction in (and not a complete exemption from) the
applicable withholding tax, the applicable Borrower may withhold from any
interest payment to such Agent or such Lender, as the case may be, an amount
equivalent to the applicable withholding tax after taking into account such
reduction.

 

1.13.        Capital Adequacy;
Increased Costs; Illegality.

 

(l)            If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding
capital adequacy, reserve requirements or similar requirements or compliance by
any Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the Closing Date, from any central bank or other
Governmental Authority increases or would have the effect of increasing the
amount of capital, reserves or other funds required to be maintained by such
Lender and thereby reducing the rate of return on such Lender’s capital as a
consequence of its obligations hereunder, then Borrowers shall from time to
time upon demand by such Lender (with a copy of such demand to Agent) pay to
Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. 
A certificate as to the amount of that reduction and showing the basis
of the computation thereof submitted by such Lender to Borrower Representative
and to Agent shall be presumptive evidence of the matters set forth therein.

 

(m)          If, due to either (i) the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) or (ii) the compliance with any guideline or
request from any central bank or other Governmental Authority (whether or not
having the force of law), in each case adopted after the Closing Date (except
for changes in the rate or tax on the overall net income of such

 

14

 

Lender or its lending office
imposed by the jurisdiction in which such Lender’s principal executive office
or lending office is located), there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Loan or incurring
any Letter of Credit Obligation, then Borrowers shall from time to time, upon
demand by such Lender (with a copy of such demand to Agent), pay to Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost.  A
certificate as to the amount of such increased cost, submitted to Borrower
Representative and to Agent by such Lender, shall, absent manifest error, be
presumptive evidence of the matters set forth therein.  Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender’s internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrowers pursuant to this Section
1.13(b).

 

(c)           Notwithstanding anything to the
contrary contained herein, if the introduction of or any change in any law or
regulation (or any change in the interpretation thereof) shall make it
unlawful, or any central bank or other Governmental Authority shall assert that
it is unlawful, for any Lender to agree to make or to make or to continue to
fund or maintain any LIBOR Loan, then, unless that Lender is able to make or to
continue to fund or to maintain such LIBOR Loan at another branch or office of
that Lender without, in that Lender’s reasonable opinion, materially adversely
affecting it or its Loans or the income obtained therefrom, on notice thereof
and demand therefor by such Lender to Borrower Representative through Agent,
(i) the obligation of such Lender to agree to make or to make or to
continue to fund or maintain LIBOR Loans shall terminate and (ii) each Borrower
shall forthwith prepay in full all outstanding LIBOR Loans owing by such
Borrower to such Lender, together with interest accrued thereon, unless
Borrower Representative on behalf of such Borrower, within five (5) Business
Days after the delivery of such notice and demand, converts all LIBOR Loans
into Index Rate Loans.

 

(d)           After receipt by Borrower
Representative of written notice and demand from any Lender (an “Affected
Lender”) for payment of additional amounts or increased costs as provided
in Sections 1.12(a), 1.13(a) or 1.13(b), Borrower Representative may, at
its option, notify Agent and such Affected Lender of its intention to replace
the Affected Lender.  So long as no
Default or Event of Default has occurred and is continuing, Borrower
Representative, with the consent of Agent (not to be unreasonably withheld or
delayed), may obtain, at Borrowers’ expense, a replacement Lender (“Replacement
Lender”) for the Affected Lender, which Replacement Lender must be
reasonably satisfactory to Agent.  If
Borrowers obtain a Replacement Lender following notice of their intention to do
so, the Affected Lender must sell and assign its Loans and Commitments to such
Replacement Lender for an amount equal to the principal balance of all Loans
held by the Affected Lender and all accrued interest and Fees with respect
thereto through the date of such sale and such assignment shall not require the
payment of an assignment fee to Agent; provided, that Borrowers shall
have reimbursed such Affected Lender for all additional amounts or increased
costs that it is entitled to receive under this Agreement through the date of
such sale and assignment. 
Notwithstanding the foregoing, Borrowers shall not have the right to
obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within 15 days following its receipt of
Borrowers’ notice of intention to replace such Affected Lender.

 

(e)           Each Affected Lender agrees that, if
requested by the Borrower Representative, it will use reasonable efforts
(subject to overall policy considerations of such Affected Lender) to designate
an alternate lending office with respect to any of its portions of LIBOR Loans
affected by the matters or circumstances described in Sections 1.12 or
1.13(a), (b) or (c) to reduce the liability of the Borrowers or avoid the
results provided thereunder, so long as such designation is not disadvantageous
to such Affected Lender as determined by such Affected Lender, which
determination if made in good faith, shall be

 

15

 

conclusive and binding on all parties
hereto.  Nothing in this Section
1.13(e) shall affect or postpone any of the obligations of any Borrower or
any right of any Lender or Agent provided hereunder.

 

1.14.        Single Loan.  All Loans to each Borrower and all of the
other Obligations of each Borrower arising under this Agreement and the other
Loan Documents shall constitute one general obligation of that Borrower
secured, until the Termination Date, by all of the Collateral.

 

1.15.        Access.  Each Credit Party shall, during normal
business hours, from time to time upon two (2) Business Days’ prior notice as
frequently as Agent reasonably determines to be appropriate: (a) provide Agent
and any of its officers, employees and agents access to its properties,
facilities, advisors, officers and employees of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party’s books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Accounts, Inventory and
other Collateral of any Credit Party.  If
an Event of Default has occurred and is continuing, each such Credit Party
shall provide such access to Agent and to each Lender at all times and without
advance notice.  Furthermore, so long as
any Event of Default has occurred and is continuing, Borrowers shall provide
Agent and each Lender with access to their suppliers.  Each Credit Party shall make available to
Agent and its counsel reasonably promptly originals or copies of all books and
records that Agent may reasonably request. 
Agent will give Lenders at least five (5) days’ prior written notice of
regularly scheduled audits. 
Representatives of other Lenders may accompany Agent’s representatives
on regularly scheduled audits at no charge to Borrowers.

 

2.                                       CONDITIONS PRECEDENT

 

2.1.          Conditions to the Initial Loans.  No Lender shall be obligated to make any Loan
or incur any Letter of Credit Obligations on the Closing Date, or to take,
fulfill, or perform any other action hereunder, until the following conditions
have been satisfied or provided for in a manner reasonably satisfactory to
Agent, or waived in writing by Agent and Requisite Lenders:

 

(a)           Credit Agreement; Loan Documents.  Agent shall have received this Agreement,
executed and delivered by Agent, Holdings, Borrowers, each other Credit Party,
and Lenders,  and such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex D, each in form and substance reasonably satisfactory to
Agent.

 

(b)           Repayment of Prior Lender
Obligations; Satisfaction of Outstanding L/Cs.  (i) Agent shall have received fully executed
original pay-off letters reasonably satisfactory to Agent confirming that all
of the Prior Lender Obligations will be repaid in full on the Closing Date and
all Liens upon any of the property of Holdings or any of its Subsidiaries in
favor of Prior Lenders shall be terminated by Prior Lenders immediately upon
such payment; and (ii) all letters of credit issued or guaranteed by Prior
Lender shall have been cash collateralized or supported by a Letter of Credit
issued pursuant to Annex B, as mutually agreed upon by Agent, Borrowers
and Prior Lenders.

 

(c)           Acquisition, Related Transactions.  The following transactions (collectively, the
“Related Transactions”) shall have been consummated, in each case on
terms and conditions reasonably satisfactory to Agent:

 

(i)            the final structure, terms and
conditions of the Acquisition shall be as set forth in the Acquisition
Agreement (including the disclosure schedules and any annexes or exhibits
thereto) and the documentation relating to the Acquisition that has been
delivered to the Agent prior to

 

16

 

February 21, 2006, and the
Agent shall be reasonably satisfied with each of the other transactions
contemplated hereby. The Acquisition and the other transactions shall be
consummated concurrently with the initial funding of the Loans hereunder in
accordance with the Acquisition Documents, in each case without any waiver,
supplement, amendment or other modification of any material provision of any of
the Acquisition Documents (including, without limitation any of the disclosure
schedules to the Acquisition Agreement) unless consented to by the Agent;

 

(ii)           Holdings shall have received at least
$54,000,000 in cash proceeds from stock issued by Holdings to funds managed by
Sponsor and other investors reasonably satisfactory to Agent, and the entire amount
of such proceeds shall have been contributed to Borrower;

 

(iii)          Festival shall have received at least
$150,000,000 in gross cash proceeds from the issuance of the Senior Unsecured
Notes and the form and substance of the Senior Unsecured Note Documents shall
be reasonably satisfactory in form and substance in all respects to Agent; and

 

(iv)          Agent shall have received satisfactory
evidence that the fees, commissions and expenses to be incurred in connection
with the Related Transactions shall not exceed $12,000,000.

 

(d)           Agent shall have received (i)
unqualified audited consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of Borrowers and their consolidated
Subsidiaries for each of the last three fiscal years ending more than 45 days
prior to the Closing Date (collectively, the “Audited Financial Statements”),
(ii) unaudited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of Borrowers and their consolidated Subsidiaries
for each fiscal quarter ended after the latest fiscal year referred to in
clause (i) above and for the comparable periods of the preceding fiscal year
(collectively, the “Unaudited Financial Statements”) (with respect to
which the independent auditors shall have performed a SAS 100 review), (iii) a pro
forma consolidated balance sheet and related statements of income and
cash flows for Borrowers and their consolidated Subsidiaries (collectively, the
“Pro Forma Financial Statements”) and pro forma earnings before
interest, taxes, depreciation, amortization and rent (the “Pro Forma EBITDAR”)
for the last fiscal year covered by the Audited Financial Statements, for the
period beginning after such fiscal year to the end of the last fiscal quarter
covered by the Unaudited Financial Statements and for the latest four-quarter
period ending with, and including, the last fiscal quarter covered by the
Unaudited Financial Statements, in each case after giving effect to the Related
Transactions, (iv) forecasts of the financial performance of Borrowers and
their Subsidiaries for the period through 2012 and (v) all internally available
monthly financial statements of the Acquired Business to the extent such
financial statements have been provided to the Sponsor or its affiliates.  The financial statements referred to in
clauses (i) and (ii) shall be prepared in accordance with accounting principles
generally accepted in the United States. 
The Pro Forma Financial Statements shall be prepared on a basis
consistent with pro  forma financial statements set forth in a
registration statement filed with the SEC.

 

(e)           Approvals.  Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the other Loan
Documents and the consummation of the Related Transactions, except where the
failure to obtain such consent or approval could not reasonably be expected to
have a Material Adverse Effect or a material adverse effect on the Related
Transactions, or (ii) an officer’s certificate in form and substance reasonably
satisfactory to Agent affirming that no such consents or approvals are required.

 

(f)            Sources and Uses of Funds.  The Proceeds and uses of funds and the
assumptions relating thereto (including Indebtedness of Borrowers and their
Subsidiaries giving effect to the Related

 

17

 

Transactions) shall be as set
forth in the Commitment Letter; provided that reductions in the purchase
price paid for the Acquisition on the Closing Date pursuant to the Acquisition
Agreement shall be allowed so long as the conditions set forth in Sections
2.1(c)(ii) and 2.1(h) are satisfied.

 

(g)           Payment of Fees.  Borrowers shall have paid the Fees required
to be paid on the Closing Date in the respective amounts specified in the GE
Capital Fee Letter, and shall have reimbursed Agent for all reasonable fees,
costs and expenses (including, without limitation, reasonable legal fees and
expenses and the fees and expenses of appraisers, consultants and other
advisors) and other compensation payable to the Agent for which invoices in
reasonable detail have been presented.

 

(h)           Financial Condition.  Agent shall have received evidence
satisfactory to it that the ratio of Funded Debt (excluding any Indebtedness
consisting of Letter of Credit Obligations) of Holdings and its consolidated
Subsidiaries to EBITDA (each calculated on a pro  forma basis in a
manner satisfactory to Agent and consistent with the Pro Forma) as of the
Closing Date shall not exceed 5.90 to 1.0, and Holdings shall provide support
for such calculation of a nature that is satisfactory to Agent.

 

(i)            USA PATRIOT Act.  Each Lender shall have received, prior to the
Closing Date, all documentation and other information with respect to the
Credit Parties which Lender (or its counsel) reasonably determines is required
by regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including, without limitation, the USA
PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001))
and requested by the Lenders.

 

2.2.          Further Conditions to Each Loan.  Except as otherwise expressly provided
herein, no Lender shall be obligated to fund any Advance or incur any Letter of
Credit Obligation, if, as of the date thereof:

 

(a)           (i) any representation or warranty by
any Credit Party contained herein or in any other Loan Document is untrue or
incorrect in any material respect (provided that any representation or warranty
that is subject to a materiality or material adverse effect qualifier shall be
accurate in all respects) as of such date (except in the case where such
representation or warranty relates to a specific earlier date, in which case
such representation or warranty shall relate to such earlier date) as
determined by Agent or Requisite Lenders, and (ii) Agent or Requisite Lenders
have determined not to make such Advance, or incur such Letter of Credit
Obligation as a result of the fact that such warranty or representation is so
untrue or incorrect;

 

(b)            (i) any Default or Event of Default
has occurred and is continuing or would result after giving effect to any
Advance (or the incurrence of any Letter of Credit Obligation), and (ii) Agent
or Requisite Lenders shall have determined not to make any Advance, or incur
any Letter of Credit Obligation as a result of that Default or Event of
Default;

 

(c)           after giving effect to any Advance
(or the incurrence of any Letter of Credit Obligations), the outstanding
principal amount of the Revolving Loan would exceed the Maximum Amount less the
then outstanding principal amount of the Swing Line Loan; or

 

(d)            in the case of any Revolving Credit
Advances made pursuant to any Revolving Commitment Increase if (i) such
Revolving Credit Advance is not permitted to be incurred under the Senior
Unsecured Note Indenture, or (ii) in connection with any request for such
Revolving Credit Advance, Borrower Representative shall not have furnished to
Agent a certificate in form and substance reasonably satisfactory to Agent
certifying and providing reasonable detail of the calculations demonstrating
that the incurrence of Indebtedness in connection with the making of any such
Revolving Credit Advances is permitted under the Senior Unsecured Note
Indenture.

 

18

 

The request and acceptance
by Borrower Representative or any Borrower of the proceeds of any Advance, the
incurrence of any Letter of Credit Obligations or the conversion or
continuation of any Loan into, or as, a LIBOR Loan shall be deemed to
constitute, as of the date thereof, (i) a representation and warranty by
Borrowers that the conditions described in clauses (a)(i), (b)(i) or (c)
of this Section 2.2 exist and are continuing and (ii) a
reaffirmation by Borrowers of the granting and continuance of Agent’s Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents.

 

In addition to the
foregoing, (A) no Borrower may convert any Index Rate Loan to a LIBOR Loan or
continue any LIBOR Loan as a LIBOR Loan if an Event of Default exists, (B) the
request and acceptance by Borrower Representative or any Borrower of the conversion
or continuation of any Loan into, or as, a LIBOR Loan shall be deemed to
constitute, as of the date thereof, (x) a representation and warranty by
Borrowers that no Event of Default exists or would result therefrom and (y) a
reaffirmation by Borrowers of the granting and continuance of Agent’s Liens, on
behalf of itself and Lenders, pursuant to the Collateral Documents, (C) no
Borrower that has filed a petition seeking relief under the Bankruptcy
Code or any other applicable federal, state or foreign bankruptcy or other
similar law or that is otherwise subject to a bankruptcy or similar case or
proceeding of the type described in Section 8.1(h) or (i) (such events referred
to herein collectively as “Bankruptcy Events”) may request or receive,
directly or indirectly, the proceeds of any Loans or the issuance of any Letter
of Credit while any such Bankruptcy Events are continuing.

 

3.                                       REPRESENTATIONS AND WARRANTIES

 

To induce Lenders to make
the Loans and to incur Letter of Credit Obligations, the Credit Parties
executing this Agreement, jointly and severally, make the following
representations and warranties to Agent and each Lender with respect to all
Credit Parties, each and all of which shall survive the execution and delivery
of this Agreement.

 

3.1.          Corporate Existence; Compliance
with Law.  Each Credit Party (a) is a
corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure
Schedule (3.1); (b) is duly qualified to conduct business and is in good
standing in each other jurisdiction where its ownership or lease of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not result in exposure to losses or
liabilities which could reasonably be expected to have a Material Adverse
Effect; (c) has the requisite power and authority and the legal right to own,
pledge, mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as now conducted
or proposed to be conducted; (d) subject to specific representations regarding
Environmental Laws, has all material licenses, permits, consents or approvals
from or by, and has made all material filings with, and has given all notices
to, all Governmental Authorities having jurisdiction, to the extent required
for such ownership, operation and conduct; (e) is in compliance with its
charter; (f) is in compliance in with its bylaws or partnership or operating
agreement, as applicable, except for any such failures individually or in the
aggregate that are not material in nature and would not be materially adverse
to Agent or Lenders or impair the execution, delivery or performance by such
Credit Party of any of its obligations hereunder and under any Related
Transaction Documents; and (g) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax and other laws, is in
compliance with all applicable provisions of law, except where the failure to
comply, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

3.2.          Executive Offices, Collateral
Locations, FEIN.  As of the Closing
Date, each Credit Party’s name as it appears in official filings in its state
of incorporation or organization, state of incorporation or organization,
organization type, organization number, if any, issued by its state

 

19

 

incorporation
or organization, and the current location of each Credit Party’s chief
executive office and the warehouses and premises at which any Collateral is
located are set forth in Disclosure Schedule (3.2), and none of such
locations has changed within four (4) months preceding the Closing Date.  In addition, Disclosure Schedule (3.2)
lists the federal employer identification number of each Credit Party.

 

3.3.          Corporate Power, Authorization,
Enforceable Obligations.  The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person’s power; (b) have been duly authorized by all necessary
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person’s charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of itself
and Lenders, pursuant to the Loan Documents; and (g) do not require the consent
or approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly
obtained, made or complied with on or prior to the Closing Date.  Each of the Loan Documents shall be duly
executed and delivered by each Credit Party that is a party thereto and each
such Loan Document shall constitute a legal, valid and binding obligation of
such Credit Party enforceable against it in accordance with its terms.

 

3.4.          Financial Statements and
Projections.  Except for the
Projections, all Financial Statements concerning Borrowers and their respective
Subsidiaries that are referred to below have been prepared in accordance with
GAAP consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for the
absence of footnotes and normal year-end audit adjustments) and present fairly
in all material respects the financial position of the Persons covered thereby
as at the dates thereof and the results of their operations and cash flows for
the periods then ended.

 

(a)           Financial Statements.  The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered on the date
hereof:

 

(i)            The audited consolidated balance
sheets as of December 31, 2003, December 31, 2004 and December 31, 2005 and the
related statements of income and cash flows of Borrowers and their Subsidiaries
for the Fiscal Years then ended, certified by Deloitte & Touche LLP.

 

(b)           Pro Forma.  The Pro Forma delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(b)) was prepared by
Borrowers giving pro  forma effect to the Related Transactions,
was based on the audited consolidated balance sheets of the Acquired Business
dated December 31, 2005 and was prepared based upon the same accounting
principles as those used in the preparation of pro  forma
financial statements set forth in the final Offering Memorandum in respect of
the Senior Unsecured Notes.

 

(c)           Projections.  The Projections delivered on the date hereof
and attached hereto as Disclosure Schedule (3.4(c)) have been prepared
by Borrowers in light of the past operations of its businesses, but including
future payments of known contingent liabilities, and reflect projections for
the period from Fiscal Year 2006 through Fiscal Year 2012.  The Projections are based upon the same
accounting principles as those used in the preparation of the financial
statements described above and the estimates and assumptions stated therein,
all of which Borrowers believe to be reasonable and fair in light of current
conditions and current facts known to Borrowers and, as of the Closing Date,
reflect

 

20

 

Borrowers’ good faith and
reasonable estimates of the future financial performance of Borrowers for the
period set forth therein.  The
Projections are not a guaranty of future performance, and actual results may
differ from the Projections.

 

3.5.          Material Adverse Effect.  Between December 31, 2005 and the Closing
Date, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, lease or other agreement or instrument has
been entered into by any Credit Party or has become binding upon any Credit
Party’s assets (other than pursuant to the Related Transaction Documents) and
no law or regulation applicable to any Credit Party has been adopted that has
had or could reasonably be expected to have a Material Adverse Effect, and (c)
no Credit Party is in default and, to the best of Borrowers’ knowledge, no
third party is in default under any material contract, lease or other agreement
or instrument, that alone or in the aggregate could reasonably be expected to
have a Material Adverse Effect.  Since
December 31, 2005, no event has occurred or is continuing, that alone or
together with other events has had or could reasonably be expected to have a
Material Adverse Effect.

 

3.6.          Ownership of Property; Liens.  As of the Closing Date, the real estate (“Real
Estate”) listed in Disclosure Schedule (3.6) constitutes all of the
real property owned, leased, subleased, or used by any Credit Party.  Disclosure Schedule (3.6) identifies
the name of each Park as of the Closing Date and the location of each such
water park, and Disclosure Schedule (5.10) identifies all of the Tier 1
Parks that as of the Closing Date generate at least 71% of EBITDA of Borrowers
and their Subsidiaries calculated on a trailing twelve month consolidated basis
as of the fiscal year ended December 31, 2005. 
Each Credit Party owns valid and marketable leasehold interests in all
of its leased Real Estate, all as described on Disclosure Schedule (3.6),
and copies of all such leases or a summary of terms thereof reasonably
satisfactory to Agent have been delivered to Agent.  Disclosure Schedule (3.6) further
describes any Real Estate with respect to which any Credit Party is a lessor,
sublessor or assignor as of the Closing Date. 
Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets (except for
Permitted Encumbrances).  The Liens
granted to Agent, on behalf of itself and Lenders, pursuant to the Collateral
Documents will at all times be fully perfected first priority Liens in and to
the Collateral described therein, subject, as to priority, only to Permitted
Encumbrances.  As of the Closing Date,
none of the properties and assets of any Credit Party are subject to any Liens
other than Permitted Encumbrances, and there are no facts, circumstances or
conditions known to any Credit Party that may result in any Liens (including
Liens arising under Environmental Laws) other than Permitted Encumbrances.  Each Credit Party has received all deeds,
assignments, waivers, consents (including landlords’ consents), nondisturbance
and attornment or similar agreements, bills of sale and other documents, and
has duly effected all recordings, filings and other actions necessary to establish,
protect and perfect such Credit Party’s right, title and interest in and to all
such Collateral, subject as to priority, only to Permitted Encumbrances, and
subject further to any exceptions to the maintenance, protection or
preservation of assets and properties expressly granted under Section 5.1.  As of the Closing Date, no portion of any
Credit Party’s Real Estate has suffered any material damage by fire or other
casualty loss that has not heretofore been repaired and restored in all
material respects to its original condition or otherwise remedied.  As of the Closing Date, all material permits
required to have been issued or appropriate to enable the Real Estate to be
lawfully occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force and effect.

 

3.7.          Labor Matters.  Except as set forth on Disclosure Schedule
(3.7), as of the Closing Date: (a) no strikes or other material labor
disputes against any Credit Party are pending or, to any Credit Party’s
knowledge, threatened; (b) hours worked by and payment made to employees of
each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law

 

21

 

applicable to
such matters; (c) all payments due from any Credit Party for employee health
and welfare insurance have been paid or accrued as a liability on the books of
such Credit Party; (d) no Credit Party is a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement, employment
agreement, bonus, restricted stock, stock option, or stock appreciation plan or
agreement or any similar plan, agreement or arrangement; (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party’s
knowledge, threatened by any labor union or group of employees; (f) there are
no representation proceedings pending or, to any Credit Party’s knowledge,
threatened with the National Labor Relations Board, and no labor organization
or group of employees of any Credit Party has made a pending demand for
recognition; and (g) there are no material complaints or charges against
any Credit Party pending or, to the knowledge of any Credit Party, threatened to
be filed with any Governmental Authority or arbitrator based on, arising out
of, in connection with, or otherwise relating to the employment or termination
of employment by any Credit Party of any individual.

 

3.8.          Ventures, Subsidiaries and
Affiliates; Outstanding Stock and Indebtedness.  Except as set forth in Disclosure Schedule
(3.8), as of the Closing Date, no Credit Party has any Subsidiaries, is
engaged in any joint venture or partnership with any other Person, or is an
Affiliate of any other Person.  As of the
Closing Date, all of the issued and outstanding Stock of each Credit Party is
owned by each of the Stockholders and in the amounts set forth in Disclosure
Schedule (3.8).  Except as set forth
in Disclosure Schedule (3.8), as of the Closing Date, there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock
or other equity securities of its Subsidiaries. 
All outstanding Indebtedness and Guaranteed Indebtedness of each Credit
Party as of the Closing Date (except for the Obligations) is described in Section
6.3 (including Disclosure Schedule (6.3)).  Palace Finance is a direct wholly-owned
Subsidiary of Holdings and does not own any Subsidiaries.

 

3.9.          Government Regulation.  No Credit Party is an “investment company” or
an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment
company,” as such terms are defined in the Investment Company Act of 1940.  No Credit Party is subject to regulation
under the Federal Power Act or any other federal or state statute that
restricts or limits its ability to incur Indebtedness or to perform its
obligations hereunder.  The making of the
Loans by Lenders to Borrowers, the incurrence of the Letter of Credit
Obligations on behalf of Borrowers, the application of the proceeds thereof and
repayment thereof and the consummation of the Related Transactions will not
violate any provision of any such statute or any rule, regulation or order
issued by the SEC.

 

3.10.        Margin Regulations.  No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of “buying” or “carrying” any “margin stock”
as such terms are defined in Regulation U of the Federal Reserve Board as now
and from time to time hereafter in effect (such securities being referred to
herein as “Margin Stock”).  No
Credit Party owns any Margin Stock, and none of the proceeds of the Loans or
other extensions of credit under this Agreement will be used, directly or
indirectly, for the purpose of buying or carrying any Margin Stock, for the
purpose of reducing or retiring any Indebtedness that was originally incurred
to buy or carry any Margin Stock or for any other purpose that might cause any
of the Loans or other extensions of credit under this Agreement to be
considered a “purpose credit” within the meaning of Regulations T, U or X of
the Federal Reserve Board.  No Credit
Party will take or permit to be taken any action that might cause any Loan
Document to violate any regulation of the Federal Reserve Board.

 

3.11.        Taxes.  All Federal and other material tax returns,
reports and statements, including information returns, required by any
Governmental Authority to be filed by any Credit Party have been filed with the
appropriate Governmental Authority, and all Charges have been paid prior to the
date on which any fine, penalty, interest or late charge may be added thereto
for nonpayment thereof,

 

22

 

excluding
Charges or other amounts being contested in accordance with Section 5.2(b)
and unless the failure to so file or pay could not reasonably be expected to
result in a Material Adverse Effect. 
Proper and accurate amounts have been withheld by each Credit Party from
its respective employees for all periods in full and complete compliance with
all applicable federal, state, local and foreign laws and such withholdings
have been timely paid to the respective Governmental Authorities.  Disclosure Schedule (3.11) sets forth
as of the Closing Date those taxable years for which any Credit Party’s tax
returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments, written threatened assessments or
other threatened assessments which any Credit Party has received notice of or
has knowledge of in connection with such audit, or otherwise currently
outstanding.  Except as described in Disclosure
Schedule (3.11), as of the Closing Date, no Credit Party has executed or
filed with the IRS or any other Governmental Authority any agreement or other
document extending, or having the effect of extending, the period for
assessment or collection of any Charges. 
None of the Credit Parties and their respective predecessors are liable
for any Charges of any Person that is not a Credit Party and no tax sharing
agreements exist between any Credit Party or any other Person (including
another Credit Party) except as disclosed in writing by Borrower Representative
to Agent on or prior to the Closing Date: (a) under any agreement (including
any tax sharing agreements) or (b) to each Credit Party’s knowledge, as a transferee.  As of the Closing Date, no Credit Party has
agreed or been requested to make any adjustment under IRC Section 481(a), by
reason of a change in accounting method or otherwise, which could reasonably be
expected to have a Material Adverse Effect.

 

3.12.        ERISA.

 

(a)           Disclosure Schedule (3.12) lists as
of the Closing Date, all Plans and separately identifies all Pension Plans,
including Title IV Plans, Multiemployer Plans, ESOPs and Welfare Plans,
including all Retiree Welfare Plans. 
Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and, nothing has occurred that would
cause the loss of such qualification or tax-exempt status.  Each Plan is in compliance in all material
respects with the applicable provisions of ERISA and the IRC, including the
timely filing of all reports required under the IRC or ERISA, including the
statement required by 29 CFR Section 2520.104-23, except for such
non-compliance that, individually or in the aggregate, could not reasonably be
expected to result in any liability, penalty, damages or claims against any
Credit Party in excess of $500,000. 
Neither any Credit Party nor ERISA Affiliate has failed to make any
material contribution or pay any material amount due as required by either
Section 412 of the IRC or Section 302 of ERISA or the terms of any such Plan,
except for such failures that, individually or in the aggregate, could not
reasonably be expected to result in any liability, penalty, damages or claims
against any Credit Party in excess of $500,000. 
Neither any Credit Party nor ERISA Affiliate has engaged in a “prohibited
transaction”, as defined in Section 406 of ERISA and Section 4975 of the IRC,
in connection with any Plan, that would subject any Credit Party to a material
tax on prohibited transactions imposed by Section 502(i) of ERISA or Section
4975 of the IRC.

 

(b)           Except as set forth in Disclosure
Schedule (3.12) and except for such events, claims, liabilities or other
circumstances that, individually or in the aggregate under clauses (i) through
(vii) below of this Section 3.12(b), could not reasonably be expected to result
in any liability, penalty, damages or claims against any Credit Party in excess
of $500,000, (i) no Title IV Plan has any material Unfunded Pension Liability;
(ii) no ERISA Event or event described in Section 4062(e) of ERISA with respect
to any Title IV Plan has occurred or is reasonably expected to occur; (iii)
there are no pending, or to the knowledge of any Credit Party, threatened
material claims (other than claims for benefits in the normal course),
sanctions, actions or lawsuits, asserted or instituted against any Plan or any
Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA
Affiliate has incurred or reasonably expects to incur any material liability as
a result of a complete or partial withdrawal from a

 

23

 

Multiemployer Plan; (v) within
the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has
been terminated, whether or not in a “standard termination” as that term is
used in Section 4041 of ERISA, nor has any Title IV Plan of any Credit Party or
ERISA Affiliate (determined at any time within the past five years) with
material Unfunded Pension Liabilities been transferred outside of the “controlled
group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party
or ERISA Affiliate; (vi) except in the case of any ESOP, Stock of all
Credit Parties and their ERISA Affiliates makes up, in the aggregate, no more
than 10% of fair market value of the assets of any Plan measured on the basis
of fair market value as of the latest valuation date of any Plan; and
(vii) no liability under any Title IV Plan has been satisfied with the
purchase of a contract from an insurance company that is not rated AAA by the
Standard & Poor’s Corporation or an equivalent rating by another nationally
recognized rating agency.

 

3.13.        No Litigation.  Except as set forth on Disclosure Schedule
(3.13), there is no action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, “Litigation”),
(a) that challenges any Credit Party’s right or power to enter into or
perform any of its obligations under the Loan Documents to which it is a party,
or the validity or enforceability of any Loan Document or any action taken
thereunder, or (b) that has a reasonable risk of being determined adversely to
any Credit Party and that, if so determined, could reasonably be expected to
have a Material Adverse Effect.   Except
as set forth on Disclosure Schedule (3.13), as of the Closing Date there
is no Litigation pending or threatened that seeks damages in excess of $250,000
or injunctive relief against, or alleges criminal misconduct of, any Credit
Party.

 

3.14.        Brokers.  Except as set forth on Disclosure Schedule
(3.14), no broker or finder acting on behalf of any Credit Party or
Affiliate thereof brought about the obtaining, making or closing of the Loans
or the Related Transactions, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.

 

3.15.        Intellectual Property.  As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now conducted by it or presently proposed to be
conducted by it.  As of the Closing Date,
each Patent, registered Trademark, registered Copyright owned by any Credit
Party and each License to which a Credit Party is a party to is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15), except for foreign Patents, foreign registered Trademarks
and foreign registered Copyrights, in each case owned by any Credit Party that
are not necessary to continue to conduct its business as now conducted by it or
presently proposed to be conducted by it. 
Each Credit Party conducts its business and affairs without infringement
of or interference with any Intellectual Property of any other Person in any
material respect.  Except as set forth in
Disclosure Schedule (3.15), no Credit Party is aware of any material
infringement claim by any other Person with respect to any Intellectual
Property.

 

3.16.        Full Disclosure.

 

(a)           No information contained in this
Agreement, any of the other Loan Documents, any Financial Statements, the
Monthly Reports or other written reports (excluding Projections and information
of a general economic nature or general industry nature) from time to time
prepared by any Credit Party and delivered hereunder or any written statement
prepared by any Credit Party and furnished by or on behalf of any Credit Party
to Agent or any Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained herein or therein,
when taken as a whole, not materially misleading in light of the circumstances
under which they were made.  Projections
from time to time delivered hereunder are or will be based upon the estimates
and assumptions stated therein, all of which

 

24

 

Borrowers believed at the time
of delivery to be reasonable and fair in light of current conditions and
current facts known to Borrowers as of such delivery date, and reflect
Borrowers’ good faith and reasonable estimates of the future financial
performance of Borrowers and of the other information projected therein for the
period set forth therein.  Such
Projections are not a guaranty of future performance and actual results may
differ from those set forth in such Projections.

 

3.17.        Environmental
Matters.  Except as set forth in Disclosure
Schedule (3.17), as of the Closing Date, (i) to the Credit Parties’
knowledge, the Real Estate is free of contamination from any Hazardous Material
requiring remediation under Environmental Laws, except for such contamination
that would not adversely impact the value of such Real Estate as it is
presently used, and that would not reasonably be expected to result in
Environmental Liabilities in excess of $1,000,000; (ii) no Credit Party has
caused any material Release of Hazardous Materials on, at, in, under, above,
to, from or about any of its Real Estate that would reasonably be expected to
result in Environmental Liabilities in excess of $1,000,000; (iii) the Credit
Parties are and for the past three years have been in material compliance with all
Environmental Laws, except for such noncompliance that would not reasonably be
expected to result in a Material Adverse Effect; (iv) the Credit Parties have
obtained, and are in material compliance with, all Environmental Permits
required by Environmental Laws for the operations of their respective
businesses as presently conducted, and have maintained all such Environmental
Permits in valid, uncontested and in good standing, except where the failure to
so obtain, comply with or maintain such Environmental Permits would not have a
Material Adverse Effect; (v) there is no Litigation pending against any Credit
Party arising under or related to any Environmental Laws, Environmental Permits
or Hazardous Material that seeks damages, penalties, fines, costs or expenses
in excess of $1,000,000, or injunctive relief against, or that alleges criminal
misconduct by, any Credit Party; (vi) no notice has been received by any Credit
Party identifying it as a “potentially responsible party” or requesting
information under CERCLA or analogous state statutes that may result in any
Credit Party being identified as a “potentially responsible party” under CERCLA
or analogous state, in each case, which would reasonably be expected to result
in a Material Adverse Effect; and (vii) the Credit Parties have provided to
Agent copies of all existing environmental reports, reviews, audits and other
material written information pertaining to material Environmental Liabilities,
in each case relating to any Credit Party.

 

3.18.        Insurance.  Disclosure Schedule (3.18) lists all
insurance policies of any nature maintained, as of the Closing Date, for
current occurrences by each Credit Party, as well as a summary of the terms of
each such policy.

 

3.19.        Deposit and
Disbursement Accounts.  As of the
Closing Date, Disclosure Schedule (3.19) lists all banks and other
financial institutions at which any Credit Party maintains deposit or other
accounts as of the Closing Date, including any Disbursement Accounts, and such
Schedule correctly identifies the name, address and telephone number of each
depository, the name in which the account is held, a description of the purpose
of the account, and the complete account number therefor.

 

3.20.        Solvency.  On the Closing Date, both before and after
giving effect to (a) the Revolving Loans, the Senior Unsecured Debt and Letter
of Credit Obligations to be made or incurred on the Closing Date, (b) the
disbursement of the proceeds of such Loans pursuant to the instructions of
Borrower Representative, (c) the Acquisition and the consummation of the other
Related Transactions and (d) the payment and accrual of all transaction costs
in connection with the foregoing, each Credit Party is and will be
Solvent.  At all times after the Closing
Date, (i) the Credit Parties taken as a whole will be Solvent and (ii) Festival
and each Significant Subsidiary is and will be Solvent.

 

3.21.        Acquisition
Documents.  As of the Closing Date,
Borrowers have delivered to Agent a complete and correct copy of all of the
Acquisition Documents and there has been no waiver, supplement, amendment or
other modification of any material provision of any of such Acquisition

 

25

 

Documents (including, without limitation any of the disclosure schedules
to the Acquisition Agreement) from the form of Acquisition Documents delivered
to Agent on February 9, 2006 unless consented to by GE Agent in writing.  As of the Closing Date, no Credit Party and
to the best of our knowledge no other Person party thereto is in default in any
material respect in the performance or compliance with any provisions of the
Acquisition Documents.  After the Closing
Date, no Credit Party and to the best of our knowledge no other Person party
thereto is in default in the performance or compliance with any provisions of
the Acquisition Documents which could reasonably be expected to result in a
Material Adverse Effect.  The Acquisition
Documents comply with, and the Acquisition has been consummated in accordance
with, the Acquisition Agreement and all applicable laws.  As of the Closing Date, the Acquisition
Agreement is in full force and effect and has not been terminated, rescinded or
withdrawn.  After the Closing Date, the
Acquisition Agreement has not been rescinded or withdrawn and, except in
accordance with the terms thereof, has not terminated.  All requisite approvals by Governmental
Authorities having jurisdiction over Seller, any Credit Party and other Persons
referenced therein, with respect to the transactions contemplated by the
Acquisition Agreement, have been obtained, in each case except for such
approvals the failure of which to obtain is not reasonably likely to have a
Material Adverse Effect or a material adverse effect on any of the Related
Transaction, and no such Governmental approvals with respect to the
transactions contemplated by the Acquisition Agreement impose any material
conditions to the consummation of the transactions contemplated by the
Acquisition Agreement or to the conduct by any Credit Party of its business
thereafter.

