Exhibit 10.1

 

 

 

 

 

 

Limited Liability
Company Agreement

of

FE CONCEPTS, LLC
a Texas limited liability company

 

 

 

 

 

 

 

 

(Dated Effective as of April 20, 2018)

 

 

 

 

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NOTICE

 

 

THE INTERESTS DESCRIBED IN THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES
LAWS OF ANY OF THE STATES OF THE UNITED STATES OR THE SECURITIES LAWS OF ANY
FOREIGN JURISDICTION (THE “ACTS”).  SUCH INTERESTS ARE BEING OFFERED AND SOLD IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH INTERESTS UNDER THE
ACTS OR AN EXEMPTION THEREFROM UNDER THE ACTS.

THE DELIVERY OF THIS LIMITED LIABILITY COMPANY AGREEMENT SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
OFFER, SOLICITATION OR SALE OF INTERESTS IN FE CONCEPTS, LLC IN ANY JURISDICTION
IN WHICH SUCH OFFER, SOLICITATION OR SALE IS NOT AUTHORIZED OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE.

THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE, MAY
NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACTS PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE REQUIREMENTS AND CONDITIONS SET FORTH IN THIS
LIMITED LIABILITY COMPANY AGREEMENT.

 

 

 

 

 

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TABLE OF CONTENTS

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

1

 

 

Section 1.1

Definitions

1

Section 1.2

Additional Definitions

11

Section 1.3

Construction

12

 

 

 

ARTICLE II ORGANIZATION, PURPOSES AND POWERS

12

 

 

 

Section 2.1

Formation of Company

12

Section 2.2

Certificates and Documents

13

Section 2.3

Company Name

13

Section 2.4

Term of the Company

13

Section 2.5

Principal Place of Business

13

Section 2.6

Registered Agent and Office

13

Section 2.7

Company Purposes

13

Section 2.8

Powers

13

Section 2.9

Organization Expenses

13

Section 2.10

Confidentiality

13

 

 

 

ARTICLE III MEMBERS; MEMBERSHIP UNITS

14

 

 

 

Section 3.1

Authorization of Membership Units

14

Section 3.2

Member Meetings

14

Section 3.3

Voting and Consents of Members

15

Section 3.4

Consent of Class

15

Section 3.5

Securities Laws; Legends

15

 

 

 

ARTICLE IV CAPITAL CONTRIBUTIONS

16

 

 

 

Section 4.1

Capital Contributions of Members

16

Section 4.2

No Interest on Contributions; No Withdrawal

17

 

 

 

ARTICLE V MANAGEMENT

17

 

 

 

Section 5.1

Management of the Company; Board

17

Section 5.2

Authority of the Board

19

Section 5.3

Restrictions on Authority of the Board

20

Section 5.4

Books and Records

22

Section 5.5

Committees

22

Section 5.6

Officers

23

Section 5.7

Management Services Agreement

23

Section 5.8

Theater Services Agreement

23

 

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Page

 

 

 

ARTICLE VI TRANSFERS

23

 

 

 

Section 6.1

Conditions to Transfers

23

Section 6.2

Effect of Membership Units in Hands of the Transferee

27

Section 6.3

Joinder

28

Section 6.4

Imposition of Restrictions

28

Section 6.5

Limitation on Admission

28

Section 6.6

Other Limitations

28

 

 

 

ARTICLE VII CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS

29

 

 

 

Section 7.1

Capital Accounts

29

Section 7.2

Allocations of Profits and Losses

30

Section 7.3

Special Allocations

30

Section 7.4

Other Allocation Rules

32

Section 7.5

Tax Allocations

32

Section 7.6

Company Tax Returns

33

Section 7.7

Tax Year and Accounting Matters

33

Section 7.8

Tax Elections

33

Section 7.9

Distributions

33

Section 7.10

Tax Distributions.

34

Section 7.11

Tax Matters Member

34

 

 

 

ARTICLE VIII TERM; DISSOLUTION

38

 

 

 

Section 8.1

Term; Termination

38

Section 8.2

Liquidation of Company

39

Section 8.3

Distribution Upon Dissolution of the Company

39

 

 

 

ARTICLE IX REPRESENTATION, WARRANTIES AND COVENANTS

39

 

 

 

Section 9.1

Representations, Warranties and Covenants of the Members

39

 

 

 

ARTICLE X ADDITIONAL AGREEMENTS

40

 

 

 

Section 10.1

Drag-Along Sale

40

Section 10.2

Class A Member Call Option

42

Section 10.3

Assignment of Option Units

42

Section 10.4

Class B Default

42

Section 10.5

Class B Conversion

43

Section 10.6

Sale of Class C Membership Units

44

Section 10.7

Sale of the Company

45

 

 

 

iii

 

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Page

 

 

 

ARTICLE XI CONFLICTS, EXCULPATION, INDEMNIFICATION

45

 

 

 

Section 11.1

Conflicts

45

Section 11.2

Limitation of Liability; Exculpation

46

Section 11.3

Indemnification

46

 

 

 

ARTICLE XII MISCELLANEOUS PROVISIONS

47

 

 

 

Section 12.1

Notices

47

Section 12.2

Amendment

48

Section 12.3

Jurisdiction; Waiver of Jury Trial

48

Section 12.4

Headings

48

Section 12.5

Governing Law; Severability

48

Section 12.6

Successors; Counterparts

49

Section 12.7

Entire Agreement

49

Section 12.8

No Waiver

49

 

 

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EXHIBITS

Exhibit A

-

Members

Exhibit B

-

Appointments

Exhibit C

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Form of Management Services Agreement

Exhibit D

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Form of Theater Services Agreement

Exhibit E

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Form of Capital Note

Exhibit F

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Form of Assignment of Membership Units

 

 

 

 

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FE CONCEPTS, LLC

LIMITED LIABILITY COMPANY AGREEMENT

This Limited Liability Company Agreement (this “Agreement”) of FE Concepts, LLC
(the “Company”), dated as of April 20, 2018 (the “Effective Date”), is entered
into by and between CNMK Texas Properties, LLC, a Texas limited liability
company, and AWSR Investments, LLC, a Texas limited liability company, and such
other Persons (as defined herein) who are or, who from time to time, become
signatories to this Agreement.

RECITALS

A.    CNMK Texas Properties, LLC is a wholly owned indirect subsidiary of
Cinemark USA, Inc., a corporation engaged in the business of owning and
operating movie theaters.

B.    AWSR Investments, LLC is an affiliate of Copper Beech Capital, LLC.

C.    The parties hereto desire to enter into this Agreement for the purpose of
jointly developing, owning and operating family entertainment facilities
offering a combination of the entertainment activities conducted by the
respective Affiliates (as defined herein) of each party.

STATEMENTS OF AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.1    Definitions.  The following capitalized terms shall have the
following meanings when used in this Agreement and the Exhibits hereto:

“Active Management Role” means serving as a member of the Board and having
primary responsibility for the strategic planning of the Company.

“Adjusted Capital Account” shall mean, with respect to any Member, a special
account maintained for such Member, the balance of which shall equal such
Member’s Capital Account balance, increased by the amount (if any) of such
Member’s share of the Company Minimum Gain and Member Minimum Gain.

“Adjusted Capital Account Deficit” shall mean, with respect to any Member, the
deficit balance, if any, in such Member’s Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:

(a)    credit to such Capital Account any amounts which such Member is obligated
to restore or is deemed to be obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5);  and

 

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(b)    debit to such Capital Account the items described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

“Affiliate” means, with respect to any Person, any Person controlling,
controlled by or under common control with such Person, with the concept of
control in such context meaning the possession, directly or indirectly, of the
power to direct the management and policies of another, whether through the
ownership of voting securities, by contract or otherwise.

“Agreement” shall have the meaning assigned to such term in the preamble.

“Assignment” means an Assignment of Membership Units in the form of Exhibit F.

“Approved Budget” means the annual operating and capital budget adopted and
approved by the Board as may be revised from time to time with the approval of
the Board.

“Assumed Tax Rate” means the highest marginal federal income tax rate prescribed
for the relevant type of income for any Member in the relevant Fiscal Year.

“Board” means the board of Managers of the Company.

“Book Basis” shall mean, with respect to any asset, the asset’s adjusted basis
for federal income tax purposes; provided, however, (a) if property is
contributed to the Company, the initial Book Basis of such property shall equal
its fair market value on the date of contribution and (b) if the Capital
Accounts of the Company are adjusted pursuant to Treasury Regulations Section
1.704-1(b) to reflect the fair market value of any Company asset, the Book Basis
of such asset shall be adjusted to equal its respective fair market value as of
the time of such adjustment in accordance with such Treasury Regulations. The
Book Basis of all assets shall be adjusted thereafter by depreciation and
amortization as provided in Treasury Regulations Section 1.704-1 (b)(2)(iv)(g).

“Business Code” means the Texas Business Organizations Code.

“Call Option Trigger” means the occurrence of any of the following:  

(a)    the eighth anniversary of the Effective Date;

(b)    a Company Mitchell Trigger Event;

(c)    a Cinemark Mitchell Trigger Event;

(d)    a Class B Default;

(e)    a Class B Conversion;

(f)    Class A Member Change in Control or a Class A Parent Change in Control to
a third party and in each case the Class A Member does not invoke its drag-along
rights under Section 10.1.

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“Call Purchase Price” means:

(a)    the amount of Unreturned Capital of the Class B Member (or Class C
Member, as the case may be) if the Call Option Trigger is (i) a Class B Default
or (ii) a Class B Conversion (other than as a result of a Company Mitchell
Trigger Event or a Cinemark Mitchell Trigger Event); or

(b)    the greater of (i) the product of (A) 8 x consolidated EBITDA less
Long-Term Debt, Severance Payments, and if not duplicative, Management Payments
and Exit Bonus plus cash and (B) Membership Interest of the Class B Member (or
Class C Member, as the case may be) expressed as a percentage and (ii) the
Designated Price, if the Call Option Trigger is an event described in (a), (b)
or (c) of the definition of Call Option Trigger.

“Capital Account” means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:

(i)    to each Member’s Capital Account there shall be credited such Member’s
Capital Contributions, such Member’s distributive share of Profits, any items in
the nature of income or gain which are specially allocated pursuant to Section
7.3 or Section 7.4 hereof, and the amount of any Company liabilities assumed by
such Member or which are secured by any asset of the Company distributed to such
Member;

(ii)    to each Member’s Capital Account there shall be debited the amount of
cash and the fair market value of any Company asset (as determined by the Board)
distributed to such Member pursuant to any provision of this Agreement, such
Member’s distributive share of Losses, any items in the nature of expenses or
losses which are specially allocated pursuant to Section 7.3 or Section 7.4
hereof, the amount of any liabilities of such Member assumed by the Company or
which are secured by any property contributed by such Member to the Company;

(iii)    except as otherwise provided in this Agreement, in the event all or a
portion of an interest in the Company is transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital Account of
the transferor to the extent it relates to the transferred interest; and

(iv)    in determining the amount of any credit or debit for purposes of
maintaining each Member’s Capital Account there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and Treasury
Regulations.

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The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with the Treasury
Regulations Section 1.704 and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.  In the event the Company shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto (including, without limitation, debits or
credits relating to liabilities which are secured by contributed or distributed
property or which are assumed by the Company, or any Member), are computed in
order to comply with such Treasury Regulations, the Board, after consultation
from the Tax Matters Member, may make such modifications.  The Board may also
(i) make any adjustments that are necessary or appropriate to maintain equality
between the Capital Accounts of the Members and the amount of Company capital
reflected on the Company’s balance sheet, as computed for book purposes, in
accordance with the Treasury Regulations Section 1.704-1(b)(2)(iv)(q) and
(ii) make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Treasury Regulations
Section 1.704-1(b).

 

“Capital Contributions” means, with respect to any Member, the aggregate amount
of money or the initial Book Basis of any other property (other than money), net
of any liabilities assumed by the Company to which such property is subject,
contributed to the Company with respect to the interest in the Company held by
such Member, which may include an Initial Capital Contribution or a Subsequent
Capital Contribution.  Loans to the Company shall not be considered Capital
Contributions or included in the Capital Account of any Member.

“Capital Leases” means any lease or similar arrangement which is of a nature
that payment obligations of the lessee or obligor thereunder at the time are or
should be capitalized and shown as liabilities (other than current liabilities)
upon a balance sheet of such lessee or obligor prepared in accordance with GAAP,
including Statement of Financial Accounting Standards No. 13.

“Capital Members” mean holders of the Capital Units who are Members of the
Company.

“Capital Units” means the Class A Membership Units, the Class B Membership Units
and the Class C Membership Units.

“CB Proposed Valuation” means the aggregate value of 100% of the Membership
Interests in the Company proposed by the CB Member in connection with the
submission of a CB Offer Notice.

“CB Purchase Price” means the product of (A) the CB Proposed Valuation and (B)
Membership Interest attributable to the CB Units expressed as a percentage.

“Change in Control” means the occurrence of any one or more of the following:

(i)    any Person (other than a Member or a Permitted Transferee) becomes the
beneficial owner, directly or indirectly, of Membership Interests of the Company
representing more than fifty percent (50%) of the Company’s then outstanding
Membership Interests;

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(ii)    any consolidation, merger, recapitalization or similar transaction
involving the Company; or

(iii)    the sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or any material portion of the assets of
the Company.

“Cinemark Mitchell Trigger Event” means, after the first Facility has been in
operation for a full year, Lee Roy Mitchell no longer serves as a board member
or executive of Cinemark Holdings, Inc. or any subsequent parent of Cinemark
Holdings, Inc. for any reason including without limitation, retirement, death or
disability.

“Class A Competing Business” means the motion picture exhibition business.

“Class A Member” means CNMK Texas Properties, LLC.

“Class A Membership Unit” means a single Class A Membership Unit in the Company
held by a Member who has made a Capital Contribution to the Company.  The number
of Class A Membership Units authorized shall be as determined from time to time
by the Board.

“Class A Parent” means Cinemark Holdings, Inc. or any of its direct or indirect
Subsidiaries that may be a direct or indirect beneficial owner of the Class A
Member.

“Class A Change in Control” means a Change in Control of the Class A Parent.

“Class B Member” means AWSR Investments, LLC.

“Class B Change in Control” means a Change in Control of the Class B Member, the
Class C Member, Management Co. or Management Parent.

“Class B Competing Business” means an entertainment facility incorporating
restaurants, games and bowling.

“Class B Conversion” means the conversion of Class B Membership Units into Class
C Membership Units pursuant to Section 10.5.

“Class B Membership Unit” means a single Class B Membership Unit in the Company
held by a Member who has made a Capital Contribution to the Company.  The number
of Class B Membership Units authorized shall be as determined from time to time
by the Board.  

“Class C Member” means a holder of Class C Membership Units.

“Class C Membership Unit” means a single Class C Membership Unit in the Company
held by a Member who has made a Capital Contribution to the Company.  The number
of Class C Membership Units authorized shall be as determined from time to time
by the Board.

“Code” means the Internal Revenue Code of 1986, as amended.

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“Company Mitchell Trigger Event” means, after the first Facility has been in
operation for a full year, Lee Roy Mitchell no longer serves in an Active
Management Role in the Company for any reason including without limitation,
retirement, death or disability.

“Company Sale Transaction” means any transaction constituting a Class A Change
in Control, a sale of all outstanding Membership Units to a third party
purchaser, a merger, consolidation, joint venture or similar transaction
involving the Company, a sale of all or substantially all assets of the Company
or other transaction resulting in a Change in Control of the Company or
disposition of the assets or business of the Company.

“Company Minimum Gain” means “partnership minimum gain” determined in accordance
with Treasury Regulations Section 1.704-2(d) and allocated pursuant to Section
7.3(a).

“Consultant” means Cinemark USA, Inc., a Texas corporation or any of its
Subsidiaries.

“Designated Price” means the sum of (i) the Unreturned Capital contributed by
the Class B Member (or Class C Member, as the case may be) in connection with
each Facility plus (ii) an eight percent (8%) compounded annual return on the
Unreturned Capital contributed by the Class B Member (or Class C Member, as the
case may be) in connection with each Facility calculated from the date such
capital was contributed to the Company, less the Class B Members (or Class C
Members) pro rata share of any Exit Bonus.

“Distributable Cash” means:  (a) all cash, revenues and funds received by the
Company from Company operations less (b) the sum of the following: (i) all
principal, interest, fees, charges and other amounts owed to any Member in
connection with any loan by any Member to the Company; (ii) all expenses payable
by the Company to a third party pursuant to the Approved Budget; and (iii) such
reserves, if any, as the Board deems reasonably necessary for the proper
operation of the Company’s business.

“EBITDA” means (a) Net Income, plus (b) Interest Expense, plus (c) to the extent
deducted in the calculation of Net Income, depreciation expense and amortization
expense, plus (d) income tax expense.

“Exit Bonus” means any payments to be paid to the Manager by the Company in
connection with a Trigger Event (as such term is defined in the Management
Services Agreement).

“Facility” or “Facilities” means an entertainment facility incorporating
restaurants, bars, games, rides, bowling and motion picture theater auditoriums
branded as Strike + Reel.

“Fiscal Year” means the Company’s fiscal year which will be a 52-53 week tax
year ending on the Sunday closest to December 31 of each year.

“GAAP” is generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other Person as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.

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“Independent Third Party” means a Person who is not an Affiliate of, or related
to, an Offering Member or a Transferring Member.

“Initial Capital Contribution” means the Initial Class A Contribution or the
Initial Class B Contribution.

“Interest Expense” means for any fiscal period, interest expense (whether cash
or non-cash) determined in accordance with GAAP for the relevant period ending
on such date, including, without limitation or duplication, all commissions,
discounts, or related amortization and other fees and charges with respect to
letters of credit and bankers’ acceptance financing and the net costs associated
with interest rate swap, cap, and similar arrangements, and the interest portion
of any deferred payment obligation (including leases of all types).

“Involuntary Transfer” means a transfer (directly or indirectly) of all or any
part of a Membership Unit or other interest in the Company to another Person
resulting (i) from bankruptcy proceedings involving a Member; (ii) from an
assignment of any Membership Units for the benefit of creditors of a Member; or
(iii) an execution of judgment or a foreclosure by a court of law against any
Membership Units or the acquisition of record or beneficial ownership of any
Membership Units by a lender or creditor.

“Lien” means a claim, mortgage, deed of trust, levy, charge, pledge, security
interest or other encumbrance of any kind, whether voluntarily incurred or
arising by operation of law or otherwise against any property.

“Long-Term Debt” means the aggregate long-term liabilities of the Company as
determined in accordance with GAAP, including Capital Leases.

“Loss” shall mean, with respect to the Company, for each taxable year, each item
of the Company’s taxable loss or deduction for such taxable year, as determined
under Section 703(a) of the Code, and Section 1.703-1 of the Treasury
Regulations (for this purpose, all items of deduction and loss required to be
stated separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable loss), but with the following adjustments:

(a)    Any expenditures of the Company described in Section 705(a)(2)(B) of the
Code, including any items treated under Section 1.704-1 (b)(2)(iv)(i) of the
Treasury Regulations as items described in Section 705(a)(2)(B) of the Code,
shall be considered an item of taxable deduction or loss;

(b)    In the event the Book Basis of any Company asset is reduced as a result
of an adjustment to Book Basis under Treasury Regulations Section 1.704-1(b) the
amount of such reduction shall be taken into account as loss from the
disposition of such asset for purposes of computing Loss;

(c)    Loss resulting from any disposition of property with respect to which
loss is recognized for federal income tax purposes shall be computed by
reference to the Book Basis of the property disposed of, notwithstanding that
the adjusted tax basis of such property differs from its Book Basis;

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(d)    Any items which are specially allocated pursuant to Section 7.3 shall not
be taken into account in computing Loss; and

(e)    In lieu of the depreciation, amortization and other cost recovery
deductions taken into account in computing such taxable loss or deduction, there
shall be taken into account depreciation and amortization as determined pursuant
to Treasury Regulations Section l.704-1(b)(2)(iv)(g), if applicable for such
taxable year or other period.

“Manager” means a voting member of the Board.

“Management Co.” means Cinema Operations, L.L.C., a Texas limited liability
company and direct or indirect subsidiary of Management Parent.

“Management Parent” means Entertainment Properties Group, Inc., or any of its
direct or indirect Subsidiaries that may be a direct or indirect beneficial
owner of Management Co.

“Management Payments” means any payments made or due to the Manager under the
Management Services Agreement or the Theater Services Agreement.

“Management Services Agreement” means the Management Services Agreement between
the Company and Management Co., in substantially the form attached as Exhibit C
hereto.

“Material Contract” means a contract for which the Company (i) is obligated to
pay or is entitled to receive amounts of Fifty Thousand Dollars ($50,000.00) or
more that is not included in the Approved Budget or (ii) grants any Person any
lien or other encumbrance on any asset of the Company, other than Permitted
Liens.

“Member Minimum Gain” means “partner nonrecourse debt minimum gain” within the
meaning set forth in Treasury Regulations Section 1.704-2(i) with respect to and
allocated pursuant to Section 7.3(a).

“Member Nonrecourse Debt Minimum Gain” means “partner nonrecourse debt minimum
gain” within the meaning set forth in Treasury Regulations Section 1.704-2(i)(2)
and shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(3).

“Member Nonrecourse Deductions” shall have the meaning set forth in Treasury
Regulations Section 1.704-2(i)(1) with respect to Partner Nonrecourse Deductions
and shall be determined in accordance with Treasury Regulations Section
1.704-2(i)(2).

“Members” mean, collectively, the Class A Member, the Class B Member and any
Class C Member of the Company.

“Membership Interest” means the ownership interest of a Member in the Company
expressed as the percentage of the aggregate number of all outstanding Class A
Membership Units, Class B Membership Units and Class C Membership Units of the
Company held by such Member.

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“Membership Unit” means a single ownership interest in the Company, which such
interests are classified as Class A Membership Units, Class B Membership Units
and Class C Membership Units.  Subject to Section 5.3 and Section 4.1, the
number and classes of Membership Units authorized and the amount of Capital
Contribution required of a Member acquiring a Membership Unit shall be as
determined by the Board.

“Mitchell Foundation” means a foundation organized by Lee Roy Mitchell and Tandy
Mitchell.

“Net Income” means, as calculated on a consolidated basis for the Company and
its Subsidiaries for any period as at any date of determination, the net profit
(or loss), after provision for taxes and before compensation expenses
attributable to any equity based compensation, of the Company and its
Subsidiaries for such period taken as a single accounting period calculated in
accordance with GAAP.

“Net Profit and Net Loss” shall mean for each taxable year or other period the
excess of items of Profit over items of Loss for such period, or the items of
Loss over the items of Profit for such period, as appropriate.  Net Profit and
Net Loss shall not include items of Profit and Loss allocated pursuant to
Section 7.3.

“Nonrecourse Deductions” shall have the meaning set forth in Treasury
Regulations 1.702-2(b)(1).

“Operating Documents” means this Agreement, the Management Services Agreement
and the Theater Services Agreement.

“Permitted Liens” means (i) liens for taxes not yet due and payable; (ii) liens
for taxes which are being contested in good faith; (iii)  liens of any landlord,
carrier, warehouseman, mechanic, materialman and any like liens arising in the
ordinary course of business for sums that are not delinquent; (iv) easements,
rights of way, zoning ordinances and other similar liens affecting real
property; (v) liens and other encumbrances in favor of banks which are
borrowings of the Company approved by the Board and (vi) liens and other
encumbrances arising by operation of law.

“Person” means any individual or entity, including, without limitation, any
corporation, association, partnership, limited liability company, joint venture,
trust, estate, governmental authority or other entity or organization.

“Profit” shall mean, with respect to the Company, for each taxable year, each
item of the Company’s taxable income or gain for such taxable year, as
determined under Section 703(a) of the Code, and Section 1.703-1 of the Treasury
Regulations (for this purpose, all items of income and gain required to be
stated separately pursuant to Section 703(a)(l) of the Code shall be included in
taxable income or gain), but with the following adjustments:

(a)    Any tax-exempt income, as described in Section 705(a)(l)(B) of the Code,
realized by the Company during such taxable year shall be considered an item of
taxable income;

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(b)    In the event the Book Basis of any Company asset is increased pursuant to
Treasury Regulations Section 1.704-1(b), the amount of such adjustment shall be
taken into account as gain from the disposition of such asset for purposes of
computing Profit;

(c)    Gain resulting from any disposition of property with respect to which
gain is recognized for federal income tax purposes shall be computed by
reference to the Book Basis of the property disposed of, notwithstanding that
the adjusted tax basis of such property differs from its Book Basis; and

(d)    Any items which are specially allocated pursuant to Section 6.3 shall not
be taken into account in computing Profit.

“Qualified Purchase Offer” means a Purchase Offer that is (i) an all cash
purchase price, (ii) not less than the CB Proposed Valuation for 100% of the
Membership Interests in the Company, and (iii) from a bona fide third party
purchaser that is not engaged in a Class A Competing Business or a Class B
Competing Business.

“Revised Partnership Audit Procedures” means Code Sections 6221 through 6241, as
amended by the Bipartisan Budget Act of 2015, as such sections may be
subsequently amended, and including any Treasury Regulations or other
administrative guidance promulgated thereunder.

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

“Severance Payments” means the Class C Member’s share of any severance payments
required to be paid by the Class C Member under the Management Agreement.

“Subsidiary” means any Person of which the Company owns equity interests having
a majority of the voting power in electing the governing body of such Person
directly or through one or more Subsidiaries or, in the case of a partnership,
limited liability partnership or other similar entity, equity interests
conveying, directly or indirectly, a majority of the economic interests in such
partnership or entity.

“Substitute Member” means the transferee of a Member’s Membership Units, when
admitted and shown as such on the books and records of the Company.

“Theater Services Agreement” means the Theater Services Agreement between the
Company and Consultant, substantially in the form attached as Exhibit D hereto.

“Transfer” means any transfer, sale, assignment, pledge, encumbrance or other
disposition, irrespective of whether any of the foregoing is effected
voluntarily, by operation of law or otherwise, or whether inter vivos or upon
death.

“Transferee” means any Person to whom Membership Units have been Transferred.

“Treasury Regulations” means the regulations promulgated under the Code by the
United States Treasury Department, as such regulations may be amended from time
to time (including corresponding provisions of succeeding regulations).

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“Unreturned Capital” means the amount of Capital Contributions contributed by a
Member less the amount of any cash or property distributed to such Member as a
return of capital.

“Voting Members” means the Members holding Voting Units.

“Voting Units” means the Class A Membership Units and the Class B Membership
Units.

Section 1.2    Additional Definitions.  The following terms have the meanings
ascribed to such terms in the following Sections of this Agreement.

 

Call Option Notice

Section 10.2(b)

Call Right Closing Date

Section 10.2(b)

Capital Contribution Default

Section 4.1(d)

Capital Note

Section 4.1(d)(ii)

CB Acceptance Notice

Section 10.6(b)

CB Member

Section 10.6(a)

CB Notice Period

Section 10.6(a)

CB Offer

Section 10.6(a)

CB Offer Notice

Section 10.6(a)

CB Units

Section 10.6(a)

Certificate

Section 2.2

Class A Managers

Section 5.1(b)(i)(A)

Class A Member Call Option

Section 10.2(a)

Class B Default

Section 10.4

Class B Managers

Section 5.1(b)(i)(B)

Committee(s)

Section 5.5

Company

Preamble

Company Sale Notice

Section 10.7(c)

Company Tax Liability

Section 7.11(e)

Confidential Information

Section 2.10

Drag-Along Sale

Section 10.1(a)

Dragged Members

Section 9.1(a)

Effective Date

Preamble

Exercising Member

Section 6.1(d)(iv)

Indemnitee

Section 11.3(a)

Initial Class A Contribution

Section 4.1(a)

Initial Class B Contribution

Section 4.1(b)

Offer Election Period

Section 10.6(a)

Offered Units

Section 5.1(c)

Offering Member

Section 6.1(c)

Offering Member Notice

Section 6.1(c)(i)

Officer(s)

Section 5.6

Option Units

Section 10.2(a)

Partnership Representative

Section 7.11(a)

Pass-Thru Member

Section 7.11(d)

Permitted Transfer

Section 6.1(a)

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Permitted Transferee

Section 6.1(b)

Proposed Purchaser

Section 6.1(d)(i)

Purchase Offer

Section 10.7(a)

Purchasing Member

Section 6.1(c)(iv)

ROFO

Section 6.1(c)

ROFO Acceptance Notice

Section 6.1 (c)(iv)

ROFO Notice Period

Section 6.1(c)(ii)

ROFR

Section 6.1(d)

ROFR Acceptance Notice

Section 6.1(d)(iv)

ROFR Notice Period

Section 6.1(d)(ii)

Sale Election Notice

Section 10.7(a)

Sale Election Period

Section 10.7(a)

Sale Process

Section 10.7(a)

Sale Right

Section 10.7(a)

Subject Units

Section 6.1(d)

Subsequent Capital Contribution

Section 4.1(d)

Tax Distributions

Section 7.10

Tax Matters Member

Section 7.11(a)

Tax Matters Partner

Section 7.11(a)

Tax Proceeding

Section 7.11(c)(ii)

Transfer Notice

Section 6.1(d)(i)

Transferring Member

Section 7.1(d)

Waived ROFO Transfer Period

Section 6.1(c)(v)

Waived ROFR Transfer Period

Section 6.1(d)(v)

 

Section 1.3    Construction.  Any reference to any law will be deemed also to
refer to such law as amended and all rules and regulations promulgated
thereunder, unless the context requires otherwise.  The words “include,”
“includes,” and “including” will be deemed to be followed by “without
limitation.”  Pronouns in masculine, feminine and neuter genders will be
construed to include the plural and vice versa, unless the context otherwise
requires.  The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder,” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited.  Any agreement,
schedule, attachment or exhibit referred to herein shall mean such agreement,
schedule, attachment or exhibit as amended, restated, supplemented or modified
from time to time to the extent permitted by the applicable provisions of this
Agreement.  Unless otherwise stated, references to recitals, articles, sections,
paragraphs, schedules and exhibits shall be references to recitals, articles,
sections, paragraphs, schedules and exhibits of this Agreement.

ARTICLE II
ORGANIZATION, PURPOSES AND POWERS

Section 2.1    Formation of Company.  The Company was formed pursuant to the
Business Code.

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Section 2.2    Certificates and Documents.  The organizer has executed and filed
the Certificate of Formation of the Company (the “Certificate”).  The Board
shall execute and file all other certificates, notices, statements or other
instruments required by law for the formation or operation of a limited
liability company in all jurisdictions where the Company may propose to do
business.

Section 2.3    Company Name.  The name of the Company is FE Concepts, LLC.  The
business of the Company will be conducted under the name of the Company or such
other name or names as the Board may adopt upon (i) causing an amendment to the
Certificate to be filed with the Secretary of State of the State of Texas and
(ii) sending notice thereof to the Members.  

Section 2.4    Term of the Company.  The existence of the Company initially
commenced on the date of the filing of the Certificate in the office of the
Secretary of State of the State of Texas and will continue indefinitely unless
dissolved in accordance with the provisions of this Agreement.

Section 2.5    Principal Place of Business.  The address of the principal place
of business of the Company shall be 12400 Coit Road, Suite 800, Dallas, Texas
75251, or such other address as shall be designated from time to time by the
Board.  The Company may maintain other offices at such other locations as the
Board shall determine from time to time.

Section 2.6    Registered Agent and Office.  The Company’s registered office in
Texas shall be at 12400 Coit Road, Suite 800, Dallas, Texas 75251 and the name
of the registered agent for service of process is Gary Witherspoon.  At any
time, the Board may designate another registered agent and/or registered office.

Section 2.7    Company Purposes.  The business purposes for which the Company is
formed are to build, own and operate a Facility and such other related lawful
acts or activities for which limited liability companies may be formed under the
Business Code.

Section 2.8    Powers.  Subject to the provisions of this Agreement, the Company
shall have the power to do any and all acts and things necessary, appropriate,
advisable or convenient for the furtherance and accomplishment of the purposes
of the Company set forth in Section 2.7, so long as said acts and things may be
lawfully engaged in or performed under the Business Code.

Section 2.9    Organization Expenses.  Each Member shall pay its own expenses
incurred in connection with the formation and organization of the Company and
the drafting and negotiation of the Operating Documents through the date
hereof.  

Section 2.10    Confidentiality.  Each Member shall, and shall cause its
Affiliates to, keep all information concerning the Company, including the terms
of the Operating Documents (collectively, “Confidential Information”), strictly
confidential.  Notwithstanding the foregoing, each Member may disclose
Confidential Information:  (i) to its directors, employees, consultants,
advisors, Affiliates, counsel and accountants on an as-needed basis to the
extent such Persons agree to keep such information confidential; and (ii) as
required by applicable law.  For the avoidance of doubt, it is understood and
agreed that Affiliates of CNMK Texas Properties, LLC are required to make public
disclosures of material facts and events under U.S.

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federal securities law and that nothing contained in this Agreement shall be
construed to prevent such Affiliates from making such public disclosures
(including, without limitation, public filings or disclosures relating to the
Company, the Operating Documents or the business of the Company) as they
determine, in their sole and absolute discretion, is required by applicable law
or regulations.  The term “Confidential Information” shall not include such
portions of the Confidential Information as (i) are or become generally
available to the public other than as a result of the disclosure by the
receiving party; (ii) was known by the receiving party prior to disclosure by
the non-disclosing party; or (iii) become available to the receiving party on a
non-confidential basis from a source other than the disclosing party (or agent
thereof) which is not prohibited from disclosing such Confidential Information
to the receiving party by a legal, contractual or fiduciary obligation to the
disclosing party.

ARTICLE III
MEMBERS; MEMBERSHIP UNITS

Section 3.1    Authorization of Membership Units.  The Membership Units shall be
classified as Class A Membership Units, Class B Membership Units and Class C
Membership Units.  The current total number of Membership Units which the
Company is authorized to issue is twelve thousand (12,000) Membership Units, of
which four thousand (4,000) shall be designated Class A Membership Units, four
thousand (4,000) shall be designated Class B Membership Units and four thousand
(4,000) shall be designated Class C Membership Units.  All of the Class A
Membership Units shall be deemed issued to and held by the Class A Member.  All
of the Class B Membership Units shall be deemed issued to and held by the Class
B Member.  The Class C Membership Units shall be issued upon the occurrence of a
Class B Conversion.

Section 3.2    Member Meetings.  

(a)    Calling the Meeting.  Meetings of the Voting Members may be called by (i)
the Board or (ii) by a Voting Member.  Only Voting Members shall have the right
to call or attend meetings of the Members, or take any action by vote as a
meeting or by written consent without a meeting, in all cases to take any action
or conduct any business.

(b)    Notice.  Written notice stating the place, date and time of the meeting
and, in the case of a meeting of the Voting Members not regularly scheduled,
describing the purposes for which the meeting is called, shall be delivered not
fewer than five (5) days and not more than thirty (30) days before the date of
the meeting to each Voting Member, by or at the direction of the Board or the
Voting Member calling the meeting, as the case may be.  Meetings of the Voting
Members may be held at the Company’s principal office or at such other place as
the Board may designate in the notice for such meeting or the Voting Members may
agree upon.

(c)    Participation.  Any Voting Member may participate in a meeting of the
Voting Members by means of conference telephone or other communications
equipment by means of which all Persons participating in the meeting can hear
each other, and participation in a meeting by such means shall constitute
presence in person at such meeting.

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(d)    Vote by Proxy.  On any matter that is to be voted on by Voting Members, a
Voting Member may vote in person or by proxy, and such proxy may be granted in
writing, by means of electronic transmission or as otherwise permitted by
applicable law.  Every proxy shall be revocable in the discretion of the Voting
Member executing it unless otherwise provided in such proxy; provided that such
right to revocation shall not invalidate or otherwise affect actions taken under
such proxy prior to such revocation.

(e)    Conduct of Business.  The business to be conducted at such meeting need
not be limited to the purpose described in the notice and can include business
to be conducted by Voting Members holding Voting Units; provided, that the
appropriate Voting Members shall have been notified of the meeting in accordance
with Section 3.2(b).  Attendance of a Voting Member at any meeting shall
constitute a waiver of notice of such meeting, except where a Voting Member
attends a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.

(f)    Quorum; Required Vote.  A quorum of any meeting of the Voting Members
shall require the presence of the Voting Members holding a majority of the
Voting Units held by all Voting Members.  Subject to Section 3.3, no action at
any meeting may be taken by the Voting Members (i) unless the appropriate quorum
is present and (ii) except as otherwise provided in Section 5.3(b), at any
meeting at which a quorum is present, without the affirmative vote of Voting
Members holding a majority of the Voting Units held by all Voting Members.

Section 3.3    Voting and Consents of Members.  Any action requiring the consent
or approval of the Members shall be approved solely by the Voting Members in
accordance with Section 5.3(b).  To the extent that the Voting Members approve
any action pursuant to this Agreement, the Board shall carry out such action in
accordance with the approval by the Voting Members.  Any action required or
permitted to be taken or authorized at a meeting of the Voting Members may be
taken or authorized without a meeting if, prior or subsequent to the action, a
consent or consents thereto is signed by the holders of the minimum number of
Membership Units that would be necessary to authorize or take such action
pursuant to Section 5.3(b) and is filed with the records of the Company.  The
Class C Membership Units shall be non-voting Membership Units with no right to
vote on any matter, except as provided in Section 4.1(c), Section 5.3(c) and
Section 12.2.

Section 3.4    Consent of Class.  To the extent that any consent, approval or
other action by the holder or holders of a class of Membership Units is required
or permitted under this Agreement, such consent, approval or other action shall
be the consent of, approval or other action by the holders of a majority of the
Membership Units of such class and shall be binding on all holders of Membership
Units of such class.

Section 3.5    Securities Laws; Legends.

(a)    The Membership Units have been issued pursuant to a claim of exemption
from the registration or qualification provisions of federal and state
securities laws and, in addition to the other restrictions contained herein, may
not be transferred without compliance with the registration or qualification
provisions of applicable federal and state securities laws or applicable
exemptions therefrom.

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(b)    If certificates evidencing any Membership Units are issued, each such
certificate shall bear such legends as may be required by applicable federal or
state laws, or as may be deemed necessary or appropriate by the Board to reflect
restrictions upon transfer contemplated herein.

ARTICLE IV
CAPITAL CONTRIBUTIONS

Section 4.1    Capital Contributions of Members.

(a)    The Class A Member has made (or will promptly make, at the request of the
Board, a contribution to the capital of the Company in the amount of twenty
million dollars ($20,000,000) (the “Initial Class A Contribution”).

(b)    The Class B Member has made (or will promptly make, at the request of the
Board, a contribution to the capital of the Company in the amount of twenty
million dollars ($20,000,000) (the “Initial Class B Contribution”).

(c)    The aggregate Initial Class A Contribution and the Initial Class B
Contribution shall each be made as of the Effective Date in cash, along with and
the contribution of mutually agreed costs and expenses incurred on behalf of the
Company prior to the Effective Date.

(d)    In the event that the Board approves an additional Facility or Facilities
each Capital Member shall be required to make subsequent capital contributions
in such amounts and on such dates as may be required by the Board, provided that
following a Company Mitchell Trigger Event or Cinemark Mitchell Trigger Event,
subsequent mandatory capital contributions shall require the consent of the
Class C Member.  In the event of mandatory capital call, each Capital Member
shall be required to contribute, pro rata, the aggregate amount of the capital
call (a “Subsequent Capital Contribution”).  In the event that any Capital
Member fails to make its Initial Capital Contribution or any Subsequent Capital
Contribution within thirty (30) days of the date set forth in a notice by the
Board (or within thirty (30) days of the Effective Date with respect to an
Initial Capital Contribution) (in each case, a “Capital Contribution Default”),
the non-defaulting Member may elect one of the following:  

(i)    such non-defaulting Member may contribute the amount of the defaulting
Member’s Capital Contribution, with a corresponding adjustment to the Membership
Interest held by the Members based on the aggregate amount of capital
contributed by each Member; or

(ii)    the non-defaulting Member may contribute the amount of the defaulting
Member’s Capital Contribution in the form of a loan evidenced by a capital note
in the form of Exhibit E (a “Capital Note”).

The issuance of any additional Membership Units to the non-defaulting Member in
the event of a Capital Contribution Default will be based on a valuation equal
to the lesser of the post-money valuation following the latest Capital
Contribution or at the non-defaulting Member’s option, the fair market value of
the Membership Units as determined by a third party appraiser selected by the
non-defaulting Member and approved by the defaulting Member (whose approval
shall not be unreasonably withheld, delayed or conditioned).

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Section 4.2    No Interest on Contributions; No Withdrawal.  No interest shall
accrue on any Capital Contribution and no Member shall have the right to
withdraw or to be repaid any capital contributed by such Member except as
otherwise specifically provided in this Agreement and permitted by applicable
law.

ARTICLE V
MANAGEMENT

Section 5.1    Management of the Company; Board.

(a)    General.  Except as provided for herein or by the Business Code, the
management, control and operation of the Company shall be vested exclusively in
the Board.  The Board, acting as a body pursuant to this Agreement, shall
constitute a “manager” for purposes of the Business Code.  No Manager, in such
capacity, acting singly or with any other Manager, shall have any authority or
right to represent, make public statements on behalf of, advocate or take
positions on any matter on behalf of, act on behalf of or bind the Company other
than by exercising the Manager’s voting power as a member of the Board, unless
specifically authorized by the Board in each instance.

(b)    Number of Managers; Composition.

(i)    Except as otherwise provided herein in the event of a Capital
Contribution Default, a Class B Default or a Class B Conversion, the voting
members of the Board shall be comprised of four (4) voting members who shall be
divided into two (2) classes as described below:

(A)    Two (2) Class A Managers, who shall be appointed by the Class A Member
(the “Class A Managers”); and

(B)    Two (2) Class B Managers, who shall be appointed by the Class B Member
and shall initially include Lee Roy Mitchell (the “Class B Managers”).  

(ii)    The Board as of the Effective Date is set forth on Exhibit B.

(iii)    On the death, resignation or removal of any Class A Manager, the Class
A Member may appoint an individual representative of the Class A Member to
replace such Class A Manager.  Subject to Section 5.1(b)(iv), on the death,
resignation or removal of any Class B Manager, the Class B Member may appoint an
individual representative of the Class B Member to replace such Class B Manager.

(iv)    In the event of a Class B Default or a Class B Conversion, (1) there
shall only be one class of Managers, each of whom shall be appointed by the
Class A Member, and (2) the Class A Member shall have the sole right to remove
any Manager and fill any vacancy resulting from the death, resignation or
removal of any Manager or any increase in the number of Managers.

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(c)    Qualifications for Service.  Managers need not be residents of the State
of Texas.  

(d)    Election; Tenure.  The Class A Managers shall be appointed by the Class A
Member and, except as otherwise provided in this Agreement, the Class B Managers
shall be appointed by the Class B Member; provided, however, that in the event
that Lee Roy Mitchell no longer serves as a Class B Manager due to death,
disability, retirement, or any other reason, before the first Facility has been
in operation for a full year, Gary Witherspoon shall automatically be appointed
as the successor Class B Manager, without any action required by the Class B
Member.  Each Manager shall hold office until a qualified successor has been
appointed or until the Manager’s death, resignation, or removal, if
sooner.  Except as otherwise provided in this Agreement, any Manager may be
removed at any time by the Member appointing such Manager in which case, such
Member shall promptly appoint a qualified successor Manager of the same class as
the removed Manager.

(e)    Quorum; Proxy; Voting; Meetings.  The Board shall meet at least quarterly
during each Fiscal Year.  A majority of the then serving Managers, either
present (in person or by teleconference), shall constitute a quorum for purposes
of any meeting of the Board, except as otherwise provided by law or this
Agreement; provided, however, a Class A Manager must be present to constitute a
quorum.  Unless otherwise expressly required by the non-waivable provisions of
the Business Code or this Agreement, the act or decision of Managers, holding at
least fifty-one percent (51%) of the total voting power of the Board, shall be
the act or decision, as applicable, of the Board.  Meetings of the Managers may
be held at such time or times and such place or places as shall be determined
from time to time by the Managers, provided that notice of such meeting(s) is
sent to all Managers in advance thereof.  Meeting dates for regular meetings may
be determined in advance by the Board.  Special meetings of the Board may be
called by the Class A Member, the Class B Member, the Chair of the Board, the
Secretary of the Company or any two (2) Managers on at least twenty-four (24)
hours’ notice to the Board.  To the extent practicable, the notice should state
the purpose of and business to be transacted at, such meeting.  Attendance of a
Manager at a meeting constitutes a waiver of notice of the meeting, except where
a Manager attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.  A Manager who is present at a meeting of the Board at which
action on any matter is taken shall be presumed to have assented to the action
unless his or her dissent is entered in the minutes of the meeting or unless he
or she files his or her written dissent to the action with the secretary of the
meeting before the adjournment thereof, or delivers the dissent to the Company
immediately after the adjournment of the meeting.  A Manager who votes in favor
of the action waives his or her right to dissent.  Each Manager shall be
entitled to one (1) vote on the Board.

(f)    Attendance at Meetings.  Attendance at any meeting of the Board may be in
person, by telephonic or by any other electronic means such that each attendee
may be heard by, and may hear, each other attendee.

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(g)    Action by Written Consent.  Any action required or permitted to be taken
or authorized at a meeting of the Board may be taken or authorized without a
meeting if, either (i) at least twenty-four (24) hours prior notice of such
action is provided to the Board and prior or subsequent to the action, a consent
or consents thereto is signed by the minimum number of Managers that would be
necessary to authorize or take such action, and is filed with the records of the
Company or (ii) a consent or consents to such action is signed by all of the
Managers.

(h)    Conduct of Business; Record of Action.  The Board shall appoint the Chair
of the Board; provided, however, in the event Gary Witherspoon replaces Lee Roy
Mitchell as a Class B Manager, pursuant to Section 5.1(d), then the individual
who is currently serving as Vice Chair shall be appointed as Chair of the Board,
and Gary Witherspoon shall be appointed the Vice Chair.  The Chair of the Board
shall preside over all meetings and the Secretary of the Company shall act as
secretary of all meetings of the Board, but in the absence of the Secretary, the
Chair may appoint any person to act as secretary of the meeting.  The Chair
shall determine the order of the business and the procedure at any meeting of
the Board.  Written minutes of the business transacted at any Board meeting and
meetings of any committees thereof shall be made and circulated to each Manager
for his or her approval.  Such written minutes, together with any and all
written consents executed by the Managers pursuant to Section 5.1(g) shall be
maintained as part of the records of the Company pursuant to Section 5.4.  The
initial Chair is set forth on Exhibit B.

(i)    Compensation; Expense Reimbursement.  Managers shall receive no
compensation for their services, including, without limitation, their attendance
at meetings of the Board, except as may be approved by unanimous vote of the
Board.  Managers shall be reimbursed for necessary, documented and reasonable
authorized expenses incurred on behalf of the Company.

(j)    Resignation.  Any Manager may resign at any time by giving at least
thirty (30) days’ prior written notice to the other Manager(s) of the
Company.  The resignation of any Manager shall take effect on the thirtieth
(30th) day following receipt of such notice or at such later time as shall be
specified in the notice; and, unless otherwise specified in the notice, the
acceptance of the resignation shall not be necessary to make it effective.

(k)    Filling Vacancies.  Any vacancy resulting from the death, resignation or
removal of a Class A Manager may be filled by the Class A Member.  Subject to
Section 5.1(b)(iv), any vacancy resulting from the death, resignation or removal
of a Class B Manager may be filled by the Class B Member.  The Class A Managers
may be executive officers of the Class A Member or its Affiliates.  The Class B
Managers may be executive officers of the Class B Member or its
Affiliates.  Subject to Section 5.1(b)(iv), any vacancy occurring on the Board
as a result of an increase in the number of Managers constituting the Board may
be filled by the mutual consent of the Class A Member and the Class B Member.  

Section 5.2    Authority of the Board.

(a)    Subject to Section 5.3 and except as otherwise provided in this Section
5.2(a), the Board, by a majority vote of the Board, shall have the sole power on
behalf and in the name of the Company to carry out any and all of the objects
and purposes of the Company and to perform all acts which they may, in their
discretion, deem necessary or desirable.  

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(b)    Subject to Section 5.3, the Board may delegate to any Person or Persons
all or any of the powers, rights, privileges, duties and discretion vested in it
in this ARTICLE V, and such delegation may be made upon such terms and
conditions as the Board shall determine; except that no such delegation shall
modify the obligations, liabilities or responsibilities of the Board under the
Business Code and under this Agreement.

Section 5.3    Restrictions on Authority of the Board.