 

3.22.        Status of Holdings
and Palace Finance.  Prior to the
Closing Date, Holdings will not have engaged in any business or incurred any
Indebtedness or any other liabilities (except in connection with its corporate
formation, the Related Transactions Documents and this Agreement).   Prior to the Closing Date, Palace Finance
will not have engaged in any business or incurred any Indebtedness or any other
liabilities.

 

3.23.        Senior Unsecured
Note Documents.  As of the Closing
Date, Borrowers have delivered to Agent a complete and correct copy of the
final form of the Senior Unsecured Notes together with all other Senior
Unsecured Note Documents (including all schedules, exhibits, amendments,
supplements, modifications, assignments and all other documents delivered
pursuant thereto or in connection therewith). 
The Liens granted by the Credit Parties in favor of Agent for the
benefit of itself and the Lenders under the Loan Documents to secure the Loans
and all other Obligations shall at all times constitute “Permitted Liens” under
and as defined in the Senior Unsecured Note Indenture.

 

3.24.        Use of Proceeds.  Borrowers shall utilize the proceeds of the
Loans solely as permitted under Section 1.4.

 

3.25.        Patriot Act.  Each Credit Party is in compliance with the
(a) the Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, and (b) the Uniting And Strengthening America By Providing
Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act
of 2001).  No part of the proceeds of the
Loans or any Letters of Credit will be used, directly or indirectly, for any
payments to any governmental official or employee, political party, official of
a political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.

 

3.26.        OFAC.  No Credit Party (i) is a person whose
property or interest in property is blocked or subject to blocking pursuant to
Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or
transactions prohibited by

 

26

 

Section 2 of such executive order, or is otherwise associated with any
such person in any manner violative of Section 2, or (iii) is a person on the
list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s
Office of Foreign Assets Control regulation or executive order.

 

4.                                       FINANCIAL STATEMENTS AND INFORMATION

 

4.1.          Reports and
Notices.

 

(a)           Each Credit Party executing this
Agreement hereby agrees that from and after the Closing Date and until the
Termination Date, it shall deliver to Agent or to Agent and Lenders, as
required, the Financial Statements, notices, Projections and other information
at the times, to the Persons and in the manner set forth in Annex E.

 

(b)           Each
Credit Party executing this Agreement hereby agrees that from and after the
Closing Date and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the various Collateral Reports at the times, to
the Persons and in the manner set forth in Annex F.

 

4.2.          Communication with Accountants.  Each Credit Party executing this Agreement
authorizes (a) Agent and (b) so long as an Event of Default has occurred and is
continuing, each Lender, to communicate directly with its independent certified
public accountants, including Deloitte & Touche LLP, and authorizes and
shall instruct those accountants and advisors to communicate to Agent and each
Lender information relating to any Credit Party with respect to the business,
results of operations and financial condition of any Credit Party so long as
such Credit Party is given the opportunity to be present at such meetings.

 

5.                                       AFFIRMATIVE COVENANTS

 

Each Credit Party executing this Agreement jointly
and severally agrees as to all Credit Parties that from and after the date
hereof and until the Termination Date:

 

5.1.          Maintenance of Existence and
Conduct of Business.  Each Credit
Party shall (a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and its material
corporate or limited company (as applicable) rights and franchises; (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted under Section 6.5; (c) at all times maintain, preserve and
protect all of its assets and properties used or useful in the conduct of its
business, and keep the same in good repair, working order and condition in all
respects (taking into consideration (x) ordinary wear and tear and (y) loss
from casualty or eminent domain, subject to compliance with Section 1.3(b)
(ii)) and from time to time make, or cause to be made, all necessary or
appropriate repairs, replacements and improvements thereto consistent with
industry practices or otherwise commercially reasonable for such industry
Borrowers are engaged in on the Closing Date, except where the failure to
maintain, preserve or protect such assets and properties, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect, provided, however that this clause (c) shall not prohibit any Credit
Party from disposing of any of its assets to the extent such disposition is
expressly permitted under Section 6.8; and (d) transact business only in
such corporate and trade names as are set forth in Disclosure Schedule (5.1)
as such Disclosure Schedule may be updated from time to time in accordance with
the provisions of Section 5.6 hereof.

 

27

 

5.2.          Payment of
Charges.

 

(a)           Subject to Section 5.2(b), each
Credit Party shall pay and discharge or cause to be paid and discharged
promptly (i) all federal and state Charges individually or in the
aggregate in excess of $100,000 imposed upon it, its income and profits, or any
of its property (real, personal or mixed) and all Charges with respect to tax,
social security and unemployment withholding with respect to its employees, all
Charges payable by it, (ii) all other Charges payable by it and not described
in the immediately preceding clause (i), (iii) lawful claims for labor,
materials, supplies and services or otherwise, and (iv) all storage or
rental charges payable to warehousemen and bailees, in each case, before any
thereof shall become past due, except in the case of clauses (ii), (iii) and
(iv) where the failure to pay or discharge such Charges could not reasonably be
expected to have a Material Adverse Effect or to result in a Default or Event
of Default under this Agreement.

 

(b)           Each Credit Party may in good faith
contest, by appropriate proceedings, the validity or amount of any Charges,
Taxes or claims described in Section 5.2(a); provided, that (i)
adequate reserves with respect to such contest are maintained on the books of
such Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed to
secure payment of such Charges (other than payments to warehousemen and/or
bailees) that is superior to any of the Liens securing payment of the
Obligations and such contest is maintained and prosecuted continuously and with
diligence and operates to suspend collection or enforcement of such Charges,
except to the extent such Liens constitutes a Permitted Encumbrance, (iii) none
of the Collateral becomes subject to forfeiture or loss as a result of such
contest, and (iv) such Credit Party shall promptly pay or discharge such
contested Charges, Taxes or claims and all additional charges, interest,
penalties and expenses, if any, and shall deliver to Agent evidence reasonably
acceptable to Agent of such compliance, payment or discharge, if such contest
is terminated or discontinued adversely to such Credit Party or the conditions
set forth in this Section 5.2(b) are no longer met.

 

5.3.          Books and Records; Inspection of
Property; Lender Meeting.  Each Credit
Party shall (a) keep adequate books and records with respect to its business
activities in which proper entries, reflecting all financial transactions, are
made in accordance with GAAP and on a basis consistent with the Financial
Statements attached as Disclosure Schedule (3.4(a)) and (b) permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records as permitted under
Section 1.15.  Without in any way
limiting the foregoing, Borrowers shall, upon the request of Agent, participate
in a meeting of Agent and Lenders once during each Fiscal Year to be held at
Borrowers’ corporate offices (or such other location as may be agreed to by
Borrowers and Agent) at such time as may be agreed to by Borrower and Agent.

 

5.4.          Insurance; Damage
to or Destruction of Collateral.

 

(a)           As of the Closing Date, the Credit
Parties maintain the policies of insurance described on Disclosure Schedule
(3.18) as in effect on the date hereof. 
At all times on and after the Closing Date, the Credit Parties shall, at
their sole cost and expense, maintain policies of insurance insured at all
times by financially sound and reputable insurers against such risks, in such
amounts and with terms, conditions, limits and deductibles as is customary for
companies of the same or similar size in the same or similar businesses as the
Borrowers and their Subsidiaries, including general liability insurance against
claims for personal injury or death or property damage occurring upon, in,
about or in connection with the use of any properties owned, occupied or
controlled by it; and maintain such other insurance as may be required by law
or any other Loan Document.  All such
policies of insurance (or the loss payable and additional insured endorsements
delivered to Agent) shall contain provisions pursuant to which the insurer
agrees to provide thirty (30) days prior written notice to Agent in the event
of any non-renewal, cancellation or amendment of any such insurance policy.  If any Credit Party at any time or

 

28

 

times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any
other action with respect thereto that Agent deems advisable.  Agent shall have no obligation to obtain
insurance for any Credit Party or pay any premiums therefor.  By doing so, Agent shall not be deemed to
have waived any Default or Event of Default arising from any Credit Party’s
failure to maintain such insurance or pay any premiums therefor.  All sums so disbursed, including reasonable
attorneys’ fees, court costs and other charges related thereto, shall be
payable on demand by Borrowers to Agent and shall be additional Obligations
hereunder secured by the Collateral.

 

(b)           If reasonably requested by Agent,
each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker reasonably satisfactory to Agent, with respect to
its insurance policies.

 

(c)           Each Credit Party shall deliver to
Agent, in form and substance reasonably satisfactory to Agent, endorsements to
(i) all “All Risk” and business interruption insurance naming Agent, on behalf
of itself and Lenders, as loss payee, and (ii) all general liability and other
liability policies naming Agent, on behalf of itself and Lenders, as additional
insured.  Each Credit Party irrevocably
makes, constitutes and appoints Agent (and all officers, employees or agents
designated by Agent), so long as any Event of Default has occurred and is
continuing, as such Credit Party’s true and lawful agent and attorney-in-fact
for the purpose of making, settling and adjusting claims under such “All Risk”
policies of insurance, endorsing the name of such Credit Party on any check or
other item of payment for the proceeds of such “All Risk” policies of insurance
and for making all determinations and decisions with respect to such “All Risk”
policies of insurance.  Agent shall have
no duty to exercise any rights or powers granted to it pursuant to the
foregoing power-of-attorney.  Borrower
Representative shall promptly notify Agent of any loss, damage, condemnation or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds (i) the expenses
incurred by Agent in the collection or handling thereof, and (ii) amounts required
to be paid to creditors (other than Lenders) having Permitted Encumbrances,
Agent shall apply such proceeds to the reduction of the Obligations in
accordance with Sections 1.3(b)(ii) and 1.3(c).

 

5.5.          Compliance with Laws.  Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including ERISA, labor laws, Taxes, and Environmental Laws and Environmental
Permits required for the operation of their respective businesses as presently
conducted, except to the extent that the failure to comply, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

5.6.          Supplemental Disclosure.  From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of an Event of Default) or at
Credit Parties’ election, the Credit Parties shall supplement each Disclosure
Schedule hereto, or any representation herein or in any other Loan Document,
with respect to any matter hereafter arising that, if existing or occurring at
the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedule or as an exception to such representation
or that is necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that
(a) no such supplement to any such Disclosure Schedule or representation shall
amend, supplement or otherwise modify any Disclosure Schedule or
representation, or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by Agent
and Requisite Lenders in writing, and (b) no supplement shall be required
or permitted as to representations and warranties that relate solely to the
Closing Date.

 

29

 

5.7.                              Intellectual
Property. Each Credit Party will conduct its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect and shall comply in all material respects with
the terms of its Licenses.

 

5.8.                              Environmental
Matters. Each Credit Party shall and shall undertake commercially
reasonable efforts to cause each Person within its control to: (a) conduct
its operations and keep and maintain its Real Estate in material compliance with
all Environmental Laws and Environmental Permits, except where the failure to
comply would not reasonably be expected to have a Material Adverse Effect; (b) refrain
from causing a Release of any Hazardous Material on, at, in, under, above, to,
from or about any of the Real Estate, except where such Release would not be
reasonably expected to have a Material Adverse Effect; (c) implement any
and all Hazardous Material investigation, remediation, removal and response
actions that are required under Environmental Laws (“Remedial Actions”)
pertaining to the presence, generation, treatment, storage, use, disposal,
transportation or Release of any Hazardous Material on, at, in, under, above,
to, from or about any of its Real Estate (for which such Credit Party is
responsible, except to the extent the failure to implement such Remedial
Actions would not reasonably be expected to have a Material Adverse Effect; (d) notify
Agent promptly after such Credit Party receives written notice from any
governmental authority alleging any violation of Environmental Laws or
Environmental Permits or any Release of Hazardous Material by such Credit Party
on, at, in, under, above, to, from or about any Real Estate, in each case that
is reasonably likely to result in Environmental Liabilities in excess of
$1,000,000, and promptly forward to Agent a written copy of any order, notice,
request for information or other written communication or report received by
such Credit Party in connection with such violation or Release. If Agent at any
time has material information based upon which Agent has a reasonable basis to
believe that there has been a material violation of any Environmental Laws or
Environmental Permits by any Credit Party or any Environmental Liability
arising thereunder, or a Release of Hazardous Materials on, at, in, under,
above, to, from or about any of its Real Estate, that, in each case, would
reasonably be expected to have a Material Adverse Effect, then each Credit
Party shall, upon Agent’s written request, which request shall specify in
reasonable detail the nature of the matter and the basis of such belief, either
(i) investigate such mater and, to the extent required under Environmental
Laws, undertake Remedial Actions or otherwise address the subject matter of such
request, or (ii) as applicable and necessary, cause the performance of
such environmental audits including, if needed, subsurface sampling of soil and
groundwater, and preparation of such environmental reports, at Borrowers’
expense, which shall be conducted by reputable environmental consulting firms
reasonably acceptable to Agent and shall be in form and substance
reasonably acceptable to Agent. In the event such Credit Party should fail to
perform, within a reasonable time, the obligations set forth in the previous
sentence, the Credit Party shall permit Agent or its representatives to have
reasonable access to all Real Estate for the purpose of conducting such
environmental audits and testing, including subsurface sampling of soil and
groundwater as necessary in connection with the investigation of the subject
matter of Agent’s request. Borrowers shall reimburse Agent for the reasonable
costs of such audits and tests and the same will constitute a part of the
Obligations secured hereunder.

 

5.9.                              Landlords’ Agreements;
Mortgagee Agreements, Etc.

 

(a)                                  With
respect to any Real Property leased after the Closing Date, each Credit Party
shall use commercially reasonable efforts to obtain a landlord’s agreement or
mortgagee agreement, as applicable, from the lessor of each leased property,
mortgagee of owned property or other location where Collateral is stored or
located, which agreement or letter shall contain a waiver or subordination of
all Liens or claims that the landlord, mortgagee or bailee may assert against
the Collateral at that location, and shall otherwise be reasonably satisfactory
in form and substance to Agent. Each Credit Party shall timely and fully
pay and perform its obligations under all Park leases to which it is a
party, except for such failures to perform that would not result in a
termination of one or more Park leases of any Credit Party for any Parks that,
individually or in the aggregate, generate 15% or more of Adjusted EBITDA of

 

30

 

Borrowers and
their Subsidiaries calculated on a trailing twelve month consolidated basis as
of the fiscal quarter most recently ended.

 

(b)                                 If
any Credit Party acquires a fee ownership interest in any Real Estate after the
Closing Date or a leasehold interest in any Real Estate on which any Parks are
located after the Closing Date, it shall in connection with such transaction
provide to Agent a mortgage or deed of trust granting Agent a first priority
Lien on such Real Estate or leasehold interest in such Real Estate, as
applicable (subject to Permitted Encumbrances and to the proviso set forth
below in the subsection), together with Phase I environmental audits (and if
such Phase I environmental audits indicate in Agent’s judgment any material
issues in respect of the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Estate or any material
violation or non-compliance with Environmental Laws, Phase II environmental
audits), mortgage title insurance commitment, real property survey, local
counsel opinion(s), and, if required by Agent, supplemental casualty insurance
and flood insurance, and such other documents, instruments or agreements reasonably
requested by Agent, in each case, in form and substance reasonably
satisfactory to Agent, provided, however that with respect any
such newly leased location (i) such Credit Party shall only be required to
use commercially reasonable efforts to obtain a landlord lien waiver, access
agreement and consent with respect to any such leased location and (ii) if
such Credit Party is unable to obtain a landlord lien waiver, access agreement
and consent after using commercially reasonable efforts to obtain such
agreement, and the applicable lease requires landlord consent to any leasehold
mortgage, then such Credit Party shall not be required to obtain a leasehold
mortgage or title insurance as provided above in this subsection for so
long as such restriction remains in effect.

 

5.10.                        Certain Post-Closing
Obligations.

 

(a)                                  Within
90 days after the Closing Date, Borrowers shall use their commercially
reasonable efforts to obtain and deliver to Agent, in form and substance
reasonably satisfactory to Agent, with respect to the leases and the Real
Estate in respect of Parks that (together with the Tier 1 Parks for which all
of the conditions in paragraph Q of Annex D have been satisfied),
generate at least 80%  of the EBITDA of the Borrowers and
their Subsidiaries on a trailing twelve month consolidated basis for the Fiscal
Year ended December 31, 2005 (such Parks are referred to herein
collectively as the “Tier 2 Parks”): (i) Mortgages covering all of
such Real Estate on which such Tier 2 Parks are located, (ii) title
insurance policies (with endorsements and affirmative coverage) in respect of
the Mortgages described in the immediately preceding clause (i), together with
current as-built surveys, zoning letters and such other documents, instruments
or agreements reasonably requested by Agent; (iii) a memorandum of Lease
(in recordable form) with respect to each of the Park leases for such Tier 2
Parks, and (iii) an opinion of counsel in each state in which such Tier 2
Parks are located from counsel reasonably satisfactory to Agent, provided,
however, that no new or updated surveys shall be required with respect
to any such Real Estate where Borrowers have provided to Agent copies of ALTA
existing surveys to the extent the title insurance policies covering such Real
Estate remove the survey exception and otherwise contain satisfactory
endorsements and affirmative coverage as identified by Agent’s counsel to such
Borrower’s counsel in writing prior to the Closing Date, and provided, further,
that that no new or updated surveys shall be required with respect (x) such
Real Estate consisting of the five Boomers! Parks located in Fountain Valley,
Irvine, Livermore, Modesto and San Diego, California as to which Borrower does
not have any existing survey to the extent that the title insurance policies
covering such Real Estate remove the survey exception and otherwise contain
satisfactory endorsements and affirmative coverages as identified by Agent’s
counsel to such Borrower’s counsel in writing prior to the Closing Date as to
Parks where no existing survey is available and (y) as to the Boomers! Park in
Dania, Florida Park, for which no acceptable survey is available and for which
any leasehold insurance policy will contain a survey exception. For the
avoidance of doubt, nothing in this Section 5.10(a) is
intended to or shall be construed

 

31

 

as waiver of Section 5.9
or the conditions precedent to closing set forth in paragraph Q of Annex D
hereto.

 

(b)                                 Within
90 days after the Closing Date, Borrowers shall use their commercially
reasonable efforts to obtain and deliver to Agent, in form and substance
reasonably satisfactory to Agent, with respect to the leases and the Real
Estate in respect of Parks that generate at least 70% of the EBITDA of the
Borrowers and their Subsidiaries calculated on a trailing twelve month
consolidated basis as of the fiscal year ended December 31, 2005, a
landlord’s lien waiver, access agreements and consents (in recordable form)
duly executed by each landlord and the applicable Borrower tenant with respect
to each of the Park leases for such Parks.

 

(c)                                  Within
90 days after the Closing Date, Borrowers shall use their commercially
reasonable efforts to obtain and deliver to Agent, in form and substance reasonably
satisfactory to Agent, with respect to the leases and the Real Estate in
respect of Tier 1 Parks and Tier 2 Parks where the Real Estate is subject to an
existing fee mortgage granted by the owner of such Real Estate in favor a
mortgagee, a subordination, non-disturbance and attornment agreement from such
mortgage, in form and substance reasonably satisfactory to Agent.

 

(d)                                 In
addition to and not in limitation of the above provisions of Section 5.10,
Borrowers shall fully and timely comply with all of the obligations set forth
in the Post-Closing Obligations Letter.

 

5.11.                        Additional
Subsidiaries.

 

(e)                                  Promptly
(and in any event within fifteen (15) business days) after the formation or
acquisition of any Domestic Subsidiary of Holdings or any Borrower, Holdings or
such Borrower as the case may be shall cause to be executed and delivered,
(i) by such new Domestic Subsidiary, a joinder agreement in the form attached
to the Guarantor Security Agreement and the Guaranty Agreement and pursuant to
which Agent for the benefit of itself and the Lenders shall be granted a first
priority (subject to Permitted Encumbrances) and perfected security interest in
all Collateral (as defined in the Guarantor Security Agreement) of such
Domestic Subsidiary to secure the Obligations and such Domestic Subsidiary
shall guarantee all of the Obligations, (iii) by such new Domestic
Subsidiary if it owns any Intellectual Property that is registered with the
United States Patent and Trademark Office or the United States Copyright
Office, a Copyright Security Agreement, a Patent Security Agreement and/or a
Trademark Security Agreement in form and substance reasonably satisfactory
to Agent and pursuant to which Agent for the benefit of itself and the Lenders
shall be granted a first priority (subject to Permitted Encumbrances) and
perfected security in all of such Intellectual Property to secure the
Obligations, (iv) by the domestic Credit Party that is such Domestic
Subsidiary’s direct parent company, a Pledge Agreement substantially in the form of
the Holdings Pledge Agreement or the Borrower Pledge Agreement, as applicable,
delivered on the Closing Date (or otherwise in form and substance
reasonably satisfactory to Agent) and pursuant to which all of the Stock of
such new Domestic Subsidiary owned by each such parent company shall be pledged
to Agent for the benefit of itself and the Lenders on a first priority and
perfected basis to secure the Obligations, and (v)  by the Credit Parties,
such other related documents (including closing certificates, legal opinions
and other similar documents) as Agent may reasonably request, all in form and
substance reasonably satisfactory to Agent.

 

(f)                                    Promptly
(and in any event within fifteen (15) business days) after the creation or
acquisition of any first-tier Foreign Subsidiary by any Credit Party, the
applicable Credit Party shall cause to be executed and delivered a Pledge
Agreement substantially in the form of the Holdings Pledge Agreement or
the Borrower Pledge Agreement, as applicable, delivered on the Closing Date (or
otherwise in form and substance reasonably satisfactory to Agent) and
pursuant to which sixty-five percent (65%) of

 

32

 

the Stock of
such new Foreign Subsidiary shall be pledged to Agent for the benefit of itself
and the Lenders to secure the Obligations.

 

5.12.                        Further
Assurances. Each Credit Party executing this Agreement agrees that it shall
and shall cause each other Credit Party to, at such Credit Party’s expense and
upon the reasonable request of Agent, duly execute and deliver, or cause to be
duly executed and delivered, to Agent such further instruments and do and cause
to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement and each Loan Document.

 

6.                                       NEGATIVE COVENANTS

 

Each Credit Party executing
this Agreement jointly and severally agrees as to all Credit Parties that from
and after the date hereof until the Termination Date:

 

6.1.                              Mergers, Subsidiaries, Etc.

 

(a)                                  No
Credit Party shall directly or indirectly, by operation of law or otherwise,
(x) form or acquire any Subsidiary, or (y) merge with, consolidate with,
acquire all or substantially all of the assets or Stock of, or otherwise
combine with or acquire, any Person (other than the Acquisition consummated on
the Closing Date), except that:

 

(b)                                 Any
Borrower (or Holdings, so long as contemporaneously therewith, all assets so
acquired are transferred to such Borrower), may acquire all or
substantially all of the assets or Stock of any Person (the “Target”)
(in each case, a “Permitted Acquisition”) subject to the satisfaction of
each of the following conditions:

 

(i)                                     Agent
shall receive at least twenty (20) Business Days’ prior written notice of such
proposed Permitted Acquisition, which notice shall include a reasonably
detailed description of such proposed Permitted Acquisition;

 

(ii)                                  such
Permitted Acquisition shall only involve assets located in the United States or
Canada and comprising a business, or those assets of a business, of the type
engaged in by Borrowers as of the Closing Date and businesses reasonably
related thereto (including, any complementary businesses related to the
businesses engaged in by Borrowers on the Closing Date at the Parks so long as
such complementary businesses are conducted at and confined to the Parks of the
type and character owned and operated by Borrowers on the Closing Date), and
which business would not subject Agent or any Lender to regulatory or third
party approvals in connection with the exercise of its rights and remedies
under this Agreement or any other Loan Documents other than approvals
applicable to the exercise of such rights and remedies with respect to such
Borrower prior to such Permitted Acquisition;

 

(iii)                               such
Permitted Acquisition shall be consensual and shall have been approved by the
Target’s board of directors;

 

(iv)                              no
additional Indebtedness or Guaranteed Indebtedness shall be incurred, assumed
or otherwise be reflected on a consolidated balance sheet of Borrowers and
Target after giving effect to such Permitted Acquisition, except (A) Loans
made hereunder, (B) ordinary course trade payables, accrued expenses and
unsecured Indebtedness of the Target to the extent no Default or Event of
Default has occurred and is continuing or would result after giving effect to
such Permitted Acquisition, (C) Capital Lease Obligations and purchase
money debt (including any mortgage loans) assumed in

 

33

 

connection
with such Permitted Acquisition, provided that (in the case of this
clause (C)) the aggregate principal amount of all such Capital Lease
Obligations and purchase money debt (including any mortgage loans) so assumed,
together with all outstanding Capital Lease Obligations and purchase money debt
(including any mortgage loans) permitted to be incurred after the Closing Date
under Section 6.3(a)(i) does not at any time exceed
$5,900,000;

 

(v)                                 the
Target shall not have incurred an operating loss for the trailing twelve-month
period preceding the date of the Permitted Acquisition, as determined based
upon the Target’s financial statements for its most recently completed fiscal
year and its most recent interim financial period completed within sixty (60)
days prior to the date of consummation of such Permitted Acquisition;

 

(vi)                              the
business and assets acquired in such Permitted Acquisition shall be free and
clear of all Liens (other than Permitted Encumbrances);

 

(vii)                           at
or prior to the closing of any Permitted Acquisition, Agent will be granted a
first priority perfected Lien (subject to Permitted Encumbrances) in all assets
(whether real, personal or mixed) to the extent required hereunder (including
under Section 5.9 and Section 5.11 hereof), acquired pursuant thereto
and in the assets and Stock of the Target, and Holdings and Borrowers and the
Target shall have executed such documents (including, in the case of the
Target, a guarantee) and taken such actions as may be required by Agent in
connection therewith;

 

(viii)                        Concurrently
with delivery of the notice referred to in clause (i) above,
Borrower Representative shall have delivered to Agent, in form and
substance reasonably satisfactory to Agent:

 

(A)                              a pro
forma consolidated balance sheet, income statement and cash flow
statement of Borrowers and their Subsidiaries (the “Acquisition Pro Forma”),
based on recent financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities, financial condition
and results of operations of Borrowers and their Subsidiaries in accordance
with GAAP consistently applied, but taking into account such Permitted
Acquisition and the funding of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that (x) on a pro  forma
basis, Borrowers would be in compliance with all of the Financial Covenants for
the four quarter period reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex E prior to the consummation of such
Permitted Acquisition (after giving effect to such Permitted Acquisition and
all Loans funded in connection therewith as if made on the first day of such
period), and (y) on a pro  forma basis, no Event of Default
has occurred and is continuing or would result after giving effect to such
Permitted Acquisition and Borrowers would have been in compliance with the
financial covenants set forth in Annex G for the four quarter period
reflected in the Compliance Certificate most recently delivered to Agent
pursuant to Annex E prior to the consummation of such Permitted
Acquisition (after giving effect to such Permitted Acquisition and all Loans
funded in connection therewith as if made on the first day of such period);

 

(B)                                updated
versions of the most recently delivered Projections covering the one (1) year
period commencing on the date of such Permitted Acquisition and otherwise
prepared in accordance with the Projections (the “Acquisition Projections”)
and based upon historical financial data of a recent date reasonably
satisfactory to Agent, taking into account such Permitted Acquisition; and

 

34

 

(C)                                a
certificate of the chief financial officer of Borrower Representative to the
effect that: (w) the Credit Parties taken as a whole will be Solvent and (ii) Festival
and each Significant Subsidiary is and will be Solvent (after taking into
consideration all rights of contribution and indemnity Festival or such
Subsidiary has against Holdings and each other Subsidiary of Holdings) upon the
consummation of the Permitted Acquisition; (x) the Acquisition Pro Forma fairly
in all material respects presents the financial condition of Borrowers and
their Subsidiaries (on a consolidated basis) as of the date thereof after
giving effect to the Permitted Acquisition; (y) the Acquisition Projections are
reasonable estimates of the future financial performance of Borrowers and their
Subsidiaries subsequent to the date thereof based upon the historical
performance of Borrowers, their Subsidiaries and the Target and show that
Borrowers shall continue to be in compliance with the financial covenants set
forth in Annex G for the three-year period thereafter; and (z) Holdings
and Borrowers have completed their due diligence investigation with respect to
the Target and such Permitted Acquisition, which investigation was conducted in
a manner similar to that which would have been conducted by a prudent purchaser
of a comparable business and the results of which investigation were delivered
to Agent and Lenders;

 

(ix)                                on
or prior to the date of such Permitted Acquisition, Agent shall have received
copies of the acquisition agreement and related agreements and instruments, and
all opinions, certificates, lien search results and other documents reasonably
requested by Agent, including those specified in the last sentence of Section 5.9;

 

(x)                                   at
the time of such Permitted Acquisition and after giving effect thereto, no
Default or Event of Default has occurred and is continuing; and

 

(xi)                                the
aggregate amount of consideration paid in respect of all such Permitted
Acquisitions (including all transaction costs and all Indebtedness, liabilities
and contingent obligations incurred or assumed in connection therewith or
otherwise reflected on a consolidated balance sheet of such Borrowers, their
Subsidiaries and Target) shall not exceed $5,000,000 in any fiscal year, and
$10,000,000 in the aggregate after the Closing Date for all such Permitted
Acquisitions, provided, however that (x) any cash equity
contributions made by Sponsor to Holdings to fund such Permitted Acquisitions
shall not count against the dollar limitations in this Section 6.1(b)(xi)
to the extent and only to the extent that such cash equity contribution are in
fact used to fund the consideration paid in respect of such Permitted
Acquisitions at the time such consideration is required to be paid under the
applicable acquisition agreement, and (y) any consideration in the form of
Stock of Holdings paid to seller to fund such Permitted Acquisitions shall not
count against the dollar limitations in this Section 6.1(b)(xi) to
the extent and only to the extent that such Stock is in fact used to fund the
consideration paid in respect of such Permitted Acquisitions at the time such
consideration is required to be paid under the applicable acquisition
agreement.

 

Notwithstanding
anything to the contrary in this Section 6.1(b), in the case of any
Permitted Acquisitions where individually or in the aggregate the amount of
consideration paid or to be paid in connection with all Permitted Acquisitions
previously consummated and the subject acquisition proposed to be consummated
(including all transaction costs and all Indebtedness, liabilities and
contingent obligations incurred or assumed in connection therewith or otherwise
reflected on a consolidated balance sheet of such Borrower and Target) does not
exceed $2,500,000, (A) Borrower Representative shall only be required to
give Agent five (5) Business Days’ prior notice of such proposed Permitted
Acquisition, together with a reasonably detailed description thereof, (B) Borrowers
shall only be required to comply with clauses (ii), (iii), (iv), (v), (vi),
(vii), (x) and (xi) of Section 6.1(b), provided, however, that in
respect of clause (v) of this Section 6.1(b), the Target may have
incurred an operating

 

35

 

loss for the
trailing twelve-month period preceding the date of the Permitted Acquisition so
long as Agent receives from Borrower Representative projections in form and
substance reasonably satisfactory to Agent showing that, on a pro forma basis,
Target will have positive EBITDA for the twelve full consecutive months
immediately succeeding the date of consummation of such Permitted Acquisition;
and (C) promptly (and in any event within 15 days) after the date of
consummation of such Permitted Acquisition, Agent shall have received copies of
the acquisition agreement and related agreements and instruments, and all opinions,
certificates, lien search results and other documents reasonably requested by
Agent, including those specified in the last sentence of Section 5.9;

 

(c)                                  any
Subsidiary (other than a Borrower) of a Borrower may be merged or
consolidated with or into such Borrower (provided that such Borrower
shall be the continuing or surviving corporation) or with or into any
Subsidiary Guarantor (provided that the Subsidiary Guarantor shall be
the continuing or surviving corporation);

 

(d)                                 any
Credit Party may at any time after the Closing Date form a Subsidiary
so long as at the time of formation thereof, such Credit Party causes such
Subsidiary to become a Subsidiary Guarantor and fully complies with all of the
requirements of Section 5.11; and

 

(e)                                  (i) any
Subsidiary of any Borrower may dispose of any or all of its assets to a
Borrower (upon voluntary liquidation or otherwise) or to a Subsidiary
Guarantor, and (ii) any Credit Party may dispose of any of its assets
in connection with any disposition expressly permitted by Section 6.8(g).

 

6.2.                              Investments;
Loans and Advances. Except as otherwise expressly permitted by this Section 6,
no Credit Party shall make or permit to exist any investment in, or make,
accrue or permit to exist loans or advances of money to, any Person, through
the direct or indirect lending of money, holding of securities or otherwise,
except that:  (a) each Credit Party
(other than Palace Finance) may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to such Credit
Party pursuant to negotiated agreements with respect to settlement of such
Account Debtor’s Accounts in the ordinary course of business, consistent with
past practice; (b) each Credit Party may maintain its existing
investments in its Subsidiaries as of the Closing Date; (c) Borrowers may make,
directly or through other Credit Parties (other than Palace Finance),
investments not to exceed $1,000,000 in the aggregate in joint ventures,
subject to the following conditions:  (i) no
Indebtedness, Guaranteed Indebtedness, contingent obligations or other
liabilities shall be incurred, assumed by Holdings, Borrowers or any of their
Subsidiaries in connection therewith after giving effect to such joint venture
and (ii) at the time of such joint venture and after giving effect
thereto, no Default or Event of Default has occurred and is continuing; (d) each
Credit Party (other than Palace Finance) may make investments, subject to
Control Letters in favor of Agent for the benefit of Lenders or otherwise
subject to a perfected security interest in favor of Agent for the benefit of
Lenders, in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States or any agency thereof maturing within one year
from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having the
highest rating obtainable from either S & P or Moody’s, (iii) certificates
of deposit maturing no more than one year from the date of creation thereof
issued by commercial banks incorporated under the laws of the United States,
each having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior unsecured rating of “A” or better by a
nationally recognized rating agency (an “A Rated Bank”), (iv) time
deposits maturing no more than thirty (30) days from the date of creation
thereof with A Rated Banks and (v) mutual funds that invest solely in one
or more of the investments described in clauses (i) through (iv) above;
(e) each Credit Party (other than Palace Finance) may make
intercompany Investments in any Borrower or any Person that, prior to or
immediately after such investment, is or becomes a Subsidiary Guarantor,
subject to compliance with Section 6.3(a)(vi) in the case of
any such investment consisting of intercompany loans and advances; (f) Holdings
and Festival and their Subsidiaries may consummate the Acquisition; (g)

 

36

 

notes issued to any Credit Party in connection with any asset
dispositions expressly permitted under this Agreement, provided that the
applicable Borrower engaged in such disposition receives at least 75% cash
consideration from the purchaser of the assets disposed of and the aggregate
principal amount of all such notes outstanding at any time does not exceed
$3,000,000, (h) loans and advances to employees and officers not to exceed
$300,000 in the aggregate at any time outstanding, (i) Guaranteed
Indebtedness expressly permitted under Section 6.3 or Section 6.6
, (j) receivables owing to any Credit Party created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include
such concessionary trade terms the applicable Borrower deems commercially
reasonable under the circumstances; (k) stock, obligations or securities
received in settlement of debts created in the ordinary course of business of
any Credit Party and owing by non-Affiliates to any Credit Party or in
satisfaction of judgments or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of a non-Affiliated debtor; (l)
investments in negotiable instruments issued by non-Affiliates and held by any
Credit Party for collection and lease, utility and workers compensation,
performance and other similar deposits made in the ordinary course of business
of any Credit Party (and not to secure any Indebtedness for money borrowed), subject
to compliance with the terms of Collateral Documents with respect to any such
negotiable instruments, and (m) the Credit Parties (other than Palace Finance) may make
other investments not exceeding $100,000 in the aggregate at any time
outstanding. It being understood that the value of any investment shall be
determined as of the date of the making of such investment less any cash return
received by the applicable Credit Party after the initial date of such
investment in connection therewith.