(a)    Notwithstanding anything to the contrary herein, except as provided in
Section 5.3(b), the following activities of the Company shall require the
approval of all of the Class A Managers and, so long as neither a Class B
Default nor a Class B Conversion has occurred, all of the Class B Managers.  In
the event of a Class B Default or a Class B Conversion, the following activities
may be approved solely by the consent of a majority of the Class A
Managers.  Such activities shall include the following:

(i)    authorizing or issuing additional Membership Units or any equity in, or
any options, warrants or other rights to acquire any equity in, the Company or
requiring any Member to make any Capital Contribution;

(ii)    any conversion of the Company to another form of entity or other
material corporate reorganization of the Company;

(iii)    any change in, or addition to, the designation of any rights, powers
and/or preferences of any class of Membership Interests;

(iv)    any amendment or modification to this Agreement, the Management Services
Agreement or the Theater Services Agreement;

(v)    the appointment of any Officers pursuant to Section 5.6;

(vi)    the incurrence of any indebtedness (other than pursuant to a Capital
Note) or entering into or consummating any other financing transaction or
capital lease or creating any Lien against the assets of the Company, in any
case for an amount in excess of $100,000;

(vii)    incurring any costs, expenses, debts, liabilities, obligations or
otherwise that result in a variance of greater than five percent (5%) of any
category for the entire fiscal year in the Approved Budget as previously
approved by the Board;

(viii)    distributing any Distributable Cash to the Members other than as
provided in this Agreement;

(ix)    approving the design of the Facility, including without limitation, the
motion picture theater auditoriums incorporated in any Facility;

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(x)    forming any subsidiary, joint venture or other affiliated entity or
authorizing any existing or future affiliate of the Company to operate the
business of the Company in a new location or making any investment in any
non-controlled entity in excess of $100,000;

(xi)    approving any acquisition (by merger or otherwise), leasing or licensing
by the Company or sale not in the ordinary course of business of any assets of
the Company and the locations thereof including site selection for Facilities
and decisions to lease or purchase Facility locations;

(xii)    entering into, waiving any rights under, modifying, or terminating any
Material Contract;  

(xiii)    engaging any professional advisors (e.g., attorneys (including in
connection with real estate, liability and employment matters), financial
advisors, auditors, etc.) for, or on behalf of, the Company for a cost in excess
of $25,000 for any such professional advisor;

(xiv)    approving the Company’s business plan, Approved Budget, capital
projects and expenditures, financial statements, and tax returns, and any
material change in the Approved Budget, accounting or tax practices, procedures
or policies of the Company;

(xv)    entering into any agreement or transaction with any Member or any
officer, director, employee, Affiliate or relative of any Member or any Manager
or their respective Affiliates;

(xvi)    commencing, settling, or withdrawal from any suit, action or legal,
administrative or arbitral proceeding in excess of $50,000 or where equitable
relief or injunctive relief is included as part of such suit or settlement;

(xvii)    filing any documents with any regulatory agency, including the
Internal Revenue Service, other than the permitted filings specified in the
Management Services Agreement;

(xviii)    any change in the size of the Board;

(xix)    terminating Management Co. or appointing a new third party to provide
the services under the Management Services Agreement or terminating or amending
the Management Services Agreement;

(xx)    terminating Consultant or appointing a new third party to provide the
services under the Theater Services Agreement or terminating or amending the
Theater Services Agreement;  

(xxi)    adopting or amending any other form of incentive plan; and

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(xxii)    taking any action or authorizing, approving or entering into any
binding agreement with respect to any of the foregoing.

(b)    Notwithstanding anything to the contrary herein, the following activities
of the Company shall require the approval of each of the Voting Members
(provided that if a Class B Default or Class B Conversion has occurred, then
only the approval of the Class A Member shall be required):

(i)    the Company entering into any transactions (other than a Class A Change
in Control, a Drag-Along Sale or a Qualified Purchase Offer) which could
reasonably be expected to result in a Change in Control;

(ii)    any amendment or repeal of this Agreement other than as provided in
Section 12.2;

(iii)    any recapitalization, reorganization winding up liquidation or
dissolution of the Company, including any distribution of assets pursuant to a
plan of dissolution or the filing of any petition under any bankruptcy or other
insolvency law; and

(iv)    engaging the Company in any business other than the business of the
Company described in Section 2.7 of this Agreement.

(c)    Notwithstanding anything to the contrary herein, upon the occurrence of a
Company Mitchell Trigger Event or a Cinemark Mitchell Trigger Event:

(i)    no additional Facilities shall be approved by the Board without Class C
Member approval; and

(ii)    the Company shall not enter into any agreement or arrangement or
transaction with the Class A Member or any of its affiliates, directors,
managers, employees or Affiliates that is not in the ordinary course of
business, arms-length and on commercially reasonable terms, without Class C
Member approval.

Section 5.4    Books and Records.  The Board shall keep or cause to be kept at
the address of the Company (or at such other place as the Board shall advise the
Members in writing) full and accurate books and records of the Company.  A
Member, on written request stating the purpose therefor, may examine at any
reasonable time, for any proper purpose and at such Member’s expense, the
records required to be kept under this Section 5.4 and other information
regarding the business, affairs, and financial condition of the Company as is
just and reasonable for such Member to examine.

Section 5.5    Committees.  The Board shall have the power to create one (1) or
more committees, each of which shall have such purposes, functions, duties and
authority as the Board may determine (each, a “Committee” and, collectively, the
“Committees”).  The composition and membership of each Committee shall be as
determined by the Board.  All Committee members shall serve one (1) year terms,
unless otherwise determined by the Board.  

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Section 5.6    Officers.  The Board shall have the power to appoint one (1) or
more officers of the Company, who shall be responsible for the day-to-day
operations of the Company, subject to the direction and control of the Board
(each, an “Officer” and, collectively, the “Officers”).  The Company shall have
such number of Officers as the Board shall determine.  No Officer need be a
resident of the State of Texas.  Officers are not “managers,” as that term is
used in the Business Code.  Any Officers so designated shall have the authority
to perform such duties as the Board delegates to them.  The Board may assign
titles to particular Officers.  Each Officer holds office until his successor
has been duly designated and qualified or until his death or until he resigns or
has been removed in the manner hereinafter provided.  Any number of offices may
be held by the same person.  Officers shall not be considered employees of the
Company.  Any Officer may resign as such at any time.  Resignations are to be
made in writing and take effect at the time specified therein, or if no time be
specified, at the time of its receipt by the Board.  The acceptance of a
resignation is not necessary to make it effective, unless expressly so provided
in the resignation.  Any Officer may be removed as such, either with or without
cause, by the Board whenever in their judgment the best interests of the Company
will be served thereby.  Any vacancy occurring in any office of the Company
shall be filled by the Board.

Section 5.7    Management Services Agreement.  Concurrently with the execution
and delivery of this Agreement, the Company shall enter into the Management
Services Agreement with Management Co. pursuant to which Management Co. shall
provide the development, management and staffing services described in the
Management Services Agreement.

Section 5.8    Theater Services Agreement.  Concurrently with the execution and
delivery of this Agreement, the Company shall enter into the Theater Services
Agreement with Consultant pursuant to which Consultant shall provide the theater
services described in the Theater Services Agreement.  The Parties hereto
acknowledge and agree that so long as the Theater Services Agreement remains in
effect, the ticket prices charged for admission to any motion picture at any
Facility shall be determined exclusively by Consultant.

ARTICLE VI
TRANSFERS

Section 6.1    Conditions to Transfers.

(a)    Restrictions on Transfers of Membership Units.  No Member shall Transfer
any interest in any Membership Units except:  (i) a Transfer by a Capital Member
to a Permitted Transferee as expressly set forth in Section 6.1(b) hereof; (ii)
with the prior written consent of the Board (which consent may be withheld for
any reason or for no reason); or (iii) as expressly permitted by this Agreement
with respect to a Change in Control of the Company, a Drag-Along Sale pursuant
to Section 10.1 or the exercise of the Class A Member Call Option pursuant to
Section 10.2 (each of (i), (ii) or (iii) above, a “Permitted Transfer”).  Any
purported Transfer of Membership Units in violation of this Agreement shall be
null and void.  The Company shall not be required (a) to transfer on its books
Membership Units which have been Transferred in violation of any of the
provisions set forth in this Agreement or (b) to treat as an owner of such
Membership Units, to afford the right to vote or to pay distributions to, any
Transferee to whom Membership Units have been Transferred (or purported to have
been Transferred) in violation of the provisions set forth in this Agreement.

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(b)    Permitted Transfers.  Membership Units may be Transferred as follows
without the Board’s approval (each such transferee being a “Permitted
Transferee”):  (i) by a Member or Permitted Transferee to the Company; (ii) by a
Capital Member or any Permitted Transferee to any member, partner or shareholder
of such Capital Member or Permitted Transferee and, if such member, partner or
shareholder is a corporation, limited liability company or partnership, such
member may transfer such Capital Units to the ultimate holders of the equity
interest in such member, or to a liquidating trust for their benefit; (iii) by a
Capital Member to any Person which such Capital Member or any of its Affiliates,
directly or indirectly, has the sole power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
Capital Units, by contract or otherwise; (iv) by a Capital Member to any of its
Affiliates; (v) by a Capital Member to the remaining Capital Member or (vi) by
the Class B Member or Management Parent to the Mitchell Foundation. For the
avoidance of doubt, no Capital Member may transfer any portion of its Capital
Units to a competitor of the remaining Capital Member without such remaining
Member’s prior written consent.  

(c)    Rights of First Offer.  Each Capital Member will have a right of first
offer (the “ROFO”) if the other Capital Member (the “Offering Member”) proposes
to Transfer, directly or indirectly, all or any portion of the Membership Units
owned by it (the “Offered Units”) other than pursuant to a Permitted Transfer or
a Drag-Along Sale. Each time the Offering Member proposes to so Transfer any
Offered Units, the Offering Member will first offer to sell the Offered Units to
the other Capital Member in accordance with the provisions of this Section
6.1(c).

(i)    The Offering Member will give written notice (the “Offering Member
Notice”) to the Company and the other Capital Member stating the Offering
Member’s intention to Transfer the Offered Units and specify the Membership
Interest to be Transferred as the Offered Units and the material terms and
conditions, including price, pursuant to which the Offering Member proposes to
Transfer the Offered Units.  

(ii)    The Offering Member Notice will constitute the Offering Member’s offer
to Transfer the Offered Units to the other Capital Member, which offer will be
irrevocable for a period of 60 days (the “ROFO Notice Period”).

(iii)    By delivering the Offering Member Notice, the Offering Member will be
deemed to represent and warrant to the Company and the other Capital Member
that: (1) the Offering Member has full right, title and interest in and to the
Offered Units; (2) the Offering Member has all necessary power and authority and
has taken all necessary action to sell such Offered Units as contemplated by
this Section 6.1(c); and (3) the Offered Units will be Transferred free and
clear of any and all Liens other than restrictions on transfer arising under
state or federal securities laws or under this Agreement.

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(iv)    Upon receipt of the Offering Member Notice, the other Capital Member
will have until the expiration of the ROFO Notice Period to offer to purchase
all (but not less than all) of the Offered Units by delivering a written notice
(a “ROFO Acceptance Notice”) to the Offering Member and the Company stating that
it offers to purchase such Offered Units on the terms specified in the Offering
Member Notice.  Any ROFO Acceptance Notice so delivered will be binding upon
delivery and irrevocable by the applicable Capital Member.  A Capital Member
that does not deliver a ROFO Offer Notice during the ROFO Notice Period will be
deemed to have waived all such Capital Member’s rights to purchase the Offered
Units under this Section 6.1(c)(iv).  If the other Capital Member timely
delivers a ROFO Acceptance Notice, such Capital Member (the “Purchasing Member”)
will be entitled to purchase the Offered Units.

(v)    If the other Capital Member fails to deliver a ROFO Acceptance Notice in
accordance with Section 6.1(c)(iv), the Offering Member may, during the 90-day
period following the expiration of the ROFO Notice Period (which period may be
extended for a reasonable time to the extent reasonably necessary to obtain any
governmental approvals) (the “Waived ROFO Transfer Period”), and subject to
compliance with the provisions of Section 6.1(d), Transfer all of the Offered
Units to an Independent Third Party at a higher price and otherwise on terms and
conditions no more favorable to the Independent Third Party than those specified
in the Offering Member Notice.  Any noncash consideration offered by an
Independent Third Party will be valued at its fair market value, as reasonably
agreed by the Offering Member and the other Capital Member, and failing such
agreement, as determined by an independent third party appraiser selected by the
Offering Member and reasonably acceptable to the other Capital Member (the cost
for which third party appraiser will be paid by the Offering Member).  Any
Independent Third Party to whom Offered Units are Transferred in accordance with
this Section 6.1(c)(v) will become a Substitute Member if the Offering Member so
designates, in a written instrument delivered to the Company and the other
Capital Member, and such Independent Third Party executes a joinder to this
Agreement as required by Section 6.3.  If the Offering Member does not Transfer
the Offered Units within such period or, if such Transfer is not consummated
within the Waived ROFO Transfer Period, the Offered Units in question will once
again become subject to the preceding provisions of this Section 6.1(c) and the
Offering Member will no longer be permitted to Transfer such Offered Units
without again fully complying with such provisions.

(vi)    The Offering Member and the Purchasing Member will take all actions as
may be reasonably necessary to consummate any sale to the Purchasing Member
contemplated by this Section 6.1(c), including entering into agreements and
delivering certificates and instruments and consents as may be deemed necessary
or appropriate by the Company.

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(vii)    At the closing of any sale and purchase to a Purchasing Member pursuant
to this Section 6.1(c), the Offering Member will deliver to the Purchasing
Member an Assignment of the Offered Units to be sold (if any), accompanied by
any other evidence of transfer and all necessary transfer taxes paid and stamps
affixed, if necessary, against receipt of the purchase price therefor from such
Purchasing Member by wire transfer of immediately available funds into an
account specified by the Offering Member (or such other method of payment as may
be agreed upon by the Offering Member).

(d)    Rights of First Refusal.  Each Capital Member will have a right of first
refusal (the “ROFR”) if the other Capital Member (the “Transferring Member”)
proposes to Transfer, directly or indirectly, all or any portion of the
Membership Units owned by it (the “Subject Units”) other than pursuant to a
Permitted Transfer or a Drag-Along Sale. Each time the Transferring Member
proposes to so Transfer any Subject Units, the Transferring Member will first
offer to sell the Subject Units to the other Capital Member in accordance with
the provisions of this Section 6.1(d).

(i)    The Transferring Member will give written notice (the “Transfer Notice”)
to the Company and the other Capital Member stating the Transferring Member’s
intention to Transfer the Subject Units and specify the Membership Interest to
be Transferred as the Subject Units, the identity of the proposed purchaser of
the Subject Units (the “Proposed Purchaser”) and a complete description of all
terms and conditions of the proposed sale, including price and type of
consideration, pursuant to which the Transferring Member proposes to Transfer
the Subject Units.  

(ii)    The Transfer Notice will constitute the Transferring Member’s offer to
Transfer the Subject Units to the other Capital Member, which offer will be
irrevocable for a period of 60 days (the “ROFR Notice Period”).

(iii)    By delivering the Transfer Notice, the Transferring Member will be
deemed to represent and warrant to the Company and the other Capital Member
that: (1) the Transferring Member has full right, title and interest in and to
the Subject Units; (2) the Transferring Member has all necessary power and
authority and has taken all necessary action to sell such Subject Units as
contemplated by this Section 6.1(d); and (3) the Subject Units will be
Transferred free and clear of any and all Liens other than restrictions on
transfer arising under state or federal securities laws or under this Agreement.

(iv)    Upon receipt of the Transfer Notice, the other Capital Member will have
until the expiration of the ROFR Notice Period to offer to purchase all (but not
less than all) of the Subject Units by delivering a written notice (a “ROFR
Acceptance Notice”) to the Transferring Member and the Company stating that it
offers to purchase such Subject Units on the terms specified in the Transfer
Notice.  Any ROFR Acceptance Notice so delivered will be binding upon delivery
and irrevocable by the applicable Capital Member.  A Capital Member that does
not deliver a ROFR Acceptance Notice during the ROFR Notice Period will be
deemed

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to have waived all such Capital Member’s rights to purchase the Subject Units
under this Section 6.1(d)(iv).  If the other Capital Member timely delivers a
ROFR Acceptance Notice, such Capital Member (the “Exercising Member”) will be
entitled to purchase the Subject Units.

(v)    If the other Capital Member fails to deliver a ROFR Acceptance Notice in
accordance with Section 7.1(d)(iv), the Transferring Member may, during the
90-day period following the expiration of the ROFR Notice Period (which period
may be extended for a reasonable time to the extent reasonably necessary to
obtain any governmental approvals) (the “Waived ROFR Transfer Period”), and
subject to compliance with the provisions of Section 6.1(c), Transfer all of the
Subject Units to the Proposed Purchaser on terms and conditions no more
favorable to the Proposed Purchaser than those specified in the Transfer
Notice.  Any noncash consideration offered by the Proposed Purchaser will be
valued at its fair market value, as reasonably agreed by the Transferring Member
and the other Capital Member, and failing such agreement, as determined by an
independent third party appraiser selected by the Transferring Member and
reasonably acceptable to the other Capital Member (the cost for which third
party appraiser will be paid by the Transferring Member).  Any Proposed
Purchaser to whom Subject Units are Transferred in accordance with this Section
6.1(d)(v) will become a Substitute Member if the Transferring Member so
designates, in a written instrument delivered to the Company and the other
Capital Member, and such Proposed Purchaser executes a joinder to this Agreement
as required by Section 6.3.  If the Transferring Member does not Transfer the
Subject Units within such period or, if such Transfer is not consummated within
the Waived ROFR Transfer Period, the Subject Units in question will once again
become subject to the preceding provisions of this Section 6.1(d) and the
Transferring Member will no longer be permitted to Transfer such Subject Units
without again fully complying with such provisions.

(vi)    The Transferring Member and each Exercising Member will take all actions
as may be reasonably necessary to consummate any sale to the Exercising Member
contemplated by this Section 6.1(d), including entering into agreements and
delivering certificates and instruments and consents as may be deemed necessary
or appropriate by the Company.

(vii)    At the closing of any sale and purchase pursuant to this Section
6.1(d), the Transferring Member will deliver to the Exercising Member an
Assignment of the Subject Units to be sold (if any), accompanied by any other
evidence of transfer and all necessary transfer taxes paid and stamps affixed,
if necessary, against receipt of the purchase price therefor from such
Exercising Member by wire transfer of immediately available funds into an
account specified by the Transferring Member (or such other method of payment as
may be agreed upon by the Transferring Member).

Section 6.2    Effect of Membership Units in Hands of the
Transferee.  Membership Units that are Transferred pursuant to this ARTICLE VI
shall thereafter continue to be subject to all restrictions on Transfer
contained in this Agreement except as otherwise provided in this ARTICLE
VI.  Without limiting the generality of the foregoing, the Transferee must
comply with the provisions of this ARTICLE VI if such Transferee shall propose
to Transfer any such Membership Units, as if such Transferee were a Member.  If
any Membership Units are Transferred to a Transferee that is not admitted as a
Member pursuant to Section 6.1(c)(v), Section 6.1(d)(v) and Section 6.5, then
the Transferee shall issue an irrevocable proxy to the

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Offering Member or Transferring Member, as the case may be, to vote such
Transferred Units with respect to all matters submitted to the Voting
Members.  The right of first offer under Section 6.1(c) and the right of first
refusal under Section 6.1(d) does not inure to the benefit of any Transferee of
Membership Units and may not be exercised by any Transferee of Membership
Units.  

Section 6.3    Joinder.  Any Person (including any Permitted Transferee) to whom
Membership Units are to be Transferred shall execute and deliver, as a condition
to such Transfer, all documents deemed reasonably necessary by the Company, in
consultation with its counsel, to evidence such party’s joinder in, acceptance
of, and agreement with, the obligations with respect to the Membership Units
contained in this Agreement.  Any subsequent holder of the Membership Units
shall execute and deliver to the Class A Member a blank Assignment of Membership
Units pursuant to Section 10.3 as a condition to the transfer of the Membership
Units.  Each such transferor of Membership Units shall, prior to the Transfer,
cause the Transferee thereof to so execute and deliver such documents.

Section 6.4    Imposition of Restrictions.  Membership Units that are
Transferred shall thereafter continue to be subject to all restrictions and
obligations imposed by this Agreement with respect to Membership Units and
Transfers thereof.

Section 6.5    Limitation on Admission.  Notwithstanding anything to the
contrary that may be expressed or implied in this Agreement, upon a Transfer of
Membership Units permitted pursuant to this ARTICLE VI, no Transferee of such
Membership Units (including a Permitted Transferee other than an Affiliate or
the Mitchell Foundation) shall be admitted into the Company as an additional or
Substituted Member or have any rights to participate in the management of the
business and affairs of the Company as a Member without the prior express
written consent of the Board which consent may be granted or withheld in the
sole discretion of the Board for any reason or for no reason.  A Transferee of a
Membership Unit not admitted into the Company as an additional or Substituted
Member shall not be considered a voting Member.

Section 6.6    Other Limitations.  Notwithstanding anything in this ARTICLE VI
to the contrary:  (a) no Transfer of Class A Membership Units shall be made by
the Class A Member to a Transferee engaged in a Class B Competing Business
without the consent of the Class B Member or Class C Member, as applicable,
unless such Transfer is pursuant to a Drag-Along Sale resulting from a Class A
Change in Control; (b) no Transfer of Class B Membership Units or Class C
Membership Units shall be made by the Class B Member or Class C Member,
respectively, to a Transferee engaged in a Class A Competing Business without
the consent of the Class A Member; and (c) no Transfer of Membership Units shall
be permitted, and no Transferee of Membership Units shall be admitted to the
Company as a Member, if, (x) such Transfer is not expressly permitted pursuant
to Section 6.1(a) or (y) in the opinion of the Board, such transfer or admission
alone or in conjunction with one or more other transfers or admissions
would:  (i) result in a violation of applicable securities laws, (ii) result in
the Company being taxable as a corporation, (iii) if unknowingly waived by the
Board, cause a termination of the Company under Section 708(b)(1)(B) or any
other section of the Code, (iv) result in the Company becoming a “publicly
traded partnership” within the meaning of Sections 469(k)(2) and 7704(b) of the
Code, (v) be an event which would constitute a violation or breach

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(or, with the giving of notice or passage of time, would constitute a violation
or breach) of any law, regulation, ordinance, agreement or instrument by which
the Company, or any of its properties or assets, is bound, or (vi) require the
Company to register under the Investment Company Act of 1940, as amended.

ARTICLE VII
CAPITAL ACCOUNTS; TAX ALLOCATIONS; TAX MATTERS

Section 7.1    Capital Accounts.

(a)    A separate Capital Account shall be established for each Member on the
books of the Company on the date on which such Member first makes its Capital
Contribution and shall be maintained in the manner set out in the definition of
Capital Account.  The foregoing provisions and other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Section 1.704-1(b) of the Treasury Regulations and shall be interpreted and
applied in a manner consistent with such Treasury Regulations.  Upon the
Transfer of any Membership Units in accordance with this Agreement, the Capital
Account of the transferor Member that is attributable to the transferred
Membership Units will be carried over to the transferee Member.  

(b)    Any loans made by any Member to the Company shall not be deemed to result
in an increase (or decrease) in the Capital Contribution, Capital Account or
Membership Units of such Member; rather, such loans shall constitute an
indebtedness of the Company to the Member making such loan.

(c)    Except as otherwise provided in this Agreement or as may be approved by
the Board acting in its sole and absolute discretion, no Member shall demand or
receive a return of its Capital Contribution.  Under circumstances requiring a
return of any Capital Contribution, no Member shall have the right to receive
property other than cash, except as may be specifically provided herein or as
may be determined by the Board acting in its reasonable discretion.

(d)    Except as expressly otherwise provided in this Agreement and/or in a
separate services or employment agreement or as may be determined by the Board
acting in its sole and absolute discretion, no Member shall receive any
interest, salary or draw with respect to its Capital Contribution or its Capital
Account or for services rendered on behalf of the Company or otherwise in its
capacity as a Member.

(e)    The Members shall not be personally liable for the debts, liabilities,
contracts or any other obligations of the Company.  No Member shall be required
to lend any funds to the Company.

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Section 7.2    Allocations of Profits and Losses.

(a)    Profits. Subject to and after making any special allocations pursuant to
Section 7.4, any remaining Profits for each fiscal year shall be allocated among
the Members in the following manner:

(i)    First.  First, among the Members in proportion to, and to the extent of,
Losses previously allocated to each Member that have not been offset by
allocations of Profits pursuant to this Section 7.1(a)(i); and

(ii)    Second.  Thereafter, to the Members pro rata in proportion to their
respective Membership Interests.