 

6.3.                              Indebtedness.

 

(a)                                  No
Credit Party shall create, incur, assume or permit to exist any Indebtedness,
except (without duplication):  (i) Indebtedness
secured by purchase money security interests, mortgage financing and Capital
Leases to the extent permitted in Section 6.1(b)(iv) and Section 6.7(c),
(ii) the Loans and the other Obligations, (iii) unfunded pension fund
and other employee benefit plan obligations and liabilities to the extent they
are permitted to remain unfunded under applicable law, (iv) existing
Indebtedness (other than Senior Unsecured Debt) described in Disclosure Schedule (6.3)
and refinancings thereof or amendments or modifications thereof that do not
have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) in any material respect, (v) Indebtedness
expressly permitted to be incurred or assumed under Section 6.1 and
any refinancings thereof or amendments or modifications thereof that do not
have the effect of increasing the principal amount thereof or changing the
amortization thereof (other than to extend the same) in any material respect, (vi) Indebtedness
consisting of intercompany loans and advances made by any Borrower to any other
Borrower or Subsidiary Guarantor or by any Guarantor to any Borrower; provided
that:  (A) each Borrower shall have
executed and delivered to each such Guarantor or Borrower, and each such
Guarantor or Borrower shall have executed and delivered to such other Borrower,
on the Closing Date, a demand note (collectively, the “Intercompany Notes”)
to evidence any such intercompany Indebtedness owing at any time by such
Borrower to such Guarantor or other Borrowers or by such Subsidiary Guarantor
to such Borrower or other Guarantor, which Intercompany Notes shall be in form and
substance reasonably satisfactory to Agent and shall be pledged and delivered
to Agent pursuant to the Pledge Agreements as additional collateral security
for the Obligations; (B) each Borrower shall record all intercompany transactions
on its books and records in a manner reasonably satisfactory to Agent; (C) at
the time any such intercompany loan or advance is made by any Borrower to any
other Borrower and after giving effect thereto, each such Borrower shall be
Solvent; and (D) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan;  (vii)(A) unsecured Indebtedness of
Festival and Palace Finance in respect of the Senior Unsecured Notes in an
aggregate principal amount at any time outstanding not to exceed $150,000,000
(less the amount of any repayments of principal of Senior Unsecured Notes made
after the Closing Date), together with any increase in the principal amount of
such Senior Unsecured Notes after the Closing Date provided that (1)

 

37

 

at the time of
and immediately after giving effect to any such increase, Borrowers and their
Subsidiaries shall have a Fixed Charge Coverage Ratio as of the last day of
most recently ended Fiscal Quarter for the 12-month period then ended,
calculated on a pro forma basis after giving effect to such increase, of not
less than 1.40 to 1.00 and Borrower Representative shall have delivered to
Agent a certificate of the chief financial officer of Borrower Representative,
in form and substance reasonably satisfactory to Agent, demonstrating
compliance with such financial test on a pro forma basis after giving effect to
such additional Senior Unsecured Indebtedness, and (2) no Default or Event
of Default exists or would result therefrom, (B) unsecured Guaranteed
Indebtedness of any Borrower (other than Festival), any Subsidiary Guarantor or
Holdings in respect of such Senior Unsecured Debt permitted to be incurred
pursuant to the immediately preceding clause (A); (viii) Indebtedness
(other than for borrowed money) of Borrowers and their Subsidiaries in
connection with surety, appeal (or similar) bonds, letters of credit and
performance bonds obtained in the ordinary course of business in connection
with workers’ compensation obligations of Borrowers and their Subsidiaries and
in connection with other surety, appeal (or similar) and performance bonds in
the ordinary course of business of Borrowers; (ix) Indebtedness under
hedging agreements entered into by Borrowers provided that such hedging
agreements are entered into in the ordinary course of business of Borrowers to
hedge or mitigate risks to which any Borrowers are exposed in the conduct of
its business or the management of its liabilities and not entered into for
speculative purposes or of a speculative nature; (x)  Indebtedness arising from agreements of
Credit Parties providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
Permitted Acquisitions or disposition of any assets to the extent expressly
permitted under Section 6.8 or to pay related fees and expenses,
provided that (A) with respect to any such dispositions, the maximum
aggregate liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by the Credit Parties in connection with
such disposition, and (B) with respect to any such Permitted Acquisition,
the aggregate principal amount of such Indebtedness shall be included in
determining whether or not such acquisition complies with the dollar
limitations in Section 6.1(b)(xi); and (xi) additional Indebtedness
of Holdings or any of its Subsidiaries in an aggregate principal amount (for
Holdings and all of its Subsidiaries) not to exceed $1,000,000 at any one time
outstanding. Notwithstanding anything in the foregoing to the contrary, Palace
Finance may not create, incur, assume or permit to exist any Indebtedness,
except that Palace Finance may incur unsecured Indebtedness as a co-issuer
in respect of the Senior Unsecured Notes in an aggregate principal amount at
any time outstanding not to exceed the amount of Senior Unsecured Debt
permitted to be incurred under clause (vii)(A) above.

 

(b)                                 No
Credit Party shall, directly or indirectly, voluntarily purchase, redeem,
defease or prepay any principal of, premium, if any, interest or other amount
payable in respect of any Indebtedness prior to its scheduled maturity, other
than (i) the Obligations; (ii) Indebtedness secured by a Permitted
Encumbrance if the asset securing such Indebtedness has been sold or otherwise
disposed of in accordance with Sections 6.8(b) or (c); (iii) Indebtedness
permitted by Section 6.3(a)(iv), (v) and (xi) upon any
refinancing thereof in accordance with Section 6.3(a)(iv) and (v);
(iv) Indebtedness permitted by Section 6.3(a)(i), (v), (vi),
(viii), (ix), (x) or (xi); (v) other Indebtedness (excluding
Subordinated Debt and the Senior Unsecured Debt) not in excess of $100,000; and
(vi) as otherwise permitted in Section 6.13.

 

6.4.                              Affiliate Transactions
and Employee Loans. 

 

(a)                                  Except
as otherwise expressly permitted in this Section 6 with respect to
transactions with Affiliates and intercompany transactions, (B) no Credit
Party shall enter into or be a party to any transaction with any Affiliate
unless such transaction is (i) otherwise expressly permitted under this
Agreement, or (ii) in the ordinary course of and pursuant to the
reasonable requirements of such Credit Party’s business and upon fair and
reasonable terms that are no less favorable to such Credit Party than would be
obtained in a comparable arm’s length transaction with a Person that is not an

 

38

 

Affiliate. All
agreements and contracts evidencing such transactions existing as of the
Closing Date are described in Disclosure Schedule (6.4(a)). Notwithstanding
the foregoing, (i) Borrowers and their Subsidiaries may pay to
Sponsor the amounts permitted to paid under Section 6.13, and (ii) Palace
Finance may not at any time enter into any transactions with any
Affiliates except as expressly permitted under Section 6.19(b).

 

(b)                                 No
Credit Party shall enter into any lending or borrowing transaction with any
employees of any Credit Party, except loans to employees of any Credit Party
(other than Palace Finance) on an arm’s-length basis in the ordinary course of
business consistent with past practices for travel and entertainment expenses,
relocation costs and similar purposes and stock option financing up to a
maximum of $75,000 to any employee and up to a maximum of $300,000 in the
aggregate at any one time outstanding.

 

6.5.                              Capital
Structure and Business. If all or part of a Credit Party’s Stock is
pledged to Agent, that Credit Party shall not issue additional Stock unless all
of such additional Stock is pledged to Agent as and to the extent required
pursuant to this Agreement and the terms of the Collateral Documents. No Credit
Party shall amend its charter or bylaws in a manner that would adversely affect
Agent or Lenders or such Credit Party’s duty or ability to repay the
Obligations. No Borrowers or any of their Subsidiaries shall engage in any
business other than the businesses currently engaged in by Borrowers on the
Closing Date and businesses reasonably related thereto (including, any
complementary businesses related to the businesses engaged in by Borrowers on
the Closing Date at the Parks so long as such complementary businesses are
conducted at and confined to the Parks of the type and character owned and
operated by Borrowers on the Closing Date).

 

6.6.                              Guaranteed
Indebtedness. No Credit Party shall create, incur, assume or permit to
exist any Guaranteed Indebtedness except (a) by endorsement of instruments
or items of payment for deposit to the general account of any Credit Party, (b) Guaranteed
Indebtedness incurred for the benefit of any other Credit Party if the primary
obligation is expressly permitted by this Agreement other than Indebtedness, if
any, of a Target existing at the time such Target is acquired unless such
Indebtedness is expressly permitted to be incurred or assumed under Section 6.3
and (c) unsecured Guaranteed Indebtedness of Holdings and the Borrowers
(other than Festival) of the Senior Unsecured Debt pursuant to the Senior
Unsecured Note Documents (as in effect on the date hereof and as amended,
refinanced, increased, supplemented or modified from time to time to the extent
such amendment, refinancing, increase, supplement or modification is expressly
permitted under this Agreement).

 

6.7.                              Liens.
No Credit Party shall create, incur, assume or permit to exist any Lien on or
with respect to any of its properties or assets (whether now owned or hereafter
acquired) except for (a) Permitted Encumbrances; (b) Liens in
existence on the date hereof and summarized on Disclosure Schedule (6.7)
securing Indebtedness and other obligations described on Disclosure Schedule (6.3)
(including, existing Capital Lease Obligations) and permitted refinancings,
extensions and renewals thereof, including extensions or renewals of any such
Liens; provided that the principal amount so secured is not increased
and the Lien does not attach to any other property; and (c) Liens created
after the Closing Date by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money Indebtedness
and mortgage financing with respect to Equipment, Fixtures and Real Estate
acquired by any Credit Party in the ordinary course of business or in connection
with any Permitted Acquisition, involving the incurrence of an aggregate amount
of purchase money Indebtedness, mortgage financing and Capital Lease
Obligations of not more than $5,900,000 (less any amounts or obligations of any
Borrowers of the type described in clauses (a) and (b) of Section 6.12
and less the aggregate principal amount any Capital Leases Obligations,
mortgage loans or other purchase money debt permitted to be assumed in
connection with any Permitted Acquisition pursuant to Section 6.1(b)(iv))
outstanding at any one time for all such Liens (provided that (x) in all
cases (other than

 

39

 

Permitted Acquisitions) such Liens attach only to the assets subject to
such Capital Leases, mortgage financing or purchase money debt and such
Indebtedness is incurred within twenty (20) days following such purchase and
(y) in all cases such Liens do not exceed 100% of the purchase price of the
subject assets). In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that would
prohibit the creation of a Lien on any of its properties or other assets in
favor of Agent, on behalf of itself and Lenders, as additional collateral for
the Obligations, except (i) operating leases, (ii) Capital Leases,
purchase money debt and mortgage debt to the extent expressly permitted to be
incurred hereunder,  and (iii) Licenses
and licensed Intellectual Property, in each case (in the case of the
immediately preceding clauses (i), (ii) and (iii)) which prohibit Liens
only upon the assets that are subject thereto. Notwithstanding anything in the
foregoing to the contrary, Palace Finance shall not create, incur, assume or
permit to exist any Lien on or with respect to any of its properties or assets
(whether now owned or hereafter acquired) except for Liens securing the
Obligations.

 

6.8.                              Sale
of Stock and Assets. No Credit Party shall sell, transfer, convey, assign
or otherwise dispose of any of its properties or other assets, including the
Stock of any of its Subsidiaries (whether in a public or a private offering or
otherwise), other than (a) the sale of Inventory in the ordinary course of
business; (b) the sale or other disposition by a Credit Party of property
that is obsolete, worn-out or no longer used or useful in such Credit Party’s
business; (c) dispositions permitted by Section 6.1(c) or
clause (i) of Section 6.1(e); (d) the sale of any
Subsidiary’s Stock to any Borrower or any Subsidiary Guarantor; (e) the
sale of Cash Equivalents; (f) the sale of any joint venture investments, (g) the
sale or other disposition of property of any Credit Party (including the Stock
of any Borrower or Subsidiary of any Borrower) on and after the Closing having
a book value determined as of the date of such disposition and immediately
prior thereto not exceeding $20,000,000 in the aggregate provided no Default or
Event of Default exists or would result therefrom, (h) transfers of
properties and other assets (including the Stock of any Subsidiary) among and
between Borrowers and/or Subsidiary Guarantors, and (i) transfers of
properties and other assets (including the Stock of any Subsidiary) from any
Subsidiary to any Borrower or any Subsidiary Guarantor.

 

6.9.                              ERISA.
No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause
or permit to occur (i) an event that could result in the imposition of a
Lien under Section 412 of the IRC or Section 302 or 4068 of ERISA or (ii) an
ERISA Event to the extent such Lien or ERISA Event would reasonably be expected
to result in taxes, penalties and other liability in excess of $500,000 in the
aggregate.

 

6.10.                        Financial
Covenants. Borrowers shall not breach or fail to comply with any of the
Financial Covenants.

 

6.11.                        Hazardous
Materials. No Credit Party shall cause or permit a Release of any Hazardous
Material on, at, in, under, above, to, from or about any of the Real Estate
where such Release would (a) violate in any respect, or form the
basis for any Environmental Liabilities under, any Environmental Laws or
Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that, in the case of either clause
(a) or clause (b) of this Section could not reasonably be
expected to have a Material Adverse Effect.

 

6.12.                        Sale-Leasebacks.
No Credit Party shall engage in any sale-leaseback, synthetic lease or similar
transaction involving any of its assets, except in the case of any synthetic
lease or sale-leaseback transaction engaged in by any Borrower where the sum of
(a) all remaining rental obligations of such Person as lessee under all
such synthetic leases transactions which are attributable to principal and,
without duplication, plus (b) all rental and purchase price payment
obligations of Borrowers under all such synthetic leases transactions, assuming
the applicable Borrowers exercise the option to purchase the

 

40

 

lease property at the end of the lease term, plus (c) the
aggregate principal amount of all purchase money indebtedness (including
mortgage financing) and Capital Leases incurred or assumed after the Closing
Date pursuant to Sections 6.1(b)(iv) and 6.7(c), does not at any
exceed $5,900,000 in the aggregate outstanding at any time.

 

6.13.                        Restricted
Payments. No Credit Party shall make any Restricted Payment, except (a) intercompany
loans and advances and other transactions between Borrowers, Holdings and
Subsidiaries to the extent expressly permitted under this Agreement, (b) dividends
and distributions by Subsidiaries of any Borrower paid to such Borrower or any
Subsidiary Guarantor, and other payments, loans, contributions and other
transfers of funds or other property between or among Borrowers and/or
Subsidiary Guarantors, (c) employee loans permitted under Section 6.4(b),
(d) payments of principal and interest of Intercompany Notes issued in
accordance with Section 6.3, (e) so long as no Event of
Default or payment Default shall have occurred and be continuing or would
result therefrom, payments of management fees to Sponsor pursuant to Sponsor
Management Agreement in an aggregate amount not to exceed $1,000,000 per year, (f) closing
fees to Sponsor upon the Closing Date in connection with the Acquisition in an
aggregate amount not to exceed $2,500,000, (g) payments to Holdings to
permit Holdings to pay (w) its reasonable corporate overhead expenses incurred
in the ordinary course of business (including, without limitation, fees,
expenses and reimbursement obligations to its non-Affiliated board members,
expenses relating to audits, accounting and SEC reporting requirements), (x) to
reimburse Holdings officers and directors for reasonable and customary travel
expenses incurred solely in furtherance of the business that Holdings and its
Subsidiaries are expressly permitted to be engaged in hereunder, (y) so long as
no Event of Default exists or would result therefrom, payments to such officers
and directors in order to indemnify such officers or directors from any losses,
damages or claims suffered by them in carrying out their duties solely in
furtherance of the business that Holdings and its Subsidiaries are expressly
permitted to be engaged in hereunder to the extent and only to the extent that
such losses, damages or claims are not covered by insurance and are not caused
by any negligence, criminal or willful misconduct of such officer, director or
employee, and (z) Permitted Tax Distributions, (h) payments to Sponsor of
Financial Advisory Fees (as such term is defined in the Sponsor Management
Agreement) for Financial Advisory Services rendered under and as defined in the
Sponsor Management Agreement and reimbursement of Sponsor for expenses and indemnities
under the Sponsor Management Agreement, provided in each case that such fees
and such reimbursed fees and expenses are customary and reasonable in type and
amount and otherwise in compliance with Section 6.4, (i) Permitted
Prepayments of Senior Unsecured Notes, (j) regularly scheduled payments of
interest on the Senior Unsecured Notes, together with the underwriting fee to
be paid on the Closing Date in connection with the issuance of the Senior
Unsecured Notes in an amount as identified on the Sources and Uses delivered by
Borrower Representative to Agent on the Closing Date and any customary and
reasonable underwriting fees to be paid after the Closing Date in connection
with any additional issuance of the Senior Unsecured Notes to extent such additional
issuance is permitted hereunder, reimbursement of the Senior Unsecured
Noteholder Indenture Trustee of any fees or expenses incurred in connection
with the administration, monitoring or enforcement of the Senior Unsecured Note
Documents, in each case in accordance with the Senior Unsecured Note Documents
(as in effect on the date hereof and as amended, refinanced, increased,
supplemented or modified from time to time to the extent such amendment,
refinancing, increase, supplement, refinancing or modification is expressly
permitted under this Agreement).

 

6.14.                        Change
of Corporate Name or Location. No Credit Party shall (a) change its
name as it appears in official filings in the state of its incorporation or
other organization, (b) change its chief executive office, principal place
of business, corporate offices or warehouses or locations at which Collateral
is held or stored, or the location of its records concerning the Collateral,
except for such changes in the location of Collateral in connection with (i) the
movement of Collateral from a location existing on Closing Date and identified
on schedules to Collateral Agreement or otherwise previously noticed to Agent
in accordance with this Section to another location existing on Closing
Date and

 

41

 

identified on schedules to Collateral Agreement or otherwise previously
noticed to Agent in accordance with this Section, or (ii) changes in the
location of Collateral that, individually or in the aggregate, does not have a
book value determined as of the date of such change in excess of $1,000,000, (c) change
the type of entity that it is, (d) change its organization identification
number, if any, issued by its state of incorporation or other organization, or (e) change
its state of incorporation or organization, in each case (in the case of
clauses (a) through (e) above in this Section) without at least
thirty (30) days prior written notice to Agent and after Agent’s written
acknowledgment that any reasonable action requested by Agent in connection
therewith, including to continue the perfection of any Liens in favor of Agent,
on behalf of Lenders, in any Collateral, has been completed or taken, and provided
that any such new location shall be in the continental United States.

 

6.15.                        Fiscal
Year. No Credit Party shall change its Fiscal Year.

 

6.16.                        No
Impairment of Intercompany Transfers or Distributions. No Credit Party
shall directly or indirectly enter into or become bound by any agreement,
instrument, indenture or other obligation (other than (x) as required by law,
and (y) this Agreement, the other Loan Documents, and the Senior Unsecured Note
Documents as in effect on the date hereof and as amended, refinanced,
increased, supplemented or modified from time to time to the extent such
amendment, refinancing, supplement, increase or modification is expressly
permitted under this Agreement) that could directly or indirectly restrict,
prohibit or require the consent of any Person with respect to (a) the
payment of dividends or distributions to Borrowers or any Subsidiaries of
Borrowers, (b) the making of loans or advances to, or investments in,
Borrowers or any other Subsidiaries of Borrowers or (c) the transfer of
any of its assets to Borrower or any other Subsidiaries of Borrowers, except
for such encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under this Agreement, the other Loan Documents and the
Senior Unsecured Note Documents (as in effect on the date hereof and as amended,
refinanced, increased, supplemented or modified from time to time to the extent
such amendment, supplement, increase refinancing or modification is expressly
permitted under this Agreement), (ii) any restrictions with respect to any
assets or Stock of any Borrowers or Subsidiaries imposed pursuant to an
agreement that has been entered into in connection with the disposition of such
assets or Stock to extent such disposition is expressly permitted under this
Agreement, (iii) solely in the case of clause (c) of this Section 6.16,
restrictions on transfer of assets securing permitted purchase money debt,
Capital Lease Obligations and mortgage financing to the extent and only to the
extent that such restrictions apply only to the assets which are the subject of
such Capital Leases, mortgage financing or purchase money debt and such
Indebtedness, (iv) restrictions in any permitted refinancings of purchase
money financing, mortgage financing and Capital Leases, provided that such
restrictions are limited solely to the assets that are the subject of such
purchase money financing, mortgage financing or capital leases, (v) net
worth provisions in leases and other agreements (not for Indebtedness for money
borrowed) entered into by Borrowers or subsidiaries in the ordinary course of
business, and (vi) restrictions required by law.

 

6.17.                        Real
Estate Purchases. Except as otherwise permitted in Section 6.1
in connection with a Permitted Acquisition, no Credit Party shall purchase a
fee simple ownership interest Real Estate, except in connection with Permitted
Acquisitions.

 

6.18.                        Changes
Relating to Senior Unsecured Notes; Material Contracts.

 

(a)                                  No
Credit Party shall change, restate, supplement, amend or otherwise modify any
of the terms or provisions of the Senior Unsecured Note Documents as in effect
on the Closing Date if the effect of such amendment is to:  (a) increase the interest rate on such
Senior Unsecured Notes (other than no cash payment-in-kind interest) or fees
(other than customary amendment and waiver fees and customary and reasonable
underwriting fees in connection with issuance of additional Senior Unsecured
Notes to extent such additional issuance is expressly permitted hereunder), by
more than an amount that

 

42

 

would result in an interest rate per annum on the Senior Unsecured
Notes in excess of 12.5% per annum, except in connection with the imposition of
a default rate of interest in accordance with the terms of the Senior Unsecured
Note Documents as in effect as of the Closing Date; (b) change the dates
upon which payments of principal or interest are due on such Senior Unsecured
Notes other than to extend such dates; (c) change any default or event of
default other than to delete or make less restrictive any default provision
therein, or add any covenant with respect to such Senior Unsecured Notes; (d) change
the redemption or prepayment provisions of such Senior Unsecured Notes other
than to extend the dates therefor or to reduce the premiums payable in
connection therewith; or (e) grant any security or collateral to secure
payment of such Senior Unsecured Debt; or (f) change or amend any other
term if such change or amendment, individually or in the aggregate, would
materially increase the obligations of the Credit Party thereunder or confer
additional material rights on the Senior Unsecured Note Holders in a manner
adverse to any Credit Party, Agent or any Lender, except in the case of any
increase in Senior Unsecured Debt to the extent such increase is expressly
permitted to be incurred under Section 6.3 (vii)(A).

 

(b)                                 No
Credit Party shall change or amend the terms of any Material Agreements (other
than the Senior Unsecured Note Documents to extent permitted under Section 6.18(a))
in any manner adverse in any material respect to the Lenders unless consented
to in writing by the Requisite Lenders and the Agent.

 

6.19.                        Holdings and Palace Finance
Covenant.

 

(a)                                  Holdings
shall not (i) conduct, transact, purchase, invest or otherwise engage in,
or commit to conduct, transact, purchase, invest or otherwise engage in, any
business or operations other than (A) those activities necessary to
carry-out its obligations as expressly set forth in this Agreement, the other
Loan Documents and the Senior Unsecured Note Documents to which it is a party,
and (B) those incidental to its ownership of the Stock of Borrowers and
Palace Finance, (ii) incur, create, assume or suffer to exist any
Indebtedness or other liabilities or financial obligations (other than liabilities
and financial obligations arising in the ordinary course in connection with the
carrying out of those activities permitted under the immediately preceding
clauses (A) and (B)), except as expressly permitted pursuant to the Loan
Documents and the Senior Unsecured Note Documents (as in effect on the date
hereof and as amended, refinanced, increased, supplemented or modified from
time to time to the extent such amendment, modification, increase, supplement
or refinancing is expressly permitted under this Agreement), or (iii) own,
lease, manage or otherwise operate any properties or assets, other than in each
case, the ownership of shares of Stock of Borrower and Palace Finance and cash
or Cash Equivalents or as otherwise expressly permitted hereunder.

 

(b)                                 Palace
Finance shall not (i) conduct, transact, purchase, invest or otherwise
engage in, or commit to conduct, transact, purchase, invest or otherwise engage
in, any business or operations, except those activities necessary to carry-out
its obligations as set forth in this Agreement, the other Loan Documents and
the Senior Unsecured Note Documents to which it is a party, (ii) incur,
create, assume or suffer to exist any Indebtedness or other liabilities or
financial obligations (other than liabilities and financial obligations arising
in the ordinary course in connection with the carrying out of those activities
permitted under the immediately preceding clause (i)), except as expressly
permitted pursuant to the Loan Documents and the Senior Unsecured Note
Documents as in effect on the date hereof and as amended, refinanced,
increased, supplemented or modified from time to time to the extent such
amendment, increase, supplement, refinancing or modification is expressly
permitted under this Agreement to which it is a party, or (iii) own,
lease, manage or otherwise operate any properties or assets.

 

43

 

7.                                       TERM

 

7.1.                              Termination.
The financing arrangements contemplated hereby shall be in effect until the
Commitment Termination Date, and the Loans and all other Obligations shall be
automatically due and payable in full on such date.

 

7.2.                              Survival
of Obligations Upon Termination of Financing Arrangements. Except as
otherwise expressly provided for in the Loan Documents, no termination or
cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders relating
to any unpaid portion of the Loans or any other Obligations, due or not due,
liquidated, contingent or unliquidated or any transaction or event occurring
prior to such termination, or any transaction or event, the performance of
which is required after the Commitment Termination Date. Except as otherwise
expressly provided herein or in any other Loan Document, all undertakings,
agreements, covenants, warranties and representations of or binding upon the
Credit Parties, and all rights of Agent and each Lender, all as contained in
the Loan Documents, shall not terminate or expire, but rather shall survive any
such termination or cancellation and shall continue in full force and effect
until the Termination Date; provided, that the provisions of Section 11,
the payment obligations under Sections 1.11, 1.12 and 1.13, and the
indemnities contained in the Loan Documents shall survive the Termination Date.

 

8.                                       EVENTS OF DEFAULT; RIGHTS AND REMEDIES

 

8.1.                              Events
of Default. The occurrence of any one or more of the following events
(regardless of the reason therefor) shall constitute an “Event of Default”
hereunder:

 

(a)                                  Any
Borrower fails to (i) make any payment of principal of the Loans or any of
the other Obligations when due and payable, (ii) make any payment of
interest on, or Fees owing in respect of, the Loans or any of the other
Obligations within three (3) days after any such interest or Fees become
due in accordance with the terms thereof, or (iii) pay or reimburse Agent
or Lenders for any expense reimbursable hereunder or under any other Loan
Document within ten (10) days following Agent’s demand for such
reimbursement or payment of expenses.

 

(b)                                 Any
Credit Party fails or neglects to perform, keep or observe any of the
provisions of Sections 1.4, 5.4(a), 5.10 or 6 (other than Section 6.11
which is covered under clause (d) below of this Section 8.1),
or any of the provisions set forth in Annex G.

 

(c)                                  Any
Borrower fails or neglects to perform, keep or observe any of the provisions of
Sections 1.6 or 4.1 or any provisions set forth in Annex C or E,
and the same shall remain unremedied for three (3) Business Days or more.

 

(d)                                 Any
Credit Party fails or neglects to perform, keep or observe any other provision
of this Agreement or of any of the other Loan Documents (other than any
provision embodied in or covered by any other clause of this Section 8.1)
and the same shall remain unremedied for thirty (30) days or more.

 

(e)                                  A
default or breach occurs under any other agreement, document or instrument to
which any Credit Party is a party, that is not cured within any applicable
grace period therefor, and such default or breach (i) involves the failure
to make any payment when due in respect of any Indebtedness or Guaranteed
Indebtedness (other than the Obligations) of any Credit Party in excess of
$2,000,000 in the aggregate (including (x) undrawn committed or available
amounts and (y) amounts owing to all creditors under any combined or syndicated
credit arrangements), or (ii) causes, or permits any holder of such

 

44

 

Indebtedness
or Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed
Indebtedness or a portion thereof in excess of $2,000,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, or cash collateral to be demanded in respect thereof, in each
case, regardless of whether such default is waived, or such right is exercised,
by such holder or trustee.

 

(f)                                    Any
representation or warranty made or deemed made by any Credit Party herein or in
any other Loan Document or that is contained in any certificate, document or
financial or other statement furnished by it at any time under or in connection
with this Agreement or any such other Loan Document shall prove to have been
inaccurate in any material respect on or as of the date made or deemed made.

 

(g)                                 Assets
of any Credit Party with a fair market value of $1,500,000 or more are
attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of creditors of any Credit Party and such condition continues for
thirty (30) days or more.

 

(h)                                 A
case or proceeding is commenced against Holdings, Festival or any Significant
Subsidiary seeking a decree or order in respect of such Credit Party (i) under
the Bankruptcy Code or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) for such Credit Party
or for any substantial part of any such Credit Party’s assets, or (iii) ordering
the winding-up or liquidation of the affairs of such Credit Party, and such
case or proceeding shall remain undismissed or unstayed for sixty (60) days or
more or a decree or order granting the relief sought in such case or proceeding
is granted by a court of competent jurisdiction.

 

(i)                                     Holdings,
Festival or any Significant Subsidiary (i) files a petition seeking relief
under the Bankruptcy Code or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner to the institution of proceedings thereunder or
to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for any substantial
part of any such Credit Party’s assets, (iii) makes an assignment for
the benefit of creditors, or (iv) takes any action in furtherance of any
of the foregoing, or (v) admits in writing its inability to, or is
generally unable to, pay its debts as such debts become due.

 

(j)                                     A
final judgment or judgments for the payment of money in excess of $1,500,000 in
the aggregate at any time are outstanding against one or more of the Credit
Parties (which judgments are not covered by insurance policies as to which
liability has been accepted by the insurance carrier), and the same are not,
within thirty (30) days after the entry thereof, discharged or execution
thereof stayed or bonded pending appeal, or such judgments are not discharged
prior to the expiration of any such stay.

 

(k)                                  Any
material provision of any Loan Document for any reason ceases to be valid,
binding and enforceable in accordance with its terms (or any Credit Party shall
challenge the enforceability of any Loan Document or shall assert in writing,
or engage in any action or inaction based on any such assertion, that any
provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.

 

(l)                                     Any
Change of Control occurs.

 

45

 

(m)                               An
ERISA Event occurs.

 

(n)                                 Any
Event of Default occurs and is continuing under (and as such term is defined
in) any Senior Unsecured Note Document that may be then in effect.

 

8.2.                              Remedies.

 

(a)                                  If
any Default or Event of Default has occurred and is continuing, Agent may (and
at the written request of the Requisite Lenders shall) (i) without notice,
suspend the Lenders’ commitments hereunder to make additional Advances and/or
incur any additional Letter of Credit Obligations, whereupon any additional
Advances or Letter of Credit Obligations shall be made or incurred in Agent’s
sole discretion (or in the sole discretion of the Requisite Lenders, if such
suspension occurred at their direction) so long as such Default or Event of
Default is continuing, and (ii) require that the Letter of Credit
Obligations be cash collateralized in the manner set forth in Annex B. If
any Event of Default under Section 8.1(a) shall have occurred and be
continuing, Agent may (and at the written request of Requisite Lenders
shall), without notice except as otherwise expressly provided herein, increase
the rate of interest applicable to the overdue Loans and the Letter of Credit
Fees to the Default Rate as provided in Section 1.5(d).

 

(b)                                 If
any Event of Default shall have occurred and be continuing, Agent may (and
at the written request of the Requisite Lenders shall), without notice: (i) terminate
the Lenders’ commitments hereunder to make any further Loans or incur any
further Letter of Credit Obligations; (ii) declare all or any portion of
the Obligations, including all or any portion of any Loan to be forthwith due
and payable, and require that the Letter of Credit Obligations be cash
collateralized as provided in Annex B, all without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrowers and each other Credit Party; or (iii) exercise any rights and
remedies provided to Agent under the Loan Documents and/or at law or equity,
including all remedies provided under the Code; provided, however, that upon
the occurrence of an Event of Default specified in Sections 8.1(h) or
(i), the Revolving Loan facility shall be immediately terminated and all
of the Obligations, including the Loans and Letter of Credit Obligations, shall
become immediately due and payable without declaration, notice or demand by any
Person.

 

8.3.                              Waivers
by Credit Parties. Except as otherwise provided for in this Agreement or by
applicable law, each Credit Party waives: (a) presentment, demand and
protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this
regard during the occurrence and continuance of any Event of Default, (b) all
rights to notice and a hearing prior to Agent’s taking possession or control
of, or to Agent’s replevy, attachment or levy upon, the Collateral or any bond
or security that might be required by any court prior to allowing Agent to
exercise any of its remedies during the occurrence and continuance of any Event
of Default, and (c) the benefit of all valuation, appraisal, marshaling
and exemption laws.

 

9.                                       ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT

 

9.1.                              Assignment and
Participations.

 

(a)                                  Subject
to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sale of participations in, at any
time or times, the Loan Documents, Loans, Letter of Credit Obligations and the
Revolving Commitment or any portion thereof or interest therein,

 

46

 

including any
Lender’s rights, title, interests, remedies, powers or duties thereunder. Any
assignment by a Lender shall (i) require the consent of Agent (except in
the case of an assignment to a Qualified Assignee), which consent shall not be
unreasonably withheld or delayed, and the execution of an assignment agreement
(an “Assignment Agreement”) substantially in the form attached hereto as Exhibit 9.1(a) and
otherwise in form and substance reasonably satisfactory to, and acknowledged
by, Agent; (ii) be conditioned on such assignee Lender representing to the
assigning Lender and Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iii) after giving effect to any such partial
assignment, the assignee Lender shall have Revolving Loan Commitments in an
amount at least equal to $2,500,000 and, unless it is assigning all of its
Revolving Loan Commitments, the assigning Lender shall have retained Revolving
Loan Commitments in an amount at least equal to $2,500,000; (iv) include a payment to Agent of an assignment
fee of $3,500, and (v) so long as no Event of Default has occurred and is
continuing, require the consent of Borrower Representative, which shall not be
unreasonably withheld or delayed. In the case of an assignment by a Lender
under this Section 9.1(a), the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as all other Lenders
hereunder. The assigning Lender shall be relieved of its obligations hereunder
with respect to its Revolving Loan Commitments or assigned portion thereof from
and after the date of such assignment. Each Borrower hereby acknowledges and
agrees that any assignment shall give rise to a direct obligation of Borrowers
to the assignee and that the assignee shall be considered to be a “Lender”. In
all instances, each Lender’s liability to make Loans hereunder shall be several
and not joint and shall be limited to such Lender’s Pro Rata Share of the
Revolving Loan Commitments. In the event any Lender assigns or otherwise
transfers all or any part of the Obligations, such Lender shall so notify
Borrowers and Borrowers shall, upon the request of Agent or such Lender,
execute new Notes in exchange for the Notes, if any, being assigned. Notwithstanding
the foregoing provisions of this Section 9.1(a), any Lender may at
any time pledge the Obligations held by it and such Lender’s rights under this
Agreement and the other Loan Documents to a Federal Reserve Bank, and any
lender that is an investment fund may assign the Obligations held by it
and such Lender’s rights under this Agreement and the other Loan Documents to
another investment fund managed by the same investment advisor; provided, that
no such pledge to a Federal Reserve Bank shall release such Lender from such
Lender’s obligations hereunder or under any other Loan Document.

 

(b)                                 Any
participation by a Lender of all or any part of its Revolving Loan Commitments
shall be made with the understanding that all amounts payable by Borrowers
hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, any Loan in which
such holder participates, (ii) any extension of the scheduled amortization
of the principal amount of any Loan in which such holder participates or the
final maturity date thereof, and (iii) any release of all or substantially
all of the Collateral (other than in accordance with the terms of this
Agreement, the Collateral Documents or the other Loan Documents). Solely for
purposes of Sections 1.11, 1.12, 1.13 and 9.8, each Borrower
acknowledges and agrees that a participation shall give rise to a direct
obligation of Borrowers to the participant and the participant shall be
considered to be a “Lender” provided, (i) a participant shall not
be entitled to receive any greater payment under Sections 1.11, 1.12 or 1.13
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such participant, unless the sale of the
participation to such participant is made with Borrower’s prior written consent
and (ii) a participant that would be a Foreign Lender if it were a Lender
shall not be entitled to the benefits of Section 1.12 unless Borrower
is notified of the participation sold to such participant and such participant
agrees, for the benefit of Borrower, to comply with Section 1.12 as
though it were a Lender. Except as set forth in the preceding sentence no
Borrower or Credit Party shall have any obligation or duty to any participant. Neither
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely with the
Lender selling a participation as if no such sale had occurred.

 

47

 

(c)                                  Except
as expressly provided in this Section 9.1, no Lender shall, as
between Borrowers and that Lender, or Agent and that Lender, be relieved of any
of its obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the
Loans, the Notes or other Obligations owed to such Lender.

 

(d)                                 Each
Credit Party executing this Agreement shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and
all agreements, notes and other documents and instruments as shall be
reasonably requested and the preparation of informational materials for, and
the participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy in all material respects of all
descriptions of the Credit Parties and their respective affairs contained in
any selling materials provided by it and all other information provided by it
and included in such materials, except that any Projections delivered by
Borrowers shall only be certified by Borrowers as having been prepared by
Borrowers in compliance with the representations contained in Section 3.4(c).

 

(e)                                  A
Lender may furnish any information concerning Credit Parties in the
possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from potential assignees or participants containing
confidentiality covenants or agreements substantially equivalent to those
contained in Section 11.8.

 

(f)                                    So
long as no Event of Default has occurred and is continuing, no Lender shall
assign or sell participations in any portion of its Loans or Revolving Loan
Commitments to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements under Section 1.13(a),
increased costs under Section 1.13(b), an inability to fund LIBOR
Loans under Section 1.13(c), or withholding taxes in accordance
with Section 1.12.

 

(g)                                 Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”),
may grant to a special purpose funding vehicle (an “SPC”),
identified as such in writing by the Granting Lender to Agent and Borrowers,
the option to provide to Borrowers all or any part of any Loans that such
Granting Lender would otherwise be obligated to make to Borrowers pursuant to
this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to make any Loan; and (ii) if an SPC elects not to
exercise such option or otherwise fails to provide all or any part of such
Loan, the Granting Lender shall be obligated to make such Loan pursuant to the
terms hereof. The making of a Loan by an SPC hereunder shall utilize the
Revolving Loan Commitment of the Granting Lender to the same extent, and as if
such Loan were made by such Granting Lender. No SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability for
which shall remain with the Granting Lender). Any SPC may (i) with
notice to, but without the prior written consent of, Borrowers and Agent,
assign all or a portion of its interests in any Loans to the Granting Lender or
to any financial institutions (consented to by Borrowers and Agent) providing
liquidity and/or credit support to or for the account of such SPC to support
the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This Section 9.1(g) may not
be amended without the prior written consent of each Granting Lender, all or
any of whose Loans are being funded by an SPC at the time of such amendment. For
the avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the

 

48

 

obligation to
pay any amount otherwise payable by the Granting Lender under the Loan
Documents, continue to be the Lender of record hereunder.

 

9.2.                              Appointment
of Agent. GE Capital is hereby appointed to act on behalf of all Lenders as
Agent under this Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agent and Lenders and no
Credit Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement and the other Loan Documents, Agent shall act
solely as an agent of Lenders and does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and
administrative in nature and Agent shall not have, or be deemed to have, by
reason of this Agreement, any other Loan Document or otherwise a fiduciary
relationship in respect of any Lender. Except as expressly set forth in this
Agreement and the other Loan Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to any Credit Party or any of their respective Subsidiaries or any
Account Debtor that is communicated to or obtained by GE Capital or any of its
Affiliates in any capacity. Neither Agent nor any of its Affiliates nor any of
their respective officers, directors, employees, agents or representatives
shall be liable to any Lender for any action taken or omitted to be taken by it
hereunder or under any other Loan Document, or in connection herewith or
therewith, except for damages finally found by a court of competent
jurisdiction to have resulted from its or their own gross negligence or willful
misconduct.

 

If Agent shall request
instructions from Requisite Lenders or all affected Lenders with respect to any
act or action (including failure to act) in connection with this Agreement or
any other Loan Document, then Agent shall be entitled to refrain from such act
or taking such action unless and until Agent shall have received instructions
from Requisite Lenders or all affected Lenders, as the case may be, and
Agent shall not incur liability to any Person by reason of so refraining. Agent
shall be fully justified in failing or refusing to take any action hereunder or
under any other Loan Document (a) if such action would, in the opinion of
Agent, be contrary to law or the terms of this Agreement or any other Loan
Document, (b) if such action would, in the opinion of Agent, expose Agent
to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against Agent as a result of Agent acting or refraining from
acting hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders or all affected Lenders, as applicable.

 

9.3.                              Agent’s Reliance, Etc.
Neither Agent nor any of its Affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this Agreement
or the other Loan Documents, except for damages caused by its or their own
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, Agent:  (a)  may treat
the payee of any Note as the holder thereof until Agent receives written notice
of the assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not
be liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts; (c) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance of
any of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Credit Party or to inspect the Collateral
(including the books and records) of any Credit Party; (e) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of

 

49

 

this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no
liability under or in respect of this Agreement or the other Loan Documents by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telecopy) believed by it to be genuine and signed or sent
by the proper party or parties.

 

9.4.                              GE
Capital and Affiliates. With respect to its Revolving Loan Commitment
hereunder, GE Capital shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise
the same as though it were not Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include GE Capital in its individual
capacity. GE Capital and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party, any of their
Affiliates and any Person who may do business with or own securities of
any Credit Party or any such Affiliate, all as if GE Capital were not Agent and
without any duty to account therefor to Lenders. GE Capital and its Affiliates may accept
fees and other consideration from any Credit Party for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders.

 

9.5.                              Lender
Credit Decision. Each Lender acknowledges that it has, independently and
without reliance upon Agent or any other Lender and based on the Financial
Statements referred to in Section 3.4(a) and such other
documents and information as it has deemed appropriate, made its own credit and
financial analysis of the Credit Parties and its own decision to enter into
this Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as
a result of Lenders holding disproportionate interests in the Loans, and
expressly consents to, and waives any claim based upon, such conflict of
interest.

 

9.6.                              Indemnification.
Lenders agree to indemnify Agent (to the extent not reimbursed by Credit
Parties and without limiting the obligations of Credit Parties hereunder),
ratably according to their respective Pro Rata Shares, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any other Loan Document or any action taken or
omitted to be taken by Agent in connection therewith; provided, that no
Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and each
other Loan Document, to the extent that Agent is not reimbursed for such
expenses by Credit Parties.

 

9.7.                              Successor
Agent. Agent may resign at any time by giving not less than thirty
(30) days’ prior written notice thereof to Lenders and Borrower Representative.
Upon any such resignation, the Requisite Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within thirty
(30) days after the resigning Agent’s giving notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary
of a commercial bank or financial institution if such commercial bank or
financial institution is organized

 

50

 

under the laws of the United States or of any State thereof and has a
combined capital and surplus of at least $300,000,000. If no successor Agent
has been appointed pursuant to the foregoing, within thirty (30) days after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent hereunder shall be subject to the approval of Borrower Representative,
such approval not to be unreasonably withheld or delayed; provided that
such approval shall not be required if a Default or an Event of Default has
occurred and is continuing or if such successor agent is an existing Lender
appointed by Agent in accordance with the provisions above. Upon the acceptance
of any appointment as Agent hereunder by a successor Agent, such successor
Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Agent. Upon the earlier of the
acceptance of any appointment as Agent hereunder by a successor Agent or the
effective date of the resigning Agent’s resignation, the resigning Agent shall
be discharged from its duties and obligations under this Agreement and the
other Loan Documents, except that any indemnity rights or other rights in favor
of such resigning Agent shall continue. After any resigning Agent’s resignation
hereunder, the provisions of this Section 9 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
acting as Agent under this Agreement and the other Loan Documents.

 

9.8.                              Setoff
and Sharing of Payments. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuance of any Event of Default and subject to Section 9.9(f),
each Lender is hereby authorized at any time or from time to time, without
prior notice to any Credit Party or to any Person other than Agent, any such
notice being hereby expressly waived, to offset and to appropriate and to apply
any and all balances held by it at any of its offices for the account of any
Borrower or Guarantor (regardless of whether such balances are then due to such
Borrower or Guarantor) and any other properties or assets at any time held or
owing by that Lender or that holder to or for the credit or for the account of
any Borrower or Guarantor against and on account of any of the Obligations that
are not paid when due; provided that the Lender exercising such offset rights
shall give notice thereof to the affected Credit Party promptly after exercising
such rights. Any Lender exercising a right of setoff or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares, (other than offset rights exercised by
any Lender with respect to Sections 1.11, 1.12 or 1.13. Each Lender’s
obligation under this Section 9.8 shall be in addition to and not
in limitation of its obligations to purchase a participation in an amount equal
to its Pro Rata Share of the Swing Line Loans under Section 1.1. Each
Credit Party that is a Borrower and each Guarantor agrees, to the fullest
extent permitted by law, that (a) any Lender may exercise its right
to offset with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amounts so offset to other
Lenders and holders and (b) any Lender so purchasing a participation in
the Loans made or other Obligations held by other Lenders or holders may exercise
all rights of offset, bankers’ lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the
offset amount or payment otherwise received is thereafter recovered from the
Lender that has exercised the right of offset, the purchase of participations
by that Lender shall be rescinded and the purchase price restored without
interest.

 

9.9.                              Advances;
Payments; Non-Funding Lenders; Information; Actions in Concert.

 

(a)                                  Advances;
Payments. (i)  Lenders shall refund or participate in the Swing Line Loan
in accordance with clauses (iii) and (iv) of Section 1.1(b). If
the Swing Line Lender declines to

 

51

 

make a Swing
Line Loan or if Swing Line Availability is zero, Agent shall notify Lenders,
promptly after receipt of a Notice of Revolving Advance and in any event prior
to 2:00 p.m. (New York time) on the date such Notice of Revolving Advance
is received, by telecopy, telephone or other similar form of transmission.
Each Lender shall make the amount of such Lender’s Pro Rata Share of such
Revolving Credit Advance available to Agent in same day funds by wire transfer
to Agent’s account as set forth in Annex H not later than 3:00 p.m. (New
York time) on the requested funding date, in the case of an Index Rate Loan and
not later than 11:00 a.m. (New York time) on the requested funding date in
the case of a LIBOR Loan. After receipt of such wire transfers (or, in the
Agent’s sole discretion, before receipt of such wire transfers), subject to the
terms hereof, Agent shall make the requested Revolving Credit Advance to the Borrower
designated by Borrower Representative in the Notice of Revolving Credit Advance.
All payments by each Lender shall be made without setoff, counterclaim or
deduction of any kind.

 

(ii)                                  Not
less than once during each calendar week or more frequently at Agent’s election
(each, a “Settlement Date”), Agent shall advise each Lender by
telephone, or telecopy of the amount of such Lender’s Pro Rata Share of
principal, interest and Fees paid for the benefit of Lenders with respect to
each applicable Loan. Provided that each Lender has funded all payments and
Advances required to be made by it and purchased all participations required to
be purchased by it under this Agreement and the other Loan Documents as of such
Settlement Date, Agent shall pay to each Lender such Lender’s Pro Rata Share of
principal, interest and Fees paid by Borrowers since the previous Settlement
Date for the benefit of such Lender on the Loans held by it. To the extent that
any Lender (a “Non-Funding Lender”) has failed to fund all such payments
and Advances or failed to fund the purchase of all such participations, Agent
shall be entitled to set off the funding short-fall against that Non-Funding
Lender’s Pro Rata Share of all payments received from Borrowers. Such
payments shall be made by wire transfer to such Lender’s account (as specified
by such Lender in Annex H or the applicable Assignment Agreement) not
later than 2:00 p.m. (New York time) on the next Business Day following
each Settlement Date.

 

(b)                                 Availability
of Lender’s Pro Rata Share. Agent may assume that each Lender will
make its Pro Rata Share of each Revolving Credit Advance available to Agent on
each funding date. If such Pro Rata Share is not, in fact, paid to Agent by
such Lender when due, Agent will be entitled to recover such amount on demand
from such Lender without setoff, counterclaim or deduction of any kind. If any
Lender fails to pay the amount of its Pro Rata Share forthwith upon Agent’s
demand, Agent shall promptly notify Borrower Representative and Borrowers shall
immediately repay such amount to Agent. Nothing in this Section 9.9(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Borrowers may have against any Lender as a result of any
default by such Lender hereunder. To the extent that Agent advances funds to
any Borrower on behalf of any Lender and is not reimbursed therefor on the same
Business Day as such Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Advance until reimbursed by the applicable
Lender.

 

(c)                                  Return
of Payments. (i)  If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrowers and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender on
demand without setoff, counterclaim or deduction of any kind.

 

(ii)                                  If
Agent determines at any time that any amount received by Agent under this
Agreement must be returned to any Borrower or paid to any other Person pursuant
to any insolvency law or otherwise, then, notwithstanding any other term or
condition of this Agreement or any other Loan Document, Agent will not be
required to distribute any portion thereof to any Lender. In

 

52

 

addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to any Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.

 

(d)                                 Non-Funding
Lenders. The failure of any Non-Funding Lender to make any Revolving Credit
Advance or any payment required by it hereunder, or to purchase any
participation in any Swing Line Loan to be made or purchased by it on the date
specified therefor shall not relieve any other Lender (each such other Lender,
an “Other Lender”) of its obligations to make such Advance or purchase
such participation on such date, but neither any Other Lender nor Agent shall
be responsible for the failure of any Non-Funding Lender to make an Advance,
purchase a participation or make any other payment required hereunder. Notwithstanding
anything set forth herein to the contrary, a Non-Funding Lender shall not have
any voting or consent rights under or with respect to any Loan Document or
constitute a “Lender” (or be included in the calculation of “Requisite Lenders”
hereunder) for any voting or consent rights under or with respect to any Loan
Document. At Borrower Representative’s request, Agent, an existing Lender (other
than a Non-Funding Lender) or another Person that is a Qualified Assignee
pursuant to Section 9.1 shall have the right with Agent’s consent
(not to be unreasonably withheld or delayed) to purchase from any Non-Funding
Lender, and each Non-Funding Lender agrees that it shall, at Agent’s request,
sell and assign to Agent, such existing Lender or such Qualified Assignee, all
of the Commitments of that Non-Funding Lender for an amount equal to the
principal balance of all Loans held by such Non-Funding Lender and all accrued
interest and fees with respect thereto through the date of sale, such purchase
and sale to be consummated pursuant to an executed Assignment Agreement.

 

(e)                                  Dissemination
of Information. Agent shall use reasonable efforts to provide Lenders with
any notice of Default or Event of Default received by Agent from, or delivered
by Agent to, any Credit Party, with notice of any Event of Default of which
Agent has actually become aware and with notice of any action taken by Agent
following any Event of Default; provided, that Agent shall not be liable to any
Lender for any failure to do so, except to the extent that such failure is
attributable to Agent’s gross negligence or willful misconduct. Lenders
acknowledge that Borrowers are required to provide Financial Statements and
Collateral Reports to Lenders in accordance with Annexes D and F
hereto and agree that Agent shall have no duty to provide the same to Lenders.

 

(f)                                    Actions
in Concert. Anything in this Agreement to the contrary notwithstanding,
each Lender hereby agrees with each other Lender that no Lender shall take any
action to protect or enforce its rights arising out of this Agreement or the
Notes (including exercising any rights of setoff) without first obtaining the
prior written consent of Agent and Requisite Lenders, it being the intent of
Lenders that any such action to protect or enforce rights under this Agreement
and the Notes shall be taken in concert and at the direction or with the
consent of Agent or Requisite Lenders.

 

53

 

10.                                 SUCCESSORS AND ASSIGNS

 

10.1.                        Successors
and Assigns. This Agreement and the other Loan Documents shall be binding
on and shall inure to the benefit of each Credit Party, Agent, Lenders and
their respective successors and assigns (including, in the case of any Credit
Party, a debtor-in-possession on behalf of such Credit Party), except as
otherwise provided herein or therein. No Credit Party may assign,
transfer, hypothecate or otherwise convey its rights, benefits, obligations or
duties hereunder or under any of the other Loan Documents without the prior
express written consent of Agent and Lenders. Any such purported assignment,
transfer, hypothecation or other conveyance by any Credit Party without the
prior express written consent of Agent and Lenders shall be void. The terms and
provisions of this Agreement are for the purpose of defining the relative
rights and obligations of each Credit Party, Agent and Lenders with respect to
the transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.

 

11.                                 MISCELLANEOUS

 

11.1.                        Complete
Agreement; Modification of Agreement. The Loan Documents constitute the
complete agreement between the parties with respect to the subject matter
thereof and may not be modified, altered or amended except as set forth in
Section 11.2. Any letter of interest, commitment letter, fee letter
or confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement. Notwithstanding the foregoing, the GE Capital
Fee Letter shall survive the execution and delivery of this Agreement and shall
continue to be binding obligations of the parties.

 

11.2.                        Amendments and Waivers.

 

(a)                                  Except
for actions expressly permitted to be taken by Agent, no amendment,
modification, termination or waiver of any provision of this Agreement or any
other Loan Document, or any consent to any departure by any Credit Party
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Agent and Borrowers, and by Requisite Lenders or all affected
Lenders, as applicable. Except as set forth in clauses (b) and (c) below,
all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.

 

(b)                                 No
amendment, modification, termination or waiver of or consent with respect to
any provision of this Agreement that waives compliance with the conditions
precedent set forth in Section 2.2 to the making of any Loan or the
incurrence of any Letter of Credit Obligations shall be effective unless the
same shall be in writing and signed by Agent, Requisite Lenders and Borrowers. Notwithstanding
anything contained in this Agreement to the contrary, no waiver or consent with
respect to any Default or any Event of Default shall be effective for purposes
of the conditions precedent to the making of Loans or the incurrence of Letter
of Credit Obligations set forth in Section 2.2 or unless the same
shall be in writing and signed by Agent, Requisite Lenders and Borrowers.

 

(c)                                  No
amendment, modification, termination or waiver shall, unless in writing and
signed by Agent and each Lender directly affected thereby:  (i) increase the principal amount of any
Lender’s Commitment (which action shall be deemed only to affect those Lenders
whose Revolving Commitments are increased and may be approved by Requisite
Lenders, including those lenders whose Revolving Commitments are increased); (ii) reduce
the principal of, rate of interest on or Fees payable with respect to any Loan
or Letter of Credit Obligations of any affected Lender; (iii) extend any
scheduled payment date (other than payment dates of mandatory prepayments under
Section 1.3(b)(ii) or

 

54

 

(iii))
or final maturity date of the principal amount of any Loan of any affected
Lender; (iv) waive, forgive, defer, extend or postpone any payment of
interest or Fees as to any affected Lender; (v) release any Guaranty or,
except as otherwise permitted herein or in the other Loan Documents, release,
or permit any Credit Party to sell or otherwise dispose of, any Collateral with
a value exceeding $5,000,000 in the aggregate (which action shall be deemed to
directly affect all Lenders); (vi) change the percentage of the Revolving
Loan Commitments or of the aggregate unpaid principal amount of the Loans that
shall be required for Lenders or any of them to take any action hereunder; and (vii) amend
or waive this Section 11.2 or the definition of “Requisite Lenders”
insofar as such definition affects the substance of this Section 11.2.
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent or L/C Issuer under this Agreement or any other Loan
Document shall be effective unless in writing and signed by Agent or L/C
Issuer, as the case may be, in addition to Lenders required hereinabove to
take such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that Note. No
notice to or demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 11.2
shall be binding upon each holder of the Notes at the time outstanding and each
future holder of the Notes.

 

(d)                                 If,
in connection with any proposed amendment, modification, waiver or termination
(a “Proposed Change”) requiring the consent of all affected Lenders, the
consent of Requisite Lenders is obtained, but the consent of other Lenders
whose consent is required is not obtained (any such Lender whose consent is not
obtained as described in this clause (d) being referred to as “Non
Consenting Lender”), then, so long as Agent is not a Non Consenting Lender,
at Borrower Representative’s request Agent, an existing Lender (other than a
Non Consenting Lender) or a Person that is a Qualified Assignee pursuant to Section 9.1,
shall have the right with Agent’s consent (not to be unreasonably withheld or
delayed) to purchase from such Non Consenting Lenders, and such Non Consenting
Lenders agree that they shall, upon Agent’s request, sell and assign to Agent,
such existing Lender or such Qualified Assignee, all of the Revolving Loan
Commitments of such Non Consenting Lenders for an amount equal to the principal
balance of all Loans and non-contingent Letter of Credit Obligations held by
the Non Consenting Lenders and all accrued interest and Fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.

 

(e)                                  Upon
payment in full in cash and performance of all of the Obligations (other than
indemnification Obligations for which a claim has not been asserted),
termination of the Revolving Commitments and a release of all claims against
Agent and Lenders, and so long as no suits, actions proceedings, or claims are
pending or threatened against any Indemnified Person asserting any damages,
losses or liabilities that are Indemnified Liabilities, Agent shall deliver to
Borrowers termination statements, mortgage releases and other documents
necessary or appropriate to evidence the termination of the Liens securing
payment of the Obligations.

 

11.3.                        Fees
and Expenses. (a) Borrowers shall reimburse Agent for all reasonable
out of pocket fees, costs and expenses, including the reasonable out of pocket
fees, costs and expenses of counsel and other external advisors (including
environmental and management consultants and appraisers) incurred in connection
with (i) the negotiation, preparation and filing and/or recordation of the
Loan Documents and any amendment, modification or waiver of, or consent with
respect to, or termination of, any of the Loan Documents or Related
Transactions Documents or advice in connection with the syndication and
administration of the Loans made pursuant hereto or its rights hereunder or
thereunder, and (ii) prior to the occurrence of any Event of Default,
effort to (A) monitor the Loans or any

 

55

 

of the other Obligations, and (B) evaluate, observe or assess any
of the Credit Parties or their respective affairs.

 

(b) Borrowers
shall reimburse Agent and all Lenders for all reasonable and out of pocket
fees, costs and expenses, including the reasonable out of pocket fees, costs
and expenses of counsel or other external advisors (including environmental and
management consultants and appraisers) incurred in connection with:

 

(i)                                     any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, any Lender, any Credit Party or any other Person and whether as a party,
witness or otherwise) in any way relating to the Collateral, any of the Loan
Documents or any other agreement to be executed or delivered in connection
herewith or therewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in connection with a
case commenced by or against any or all of the Credit Parties or any other
Person that may be obligated to Agent by virtue of the Loan Documents,
including any such litigation, contest, dispute, suit, proceeding or action
arising in connection with any work-out or restructuring of the Loans during
the pendency of one or more Events of Default; provided that no Person
shall be entitled to reimbursement under this clause (ii) in respect
of any litigation, contest, dispute, suit, proceeding or action to the extent
any of the foregoing results from such Person’s gross negligence or willful
misconduct;

 

(ii)                                  any
attempt to enforce any remedies of Agent or any Lender against any or all of
the Credit Parties or any other Person that may be obligated to Agent or
any Lender by virtue of any of the Loan Documents, including any such attempt
to enforce any such remedies in the course of any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided,
that in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;

 

(iii)                               any
workout or restructuring of the Loans during the pendency of one or more Events
of Default; and

 

(iv)                              during
the occurrence of any Event of Default, efforts to verify, evaluate, assess,
appraise, collect, sell, liquidate or otherwise dispose of any of the
Collateral

 

including, as to each of clauses
(a) and (b) above, all reasonable out of pocket attorneys’ and
other professional and service providers’ fees arising from such services and
other advice, assistance or other representation, including those in connection
with any appellate proceedings, and all reasonable out of pocket expenses,
costs, charges and other fees incurred by such counsel and others in connection
with or relating to any of the events or actions described in this Section 11.3,
all of which shall be payable, on demand, by Borrowers to Agent. Without
limiting the generality of the foregoing, such expenses, costs, charges and
fees may include: fees, costs and expenses of accountants, environmental
advisors, appraisers, investment bankers, management and other consultants and
paralegals; court costs and expenses; photocopying and duplication expenses;
court reporter fees, costs and expenses; long distance telephone charges; air
express charges; telecopy charges; secretarial overtime charges; and expenses
for travel, lodging and food paid or incurred in connection with the
performance of such legal or other advisory services. Reimbursement by
Borrowers’ of any appraisals conducted after the Closing Date shall be
subject to the limitations on reimbursement of appraisal fees and expenses set
forth in paragraph (b) of Annex F.

 

11.4.                        No
Waiver. Agent’s or any Lender’s failure, at any time or times, to require
strict performance by the Credit Parties of any provision of this Agreement or
any other Loan Document shall not waive, affect or diminish any right of Agent
or such Lender thereafter to demand strict

 

56

 

compliance and performance herewith or therewith. Any suspension or
waiver of an Event of Default shall not suspend, waive or affect any other
Event of Default whether the same is prior or subsequent thereto and whether
the same or of a different type. Subject to the provisions of Section 11.2,
none of the undertakings, agreements, warranties, covenants and representations
of any Credit Party contained in this Agreement or any of the other Loan
Documents and no Default or Event of Default by any Credit Party shall be
deemed to have been suspended or waived by Agent or any Lender, unless such
waiver or suspension is by an instrument in writing signed by an officer of or
other authorized employee of Agent and the applicable required Lenders and
directed to Borrowers specifying such suspension or waiver.

 

11.5.                        Remedies.
Agent’s and Lenders’ rights and remedies under this Agreement shall be cumulative
and nonexclusive of any other rights and remedies that Agent or any Lender may have
under any other agreement, including the other Loan Documents, by operation of
law or otherwise. Recourse to the Collateral shall not be required.

 

11.6.                        Severability.
Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement or any other Loan
Document shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining
provisions of this Agreement or such other Loan Document.

 

11.7.                        Conflict
of Terms. Except as otherwise provided in this Agreement or any of the
other Loan Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with any
provision in any of the other Loan Documents, the provision contained in this
Agreement shall govern and control.

 

11.8.                        Confidentiality.
Agent and each Lender agree to use commercially reasonable efforts (equivalent
to the efforts Agent or such Lender applies to maintain the confidentiality of
its own confidential information) to maintain as confidential all confidential
information provided to them by the Credit Parties and designated as
confidential for a period of two (2) years following receipt thereof,
except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any
such bona fide assignee or participant or potential assignee or participant may disclose
such information to Persons employed or engaged by them as described in clause
(a) above); (c) as required or requested by any Governmental Authority
or reasonably believed by Agent or such Lender to be compelled by any court
decree, subpoena or legal or administrative order or process; (d) as, on
the advice of Agent’s or such Lender’s counsel, is required by law; (e) in
connection with the exercise of any right or remedy under the Loan Documents or
in connection with any Litigation to which Agent or such Lender is a party; or (f) that
ceases to be confidential through no fault of Agent or any Lender.

 

11.9.                        GOVERNING LAW. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THE LOAN
DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE
UNITED STATES. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, NEW YORK SHALL
HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
BETWEEN THE

 

57

 

CREDIT PARTIES, AGENT OR THE LENDERS PERTAINING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT,
LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY AND; PROVIDED,
FURTHER THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH
CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY
WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM  NON  CONVENIENS
AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL
SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION
OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE
ADDRESS SET FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE
SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY’S ACTUAL
RECEIPT THEREOF OR THREE (3) BUSINESS DAYS AFTER DEPOSIT IN THE UNITED
STATES MAILS, PROPER POSTAGE PREPAID.

 

EACH CREDIT PARTY DOES HEREBY DESIGNATE AND
APPOINT:

 

CT
CORPORATION SYSTEM

111
EIGHTH AVENUE

NEW
YORK, NEW YORK 10010

 

AS ITS AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN
NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID
ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO EACH OF THE
UNDERSIGNED IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
SERVICE OF PROCESS UPON ANY CREDIT PARTY IN ANY SUCH SUIT, ACTION OR PROCEEDING
IN THE STATE OF NEW YORK. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.

 

11.10.                  Notices.

 

(a)                                  Addresses.
All notices, demands, requests, directions and other communications required or
expressly authorized to be made by this Agreement shall, whether or not
specified to be in writing but unless otherwise expressly specified to be given
by any other means, be given in writing and (i) addressed to (A) the party to be notified and sent to the
address or facsimile number indicated in Annex I, or (B) otherwise
to the party to be notified at its address specified on the signature page of
any applicable Assignment Agreement, (ii) posted to Intralinks® (to the extent
such system is available and set up by or at the direction of Agent prior to
posting) in an appropriate location by uploading such notice,

 

58

 

demand,
request, direction or other communication to www.intralinks.com, faxing it to
866-545-6600 with an appropriate bar-coded fax coversheet or using such other
means of posting to Intralinks®
as may be available and reasonably acceptable to Agent prior to such
posting, (iii) posted to any other
E-System set up by or at the direction of Agent in an appropriate
location or (iv) addressed to such other address as shall be notified in
writing (A) in the case of Borrower Representative, Agent and Swingline
Lender, to the other parties hereto and (B) in the case of all other
parties, to Borrower Representative and Agent. Transmission by electronic mail
(including E-Fax, even if transmitted to the fax numbers set forth in clause (i) above)
shall not be sufficient or effective to transmit any such notice under this
clause (a) unless such transmission is an available means to post to any
E-System.

 

(b)                                 Effectiveness.
All communications described in clause (a) above and all other notices,
demands, requests and other communications made in connection with this
Agreement shall be effective and be deemed to have been received (i) if
delivered by hand, upon personal delivery, (ii) if delivered by overnight
courier service, one Business Day after delivery to such courier service, (iii) if
delivered by mail, when deposited in the mails, (iv) if delivered by
facsimile (other than to post to an E-System pursuant to clause (a)(ii) or
(a)(iii) above), upon sender’s receipt of confirmation of proper
transmission, and (v) if delivered by posting to any E-System, on the
later of the date of such posting in an appropriate location and the date
access to such posting is given to the recipient thereof in accordance with the
standard procedures applicable to such E-System. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to any Person (other than
Borrower Representative or
Agent) designated in Annex I to receive copies shall in no way adversely
affect the effectiveness of such notice, demand, request, consent, approval,
declaration or other communication. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice.

 

11.11.                  Section Titles.
The Section titles and Table of Contents contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.

 

11.12.                  Counterparts.
This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.

 

11.13.                  WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY
(RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE
RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG
THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
THE TRANSACTIONS RELATED THERETO.

 

11.14.                  Press
Releases and Related Matters. Each Credit Party executing this Agreement
agrees that neither it, the Sponsor nor any Affiliates controlled by it will in
the future issue any press releases or other public disclosure using the name
of GE Capital or its affiliates or referring to this Agreement, the other Loan
Documents or the transactions contemplated herein and therein without at

 

59

 

least two (2) Business Days’ prior notice to GE Capital and
without the prior written consent of GE Capital (not to be unreasonably
withheld) unless (and only to the extent that) such Credit Party, the Sponsor
or such Affiliate is required to do so under law and then, in any event, such
Credit Party, the Sponsor or such Affiliate will consult with GE Capital before
issuing such press release or other public disclosure (other than any public
filing required under applicable law to the extent and only to the extent such
disclosure in such public filing is required to be made under applicable law), provided
that the foregoing shall not prohibit referencing this Agreement, the other
Loan Documents or any other Related Transaction Documents in the Senior
Unsecured Note Documents or any offering memorandum in connection therewith or
in any other public filing required under applicable law (to the extent and
only to the extent such disclosure in such public filing is required to be made
under applicable law). Each Credit Party consents to the publication by Agent
or any Lender of advertising material relating to the financing transactions
contemplated by this Agreement using Borrowers’ name, product photographs, logo
or trademark. Agent or such Lender shall provide a draft of any advertising
material to each Credit Party a reasonable period of time beforehand for review
and comment prior to the publication thereof. Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.

 

11.15.                  Reinstatement.
This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Credit Party for
liquidation or reorganization, should any Credit Party become insolvent or make
an assignment for the benefit of any creditor or creditors or should a receiver
or trustee be appointed for all or any significant part of any Credit
Party’s assets, and shall continue to be effective or to be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced,
restored or returned, the Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.

 

11.16.                  Advice
of Counsel. Each of the parties represents to each other party hereto that
it has discussed this Agreement and, specifically, the provisions of Sections
11.9 and 11.13, with its counsel.

 

11.17.                  No
Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.

 

60

 

12.                                 CROSS-GUARANTY

 

12.1.                        Cross-Guaranty.
Each Borrower hereby agrees that such Borrower is jointly and severally liable
for, and hereby absolutely and unconditionally guarantees to Agent and Lenders
and their respective successors and assigns, the full and prompt payment
(whether at stated maturity, by acceleration or otherwise) and performance of,
all Obligations owed or hereafter owing to Agent and Lenders by each other
Borrower. Each Borrower agrees that its guaranty obligation hereunder is a
continuing guaranty of payment and performance and not of collection, that its
obligations under this Section 12 shall not be discharged until payment
and performance, in full, of the Obligations has occurred, and that its
obligations under this Section 12 shall be absolute and unconditional,
irrespective of, and unaffected by.

 

(a)                                  the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in, this Agreement, any other Loan Document or any other agreement,
document or instrument to which any Borrower is or may become a party;

 

(b)                                 the
absence of any action to enforce this Agreement (including this Section 12)
or any other Loan Document or the waiver or consent by Agent and Lenders with
respect to any of the provisions thereof;

 

(c)                                  the
existence, value or condition of, or failure to perfect its Lien against, any
security for the Obligations or any action, or the absence of any action, by
Agent and Lenders in respect thereof (including the release of any such
security);

 

(d)                                 the
insolvency of any Credit Party; or

 

(e)                                  any
other action or circumstances that might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor.

 

Each Borrower
shall be regarded, and shall be in the same position, as principal debtor with
respect to the Obligations guaranteed hereunder.

 

12.2                           Waivers
by Borrowers. Each Borrower expressly waives all rights it may have
now or in the future under any statute, or at common law, or at law or in
equity, or otherwise, to compel Agent or Lenders to marshal assets or to
proceed in respect of the Obligations guaranteed hereunder against any other
Credit Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition to
proceeding against, such Borrower. It is agreed among each Borrower, Agent and
Lenders that the foregoing waivers are of the essence of the transaction
contemplated by this Agreement and the other Loan Documents and that, but for
the provisions of this Section 12 and such waivers, Agent and Lenders
would decline to enter into this Agreement.

 

12.3                           Benefit
of Guaranty. Each Borrower agrees that the provisions of this Section 12
are for the benefit of Agent and Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall impair,
as between any other Borrower and Agent or Lenders, the obligations of such
other Borrower under the Loan Documents.

 

12.4                           Waiver
of Subrogation, Etc. Notwithstanding anything to the contrary in this
Agreement or in any other Loan Document, and except as set forth in Section 12.7,
each Borrower hereby expressly and irrevocably waives any and all rights at law
or in equity to subrogation, reimbursement, 
exoneration, contribution, indemnification or set off and any and all
defenses available to a surety,

 

61

 

guarantor or
accommodation co-obligor. Each Borrower acknowledges and agrees that this
waiver is intended to benefit Agent and Lenders and shall not limit or
otherwise affect such Borrower’s liability hereunder or the enforceability of
this Section 12, and that Agent, Lenders and their respective successors
and assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 12.4.

 

12.5                           Election
of Remedies. If Agent or any Lender may, under applicable law, proceed to
realize its benefits under any of the Loan Documents giving Agent or such
Lender a Lien upon any Collateral, whether owned by any Borrower or by any
other Person, either by judicial foreclosure or by non judicial sale or
enforcement, Agent or any Lender may, at its sole option, determine which of
its remedies or rights it may pursue without affecting any of its rights
and remedies under this Section 12. If, in the exercise of any of its
rights and remedies, Agent or any Lender shall forfeit any of its rights or
remedies, including its right to enter a deficiency judgment against any
Borrower or any other Person, whether because of any applicable laws pertaining
to “election of remedies” or the like, each Borrower hereby consents to such
action by Agent or such Lender and waives any claim based upon such action,
even if such action by Agent or such Lender shall result in a full or partial
loss of any rights of subrogation that each Borrower might otherwise have had
but for such action by Agent or such Lender. Any election of remedies that
results in the denial or impairment of the right of Agent or any Lender to seek
a deficiency judgment against any Borrower shall not impair any other Borrower’s
obligation to pay the full amount of the Obligations. In the event Agent or any
Lender shall bid at any foreclosure or trustee’s sale or at any private sale
permitted by law or the Loan Documents, Agent or such Lender may bid all
or less than the amount of the Obligations and the amount of such bid need not
be paid by Agent or such Lender but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether Agent, Lender or any
other party is the successful bidder, shall be conclusively deemed to be the
fair market value of the Collateral and the difference between such bid amount
and the remaining balance of the Obligations shall be conclusively deemed to be
the amount of the Obligations guaranteed under this Section 12,
notwithstanding that any present or future law or court decision or ruling may have
the effect of reducing the amount of any deficiency claim to which Agent or any
Lender might otherwise be entitled but for such bidding at any such sale.

 

12.6                           Limitation.
Notwithstanding any provision herein contained to the contrary, each Borrower’s
liability under this Section 12 (which liability is in any event in
addition to amounts for which such Borrower is primarily liable under Section 1)
shall be limited to an amount not to exceed as of any date of determination the
greater of:

 

(a)                                  the
net amount of all Loans advanced to any other Borrower under this Agreement and
then re-loaned or otherwise transferred to, or for the benefit of, such
Borrower; and

 

(b)                                 the
amount that could be claimed by Agent and Lenders from such Borrower under this
Section 12 without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the Bankruptcy Code or under any applicable state Uniform Fraudulent
Transfer Act, Uniform Fraudulent Conveyance Act or similar statute or
common law after taking into account, among other things, such Borrower’s right
of contribution and indemnification from each other Borrower under Section 12.7.

 

12.7                           Contribution
with Respect to Guaranty Obligations.

 

(a)                                  To
the extent that any Borrower shall make a payment under this Section 12 of
all or any of the Obligations (other than Loans made to that Borrower for which
it is primarily liable) (a “Guarantor Payment”) that, taking into account all
other Guarantor Payments then previously or concurrently made by any other
Borrower, exceeds the amount that such Borrower would otherwise have

 

62

 

paid if each
Borrower had paid the aggregate Obligations satisfied by such Guarantor Payment
in the same proportion that such Borrower’s “Allocable Amount” (as defined
below) (as determined immediately prior to such Guarantor Payment) bore to the
aggregate Allocable Amounts of each of the Borrowers as determined immediately prior
to the making of such Guarantor Payment, then, following payment in full in
cash of the Obligations (other than contingent unliquidated indemnification
obligations, and subject to the reinstatement provisions in Section 11.15
of this Agreement and any other similar reinstatement provisions in the other
Loan Documents) and termination of the Commitments, such Borrower shall be
entitled to receive contribution and indemnification payments from, and be
reimbursed by, each other Borrower for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to
such Guarantor Payment.

 

(b)                                 As
of any date of determination, the “Allocable Amount” of any Borrower shall be
equal to the maximum amount of the claim that could then be recovered from such
Borrower under this Section 12 without rendering such claim voidable or
avoidable under Section 548 of Chapter 11 of the Bankruptcy Code or under
any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.

 

(c)                                  This
Section 12.7 is intended only to define the relative rights of Borrowers
and nothing set forth in this Section 12.7 is intended to or shall impair
the obligations of Borrowers, jointly and severally, to pay any amounts as and
when the same shall become due and payable in accordance with the terms of this
Agreement, including Section 12.1. Nothing contained in this Section 12.7
shall limit the liability of any Borrower to pay the Loans made directly or indirectly
to that Borrower and accrued interest, Fees and expenses with respect thereto
for which such Borrower shall be primarily liable.

 

(d)                                 The
parties hereto acknowledge that the rights of contribution and indemnification
hereunder shall constitute assets of the Borrower to which such contribution
and indemnification is owing.

 

(e)                                  The
rights of the indemnifying Borrowers against other Credit Parties under this Section 12.7
shall be exercisable upon the full and payment of the Obligations (other than contingent
unliquidated indemnification obligations, and subject to the reinstatement
provisions in Section 11.15 of this Agreement and any other similar
reinstatement provisions in the other Loan Documents) and the termination of
the Commitments.

 

12.8                           Liability
Cumulative. The liability of Borrowers under this Section 12 is in
addition to and shall be cumulative with all liabilities of each Borrower to
Agent and Lenders under this Agreement and the other Loan Documents to which
such Borrower is a party or in respect of any Obligations or obligation of the
other Borrower, without any limitation as to amount, unless the instrument or
agreement evidencing or creating such other liability specifically provides to
the contrary.

 

[Remainder of page intentionally blank;
next page is signature page]

 

63

 

IN WITNESS WHEREOF, this
Credit Agreement has been duly executed as of the date first written above.