(b)    Losses.  Subject to and after making any special allocations pursuant to
Section 7.3, any remaining Loss for each fiscal year shall be allocated among
the Members in proportion to their respective Membership Interests.

Notwithstanding the foregoing, no Member shall receive an allocation of Loss
pursuant to this Section 7.2(b) which would cause such Member to have an
Adjusted Capital Account Deficit at the end of any fiscal year.  Loss not
allocated to a Member pursuant to this Section 7.2(b) shall be allocated to the
other Members pro rata in proportion to their respective Membership Interests to
the extent an Adjusted Capital Account Deficit balance would not be created or
increased with respect to the other Members.  If no Member may receive an
additional allocation of Losses pursuant to this Section 7.2(b) such additional
Losses shall be allocated to the Member or Members who bear the economic risk of
loss pursuant the Treasury Regulations, as determined by the Board.

Section 7.3    Special Allocations.  The following special allocations shall be
made in the following order:

(a)    Minimum Gain Chargeback.  Notwithstanding any other provision of this
Agreement, if there is a net decrease in Company Minimum Gain or in any Member
Minimum Gain during any taxable year or other period, prior to any other
allocation pursuant hereto, the Members shall be specially allocated items of
Profit for such year (and, if necessary, subsequent years) in an amount and
manner required by Treasury Regulations Section 1.704-2(f) or 1
.704-2(i)(4).  The items to be so allocated shall be determined in accordance
with Treasury Regulations Section 1.704-2.  This Section 6.3(a) is intended to
comply with the minimum gain chargeback requirements of Treasury Regulations
Section 7.3(a), and will be interpreted consistently with the Treasury
Regulations and will be subject to all exceptions provided therein.

(b)    Qualified Income Offset.  Any Member who unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulations Section
1.704-l(b)(2)(ii)(d)(4), (5) or (6) which causes or increases an Adjusted
Capital Account Deficit shall be allocated items of income or gain in an amount
and manner sufficient to eliminate, to the extent required by such Treasury
Regulations, the Adjusted Capital Account Deficit of the Member as quickly as
possible. This Section 7.3(b) is intended to constitute a “qualified income
offset” within the meaning of Treasury Regulations Section 1.704-1
(b)(2)(ii)(d), will be interpreted consistently with the Treasury Regulations
and will be subject to all exceptions provided therein.

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(c)    Gross Income Allocation.  Each Member who has a deficit Capital Account
at the end of any Company taxable year that is in excess of the amount the
Member is obligated to restore pursuant to any provision of this Agreement,
including any amount that it is deemed to be obligated to restore under Treasury
Regulations Section 1.704-2(g)(l) and Section 1.704- 2(i)(5), will be specially
allocated items of Company income and gain in the amount of the excess as
quickly as possible.

(d)    Nonrecourse Deductions.  Nonrecourse Deductions for any taxable year or
other period will be specially allocated among the Members pro rata in
proportion to their respective Membership Interests in the Company.

(e)    Member Nonrecourse Deductions.  Any Member Nonrecourse Deductions for any
taxable year or other period will be allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
Member Nonrecourse Deductions are attributable in accordance with principles
under Treasury Regulations Section 1.704-2(i).

(f)    Code Section 754 Adjustments.  To the extent an adjustment to the
adjusted tax basis of any Company asset under Sections 734(b) or 743(b) of the
Code is required to be taken into account in determining Capital Accounts under
Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the adjustment
to the Capital Accounts will be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment decreases the
basis), and the gain or loss will be specially allocated to the Members in a
manner consistent with the manner in which their Capital Accounts are required
to be adjusted under Treasury Regulations Section 1.704- l(b)(2)(iv)(m).

(g)    Curative Allocations.  The “Regulatory Allocations” consist of
allocations made to a Member (or predecessor) under Section 7.3(a) through
Section 7.3(j).  Notwithstanding any other provision of this Section 7.3 other
items of income, gain, loss and deduction will be allocated among the Members so
that, to the extent possible, the net amount of those allocations of other items
and the Regulatory Allocations to each Member will be equal to the net amount
that would have been allocated to the Member if the Regulatory Allocations had
not occurred.  The Board shall take into account future Regulatory Allocations
under Section 7.3(a) that, although not yet made, are likely to offset
Regulatory Allocations under Section 7.3(d) and Section 7.3(e).

(h)    Compliance with Section 704(c).  In accordance with Section 704(c) of the
Code and the applicable Treasury Regulations thereunder, income, gain, loss and
deduction with respect to any Company property for which its adjusted tax basis
differs from its Book Basis will, solely for tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted tax
basis of such property to the Company for federal income tax purposes and the
Book Basis of such Property.  Any elections or other decisions relating to
allocations under this Section 7.3(h) will be made in any manner which the Board
shall determine is consistent with Section 704(c) of the Code and the Treasury
Regulations promulgated thereunder and reasonably reflects the purpose and
intention of this Agreement.  Allocations under this Section 7.3(h) are solely
for purposes of federal, state and local taxes and will not affect, or in any
way be taken into account in computing, any Member’s Capital Account or share of
Profits, Losses or other items or distributions under any provision of this
Agreement.

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(i)    Sale of Assets.  Notwithstanding Section 7.2, any income, gain, loss or
deduction of the Company resulting from the sale, exchange or other disposition
of Company assets shall be allocated as follows: (i) first to each Member in the
minimum amount required to cause each Member’s positive Capital Account balance
to be in the same ratio as their respective Membership Interests, in proportion
to such required amounts, and (ii) thereafter, to the Members in proportion to
their Membership Interests.

(j)    Intent of Allocations.  The parties intend that the foregoing allocation
provisions of this Section 7.3 shall produce final Capital Account balances of
the Members that will permit liquidating distributions under Section 8.3 to be
made in a manner identical to the priorities set forth in Section 7.9.  To the
extent that the allocation provisions of this Section 7.3 would fail to produce
such final Capital Account balances, (i) such provisions shall be amended by the
Board if and to the extent necessary to produce such result and (ii) Net Profits
and Net Losses of the Company for prior open years (or items of gross income,
gain, loss and deduction of the Company for such years) shall be reallocated by
the Board among the Members to the extent it is not possible to achieve such
result with allocations of items of, income (including gross income and gain),
deduction and loss for the current year and future years.  This Section 7.3
shall control notwithstanding any other provision of this Agreement or the
reallocation or adjustment of taxable income, taxable loss or items thereof by
the Internal Revenue Service or any other taxing authority.

(k)    Member Acknowledgment.  The Members agree to be bound by the provisions
of this Section 7.3 in reporting their shares of Company income and loss for
income tax purposes.

Section 7.4    Other Allocation Rules.

(a)    For purposes of determining the Profits, Losses, or any other items
allocable to any period, Profits, Losses, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Tax Matters
Member, subject to the prior approval of the Board, using any permissible method
under Code Section 706 and the Treasury Regulations promulgated pursuant
thereto.

(b)    Notwithstanding any other provision of this Agreement, no Member shall
have any obligation to restore any deficit balance in such Member’s Capital
Account.

Section 7.5    Tax Allocations.

(a)    For federal, state and local income tax purposes, each item of income,
gain, loss, deduction and credit of the Company shall be allocated among the
Members as nearly as possible in the same manner as the corresponding item of
income, expense, gain or loss is allocated pursuant to the other provisions of
this ARTICLE VII.  It is intended that the Capital Accounts will be maintained
at all times in accordance with Section 704 of the Code and applicable Treasury
Regulations promulgated pursuant thereto, and that the provisions hereof
relating to the Capital Accounts be interpreted in a manner consistent
therewith.  The Tax Matters Member, subject to the prior approval of the Board,
shall be authorized to make appropriate amendments to the allocations of items
pursuant to this Section 7.5 in its discretion

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to comply with Section 704 of the Code or applicable Treasury Regulations
promulgated pursuant thereto; provided that no such change shall have an adverse
effect upon the amount distributable to any Member hereunder.

(b)    Notwithstanding anything else contained in this ARTICLE VII, if any
Member has a deficit Capital Account for any fiscal period as a result of any
adjustment of the type described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4) through (6), then the Company’s income and gain will be
specially allocated to such Member in an amount and manner sufficient to
eliminate such deficit as quickly as possible.  Any special allocation of items
of income or gain pursuant to this paragraph shall be taken into account in
computing subsequent allocations pursuant to this ARTICLE VII so that the
cumulative net amount of all items allocated to each Member shall, to the extent
possible, be equal to the amount that would have been allocated to such Member
if there had never been any allocation pursuant to this paragraph.

Section 7.6    Company Tax Returns.  The Tax Matters Member, subject to the
prior approval of the Board, shall cause to be prepared and timely filed all tax
returns required to be filed for the Company.

Section 7.7    Tax Year and Accounting Matters.  The taxable year of the Company
shall be the Fiscal Year of the Company.  The Company shall adopt such methods
of accounting and file its tax returns on the methods of accounting as
determined by the Board.

Section 7.8    Tax Elections.  The Tax Matters Member, in the exercise of its
reasonable discretion, may cause the Company to make or revoke all tax elections
provided for under the Code.

Section 7.9    Distributions.  Distributable Cash shall be determined by the
Board.  Distributable Cash, if any, may be distributed in the following order
and priority, as determined in the discretion of the Board:

(a)    First, on or before April 1 of each year, to the Members in an aggregate
amount equal to the Tax Distributions for the preceding fiscal year.  Subject to
applicable law, distributions of property other than cash may be made in the
discretion of the Board.  Distributions of property shall be valued at the fair
market value therein as determined by the Board, less any encumbrances.

(b)    Second, on or before October 1 of each year, an additional Tax
Distribution to each Member in an amount equal to the positive difference, if
any, between the Tax Distribution made pursuant to Section 7.10 and the amount
of Tax Distribution calculated on the basis of the actual tax liability of such
Member for the preceding fiscal year if the actual tax liability exceeds the
estimated tax liability by ten percent (10%) or more.

(c)    Thereafter, any remaining Distributable Cash shall be distributed to the
Members pro rata (in accordance with their respective Membership Interests).

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(d)    Set-Off. The Company may set-off against and reduce any distributions
payable under this ARTICLE VII by any bona fide amounts actually owing from a
Member to the Company.

Section 7.10    Tax Distributions.  To the extent that any Member receives an
allocation of taxable income pursuant to Section 7.2 or Section 7.3 but is not
otherwise entitled to receive a distribution pursuant to Section 7.9 sufficient
to pay, or to permit such Member (including the direct and indirect owners of
any entity treated as a partnership for federal income tax purposes) to pay, the
federal, state and local income taxes attributable to such allocation, a
distribution for the payment of such taxes (a “Tax Distribution”) for each
applicable period shall be made, prior to making any distribution pursuant to
Section 7.9, to such Member in an amount equal to (a) the amount of taxable Net
Profits allocated (and, items of taxable income and gain specially allocated) to
such Member for the current period pursuant to Section 7.2 and Section 7.3
(determined for the current period as if all distributions for such period were
already made pursuant to Section 7.9 without giving effect to this Section
7.10), multiplied by (b) the Assumed Tax Rate.  Any Tax Distributions to a
Member under this Section 7.10 shall be treated as a preliminary distribution of
future amounts due to such Member, and any future distributions otherwise due to
such Member hereunder shall be adjusted so that, to the greatest extent
possible, all distributions are according to the priorities otherwise set forth
in Section 7.9(a).  Tax Distributions shall be determined with regard to the
allocation related to the basis adjustments pursuant to Code Section 743(b).

Section 7.11    Tax Matters Member.

(a)    With respect to tax years beginning on or before December 31, 2017, the
Class B Member shall be the “tax matters partner” of the Company pursuant to
Code Section 6231(a)(7) (the “Tax Matters Partner”) and with respect to tax
years beginning after December 31, 2017, the Class B Member, or such other
qualified Person designated by the Class B Member, shall serve as the
“partnership representative” within the meaning of the Revised Partnership Audit
Procedures (the “Partnership Representative”). The Tax Matters Partner or
Partnership Representative, as applicable, shall be referred to herein as the
“Tax Matters Member.” The Tax Matters Member is specifically directed and
authorized to take whatever steps it, in its discretion, deems necessary or
desirable to perfect such designation, including filing any forms or documents
with the Internal Revenue Service and taking such other action as may from time
to time be required to perfect such designation under the Treasury Regulations.

(b)    In the event of a Class B Default or Class B Conversion, the Class A
Member shall become the Tax Matters Member to the extent permitted by applicable
law.

(c)    The Tax Matters Member shall be subject to the following provisions.

(i)    The Tax Matters Member shall represent the Company with regard to any tax
matters initiated by the Internal Revenue Service or any state, local, or
foreign taxing authority.

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(ii)    With the Consent of the Board, the Tax Matters Member shall have full
authority to act on behalf of the Members and the Company, as provided by
applicable law, with respect to any tax audit, investigation, or other
proceeding brought by any taxing authority, including administrative settlement
and judicial review (a “Tax Proceeding”) and, subject to applicable law, the
Members and the Company shall be bound by the actions taken by the Tax Matters
Member in such capacity. With the consent of the Board, the Tax Matters Member
may: (A) execute any agreement or other document relating to, or affecting, any
tax matter, (B) make (or decline to make) any election under the Revised
Partnership Audit Procedures or any similar provisions of applicable law, and
(C) take any action and execute and file any statement or form on behalf of the
Company that applicable law permits or requires, in each case in accordance with
applicable law, provided, however, the Tax Matters Member shall not have any
right to settle or compromise any Tax Proceeding that would have a
disproportionate adverse effect on a Member without obtaining the prior written
consent of the Member (such consent not to be unreasonably withheld,
conditioned, or delayed). The Members acknowledge and agree that it is the
intention of the Members to minimize any obligations of the Company and its
Members to pay taxes, interest, and penalties in connection with any audit of
the Company, including by means of elections or alternatives available under the
Revised Partnership Audit Procedures.

(iii)    Each Member, if it so requests, may participate in a non-binding manner
in all Tax Proceedings.

(iv)    With the consent of the Board the Tax Matters Member may employ
experienced tax counsel to represent the Company in connection with any Tax
Proceeding.

(v)    The Tax Matters Member shall keep the Members reasonably informed
regarding tax matters related to the Company.

(vi)    The relationship of the Tax Matters Member to the Members is that of a
fiduciary, and the Tax Matters Member has a fiduciary obligation to perform its
duties as Tax Matters Member in such manner as will serve the best interests of
the Company and all of the Company’s Members.

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(vii)    All costs and expenses incurred in connection with any Tax Proceeding
or otherwise incurred by the Tax Matters Member in performing its duties shall
be borne by the Company, subject to reimbursement in the reasonable discretion
of the Board to ensure that each Member bears its allocable share of such
expenses. If the Tax Matters Member incurs expenses in connection with tax
matters not affecting each of the Members, then the Company may seek
reimbursement from, or charge such expenses to the Capital Accounts of, those
Members on whose behalf such expenses were incurred. Each Member shall be
responsible for any costs incurred by the Member with respect to any Tax
Proceeding against the Member, even though the Tax Proceeding may relate to the
Company.

(viii)    To the fullest extent permitted by applicable law, but subject to the
limitations and exclusions of Section 11.3, the Company agrees to indemnify the
Tax Matters Member and its agents and save and hold them harmless, from and in
respect to all (A) fees, costs and expenses in connection with or resulting from
any claim, action, or demand against the Tax Matters Member or the Company that
arise out of or in any way relate to the Tax Matters Member’s status as Tax
Matters Member for the Company, and (B) all such claims, actions, and demands
and any losses or damages therefrom, including amounts paid in settlement or
compromise of any such claim, action, or demand.

(d)     Each Person (herein called a “Pass-Thru Member”) that holds or controls
an interest as a Member on behalf of, or for the benefit of another Person or
Persons, or which Pass-Thru Member is beneficially owned (directly or
indirectly) by another Person or Persons shall, within thirty (30) days
following receipt from the Tax Matters Member of any notice, demand, request for
information or similar document, convey such notice or other document in writing
to all holders of beneficial interests in the Company holding such interests
through such Pass-Thru Member.

(e)    If the Company incurs or is required to pay any liability for any taxes,
interest, penalties, other additions to tax, or any related costs and expenses
(including reasonable accounting and attorney’s fees) of any kind or nature that
may be sustained or suffered by the Company or the Members (including any costs
incurred in connection with a Tax Proceeding) for any taxable year (a “Company
Tax Liability”):

(i)    With the consent of the Board the Tax Matters Member may cause each
Member to pay its allocable share of such Company Tax Liability, as reasonably
determined by the Tax Matters Member, and each such Member hereby agrees to pay
that amount to the Company and such amount shall not be treated as a Capital
Contribution for purposes of any provision of this Agreement that affects
distributions to the Members;

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(ii)    Any amount not paid by a Member at the time reasonably requested by the
Tax Matters Member shall accrue interest at the rate set by the Board (not to
exceed the maximum rate permitted by law) until paid, and that Member shall also
be liable to the Company for any damages resulting from a delay in making such
payment beyond the date such payment is reasonably requested by the Tax Matters
Member, and for this purpose the fact that the Company could have paid this
amount with other funds shall not be taken into account in determining such
damages; and

(iii)    Without reduction in a Member’s obligation under paragraphs (d)(i) and
(d)(ii), any amount paid by the Company that is attributable to a Member, as
determined by the Tax Matters Member in its reasonable discretion with the
consent of the Board, and that is not paid by that Member pursuant to paragraphs
(d)(i) and (d)(ii) may be treated (A) as a distribution to (and shall reduce
amounts otherwise distributable to) that Member or (B) in such other manner as
determined by the Tax Matters Member in its reasonable discretion.

(f)    Each Member hereby agrees to indemnify and hold harmless the other
Members from and against any liability (including any liability for taxes) with
respect to income attributable to, or distributions or other payments to, such
Member.

(g)    Each Member shall cooperate as reasonably requested by the Tax Matters
Member in connection with any Tax Proceeding, the reduction or satisfaction of
any Company Tax Liability, to enable the Company to satisfy any applicable tax
reporting or compliance requirements, to make any tax election, to qualify for
an exception from or reduced rate of tax or other tax benefit, to be relieved of
liability for any tax, or any other action taken by the Tax Matters Member
regardless of whether such requirement, tax benefit, or tax liability existed on
the date such Member was admitted to the Company. The Members shall promptly
provide upon the Tax Matters Member’s request therefor, such information as the
Tax Matters Member may reasonably request, and shall take such action as
reasonably requested by the Tax Matters Member, including executing and filing
returns, forms, or other statements, providing information about the Member, or
any other action reasonably requested by the Tax Matters Member. If a Member
fails to file or provide any such returns, forms, statements, or other
information requested by the Tax Matters Member such Member will be required to
indemnify the Company and the other Members for the share of any tax deficiency
paid or payable by the Company that is due to such failure (as reasonably
determined by the Board).

(h)    Notwithstanding any other provision of this Agreement, the obligations of
a Member pursuant to this Section 7.11 (i) may be enforced by legal process or
any other lawful means, including, without limitation, by offsetting any unpaid
obligations against amounts otherwise distributable to the Member, (ii) will
survive indefinitely with respect to any taxes withheld by the Company, or paid
by the Company or the Members, that relate to the period during which such
Person was actually a Member, regardless of whether such taxes are assessed,
withheld or otherwise paid during such period, (iii) will survive the transfer
by that Member of its interest, the withdrawal of that Member, or that Member
otherwise ceasing to be a Member of the Company, (iv) will survive the
dissolution, liquidation, winding up, and termination of the

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Company, and (v) will remain binding on the Members for as long a period of time
as is necessary to resolve with the Internal Revenue Service or any other taxing
authority any and all matters regarding the taxation of the Company or the
Members. If any Member withdraws or otherwise disposes of their Membership
Interests, they shall keep the Company advised of their contact information
until released in writing by the Company from such obligation.

(i)    References to a Member in this Section 7.11 include those Persons who or
which are (i) former Members or (ii) transferees or assignees of a Member or
former Member.

(j)    The Members covenant and agree to amend this Agreement in order to
reflect the effect of any applicable Treasury Regulations or other guidance
promulgated with respect to a tax matters partner or partnership representative.

ARTICLE VIII
TERM; DISSOLUTION

Section 8.1    Term; Termination.

(a)    The term of the Company commenced on the date specified in the
Certificate and shall continue until the Company is dissolved pursuant to this
Agreement.

(b)    This Agreement may be terminated under the following circumstances:

(i)    By the Class A Member, upon a material breach of this Agreement by the
Class B Member, which breach is not cured within ten (10) days (for any monetary
breach) or sixty (60) days (for any non-monetary breach) after receipt of
written notice of such breach;

(ii)    By the Class B Member, upon a material breach of this Agreement by the
Class A Member, which breach is not cured within ten (10) days (for any monetary
breach) or sixty (60) days (for any non-monetary breach) after receipt of
written notice of such breach;

(iii)    By the Class A Member, upon a material breach of the Management
Services Agreement by Management Co., which breach is not cured within the cure
period provided under the Management Services Agreement;

(iv)    By the Class B Member, upon a material breach of the Theater Services
Agreement by the Company, which breach is not cured within the cure period
provided under the Theater Services Agreement;

(v)    By the mutual agreement of the Class A Member and the Class B Member; or

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(vi)    By either the Class A Member or the Class B Member in the event of a
winding up, liquidation or dissolution of the other Member or the filing of any
petition under any bankruptcy or other insolvency law by or against the other
Member or assignment for the benefit of creditors of the other Member.

Section 8.2    Liquidation of Company.  Upon termination of this Agreement
pursuant to Section 8.1, the Company’s business shall be liquidated in an
orderly manner.  Subject to Section 5.3(b), the Board may act as the liquidator
and wind up the affairs pursuant to this Agreement.  Upon the election of the
Board, the Board may approve one or more liquidators to act as the liquidator in
carrying out such liquidation, subject to Section 5.3(a).  In performing its
duties, the liquidator is authorized to sell, distribute, exchange or otherwise
dispose of the assets of the Company in any reasonable manner that the
liquidator shall determine to be in the best interest of the Members, subject to
Section 5.3(a).

Section 8.3    Distribution Upon Dissolution of the Company.  Upon dissolution
of the Company, subject to Section 5.3(a), the liquidator winding up the affairs
of the Company shall determine in its discretion which assets of the Company
shall be sold and which assets of the Company shall be retained for distribution
in kind to the Members.  The value of assets to be distributed in kind shall be
reasonably determined by the liquidator in good faith.  Subject to the Business
Code, after all liabilities of the Company have been satisfied or duly provided
for, the remaining assets of the Company shall be distributed to the Members in
accordance with the Members’ respective positive Capital Account balances after
giving effect to all contributions, distributions and allocations for all
periods.

ARTICLE IX
REPRESENTATION, WARRANTIES AND COVENANTS

Section 9.1    Representations, Warranties and Covenants of the Members.  Each
Member hereby represents, warrants and covenants to the Company and the other
Member that:

(a)    it is duly organized, validly existing and in good standing under the
laws of its state of organization, and is registered as a foreign corporation in
each jurisdiction in which it conducts business;

(b)    it has full power and authority to execute and deliver the Operating
Documents to which it is a party and to consummate the transactions contemplated
by such documents, the execution, delivery and performance of the Operating
Documents by such Member has been approved by all necessary action of such
Member and no other proceedings on the part of such Member are necessary to
approve and authorize the execution and delivery of the Operating Documents and
the consummation of the transactions contemplated hereby;

(c)    it is aware that the Membership Units have not been registered under any
federal or state securities laws and acknowledges that it has acquired its
Membership Units for its own account for investment purposes only and not with a
view to the distribution or resale thereof, in whole or in part, and agrees that
it will not Transfer, or offer to Transfer, all or any portion of its Membership
Units in any manner that would violate or cause the Company to violate any
federal or state securities laws;

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(d)    each Operating Document to which it is a party has been duly executed and
delivered by such Member and, assuming due authorization, execution and delivery
hereof by the other parties thereto, constitutes a valid and binding agreement
of such Member enforceable against it in accordance with its terms;

(e)    other than any reports required to be filed by Affiliates of the Class A
Member under applicable securities laws, it is not required to submit any
notice, report or other filing with any governmental entity in connection with
the execution or delivery of the Operating Documents or the consummation of the
transactions contemplated thereby, and no waiver, consent, authorization or
approval of any governmental entity is required to be obtained by such Member in
connection with its execution and delivery of the Operating Documents or the
transactions contemplated thereby;

(f)    it is aware of the income tax consequences of this Agreement and the
transactions contemplated hereby, agrees to be bound by the provisions of this
Agreement in reporting its share of Company Profit and Loss for income tax
purposes, and is aware that there may not be any Distributable Cash available
for distribution;

(g)    it shall comply in all material respects with all applicable laws, rules
and regulations of any governmental agency, entity or authority in connection
with the execution, delivery and performance of the Operating Documents and the
transactions contemplated thereby;  and

(h)    it will abide by the Company’s conflict of interest policy as adopted by
the Board, and as may be amended from time to time.