 

 

BORROWERS:

 

 

FESTIVAL FUN PARKS, LLC

SPLISH SPLASH AT ADVERTURELAND, INC.

FAMILY FUN CENTER HOLDINGS, LLC

SMARTPARKS – SAN JOSE, INC.

SMARTPARKS – RIVERSIDE, INC.

SMARTPARKS – SAN DIMAS, INC.

RAGING WATERS GROUP, INC.

SMARTPARKS – CAROLINA, INC.

SMARTPARKS – FLORIDA, INC.

SMARTPARKS – SILVER SPRINGS, INC.

PALACE MANAGEMENT COMPANY,
LLC

 

 

	
   

  	
  By:

  	
  /s/ JOHN A. CORA

  
	
   

  	
  Name:

  	
  JOHN A. CORA

  
	
   

  	
  Title:

  	
  PRESIDENT

  
				

 

 

AGENT AND LENDERS:

 

 

GENERAL ELECTRIC CAPITAL

CORPORATION, as
Agent and Lender

 

 

	
   

  	
  By:

  	
  /s/ Jason A. Soto

  
	
   

  	
  Name:

  	
  Jason A. Soto

  
	
   

  	
   

  	
  Duly Authorized Signatory

  
					

 

 

 

 

The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrowers.

 

 

	
   

  	
  PALACE FINANCE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN A. CORA

  
	
   

  	
  Name:

  	
  JOHN A. CORA

  
	
   

  	
  Title:

  	
  CHIEF EXECUTIVE OFFICER AND PRESIDENT

  
				

 

 

	
   

  	
  PALACE ENTERTAINMENT HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN A. CORA

  
	
   

  	
  Name:

  	
  JOHN A. CORA

  
	
   

  	
  Title:

  	
  CHIEF EXECUTIVE OFFICER AND PRESIDENT

  
					

 

 

	
   

  	
  WET ‘N WILD NEVADA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN A. CORA

  
	
   

  	
  Name:

  	
  JOHN A. CORA

  
	
   

  	
  Title:

  	
  PRESIDENT

  
				

 

 

Credit Agreement

 

 

ANNEX A (Recitals)

to

CREDIT
AGREEMENT

 

DEFINITIONS

 

Capitalized terms used in
the Loan Documents shall have (unless otherwise provided elsewhere in the Loan
Documents) the following respective meanings and all references to Sections,
Exhibits, Schedules or Annexes in the following definitions shall refer to
Sections, Exhibits, Schedules or Annexes of or to the Agreement:

 

“Account Debtor”
means any Person who may become obligated to any Credit Party under, with
respect to, or on account of, an Account, Chattel Paper or General Intangibles
(including a payment intangible).

 

“Accounting Changes”
has the meaning ascribed thereto in Annex G.

 

“Accounts” means all “accounts,”
as such term is defined in the Code, now owned or hereafter acquired by an
Credit Party, including (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by Chattel Paper, Documents or Instruments), (including any such
obligations that may be characterized as an account or contract right under
the Code), (b) all of each Credit Party’s rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party’s rights to any goods represented by any of the foregoing (including
unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all
rights to payment due to any Credit Party for property sold, leased, licensed,
assigned or otherwise disposed of, for a policy of insurance issued or to be
issued, for a secondary obligation incurred or to be incurred, for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all health-care insurance receivables, and (f) all
collateral security, guarantees or other Supporting Obligations of any kind,
now or hereafter in existence, given by any Account Debtor or other Person with
respect to any of the foregoing.

 

“Acquired Business”
means, collectively, Borrowers and their Subsidiaries.

 

“Acquisition” means the
acquisition by Holdings of all of the outstanding Stock of Festival pursuant to
the Acquisition Agreement.

 

“Acquisition Agreement”
means the Stock Purchase Agreement dated as of February 9, 2006, among
Seller, Holdings and Festival, as amended, supplemented or modified from
time to time to the extent such amendment, supplement or modification is
expressly permitted under the Agreement.

 

“Acquisition Documents”
means, collectively, the Acquisition Agreement and all schedules, exhibits and
annexes thereto and all side letters and agreements affecting the terms thereof
or entered into in connection therewith, as amended, supplemented or
modified from time to time to the extent such amendment, supplement or
modification is expressly permitted under the Agreement.

 

“Activation Event”
and “Activation Notice” have the meanings ascribed thereto in Annex C.

 

A-1

 

“Additional Lender”
has the meaning ascribed to it in Section 1.1(a)(iii).

 

“Adjusted EBITDA”
means, for any period with respect to any Person, the sum of (a) its
EBITDA for such period plus (b) its general and administrative
expenses as set forth in its income statement for such period.

 

“Advance” means any
Revolving Credit Advance or Swing Line Advance, as the context may require.

 

“Affiliate” means,
with respect to any Person, (a) each Person that, directly or indirectly,
owns or controls, whether beneficially, or as a trustee, guardian or other
fiduciary, 5% or more of the Stock having ordinary voting power in the election
of directors of such Person, (b) each Person that controls, is controlled
by or is under common control with such Person, (c) each of such Person’s
officers, directors, joint venturers, managers, members and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, “control” of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise; provided, however, that the term “Affiliate”
shall specifically exclude Agent and each Lender.

 

“Agent” means GE
Capital in its capacity as Agent for Lenders or its successor appointed
pursuant to Section 9.7.

 

“Agreement” means the
Credit Agreement dated as of April 12, 2006, among Holdings, Borrower, the
other Credit Parties party thereto, GE Capital, as Agent and Lender, and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.

 

“Antares Credit Agreement”
means that certain Credit Agreement dated as of July 5, 2002 among
Festival, Antares Capital Corporation, as agent and lender, Royal Bank of
Scotland,  Madison Capital Funding LLC,
and the other Persons party thereto as lenders, as amended, modified,
supplemented or restated.

 

“Appendices” has the
meaning ascribed to it in the recitals to the Agreement.

 

“Applicable L/C Margin”
means the per annum fee, from time to time in effect, payable with respect to
outstanding Letter of Credit Obligations, as determined by reference to Section 1.5(a).

 

“Applicable Margins”
means, collectively, the Applicable L/C Margin, the Applicable Unused Line Fee
Margin, the Applicable Revolver Index Margin and the Applicable Revolver LIBOR
Margin.

 

“Applicable Revolver
Index Margin” means the per annum interest rate from time to time in effect
and payable in addition to the Index Rate applicable to the Revolving Loan, as
determined by reference to Section 1.5(a).

 

“Applicable Revolver
LIBOR Margin” means the per annum interest rate from time to time in effect
and payable in addition to the LIBOR Rate applicable to the Revolving Loan, as
determined by reference to Section 1.5(a).

 

A-2

 

“Applicable Unused Line
Fee Margin” means the per annum fee, from time to time in effect, payable
in respect of Borrower’s non-use of committed funds pursuant to Section 1.5(a),
which fee is determined by reference to Section 1.5(a).

 

“Assignment Agreement”
has the meaning ascribed to it in Section 9.1(a).

 

“Authorized Officer”
means, with respect to any Credit Party, the president, chief executive
officer, chief financial officer, treasurer, any vice president of such Credit
Party or any other officer of any Credit Party whose responsibilities include
the administration of any Credit Parties obligations under this Credit
Agreement.

 

“Bankruptcy Code”
means the provisions of Title 11 of the United States Code, 11 U.S.C. §§ 101
et seq.

 

“Blocked Accounts” has the meaning
ascribed to it in Annex C.

 

“Borrower Representative”
means Festival in its capacity as Borrower Representative pursuant to the
provisions of Section 1.1(d).

 

“Borrowers” and “Borrower”
have the respective meanings ascribed thereto in the preamble to the Agreement.

 

“Borrower Pledge
Agreement” means the Pledge Agreement of event date herewith entered
into by Borrowers and Agent, on behalf of itself and Lenders.

 

“Borrower
Security Agreement” means the Security Agreement of even date herewith
entered into by and among Agent, on behalf of itself and Lenders, and
Borrowers.

 

“Business Day” means
any day that is not a Saturday, a Sunday or a day on which banks are required
or permitted to be closed in the State of New York and in reference to LIBOR
Loans shall mean any such day that is also a LIBOR Business Day.

 

“Capital Expenditures”
means, with respect to any Person, all expenditures (by the expenditure of cash
or the incurrence of Indebtedness) by such Person during any measuring period
for any fixed assets or improvements or for replacements, substitutions or
additions thereto, that have a useful life of more than one year and that are
required to be capitalized under GAAP.

 

“Capital Lease”
means, with respect to any Person, any lease of any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with GAAP,
would be required to be classified and accounted for as a capital lease on a
balance sheet of such Person.

 

“Capital Lease Obligation”
means, with respect to any Capital Lease of any Person, the amount of the
obligation of the lessee thereunder that, in accordance with GAAP, would appear
on a balance sheet of such lessee in respect of such Capital Lease.

 

“Cash Collateral Account”
has the meaning ascribed to it Annex B.

 

“Cash Equivalents”
has the meaning ascribed to it in Annex B.

 

“Cash
Management Systems” has the meaning ascribed to it in Annex C.

 

A-3

 

“Change of Control”
means:

 

(a) the occurrence of
any “Change of Control” under and as defined in the Senior Unsecured Note
Indenture; or

 

(b) any event,
transaction or occurrence as a result of which (i) Sponsor ceases to own
and control all of the economic and voting rights associated with ownership of
more than 50 percent (50%) of all classes of the outstanding Stock of Holdings
on a fully diluted basis, or (ii) Holdings ceases to own and control all
of the economic and voting rights associated with all of the outstanding Stock
of Festival.

 

“Charges” means all
federal, state, county, city, municipal, local, foreign or other governmental
taxes (including taxes owed to the PBGC at the time due and payable), levies,
assessments, charges, liens, claims or encumbrances upon or relating to (a) the
Collateral, (b) the Obligations, (c) the employees, payroll, income
or gross receipts of any Credit Party, (d) any Credit Party’s ownership or
use of any properties or other assets, or (e) any other aspect of any
Credit Party’s business.

 

“Chattel Paper” means
all “chattel paper,” as such term is defined in the Code, including electronic
chattel paper, now owned or hereafter acquired by any Credit Party, wherever
located.

 

“Closing Date” means April 12,
2006.

 

“Closing Date Excluded
Parks” has the meaning ascribed to it in paragraph Q of Annex D.

 

“Closing Checklist”
means the schedule, including all appendices, exhibits or schedules thereto,
listing certain documents and information to be delivered in connection with
the Agreement, the other Loan Documents and the transactions contemplated
thereunder, substantially in the form attached hereto as Annex D.

 

“Code” means the Uniform Commercial
Code as the same may, from time to time, be enacted and in effect in the State
of New York; provided, that to the extent that the Code is used to
define any term herein or in any Loan Document and such term is defined
differently in different Articles or Divisions of the Code, the definition of
such term contained in Article or Division 9 shall govern; provided
further, that in the event that, by reason of mandatory provisions of law,
any or all of the attachment, perfection or priority of, or remedies with
respect to, Agent’s or any Lender’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other
than the State of New York, the term “Code” shall mean the Uniform Commercial
Code as enacted and in effect in such other jurisdiction solely for purposes of
the provisions thereof relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such provisions.

 

“Collateral” means
the property covered by the Mortgages and the other Collateral Documents and
any other property, real or personal, tangible or intangible, now existing or
hereafter acquired, that may at any time be or become subject to a
security interest or Lien in favor of Agent, on behalf of itself and Lenders,
to secure the Obligations.

 

“Collateral Documents”
means, collectively, the Borrower Security Agreement, the Borrower Pledge
Agreement, the Holdings Pledge Agreement, any other Pledge Agreements, the
Palace Finance Guaranty, the Guarantee Agreement, any other Guaranty Agreements,
the Palace Finance Security Agreement, the Guarantor Security Agreement, any
other Security Agreements, the Mortgages, the Patent Security Agreement, the
Trademark Security Agreement, the Copyright Security and all similar

 

A-4

 

 

agreements hereafter delivered to Agent guaranteeing payment of, or
granting a Lien upon property as security for payment of, the Obligations.

 

“Collection Account”
means that certain account of Agent, account number 502-328-54 in the name of
Agent at Deutsche Bank Trust Company Americas in New York, New York ABA No. 021
001 033, or such other account as may be specified in writing by Agent as
the “Collection Account.”

 

“Commitment Letter”
means the commitment letter dated, as of February 21, 2006, between
Holdings and GE Capital.

 

“Commitment Termination
Date” means the earliest of (a) the State Maturity Date, (b) the
date of termination of Lenders’ obligations to make Advances and to incur
Letter of Credit Obligations or permit existing Loans to remain outstanding
pursuant to Section 8.2(b) and (c) the date of prepayment
in full by Borrowers of the Loans and the cancellation and return (or stand-by
guarantee) of all Letters of Credit or the cash collateralization of all Letter
of Credit Obligations pursuant to Annex B, and the permanent reduction
of the Commitments to zero dollars ($0).

 

“Compliance Certificate”
has the meaning ascribed to it in Annex E.

 

“Concentration Account” has the
meaning ascribed to it in Annex C.

 

“Concentration Account Bank” has the
meaning ascribed to it in Annex C.

 

“Contracts” means all
“contracts,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, in any event, including all contracts,
undertakings, or agreements (other than rights evidenced by Chattel Paper,
Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating
to the terms of payment or the terms of performance of any Account.

 

“Control Letter”
means an agreement between Agent and (i) a banking institution holding
funds of any Credit Party, (ii) the issuer of uncertificated securities
with respect to uncertificated securities in the name of any Credit Party, (iii) a
securities intermediary with respect to securities, whether certificated or
uncertificated, securities entitlements and other financial assets held in a
securities account in the name of any Credit Party and (iv) a futures
commission merchant or clearing house, as applicable, with respect to commodity
accounts and commodity contracts held by any Credit Party, whereby, among other
things, the banking institution, issuer, securities intermediary or futures
commission merchant limits any security interest in the applicable financial
assets in a manner reasonably satisfactory to Agent, acknowledges the Lien of
Agent, on behalf of itself and Lenders, on such financial assets, and agrees to
follow the instructions or entitlement orders of Agent without further consent
by the affected Credit Party.

 

“Copyright License”
means any and all rights now owned or hereafter acquired by any Credit Party
under any written agreement granting any right to use any Copyright or
Copyright registration.

 

“Copyright Security
Agreements” means the Copyright Security Agreements made in favor of Agent,
on behalf of itself and Lenders, by each applicable Credit Party.

 

“Copyrights” means
all of the following now owned or hereafter adopted or acquired by any Credit
Party: (a) all copyrights and General Intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including all registrations, recordings
and applications in the United States Copyright Office or in any

 

A-5

 

similar office or agency of
the United States, any state or territory thereof, or any other country or any
political subdivision thereof, and (b) all reissues, extensions or
renewals thereof.

 

“Credit Parties” means
Holdings, Borrowers and their Subsidiaries. In addition, Palace Finance shall
be deemed to be a Credit Party hereunder.

 

“Cyberbank Agreement”
means the Cyberbank International Operations Agreement, dated as of the Closing
Date, among the Borrower, Agent and Wachovia Bank, N.A., substantially
in the form of Exhibit C.

 

“Default” means any
event that, with the passage of time or notice or both, would, unless cured or
waived, become an Event of Default.

 

“Default Rate” has
the meaning ascribed to it in Section 1.5(d).

 

“Deposit Accounts”
means all “deposit accounts” as such term in defined in the Code, now or
hereafter held in the name of any Credit Party.

 

“Disbursement Accounts”
has the meaning ascribed to it in Annex C.

 

“Disclosure Schedules”
means the Schedules prepared by Borrowers and denominated as Disclosure
Schedules (1.4) through (6.7) in the Index to the Agreement.

 

“Documents” means all
“documents” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located.

 

“Dollars” or “$”
means lawful currency of the United States.

 

“Domestic Subsidiary”
means any Subsidiary of Holdings or Borrowers organized under the laws of any
jurisdiction within the United States.

 

“E-Fax”
means any system used to receive or transmit faxes
electronically.

 

“E-System”
means any electronic system, including Intralinks® and any other
Internet or extranet-based site, whether such electronic system is owned,
operated or hosted by Agent, any of its Affiliates, or any of such Person’s respective officers, directors,
employees, attorneys, agents and representatives or any other Person, providing for access to data protected by passcodes
or other security system.

 

“EBITDA” means, with
respect to any Person for any fiscal period, without duplication, an amount
equal to (a) consolidated net income of such Person for such period,
determined in accordance with GAAP, minus (b) the sum of (i) income
tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, (iv) any aggregate net gain (but not any aggregate
net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other
non-cash gains that have been added in determining consolidated net income, in
each case to the extent included in the calculation of consolidated net income
of such Person for such period in accordance with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income
taxes, (ii) Interest Expense, (iii) loss from extraordinary items for
such period, (iv) depreciation and amortization for such period,
including, without limitation, any amortization of any write-up of leases
arising from purchase accounting in accordance with GAAP, (v) amortized
debt

 

A-6

 

discount for such period, (vi) the
amount of any deduction to consolidated net income as the result of any grant
to any members of the management of such Person of any Stock, (vi) sale-leaseback
cash payments (to the extent included in the calculation of consolidated net
income of such Person for such period in accordance with GAAP) (vii) the
sum of: (A) non-cash charges (including impairment of goodwill); (B) payments
made pursuant to the Sponsor Management Agreement and advisory fees paid to
Sponsor in connection with acquisitions to the extent the payment of such amounts
are expressly permitted under this agreement; 
(C) restructuring charges (other than those arising in connection
with the Related Transactions, which are addressed in clause (L) below), (D) non-capitalized
acquisition costs; (E) gain or loss on sale of assets; (F) non-recurring
costs associated with dispositions or financings (including, without
limitation, any loss arising from the acquisition of any securities or of
extinguishment of any Indebtedness; (G) impairment charges; (H) any
extraordinary expenses or losses; (I) cumulative effect of changes in
accounting principles; (J) expenses arising out of or incurred due to
hurricanes, windstorms or earthquakes to the extent not reimbursed in such
period or reimbursable with the proceeds of insurance; (K) losses with respect
to obligations under hedging agreements to the extent such hedging agreements
do not violate this Agreement; (L) fees, costs and expenses incurred in
connection with the Related Transactions, including, without limitation,
restructuring and other expenses or arising in connection with the Related
Transactions which, in each case are incurred within one year after the Closing
Date, provided that that total amount of all such fees, costs and expenses in
this clause (L) do not exceed in the aggregate $15,000,000; (M) proceeds from
business interruption insurance; in each case to the extent included in the
calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to
the date it became a Subsidiary of, or was merged or consolidated into, such
Person or any of such Person’s Subsidiaries; (2) the income (or deficit)
of any other Person (other than a Subsidiary) in which such Person has an
ownership interest, except to the extent any such income has actually been
received by such Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that the
declaration or payment of dividends or similar distributions by such Subsidiary
is not at the time permitted by the terms of any contractual obligation or
requirement of law applicable to such Subsidiary; (4) any non-cash
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of income accrued during such period; (5) any
write-up of any asset; (6) any net gain from the collection of the
proceeds of life insurance policies; (7) any net gain arising from the
acquisition of any securities, or the extinguishment, under GAAP, of any
Indebtedness, of such Person; (8) in the case of a successor to such
Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets; and (9) any deferred credit representing the excess of equity in
any Subsidiary of such Person at the date of acquisition of such Subsidiary
over the cost to such Person of the investment in such Subsidiary; provided
that, with respect to the Borrower and its consolidated Subsidiaries, EBITDA
shall be deemed to be the following amounts for the following Fiscal Quarters: (1) Fiscal
Quarter ended March 31, 2006, -$3,530,000; (2) Fiscal Quarter ended December 31,
2005, -$4,932,000; (3) Fiscal Quarter ended September 30, 2005,
$33,473,000 and (4) Fiscal Quarter ended June 30, 2005, $6,864,000. In
connection with any Permitted Acquisition, the EBITDA of the Target for the
trailing twelve months most recently ended immediately preceding the
consummation of such Permitted Acquisition shall be included on a pro forma
basis solely for purposes of determining compliance with the Financial
Covenants, provided that any pro forma adjustments to such Target EBITDA shall (1) have
been reviewed by independent certified public accountants of nationally
recognized standing, (2) pro forma adjustments for net income of targets
to extent expressly permitted under Regulation S-X of the Securities Act of
1933, as amended, or (3) have been found reasonably acceptable by the
Agent.

 

“EBITDAR” means, for
any period with respect to any Person, its EBITDA for such period plus (a) general
and administrative expenses as set forth in its income statement for such
period,

 

A-7

 

and (b) Lease Expenses for such period, determined on a
consolidated basis; provided that, with respect to the Borrower and its
consolidated Subsidiaries, EBITDAR shall be deemed to be the following amounts
for the following Fiscal Quarters: (1) Fiscal Quarter ended March 31,
2006, $3,089,000; (2) Fiscal Quarter ended December 31, 2005,
$2,274,000; (3) Fiscal Quarter ended September 30, 2005, $41,515,000
and (4) Fiscal Quarter ended June 30, 2005, $13,983,000.

 

“Environmental Laws”
means all applicable federal, state, local and foreign laws, statutes,
ordinances, codes, rules, standards and regulations, now or hereafter in
effect, and any applicable judicial or administrative interpretation thereof,
including any applicable judicial or administrative order, consent decree,
order or judgment, imposing liability or standards of conduct for or relating
to the regulation and protection of human health, safety, the environment and
natural resources (including ambient air, surface water, groundwater, wetlands,
land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental
Laws include the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”);
the Hazardous Materials Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101
et seq.); the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. §§ 136 et seq.); the Solid Waste Disposal Act (42 U.S.C. §§ 6901
et seq.); the Toxic Substance Control Act (15 U.S.C. §§ 2601 et
seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the
Federal Water Pollution Control Act (33 U.S.C. §§ 1251 et seq.);
the Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.);
and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et seq.),
and any and all regulations promulgated thereunder, and all analogous state,
local and foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.

 

“Environmental
Liabilities” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs,
investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand
by any other Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or common law, in each
case arising under or related to any Environmental Laws, Environmental Permits,
or in connection with any Release or threatened Release or presence of a
Hazardous Material whether on, at, in, under, from or about or in the vicinity
of any real or personal property.

 

“Environmental Permits”
means all permits, licenses, authorizations, certificates, approvals or
registrations required by any Governmental Authority under any Environmental
Laws.

 

“Equipment” means all
“equipment,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located and, in any event, including all
such Credit Party’s machinery and equipment, including processing equipment,
conveyors, machine tools, data processing and computer equipment, including
embedded software and peripheral equipment and all engineering, processing and
manufacturing equipment, office machinery, furniture, materials handling
equipment, tools, attachments, accessories, automotive equipment, trailers,
trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock and other
equipment of every kind and nature, trade fixtures and fixtures not forming a part of
real property, together with all additions and accessions thereto, replacements
therefor, all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights with
respect thereto, and all products and proceeds thereof and condemnation awards
and insurance proceeds with respect thereto.

 

A-8

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
and any regulations promulgated thereunder.

 

“ERISA Affiliate”
means, with respect to any Credit Party, any trade or business (whether or not
incorporated) that, together with such Credit Party, are treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the IRC.

 

“ERISA Event” means,
with respect to any Credit Party or any ERISA Affiliate, (a) any event
described in Section 4043(c) of ERISA with respect to a Title IV
Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any
ERISA Affiliate from any Multiemployer Plan; (d) the filing of a notice of
intent to terminate a Title IV Plan or the treatment of a plan amendment as a
termination under Section 4041 of ERISA; (e) the institution of
proceedings to terminate a Title IV Plan or Multiemployer Plan by the PBGC; (f) the
failure by any Credit Party or ERISA Affiliate to make when due required
contributions to a Multiemployer Plan or Title IV Plan unless such failure is
cured within thirty (30) days; (g) any other event or condition that would
reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or Multiemployer Plan or for the imposition of liability under Section 4069
or 4212(c) of ERISA; (h) the termination of a Multiemployer Plan
under Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA; or (i) the
loss of a Qualified Plan’s qualification or tax exempt status; or (j) the
termination of a Plan described in Section 4064 of ERISA.

 

“Event of Default”
has the meaning ascribed to it in Section 8.1.

 

“Excluded Foreign
Subsidiary” means any Foreign Subsidiary in respect of which either (a) the
pledge of all of the Stock of such Subsidiary as Collateral or (b) the
guaranteeing by such Subsidiary of the Obligations, would, in the good faith
judgment of Borrower, result in adverse tax consequences to Borrower under
applicable provisions of the IRC.

 

“Existing Secured
Subordinated Notes” means (a) the Secured Subordinated Note dated January 5,
2004 in the original principal sum of $3,853,258.77 issued by Company in favor
of Windward Capital Partners II, L.P., together with any additional notes
issued in replacement or substitution thereof, (b) the certain Secured
Subordinated Note dated January 5, 2004 in the original principal sum of
$146,741.23 issued by Festival in favor of Windward Capital LP II, LLC,
together with any additional notes issued in replacement or substitution
thereof, and (c) any other promissory notes issued by Festival pursuant to
that certain Secured Subordinated Note Agreement, dated as of January 5,
2004, by and among Windward Capital Partners II, L.P., Windward Capital LP II,
LLC, Festival, the Seller, and Antares Capital Corporation, together with any
additional notes issued in replacement or substitution thereof.

 

“Existing Subordinated
Notes” means (a) the promissory notes issued by Festival in favor of
Windward Capital Partners II, L.P. and Windward Capital LP II, LLC pursuant to
that certain Purchase Agreement, dated as of January 5, 2004, by and among
the Seller, Festival, Windward Capital Partners II, L.P., Windward Capital LP
II, LLC, together with any additional notes issued in replacement or
substitution thereof, and (b) the promissory notes issued by Festival
pursuant to that certain Second Amended and Restated Subordinated Note
Agreement, dated as of January 5, 2004, by and among the Festival, the
Seller, The Northwestern Mutual Life Insurance Company, Fleet Corporate Finance, Inc.,
J.H. Whitney Mezzanine Fund, Whitney Private Debt Fund, L.P., Pacific Life
Insurance Company,

 

A-9

 

Pacific Life and Annuity
Company, Capital d’Amerique CDPQ, COM Mezzanine Fund, L.P., Metropolitan Life
Insurance Company, the Royal Bank of Scotland plc, Antares Capital, Windward
Capital Partners II, L.P., and Windward Capital Partners LP II, LLC to, as
amended, modified, supplemented or restated, together with any additional notes
issued in replacement or substitution thereof.

 

“Fair Labor Standards Act”
means the Fair Labor Standards Act, 29 U.S.C. §201 et seq.

 

“Federal Funds Rate”
means, for any day, a floating rate equal to the weighted average of the rates
on overnight federal funds transactions among members of the Federal Reserve
System, as published on the next succeeding Business Day by the Federal Reserve
Bank of New York or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for the day of such transactions
received by GE Capital from three federal funds brokers of recognized standing
selected by it.

 

“Federal Reserve Board”
means the Board of Governors of the Federal Reserve System.

 

“Fees” means any and
all fees payable to Agent or any Lender pursuant to the Agreement or any of the
other Loan Documents.

 

“Festival” has the
meaning ascribed thereto in the preamble to the Agreement.

 

“Financial Covenants”
means the financial covenants set forth in Annex G.

 

“Financial Statements”
means the consolidated income statements, statements of cash flows and balance
sheets of the Credit Parties delivered in accordance with Section 3.4
and Annex E.

 

“Fiscal Quarter”
means any of the quarterly accounting periods of the Credit Parties, ending on March 31,
June 30, September 30 and December 31 of each year.

 

“Fiscal Year” means
any of the annual accounting periods of the Credit Parties ending on December 31
of each year.

 

“Fixed Charges”
means, with respect to any Person for any fiscal period, (a) the aggregate
of all Interest Expense paid in cash during such period,
plus (b) scheduled payments of principal with respect to
Indebtedness during such period (after giving effect to all voluntary
prepayments of such Indebtedness during such period), and plus (c) Lease
Expenses; provided that, with respect to the Borrower and its
consolidated Subsidiaries, Fixed Charges shall be deemed to be the following
amounts for the following Fiscal Quarters: (1) Fiscal Quarter ended March 31,
2006, $8,791,000; (2) Fiscal Quarter ended December 31, 2005, $8,297,000;
(3) Fiscal Quarter ended September 30, 2005, $10,062,000 and (4) Fiscal
Quarter ended June 30, 2005, $9,195,000.

 

“Fixed Charge Coverage
Ratio” means, with respect to any Person for any fiscal period, the ratio
of its EBITDAR calculated on a trailing twelve month basis to its Fixed Charges calculated on a
trailing twelve month basis, determined
on a consolidated basis.

 

“Fixtures” means all “fixtures”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party.

 

“Foreign Subsidiary”
means any Subsidiary of Holdings or Borrowers that is not a Domestic
Subsidiary.

 

A-10

 

“Funded Debt” means,
with respect to any Person, without duplication, all Indebtedness for borrowed
money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and that by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person’s option under a
revolving credit or similar agreement obligating the lender or lenders to
extend credit over a period of more than one year from the date of creation
thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrowers, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons; provided that,
with respect to the Borrower and its consolidated Subsidiaries, Funded Debt
shall be deemed to be the following amounts for the following Fiscal Quarters: (1) Fiscal
Quarter ended March 31, 2006, $156,733,000; (2) Fiscal Quarter ended December 31,
2005, $151,600,000; (3) Fiscal Quarter ended September 30, 2005,
$152,536,000 and (4) Fiscal Quarter ended June 30, 2005,
$165,207,000.

 

“GAAP” means
generally accepted accounting principles in the U.S., consistently applied, as
such term is further defined in Annex E to the Agreement.

 

“GE Capital” means
General Electric Capital Corporation, a Delaware corporation.

 

“GE Capital Fee Letter”
means that certain letter, dated as of February 21, 2006, between GE
Capital and Holdings with respect to certain Fees to be paid from time to time
by Borrower to GE Capital.

 

“General Intangibles”
means all “general intangibles,” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, including all right, title and
interest that such Credit Party may now or hereafter have in or under any
Contract, all payment intangibles, customer lists, Licenses, Copyrights,
Trademarks, Patents, and all applications therefor and reissues, extensions or
renewals thereof, rights in Intellectual Property, interests in partnerships, joint
ventures and other business associations, licenses, permits, copyrights, trade
secrets, proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience, processes,
models, drawings, materials and records, goodwill (including the goodwill
associated with any Trademark or Trademark License), all rights and claims in
or under insurance policies (including insurance for fire, damage, loss and
casualty, whether covering personal property, real property, tangible rights or
intangible rights, all liability, life, key man and business interruption
insurance, and all unearned premiums), uncertificated securities, choses in
action, deposit, checking and other bank accounts, rights to receive tax
refunds and other payments, rights to receive dividends, distributions, cash,
Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in
the possession or under the control of such Credit Party or any computer bureau
or service company from time to time acting for such Credit Party.

 

“Goods” means all “goods”
as defined in the Code, now owned or hereafter acquired by any Credit Party,
wherever located, including embedded software to the extent included in “goods”
as defined in the Code, manufactured homes, standing timber that is cut and
removed for sale and unborn young of animals.

 

A-11

 

“Governmental Authority”
means any nation or government, any state or other political subdivision
thereof, and any agency, department or other entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

 

“Guaranteed Indebtedness”
means, as to any Person, any obligation of such Person guaranteeing, providing
comfort or otherwise supporting any indebtedness, lease, dividend, or other
obligation (“primary obligation”) of any other Person (the “primary
obligor”) in any manner, including any obligation or arrangement of such
Person to (a) purchase or repurchase any such primary obligation, (b) advance
or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet condition of the primary obligor, (c) purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment
of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of
(x) the stated or determinable amount of the primary obligation in respect of
which such Guaranteed Indebtedness is incurred and (y) the maximum amount for
which such Person may be liable pursuant to the terms of the instrument
embodying such Guaranteed Indebtedness, or, if not stated or determinable, the
maximum reasonably anticipated liability (assuming full performance) in respect
thereof.

 

“Guarantor
Security Agreement” means the Security Agreement of even date herewith
entered into by and among Agent, on behalf of itself and Lenders, Holdings and
each Subsidiary Guarantor.

 

“Guarantors” means
Holdings, Palace Finance and each Subsidiary Guarantor.

 

“Guaranty Agreement”
means the Guaranty Agreement of even date herewith executed by Holdings and
each Subsidiary of Holdings (other than Borrowers and Palace Finance) in favor
of Agent, on behalf of itself and Lenders.

 

“Hazardous Material”
means any substance, material or waste that is regulated by, or forms the basis
of liability now or hereafter under, any Environmental Laws, including any
material or substance that is (a) defined as a “solid waste,” “hazardous
waste,” “hazardous material,” “hazardous substance,” “extremely hazardous
waste,”  “restricted hazardous waste,” “pollutant,”
“contaminant,” “hazardous constituent,” “special waste,” “toxic substance” or
other similar term or phrase under any Environmental Laws, or (b) petroleum
or any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB’s),
or any radioactive substance.

 

“Holdings” has the
meaning ascribed thereto in the preamble to the Agreement.

 

“Holdings Pledge
Agreement” means the Pledge Agreement of event date herewith entered
into by Holdings and Agent, on behalf of itself and Lenders.

 

“Incremental Amendment”
has the meaning ascribed to it in Section 1.1(a)(iii).

 

“Indebtedness” means,
with respect to any Person, without duplication (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property
payment for which is deferred 6 months or more, but excluding obligations to
trade creditors incurred in the ordinary course of business that are unsecured
and not overdue by more than 6 months unless being contested in good faith, (b) all
reimbursement and other obligations with respect to letters of credit,

 

A-12

 

bankers’ acceptances and
surety bonds, whether or not matured, (c) all obligations evidenced by
notes, bonds, debentures or similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (e) all
Capital Lease Obligations and the present value (discounted at the Index Rate
as in effect on the Closing Date) of future rental payments under all synthetic
leases, (f) all obligations of such Person under commodity purchase or
option agreements or other commodity price hedging arrangements, in each case
whether contingent or matured, (g) all obligations of such Person under
any foreign exchange contract, currency swap agreement, interest rate swap, cap
or collar agreement or other similar agreement or arrangement designed to alter
the risks of that Person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.

 

“Indemnified Liabilities”
has the meaning ascribed to it in Section 1.11(d).

 

“Indemnified Person”
has the meaning ascribed to it in Section 1.11(d).

 

“Index Rate” means,
for any day, a floating rate equal to the higher of (i) the rate publicly
quoted from time to time by The Wall Street Journal as
the “prime rate” (or, if The Wall Street Journal ceases
quoting a prime rate, the highest per annum rate of interest published by the
Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled “Selected Interest Rates” as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per
annum. Each change in any interest rate provided for in the Agreement based
upon the Index Rate shall take effect at the time of such change in the Index
Rate.

 

“Index Rate Loan”
means a Loan or portion thereof bearing interest by reference to the Index
Rate.

 

“Instruments” means
all “instruments,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, and, in any event, including
all certificated securities, all certificates of deposit, and all promissory
notes and other evidences of indebtedness, other than instruments that
constitute, or are a part of a group of writings that constitute, Chattel
Paper.

 

“Intellectual Property”
means any and all Licenses, Patents, Copyrights, Trademarks, and the goodwill
associated with such Trademarks.

 

“Intercompany Notes”
has the meaning ascribed to it in Section 6.3.

 

“Interest Expense”
means, with respect to any Person for any fiscal period, cash interest expense
of such Person determined in accordance with GAAP for the relevant period ended
on such date, including interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been capitalized
on the balance sheet of such Person.

 

“Interest Payment Date”
means (a) as to any Index Rate Loan, the first Business Day of each
calendar quarter to occur while such Loan is outstanding, and (b) as to
any LIBOR Loan, the last day of the applicable LIBOR Period; provided,
that in the case of any LIBOR Period greater than three months in duration,
interest shall be payable at three month intervals and on the last day of such
LIBOR Period; and provided  further that, in addition to the
foregoing, each of (x) the date upon which all of the

 

A-13

 

Commitments have been
terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an “Interest Payment Date” with
respect to any interest that has then accrued under the Agreement.

 

“Inventory” means all
“inventory,” as such term is defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, and in any event including
inventory, merchandise, goods and other personal property that are held by or
on behalf of any Credit Party for sale or lease or are furnished or are to be
furnished under a contract of service, or that constitute raw materials, work
in process, finished goods, returned goods, supplies or materials of any kind,
nature or description used or consumed or to be used or consumed in such Credit
Party’s business or in the processing, production, packaging, promotion,
delivery or shipping of the same, including all supplies and embedded software.

 

“Investment Property”
means all “investment property” as such term is defined in the Code now owned
or hereafter acquired by any Credit Party, wherever located, including (i) all
securities, whether certificated or uncertificated, including stocks, bonds,
interests in limited liability companies, partnership interests, treasuries,
certificates of deposit, and mutual fund shares; (ii) all securities
entitlements of any Credit Party, including the rights of such Credit Party to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or other
money owing by any securities intermediary with respect to that account; (iii) all
securities accounts of any Credit Party; (iv) all commodity contracts of
any Credit Party; and (v) all commodity accounts held by any Credit Party.

 

“IRC” means the
Internal Revenue Code of 1986, as amended, and all regulations promulgated
thereunder.

 

“IRS” means the
Internal Revenue Service.

 

“L/C Issuance Fee”
means, with respect to each Letter of Credit outstanding, an amount equal to (i) the
face amount of such Letter of Credit from time to time, multiplied by (ii) one-quarter
of one percent (0.25%) per annum.

 

“L/C Issuer” has the
meaning ascribed to it in Annex B.

 

“L/C Participants”
means, collectively, all Lenders other than the L/C Issuer.

 

“L/C Sublimit” has
the meaning ascribed to in it Annex B.