ARTICLE X
ADDITIONAL AGREEMENTS

Section 10.1    Drag-Along Sale.  

(a)    Required Sale of Membership Units. If at any time (i) the Class A Member
approves a sale to a third party that is not an Affiliate of the Class A Member
of its Membership Units and such third party proposes to acquire the Company in
a Company Sale Transaction or (ii) the Class A Parent approves a Class A Change
in Control to a third party that is not an Affiliate of the Class A Member which
would include a Company Sale Transaction (in either case, a “Drag-Along Sale”),
then, without any further action or approval by the Managers, all other Members
(the “Dragged Members”) shall consent to and raise no objections against the
Drag-Along Sale or the process by which the Drag-Along Sale is undertaken and
the Dragged Members, if requested by the Class A Member, shall sell (or
otherwise Transfer) each such Dragged Member’s respective Membership Units (or
any portion thereof if requested), on the same terms and conditions approved by
and applicable to the Class A Member and as set forth in this ARTICLE X and
provided that the purchase price for the Membership Units of the applicable
Dragged Member is not less than the Call Purchase Price that would be applicable
to the Membership Units (or portion thereof) of the applicable Dragged Member
pursuant to the Class A Member Call Option.  Each Dragged Member shall promptly
take all actions deemed necessary or desirable (in the sole judgment of the
Class A Member) in connection with, and to

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facilitate the consummation of, the Drag-Along Sale, including the execution of
all agreements and instruments as requested by, and on the same terms applicable
to, the Class A Member.  Without limiting the foregoing, (i) if the Drag-Along
Sale is structured as a merger, consolidation, joint venture, sale of all or
substantially all assets of the Company or similar transaction, then each
Dragged Member shall vote in favor of such transaction and waive any dissenters’
rights, appraisal rights or similar rights in connection with such merger,
consolidation or sale and (ii) if the Drag-Along Sale is structured as a sale or
exchange of Membership Units, each Dragged Member shall agree to sell or
exchange its Membership Units on the terms and conditions approved by the Class
A Member and upon which the Class A Member agrees to sell or exchange its Class
A Membership Units.  The Company shall notify the Dragged Members in writing not
less than thirty (30) days prior to the proposed consummation of a Drag-Along
Sale; provided, however, that the Dragged Members agree not to directly or
indirectly (without the prior written consent of the Company) disclose to any
other Person (other than to such Dragged Member’s legal counsel in confidence,
as otherwise necessary to protect such Dragged Member’s rights under this
Agreement or as otherwise required by law) any information related to such
potential Drag-Along Sale.  Notwithstanding anything in this Section 10.1(a) to
the contrary, the Class A Member may not invoke the right to require a
Drag-Along Sale to a purchaser engaged in a Class B Competing Business unless
such Drag-Along Sale is related to a Class A Change in Control.  In the event of
any Drag-Along Sale, the proceeds will be distributed to the Members pro rata
(in accordance with their respective Membership Interests).

(b)    Exceptions.  Notwithstanding the foregoing, neither a Class A Member nor
a Class B Member or Class C Member (if an Affiliate of such Class B Member or
Class C Member has not managed the Facility for the prior 6 months preceding a
Drag-Along Sale) will be required to comply with the provisions of Section
10.1(a) above in connection with any Drag-Along Sale, unless:  

(i)    any representations and warranties to be made by such Member in
connection with the Drag-Along Sale are limited to representations and
warranties related to authority, ownership and the ability to convey title to
such Membership Interest, including, but not limited to, representations and
warranties that (A) the Member holds all right, title and interest in and to the
Membership Interest such Member purports to hold, free and clear of all liens
and encumbrances, (B) the obligations of the Member in connection with the
transaction have been duly authorized, (C) the documents to be entered into by
the Member have been duly executed by the Member and delivered to the acquirer
and are enforceable against the Member in accordance with their respective
terms; and (D) neither the execution and delivery of documents to be entered
into in connection with the transaction, nor the performance of the Member’s
obligations thereunder, will cause a breach or violation of the terms of any
agreement, law or judgment, order or decree of any court or governmental agency;

(ii)    the Member shall not be liable for the inaccuracy of any representation
or warranty made by any other Person in connection with the Drag-Along Sale;

(iii)    the liability for indemnification, if any, of such Member in the
Drag-Along Sale and for the inaccuracy of any representations and warranties is
several and not joint with any other Person and is pro rata in proportion to,
and does not exceed, the amount of consideration paid to such Member in
connection with such Drag-Along Sale; and

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(iv)    if any Member is given an option as to the form and amount of
consideration to be received as a result of the Drag-Along Sale, (i) all Members
will receive the same economic considerations and (ii) if the consideration
consists of cash and non-cash components, the Class B Member (or Class C Member
as applicable) shall receive cash.

Section 10.2    Class A Member Call Option.  

(a)    Right to Purchase Membership Units. At any time after the occurrence of a
Call Option Trigger, the Class A Member shall have the right (the “Class A
Member Call Option”) to elect to purchase all Membership Units then outstanding
(the “Option Units”) for a purchase price equal to the Call Purchase Price;
provided that if the Call Option Trigger is a Class B Default, the Call Purchase
Price shall be reduced by fifty percent (50%).

(b)    Procedure. If the Class A Member wishes to exercise its right to purchase
Option Units pursuant to this Section 10.2, the Class A Member shall deliver to
the holders of the Option Units any time after the occurrence of a Call Option
Trigger, a written notice (the “Call Option Notice”) specifying the applicable
Call Option Trigger, the applicable Call Purchase Price and the closing date for
the purchase of the Option Units (the “Call Right Closing Date”), which such
Call Right Closing Date shall be no earlier than 30 days from the date of the
Call Option Notice. At the closing of any purchase consummated pursuant to this
Section 10.2, each holder of Option Units shall represent and warrant to the
Class A Member that (i) such holder has full right, title and interest in and to
its Option Units, (ii) such holder has all the necessary power and authority and
has taken all necessary action to sell such Option Units as contemplated by this
Section 10.2, and (iii) the Option Units are free and clear of any and all
Liens. Each holder of Option Units shall take all actions as may be reasonably
necessary to consummate the sale contemplated by this Section 10.2, including
without limitation, entering into agreements and delivering certificates,
instruments and consents as may be deemed necessary or appropriate.  

Section 10.3    Assignment of Option Units.  Each holder of Option Units and any
subsequent holder of the Option Units shall execute and deliver to the Class A
Member a blank Assignment of Membership Units in the form of Exhibit F to enable
the Class A Member to exercise its rights under Section 10.1 and Section 10.2
without requiring additional signatures on the part of any holder of Option
Units or any subsequent holder of the Option Units.

Section 10.4    Class B Default.  In the event of a Class B Default (defined
below), all outstanding Class B Membership Units shall automatically convert
into Class C Membership Units as provided in Section 10.5. A “Class B Default”
shall have occurred in any of the following instances:

(a)    A Capital Contribution Default by the Class B Member.

(b)    Any Transfer by the Class B Member (including, without limitation, an
Involuntary Transfer) made in violation of this Agreement.

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(c)     A material breach by the Class B Member under this Agreement that is not
cured within ten (10) days (for any monetary breach) or sixty (60) days (for any
non-monetary breach that the Class B Member makes reasonable efforts to cure
during such cure period) after receipt of written notice from the Class A Member
of such breach.

(d)    A material breach by Management Co. under the Management Services
Agreement that is not cured within the cure period provided in the Management
Services Agreement.

(e)    Management Co. terminates the Management Agreement without cause under
Section 10.2(b) of the Management Agreement and another company owned by the
Class B Member that has operating capabilities has not been contracted prior to
the end of the applicable transition period; provided however, that if
Management Co. terminates the Management Agreement as a result of termination of
the Theater Services Agreement, this shall not be a Class B Default.

(f)    A Class B Change in Control that is not approved by the Class A Member
(which such approval may be withheld for any reason).

(g)    The Class B Member (or its direct or indirect parent), Management Co. or
Management Parent winds up, liquidates or dissolves or commences any proceeding
to take such action.

(h)    A petition under bankruptcy or other insolvency laws is filed against the
Class B Member (or its direct or indirect parent), Management Co. or Management
Parent or the Class B Member (or its direct or indirect parent), Management Co.
or Management Parent makes an assignment for the benefit of its creditors.

Section 10.5    Class B Conversion.  In the event that (a) a Class B Default
occurs, (b) a Company Mitchell Trigger Event or Cinemark Mitchell Trigger Event
occurs or (c) the Class B Membership Units are Transferred to any Person other
than a Permitted Transferee, then unless otherwise expressly waived in writing
by the Class A Member in its sole discretion within five days after the Class A
Member receives notice of a Class B Default, a Company Mitchell Trigger Event, a
Cinemark Mitchell Trigger Event or Transfer of Class B Membership Interests, all
outstanding Class B Membership Units shall automatically convert into the same
number of Class C Membership Units without further action by the Class B
Member.  Upon the conversion of the Class B Membership Units into Class C
Membership Units, (i) all voting or consent rights of the Class B Member shall
cease, (ii) the Class A Member shall have the right to elect the entire Board,
(iii) the Class A Member (or Class A Managers, as applicable) shall have the
right to make all decisions enumerated in Section 5.3, and (iv) the holder of
the Class C Membership Units shall have such rights and obligations with respect
to the Class C Membership Units as a Member as set forth in this Agreement.  For
the avoidance of doubt, the Capital Account attributable to the Class B
Membership Units converted to Class C Membership Units shall be the Capital
Account of the Class C Member attributable to such Class C Membership Units.

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Section 10.6    Sale of Class C Membership Units.

(a)    Class B or Class C Offer Election.  If the Class A Member has not
delivered a Call Option Notice within nine (9) months after the occurrence of a
Company Mitchell Trigger Event or a Cinemark Mitchell Trigger Event, the Class B
Member or Class C Member, as applicable (the “CB Member”) will have the right
for ninety (90) days after the expiration of such ninety (90) day period (the
“Offer Election Period”) to offer to sell all Class B Membership Units, or Class
C Membership Units, as applicable (the “CB Units”), to the Class A Member for
the CB Purchase Price (a “CB Offer”).  The CB Offer shall be evidenced by a
written notice (the “CB Offer Notice”) to be delivered to the Class A Member
during the Offer Election Period and setting forth the CB Proposed Valuation and
CB Purchase Price as determined by the CB Member.  The CB Offer Notice will
constitute the CB Member’s offer to Transfer the CB Units to the Class A Member,
which offer will be irrevocable for a period of 30 days (the “CB Notice
Period”).

(b)    Purchase of CB Units.  The Class A Member may accept the CB Offer by
delivering a written notice (a “CB Acceptance Notice”) to the CB Member stating
that it accepts the CB Offer to sell the CB Units for the CB Purchase Price
specified in the CB Offer Notice.  

(i)    By delivering the CB Offer Notice, the CB Member will be deemed to
represent and warrant to the Company and the Class A Member that: (1) the CB
Member has full right, title and interest in and to the CB Units; (2) the CB
Member has all necessary power and authority and has taken all necessary action
to sell such CB Units as contemplated by this Section 10.6; and (3) the CB Units
will be Transferred free and clear of any and all Liens other than restrictions
on transfer arising under state or federal securities laws or under this
Agreement.

(ii)    If the Class A Member delivers a CB Acceptance Notice on or before the
expiration of the CB Notice Period, the CB Member and the Class A Member will
take all actions as may be reasonably necessary to consummate any sale to the
Class A Member contemplated by this Section 10.6, including entering into
agreements and delivering certificates and instruments and consents as may be
deemed necessary or appropriate by the Company.

(iii)    The closing date for the purchase of the CB Units shall be specified by
the Class A Member in the CB Acceptance Notice and shall be a date not more than
thirty (30) days after the date of the CB Acceptance Notice.  At the closing of
any sale to the Class A Member pursuant to this Section 10.6, the CB Member will
deliver to the Class A Member an Assignment of the CB Units to be sold,
accompanied by any other evidence of transfer and all necessary transfer taxes
paid and stamps affixed, if necessary, against receipt of the purchase price
therefor from the Class A Member by wire transfer of immediately available funds
into an account specified by the CB Member (or such other method of payment as
may be agreed upon by the CB Member).

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Section 10.7    Sale of the Company.

(a)    Sale Election.  If (i) the Class A Member has not delivered a Call Option
Notice within nine (9) months after the occurrence of a Company Mitchell Trigger
Event or a Cinemark Mitchell Trigger Event, (ii) the CB Member has delivered a
CB Offer Notice during the CB Notice Period and (iii) the Class A Member has not
accepted the CB Offer pursuant to Section 10.6, then the CB Member will have the
right (the “Sale Right”) during the six (6) month period following the
expiration of the CB Notice Period (the “Sale Election Period”) to elect to
cause the Company to solicit offers from prospective third party purchasers to
buy the Company (each, a “Purchase Offer”).  If the CB Member elects to exercise
the Sale Right, the CB Member will notify the Class A Member, in writing of any
such election (a “Sale Election Notice”).  Upon receipt of a Sale Election
Notice from the CB Member, the Class A Member will proceed to cause the Board to
commence the process to solicit a Purchase Offer pursuant to Section 10.7(b)
(the “Sale Process”).

(b)    Sale Process.  Within 10 days after receipt of a Sale Election Notice to
commence a Sale Process, the CB Member and the Class A Member shall jointly
retain (or cause the Company to retain) either Peter J. Solomon Company or
Barclays Bank as the investment banker to conduct the Sale Process.  If the CB
Member and the Class A Member are unable to agree on which of the two investment
banks to retain, the investment bank offering the most favorable economic terms
to the Company shall be selected.  The CB Member and the Class A Member shall
cause the Board to prepare an information package on the Company that includes
(i) a form purchase agreement reasonably approved by the Board (to be executed
by any such prospective third party purchaser), and (ii) the other material
terms and conditions on which the Class A Member and the CB Member are prepared
to sell the Company.  

(c)    Purchase Offer.  Unless otherwise mutually agreed by the Class A Member
and the CB Member, any Purchase Offer must be a Qualified Purchase Offer.  If
the Company obtains a Qualified Purchase Offer within six (6) months after
delivery of a Sale Election Notice to commence a Sale Process, and the CB Member
determines that the Company should accept such Qualified Purchase Offer, the CB
Member will provide written notice (a “Company Sale Notice”) to the Class A
Member of its desire to accept such Qualified Purchase Offer.  Upon receipt of
the Company Sale Notice, the Board shall consummate a sale of the entire Company
on the terms and subject to the conditions set forth in the applicable Qualified
Purchase Offer.

ARTICLE XI
CONFLICTS, EXCULPATION, INDEMNIFICATION

Section 11.1    Conflicts.  The Company and the Class B Member acknowledge and
agree that except as otherwise expressly provided herein, nothing herein shall
be deemed to restrict Affiliates of the Class A Member from owning, acquiring
and operating entertainment facilities similar to the Facilities, including
entertainment facilities with movie theaters, bowling, games, rides,
restaurants, and bars and in no event shall the Company or the Class B Member be
deemed to have any interest in any entertainment facility owned, acquired, or
operated by Affiliates of the Class A Member.  The Company and the Class A
Member acknowledge and agree that except as otherwise expressly provided herein,
nothing herein shall be deemed to restrict the Affiliates of the Class B Member
from owning, acquiring and operating any

45

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entertainment facilities that do not contain a movie theater.  For a period of
10 years from the Effective Date, except for facilities in existence as of the
Effective Date, (i) neither the Class A Member nor the Class B Member nor their
respective Affiliates shall own, acquire or operate entertainment facilities
similar to the Facilities within a radius of eight (8) miles from any Facility
developed and owned by the Company, (ii) neither the Class A member nor any of
its Affiliates shall own, acquire or operate a movie theatre within three (3)
miles from any Facility owned by the Company or (iii) neither the Class B Member
or its Affiliates shall own, acquire or operate a family entertainment center
incorporating bowling, games, restaurant, bar and rides within eight (8) miles
from any Facility owned by the Company.

Section 11.2    Limitation of Liability; Exculpation.

(a)    The debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and no Member or Manager shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member or Manager.

(b)    No Member, Manager or Officer of the Company shall be liable to the
Company or to any Member for any action (or omission to act) taken with respect
to the Company so long as such Member, Manager or Officer:  (i) acted in good
faith and in a manner such Person reasonably believed to be in the best
interests of the Company; (ii) was neither grossly negligent nor engaged in
fraud or willful malfeasance; (iii) did not breach this Agreement in any
material respect; and (iv) did not knowingly violate any material law.  A
Member, Manager or an Officer shall be fully protected and justified with
respect to any action or omission taken or suffered by such Person in good faith
if such action or omission was taken or suffered in reliance upon and in
accordance with the opinion or advice as to matters of law, of legal counsel or,
as to matters of accounting, of accountants selected with reasonable care so
long as such Member, Manager or Officer:  (i) acted in good faith and in a
manner such Person reasonably believed to be in the best interests of the
Company; (ii) was neither grossly negligent nor engaged in fraud or willful
malfeasance; (iii) did not breach this Agreement in any material respect; and
(iv) did not knowingly violate any material law.  A failure to observe any
formalities or requirements of this Agreement, the Certificate or the Business
Code shall not be grounds for imposing personal liability on any Members,
Manager or Officer for liabilities of the Company.

Section 11.3    Indemnification.

(a)    The Company shall indemnify any Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such Person is or was a Member, Manager, Affiliate of a
Member or Officer or agent of the Company, or is or was serving at the request
of the Company as a manager, director, officer or agent of another limited
liability company, corporation, partnership, joint venture, trust or other
entity or enterprise (each, an “Indemnitee”), against any loss, damage,
liability or expense (including attorneys’ fees, costs of investigation and
amount paid in settlement) incurred by or imposed upon the Indemnitee in
connection with any action, suit or proceeding, unless it shall have been
finally adjudicated that the Indemnitee:  (i) did not act in good faith and in a
manner that such Indemnitee reasonably believed to be in the best interest of
the Company; (ii) was either grossly

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negligent or engaged in willful malfeasance; (iii) breached this Agreement in
any material respect; or (iv) knowingly violated any material
law.  Notwithstanding the foregoing, no indemnification shall be payable
hereunder to any Indemnitee in respect of any action in which such Indemnitee is
a plaintiff, other than an action for indemnification under this Section
11.3.  The Board shall have the discretion to extend the protection of this
Section 11.3 to employees of the Company or of any Subsidiary who are not
officers.

(b)    The Company shall pay the expenses incurred by an Indemnitee in defending
any action, suit or proceeding, or in opposing any claim arising in connection
with any potential or threatened action, suit or proceeding, in each case for
which indemnification may be sought pursuant to this ARTICLE XI, in advance of
the final disposition thereof, upon receipt of a written undertaking by such
Indemnitee to repay such payment if it shall be determined by a court of final
jurisdiction that such Indemnitee is not entitled to indemnification therefor as
provided herein.

(c)    The rights to indemnification and advancement of expenses conferred in
this ARTICLE XI shall not be exclusive of any other right which any Indemnitee
may have or hereafter acquire under any law, statute, rule, regulation, charter
document, bylaw, contract or agreement and shall inure to the benefit of the
executors, administrators, personal representatives, successors and permitted
assigns of each such Indemnitee.

(d)    Recourse by an Indemnitee for indemnity under this ARTICLE XI shall be
only against the Company as an entity, and no Member shall by reason of being a
Member be liable for the Company’s obligations under this ARTICLE XI.

(e)    The Company may purchase and maintain insurance on behalf of any Person
who is or was a Member, Manager, Affiliate of a Member or Manager, officer,
agent or employee of the Company, or is or was serving at the request of the
Company as a manager, director, officer, employee or agent of another Person,
against any liability asserted against such Person and incurred by such Person
in any such capacity, or arising out of such Person’s status as such, whether or
not such Person would be entitled to indemnity against such liability under the
provisions of this ARTICLE XI.

(f)    Rights and benefits conferred on an Indemnitee under this ARTICLE XI
shall be considered a contract right and shall not be retroactively abrogated or
restricted without the written consent of the Indemnitee affected by the
proposed abrogation or restriction.

ARTICLE XII
MISCELLANEOUS PROVISIONS

Section 12.1    Notices.  All notices, requests and other communications to any
party hereunder shall be in writing (including a telecopy or similar writing)
and shall be given to such party at its address, electronic mail address or
telecopy number set forth on Exhibit A hereto or such other address, electronic
mail address or telecopy number as such party may hereafter specify, in writing,
for such purpose by notice to the Board (if such party is a Manager) or to all
the Members (if such party is a Member).  Each such notice, request or other
communication shall be effective (i) if given by telecopy, when such telecopy is
transmitted to the telecopy

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number specified pursuant to this Section 12.1; (ii) if given by electronic
mail, when such electronic mail is transmitted to the electronic mail address
specified pursuant to this Section 12.1; or (iii) if given by any other means,
when delivered at the address specified pursuant to this Section 12.1.

Section 12.2    Amendment.  This Agreement may not be altered, amended or
repealed without the approval of (i) the Class A Member and (ii) the holders of
a majority of the combined Class B Membership Units and Class C Membership Units
voting together as a single class.  Upon any change in the Membership Units of
the Members resulting from (i) the assignment or transfer of any Membership
Units or (ii) the issuance of any new Membership Units, the Board shall be
authorized to and shall amend Exhibit A to reflect any change in the Membership
Units of any Member.  Notwithstanding any provision of this Agreement to the
contrary, without the approval of each affected Member, no amendment to this
Agreement shall be adopted that would (a) increase the liability of a Member
beyond the liability of such Member expressly set forth in this Agreement or
otherwise adversely modify or affect the limited liability of such Member,
(b) disproportionately decrease the interest in the Company of any Member (other
than as a result of the issuance of additional Membership Units or as otherwise
provided in this Agreement), (c) adversely change the method of distributions or
allocations made under ARTICLE VII hereof to any Member, or (d) reduce the
Capital Account of any Member other than as contemplated in this Agreement.

Section 12.3    Jurisdiction; Waiver of Jury Trial.  To the fullest extent
permitted by applicable law, the Managers and each Member hereby agree that any
claim, action or proceeding by any Member seeking any relief whatsoever against
any Indemnified Party based on, arising out of or in connection with this
Agreement or the Company’s affairs shall be brought only in State or Federal
courts located in Dallas or Collin County, Texas, and not in any other State or
Federal court in the United States of America or any court in any other
country.  The Managers and each Member acknowledge that, in the event of any
breach of this provision, such Indemnified Parties have no adequate remedy at
law and shall be entitled to injunctive relief to enforce the terms of this
Agreement.  EACH MEMBER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.4    Headings.  The headings used in this Agreement are for
convenience only and do not constitute matter to be construed in the
interpretation of this Agreement.

Section 12.5    Governing Law; Severability.  This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas.  In
particular, it shall be construed to the maximum extent possible to comply with
all of the terms and conditions of the Business Code.  If, nevertheless, it
shall be determined by a court of competent jurisdiction that any provision or
wording of this Agreement shall be invalid or unenforceable under the Business
Code or other applicable law, such invalidity or unenforceability shall not
invalidate the entire Agreement.  In that case, this Agreement shall be
construed so as to limit any term or provision so as to make it enforceable or
valid within the requirements of applicable law, and, in the event such term or
provision cannot be so limited, this Agreement shall be construed to omit such
invalid or unenforceable provisions.

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Section 12.6    Successors; Counterparts.  This Agreement (i) shall be binding
as to the executors, administrators, estates, heirs and legal successors of the
Members and (ii) may be executed in several counterparts with the same effect as
if the parties executing the several counterparts had all executed one
counterpart.  Signatures to this Agreement which are distributed to the Members
via facsimile or other electronic means (including .pdf) shall have the same
effect as if distributed in original form to all Members.

Section 12.7    Entire Agreement.  This Agreement, including all exhibits and
schedules hereto, constitutes the entire agreement of the Members hereto with
respect to the subject matter hereof and supersedes any prior or contemporaneous
oral and written understandings or agreements.  All exhibits and schedules that
are annexed or attached to this Agreement are expressly made a part of this
Agreement as fully as though completely set forth herein and all references to
this Agreement herein or in any of such exhibits and schedules shall be deemed
to refer to, and include, all such exhibits and schedules.