 

“Lease Expenses”
means, with respect to any Person for any fiscal period, the aggregate rental
obligations of such Person determined in accordance with GAAP which are payable
in respect of such period under leases of real or personal property (net of
income from subleases thereof, but including property taxes in respect of such
leased property that such Person is obligated to pay under the terms of such
leases), whether or not such obligations are reflected as liabilities or
commitments on a consolidated balance sheet of such Person or in the notes
thereto, excluding, however, any such obligations under Capital Leases.

 

“Lenders” means GE
Capital, the other Lenders named on the signature pages of the Agreement,
and, if any such Lender shall decide to assign all or any portion of the
Obligations, such term shall include any assignee of such Lender.

 

“Letter of Credit Fee”
has the meaning ascribed to it in Annex B.

 

A-14

 

“Letter of Credit
Obligations” means all outstanding obligations incurred by Agent and
Lenders at the request of Borrower Representative, whether direct or indirect,
contingent or otherwise, due or not due, in connection with the issuance of
Letters of Credit by Agent or another L/C Issuer or the purchase of a
participation as set forth in Annex B with respect to any Letter of
Credit. The amount of such Letter of Credit Obligations shall equal the maximum
amount that may be payable by Agent or Lenders thereupon or pursuant
thereto.

 

“Letter-of-Credit Rights”
means “letter-of-credit rights” as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, including rights to payment or
performance under a letter of credit, whether or not such Credit Party, as
beneficiary, has demanded or is entitled to demand payment or performance.

 

“Letters of Credit”
means documentary or standby letters of credit issued for the account of any
Borrower by any L/C Issuer, and bankers’ acceptances issued by any Borrower,
for which Agent and Lenders have incurred Letter of Credit Obligations.

 

“Leverage Ratio”
means, with respect to Borrowers and their Subsidiaries, on a consolidated
basis, as of any date of determination, the ratio of (a) average Net Debt
for the twelve months ending on such date of determination, to (b) EBITDA
for the twelve months ending on such date of determination.

 

“LIBOR Business Day”
means a Business Day on which banks in the City of London are generally open
for interbank or foreign exchange transactions.

 

“LIBOR Loan” means a
Loan or any portion thereof bearing interest by reference to the LIBOR Rate.

 

“LIBOR Period” means,
with respect to any LIBOR Loan, each period commencing on a LIBOR Business Day
selected by Borrower Representative pursuant to the Agreement and ending one,
two, three or six months thereafter, as selected by Borrower Representative’s irrevocable
notice to Agent as set forth in Section 1.4(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:

 

(a)                                  if any LIBOR Period would otherwise end on a
day that is not a LIBOR Business Day, such LIBOR Period shall be extended to
the next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in which event
such LIBOR Period shall end on the immediately preceding LIBOR Business Day;

 

(b)                                 any LIBOR Period that would otherwise extend
beyond the Commitment Termination Date shall end two (2) LIBOR Business
Days prior to such date;

 

(c)                                  any LIBOR Period that begins on the last
LIBOR Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;

 

(d)                                 Borrower Representative shall select LIBOR
Periods so as not to require a payment or prepayment of any LIBOR Loan during a
LIBOR Period for such Loan; and

 

(e)                                  Borrower Representative shall select LIBOR
Periods so that there shall be no more than 5 separate LIBOR Loans in existence
at any one time.

 

A-15

 

“LIBOR Rate” means
for each LIBOR Period, a rate of interest determined by Agent equal to:

 

(a)                                  the offered rate for deposits in United
States Dollars for the applicable LIBOR Period that appears on Telerate Page 3750
as of 11:00 a.m. (London time), on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period; divided by

 

(b)                                 a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on the day that is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including basic,
supplemental, marginal and emergency reserves under any regulations of the
Federal Reserve Board or other Governmental Authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
the Federal Reserve Board that are required to be maintained by a member bank
of the Federal Reserve System.

 

If such interest rates shall
cease to be available from Telerate News Service, the LIBOR Rate shall be
determined from such financial reporting service or other information as shall
be mutually acceptable to Agent and Borrower Representative.

 

“License” means any
Copyright License, Patent License, Trademark License or other license of rights
or interests now held or hereafter acquired by any Credit Party.

 

“Lien” means any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement,
lien, charge, claim, security interest, easement or encumbrance, or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including any lease or title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of, or agreement to give, any financing statement
perfecting a security interest under the Code or comparable law of any
jurisdiction).

 

“Litigation” has the
meaning ascribed to it in Section 3.13.

 

“Loan Account” has
the meaning ascribed to it in Section 1.10.

 

“Loan Documents”
means the Agreement, the Notes, the Collateral Documents, the Master Standby
Agreement, Post-Closing Obligations Letter, the Cyberbank Agreement, the GE
Capital Fee Letter, the Master Documentary Agreement, and all other agreements,
instruments, documents and certificates identified in the Closing Checklist
executed and delivered by any Credit Party to, or in favor of, Agent or any
Lenders. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to the Agreement or such Loan Document as the same may be in effect
at any and all times such reference becomes operative. For the avoidance of
doubt, the term “Loan Documents” shall not include any of the Senior Unsecured
Note Documents or any of the Acquisition Agreements.

 

“Loans” means the
Revolving Loan and the Swing Line Loan.

 

“Margin Stock” has
the meaning ascribed to it in Section 3.10.

 

A-16

 

“Master Documentary
Agreement” means the Master Agreement for Documentary Letters of Credit
dated as of the Closing Date among Borrowers, as Applicants, and GE Capital, as
Issuer, substantially in the form of Exhibit B-4.

 

“Master Standby Agreement”
means the Master Agreement for Standby Letters of Credit dated as of the
Closing Date among Borrowers, as Applicants, and GE Capital, as Issuer, substantially
in the form of Exhibit B-2.

 

“Material Adverse Effect”
means a material adverse effect on (a) the assets, business, operations,
condition (financial or otherwise) or results of operations of Holdings,
Borrowers and their respective Subsidiaries, taken as a whole, or (b) the
validity or enforceability of the Agreement or any of the other Loan Documents
or the rights or remedies of Agent or Lenders thereunder.

 

“Material Agreements”
means, as of any date of determination, any agreements, leases, contracts or
licenses to which any Credit Party is a party to, the termination of which or
breach of which (by Credit Party or any other Person party thereto) could
reasonably be expected to result in an Material Adverse Effect.

 

“Maximum Amount”
means, as of any date of determination, an amount equal to the Revolving Loan
Commitment of all Lenders as of that date.

 

“Monthly Reports”
means the monthly financial data generated by Borrowers’ (or, prior to the
Closing Date, the Acquired Business’s) internal accounting systems for use by
its senior and financial management and any other of its monthly financial data
made available to Sponsor and its Affiliates.

 

“Moody’s” means Moody’s
Investors Service, Inc.

 

“Mortgaged Properties”
means the Real Property described in paragraph Q of Annex D hereto,
together with any other Real Property that now or hereafter becomes subject to
a Mortgage.

 

“Mortgages” means
each of the mortgages, deeds of trust, leasehold mortgages, leasehold deeds of
trust, collateral assignments of leases or other real estate security documents
delivered by any Credit Party to Agent on behalf of itself and Lenders with
respect to any Real Property now or hereafter owned or leased by any of the
Credit Parties, all in form and substance reasonably satisfactory to
Agent.

 

“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA, and to which any Credit Party or ERISA Affiliate is making, is obligated
to make or has made or been obligated to make, contributions on behalf of
participants who are or were employed by any of them.

 

“Net Debt” means, as
of any date of determination, (a) the aggregate outstanding principal
amount of all Funded Debt of the Borrowers and their Subsidiaries, calculated
on a consolidated basis, as of such date of determination, less (b) cash
and Cash Equivalents owned by Borrowers and their Subsidiaries which are either
(i) freely available to fund debt service of Borrowers and their Subsidiaries
as of such date of determination or (ii) to the extent and only to the
extent that such cash or Cash Equivalents have been pledged to Agent and Agent
for the benefit of itself and the Lenders has a first priority perfected Lien
in such cash or Cash Equivalents as of such date of determination.

 

“Non-Funding Lender”
has the meaning ascribed to it in Section 9.9(a)(ii).

 

“Notes” means,
collectively, the Revolving Notes and the Swing Line Note.

 

A-17

 

“Notice of
Conversion/Continuation” has the meaning ascribed to it in Section 1.5(e).

 

“Notice of Revolving
Credit Advance” has the meaning ascribed to it in Section 1.1(a).

 

“Obligations” means
all loans, advances, debts, liabilities and obligations, for the performance of
covenants, tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts are liquidated
or determinable) owing by any Credit Party to Agent or any Lender, and all
covenants and duties regarding such amounts, of any kind or nature, present or
future, whether or not evidenced by any note, agreement, letter of credit
agreement or other instrument, arising under the Agreement or any of the other
Loan Documents. This term includes all principal, interest (including all
interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, hedging obligations under swaps, caps and collar
arrangements provided by any Lender, expenses, attorneys’ fees and any other
sum chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.

 

“Palace Finance”
means Palace Finance, Inc., a Delaware corporation and a direct
wholly-owned Subsidiary of Holdings.

 

“Palace Finance Guaranty
Agreement” means the Guaranty Agreement of even date herewith executed by
Palace Finance in favor of Agent, on behalf of itself and Lenders.

 

“Palace
Finance Security Agreement” means the Security Agreement of even date
herewith entered into by and among Agent, on behalf of itself and Lenders, and
Palace Finance.

 

“Park” means any water
park or family entertainment center now or hereafter owned and operated by the
Borrowers or any of their Subsidiaries, including, without limitation, as of
the Closing Date, the water parks and family entertainment centers owned and
operated by Borrowers and their Subsidiaries and identified on Disclosure Schedule (3.6).

 

“Patent License”
means rights under any written agreement now owned or hereafter acquired by any
Credit Party granting any right with respect to any invention on which a Patent
is in existence.

 

“Patent Security
Agreements” means the Patent Security Agreements made in favor of Agent, on
behalf of itself and Lenders, by each applicable Credit Party.

 

“Patents” means all
of the following in which any Credit Party now holds or hereafter acquires any
interest: (a) all letters patent of the United States or any other
country, all registrations and recordings thereof, and all applications for
letters patent of the United States or of any other country, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.

 

“PBGC” means the
Pension Benefit Guaranty Corporation.

 

“Pension Plan” means
a Plan described in Section 3(2) of ERISA.

 

“Permitted Acquisition”
has the meaning ascribed to it in Section 6.1(a).

 

A-18

 

“Permitted Encumbrances”
means the following encumbrances: (a) Liens for taxes or assessments or
other governmental Charges not yet due and payable or which are being contested
in accordance with Section 5.2(b) or otherwise not required to
be paid under Section 5.2(b); 
(b) pledges or deposits of money securing statutory obligations
under workmen’s compensation, unemployment insurance, social security or public
liability laws or similar legislation (excluding Liens under ERISA); (c) pledges
or deposits of money securing bids, tenders, contracts (other than contracts
for the payment of money) or leases to which any Credit Party is a party as
lessee made in the ordinary course of business; (d) inchoate and
unperfected workers’, mechanics’ or similar liens arising in the ordinary
course of business, so long as such Liens attach only to Equipment, Fixtures
and/or Real Estate; (e) carriers’, warehousemen’s, suppliers’ or other
similar possessory liens arising in the ordinary course of business and
securing liabilities (other than Indebtedness) in an outstanding aggregate amount not in
excess of $1,000,000 at any time; (f) deposits or Cash or Cash Equivalents
securing, or in lieu of, surety, appeal or customs bonds, letters of credit or
banker’s acceptances in proceedings to which any Credit Party is a party; (g) any
attachment or judgment lien not constituting an Event of Default under Section 8.1(j);
(h) zoning restrictions, easements, licenses, or other restrictions on the
use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the use,
value, or marketability of such Real Estate; (i) presently existing or
hereafter created Liens in favor of Agent, on behalf of Lenders; (j) banker’s
liens and rights of setoff relating to Deposit Accounts (and not for
Indebtedness for borrowed money), including security interests of collecting
banks arising under Section 4-210 of the Code, in each case, to the extent
not required to be waived or subordinated pursuant to any tri-party Deposit
Account control agreements required under the Cash Management System; (k)
deposits, in an aggregate amount not to exceed $50,000 for all Credit Parties
combined, made in the ordinary course of business to secure liability to
insurance carriers, (j) Liens expressly permitted under clauses (b) and
(c) of Section 6.7 of the Agreement; (k) other Liens securing
other liabilities or obligations in an aggregate principal amount outstanding
at any time not to exceed $250,000, (l) Liens securing Indebtedness
under hedging agreements permitted
under Section 6.3(a)(ix), provided that such Liens are
junior in priority to the Liens granted in favor of Agent securing the
Obligations and such Liens are subject to an intercreditor agreement in form and
substance satisfactory to Agent.

 

“Permitted Prepayments of Senior Unsecured
Debt” means and includes:

 

(a) the prepayment of the Senior
Unsecured Debt from Indebtedness that refinances such Senior Unsecured Debt
(such Indebtedness being referred to herein as “Refinancing Debt”), provided
that such Refinancing Debt (i) is unsecured, (ii) has a bullet
maturity date not less than one year after the Stated Maturity Date, (iii) does
not have covenants, representations, warranties, events of default, mandatory
prepayment provisions or other terms and provisions (including interest and
fees) that are more restrictive or burdensome on any of the Credit Parties than
the Senior Unsecured Note Documents as in effect on the Closing Date (and as
amended, provided such amendments are expressly permitted under this Agreement
or consented to in writing by the Requisite Lenders), and otherwise is on terms
no less favorable in any material respect to Lenders than the Senior Unsecured
Note Documents as in effect on the Closing Date (and as amended, provided such
amendments are expressly permitted under this Agreement or consented to in writing
by the Requisite Lenders);

 

(b) the prepayment from the cash
proceeds of any asset disposition or Recovery Event, net of (A) commissions
and other reasonable and customary transaction costs, fees and expenses
properly attributable to such transaction and payable by Borrowers in
connection therewith (in each case, paid to non-Affiliates), (B) transfer
taxes, (C) amounts payable to holders of senior Liens on such asset (to
the extent such Liens constitute Permitted Encumbrances hereunder), if any, and
(D) an appropriate reserve for income taxes in accordance with GAAP in
connection therewith, provided that (i) such asset sales are
expressly permitted under this Agreement, (ii) no Default or Event of
Default exists or will result from

 

A-19

 

such asset sale or prepayment, (iii) the entire amount of such net
proceeds from such asset sales and Recovery Events shall first be applied to
repay all outstanding Loans, together with accrued interest thereon, and to cash
collateralize any outstanding Letters of Credit in the manner provided for in
Annex B hereto, (iv) after giving effect to the repayment of such Loans in
the immediately preceding clause (iii), the remaining balance, if any, of such
net proceeds may then be applied to repay the principal amount of Senior
Unsecured Debt, and (v) in the connection with the required prepayment of
Loans (and cash collateralization of any outstanding Letters of Credit) under
clause (iii) above of this paragraph, the aggregate Revolving Loan
Commitments shall be permanently reduced on a percentage basis by an amount
equal to the same percentage as the percentage reduction in the outstanding
principal amount of Senior Unsecured Debt resulting from any prepayment of
Senior Unsecured Debt from such net proceeds pursuant to clause (iv) above
of this paragraph; and

 

(c) at any time after the Closing Date,
from (i) unrestricted cash on hand of the Borrowers and their Subsidiaries
generated from the business operations of the Borrowers and their Subsidiaries
(and excluding the proceeds of any Loans, capital contributions, Refinancing
Debt or other Indebtedness) and (ii) the proceeds of cash capital
contributions, limited to not more than once per Fiscal Year in the case of any
cash capital contributions, provided that (x) no Default or Event of
Default exists or will result therefrom, (y) the entire net proceeds from such
unrestricted cash on hand must first be applied by Borrowers to repay all
outstanding Loans, together with accrued interest thereon, and to cash
collateralize any outstanding Letters of Credit in the manner provided for in
Annex B hereto, without any required reduction in the any Revolving Loan
Commitments as a result of such prepayment and/or cash collateralization), and (z)
the prepayment premium in respect thereof shall not exceed 2% of the amount to
be prepaid.

 

“Permitted Tax Distributions” means,
any and all (a) cash distributions made by any Subsidiary of Holdings to
Holdings to the extent used by Holdings to pay the federal and state income
taxes owed by the Credit Parties for such Fiscal Year; provided, however,
that prior to paying each such distribution to Holdings, the chief financial
officer of the Borrower Representative shall provide Agent with a written certificate
calculating the amount of such distribution and, upon request from Agent,
promptly provide Agent with any further information it may reasonably
request relating to the amount or calculation of such distribution.

 

“Person” means any
individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign, or otherwise,
including any instrumentality, division, agency, body or department thereof).

 

“Plan” means, at any
time, an “employee benefit plan,” as defined in Section 3(3) of
ERISA, that any Credit Party or ERISA Affiliate maintains, contributes to or
has an obligation to contribute to on behalf of participants who are or were
employed by any Credit Party.

 

“Pledge Agreements”
means, collectively, the Holdings Pledge Agreement, the Borrower Pledge
Agreement, and any other Pledge Agreement now or hereafter entered into by any
Credit Party in favor of Agent for the benefit of itself and the Lenders to
secure the Obligations.

 

“Post-Closing Obligations
Letter” means that certain Post-Closing Obligations Letter dated as of the
Agreement between Borrower Representative and Agent.

 

“Prior Lenders” means
(a) Antares Capital Corporation, Royal Bank of Scotland and the other
Persons party to the Antares Credit Agreement as lenders, (b) Windward
Capital Partners II, L.P.,

 

A-20

 

Windward Capital LP II, LLC, Windward Capital Management, LLC, Antares
Capital Corporation and any other Persons that hold any of the Existing Secured
Subordinated Notes, (c) The Northwestern Mutual Life Insurance Company,
Fleet Corporate Finance, Inc., J.H. Whitney Mezzanine Fund, Whitney
Private Debt Fund, L.P., Pacific Life Insurance Company, Pacific Life and
Annuity Company, Capital d’Amerique CDPQ, COM Mezzanine Fund, L.P.,
Metropolitan Life Insurance Company, the Royal Bank of Scotland plc, Antares
Capital, Windward Capital Partners II, L.P., Windward Capital Partners LP II,
LLC and any other Persons that hold any of the Existing Subordinated Notes.

 

“Prior Lender Obligations”
means any and all outstanding Indebtedness and other obligations (whether
primary of secondary) owing by any Credit Party under the (a) Antares
Credit Agreement, (b) the Existing Subordinated Notes, (c) the
Existing Secured Subordinated Notes or (d) any other loan document,
agreement, guaranty or note purchase agreement evidencing any of the
Indebtedness of such Credit Party under the preceding clauses (a) through
(c).

 

“Proceeds” means all “proceeds,”
as such term is defined in the Code, including (a) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable to any Credit Party from
time to time with respect to any of the Collateral, (b) any and all
payments (in any form whatsoever) made or due and payable to any Credit
Party from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral
by any Governmental Authority (or any Person acting under color of governmental
authority), (c) any claim of any Credit Party against third parties (i) for
past, present or future infringement of any Patent or Patent License, or (ii) for
past, present or future infringement or dilution of any Copyright, Copyright
License, Trademark or Trademark License, or for injury to the goodwill
associated with any Trademark or Trademark License, (d) any recoveries by
any Credit Party against third parties with respect to any litigation or
dispute concerning any of the Collateral including claims arising out of the
loss or nonconformity of, interference with the use of, defects in, or
infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to
payment or other property acquired upon the sale, lease, license, exchange or
other disposition of Collateral and all rights arising out of Collateral.

 

“Pro Forma” means,
collectively, (a) the audited consolidated balance sheet of Borrowers and
their Subsidiaries as of December 31, 2005 and the related audited
consolidated statements of income and cash flows for the Fiscal Year ended on
such date, and (b) the audited consolidated earnings statement (before
giving effect to any deductions for (i) Interest Expense, (ii) Taxes,
(iii) depreciation and amortization and (iv) Lease Expenses for such
period) of Borrowers and their Subsidiaries for the Fiscal Year ended on December 31,
2005, in each case after giving pro  forma effect to the Related
Transactions.

 

“Projections” means
Borrowers’ forecasted consolidated:  (a) balance
sheets; (b) profit and loss statements; and (c) cash flow statements;
all consistent with the historical Financial Statements of Borrowers, together
with appropriate supporting details and a statement of underlying assumptions.

 

“Pro Rata Share”
means with respect to all matters relating to any Lender, the percentage
obtained by dividing (i) the Revolving Loan Commitment of that Lender by (ii) the
aggregate Revolving Loan Commitments of all Lenders.

 

“Qualified Assignee”
means (a) any Lender, any Affiliate of any Lender and, with respect to any
Lender that is an investment fund that invests in commercial loans, any other
investment fund that invests in commercial loans and that is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor, and (b) any commercial bank, savings and loan

 

A-21

 

association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which has a rating of BBB or higher from S&P and a rating of
Baa2 or higher from Moody’s at the date that it becomes a Lender and which,
through its applicable lending office, is capable of lending to Borrowers
without the imposition of any withholding or similar taxes; provided that no
Person proposed to become a Lender after the Closing Date and determined by
Agent to be acting in the capacity of a vulture fund or distressed debt
purchaser shall be a Qualified Assignee, and no Person or Affiliate of such
Person proposed to become a Lender after the Closing Date and that holds any
Senior Unsecured Notes or Stock issued by any Credit Party shall be a Qualified
Assignee.

 

“Qualified Plan”
means a Pension Plan that is intended to be tax-qualified under Section 401(a) of
the IRC.

 

“Real Estate” has the
meaning ascribed to it in Section 3.6.

 

“Recovery Event”
means any settlement of or payment in respect of any property or casualty
insurance claim or any condemnation proceeding relating to any asset of any
Credit Party.

 

“Refinancing” means
the repayment in full by Borrowers of the Prior Lender Obligations on the
Closing Date.

 

“Refunded Swing Line Loan”
has the meaning ascribed to it in Section 1.1(b)(iii).

 

“Related Transactions”
has the meaning ascribed thereto in Section 2.1(c).

 

“Related Transactions
Documents” means the Loan Documents, the Acquisition Documents, the Senior
Unsecured Notes, and all other
agreements or instruments executed in connection with the Related Transactions.

 

“Release” means any
release, threatened release, spill, emission, leaking, pumping, pouring,
emitting, emptying, escape, injection, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Material in the indoor or outdoor
environment, including the movement of Hazardous Material through or in the
air, soil, surface water, ground water or property.

 

“Requisite Lenders”
means Lenders having (a) more than 50% of the Revolving Loan Commitments
of all Lenders, or (b) if the Revolving Loan Commitments have been
terminated, more than 50% of the aggregate outstanding amount of the Revolving
Loan and participations in respect of outstanding Swing Line Advances.

 

“Restricted Payment”
means, with respect to any Credit Party (a) the declaration or payment of
any dividend or the incurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Stock (other
than non-cash dividends payable in kind); (b) any payment on account of
the purchase, redemption, defeasance, sinking fund or other retirement of such
Credit Party’s Stock or any other payment or distribution made in respect
thereof, either directly or indirectly; (c) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to, any
Subordinated Debt or any Senior Unsecured Debt (except in the case of Senior Unsecured Debt regularly scheduled
payments of principal and interest pursuant to the terms of the Senior
Unsecured Note Documents as in effect on the Closing Date); (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the surrender
of, any

 

A-22

 

outstanding warrants, options or other rights to acquire Stock of such
Credit Party now or hereafter outstanding; (e) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising from
the purchase or sale of, any shares of such Credit Party’s Stock or of a claim
for reimbursement, indemnification or contribution arising out of or related to
any such claim for damages or rescission; (f) any payment, loan,
contribution, or other transfer of funds or other property to any Stockholder
of such Credit Party other than payment of compensation in the ordinary course
of business to Stockholders who are employees of such Credit Party; and (g) any
payment of management fees (or other fees of a similar nature) by such Credit
Party to any Stockholder of such Credit Party or its Affiliates.

 

“Retiree Welfare Plan”
means, at any time, a Welfare Plan that provides for continuing coverage or
benefits for any participant or any beneficiary of a participant after such
participant’s termination of employment, other than continuation coverage
provided pursuant to Section 4980B of the IRC and at the sole expense of
the participant or the beneficiary of the participant.

 

“Revolving Commitment
Increase” has the meaning ascribed to it in Section 1.1(a)(iii).

 

“Revolving Commitment
Increase Lender” has the meaning ascribed to it in Section 1.1(a)(iii).

 

“Revolving Credit Advance”
has the meaning ascribed to it in Section 1.1(a)(i).

 

“Revolving Loan”
means, at any time, the sum of (i) the aggregate principal amount of
Revolving Credit Advances outstanding to Borrowers plus (ii) the
aggregate Letter of Credit Obligations incurred on behalf of Borrowers. Unless
the context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of Credit
Obligations.

 

“Revolving Loan
Commitment” means (a) as to any Lender, the aggregate commitment of
such Lender to make Revolving Credit Advances or incur Letter of Credit
Obligations, which commitment shall be in the Dollar amount set forth on Annex
H to the Agreement or in the most recent Assignment Agreement executed by
such Lender (including, without duplication, the Swing Line Lender’s Swing Line
Commitment as a subset thereof) and (b) as to all Lenders, the aggregate
commitment of all Lenders to make Revolving Credit Advances or incur Letter of
Credit Obligations (including, without duplication, the Swing Line Lender’s
Swing Line Commitment as a subset thereof), which aggregate commitments shall
be in the amount of $40,000,000 on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the Agreement.

 

“Revolving Note” has
the meaning ascribed to it in Section 1.1(a)(ii).

 

“SEC” means the
Securities and Exchange Commission.

 

“Senior
Unsecured Debt” means the Indebtedness of Borrowers
evidenced by the Senior Unsecured Notes,
together with any Refinancing Debt as such term is defined in paragraph (a) of
the definition of “Permitted Prepayments of Senior Unsecured Debt” and meets
all of the conditions set forth in paragraph (a) of such definition.

 

“Senior Unsecured Note
Holders” means, collectively, the holders of the Senior Unsecured Notes.

 

A-23

 

“Senior Unsecured Note
Documents” means, collectively, the Senior Unsecured Notes, the Senior
Unsecured Note Indenture and any other agreement, document or instrument
evidencing the obligations (whether primary or secondary) of any Borrower,
Palace Finance or any of the other Credit Parties to the Senior
Unsecured Note Holders or the
Senior Unsecured Note Indenture Trustee, in each case as amended, supplemented,
restated or otherwise modified from time to time.

 

“Senior Unsecured Note
Indenture” means the Indenture dated as of April 12, 2006, among
Holdings, Borrowers, Palace Finance, the Subsidiaries of Borrowers party
thereto, and the Senior Unsecured Note Indenture Trustee.

 

“Senior Unsecured Note
Indenture Trustee” means Wells Fargo Bank, N.A., as trustee under the
Senior Unsecured Note Indenture, together with its successors and assigns in
such capacity.

 

“Senior Unsecured Notes”
means those certain 10 7/8% Senior Notes due 2014 issued by Festival and Palace Finance in an aggregate
original principal amount of up to $150,000,000, in each case as amended,
supplemented, restated, increased or otherwise modified from time to time,
together with any such notes issued in replacement or substitution thereof or
in connection with any refinancing or increase of Senior Unsecured Debt
provided such amendment, restatement, supplement, increase, modification or
refinancing is expressly permitted hereunder.

 

“Seller” means Palace
Entertainment, Inc., a Delaware corporation.

 

“Significant Subsidiary”
means, as of any date of determination, any Subsidiary of Festival or Holdings
contributing at least fifteen percent (15%) of Adjusted EBITDA of
Borrowers and their Subsidiaries calculated on a trailing twelve month
consolidated basis as of the fiscal quarter most recently ended.

 

“Software” means all “software”
as such term is defined in the Code, now owned or hereafter acquired by any
Credit Party, other than software embedded in any category of Goods, including
all computer programs and all supporting information provided in connection
with a transaction related to any program.

 

“Solvent” means, with
respect to any Person on a particular date, that on such date (a) the fair
value of the property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person; (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured; (c) such Person does not
intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay as such debts and liabilities mature; and (d) such
Person is not engaged in a business or transaction, and is not about to engage
in a business or transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.

 

“Sponsor” means each
of MidOcean Partners, LP, MidOcean Partners II, LP and their Affiliates (other
than Credit Parties).

 

“Sponsor Management
Agreement” means the Professional Services Agreement dated as of the
Closing Date, among Festival, Holdings, Palace Holdings Group, LLC, a Delaware
limited liability company (“PHG”) and MidOcean US Advisor, LP.

 

A-24

 

“Stated Maturity Date”
means April 12, 2012.

 

“Stock” means all
shares, options, warrants, general or limited partnership interests, membership
interests or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity
whether voting or nonvoting, including common stock, preferred stock or any
other “equity security” (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Securities
Exchange Act of 1934).

 

“Stockholder” means,
with respect to any Person, each holder of Stock of such Person.

 

“Subordinated Debt”
means any Indebtedness of any Credit Party subordinated to the Obligations in a
manner and form satisfactory to Agent and Lenders in their sole
discretion, as to right and time of payment and as to any other rights and
remedies thereunder.

 

“Subsidiary” means,
with respect to any Person, (a) any corporation of which an aggregate of
more than 50% of the outstanding Stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of
whether, at the time, Stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time, directly or indirectly, owned legally or
beneficially by such Person or one or more Subsidiaries of such Person, or with
respect to which any such Person has the right to vote or designate the vote of
50% or more of such Stock whether by proxy, agreement, operation of law or
otherwise, and (b) any partnership or limited liability company in which
such Person and/or one or more Subsidiaries of such Person shall have an
interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50% or of which any such Person is a general
partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrowers.

 

“Subsidiary Guarantor”
means (a) Wet ‘N Wild Nevada, Inc., a Nevada corporation, and (b) each
other Subsidiary of any Borrower or Holdings that enters into a Guaranty
Agreement in favor of Agent for the benefit of itself and the Lenders.

 

“Supporting Obligations”
means all “supporting obligations” as such term is defined in the Code,
including letters of credit and guaranties issued in support of Accounts,
Chattel Paper, Documents, General Intangibles, Instruments, or Investment
Property.

 

“Swing Line Advance”
has the meaning ascribed to it in Section 1.1(b)(i).

 

“Swing Line Availability”
has the meaning ascribed to it in Section 1.1(b)(i).

 

“Swing Line Commitment”
means, as to the Swing Line Lender, the commitment of the Swing Line Lender to
make Swing Line Advances as set forth on Annex H to the Agreement, which
commitment constitutes a subfacility of the Revolving Loan Commitment of the
Swing Line Lender.

 

“Swing Line Lender”
means GE Capital.

 

“Swing Line Loan”
means at any time, the aggregate amount of Swing Line Advances outstanding to
any Borrower or to all Borrowers.

 

“Swing Line Note” has
the meaning ascribed to it in Section 1.1(b)(ii).

 

A-25

 

“Taxes” means taxes,
levies, imposts, deductions, Charges or withholdings, and all liabilities with
respect thereto, excluding with respect to Agent or any Lender (i) income
or franchise taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which such Lender is located.

 

“Termination Date”
means the date on which (a) the Loans have been repaid in full, subject
to the reinstatement provisions in Section 11.15 of this Agreement
and any other similar reinstatement provisions in the other Loan Documents, (b) all other Obligations under the
Agreement and the other Loan Documents have been completely discharged (other
than contingent unliquidated indemnification obligations), (c) all Letter of Credit Obligations
have been cash collateralized, cancelled or backed by standby letters of credit
in accordance with Annex B, and (d) no Borrower shall have any further
right to borrow any monies under the Agreement.

 

“Tier 1 Parks” has
the meaning ascribed to it in paragraph Q of Annex D.

 

“Tier 2 Parks” has
the meaning ascribed to it in Section 5.10(a).

 

“Tier 3 Parks” has
the meaning ascribed to it in Section 5.10(b).

 

“Title IV Plan” means
a Pension Plan (other than a Multiemployer Plan), that is covered by Title IV
of ERISA, and that any Credit Party or ERISA Affiliate maintains, contributes
to or has an obligation to contribute to on behalf of participants who are or
were employed by any of them.

 

“Trademark License”
means rights under any written agreement now owned or hereafter acquired by any
Credit Party granting any right to use any Trademark.

 

“Trademark Security
Agreements” means the Trademark Security Agreements made in favor of Agent,
on behalf of Lenders, by each applicable Credit Party.

 

“Trademarks” means
all of the following now owned or hereafter adopted or acquired by any Credit
Party: (a) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers,
prints and labels on which any of the foregoing have appeared or appear,
designs and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all applications
in connection therewith, including registrations, recordings and applications
in the United States Patent and Trademark Office or in any similar office or
agency of the United States, any state or territory thereof, or any other
country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by
any of the foregoing.

 

“Unfunded Pension
Liability” means, at any time, the aggregate amount, if any, of the sum of (a) the
amount by which the present value of all accrued benefits under each Title IV
Plan exceeds the fair market value of all assets of such Title IV Plan
allocable to such benefits in accordance with Title IV of ERISA, all determined
as of the most recent valuation date for each such Title IV Plan using the
actuarial assumptions for funding purposes in effect under such Title IV Plan,
and (b) for a period of five (5) years following a transaction which
might reasonably be expected to be covered by Section 4069 of ERISA, the
liabilities (whether or not accrued) that could be avoided by any Credit Party
or any ERISA Affiliate as a result of such transaction.

 

A-26

 

“United States” and “U.S.”
mean the United States of America.

 

“Welfare Plan” means
a Plan described in Section 3(i) of ERISA.

 

“Wholly Owned Subsidiary”
means, as to any Person, any other Person all of the Stock of which (other than
directors’ qualifying shares required by law) is owned by such Person directly
and/or through other Wholly Owned Subsidiaries.

 

Rules of construction
with respect to accounting terms used in the Agreement or the other Loan
Documents shall be as set forth in Annex E. All other undefined terms
contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same
are used or defined therein; in the event that any term is defined differently
in different Articles or Divisions of the Code, the definition contained in Article or
Division 9 shall control. Unless otherwise specified, references in the
Agreement or any of the Appendices to a Section, subsection or clause
refer to such Section, subsection or clause as contained in the Agreement.
The words “herein,” “hereof” and “hereunder” and other words of similar import
refer to the Agreement as a whole, including all Annexes, Exhibits and
Schedules, as the same may from time to time be amended, restated, modified
or supplemented, and not to any particular section, subsection or clause
contained in the Agreement or any such Annex, Exhibit or Schedule.

 

Wherever from the context it
appears appropriate, each term stated in either the singular or plural shall include
the singular and the plural, and pronouns stated in the masculine, feminine or
neuter gender shall include the masculine, feminine and neuter genders. The
words “including”, “includes” and “include” shall be deemed to be followed by
the words “without limitation”; the word “or” is not exclusive; references to
Persons include their respective successors and assigns (to the extent and only
to the extent permitted by the Loan Documents) or, in the case of governmental
Persons, Persons succeeding to the relevant functions of such Persons; and all
references to statutes and related regulations shall include any amendments of
the same and any successor statutes and regulations. Whenever any provision in
any Loan Document refers to the knowledge (or an analogous phrase) of any
Credit Party, such words are intended to signify that such Credit Party has
actual knowledge or awareness of a particular fact or circumstance or that such
Credit Party, if it had exercised reasonable diligence, would have known or been
aware of such fact or circumstance.

 

A-27

 

ANNEX B (Section 1.2)

to

CREDIT AGREEMENT

 

LETTERS OF CREDIT

 

(d)                                 Issuance.
Subject to the terms and conditions of the Agreement, Agent and Lenders agree
to incur, from time to time prior to the Commitment Termination Date, upon the
request of Borrower Representative on behalf of the applicable Borrower and for
such Borrower’s account, Letter of Credit Obligations by causing Letters of
Credit to be issued by GE Capital or a Subsidiary thereof or a bank or other
legally authorized Person selected by or acceptable to Agent in its sole
discretion (each, an “L/C Issuer”) for such Borrower’s account and
guaranteed by Agent; provided, that if the L/C Issuer is a Lender, then
such Letters of Credit shall not be guaranteed by Agent. The aggregate amount
of all such Letter of Credit Obligations shall not at any time exceed the least
of (i) $15,000,000 (the “L/C Sublimit”), and (ii) the Maximum
Amount less the aggregate outstanding principal balance of the Revolving Credit
Advances and the Swing Line Loan. No such Letter of Credit shall have an expiry
date that is more than one year following the date of issuance thereof, unless
otherwise determined by Agent in its sole discretion (including with respect to
customary evergreen provisions), and neither Agent nor Lenders shall be under
any obligation to incur Letter of Credit Obligations in respect of, or purchase
risk participations in, any Letter of Credit having an expiry date that is
later than fifth day preceding the Commitment Termination Date.

 

(e)                                  (i) Advances
Automatic; Participations. In the event that Agent or any Lender shall make
any payment on or pursuant to any Letter of Credit Obligation, such payment
shall then be deemed automatically to constitute a Revolving Credit Advance to
the applicable Borrower under Section 1.1(a) of the Agreement
regardless of whether a Default or Event of Default has occurred and is
continuing and notwithstanding Borrowers’ failure to satisfy the conditions
precedent set forth in Section 2, and each Lender shall be
obligated to pay its Pro Rata Share thereof in accordance with the Agreement. The
failure of any Lender to make available to Agent for Agent’s own account its
Pro Rata Share of any such Revolving Credit Advance or payment by Agent under
or in respect of a Letter of Credit shall not relieve any other Lender of its
obligation hereunder to make available to Agent its Pro Rata Share thereof, but
no Lender shall be responsible for the failure of any other Lender to make
available such other Lender’s Pro Rata Share of any such payment.

 

(ii)                                  If
it shall be illegal or unlawful for any Borrower to incur Revolving Credit
Advances as contemplated by paragraph (b)(i) above because of an Event of
Default described in Sections 8.1(h) or (i) or otherwise or if
it shall be illegal or unlawful for any Lender to be deemed to have assumed a
ratable share of the reimbursement obligations owed to an L/C Issuer, or if the
L/C Issuer is a Lender, then (i) immediately and without further action
whatsoever, each Lender shall be deemed to have irrevocably and unconditionally
purchased from Agent (or such L/C Issuer, as the case may be) an undivided
interest and participation equal to such Lender’s Pro Rata Share (based on the
Revolving Loan Commitments) of the Letter of Credit Obligations in respect of
all Letters of Credit then outstanding and (ii) thereafter, immediately
upon issuance of any Letter of Credit, each Lender shall be deemed to have
irrevocably and unconditionally purchased from Agent (or such L/C Issuer, as
the case may be) an undivided interest and participation in such Lender’s
Pro Rata Share (based on the Revolving Loan Commitments) of the Letter of
Credit Obligations with respect to such Letter of Credit on the date of such
issuance. Each Lender shall fund its participation in all payments or
disbursements made under the Letters of Credit in the same manner as provided
in the Agreement with respect to Revolving Credit Advances.

 

B-1

 

(f)                                    Cash
Collateral. (i) If Borrowers are required to provide cash collateral
for any Letter of Credit Obligations pursuant to the Agreement, including Section 8.2
of the Agreement, prior to the Commitment Termination Date, each Borrower will
pay to Agent for the ratable benefit of itself and Lenders cash or cash
equivalents acceptable to Agent (“Cash Equivalents”) in an amount equal
to 105% of the maximum amount then available to be drawn under each applicable
Letter of Credit outstanding for the benefit of such Borrower. Such funds or
Cash Equivalents shall be held by Agent in a cash collateral account (the “Cash
Collateral Account”) maintained at a bank or financial institution
acceptable to Agent. The Cash Collateral Account shall be in the name of the
applicable Borrower and shall be pledged to, and subject to the control of,
Agent, for the benefit of Agent and Lenders, in a manner satisfactory to Agent.
Each Borrower hereby pledges and grants to Agent, on behalf of itself and
Lenders, a security interest in the Cash Collateral Account and all such funds
and Cash Equivalents held in the Cash Collateral Account from time to time and
all proceeds thereof, as security for the payment of all amounts due in respect
of the Letter of Credit Obligations and other Obligations, whether or not then
due. The Agreement, including this Annex B, shall constitute a security
agreement under applicable law.

 

(ii)                                  If
any Letter of Credit Obligations, whether or not then due and payable, shall
for any reason be outstanding on the Commitment Termination Date, Borrowers
shall either (A) provide cash collateral therefor in the manner described
above, or (B) cause all such Letters of Credit and guaranties thereof, if
any, to be canceled and returned, or (C) deliver a stand-by letter (or
letters) of credit in guarantee of such Letter of Credit Obligations, which
stand-by letter (or letters) of credit shall be of like tenor and duration
(plus thirty (30) additional days) as, and in an amount equal to 105% of the
aggregate maximum amount then available to be drawn under, the Letters of
Credit to which such outstanding Letter of Credit Obligations relate and shall
be issued by a Person, and shall be subject to such terms and conditions, as
are be satisfactory to Agent in its sole discretion.

 

(iii)                               From
time to time after funds are deposited in the Cash Collateral Account by any
Borrower, whether before or after the Commitment Termination Date, Agent may apply
such funds or Cash Equivalents then held in the Cash Collateral Account to the
payment of any amounts, and in such order as Agent may elect, as shall be
or shall become due and payable by such Borrower to Agent and Lenders with
respect to such Letter of Credit Obligations of such Borrower and, upon the
satisfaction in full of all Letter of Credit Obligations of such Borrower, to
any other Obligations of any Borrower then due and payable.

 

(iv)                              No
Borrower nor any Person claiming on behalf of or through any Borrower shall
have any right to withdraw any of the funds or Cash Equivalents held in the
Cash Collateral Account, except that upon the termination of all Letter of
Credit Obligations and the payment of all amounts payable by Borrowers to Agent
and Lenders in respect thereof, any funds remaining in the Cash Collateral
Account shall be applied to other Obligations then due and owing and upon
payment in full of such Obligations any remaining amount shall be paid to
Borrowers or as otherwise required by law. Interest earned on deposits in the
Cash Collateral Account shall be held as additional collateral.

 

(g)                                 Fees
and Expenses. (i) Borrowers agree to pay to Agent for the benefit of
Lenders, as compensation to such Lenders for Letter of Credit Obligations
incurred hereunder, (A) all costs and expenses incurred by Agent or any
Lender on account of such Letter of Credit Obligations, and (B) for each
month during which any Letter of Credit Obligation shall remain outstanding, a
fee (the “Letter of Credit Fee”) in an amount equal to the Applicable
L/C Margin from time to time in effect multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of Credit. Such
fee shall be paid to Agent for the benefit of the Lenders in arrears, on the
first day of each calendar quarter and on the Commitment Termination Date. In
addition, Borrowers shall pay to any L/C

 

B-2

 

Issuer (x) the L/C Issuance Fee, such fee being payable quarterly in
arrears, on the first day of each calendar quarter until the expiration of such
Letter of Credit, and (y) on demand, such fees (including all per annum fees),
charges and expenses of such L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Letter of
Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.

 

(ii)                                  Each
L/C Participant agrees with the L/C Issuer that, if a draft is paid under any
Letter of Credit for which the L/C Issuer is not reimbursed in full by
Borrowers in accordance with the terms of this Agreement, such L/C Participant
shall pay to the L/C Issuer upon demand an amount equal to such L/C Participant’s
Pro Rata Share of the amount of such draft, or any part thereof, that is
not so reimbursed. Each L/C Participant’s obligation to pay such amount shall
be absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right
that such L/C Participant may have against the L/C Issuer, Borrowers or
any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default or an Event of Default or the failure to satisfy any
of the other conditions specified in Section 2.2 of this Agreement, (C) any
adverse change in the condition (financial or otherwise) of Borrowers, (D) any
breach of this Agreement or any other Loan Document by Borrowers, any other
Credit Party or any other L/C Participant or (E) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing

 

(iii)                               If
any amount required to be paid by any L/C Participant to the L/C Issuer
pursuant to this Section 2.1(d) (in respect of any
unreimbursed portion of any payment made by the L/C Issuer under any Letter of
Credit) is paid to the L/C Issuer within three Business Days after the date
such payment is due, such L/C Participant shall pay to the L/C Issuer on demand
an amount equal to the product of (i) such amount, times (ii) the daily
average Federal Funds Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer, times (iii) a fraction the numerator of which is the
number of days that elapse during such period and the denominator of which is
360. If any such amount required to be paid by any L/C Participant pursuant to
this Section 2.1(d) is not made available to the L/C Issuer by
such L/C Participant within three Business Days after the date such payment is
due, the L/C Issuer shall be entitled to recover from such L/C Participant, on
demand, such amount with interest thereon calculated from such due date at the
rate per annum applicable to Index Rate Loans. A certificate of the L/C Issuer submitted
to any L/C Participant with respect to any amounts owing under this Section 2.1(d) shall
be conclusive in the absence of manifest error.

 

(h)                                 Request
for Incurrence of Letter of Credit Obligations. Prior to the incurrence of
the initial Letter of Credit Obligations, Borrowers and GE Capital shall have
entered into the Master Standby Agreement, the Master Documentary Agreement and
the Cyberbank Agreement. Borrower Representative shall give Agent at least
three (3) Business Days’ prior written notice requesting the incurrence of
any Letter of Credit Obligation specifying the date such Letter of Credit
Obligation is to be incurred, identifying the beneficiary to which such Letter
of Credit Obligation relates and describing the nature of the transactions
proposed to be supported thereby. The notice shall be accompanied by the form of
the Letter of Credit (which shall be acceptable to the L/C Issuer) and a
completed application for such Letter of Credit in the form supplied by
the L/C Issuer to the Borrower Representative substantially in the form of
Exhibit B-1 in the case of Standby Letters of Credit and Exhibit B-3
in the case of Documentary Letters of Credit. Notwithstanding anything
contained herein to the contrary, Letter of Credit applications by Borrower
Representative and approvals by Agent and the L/C Issuer may be made and
transmitted pursuant to electronic codes and security measures mutually agreed
upon and established by and among a representative of Borrower Representative,
Agent and the L/C Issuer.

 

B-3

 

(i)                                     Obligation
Absolute. The obligation of Borrowers to reimburse Agent and Lenders for
payments made with respect to any Letter of Credit Obligation shall be
absolute, unconditional and irrevocable, without necessity of presentment,
demand, protest or other formalities, and the obligations of each Lender to
make payments to Agent with respect to Letters of Credit shall be unconditional
and irrevocable. Such obligations of Borrowers and Lenders shall be paid
strictly in accordance with the terms hereof under all circumstances including
the following:

 

(i)                                     any
lack of validity or enforceability of any Letter of Credit or the Agreement or
the other Loan Documents or any other agreement;

 

(ii)                                  the
existence of any claim, setoff, defense or other right that any Borrower or any
of its respective Affiliates or any Lender may at any time have against a
beneficiary or any transferee of any Letter of Credit (or any Persons or
entities for whom any such transferee may be acting), Agent, any Lender,
or any other Person, whether in connection with the Agreement, the Letter of
Credit, the transactions contemplated herein or therein or any unrelated
transaction (including any underlying transaction between any Borrower or any
of its respective Affiliates and the beneficiary for which the Letter of Credit
was procured);

 

(iii)                               any
draft, demand, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein being untrue or inaccurate in any respect;

 

(iv)                              payment
by Agent (except as otherwise expressly provided in paragraph (g)(ii)(C) below)
or any L/C Issuer under any Letter of Credit or guaranty thereof against
presentation of a demand, draft or certificate or other document that does not
comply with the terms of such Letter of Credit or such guaranty;

 

(v)                                 any
other circumstance or event whatsoever, that is similar to any of the
foregoing; or

 

(vi)                              the
fact that a Default or an Event of Default has occurred and is continuing.

 

(j)                                     Indemnification;
Nature of Lenders’ Duties.

 

(i)                                     In
addition to amounts payable as elsewhere provided in the Agreement, Borrowers
hereby agree to pay and to protect, indemnify, and save harmless Agent and each
Lender from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys’ fees and
allocated costs of internal counsel) that Agent or any Lender may incur or
be subject to as a consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or guaranty thereof, or (B) the failure of Agent or
any Lender seeking indemnification or of any L/C Issuer to honor a demand for
payment under any Letter of Credit or guaranty thereof as a result of any act
or omission, whether rightful or wrongful, of any present or future de jure or
de facto government or Governmental Authority, in each case other than to the
extent as a result of the gross negligence or willful misconduct of Agent or
such Lender (as finally determined by a court of competent jurisdiction).

 

(ii)                                  As
between Agent and any Lender and Borrowers, Borrowers assume all risks of the
acts and omissions of, or misuse of any Letter of Credit by beneficiaries of
any Letter of Credit. In furtherance and not in limitation of the foregoing, to
the fullest extent permitted by law neither

 

B-4

 

Agent nor any Lender shall be responsible for:  (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document issued by any party in
connection with the application for and issuance of any Letter of Credit, even
if it should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, that may prove to be invalid or ineffective for any
reason; (C) failure of the beneficiary of any Letter of Credit to comply
fully with conditions required in order to demand payment under such Letter of
Credit; provided, that in the case of any payment by Agent under any
Letter of Credit or guaranty thereof, Agent shall be liable to the extent such
payment was made solely as a result of its gross negligence or willful
misconduct (as finally determined by a court of competent jurisdiction) in
determining that the demand for payment under such Letter of Credit or guaranty
thereof complies on its face with any applicable requirements for a demand for
payment under such Letter of Credit or guaranty thereof; (D) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they may be
in cipher; (E) errors in interpretation of technical terms; (F) any
loss or delay in the transmission or otherwise of any document required in
order to make a payment under any Letter of Credit or guaranty thereof or of
the proceeds thereof; (G) the credit of the proceeds of any drawing under
any Letter of Credit or guaranty thereof; and (H) any consequences arising
from causes beyond the control of Agent or any Lender. None of the above shall
affect, impair, or prevent the vesting of any of Agent’s or any Lender’s rights
or powers hereunder or under the Agreement.

 

(iii)                               Nothing
contained herein shall be deemed to limit or to expand any waivers, covenants
or indemnities made by Borrowers in favor of any L/C Issuer in any letter of
credit application, reimbursement agreement or similar document, instrument or
agreement between or among Borrowers and such L/C Issuer, including any Letter
of Credit Documents.

 

B-5

 

ANNEX C (Section 1.6)

to

CREDIT AGREEMENT

CASH MANAGEMENT SYSTEM

 

Holdings and each Borrower shall, and shall
cause its Subsidiaries to, establish and maintain the Cash Management Systems
described below:

 

(a)                                  On or before the
Closing Date and until the Termination Date, Holdings, each Borrower and their
Subsidiaries shall (i) establish blocked accounts (“Blocked Accounts”)
at one or more of the banks set forth in Disclosure Schedule (3.19),
and (ii) deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day after
the date of receipt thereof, all cash, checks, drafts or other similar items of
payment relating to or constituting payments made in respect of any and all
Collateral into one or more Blocked Accounts in Holdings’ or such Borrower’s
name or any such Subsidiary’s name and at a bank identified in Disclosure Schedule (3.19)
(each, a “Relationship Bank”). On or before the Closing Date, Festival
shall have established a concentration account in its name (a “Concentration
Account”) at the bank or banks that shall be designated as the
Concentration Account bank in Disclosure Schedule (3.19) (a “Concentration
Account Bank”) which bank shall be reasonably satisfactory to Agent.

 

(b)                                 Each Borrower may maintain,
in its name, an account (each a “Disbursement Account” and collectively,
the “Disbursement Accounts”) at a bank acceptable to Agent into which
Agent shall, from time to time, deposit proceeds of Revolving Credit Advances
and Swing Line Advances made to such Borrower pursuant to Section 1.1
for use by such Borrower in accordance with the provisions of Section 1.4.

 

(c)                                  On or before the
Closing Date (or such later date as Agent shall consent to in writing),
Concentration Account Bank, each bank where a Disbursement Account is
maintained and all other Relationship Banks, shall have entered into tri-party
blocked account agreements with Agent, for the benefit of itself and Lenders,
and the applicable Credit Party thereof, as applicable, in form and
substance reasonably acceptable to Agent, which shall become operative on or
prior to the Closing Date. Agent hereby agrees that with respect to any Blocked
Account Agreement or Concentration Account Agreement, Agent shall not give any “Activation
Notice” as defined in such account agreement (each such notice, an “Activation
Notice”) unless an Event of Default has occurred and is continuing (the
foregoing being referred to herein as an “Activation Event”). Agent
further agrees that it shall promptly provide the applicable Relationship Bank
or Concentration Account Bank with a written notice rescinding any Activation
Notice given by Agent at such time that no Event of Default continues to exist.
No Credit Party shall nor shall cause or permit any Subsidiary thereof to,
accumulate or maintain cash in Disbursement Accounts or payroll accounts as of
any date of determination in excess of $100,000 above the amount of checks
outstanding against such accounts as of that date and amounts necessary to meet
minimum balance requirements. Notwithstanding the foregoing, no Blocked Account
Agreements shall be required in connection with any Deposit Accounts that are
used solely for the purpose of funding payroll or that constitute trust
accounts maintained solely for payment of employee benefits (such as flexible
spending accounts) of Borrowers.

 

(d)                                 So long as no Event of
Default has occurred and is continuing, Borrowers may amend Disclosure Schedule (3.19)
to add or replace a Relationship Bank or Blocked Account or to replace
Concentration Account or Concentration Account Bank or any Disbursement
Account; provided, that (i)

 

C-1

 

Agent shall have consented in writing in advance to the opening of such
account with the relevant bank and (ii) prior to the time of the opening
of such account, the applicable Credit Party and such bank shall have executed
and delivered to Agent a tri-party blocked account agreement, in form and
substance reasonably satisfactory to Agent. The applicable Credit Party shall
close any of its accounts (and establish replacement accounts in accordance
with the foregoing sentence) promptly and in any event within thirty (30) days
following notice from Agent that the creditworthiness of any bank holding an
account is no longer acceptable in Agent’s reasonable judgment, or as promptly
as practicable and in any event within sixty (60) days following notice from
Agent that the operating performance, funds transfer or availability procedures
or performance with respect to accounts of the bank holding such accounts or
Agent’s liability under any tri-party blocked account agreement with such bank
is no longer acceptable in Agent’s reasonable judgment.

 

(e)                                  The Blocked Accounts,
Disbursement Accounts and the Concentration Account shall be cash collateral
accounts, with all cash, checks and other similar items of payment in such
accounts securing payment of the Loans and all other Obligations, and in which each
Credit Party shall have granted a Lien to Agent, on behalf of itself and
Lenders, pursuant to the Security Agreement.

 

(f)                                    All amounts
deposited in the Collection Account shall be deemed received by Agent in
accordance with Section 1.8 and shall be applied (and allocated) by
Agent in accordance with Section 1.9. In no event shall any amount
be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.

 

(g)                                 Each Credit Party
shall and shall cause its Affiliates, officers, employees, agents, directors or
other Persons acting for or in concert with such Borrower (each a “Related
Person”) to (i) hold in trust for Agent, for the benefit of itself and
Lenders, all checks, cash and other items of payment in respect of any and all
Collateral received by such Credit or any such Related Person, and (ii) within
one (1) Business Day after receipt by such Credit Party or any such
Related Person of any such checks, cash or other items of payment, deposit the
same into a Blocked Account of such applicable Credit Party. Each Credit Party
on behalf of itself and each Related Person acknowledges and agrees that all
cash, checks or other items of payment constituting proceeds of Collateral are part of
the Collateral. All proceeds of the sale or other disposition of any
Collateral, shall be deposited directly into the applicable Blocked Accounts.

 

C-2

 

ANNEX D (Section 2.1(a))

to

CREDIT AGREEMENT

 

CLOSING CHECKLIST

 

In addition to, and not in
limitation of, the conditions described in Section 2.1 of the
Agreement and the items identified in any closing checklist prepared by Agent’s
counsel and distributed to Borrowers and Borrowers’ counsel prior to the
Closing Date, pursuant to Section 2.1(a), the following items must
be received by Agent in form and substance satisfactory to Agent on or
prior to the Closing Date (each capitalized term used but not otherwise defined
herein shall have the meaning ascribed thereto in Annex A to the
Agreement):

 

A.                                   Appendices.
All Appendices to the Agreement, in form and substance satisfactory to
Agent.

 

B.                                     Revolving
Notes and Swing Line Note. Duly executed originals of the Revolving Notes
and Swing Line Note for each applicable Lender, dated the Closing Date.

 

C.                                     Insurance.
Satisfactory evidence that the insurance policies required by Section 5.4
are in full force and effect, together with appropriate evidence showing loss
payable and/or additional insured clauses or endorsements, as reasonably
requested by Agent, in favor of Agent, on behalf of Lenders.

 

D.                                    Security
Interests and Code Filings. (a) Evidence satisfactory to Agent that
Agent (for the benefit of itself and Lenders) has, or upon the filing of such
documents will have, a valid and perfected first priority security interest in
the Collateral (subject to Permitted Encumbrances), including (i) such
documents duly executed or authorized by each Credit Party (including financing
statements under the Code and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Agent may request
in order to perfect its security interests in the Collateral and (ii) copies
of Code search reports listing all effective financing statements that name any
Credit Party as debtor, together with copies of such financing statements, none
of which shall cover the Collateral, except for those relating to the Prior
Lender Obligations (all of which shall be terminated on the Closing Date) and
Permitted Encumbrances.

 

(b)                                 Control
Letters from (i) all banking institutions with respect to funds held by
any Credit Party, (ii) all issuers of uncertificated securities and
financial assets held by any Credit Party, (iii) all securities
intermediaries with respect to all securities accounts and securities
entitlements of any Credit Party, and (iv) all futures commission agents
and clearing houses with respect to all commodities contracts and commodities
accounts held by any Credit Party.

 

E.                                      Payoff
Letter; Termination Statements. Copies of a duly executed payoff letter, in
form and substance reasonably satisfactory to Agent, by and between all
parties to the Prior Lender loan documents evidencing repayment in full of all
Prior Lender Obligations, together with (a) UCC-3 or other appropriate
termination statements, in form and substance satisfactory to Agent,
manually signed by the Prior Lender releasing all liens of Prior Lender upon
any of the personal property of each Credit Party, and (b) termination of
all blocked account agreements, bank agency agreements or other similar
agreements or arrangements or arrangements in favor of Prior Lender or relating
to the Prior Lender Obligations.

 

D-1

 

F.                                      Intellectual
Property Security Agreements. Duly executed counterparts of Trademark
Security Agreements, Copyright Security Agreements and Patent Security
Agreements, each dated the Closing Date and signed by each Credit Party which
owns Trademarks, Copyrights and/or Patents, as applicable, all in form and
substance reasonably satisfactory to Agent, together with all instruments,
documents and agreements executed pursuant thereto.

 

G.                                     Initial
Notice of Revolving Credit Advance. Duly executed originals of a Notice of
Revolving Credit Advance, dated the Closing Date, with respect to the initial
Revolving Credit Advance to be requested by Borrower Representative on the
Closing Date.

 

H.                                    Charter
and Good Standing. For each Credit Party, such Person’s (a) charter as
in effect on the Closing Date, (b) good standing certificates in its state
of incorporation and (c) good standing certificates and certificates of
qualification to conduct business in each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification,
each dated a recent date prior to the Closing Date and certified by the
applicable Secretary of State or other authorized Governmental Authority.

 

I.                                         Bylaws
and Resolutions. For each Credit Party, (a) such Person’s bylaws as in
effect on the Closing Date and (b) resolutions of such Person’s Board of
Directors approving and authorizing the execution, delivery and performance of
the Loan Documents to which such Person is a party and the transactions to be
consummated in connection therewith, each certified as of the Closing Date by
such Person’s corporate secretary or an assistant secretary as being in full
force and effect without any modification or amendment.

 

J.                                        Incumbency
Certificates. For each Credit Party, signature and incumbency certificates
of the officers of each such Person executing any of the Loan Documents,
certified as of the Closing Date by such Person’s corporate secretary or an
assistant secretary as being true, accurate, correct and complete.

 

K.                                    Opinions
of Counsel. Duly executed originals of opinions of Kirkland &
Ellis LLP, counsel for the Credit Parties, together with any local counsel
opinions reasonably requested by Agent, each in form and substance
reasonably satisfactory to Agent and its counsel, dated the Closing Date.

 

L.                                      Letter
of Direction. Duly executed originals of a letter of direction from
Borrower Representative addressed to Agent, on behalf of itself and Lenders,
with respect to the disbursement on the Closing Date of the proceeds of the
initial Revolving Credit Advance.

 

M.                                 Cash
Management System; Blocked Account Agreements. Evidence satisfactory to
Agent that, as of the Closing Date, Cash Management Systems complying with Annex
C to the Agreement have been established and are currently being maintained
in the manner set forth in such Annex C, together with copies of duly
executed tri-party blocked account agreements, reasonably satisfactory to
Agent, with the banks as required by Annex C.

 

N.                                    Accountants’
Letter. A letter from the Credit Parties to their independent auditors
authorizing the independent certified public accountants of the Credit Parties
to communicate with Agent and Lenders in accordance with Section 4.2.

 

O.                                    Officer’s
Certificate. Agent shall have received duly executed originals of a certificate
of the Chief Executive Officer and Chief Financial Officer of each Borrower,
dated the Closing Date, stating that, since December 31, 2005 (a) no
change has occurred or is continuing which has had or

 

D-2

 

would reasonably be expected to have a Material Adverse Effect; (b) there
has been no material adverse change in the industry in which any Borrower
operates; (c) no Litigation has been commenced which, if successful, would
have a Material Adverse Effect or could challenge any of the transactions
contemplated by the Agreement and the other Loan Documents; (d) before and
after giving effect to the transactions contemplated by the Credit Agreement,
each Credit Party will be Solvent; and (e) there has been no material
increase in liabilities, liquidated or contingent (other than any increase as a
result of the incurrence of the Senior Unsecured Debt), and no material
decrease in assets of Borrower or any of its Subsidiaries.

 

P.                                      [Intentionally
Omitted].

 

Q.                                    Mortgages
and Real Estate Related Deliverables.

 

(a)                                  Duly
executed and delivered Mortgages by each applicable Borrower covering all of
the Real Estate on which Parks are located that, as of the Closing Date
generate at least 71% of the
EBITDA of the Borrowers and their Subsidiaries calculated on a trailing twelve
month consolidated basis as of the Fiscal Year ended December 31, 2005
(which Parks are identified by name as “Tier 1 Parks” on Disclosure Schedule (5.10)
by reference to this subparagraph (a) of this paragraph Q and are referred
to herein collectively as the “Tier 1 Parks”), together with evidence
that counterparts of the Mortgages have been, or will promptly be, recorded in
all places to the extent necessary or desirable, in the reasonable judgment of
Agent, to create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on each Mortgaged Property in favor of Agent for the
benefit of itself and Lenders (or in favor of such other trustee as may be
required or desired under local law).

 

(b)                                 With respect to the
Mortgages required pursuant to the immediately preceding subparagraph (a), the
following additional items with respect to the Mortgages, the leases and the
Real Estate in respect of Tier 1 Parks that, as of the Closing Date generate at
least 69% of the EBITDA of the Borrowers and their Subsidiaries calculated on a
trailing twelve month consolidated basis as of the Fiscal Year ended December 31,
2005: (i) title insurance policies (with endorsements and affirmative
coverage), together with current as-built surveys, zoning letters and such
other documents, instruments or agreements reasonably requested by Agent; (ii) a
memorandum of Lease (in recordable form) with respect to each of the Park
leases for such Tier 1 Parks, and (iii) an opinion of counsel in each
state in which such Tier 1 Parks are located from counsel reasonably
satisfactory to Agent, provided, however, that no new or updated
surveys shall be required with respect to any such Real Estate where Borrowers
have provided to Agent copies of ALTA existing surveys to the extent the title
insurance policies covering such Real Estate remove the survey exception and
otherwise contain satisfactory endorsements and affirmative coverage as
identified by Agent’s counsel to such Borrower’s counsel in writing prior to
the closing date, and provided, further, that that no new or
updated surveys shall be required with respect to (x) such Real Estate
consisting of the five Boomers! Parks located in Fountain Valley, Irvine,
Livermore, Modesto and San Diego, California as to which Borrower does not have
any existing survey to the extent that the title insurance policies covering
such Real Estate remove the survey exception and otherwise contain satisfactory
endorsements and affirmative coverages as identified by Agent’s counsel to such
Borrower’s counsel in writing prior to the closing date as to Parks where no
existing survey is available, and (y) as to the Boomers! Park in Dania, Florida
Park, for which no acceptable survey is available and for which any leasehold
insurance policy will contain a survey exception.

 

(c)                                  Landlord’s lien
waiver, access agreements and consents (in recordable form) duly executed by
each landlord and the applicable Borrower tenant with respect to each of the
Park leases for Parks (other Kingswood, Texas) that, as of the Closing Date
generate at least 39% of the
EBITDA of

 

D-3

 

the Borrowers and their Subsidiaries calculated on a trailing twelve
month consolidated basis as of the Fiscal Year ended December 31, 2005.

 

R.                                     Environmental
Reports. Agent shall have received Phase I Environmental Site Assessment
Reports, consistent with American Society of Testing and Materials (ASTM)
Standard E 1527-00 (or the current ASTM standard for Phase I environmental site
assessment reports), and applicable state requirements, on all of the Real
Estate, dated no more than 6 months prior to the Closing Date, prepared by
environmental engineers reasonably satisfactory to Agent, all in form and
substance reasonably satisfactory to Agent, in its sole discretion. Agent shall
have received letters executed by the environmental firms preparing such
environmental reports, in form and substance reasonably satisfactory to
Agent, authorizing Agent and Lenders to rely on such reports.

 

S.                                      Audited
Financials; Financial Condition. Agent shall have received the Financial
Statements, Projections and other materials set forth in Section 3.4,
certified by Borrower Representative’s Chief Financial Officer, in each case in
form and substance reasonably satisfactory to Agent. Agent shall have
further received a certificate of the Chief Executive Officer and/or the Chief
Financial Officer of each Borrower, based on such Pro Forma and Projections, to
the effect that (a) the Pro Forma fairly presents the financial condition
of such Borrower as of the date thereof after giving effect to the transactions
contemplated by the Loan Documents; (b) the Projections are based upon
estimates and assumptions stated therein, all of which such Borrower believes
to be reasonable and fair in light of current conditions and current facts
known to such Borrower and, as of the Closing Date, reflect such Borrower’s
good faith and reasonable estimates of its future financial performance and of
the other information projected therein for the period set forth therein; and (c) containing
such other statements with respect to matters related thereto as Agent shall
reasonably request.

 

T.                                     Other
Collateral Documents. Duly executed originals of all of the other
Collateral Documents, dated the Closing Date, and all documents, instruments
and agreements executed pursuant thereto.

 

U.                                    Appointment
of Agent for Service. An appointment of CT Corporation as each Credit Party’s
agent for service of process in New York.

 

V.                                     Master
Standby Agreement. A Master Agreement for Standby Letters of Credit among
Borrowers and GE Capital.

 

W.                                Assignment
of Representations, Warranties, Covenants, Indemnities and Rights. Agent
shall have received a duly executed copy of an Assignment of Representations,
Warranties, Covenants, Indemnities and Rights in respect of Holdings and
Borrowers’ rights under the Acquisition Agreement, which assignment shall be
expressly permitted under the Acquisition Agreement or shall have been
consented to by the Seller in writing.

 

X.                                    Master
Documentary Agreement. A Master Agreement for Documentary Letters of Credit
among Borrowers and GE Capital.

 

Y.                                     Cyberbank
Agreement. A Cyberbank Agreement among the Borrowers, Agent and Wachovia
Bank, N.A.

 

Z.                                     Other
Documents. Such other certificates, documents and agreements respecting any
Credit Party as Agent may reasonably request.

 

D-4

 

ANNEX E (Section 4.1(a))

to

CREDIT AGREEMENT

 

FINANCIAL STATEMENTS AND
PROJECTIONS — REPORTING

 

Borrowers shall deliver or
cause to be delivered to Agent or to Agent and Lenders, as indicated, the
following:

 

(a)                                  Monthly
Financials. To Agent, within forty-five (45) days after the end of the
Fiscal Months for July and August in each year, financial information
regarding Borrowers and their Subsidiaries, certified by the Chief Financial
Officer of Borrower Representative, consisting of consolidated and
consolidating (i) unaudited balance sheets as of the close of such Fiscal
Month and the related statements of income and cash flows for that portion of
the Fiscal Year ending as of the close of such Fiscal Month; and (ii) unaudited
statements of income and cash flows for such Fiscal Month, setting forth in
comparative form the figures for the months of July and August in
the prior year and the figures contained in the Projections for such Fiscal
Year, all prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by the
certification of the Chief Financial Officer of Borrower Representative that (i) such
financial information presents fairly in accordance with GAAP (subject to
normal year-end adjustments) the financial position and results of operations
of Borrowers and their Subsidiaries, on a consolidated and consolidating basis,
in each case as at the end of such Fiscal Month and for that portion of the
Fiscal Year then ended and (ii) any other information presented is true,
correct and complete in all material respects and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.

 

(b)                                 Quarterly
Financials. To Agent, within forty-five (45) days after the end of each
Fiscal Quarter, consolidated financial information regarding Borrowers and
their Subsidiaries, certified by the Chief Financial Officer (or the treasurer
or any other senior executive officer of Borrower Representative acting in such
capacity as chief financial officer) of Borrower Representative, including (i) unaudited
balance sheets as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year ending
as of the close of such Fiscal Quarter and (ii) unaudited statements of
income and cash flows for such Fiscal Quarter, in each case setting forth in
comparative form the figures for the corresponding period in the prior
year and the figures contained in the Projections for such Fiscal Year, all
prepared in accordance with GAAP (subject to normal year-end adjustments and
the absence of footnotes). Such financial information shall be accompanied by (A) a
statement by the Chief Financial Officer (or the treasurer or any other senior
executive officer of Borrower Representative acting in such capacity as chief
financial officer) of Borrower Representative in reasonable detail (each, a “Compliance
Certificate”) showing the calculations used in determining compliance with
each of the Financial Covenants that is tested on a quarterly basis and (B) the
certification of the Chief Financial Officer of Borrower Representative that (i) such
financial information presents fairly in all material respects in accordance
with GAAP (subject to normal year-end adjustments) the financial position,
results of operations and statements of cash flows of Borrowers and their
Subsidiaries, on a consolidated basis, as at the end of such Fiscal Quarter and
for that portion of the Fiscal Year then ended, (ii) any other information
presented is true, correct and complete in all material respects and that there
was no Default or Event of Default in existence as of such time or, if a Default
or Event of Default has occurred and is continuing, describing the nature
thereof and all efforts undertaken to cure such Default or Event of Default. In
addition, Borrowers shall deliver to Agent, within forty-five (45) days after
the end of each Fiscal Quarter, to the extent not included in a report on Form 10-Q
filed by

 

E-1

 

such Borrower with respect to such Fiscal Quarter, a management
discussion and analysis that includes a comparison to budget for that Fiscal
Quarter and a comparison of performance for that Fiscal Quarter to the
corresponding period in the prior year.

 

(c)                                  Operating
Plan. To Agent, as soon as available, but not later than thirty (30) days
after the end of each Fiscal Year, an annual operating plan for Borrowers,
approved by the Board of Directors of Borrowers, for the following Fiscal Year,
which (i) includes a statement of all of the material assumptions on which
such plan is based, (ii) includes monthly balance sheets and a monthly
budget for the following year and (iii) integrates sales, gross profits,
operating expenses, operating profit, cash flow projections, all prepared on
the same basis and in similar detail as that on which operating results are
reported (and in the case of cash flow projections, representing management’s
good faith estimates of future financial performance based on historical
performance), and including plans for personnel, Capital Expenditures and
facilities.

 

(d)                                 Annual
Audited Financials. To Agent, within ninety (90) days after the end of each
Fiscal Year, audited Financial Statements for Borrowers and their Subsidiaries
on a consolidated basis, consisting of balance sheets and statements of income
and retained earnings and cash flows, setting forth in comparative form in
each case the figures for the previous Fiscal Year, which Financial Statements
shall be prepared in accordance with GAAP and certified without qualification,
by an independent certified public accounting firm of national standing or
otherwise acceptable to Agent. Such Financial Statements shall be accompanied
by (i) a Compliance Certificate showing the calculations used in
determining compliance with each of the Financial Covenants, (ii) a report
from such accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to believe that
a Default or Event of Default has occurred with respect to the Financial
Covenants (or specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended only to
accounting matters and that no special investigation was made with respect to
the existence of Defaults or Events of Default, (iii) the annual letters
to such accountants in connection with their audit examination detailing
contingent liabilities and material litigation matters, and (iv) the
certification of the Chief Executive Officer or Chief Financial Officer (or the
treasurer or any other senior executive officer of Borrower Representative
acting in such capacity as chief financial officer) of Borrower Representative
that all such Financial Statements present fairly in all material respects in
accordance with GAAP the financial position, results of operations and statements
of cash flows of Borrowers and their Subsidiaries on a consolidated basis, as
at the end of such Fiscal Year and for the period then ended, and that there
was no Default or Event of Default in existence as of such time or, if a
Default or Event of Default has occurred and is continuing, describing the
nature thereof and all efforts undertaken to cure such Default or Event of
Default.

 

(e)                                  Management
Letters. To Agent, within ten (10) days after receipt thereof by any
Credit Party, copies of all management letters, exception reports or similar
letters or reports received by such Credit Party from its independent certified
public accountants.

 

(f)                                    Default
Notices. To Agent, as soon as practicable, and in any event within five (5) Business
Days after any Authorized Officer of any Credit Party has actual knowledge of
the existence of any Default, Event of Default or other event that has had a
Material Adverse Effect, telephonic or telecopied notice specifying the nature
of such Default or Event of Default or other event, including the anticipated
effect thereof, which notice, if given telephonically, shall be promptly
confirmed in writing on the next Business Day.

 

(g)                                 SEC
Filings and Press Releases. To Agent, promptly upon their becoming
available, copies of:  (i) all
Financial Statements, reports, notices and proxy statements made publicly

 

E-2

 

available by any Credit Party to its security and debt holders; (ii) all
regular and periodic reports and all registration statements and prospectuses,
if any, filed by any Credit Party with any securities exchange or with the SEC
or any governmental or private regulatory authority; and (iii) all press
releases and other statements made available by any Credit Party to the public
concerning material changes or developments in the business of any such Person.

 

(h)                                 Senior
Unsecured Debt. To Agent, as soon as practicable, copies of all material
written notices given or received by any Credit Party with respect to any
Senior Unsecured Debt of such Person, and, within two (2) Business Days
after any Credit Party obtains knowledge of any matured or unmatured event of
default with respect to any Senior Unsecured Debt, notice of such event of
default.

 

(i)                                     Supplemental
Schedules. To Agent, supplemental disclosures, if any, required by Section 5.6.

 

(j)                                     Litigation.
To Agent in writing, promptly upon learning thereof, notice of any Litigation
commenced or threatened against any Credit Party that (i) seeks damages in
excess of $250,000, (ii) seeks injunctive relief, (iii) is asserted
or instituted against any Plan, its fiduciaries or its assets or against any
Credit Party or ERISA Affiliate in connection with any Plan, (iv) alleges
criminal misconduct by any Credit Party, (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any Environmental
Liabilities; or (vi) involves any product recall.