Section 12.8    No Waiver.  No course of dealing between the Company and any
Members, and no delay by the Company in exercising any right, power or remedy
shall operate as a waiver or otherwise prejudice the exercise by the Company of
that right, power or remedy against that or any other Member.

[SIGNATURE PAGES FOLLOW]

 

 

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IN WITNESS WHEREOF, the undersigned has hereto set their hand as of the day and
year first above written.

 

CLASS A MEMBER:

CNMK Texas Properties, LLC

 

 

 

By:

 

/s/ Michael Cavalier

Name:

 

Michael Cavalier

Title:

 

EVP – General Counsel

 

CLASS B MEMBER:

AWSR INVESTMENTS, LLC

 

 

 

By:

 

/s/ Gary Witherspoon

Name:

 

Gary Witherspoon

Title:

 

President

 

 

Signature Page to

Limited Liability Company Agreement of FE Concepts, LLC

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have hereto set their hand as of the day and
year first above written

 

MANAGERS

 

/s/ W. Mark Moore

W. MARK MOORE

 

/s/ Lee Roy Mitchell

LEE ROY MITCHELL

 

/s/ Mark Zoradi

MARK ZORADI

 

/s/ Sean Gamble

SEAN GAMBLE

 

 

 

Signature Page to

Limited Liability Company Agreement of FE Concepts, LLC

--------------------------------------------------------------------------------

 

EXHIBIT A

 

MEMBERS

 

 

MEMBERSHIP INTEREST

CLASS A MEMBER

 

CNMK Texas Properties, LLC

50%

3900 Dallas Parkway, Suite 500

 

Plano, Texas 75093

 

Attn:  Michael Cavalier, General Counsel

 

E-mail:  MCavalier@cinemark.com

 

 

 

 

 

CLASS B MEMBER

 

AWSR Investments, LLC

50%

12400 Coit Road, Suite 800

 

Dallas, Texas 75251

 

Attn:  Gary Witherspoon

 

E-mail:  gw@cbcap.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dated:  April 20, 2018

 

 

 

A-1

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EXHIBIT B

INITIAL APPOINTMENTS

Board

Class B Manager; Board Chair:

Lee Roy Mitchell

Class A Manager; Vice Chair:

Mark Zoradi

Class A Manager:

Sean Gamble

Class B Manager:

Mark Moore

 

 

 

B-1

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EXHIBIT C

 

FORM OF MANAGEMENT SERVICES AGREEMENT

 

THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is dated and made
effective as of April 20, 2018 (the “Effective Date”), by and between FE
Concepts, LLC, a Texas limited liability company (the “Company”) and Cinema
Operations, L.L.C., a Texas limited liability company (together with any of its
subsidiaries from time to time providing Services hereunder, the
“Manager”).  The Manager and the Company are sometimes referred to in this
Agreement, collectively, as the “Parties” and each individually as a “Party.”
Defined terms used in this Agreement but not otherwise defined herein have the
meanings ascribed to them on Schedule I hereto.

RECITALS

A.    The Manager is an affiliate of AWSR Investments, LLC, a Texas limited
liability company (“CB Entity”).

B.    Cinemark USA, Inc., a Texas corporation (“Cinemark”) is an affiliate of
CNMK Texas Properties, LLC, a Texas limited liability company (“CNK Entity”).

C.    CNK Entity and CB Entity are parties to that certain Limited Liability
Company Agreement, dated as of April 20, 2018 (the “LLC Agreement”), pursuant to
which CB Entity and CNK Entity have formed the Company to own and operate a
certain family entertainment facility or facilities branded Strike + Reel
incorporating games, rides, bowling, restaurants, bars and motion picture
theater auditoriums (the “Facilities”).

D.    The Manager has or will use commercially reasonable efforts to obtain the
qualified, experienced and necessary personnel to manage each Facility and the
Manager also has or will use commercially reasonable efforts to obtain the
qualified personnel necessary to provide accounting and administrative services
in connection with the operation of a Facility.

E.    The LLC Agreement provides in part that the Company shall engage the
Manager to provide the Services pursuant to this Agreement.

F.    The Company desires to retain the Manager as the exclusive provider of the
Services with respect to any Facility and the Manager is willing to provide such
services, upon the terms and subject to the conditions set forth in this
Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

Article I
CONSTRUCTION AND DEVELOPMENT SERVICES

1.1    Provision of Construction and Development Services.  Subject to Article
III below, the Company hereby engages the Manager to provide the construction
and development services described in Schedule II hereto (collectively, the
“Development Services”) in connection with the acquisition, construction and
development of a Facility.  Subject to Article III below, the

 

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Manager is hereby vested with full authority to take all such actions, do all
such things and execute and enter into on behalf of the Company all such
contracts, agreements, leases, licenses, instruments, commitments, undertakings
and understandings (collectively, “Contracts”) relating to such activities
listed on Schedule II except as specified in Section 3.1.      

1.2    Standards for Provision of Development Services.

(a)    The Manager shall devote such time and personnel as the Manager deems
appropriate to provide the Development Services. The Manager shall not be
required to spend its full time and attention to provide the Development
Services.  

(b)    The Company will provide such cooperation as is needed from time to time
in connection with the provision of the Development Services hereunder.  In
connection with the provision of the Development Services hereunder, the Manager
shall obtain and maintain at the Company’s expense, for itself or on behalf of
the Company, as the case may be, all licenses, permits and authorizations from
any Governmental Authorities which are necessary for the construction and
development of a Facility.  The Company shall cooperate with the Manager in
obtaining all consents, authorizations, approvals, permits and licenses
necessary for the construction and development of a Facility.  The Manager shall
use commercially reasonable efforts to be at all times qualified and licensed to
do business and be in good standing in all jurisdictions where such
qualification or license is required to enable the Manager to provide the
Development Services as contemplated by the terms of this Agreement.

(c)    The Manager shall conduct all activities and duties hereunder in good
faith and shall use its commercially reasonable efforts to obtain terms for the
supply of goods and services to a Facility and the Business comparable with the
terms that the Manager and its subsidiaries and Affiliates are able to obtain
for the Manager Related Facilities, provided, however, that the Manager is not
required to purchase such goods and services on the same terms as Manager
purchases similar goods and services for Manager Related Facilities.  In
connection with the construction and development of a Facility, the Manager may
purchase necessary goods, supplies and services from or through the Manager or
any of its Affiliates so long as such prices are comparable with the prices and
terms of goods, supplies and services of like quality available from
non‑affiliated third parties in an arm’s length transaction.

1.3    Theater Services. The Manager acknowledges that the Company has entered
into the Theater Services Agreement with Cinemark pursuant to which Cinemark
shall provide the Theater Services, which includes certain expertise regarding
the construction and design of the motion picture theater auditoriums and the
selection of certain technologies related thereto (the “Theater Construction
Expertise”).  The Theater Construction Expertise shall be provided exclusively
by Cinemark and shall not be construed to constitute Development Services
provided by the Manager.  The Manager shall coordinate the provision of
Development Services under this Agreement with the provision of the Theater
Construction Expertise by Cinemark, including the implementation of any
recommendations or plans resulting therefrom.  

Article II
MANAGEMENT SERVICES

2.1    Provision of Management Services.  Subject to Article III below, the
Company hereby engages the Manager to manage a Facility and the business
conducted at a Facility (the “Business”) and to provide the Management Services
in accordance with this Agreement, and the

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Manager hereby agrees to manage a Facility and the Business and to provide the
Management Services in accordance with this Agreement.  Subject to Article III
below, the Manager is hereby vested with full authority and responsibility for
the day‑to‑day management of a Facility and the Business and is empowered to
take all such actions, do all such things and execute and enter into all such
Contracts in this regard, on behalf of and in the name of the Company, as the
Manager may, in its reasonable discretion, deem necessary or desirable for such
purpose; subject to the provisions of Article III.  For the avoidance of doubt,
it is agreed that the Manager shall have the responsibility and authority to
make any and all decisions with respect to the day‑to‑day, ordinary course of
business operations of a Facility and the Business, subject to the provisions of
Article III.

2.2    Standards for Provision of Management Services; Cooperation.

(a)    The Manager shall devote such time and personnel as the Manager deems
appropriate to provide the Management Services that are comparable to those
employed by the Manager in connection with the operation of the Manager Related
Facilities. The Manager shall not be required to spend its full time and
attention to provide the Management Services.  

(b)    The Company will provide such cooperation as is needed from time to time
in connection with the provision of the Management Services hereunder.  In
connection with the provision of the Management Services hereunder, the Manager
shall use commercially reasonable efforts to obtain and maintain at the
Company’s expense, for itself or on behalf of the Company, as the case may be,
all licenses, permits and authorizations from any Governmental Authorities which
are necessary for the operation of the Business in the manner contemplated by
this Agreement, including, but not limited to, licenses to serve food and
alcoholic beverages.  The Company shall cooperate with the Manager in obtaining
all consents, authorizations, approvals, permits and licenses necessary to
operate the Business.  The Manager shall use commercially reasonable efforts to
be qualified and licensed to do business and be in good standing in all
jurisdictions where such qualification or license is required to provide
Management Services as contemplated by the terms of this Agreement.

(c)    The Manager shall conduct all activities and duties hereunder in good
faith and shall use commercially reasonable efforts to obtain terms for the
supply of goods and services to and by the Facilities and the Business
comparable with the terms that the Manager and its subsidiaries and Affiliates
are able to obtain for the Manager Related Facilities.  In the management of the
Facilities, the Manager may purchase necessary goods, supplies and services from
or through the Manager or any of its Affiliates so long as such prices are
comparable with the prices and terms of goods, supplies and services of like
quality available from non‑affiliated third parties in an arm’s length
transaction.

(d)    As part of the Management Services, the Manager shall provide “point of
sale” systems necessary to effectuate the retail transactions incident to the
Business for the Facilities that are the same as the point of sale software
systems used by the Manager in the operations of the Manager Related
Facilities.  

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(e)    The Manager shall use commercially reasonable efforts to obtain all
software, permits, licenses, sublicenses, authorizations, intellectual property
and other intangibles and rights necessary to operate the Facilities and perform
under this Agreement, including any third party software, applications and/or
licenses.  The Manager shall use commercially reasonable efforts to obtain any
necessary consents and/or provide documentation to evidence the foregoing upon
the Company’s request.

2.3    Compliance with Leases.  In providing the Management Services, to the
extent a Facility is subject to a Lease (as defined below), the Manager shall
use commercially reasonable efforts to comply in all material respects with, and
not violate in any material respect, the terms of any real property lease
associated with the Facilities (each such lease, a “Lease” and collectively, the
“Leases”).  

2.4    Compliance with Laws.  The Manager shall use commercially reasonable
efforts to cause the Facilities to comply in all material respects with any Law
affecting the Facilities and issued by any Governmental Authority having
jurisdiction thereof.  Further, the Manager shall not unreasonably refuse or
delay compliance with any specific instructions that are given by the Company
and that are reasonably necessary to cause the Facilities to comply with such
Laws.  The Company shall cooperate with the Manager in complying with such Laws,
including paying all costs of such compliance.

2.5    Theater Services.  The Manager acknowledges that the Company has entered
into the Theater Services Agreement with Cinemark pursuant to which Cinemark
shall provide the Theater Services.  The Theater Services shall be provided
exclusively by Cinemark and shall not be construed to constitute Management
Services provided by the Manager.  The Manager shall consult with Cinemark to
receive Cinemark’s recommendations with respect to the Theater Services to be
provided by Cinemark under the Theater Services Agreement.  The Manager shall
coordinate providing its Services under this Agreement with the Theater Services
to be provided by Cinemark under the Theater Services Agreement.  The Manager
shall cause the Company to pay all fees and expenses payable to Cinemark under
the Theater Services Agreement.

2.6    Internet Websites.  The Manager will create, or cause to be created, an
Internet website for the Company listing each Facility on such website and
providing on such website the ability for customers to purchase Facility
admissions, prepaid cards and movie tickets for each Facility.

Article III
LIMITATIONS ON MANAGER AUTHORITY

3.1    Actions Requiring Prior Written Consent of the Company.  Notwithstanding
anything to the contrary contained in this Agreement, the Manager shall not,
unless specifically authorized by the Company in writing, take any of the
following actions with respect to any of the Company or any of its assets or
properties, including the Facilities:

(a)    incur or commit to incur on behalf of the Company any capital expenditure
(or series of related capital expenditures) that are, in the aggregate, more
than five percent (5%) over amounts included in an Approved Budget; provided,
however, that nothing in this Agreement shall be construed to prohibit or
prevent the Manager from making emergency repairs necessary to prevent (i)
damage to or destruction of the assets, properties or premises of the Facilities
or (ii) protect the safety of the Facilities employees, customers or other
invitees;

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(b)    subject to Section 6.3, incur or commit to incur on behalf of the Company
any expenditure(s) that would result in the aggregate of expenditures in all
accounting categories, (other than Excluded Expenditures), exceeding an Approved
Budget by more than five percent (5%) for each Facility for such entire Fiscal
Year.  Notwithstanding the preceding sentence, prior written consent will not be
required if an expenditure for the Business exceeds the amount set forth in the
Approved Budget during an interim reporting period if the Manager reasonably
determines that such expenditure will not result in the aggregate of
expenditures in all accounting categories for the Business exceeding those set
forth in an Approved Budget for such entire Fiscal Year by more than five
percent (5%) in the aggregate for a Facility;

(c)    enter into on behalf of the Company any transaction or Contract that is
neither contemplated by this Agreement nor reasonably related to the Services
being provided hereunder;

(d)    enter into on behalf of the Company any Contract in excess of $50,000 per
annum that cannot be terminated by the Company without premium or penalty on
less than thirty (30) days prior written notice;

(e)    incur, guarantee, grant any security interest in respect of, or otherwise
become liable for, any indebtedness for borrowed money, letters of credit,
notes, bonds, mortgages or similar Contracts or lease obligations that are
required to be treated as capitalized leases in accordance with generally
accepted accounting principles in the United States (“GAAP”);

(f)    agree to subject the assets of the Company to any other lien or
encumbrance, other than Permitted Liens; or

(g)    change any policy regarding the prices charged for tickets for any of the
motion pictures exhibited in a Facility without the prior approval of the Board.

In the event that the authorization of the Company is required under this
Section 3.1 in respect of any action to be taken or not to be taken hereunder or
any amount to be incurred or not to be incurred hereunder, the Manager shall
request such authorization in writing as provided in Section 12.5.

3.2    Company Approval. For the purpose of this Agreement, any consent or
approval required or permitted to be given by the Company shall require the
approval of the Board (including at least one Board member not affiliated with
the Manager) or, the approval of an executive officer of the Company not
affiliated with the Manager to the extent that specific authority to grant such
consent or approval has been expressly delegated to such officer by the Board,
subject to any additional approval required by the Members in accordance with
the LLC Agreement.  Any notice by the Manager to the Company shall be given in
accordance with Section 12.5.

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Article IV
STAFFING SERVICES

4.1    Provision of Staffing Services.  The Company hereby engages the Manager
to provide the Staffing Services at a Facility in accordance with the terms of
this Agreement, and the Manager hereby agrees to provide the Staffing Services
at a Facility in accordance with the terms of this Agreement.

4.2    Standards for the Provision of Staffing Services; Cooperation.  The
Manager shall devote such time and personnel as the Manager deems appropriate to
provide the Staffing Services. The Manager shall not be required to spend its
full time and attention to provide the Staffing Services.  Nothing in this
Agreement shall prevent or restrict the Manager from terminating the employment
or engagement of any of its employees, agency workers, consultants, contractors
or other workers at any time or from taking any other actions with respect to
its employees, agency workers, consultants, contractors or other workers, in its
sole and absolute discretion.

4.3    Manager as Employer.

(a)    The Parties hereto agree that the Manager will use commercially
reasonable efforts to recruit, employ, train and supervise any and all employees
necessary to enable the Manager to provide the Services hereunder, that such
employees will at all times be employees of the Manager, a Manager Subsidiary or
Manager Affiliate, and that the Manager will be responsible for (i) making all
determinations related to such employees, including determinations with respect
to wages, salaries, fringe benefits and other compensation, employment duration,
the assignment of duties and the negotiation and settlement of labor disputes,
(ii) making all payments in connection with the compensation of such employees,
collecting and remitting any and all payroll taxes or other withholdings in
connection therewith and filing any and all tax returns as are required with
respect to such taxes, and (iii) procuring and maintaining adequate workers’
compensation insurance as may be required by Law (it being understood that all
expenses (including expenses relating to any of the foregoing) associated with
the employment of Facility‑level employees shall be Company Expenses).

(b)    In staffing each Facility, the Manager will use its commercially
reasonable efforts to employ persons in such numbers and of such skill levels as
are comparable in number and skill level to the persons the Manager employs in
connection with the operation of the Manager Related Facilities.

(c)    The Manager acknowledges and agrees that, in any and all matters related
to a Facility and the Business, it shall comply in all material respects with
the Fair Labor Standards Act, the Occupational Safety and Health Act and any
other law, rule or regulation relating to employment or human health and safety
in connection with the Staffing Services.  The Company acknowledges that
employees at a Facility may be employed by a subsidiary or Affiliate of Manager.

(d)    The Parties hereto agree that the Company shall have no liability to any
of the employees hired by the Manager, except for reimbursing the Manager for
Company Expenses and otherwise as specifically set forth in this Agreement.

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Article V
FINANCIAL INFORMATION, ACCESS AND CONSULTATION

5.1    Maintenance of Books and Records.  The Manager shall keep full and
materially accurate books of account and such other records in accordance with
generally accepted accounting principles reflecting the Company operations of a
Facility showing all revenue and expenses of the Company from a Facility during
the term of this Agreement.  The Manager’s books and records for the Company
will correspond with the Manager’s fiscal year.  Such Company records and
accounts shall be prepared and maintained for each Facility in accordance with
good business practices and in accordance with the method the Manager prepares
such records and accounts for the Manager Related Facilities, and shall be
sufficiently detailed to enable the statements of operations, balance sheets and
statements of cash flows for the Company to be prepared from time to time for
each Facility.  For the avoidance of doubt, this Section 5.1 shall not require
the Manager to provide any books and records of any Person other than the
Company, including, but not limited to, any books and records of any Company
Affiliates, Company Subsidiaries, Manager Affiliates, or Manager Subsidiaries.

5.2    Monthly and Quarterly Financial Reporting.  The Manager shall within
thirty (30) days after the end of each Fiscal Month ending after the Effective
Date furnish to the Company a monthly Facility profit and loss statement of the
Company in the form attached as Exhibit A (which monthly Facility profit and
loss statement shall also be provided in a spreadsheet format), a trial balance
reflecting all ledger account balances for the Company for each Facility, and a
summary of all pro-rata Company costs and expenses allocated to a Facility by
Manager for such period.  Within forty-five (45) days after the end of each
Fiscal Quarter ending after the Effective Date, unless such Fiscal Quarter ends
on the last day of a Fiscal Year, in which case within sixty (60) days after the
end of such Fiscal Quarter, furnish to the Company a consolidated unaudited
balance sheet, income statement, statement of comprehensive income, statement of
Member’s equity and statement of cash flows for the Company, in each case in
accordance with U.S. GAAP, which, for the avoidance of doubt, shall not require
any footnotes.  For the avoidance of doubt, this Section 5.2 shall not require
the Manager to provide any financial records of any Person other than the
Company, including, but not limited to, any financial records of any Company
Affiliates, Company Subsidiaries, Manager Affiliates, or Manager Subsidiaries.

5.3    Inspection Rights.  The representatives of the Company shall be entitled
at all reasonable times and with reasonable prior notice to the Manager to
inspect and obtain copies of all documents, records and accounts of the Company
under the control of the Manager relating to a Facility and/or the Business and
to discuss the financial statements and performance of a Facility with
appropriate personnel of the Manager.  The frequency, manner and duration of
such inspections and discussions shall be conducted at times and dates mutually
agreed by the Manager and the Company and without undue hindrance to the proper
conduct of the operations of the Business or the activities of the Manager and
its employees, agents and independent contractors.  Any expenses incurred by the
Parties in connection with any such inspections shall be the sole cost and
expense of the Company.  For the avoidance of doubt, this Section 5.3 shall only
provide the Company with the right to inspect any documents, records and
accounts of the Company, and not any other Person, including, but not limited
to, any documents, records and accounts of any Company Affiliates, Company
Subsidiaries, Manager Affiliates, or Manager Subsidiaries.

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5.4    Year‑End Financials.  The Manager shall cause the Company’s accountants
to prepare unaudited full year end financial statements of the Company for any
such Fiscal Year (i.e., balance sheets, statements of income, statements of
comprehensive income, statements of cash flows and statements of changes in
Member’s equity), which, for the avoidance of doubt, shall not require any
footnotes, for presentation to the Company within sixty (60) days after the end
of each Fiscal Year.  The Company will also provide full year end audited
financial statements (with related footnotes) of the Company within 180 days
after the end of each Fiscal Year.  In connection with the preparation of any
such Company financial statement or any related audit or review thereof, the
Manager shall make the Company books and records of a Facility available for
such purposes in a timely manner.  Any such financial statement preparation,
audit or review shall be at the sole cost and expense of the Company.  The costs
and expenses associated with the full year end audited financial statements
shall be billed directly to the Company.  For the avoidance of doubt, this
Section 5.4 shall only require the preparation of unaudited and audited
financial statements for the Company, and not for any other Person, including,
but not limited to any Company Affiliates, Company Subsidiaries, Manager
Affiliates, or Manager Subsidiaries.

5.5    Notice of Claims, Proceedings and Material Damage.  The Manager shall
notify the Company in writing in a prompt and timely manner of receipt by the
Manager of any written threat of, or, upon becoming aware thereof, the actual
commencement or resolution of, any claims or Proceedings of the Company
involving a Facility, or of any material damage, or material repair needs, of a
Facility that the Company would be liable for.

Article VI
BUDGETS

6.1    Draft Annual Budgets.  Prior to the Effective Date, the Manager and the
Company shall agree upon an initial Annual Budget for the remainder of the
Fiscal Year following the Effective Date in the form attached hereto as Exhibit
B. With respect to each Fiscal Year thereafter during the term of this
Agreement, the Manager shall prepare and provide to the Company, no later than
the fifteenth (15th) day of December, a proposed draft budget for such Fiscal
Year relating to each Facility in the form attached hereto as Exhibit B.  The
Manager shall consult with Cinemark when preparing the draft budget for line
items relating to the motion picture theater auditoriums, including film
rentals, in-theatre advertising and projector repair and maintenance.

6.2    Approved Annual Budgets.  The Company shall consider and comment upon the
proposed draft budget prepared by the Manager with respect to each Facility
pursuant to Section 6.1, and the Manager shall from time to time amend and
revise such draft budget in accordance with any reasonable written requests of
the Company mutually agreed to by the Company and the Manager (each such budget
including the initial Annual Budget referred to in Section 6.1, as so amended
from time to time, an “Approved Budget”).  If the Manager submits a proposed
Annual Budget or an amendment to the Annual Budget for the Company’s approval,
and the Company does not request any changes or make any comments with respect
to such Annual Budget, within thirty (30) days of submission, then such proposed
Annual Budget shall be deemed the Approved Budget.  Until such time as the
proposed budget is approved by the Company, the last Approved Budget shall be
the Approved Budget for such year except that (i) any portion of the proposed
budget which is specifically approved or not in dispute shall be deemed approved
and effective and (ii) during any interim period the Manager may reasonably
exceed the Approved Budget for the prior Fiscal Year for (a) taxes, utility
charges and other

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items not within the Manager’s reasonable control and (b) increases in contract
services,  personnel and other costs to the extent required to maintain the same
level of services for the attendance volumes anticipated at a Facility provided
during the previous Fiscal Year if the costs of such items has increased above
the Approved Budget for the prior Fiscal Year.  In the event the Parties are
unable to agree on an Approved Budget for a particular Fiscal Year within ninety
(90) days of the beginning of such Fiscal Year, Manager shall operate a Facility
related to the disputed portion of the proposal based upon the last approved
Annual Budget.

6.3    Operation in Accordance with Approved Budgets.  The Parties acknowledge
and agree that Facility operating results (e.g., Facility attendance, revenues,
operating expense, net income and cash flows) are subject to significant
variance within any budgeted Fiscal Year and that no draft budget or Approved
Budget can be expected to accurately predict such variances.  Consequently, the
Parties understand that actual interim operating results may vary from the
Approved Budget.  The Manager shall have the authority to make those
expenditures that have been approved in the Approved Budget and which do not
exceed the Approved Budget by more than five percent (5%) in the aggregate with
respect to any Facility; provided that, notwithstanding the foregoing, the
Manager may reasonably exceed the Approved Budget and make additional
expenditures as Company Expenses for (a) taxes, utility charges and other items
not within the Manager’s reasonable control, and (b) increases in contract
services,  personnel and other costs, including but not limited to film rentals,
food and beverage costs, game and retail, and salaries and wages (the expenses
listed in (a) and (b), the “Excluded Expenditures”), to the extent required to
maintain the same level of services for the attendance volumes anticipated at a
Facility, if the costs of such items have increased above the Approved
Budget.  If a condition of an emergency nature should exist which precludes
consultation with and approval by the Company and requires that immediate
repairs be made for the preservation and protection of the Facility or to
protect the safety of the Facility employees, customers or other invitees,
however, the Manager shall be authorized to take all actions and to make the
necessary expenditure to repair and correct such condition, regardless of
whether any provision has been made in the Approved Budget for such
expenditure.  Cash Expenditures made by the Manager in connection with any such
emergency expenditure shall be paid as a Company Expense.  Notwithstanding the
foregoing, the Manager shall use commercially reasonable efforts to minimize
expenditures not in the Approved Budget regardless of the Company’s pre‑approval
of such expenditure.  The Manager shall use commercially reasonable efforts to
ensure that the actual costs of maintaining and operating a Facility shall not
exceed the Approved Budget by more than five percent (5%) with respect to any
Facility.  All expenses shall be charged to the proper account in accordance
with the Approved Budget.  Expenses may be reasonably classified or reclassified
in excess of the annual budgeted amount for an accounting category, provided
that the Manager shall use commercially reasonable efforts to ensure the
aggregate of expenditures in all accounting categories (other than Excluded
Categories) does not exceed the Approved Budget by more than five percent
(5%).  If the Manager determines that any interim variances are reflective of
expected operating results for the remainder of the Fiscal Year and that such
variances may result in the Approved Budget for a Facility for such entire
Fiscal Year exceeding those set forth in an Approved Budget for such Facility by
more than five percent (5%) for such entire Fiscal Year (other than Excluded
Expenditures), including any contingency with respect thereto provided for in
the Approved Budget for the entire Fiscal Year, then the Manager may notify the
Company and request that the Approved Budget for the Fiscal Year be amended in
accordance with Section 6.2.  Notwithstanding anything to the contrary in this
Agreement, the Company’s sole remedy for any breach by the Manager of this
Article VI shall be termination of the Agreement in accordance with Section
10.2.

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Article VII
MANAGEMENT COMPENSATION AND PAYMENT OF COSTS AND EXPENSES

7.1    Management Compensation.  The Company shall pay to the Manager the
compensation set forth on Exhibit E as follows:

(a)      Payments under Tier 1 shall be paid within thirty (30) days of the
opening of a new Facility.

(b)    Payments under Tier 2, if any, shall be paid annually within fifteen (15)
days after delivery by the Manager to the Company of the unaudited full year end
financial statements.

(c)    Payments under Tier 3 shall be paid upon the occurrence of a Trigger
Event concurrently with payment to the CB Entity for such Trigger Event.  For
purposes of payments under Tier 3, “Trigger Event” shall mean (i) a Company Sale
Transaction (as such term is defined in the LLC Agreement), or (ii) a transfer
under a Call Option Notice, a CB Offer Notice, or a Sale Election Notice (as
each such term is defined in the LLC Agreement).

7.2    Company Expenses.  The Company shall be responsible for the payment of
all costs and expenses incurred in connection with the construction, development
and operation of a Facility or the operation of the Business, whether such costs
or expenses are incurred directly by the Company or incurred by the Manager or
its Affiliates in connection with the provision of the Services hereunder,
including, without limitation, (a) the Facility’s pro‑rata shares of any
Facility‑level costs and expenses incurred on behalf of a Facility as part of
any arrangements entered into by the Manager on behalf of a Facility and Manager
Related Facilities, (b) Cash Expenditures and (c) all expenses and liabilities
relating to workers compensation insurance and workers compensation claims by
Facility‑level employees (all such costs and expenses for which the Company are
so responsible being referred to, collectively, as the “Company Expenses”).  The
Manager shall have the right to utilize its corporate employees and assets in
connection with the operation of a Facility as required under this
Agreement.  When doing so, the Manager shall be reimbursed for all non-Facility
level costs and expenses incurred by the Manager or its Affiliates allocable to
work done for the Company, as set forth on Exhibit F (“Manager Overhead Costs”),
including the salaries, benefits, bonuses and other compensation of home‑office
personnel who render Services and all office and overhead expenses that are
incurred other than at the Facility‑level.  Without limiting the generality of
the foregoing, Company Expenses shall include, without limitation, (i) Cash
Expenditures and all of the costs and expenses of the type described on Schedule
IV hereto, (ii) any costs and expenses in connection with any third party
consents, permits or licenses relating to any Facility that are related to the
Services, and (iii) any capital expenditures with respect to a Facility but only
to the extent any such costs have been approved in advance and in writing by the
Board.  To the extent that the Manager corporate employees are required to, or
requested to by the Company, to perform services beyond those contemplated
herein (i.e., assisting with tax audits, managing litigation, etc.), then the
Company and the Manager shall meet and consult in good faith to determine a fair
and reasonable expense allocation for such services which will be fully
reimbursable as Company Expenses.  Amounts due to the Manager under this Section
7.2 shall be paid within thirty (30) days of receipt by the Company of an
invoice for such amounts.

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7.3    Company Account; Payment of Company Expenses; Quarterly Statements.

(a)    All monies advanced by the Company to fund Company Expenses and all cash
from operations of each Facility shall be deposited in separate bank accounts of
the Company (the “Company Account”) over which the Manager, as agent for the
Company, shall have joint access and control with the Company.  The Manager is
hereby authorized to pay from the Company Account, on behalf of the Company, all
Company Expenses and to use funds in the Company Account to reimburse the
Manager for any Company Expenses previously paid by the Manager.  Checks or
other documents of withdrawal drawn upon the Company Account by the Manager
shall be signed by representatives of the Manager as agent for the Company.  The
Parties hereby acknowledge and agree that the Manager will manage the finances
of the Business on a combined Facility basis and shall be entitled to use cash
flow generated from one Facility to fund operating expenses and losses of any
other Facility.  

(b)    Concurrently with the delivery of the quarterly financial statements
required by Section 5.2, the Manager shall issue to the Company a statement (the
“Quarterly Statement”) setting forth in reasonable detail all payments made from
the Company Account in respect of Company Expenses with respect to each Facility
and on a combined basis during such Fiscal Quarter.  In the event that the
Company reasonably and in good faith questions or disputes any element of any
Quarterly Statement, written notice thereof shall be provided by the Company to
the Manager within thirty (30) days of the receipt of the Quarterly Statement by
the Company, and the Parties shall thereafter use commercially reasonable
efforts to resolve to their mutual satisfaction any such questions and disputes
during the twenty (20) days following delivery of such written notice by the
Company.  In the event the Parties are unable to resolve any such questions or
disputes, the unresolved matters may be submitted to arbitration pursuant to
Section 12.14.

Article VIII
INTELLECTUAL PROPERTY

8.1    Reservation of Rights.  Any Facility subject to this Agreement shall be
operated, marketed and branded as a “Strike + Reel” Facility at all times while
the Services are being provided under this Agreement with respect to such
Facility.  The Manager confirms and acknowledges that the Company is and shall
be at all times, the exclusive owner of all rights, title and interest in and to
the Company Trademarks, including the goodwill associated therewith, (ii) the
Manager shall not contest or challenge the Company’s rights in such Company
Trademarks at any time, (iii) nothing herein shall restrict the use of the
Company Trademarks by the Company and the Company Subsidiaries or licensees at
any time or in any manner, (iv) the Manager shall not acquire any ownership
right in the Company Trademarks by virtue of said marks’ use pursuant to this
Agreement, and (v) any goodwill derived from the use of the Company Trademarks
in connection with a Facility shall inure to the exclusive benefit of the
Company.

8.2    Quality Control.  The Manager acknowledges and agrees that: (i) all use
of the Company Trademarks under this Agreement shall be, at all times, subject
to the Company’s reasonable quality control and (ii) to protect the valuable
goodwill associated with the Company Trademarks, the Manager shall assure that
the Company Trademarks are used solely in a manner consistent with the quality
of the goods and services offered under the Company Trademarks.  Upon receiving
notice from the Company that the quality of the goods and services offered under

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the Company Trademarks does not meet the Company’s acceptable quality standards,
the Manager shall promptly take all remedial action to assure that goods and
services offered under the Company Trademarks shall meet the quality standards
that are acceptable to the Company’s reasonable satisfaction.

8.3    No Implied Rights.  Nothing in this Agreement provides or implies any
right for the Manager to use the Company Trademarks except as otherwise provided
for in this Article VIII.

Article IX
INDEMNITY

9.1    Indemnification by the Company.  The Company shall indemnify and hold
harmless the Manager and its shareholders, managers, officers, directors,
employees and other agents, representatives and Affiliates (and the members,
managers, officers, directors, employees and other agents, representatives and
Affiliates of such Persons) (such indemnified Persons, the “Manager Indemnified
Persons”) from, against and in respect of any and all claims, Proceedings,
obligations, liabilities, liens, encumbrances, losses, damages, assessments,
fines, penalties, taxes, fees, costs (including costs of investigation, defense
and enforcement of this Agreement, including attorneys’ fees and disbursements),
expenses or amounts paid in settlement (in each case, including reasonable
attorneys’ and experts fees and expenses) (collectively, “Losses”), in the case
of clauses (b), (c), and (d) below, whether or not involving a Third Party
Claim, to the extent such Losses are incurred or suffered by the Manager
Indemnified Persons as a result of, arising out of or directly or indirectly
relating to:

(a)    any claim or Proceeding made, initiated or threatened by any Person other
than a Party (a “Third Party Claim”) that relates to the provision of the
Services under this Agreement, the management and operation of a Facility or the
Business, or the consequences of the Manager’s compliance with the terms of this
Agreement or any directions provided by the Company relating to the operation of
the Business, other than to the extent such Losses are caused by the bad faith,
gross negligence or willful misconduct of the Manager or any of its
shareholders, managers, officers, directors, employees and other agents,
representatives and Affiliates (or the shareholders, members, managers,
officers, directors, employees and other agents, representatives and Affiliates
of such Persons);

(b)    all Company Expenses;

(c)    all Manager Overhead Costs;

(d)    any breach of this Agreement by the Company;

(e)    any potential regulatory issues related to the affiliation of the Company
and the CNK Entity; and

(f)    any potential action brought by a shareholder of Cinemark and/or the CNK
Entity arising from claims related to conflict of interest.

9.2    Indemnification by the Manager.  The Manager shall indemnify and hold
harmless the Company, the Company Subsidiaries and the members, managers,
officers, directors, employees and other agents, representatives and Affiliates
thereof (and the members, managers, officers, directors, employees and other
agents, representatives and Affiliates of such Persons)

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(such indemnified Persons, the “Company Indemnified Persons”) from, against and
in respect of any and all Losses to the extent such Losses are incurred or
suffered by the Manager Indemnified Persons as a result of, arising out of or
directly or indirectly relating to:

(a)    any Third Party Claim that relates to the provision of the Services under
this Agreement or the management and operation of a Facility or the Business, in
each case, to the extent such Losses are caused by the bad faith, gross
negligence or willful misconduct of the Manager or any of its shareholders,
managers, officers, directors, employees and other agents, representatives and
Affiliates (or the shareholders, members, managers, officers, directors,
employees and other agents, representatives and Affiliates of such Persons); or

(b)    any Third Party Claim brought by or on behalf of any of the Manager’s
employees, including Third Party Claims alleging age discrimination, sex
discrimination or sexual harassment; provided that this clause (b) shall not be
deemed to (i) provide for indemnification to the Company Indemnified Persons for
any cost relating to employees of the Manager that would otherwise constitute a
Company Expense (for example, compensation of Facility‑level employees in the
ordinary course of business or workers compensation‑related expenses) or (ii)
reduce or modify the obligations of the Manager or the Company pursuant to
Section 9.3.

(c)    any Third Party Claim alleging Manager has violated the Fair Labor
Standards Act, the Occupational Safety and Health Act with respect to the
operations of a Facility or any other rule related to employment or human health
and safety in connection with the Staffing Services and the Occupational Safety
and Health Act related to the construction of a Facility only if such
Occupational Safety and Health Act violation is caused by the bad faith, gross
negligence or willful misconduct of the Manager.

9.3    Insurance.

(a)    The Manager shall maintain all appropriate insurance coverage and
fidelity bonds for a Facility, and the maintenance of such insurance coverage
shall be consistent with Manager’s practices for the Manager Related Facilities
including the minimum coverages and amounts outlined in Exhibit C.  All costs
and expenses of maintaining insurance in connection with the Business and the
operation of a Facility shall be Company Expenses.

(b)    The Manager shall notify the Company concurrently with notification to
the Company’s insurance carrier of any casualty, disaster, loss, damage or
injury occurring at a Facility that is reported by the Manager to an insurance
carrier, and otherwise promptly notify the Company of any actual claim or loss
not occurring in the Company’s ordinary course of business.  The Manager shall
not use a Facility, or permit the same to be used, for any purpose which will
make void or voidable any of such insurance policies, and shall not keep or
allow to be kept at a Facility any material, machinery, equipment, substance or
other thing which may make void or voidable any of such insurance policies.  The
Manager shall, upon the request of the Company, assist the Company in any
reasonable manner, as The Company may request, in the settlement of any claim
under any of such insurance policies.

(c)    The amount of Losses for which indemnification is available under Section
9.1 and 9.2 shall be calculated net of any amounts actually recovered by the
Company Indemnified Persons or the Manager Indemnified Persons, as the case may
be, under insurance policies with respect to such Losses. In the event that any
indemnifying person makes any

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payment under Section 9.1 or 9.2 in respect of any Losses, such indemnifying
person shall be subrogated, to the extent of such payment, to the rights of such
indemnified person against any insurer or other third Person with respect to
such Losses.

Article X
TERM AND TERMINATION

10.1    Term of Agreement.  This Agreement shall apply to each Facility
acquired, owned or operated by the Company and shall commence on the Effective
Date and shall continue until the tenth (10th) anniversary of the Effective
Date, unless terminated earlier or extended pursuant to Section 10.2 (the term
of this Agreement, as so modified is referred to herein as the “Term”).  

10.2    Modification of Term; Termination.

(a)    The Company shall have the right at any time to terminate this Agreement
for Cause by giving fifteen (15) days advance notice in writing to the Manager;
and shall have the right to terminate this Agreement without Cause, by giving
two-hundred and seventy (270) days advance notice in writing to the Manager; or

(b)    The Manager may terminate this Agreement at any time upon the occurrence
of a Company Default by giving fifteen (15) days advance notice in writing to
the Company, and shall have the right to terminate this Agreement for any
reason, with or without cause, after the first anniversary of the opening of the
first Facility to the general public by giving ninety (90) days advance notice
in writing to the Company; or

(c)    The Manager may terminate this Agreement at any time if (i) the CB Entity
no longer holds Class B Units (as such term is defined in the LLC Agreement) in
the Company, (ii) Lee Roy Mitchell no longer serves as an active member of the
board of directors of Cinemark Holdings, Inc. for any reason, including without
limitation retirement, death or disability, or (iii) breach by Cinemark of the
Theater Services Agreement which remains uncured for thirty (30) days  following
such breach, by giving fifteen (15) days advance notice in writing to the
Company; or

(d)    This Agreement shall automatically terminate upon termination of the
Theater Services Agreement.

10.3    Commencement and Termination of Services with Respect to Specified
Facilities.  The provision of the Development Services, Management Services and
Staffing Services under this Agreement shall commence with respect to each
Facility as may be specified in a notice by the Company with respect to each
Facility.  After commencement of the Services, the provision of the Services
under this Agreement shall continue in respect of such Facilities, unless
terminated earlier as expressly provided in Section 10.2, until the fifteenth
(15th) calendar day after the Company shall have given the Manager written
notice of termination with respect to such Service(s).

10.4    Effects of Termination.  The termination of this Agreement shall not
terminate the rights and obligations of the Parties under Article XI, which
rights and obligations shall only terminate upon the termination of the
Transition Service Periods.  The termination of this Agreement in its entirety,
howsoever arising shall be without prejudice to the rights and duties of the
Parties accrued prior to termination or during any Transition Service
Period.  The Manager’s

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access and control over any Company Account shall terminate upon termination of
this Agreement in its entirety, or, if such access is required for the Manager
to perform one or more of the Transition Services, upon the termination of the
Transition Service Period applicable to such Transition
Services.  Notwithstanding the foregoing, the covenants, agreements, terms and
conditions of this Agreement which expressly or impliedly have effect after
termination (including, for the avoidance of doubt, those covenants, agreements,
terms and conditions contained in Articles VII, VIII, X XI and XII of this
Agreement and all indemnification and confidentiality provisions contained in
this Agreement) shall continue to be enforceable notwithstanding termination,
including the termination of any Transition Service Period. If this Agreement is
terminated for any reason, any amounts accrued but not yet paid to the Manager
hereunder shall be due and payable within ninety (90) days after the time of
such termination, any amounts accrued but not yet paid to the Company hereunder
shall be due and payable within ninety (90) days after the time of such
termination and the Manager shall deliver to the Company the originals of all
books, records, Contracts and all other documents, certificates, permits or
instruments relating to a Facility, including documents evidencing termination
of the Manager’s right to take any action with respect to the Company
Account.  If possession by the Manager of any such books, records, Contracts,
documents, certificates, permits or instruments are necessary for the
performance of any Transition Service, Manager shall deliver the same to the
Company upon termination of the Transition Service Period applicable to such
Transition Services.

 

Article XI
TRANSITION SERVICES

11.1    Transition Services.  If this Agreement terminates for any reason other
than Cause, the Manager agrees to provide the services set forth on Exhibit D,
and any other mutually agreed services determined to be necessary or appropriate
to the Company in the same manner as the Services are required to be provided by
this Agreement and to otherwise cooperate with the Company in transitioning the
Services to a new manager(s) or in winding down the operations of the Company,
as applicable, including but not limited to granting the Company access to and
otherwise making available for copies any information related to the Company
held by the Manager (collectively, the “Transition Services”) for the respective
periods set forth on Exhibit D (each such period, a “Transition Service
Period”), commencing on the date on which the termination is effective
(“Transition Start Date”). The Company agrees to pay the Manager as provided in
this Agreement during the Transition Service Period.

11.2    Software Use & License.  Subject to the terms and conditions of this
Agreement, the Manager agrees to continue to provide any software and/or
licenses that the Manager provided during the Term that are necessary for the
performance of the Transition Services.

11.3    Employees.

(a)    Offer of Employment.  During a Transition Service Period, the Company,
Cinemark and any of Cinemark’s Affiliates (any of the foregoing that makes any
such offer, the “New Facility Employer”) may make offers of employment to any
Facility-Level Employees.  During the Transition Service Period, the Manager
will make any employees of the Manager that work on an annual basis at the
Manager’s corporate offices and who dedicate at least eighty percent (80%) of
their working time to the operation and management of a Facility (the “Facility
Corporate Employees”) reasonably available to the New Facility Employer for
employment interviews.  Upon the commencement of the Transition Service Period,
the New Facility Employer will have the option, in its sole discretion, to
attempt to hire any Facility Corporate

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Employee.  To the extent such offers of employment are accepted, upon accepting
such offers of employment, such Facility Corporate Employees and Facility-Level
Employees’ employment with the Manager shall terminate.  The Manager will assist
in the transition of such employees from the Manager to the New Facility
Employer. The New Facility Employer may not make offers of employment to any
employees who are not Facility-Level Employees or Facility Corporate Employees.

(b)    Severance Expenses.  If, upon termination of this Agreement, (i) New
Facility Employer does not offer employment to any Facility-Level Employee or
Facility Corporate Employee, and (ii) as a direct result of the termination of
this Agreement, the Manager terminates the employment of such employee, the
Company will be solely responsible for, and shall reimburse the Manager for all
costs incurred by the Manager associated with the failure of the New Facility
Employer to provide employment to any Facility-Level Employee or Facility
Corporate Employee, including, but not limited to, any severance or additional
compensation.  The Manager shall provide evidence of such severance costs and
any other documentation or support reasonably requested by the Company prior to
any such payment by the Company.

11.4    Financial and Tax Cooperation and Exchange of Information.  The Manager
shall provide and transition to the Company all financial information relating
to a Facility in a manner compatible with the Company’s financial reporting
system.  The Manager and the Company shall provide each other with such
assistance as reasonably may be requested by either of them with respect to a
Facility in connection with (a) the preparation of any tax return, amended tax
return or claim of refund or (b) any audit or other examination by any taxing
authority, or any judicial or administrative proceedings relating to liability
for taxes or tax reporting by the Company (including preparation of tax
reporting information to the members of the Company).  The Manager and the
Company will make themselves (and their respective employees) available, on a
mutually convenient basis, to provide explanations of any documents or
information provided under this Section 11.4.  Any information obtained under
this Section 11.4 shall be kept confidential, except as may be otherwise
necessary in connection with the filing of tax returns or claims for refund or
in conducting an audit or other proceeding.

11.5    Post-Closing Access.  Subject to the restrictions of any applicable
legal requirement, the Manager, on the one hand, and the Company, on the other
hand, shall, following the termination of the Services and upon reasonable
notice, afford such other party or parties and their representatives reasonable
access (including the right to make photocopies, at the sole cost and expense of
the parties requesting such access), to the extent necessary in connection with
the Manager’s operation of a Facility prior to the Transition Start Date or the
Company’s operation of a Facility after the Transition Start Date, during normal
business hours and in a manner so as not to interfere unreasonably with such
other Party, to such other Party’s records related solely to a Facility,
including upon specific request, a complete copy of the books and records to the
extent permitted by applicable legal requirements and to the extent such books
and records are under such other Party’s or its Affiliates’ control.

11.6    Further Assurances.  The Parties will cooperate reasonably with each
other and with their respective representatives in connection with any steps
required to be taken as part of their respective obligations under this Article
XI, and will (a) furnish upon request to each other such further information;
(b) execute and deliver to each other such other documents; and (c) do such
other acts and things, including obtain any consents and approvals required (if
any), all as the other Party may reasonably request for the purpose of carrying
out the intent of this Article XI and the Transition Services.

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11.8    No Third Party Beneficiaries.  Nothing in this Article XI, express or
implied, is intended to confer on any person other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement. Nothing in this Article XI
shall create any third party beneficiary rights in any employee or any
beneficiary or dependents thereof or in any person other than the Parties to
this Agreement.

 

Article XII
MISCELLANEOUS

12.1    Exclusions and Limitations of Liability.

(a)    All warranties, representations, guarantees, conditions and terms, other
than those expressly set out in this Agreement, whether express or implied by
statute, common law, trade usage or otherwise and whether written or oral are
hereby expressly excluded to the fullest extent permissible by Law.

(b)    None of the Parties shall in any circumstances be liable for any claim,
whether arising in contract, tort or otherwise, for consequential, economic,
special or other indirect loss of any other Party, including losses calculated
by reference to lost profits, contracts, business, goodwill, income, production
or accruals of any such other Party (it being understood that if in connection
with any Proceeding a Party is required to pay damages to a third party based on
consequential, economic, special or other indirect losses of such third party,
such liability for such damages shall be deemed to be a direct loss of the Party
that is required to pay such amounts to such third party).

(c)    The Company acknowledges and agrees that the Manager shall not have any
liability to the Company for any Losses made, suffered or incurred by the
Company as a result of (i) the Manager’s complying with the terms of this
Agreement or any directions or authorizations that are provided to the Manager
by the Company as specifically contemplated by this Agreement or (ii) if the
Manager requests in writing an authorization from the Company under Section 2.3
(together with a reasonably detailed written explanation of the reasons for such
request) in order to take a specified action but the Company does not provide
such requested authorization, the consequences of not taking the actions that
were the subject matter of such authorization request. In addition, the Company
acknowledges and agrees that, notwithstanding anything to the contrary contained
in this Agreement, the Manager shall not be required to incur any cost or make
any expenditure that is not contemplated by the Approved Budget then in effect
and shall have no liability to the Company for any Losses made, suffered or
incurred by the Company as a result of the Manager’s not incurring any such cost
or making any such expenditure or failing to take any related actions (including
rendering the Services) as a result thereof.