 

(k)                                  Insurance
Notices. To Agent, disclosure of losses or casualties required by Section 5.4.

 

(l)                                     Lease
Default Notices. To Agent, (i) within two (2) Business Days after
receipt thereof, copies of any and all default notices received under or with
respect to any leased location or other location where any of the Collateral is
located, and (ii) such other notices or documents as Agent may reasonably
request.

 

(m)                               [Intentionally
Omitted].

 

(n)                                 Lease
Amendments. To Agent, within two (2) Business Days after receipt
thereof, copies of all material amendments to leases in respect of Real Estate.

 

(o)                                 Hedging
Agreements. To Agent within two (2) Business Days after entering into
such agreement or amendment, copies of all interest rate, commodity or currency
hedging agreements or amendments thereto.

 

(p)                                 Other Documents. To Agent, such other financial and other
information respecting any Credit Party’s business or financial condition as
Agent or any Lender shall, from time to time, reasonably request.

 

E-3

 

ANNEX F (Section 4.1(b))

 

to

 

CREDIT AGREEMENT

 

COLLATERAL
REPORTS

 

Borrowers
shall deliver or cause to be delivered the following:

 

(a)                                  To
Agent, at the time of delivery of each of the quarterly Financial Statements
delivered pursuant to Annex E, a list of any applications for the
registration of any Patent, Trademark or Copyright filed by any Credit Party
with the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency in the prior Fiscal Quarter;

 

(b)                                 Each
Borrower, at its own expense, shall deliver to Agent such appraisals of its
assets as Agent may request, provided that all such appraisals
shall be at Agent’s sole cost and expense unless an Event of Default has
occurred and is continuing at the time of such request, in which case, such
appraisals shall be at Borrowers’ sole cost and expense. All such appraisals
shall be conducted by an appraiser, and in form and substance reasonably
satisfactory to Agent; and

 

(c)                                  Such
other reports, statements and reconciliations with respect to the Collateral or
Obligations of any or all Credit Parties as Agent shall from time to time
request in its reasonable discretion.

 

F-1

 

ANNEX G (Section 6.10)

to

CREDIT AGREEMENT

 

FINANCIAL COVENANTS

 

Borrowers shall not breach
or fail to comply with any of the following financial covenants, each of which
shall be calculated in accordance with GAAP consistently applied:

 

(a)                                  Maximum
Capital Expenditures. Borrowers and their Subsidiaries on a consolidated
basis shall not make Capital Expenditures during the following periods that
exceed in the aggregate the amounts set forth opposite each of such periods:

 

	
  Fiscal Year Ending

  	
   

  	
  Maximum Capital Expenditures

  
	
  December 31,
  2006

  	
   

  	
  An amount equal to the greater of (i) $16,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2006

  
	
  December 31,
  2007

  	
   

  	
  An amount equal to the greater of (i) $14,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2007

  
	
  December 31,
  2008

  	
   

  	
  An amount equal to the greater of (i) $14,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2008

  
	
  December 31,
  2009

  	
   

  	
  An amount equal to the greater of (i) $14,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2009

  
	
  December 31,
  2010

  	
   

  	
  An amount equal to the greater of (i) $14,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2010

  

 

G-1

 

	
  December 31,
  2011

  	
   

  	
  An amount equal to the greater of (i) $14,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2011

  
	
  December 31,
  2012

  	
   

  	
  An amount equal to the greater of (i) $14,500,000
  and (ii) 40% of the EBITDA of the Borrowers and their Subsidiaries on a
  consolidated basis for the twelve months ending on December 31, 2012

  

 

; provided, however,
that the amount of permitted Capital Expenditures referenced above will be
increased in any Fiscal Year by the positive amount equal to the lesser of (i) 50%
of the amount of permitted Capital Expenditures for the immediately preceding
Fiscal Year, and (ii) the amount (if any), equal to the difference
obtained by taking the Capital Expenditures limit specified above for the
immediately prior Fiscal Year period minus the actual amount of any
Capital Expenditures expended during such immediately prior Fiscal Year (the “Carry
Over Amount”), and for purposes of measuring compliance herewith, the Carry
Over Amount shall be deemed to be the last amount spent on Capital Expenditures
in that succeeding year. Solely for purposes of determining compliance with
this Financial Covenant, Capital Expenditures made during any Fiscal Year shall
not be deemed to include any Capital Expenditures to the extent funded with (x)
cash equity contributions provided by Sponsor or any other Person to Holdings
for such purpose during such Fiscal Year, provided that neither Holdings
nor any other Credit Party has any obligation at any time to repay any such
equity contributions, (y) any Capital Expenditures constituting reinvestments
from the proceeds of any asset sales or Recovery Events made in compliance with
the reinvestment provisions set forth in Section 1.3(b)(ii) and
made during such Fiscal Year, or (z) any Capital expenditures to the extent and
only to the extent that Borrowers have been reimbursed in cash for such Capital
Expenditures during such Fiscal Year from a Person other than a Credit Party,
and neither Holdings nor any other Credit Party has any obligation at any time
to repay any such cash reimbursements of Capital Expenditures.

 

(b)                                 Minimum
Fixed Charge Coverage Ratio. Borrowers and their Subsidiaries shall have on
a consolidated basis at the end of each Fiscal Quarter on and after the Closing
Date, a Fixed Charge Coverage Ratio as of the last day of such Fiscal Quarter
and for the 12-month period then ended of not less than 1.30 to 1.00.

 

(c)                                  Maximum
Leverage Ratio. Borrowers and their Subsidiaries shall have on a
consolidated basis, at the end of each Fiscal Quarter on and after the Closing
Date, a Leverage Ratio as of the last day of such Fiscal Quarter and for the 12-month
period then ended of not more than 6.25 to 1.00.

 

Unless otherwise specifically
provided herein, any accounting term used in the Agreement shall have the
meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed in accordance with GAAP consistently
applied. That certain items or computations are explicitly modified by the
phrase “in accordance with GAAP” shall in no way be construed to limit the
foregoing. If any “Accounting Changes” (as defined below) occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in the Agreement or any other Loan Document, then
Borrowers, Agent and Lenders agree to enter into negotiations in order to amend
such provisions of the Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating Borrowers’ and their

 

G-2

 

Subsidiaries’ financial condition shall be the same after such
Accounting Changes as if such Accounting Changes had not been made; provided,
however, that the agreement of Requisite Lenders to any required amendments of
such provisions shall be sufficient to bind all Lenders. “Accounting Changes”
means (i) changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants (or
successor thereto or any agency with similar functions), (ii) changes in
accounting principles concurred in by any Borrower’s certified public
accountants; (iii) purchase accounting adjustments under A.P.B. 16 or 17
and EITF 88-16, and the application of the accounting principles set forth in
FASB 109, including the establishment of reserves pursuant thereto and any
subsequent reversal (in whole or in part) of such reserves; and (iv) the
reversal of any reserves established as a result of purchase accounting
adjustments. All such adjustments resulting from expenditures made subsequent
to the Closing Date (including capitalization of costs and expenses or payment
of pre-Closing Date liabilities) shall be treated as expenses in the period the
expenditures are made and deducted as part of the calculation of EBITDA in
such period. If Agent, Borrowers and Requisite Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in the Agreement or in any other Loan Document shall,
only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
Agent, Borrowers and Requisite Lenders cannot agree upon the required
amendments within thirty (30) days following the date of implementation of any
Accounting Change, then all Financial Statements delivered and all calculations
of financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and made
without regard to the underlying Accounting Change. For purposes of Section 8.1,
a breach of a Financial Covenant contained in this Annex G shall be
deemed to have occurred as of any date of determination by Agent or as of the
last day of any specified measurement period, regardless of when the Financial
Statements reflecting such breach are delivered to Agent.

 

G-3

 

ANNEX
H (Section 1.1(c))

to

CREDIT AGREEMENT

 

LENDERS’
WIRE TRANSFER INFORMATION

 

 

 

 

 

 

 

 

H-1

 

ANNEX
I (Section 11.10)

to

CREDIT AGREEMENT

 

NOTICE ADDRESSES

 

	
  (A)

  	
   

  	
  If to Agent
  or GE Capital, at

  
	
   

  	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
   

  	
  201 Merritt
  7

  
	
   

  	
   

  	
  Norwalk, CT 06851-5201

  
	
   

  	
   

  	
  Attention: Festival Fun Parks, LLC Account
  Manager

  
	
   

  	
   

  	
  Telecopier No.: 203-956-4543

  
	
   

  	
   

  	
  Telephone No.: 203-956-4775

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with copies
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Kilpatrick Stockton LLP

  
	
   

  	
   

  	
  Suite 2800

  
	
   

  	
   

  	
  1100 Peachtree Street

  
	
   

  	
   

  	
  Atlanta, Georgia 30309

  
	
   

  	
   

  	
  Attention: Hilary P. Jordan, Esq.

  
	
   

  	
   

  	
  Telecopier No.: 404-541-3256

  
	
   

  	
   

  	
  Telephone No.: 404-815-6362

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
  (B)

  	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
   

  	
  201 Merritt
  7

  
	
   

  	
   

  	
  Norwalk, CT
  06851-5201

  
	
   

  	
   

  	
  Attention:
  Corporate Counsel-Corporate Lending

  
	
   

  	
   

  	
  Telecopier
  No.: 203 -956 -4528

  
	
   

  	
   

  	
  Telephone
  No.: 203-956-4775

  
	
   

  	
   

  	
   

  
	
  (C)

  	
   

  	
  If to any
  Borrower, other Credit Party or Borrower Representative, at

  
	
   

  	
   

  	
  c/o Palace
  Entertainment Holdings, Inc.

  
	
   

  	
   

  	
  4590
  MacArthur Blvd, Suite 400

  
	
   

  	
   

  	
  Newport
  Beach, CA 92660

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention: John
  Cora

  
	
   

  	
   

  	
  Telecopier No.:
  949-261-1414

  
	
   

  	
   

  	
  Telephone No.: 949-261-0404

  
	
   

  	
   

  	
  with copies to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Kirkland &
  Ellis LLP

  
	
   

  	
   

  	
  200 East
  Randolph Drive

  
	
   

  	
   

  	
  Chicago,
  Illinois 60601-6636

  
	
   

  	
   

  	
  Attention: Andrew Herman, Esq.

  
	
   

  	
   

  	
  Telecopier No.: 202-654-9454

  
	
   

  	
   

  	
  Telephone
  No.: 202-879-5224

  

 

I-1

 

	
  (D)

  	
   

  	
  If to
  Lender, at

  
	
   

  	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
   

  	
  201 Merritt
  7

  
	
   

  	
   

  	
  Norwalk, CT 06851-5201

  
	
   

  	
   

  	
  Attention: Festival Fun Parks, LLC Account
  Manager

  
	
   

  	
   

  	
  Telecopier No.: 203-956-4543

  
	
   

  	
   

  	
  Telephone No.: 203-956-4775

  

 

I-2

 

ANNEX
J (from Annex A - Commitments definition)

to

CREDIT AGREEMENT

 

Lender(s):

 

GENERAL ELECTRIC CAPITAL
CORPORATION

 

Revolving Loan Commitment

(including a Swing Line Commitment

of $2,500,000):                                                                                                                                                                     $40,000,000

 

J-1Exhibit 10.6

 

PROFESSIONAL
SERVICES AGREEMENT

 

This PROFESSIONAL SERVICES AGREEMENT, dated as of April 12,
2006 (the “Agreement”), by and
among Festival Fun Parks, LLC, a Delaware limited liability company (the “Company”), Palace Holdings Group, LLC, a
Delaware limited liability company (“PHG”)
and MidOcean US Advisor, LP (“MidOcean”).

 

W I T N
E S S E T H:

 

WHEREAS, the Company, Palace Entertainment Holdings, Inc.
(“Palace”) and Palace
Entertainment, Inc. entered into a Stock Purchase Agreement, dated as of February 9,
2006 (the “Purchase Agreement”),
pursuant to which Palace acquired all of the outstanding ownership interests of
the Company; and

 

WHEREAS, MidOcean Partners, LP and MidOcean Partners
II, LP, each a Cayman Islands exempted limited partnership (collectively, the “MidOcean Partnerships”), are members of
PHG, the ultimate parent entity of the Company; and

 

WHEREAS, MidOcean provides investment advisory
services to the MidOcean Partnerships; and

 

WHEREAS, MidOcean has performed financial, management
advisory and other services (the “Transaction
Services”) for the Company in connection with the transactions
contemplated by the Purchase Agreement and the Credit Agreements (the “Transactions”), including but not limited
to services in connection with (i) the retention of various financial and
other advisors and consultants in connection with the Purchase Agreement, and (ii) the
structuring, implementation and consummation of the Transactions; and

 

WHEREAS, PHG, the Company and its affiliates from time
to time in the future may (a) offer and sell or cause to be offered
and sold equity or debt securities (such offerings, collectively, the “Subsequent Offerings”), including without
limitation (i) offerings of membership interests of PHG to employees,
directors, managers and consultants of and to the Company (“Management Offerings”), and (ii) offerings
of debt securities to refinance any indebtedness of the Company and its
affiliates or for other corporate purposes, and (b) repurchase, redeem or
otherwise acquire securities of PHG and its affiliates (any such repurchase or
redemption being referred to herein as a “Redemption”);
and

 

WHEREAS, each of PHG and the Company desires to
receive financial and managerial advisory services from MidOcean, and MidOcean
desires to provide such services to PHG and the Company; and

 

WHEREAS, the parties hereto recognize that claims
might be made against and liabilities incurred by MidOcean, the MidOcean
Partnerships, or related persons or affiliates, under applicable securities
laws or otherwise, in connection with the Transactions or any Securities
Offerings, or relating to other actions or omissions of or by the Company, or
relating to the provision by MidOcean of management consulting, monitoring and
financial advisory services to PHG and the Company, and the parties hereto
accordingly wish to provide for MidOcean, the

 

 

MidOcean Partnerships,
and related persons and affiliates to be indemnified in respect of any such
claims and liabilities.

 

NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein, and for other good and valuable
consideration, the value, receipt and sufficiency of which are acknowledged,
the Parties hereby agree as follows:

 

1.                                       Definitions.

 

“Agreement”
has the meaning set forth in the preamble.

 

“Board”
means the Board of Directors of the Company.

 

“Claim”
means, with respect to any Indemnitee, any claim against such Indemnitee
involving any Obligation with respect to which such Indemnitee may be
entitled to be defended and indemnified by the Company under this Agreement.

 

“Closing Date”
means the date of the consummation of the Transactions.

 

“Company”
has the meaning set forth in the preamble.

 

“Credit Agreements”
means (i) that certain note purchase agreement dated the date hereof with
respect to the issuance by the Company of up to $150 million of senior notes, (ii) that
certain credit agreement entered into between the Company and General Electric
Capital Corporation in connection with the consummation of the transactions
contemplated by the Purchase Agreement.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

“Expenses”
has the meaning set forth in Section 4(d).

 

“Financial Advisory
Fee” has the meaning set forth in Section 4(c).

 

“Financial Advisory
Services” has the meaning set forth in Section 3(b).

 

“Indemnitee”
means each of MidOcean, the MidOcean Partnerships and their respective
successors and assigns, and each of their respective directors, officers,
partners, members, managers, employees, agents, advisors, representatives and
controlling persons (within the meaning of the Securities Act).

 

“Information”
has the meaning set forth in Section 3(c).

 

“Management Fee”
has the meaning set forth in Section 4(b).

 

“Management
Offerings” has the meaning set forth in the recitals.

 

“Management
Services” has the meaning set forth in Section 3(a).

 

“MidOcean”
has the meaning set forth in the preamble.

 

2

 

“MidOcean
Partnerships” has the meaning set forth in the recitals.

 

“Notice of Claim”
has the meaning set forth in Section 8(a).

 

“Notice of Payment”
has the meaning set forth in Section 8(c).

 

“Obligations”
means, collectively, any and all claims, obligations, liabilities, causes of
actions, actions, suits, proceedings, investigations, judgments, decrees,
losses, damages, fees, costs and expenses (including without limitation
interest, penalties and fees and disbursements of attorneys, accountants,
investment bankers and other professional advisors), in each case whether
incurred, arising or existing with respect to third parties or otherwise at any
time or from time to time.

 

“Person”
means any individual, partnership, joint venture, corporation, limited
liability company, trust, unincorporated organization or other entity.

 

“PHG”
has the meaning set forth in the preamble.

 

“Purchase Agreement”
has the meaning set forth in the recitals.

 

“Redemption”
has the meaning set forth in the recitals.

 

“Related Document”
means any agreement, certificate, instrument or other document to which the
Company or any subsidiary thereof may be a party or by which the Company
or any of its properties or assets may be bound or affected from time to
time relating in any way to the Transactions, any Securities Offerings or any
of the transactions contemplated thereby.

 

“Securities Act”
means the Securities Act of 1933, as amended.

 

“Securities
Offerings” means any Redemption, any Management Offering and any
other Subsequent Offering.

 

“Subsequent
Offerings” has the meaning set forth in the recitals.

 

“Transaction
Services” has the meaning set forth in the recitals.

 

“Transactions”
has the meaning set forth in the recitals.

 

2.                Engagement.
Each of PHG and the Company hereby engages MidOcean as a consultant, and
MidOcean hereby agrees to provide financial and managerial consulting and
advisory services to PHG and the Company, all on the terms and subject to the
conditions set forth below.

 

3.               Services,
etc.

 

(a)           MidOcean hereby agrees
during the term of this Agreement to assist, advise and consult with the Board
and management of PHG and the Company in such manner and on such business,
management and financial matters, and provide such other financial and other
consulting and advisory services (collectively, the “Management Services”), as may be

 

3

 

reasonably requested from time to time by the Board,
including but not limited to assistance, advice or consultation in:

 

(i)                                     establishing
and maintaining banking, legal and other business relationships for PHG and the
Company;

 

(ii)                                  developing
and implementing corporate and business strategy and planning for the Company,
including plans and programs for improving operating, marketing and financial
performance, budgeting of future corporate investments, acquisition and
divestiture strategies, and reorganizational programs; and

 

(iii)                               providing
professional employees to serve as directors or officers of PHG and the
Company.

 

(b)   MidOcean further agrees to
provide to PHG and the Company and its affiliates investment banking, financial
advisory and other similar services in connection such debt and equity
financings and other similar transactions in which PHG, the Company and its
affiliates may engage (or contemplate engaging) from time to time during
the term of this Agreement (the “Financial
Advisory Services”).

 

(c)   The Company will furnish MidOcean
with such information as MidOcean reasonably believes appropriate to its
engagement hereunder (all such information so furnished being referred to
herein as the “Information”). The
Company recognizes and confirms that (i) MidOcean will use and rely
primarily on the Information and on information available from generally
recognized public sources in performing the services to be performed hereunder
and (ii) MidOcean does not assume responsibility for the accuracy or
completeness of the Information and such other information.

 

4.          Compensation;
Expenses.

 

(a)   The Company agrees to pay, on the
Closing Date, $500,000 to MidOcean as compensation for the Transaction Services
rendered by MidOcean in connection with the Transactions.

 

(b)   The Company agrees to pay to
MidOcean, as compensation for the Management Services rendered and to be
rendered hereunder, an annual fee (the “Management
Fee”), equal to $1,000,000, payable quarterly, with $250,000
payments in advance to each on each February 1, May 1, August 1
and November 1, during the term of this Agreement, unless MidOcean agrees
to defer receipt of any or all of such quarterly payments in which event they
shall accrue and be paid by the Company no later than thirty (30) days
following the end of the applicable fiscal year of the Company. The Management
Fee may be increased only upon approval in writing by the Company and may be
decreased only with the prior written consent of MidOcean.

 

(c)   In addition, the Company agrees
to pay to MidOcean, as compensation for the Financial Advisory Services to be
rendered hereunder, advisory fees (the “Financial
Advisory Fees”);
provided that the Financial Advisory Fees shall be at rates no greater
than market rates for the services being performed, nor greater that the rates
the Company could reasonably obtain from an unaffiliated third party in an arm’s-length
transaction.

 

4

 

(d)   The Company agrees to reimburse
MidOcean for such travel and other reasonable out-of-pocket expenses (“Expenses”) incurred by MidOcean, including
without limitation any reasonable fees and expenses of legal and accounting
advisors to MidOcean engaged in connection with the Management Services and the
Financial Advisory Services (but exclusive of overhead and similar costs not
reasonably attributable to the provision of the Management and Financial
Advisory Services hereunder). Additional expenses incurred by MidOcean and its
employees and advisors may be reimbursed by the Company, if such
additional expenses were approved in advance by PHG. MidOcean may submit
monthly expense statements, which shall be payable within 30 days from the date
of such submission.

 

5.          Term,
etc.

 

(a)   This Agreement shall be in effect
until, and shall terminate upon, the tenth anniversary of the date hereof.
MidOcean may terminate this Agreement at any time with 30-days’ prior
notice to PHG and the Company. The provisions of this Agreement shall survive
any termination of this Agreement, except for the provisions of Sections 2,
3 and 4.

 

(b)   Upon any consolidation,
reorganization, merger, recapitalization or any conveyance, transfer or lease
of all or substantially all of the assets of PHG, Palace or the Company, the
successor corporation or other entity formed by such consolidation or into
which PHG, Palace or the Company is merged or to which such conveyance,
transfer or lease is made (the “Successor
Entity”) shall succeed to, and be substituted for, PHG and/or the
Company, as applicable, under this Agreement with the same effect as if such
successor entity had been a party hereto if the MidOcean Partnerships and their
affiliates and designees, collectively, shall, directly or indirectly,
beneficially own (as defined in Rule 13d-3 of the Exchange Act) at least
one-third of the outstanding voting capital stock of such Successor Entity. Any
other consolidation, merger or conveyance, transfer or lease of all or substantially
all of the assets or equity of PHG, Palace or the Company shall have the effect
of terminating this Agreement with respect to PHG and the Company or of
releasing PHG and the Company, or any such Successor Entity, from its
obligations hereunder other than the payment of accrued but unpaid fees and
expenses as provided in Section 5(c).

 

(c)   Upon termination of this
Agreement, (i) any prepaid installment of the Management Fee or the
Financial Advisory Fees or any portion thereof (pro rated, with respect to the
quarter in which such termination occurs, for the portion of such quarter
following such termination), shall be immediately refunded to the Company, (ii) any
installment of the Management Fee or any portion thereof which has been
deferred and accrued shall be immediately paid by the Company to MidOcean, (iii) any
portion of the fees payable to MidOcean pursuant to Section 4(a) of
this Agreement which remains unpaid shall be immediately paid to MidOcean by
the Company, and (iv) in the case of any termination of this Agreement
pursuant to Section 5(b) in connection with a change of control
transaction, the Company shall pay MidOcean a fee to be agreed upon, which fee
shall be commensurate with the services rendered by MidOcean with respect to such
change of control transaction. In the event of the liquidation of PHG or the
Company, all amounts due by the Company to MidOcean hereunder shall be paid to
MidOcean before any liquidating distributions or similar payments are made to
stockholders of PHG or the Company.

 

5

 

6.  Independent Contractor Status. The
parties agree that MidOcean shall perform services hereunder as an
independent contractor, retaining control over and responsibility for its own
operations and personnel. Neither MidOcean nor any of its employees or agents
shall, solely by virtue of this Agreement or the arrangements hereunder, be
considered employees or agents of the Company, and none of them shall have
authority to contract in the name of or bind the Company, except (a) to
the extent that any professional employee of MidOcean may be serving as a
director or officer of the Company pursuant to Section 3(a)(iii) hereof,
or (b) as expressly agreed to in writing by the Company.

 

7.  Indemnification. The Company agrees to
indemnify, defend and hold harmless each Indemnitee:

 

(a)  from and against any and all
Obligations, whether incurred with respect to third parties or otherwise, in
any way resulting from, arising out of or in connection with, based upon or
relating to (i) except to the extent that any such Obligation is found in
a final, nonappealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence, bad faith or intentional misconduct of
MidOcean, the Securities Act, the Exchange Act, or any other applicable
securities or other laws, any Securities Offering and Related Document or any
of the transactions contemplated thereby, (ii) any other action or failure
to act of the Company or any of its subsidiaries or any of its predecessors,
whether such action or failure has occurred or is yet to occur or (iii) except
to the extent that any such Obligation is found in a final judgment by a court
of competent jurisdiction to have resulted from the gross negligence, bad faith
or intentional misconduct of MidOcean, the performance by MidOcean of
management consulting, monitoring, financial advisory or other services for the
Company (whether performed prior to the date hereof, hereafter, pursuant hereto
or otherwise); and

 

(b)  to the fullest extent permitted by
applicable law, from and against any and all Obligations in any way resulting
from, arising out of or in connection with, based upon or relating to (i) except
to the extent that any such Obligation is found in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from the gross
negligence, bad faith or intentional misconduct of MidOcean, the Securities
Act, the Exchange Act, or any other applicable securities or other laws, any
Securities Offering and Related Document or any of the transactions
contemplated thereby, (ii) the fact that such Indemnitee is or was a
member, director or officer of PHG or the Company or is or was serving at the
request of the Company as a director, officer, employee or agent of or advisor
or consultant to another limited liability company, corporation, partnership,
joint venture, trust or other enterprise, or (iii) any breach or alleged
breach by such Indemnitee of his or her fiduciary duty as a member, director or
officer of PHG or of the Company;

 

in each case including but not limited to any and all
reasonable fees, costs and expenses (including without limitation fees and
disbursements of attorneys) incurred by or on behalf of any Indemnitee in asserting,
exercising or enforcing any of its rights, powers, privileges or remedies in
respect of this Agreement, provided, however, that the Company
shall not be required to indemnify an Indemnitee pursuant to this Agreement if
such Indemnitee has obtained indemnification for the same Obligation pursuant
to the Interest Acquisition Agreement or any other agreement with the Company.

 

6

 

8.  Indemnification Procedures.

 

(a)  Whenever any Indemnitee shall have actual
knowledge of the reasonable likelihood of the assertion of a Claim, MidOcean
(acting on its own behalf or, if requested in writing by any such Indemnitee
other than itself, on behalf of such Indemnitee) or such Indemnitee shall
notify the Company in writing of the Claim (the “Notice of Claim”) with reasonable promptness after such
Indemnitee has such knowledge relating to such Claim and has notified MidOcean
thereof. The Notice of Claim shall specify all material facts known to MidOcean
(or if given by such Indemnitee, such Indemnitee) that may give rise to
such Claim and the monetary amount or an estimate of the monetary amount of the
Obligation involved if MidOcean (or if given by such Indemnitee, such
Indemnitee) has knowledge of such amount or a reasonable basis for making such
an estimate. The failure of any of MidOcean or such Indemnitee to give such
Notice of Claim shall not relieve the Company of its indemnification
obligations under this Agreement except to the extent that such omission results
in a failure of actual notice to the Company and the Company is materially
prejudiced as a result of the failure to give such Notice of Claim. The Company
shall, at its expense, undertake the defense of such Claim with attorneys of
its own choosing reasonably satisfactory to MidOcean and to any Indemnitee.
MidOcean may participate in such defense with counsel of MidOcean’s
choosing at the expense of, and reasonably satisfactory to, the Company. If in
the exercise of their good faith judgment any one or more other Indemnitee
reasonably determines that the Claim presents an actual or potential conflict
of interest with MidOcean, such Indemnitee or Indemnitees may participate
in the defense of the Claim with one counsel for all such Indemnitees (if
reasonably satisfactory to the Company) at the choosing of such Indemnitees and
at the expense of the Company. In the event that the Company does not undertake
the defense of the Claim within a reasonable time after MidOcean has given the
Notice of Claim, or in the event that MidOcean shall in good faith make a
reasonable determination that the defense of any Claim by the Company is
inadequate, provided that MidOcean must provide notice of such determination to
the Company and the Company shall have 60 days to cure any such inadequacies,
or may conflict with the interests of any Indemnitee, MidOcean may, at the
expense of the Company and after giving notice to the Company of such action,
undertake the defense of the Claim and compromise or settle the Claim, all for
the account of and at the risk of the Company. In the defense of any Claim, the
Company shall not, except with the consent of MidOcean (or, in the case of any
entry of any judgment or settlement that is binding on any other Indemnitee,
such other Indemnitee), consent to entry of any judgment or enter into any
settlement that includes any injunctive or other non-monetary relief, or that
does not include as an unconditional term thereof the giving by the person or
persons asserting such Claim to such Indemnitee of a release from all liability
with respect to such Claim. In each case, MidOcean and each other Indemnitee
seeking indemnification hereunder will cooperate with the Company so long as
the Company is conducting the defense of the Claim, in the preparation for and
the prosecution of the defense of such Claim, including without limitation
making available evidence within the control of MidOcean or such Indemnitee, as
the case may be, and persons needed as witnesses who are employed by
MidOcean or such Indemnitee, as the case may be, in each case as
reasonably needed for such defense and at cost, which cost, to the extent
reasonably incurred, shall be paid by the Company.

 

(b)  The Company hereby agrees to advance
costs and expenses, including without limitation attorney’s fees, incurred by
MidOcean (acting on its own behalf or, if requested by any such Indemnitee
other than itself, on behalf of such Indemnitee) or any Indemnitee in defending

 

7

 

any Claim in advance of the final disposition of such
Claim upon receipt of an undertaking by or on behalf of MidOcean or such
Indemnitee to repay amounts so advanced if it shall ultimately be determined
that MidOcean or such Indemnitee is not entitled to be indemnified by any of
the Company as authorized by this Agreement.

 

(c)  Each Indemnitee shall notify the
Company in writing of the amount of any Claim actually paid by such Indemnitee
(the “Notice of Payment”). The
amount of any Claim actually paid by an Indemnitee shall bear simple interest
at the rate equal to The Bank of America prime rate as of the date of such
payment plus 2% per annum, from the date the Company receive the Notice of
Payment to the date on which the Company shall repay the amount of such Claim
plus interest thereon to such Indemnitee.

 

9.  Contribution.

 

(a)  If for any reason the indemnity
provided for in Section 7 is unavailable or is insufficient to hold
harmless any Indemnitee from any of the Obligations covered by such indemnity,
then the Company shall contribute to the amount paid or payable by such
Indemnitee as a result of such Obligation in such proportion as is appropriate
to reflect (i) the relative fault of the Company, on the one hand, and
such Indemnitee, on the other, in connection with the state of facts giving
rise to such Obligation, (ii) if such Obligation results from, arises out
of, is based upon or relates to the Transactions or any Securities Offering,
the relative benefits received by the Company, on the one hand, and such Indemnitee,
on the other, from the Transactions or Securities Offering, and (iii) if
required by applicable law, any other relevant equitable considerations.

 

(b)  For purposes of Section 9(a),
the relative fault of the Company, on the one hand, and of the Indemnitee, on
the other, shall be determined by reference to, among other things, their
respective relative intent, knowledge, access to information and opportunity to
correct the state of facts giving rise to such Obligation.

 

(c)  The parties hereto acknowledge and
agree that it would not be just and equitable if contributions pursuant to Section 9(a)
were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in Sections
9(a) and 9(b). The Company shall not be liable under Section 9(a) for
contribution to the amount paid or payable by any Indemnitee except to the
extent and under such circumstances that the Company would have been liable to
indemnify, defend and hold harmless such Indemnitee under Section 7,
if such indemnity were enforceable under applicable law. No Indemnitee shall be
entitled to contribution from the Company with respect to any Obligation in the
event that such Indemnitee is finally determined to be guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act), gross negligence, intentional misconduct or bad faith in
connection with such Obligation and the Company is not guilty of such
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act), gross negligence, intentional misconduct or bad faith.

 

10. Certain Covenants. The Company agrees to
perform its obligations under this Agreement. The rights of each
Indemnitee to be indemnified under any other agreement, document, certificate
or instrument or applicable law are independent of and in addition to any

 

8

 

rights of such Indemnitee to be indemnified under this
Agreement. The rights of each Indemnitee and the obligations of the Company
hereunder shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnitee. The Company shall implement and
maintain in full force and effect any and all provisions in its governing and
organizational documents that may be necessary or appropriate to enable it
to carry out its obligations hereunder to the fullest extent permitted by
applicable law, including without limitation a provision of its limited
liability company agreement eliminating liability of a director for breach of
fiduciary duty to the fullest extent permitted by applicable law, as it may be
amended from time to time. Notwithstanding the foregoing, the parties hereto
acknowledge and agree that if, at any time, the Company shall be prohibited
under the terms of the Credit Agreements from making any payment of the
Management Fee or the Financial Advisory Fees, the failure to make such payment
(solely to the extent of such prohibition) shall not be deemed a breach of or
default under this Agreement; provided that the Company shall not be
relieved of its obligation to make such payment promptly upon the lifting of
such prohibition, but such payment or payments shall accrue and cumulate until
such time as they may be may made consistent with the terms of the
Credit Agreements.

 

11. Third-Party Beneficiaries. All Indemnitees
not signatories to this Agreement are intended third-party beneficiaries of
this Agreement.

 

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

 

13. Notices. All notices, requests, demands, waivers
and other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed, certified or registered mail with postage prepaid,
(c) sent by next-day or overnight mail or delivery or (d) sent by
fax, with a copy sent by (a), (b), or (c) above, as follows:

 

If to PHG and the Company, to:

 

c/o MidOcean Partners, LP

320 Park Avenue

17th Floor

New York, NY 10022

Facsimile:      212-497-1373

Attention:      Tyler
Zachem

 

with a copy to:

 

Kirkland & Ellis LLP

655 15th Street, NW

Washington, DC 20005

Facsimile:      202-879-5200

Attention:      Andrew
Herman, Esq.

 

9

 

If to MidOcean, to:

 

c/o MidOcean Partners, LP

320 Park Avenue

17th Floor

New York, NY 10022

Facsimile:      212-497-1373

Attention:      Tyler
Zachem

 

or, in each case, at such other address as may be
specified in writing to the other parties hereto.

 

All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal
delivery on the day after such delivery, (x) if by certified or registered
mail, on the seventh business day after the mailing thereof, (y) if by next
-day or overnight mail or delivery, on the day delivered, or (z) if by
telecopy, on the next day following the day on which such telecopy was sent,
provided that a copy is also sent by certified or registered mail.

 

14. No Representations. There are no
representations or warranties of MidOcean in connection with this Agreement or
the services to be provided hereunder, except as expressly made and contained
in this Agreement.

 

15. Headings. The headings contained in this
Agreement are for purposes of convenience only and shall not affect the meaning
or interpretation of this Agreement.

 

16. Counterparts. This Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall together constitute one and the same instrument.

 

17. Binding Effect; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties to this Agreement
and their respective successors and permitted assigns and to each Indemnitee
and their respective successors, heirs and permitted assigns; provided
that, none of MidOcean, or the Company may assign any of its rights or
obligations under this Agreement without the express written consent of the
other parties hereto. Notwithstanding any other provision of this Agreement to
the contrary, the rights and obligations of MidOcean hereunder may be
expressly assigned by MidOcean to one or more of its affiliates. Subject to Section 11,
this Agreement is not intended to confer any right or remedy upon any person
other than the parties to this Agreement, each Indemnitee and their respective
successors, heirs and permitted assigns.

 

18. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED IN ALL RESPECTS INCLUDING AS TO VALIDITY, INTERPRETATIONS AND EFFECTS
BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ITS PRINCIPLES
OR RULES OF CONFLICT OF LAWS TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD
REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THE
COMPANY AND MIDOCEAN HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA, IN

 

10

 

EACH CASE LOCATED IN THE STATE, CITY AND COUNTY OF NEW
YORK, SOLELY IN RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS
OF THIS AGREEMENT, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN
ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT HEREOF,
THAT IT IS NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT
BE BROUGHT OR IS NOT MAINTAINABLE IN SUCH COURTS OR THAT THE VENUE THEREOF MAY NOT
BE APPROPRIATE OR THAT THIS AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT
TO SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A NEW YORK
STATE OR FEDERAL COURT. THE COMPANY AND MIDOCEAN HEREBY CONSENT TO AND GRANT
ANY SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE
SUBJECT MATTER OF ANY SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER
PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED
IN SECTION 13, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW,
SHALL BE VALID AND SUFFICIENT SERVICE THEREOF.

 

19. Waiver of Jury Trial. EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR VALIDITY OF
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (C) IT MAKES THIS WAIVER VOLUNTARILY, AND (D) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS CONTAINED IN THIS SECTION 19.

 

20. Amendment; Waivers. No amendment,
modification, supplement or discharge of this Agreement, and no waiver
hereunder, shall be valid or binding unless set forth in writing and duly
executed by the party against whom enforcement of the amendment, modification,
supplement, discharge or waiver is sought. Any such waiver shall constitute a
waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the party or Indemnitee granting such
waiver in any other respect or at any other time. Neither the waiver by any of
the parties hereto or any Indemnitee of a breach of or a default under any of
the provisions of this Agreement, nor the failure by any party hereto or any
Indemnitee on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, powers or privilege hereunder, shall be
construed as a waiver of any other breach or default of a similar nature, or as
a waiver of any of such provisions, rights, power or privileges hereunder.

 

11

 

The rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies that any party or Indemnitee may otherwise
have at law or in equity or otherwise.

 

Signature Page Follows

 

12

 

IN WITNESS WHEREOF,
the parties have duly executed this Professional Services Agreement as of the
date first above written.

 

	
   

  	
  FESTIVAL FUN PARKS, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  A. Cora

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  A. Cora

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and

  	
   

  
	
   

  	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PALACE HOLDINGS GROUP, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  A. Cora

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John
  A. Cora

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Executive Officer and

  	
   

  
	
   

  	
   

  	
   

  	
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MIDOCEAN US ADVISOR, LP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tyler
  Zachem

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tyler
  Zachem

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Managing
  Director

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00105-of-00352.parquet"}]]