(d)    The Manager, its directors, agents, officers, employees, subsidiaries and
Affiliates, as agents of the Company, shall not be liable to the Company or to
any other Person for any act or omission committed in the performance of this
Agreement unless such act constitutes bad faith, gross negligence, fraud or
willful and wanton misconduct.  Notwithstanding any other provision in this
Agreement, in no event shall the Company make any claims against the Manager or
its Affiliates on account of any alleged errors of judgment made in good faith
in the development or operation of a Facility in accordance with the terms of
this Agreement.

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(e)    The Parties accept that the limitations and exclusions set out in this
Section 12.1 are reasonable having regard to all the circumstances.

12.2    Company Subsidiaries.  The Parties acknowledge that the Company may
cause one or more Facilities to be owned by a Company Subsidiary.  The Manager
agrees that the Company may designate one or more Company Subsidiaries to
receive the Services to be performed by the Manager with respect to any Facility
and all references herein to the Company shall be construed to include any such
Company Subsidiary.  For the purpose of this Agreement, Company Account may
include one or more accounts of a Company Subsidiary designated by the Company
to be used with respect to the Services provided by Manager to such Company
Subsidiary.

12.3    Succession and Assignment; No Third‑Party Beneficiaries.  This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns.  No Party may assign, delegate,
sub‑contract or otherwise transfer either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
Company (in the case of a transfer by the Manager) or the Manager (in the case
of a transfer by the Company); provided, that the Manager shall be entitled to
(a) designate one or more Affiliates of the Manager to perform its obligations
hereunder and/or (b) sub‑contract with third parties the performance of its
duties under this Agreement, provided that no such designation or sub‑contract
arrangement shall relieve any Party of its obligations under this
Agreement.  Except as expressly provided herein, this Agreement is for the sole
benefit of the Parties and nothing in this Agreement (whether expressed or
implied) will give or be construed to give any Person, other than the Parties,
any legal or equitable rights in connection with this Agreement.  Any purported
assignment in breach of this Section 12.3 shall be void and confer no rights on
the purported assignee.  

12.4    Transaction Costs.  Except as otherwise specified herein, the Company
shall bear the costs and expenses in connection with the preparation,
negotiation, execution and performance of this Agreement.

12.5    Notices and Communications.

(a)    All notices, requests, demands, claims and other communications required
or permitted to be delivered, given or otherwise provided under this Agreement
must be in writing and must be either personally delivered, mailed by first
class mail (postage prepaid and return receipt requested), sent by electronic
mail with confirmation of transmission by the transmitting equipment or sent by
reputable overnight courier service (charges prepaid) to the recipient at the
address below indicated:

If to the Company or a Company Subsidiary:

FE Concepts, LLC
12400 Coit Road, Suite 800
Dallas, TX 75251
Attention:     Gary Witherspoon
E‑mail:     gw@cbcap.com

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with a copy (which shall not constitute notice) to:

Cinemark USA, Inc.
3900 Dallas Parkway, Suite 500
Plano, Texas  75093
Attention:     Michael Cavalier, General Counsel

E Mail:    mcavalier@cinemark.com

If to the Manager, to it at:

Cinema Operations, L.L.C.

12400 Coit Road, Suite 800
Dallas, Texas 75251
Attention:     W. Mark Moore
E‑Mail:    mmoore@epgusa.com

with a copy (which shall not constitute notice) to:

Cinemark USA, Inc.
3900 Dallas Parkway, Suite 500
Plano, Texas  75093
Attention:     Michael Cavalier, General Counsel

E Mail:    mcavalier@cinemark.com

(b)    Each of the Parties may specify an address or email address different
than that set forth in Section 12.5(a) by giving notice in accordance with
Section 12.5(a) to each of the other Parties.

12.6    Severability.  Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction will not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.  In the event that any provision hereof
would, under applicable Law, be invalid or unenforceable in any respect, each
Party hereto intends that such provision will be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable Law.

12.7    Amendments, Waivers and Remedies.

(a)    No amendment or waiver of any provision of this Agreement will be valid
and binding unless it is in writing and signed, in the case of an amendment, by
each of the Parties hereto, or in the case of a waiver, by the Party against
whom the waiver is to be effective.

(b)    No waiver by any Party of any breach or violation of, or default under or
inaccuracy in, any representation, warranty or covenant hereunder, whether
intentional or not, will extend to any prior or subsequent breach or violation
of, or default under or inaccuracy in, any such representation, warranty or
covenant or affect in any way any rights arising by virtue of any such prior or
subsequent occurrence.  No delay or omission on the part of any Party in
exercising any right, power or remedy under this Agreement will operate as a
waiver thereof.

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12.8    Confidentiality.

(a)    Subject to Section 12.8(b), the Parties shall treat as strictly
confidential all information received or obtained as a result of entering into
or performing this Agreement which relates to:  (i) the provisions of this
Agreement, or any document entered into pursuant to this Agreement; (ii) the
negotiations relating to this Agreement; (iii) the provision of the Services or
the Business; and/or (iv) any of the other Parties, or their respective
businesses, operations, assets, liabilities, financial condition or results of
operations.

(b)    The restrictions in Section 12.8(a) shall not apply to prevent the use or
disclosure of any confidential information if the relevant use or
disclosure:  (i) is required by applicable Law or any Governmental Authority of
competent jurisdiction, subject to the condition that the disclosing Party will
provide notice of such requirement to the non‑disclosing Parties prior to
disclosing any confidential information; (ii) is made to any legal, financial or
other adviser, auditor, financing source, shareholder or other Affiliate of the
disclosing Party, subject to the condition that the Party making the disclosure
shall be responsible for ensuring that such Persons comply with this Section
12.8 as if they were parties to this Agreement; (iii) is made to the officers or
employees of the disclosing Party or any Affiliate thereof who need to know the
information for the purposes of the transactions effected or contemplated by
this Agreement, subject to the condition that the Party making the disclosure
shall be responsible for ensuring that such Persons comply with this Section
12.8 as if they were parties to this Agreement; (iv) is in or becomes part of
the public domain other than through an action of any Party; or (v) is approved
in writing in advance by the Company (in the case of a disclosure by the
Manager) or the Manager (in the case of a disclosure by the Company), as the
case may be.

12.9    Counterparts.  This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument.

12.10    Entire Agreement.  This Agreement constitutes the entire agreement
among the Parties hereto with respect to the subject matter hereof and
supersedes any and all prior discussions, negotiations, proposals, undertakings,
understandings and agreements, whether written or oral, with respect to such
subject matter.

12.11    No Partnership, Etc..  Nothing in this Agreement or any document
referred to in it or any arrangement contemplated by it shall be construed as
creating a joint venture or partnership between the Parties for any purpose
whatsoever and no Party shall have the power or authority to bind any other
Party or impose any obligations on it to the benefit of any third party.

12.12    Construction.  The Parties 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 will be construed as if drafted jointly
by the Parties and no presumption or burden of proof will arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  Except as otherwise explicitly specified to the contrary,
(a) references to a Section, Article or Schedule mean a Section or Article of,
or Schedule to, this Agreement, (b) the word “including” will be construed as
“including without limitation,” (c) references to a particular statute or
regulation include all rules and regulations thereunder and any predecessor or
successor statute, rules or regulation, in each case as amended or otherwise
modified from time to time and any reference to a document is to that document
as varied, supplemented or replaced from time to time by agreement between the
parties thereto, (d) the

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headings contained in this Agreement are for convenience purposes only and will
not in any way affect the meaning or interpretation of this Agreement, (e) words
in the singular or plural form include the plural and singular form,
respectively, (f) use of any gender includes the other genders, (g) any
reference to writing shall include any modes of reproducing words in a legible
and non‑transitory form, (h) references to a particular Person include such
Person’s successors and assigns to the extent not prohibited by this Agreement,
and (i) the Schedules and Recitals hereto form part of this Agreement and shall
have effect as if set out in full in the body of this Agreement, and any
reference to this Agreement includes the Schedules and Recitals hereto.

12.13    Governing Law.  This Agreement, the rights of the Parties hereunder and
all Proceedings arising in whole or in part under or in connection herewith,
will be governed by and construed in accordance with the domestic substantive
laws of the State of Texas, without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any other
jurisdiction.

12.14    Arbitration.  Any claim, dispute or other matter in question between
the Parties hereto arising out of or relating to this Agreement, the rights of
the Parties hereunder or the breach hereof, shall be decided by arbitration in
accordance with the rules of the American Arbitration Association in effect on
the Effective Date before three arbitrators; one designated by the Company, one
designated by the Manager and the third designated in accordance with the Rules
of the American Arbitration Association.  Any such arbitration shall be
conducted in Dallas, Texas, unless the Parties mutually agree to another
location.  The arbitrators shall be qualified by education, training or
experience as may be appropriate according to the nature of the claim, dispute
or other matter in question.  The foregoing agreement to arbitrate and any other
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law.  The award rendered by the arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable Law in any court
having jurisdiction thereof.  To the extent permitted by law, by agreeing to
engage in the arbitration provided for in this Section 12.14, the Parties waive
their right to appeal any decision made by the arbitrators.  The demand for
arbitration shall be made within a reasonable time after the claim, dispute or
other matter in question has arisen; and in no event shall it be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute of
limitations.  All costs and expenses (including reasonable attorneys’ fees and
costs) incurred in connection with any such arbitration shall be borne in the
manner which the arbitrators making the determination shall
direct.  Notwithstanding the provisions of this Section 12.14, either Party may
seek appropriate injunctive relief for any threatened breach.

12.15    Affiliate Transactions.  Subject to Article III, in connection with the
provision of the Management Services under this Agreement, the Manager may
purchase necessary goods, supplies, rights and services (a) from or through any
of its Affiliates or (b) pursuant to arrangements Manager Related Facilities so
long as (i) any such transaction, series of transactions or arrangement is
disclosed to the Company and approved by the Board including at least one Board
member not affiliated with the Manager, (ii) in respect of any such Affiliate
transaction or series of transactions, the terms and conditions thereof are
competitive with the prices and terms of goods, supplies, rights and services of
like quality available from non‑Affiliated third parties in an arm’s length
transaction, and (iii) in respect of such shared arrangements, the allocations
of costs with respect thereto are fair and reasonable and, if applicable,
consistent with the methodology used by the Manager and its subsidiaries and
Affiliates to allocate similar costs among the Manager Related Facilities.

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12.16    Authority; Binding Agreement.  Each Party represents and warrants that
(a) it is a corporation, limited liability company, partnership or other entity,
as applicable, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, (b) it has the requisite power and
authority to execute, deliver and perform this Agreement, (c) the execution,
delivery and performance by it of this Agreement has been duly and validly
authorized by all necessary actions on its part, and (d) this Agreement
constitutes the legal, valid and binding obligations of such Party, enforceable
against such Party in accordance with its terms.

12.17    Further Assurances.  Each Party hereto shall further execute and
deliver all such other appropriate supplemental agreements and other instruments
and take such other action as which are or may be necessary or appropriate to
effectuate and carry out the provisions of this Agreement, may be necessary to
make this Agreement fully and legally effective, binding and enforceable as
between the Parties and as against third parties, or as the other Parties may
reasonably request.

12.18    Cooperation.  The Parties will, and will cause their respective
Affiliates to, in good faith, diligently communicate, consult and cooperate with
each other to facilitate each other’s performance of their respective and joint
responsibilities and duties under this Agreement, including, but not limited to,
any licensing responsibilities and duties.  The Parties will, and will cause
their respective Affiliates to, deal with each other on all matters related to
this Agreement and otherwise in good faith in an open manner as promptly as
possible under the given circumstances.  Wherever an approval or consent is
required in this Agreement by any Party, such approval or consent shall not be
unreasonably withheld, delayed or conditioned.  Each Party shall act reasonably
with respect to the Party’s responsibilities and obligations under this
Agreement.

12.19    Other Activities.  The Company acknowledges that the Manager and its
Affiliates are in the business of developing and operating entertainment
facilities that may be competitive with a Facility and that the Manager and its
Affiliates may in the future be presented with opportunities to develop new
entertainment facilities and acquire existing entertainment facilities.  Except
as may be set forth herein, the Parties agree that nothing in this Agreement
shall be construed to restrict the Manager from pursuing opportunities to
develop new entertainment facilities and acquire existing entertainment
facilities, and the pursuit of those ventures or activities by the Manager or
its Affiliates shall not be deemed wrongful or improper, even to the extent they
may be competitive with a Facility or might otherwise constitute an opportunity
for, the Company.  Without limiting the foregoing, the Manager and its
Affiliates may pursue concepts, ventures and opportunities on behalf of
themselves rather than on behalf of the Company and need not offer, and the
Company renounces any interest or expectancy as to participate in, such
concepts, ventures and opportunities to the Company.  Notwithstanding the
foregoing, for a period of five (5) years after the termination of this
Agreement neither Manager nor its Affiliates shall own, operate or acquire
entertainment facilities similar to a Facility within a eight (8) mile radius
from any Facility owned by the Company.

[SIGNATURE PAGES FOLLOW]

 

C-22

 

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IN WITNESS WHEREOF, each of the undersigned has executed this Management
Services Agreement as of the date first above written.

 

THE COMPANY:

 

 

 

FE CONCEPTS, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

THE Manager:

 

 

 

CINEMA OPERATIONS, L.L.C.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

C-23

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EXHIBIT D

FORM OF THEATER SERVICES AGREEMENT

 

THIS THEATER SERVICES AGREEMENT (this “Agreement”) is dated and made effective
as of April 20, 2018 (the “Effective Date”), by and between FE Concepts, LLC, a
Texas limited liability company (the “Company”) and CNMK Texas Properties, LLC,
a Texas limited liability company (“Cinemark” and, together with any of its
subsidiaries or parent from time to time providing Services hereunder, the
“Consultant”).  The Consultant and the Company are sometimes referred to in this
Agreement, collectively, as the “Parties” and each individually as a “Party.”
Defined terms used in this Agreement but not otherwise defined herein have the
meanings ascribed to them on Schedule I hereto.

RECITALS

G.    Consultant and AWSR Investments, LLC, a Texas limited liability company,
are parties to that certain Limited Liability Company Agreement, dated as of
April 20, 2018 (the “LLC Agreement”), pursuant to which CB Entity and Consultant
have formed the Company to own and operate a certain family entertainment
facilities, or facilities, incorporating games, rides, bowling, restaurants,
bars and motion picture theater auditoriums (the “Facilities”).

H.    The Consultant has the qualified, experienced and necessary personnel to
consult with the Company regarding the construction and operation of the motion
picture theater auditoriums (the “Auditoriums”) to comprise a portion of a
Facility.

I.    The LLC Agreement provides in part that the Company shall engage the
Consultant to provide certain services pursuant to Article I of this Agreement
(the “Theater Services”).

J.    Cinema Management, L.L.C. (the “Manager”) is a party to a Management
Services Agreement with the Company to provide comprehensive management services
regarding the construction, development, operation and staffing of any Facility
(collectively, the “Management Services”).

K.    The Company desires     to retain the Consultant to provide the Theater
Services with respect to any Facility and the Consultant is willing to provide
such Theater Services, upon the terms and subject to the conditions set forth in
this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
in this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

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Article I
THEATER SERVICES

1.1    Auditorium Construction.  The Consultant agrees to consult with the
Company and the Manager regarding the construction of the Auditoriums to be
constructed at any Facility.  The Consultant shall advise the Company and the
Manager with respect to:

(a)    recommendations regarding the number, size and design of the Auditoriums
to be located in a Facility;

(a)    recommendations regarding architects, engineers, contractors, suppliers
and vendors in connection with the construction of the Auditoriums;

(b)    recommendations regarding furniture, fixtures and equipment to be used in
the Auditoriums; and

(c)    consultations as may be reasonably requested by the Company or Manager
during the construction of the Auditoriums at a Facility.

1.2    Theater Technologies. The Consultant agrees to provide the following
services relating to theater technologies:

(a)    select all digital projection, TMS, screen and sound equipment for
purchase by the Company or the Manager on the Company’s behalf;

(b)    install, or supervise the installation of, all digital projection and TMS
equipment;

(c)    perform remote support of the digital cinema systems through CSC;

(d)    manage the warranty and RMA of the digital cinema systems; and

(e)    perform or supervise annual maintenance, upgrades and emergency support
using the Consultant’s booth engineers.

1.3    Film Booking and Buying.  The Consultant agrees to book and license or
cause to be licensed on the Company’s behalf, films and other attractions for
exhibition in the Auditoriums.  The Consultant is hereby authorized by the
Company to execute film license agreements on behalf of the Company for any
Facility.

1.4    Training.  The Consultant agrees to provide necessary and appropriate
training both at a Facility and the Consultant Related Facilities to the
Manager’s facility-level personnel who will be assigned to conduct the
exhibition of films in the Auditoriums, including ticketing personnel, certain
concession operations and operators of film projection equipment and any other
training necessary to fully plan, construct, equip, and successfully operate the
Auditoriums.  Training will be conducted at the Consultant’s sole election at a
Facility or at the Consultant’s facilities.

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1.5    Theater Operations.  The Consultant will consult with the Company and the
Manager regarding the motion picture theater operations including:

(a)    ticket pricing policies;

(b)    film booking;

(c)    film settlement and settlement of any disputes with the distributors of
content booked by the Consultant;

(d)    scheduling of motion picture exhibition times;

(e)    publication of show times;

(f)    management of studio relations and weekly trailer programming;

(g)    management of day-to-day studio relations, in-theater and on-line
promotions;

(h)    management of trailer placements;

(i)    management of studio partnership marketing funds as applicable to the
films shown at a Facility

(j)    arranging for on-screen advertising;

(k)    recommendations regarding ticketing systems and any third party ticketing
vendors;

(l)    recommendations regarding personnel requirements in connection with
motion picture exhibition in the Auditoriums; and

(m)    recommendations regarding budget for line items relating to the motion
picture theater auditoriums, including without limitation film rental expense,
in theatre marketing and projector maintenance and repair.

1.6    Exclusive Provider of Theater Services.  Unless otherwise expressly
agreed by the Consultant with respect to any Facility, the Consultant shall be
the exclusive provider of the Theater Services contemplated by this Agreement
with respect to each Facility acquired, owned or operated by the Company.

1.7    Company Approval.  For the purpose of this Agreement, any consent or
approval required or permitted to be given by the Company regarding Theater
Services shall require the approval of the Board (including either Lee Roy
Mitchell or at least one Board member not affiliated with the Consultant) or,
the approval of an executive officer of the Company not affiliated with the
Consultant to the extent that specific authority to grant such consent or
approval has been expressly delegated to such officer by the Board, subject to
any additional approval required by the Members in accordance with the LLC
Agreement.  Any notice by the Consultant to the Company shall be given in
accordance with Section 6.5.

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Article II
ACKNOWLEDGEMENTS

2.1    Delegation of Duties.  Notwithstanding anything to the contrary contained
in this Agreement, the Consultant shall have the right to delegate or
subcontract its duties under this Agreement to any Person; provided, however,
that no such delegation or subcontracting shall relieve the Consultant of
liability under this Agreement and further provided that the Consultant shall
supervise the activities of such subcontractor, and provided, further that the
Consulting Fee continues to be paid to the Consultant.

2.2    No Restrictions on the Consultant.  The Consultant shall not be required
to spend its full time and attention to provide any of the Services.  The
Consultant shall devote such time and personnel as the Consultant deems
appropriate to provide the Services pursuant to this Agreement.  The Company
acknowledges that the Consultant and its Affiliates are in the business of
developing and acquiring motion picture exhibition theaters that may be
competitive with a Facility and that the Consultant and its Affiliates may in
the future be presented with opportunities to develop new theaters and acquire
existing theaters.  Except as may be set forth herein, the Parties agree that
nothing in this Agreement shall be construed to restrict the Consultant from
pursuing opportunities to develop new theaters and acquire existing theaters,
and the pursuit of those ventures or activities by the Consultant or its
Affiliates shall not be deemed wrongful or improper, even to the extent they are
competitive with, or might otherwise constitute an opportunity for, the
Company.  Without limiting the foregoing, the Consultant and its Affiliates may
pursue concepts, ventures and opportunities on behalf of themselves rather than
on behalf of the Company and need not offer, and the Company renounces any
interest or expectancy as to participate in, such concepts, ventures and
opportunities to the Company.

2.3    Film Settlement Policies.  The Company acknowledges that subject to the
next sentence, (i) with respect to booking services, numerous subjective and
nonquantifiable matters of judgment go into the decision of which films to book
and the terms of such booking and the Consultant, for a variety of reasons, may
find it necessary to book films of certain distributors;  (ii) separate
geographic areas may be unique and involve factors relevant to policies employed
in the negotiation and effectuation of film settlement (“Settlement Policies”)
that are not of equal importance to other geographical areas, (iii) Settlement
Policies for one area may not necessarily be evaluated against or compared to
the Settlement Policies the Consultant or its Affiliates employ or employed in
other geographic areas or markets, and (iv) the Consultant will not be required
to employ the same or similar Settlement Policies hereunder as it or its
Affiliates follow in other geographic areas or markets or for other theaters
owned, leased or managed by the Consultant in the same geographical area;
provided that the Consultant shall conduct the Settlement Policies in a good and
businesslike manner and in a manner consistent with Consultant Related
Facilities.  The Company confirms the Consultant has made no representation or
covenant as to the Settlement Policies or booking policies it has or will have
with respect to any theaters which are owned, leased or managed by the
Consultant or its Affiliates or which are to be managed pursuant to the
Management Agreement other than that Consultant will employ the same policies
and practices in respect thereof on behalf of the Company as it does on behalf
of the Consultant’s theaters and that the Consultant will act in good faith in
respect thereof.

D-4

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2.4    No Restriction on Payment of Consulting Fee.  The Company agrees not to
directly or indirectly create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or the restriction on the ability of the
Company to pay to the Consultant any fees or other amounts payable to the
Consultant under this Agreement.

2.5    Management Agreement.  The Consultant acknowledges that the Company has
entered into the Management Agreement with the Manager pursuant to which the
Manager shall provide the Management Services.  The Company hereby authorizes
the Consultant to coordinate providing the Theater Services with the
Manager.  The Consultant is authorized to rely on instructions from the Manager
and advise the Manger’s personnel regarding the various recommendations to be
provided by the Consultant under this Agreement.  The Company authorizes and
directs the Manager to pay all Consulting Fees to the Consultant, and reimburse
the Consultant for all Consultant Expenses incurred by the Consultant, as
provided in this Agreement.

Article III
CONSULTING FEE

3.1    Consulting Fees.  As compensation for its services under this Agreement,
the Company will pay Consultant fees (the “Consulting Fees”) as set forth on
Schedule II hereto. Consultant shall invoice the Company monthly in arrears for
Consulting Fees due with respect to the Theater Services performed by Consultant
each month during the term of this Agreement.  All invoices shall be due and
payable within thirty days after receipt by the Company.

3.2    Consulting Expenses.  The Company shall reimburse the Consultant for its
out-of-pocket expenses incurred in providing the Theater Services, including,
but not limited to travel expenses to any Facility or proposed Facility site,
any Company Trademark related fees or expenses advanced by the Consultant in its
reasonable discretion and such other expenses as may be reasonably incurred by
the Consultant as set forth on Schedule III hereto (“Consultant Expenses”).

Article IV
INDEMNITY

4.1    Indemnification by the Company.  The Company shall indemnify and hold
harmless the Consultant and its shareholders, managers, officers, directors,
employees and other agents, representatives and Affiliates (and the members,
managers, officers, directors, employees and other agents, representatives and
Affiliates of such Persons) (such indemnified Persons, the “Consultant
Indemnified Persons”) from, against and in respect of any and all claims,
Proceedings, obligations, liabilities, liens, encumbrances, losses, damages,
assessments, fines, penalties, taxes, fees, costs (including costs of
investigation, defense and enforcement of this Agreement, including attorneys’
fees and disbursements), expenses or amounts paid in settlement (in each case,
including reasonable attorneys’ and experts fees and expenses) (collectively,
“Losses”), in the case of clauses (b) and (c) below, whether or not involving a
Third Party Claim, to the extent such Losses are incurred or suffered by the
Consultant Indemnified Persons as a result of, arising out of or directly or
indirectly relating to:

D-5

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(a)    any claim or Proceeding made, initiated or threatened by any Person other
than a Party (a “Third Party Claim”) that relates to the provision of the
Services under this Agreement, the management and operation of a Facility or the
Business, or the consequences of the Consultant’s compliance with the terms of
this Agreement or any directions provided by the Company or the Manager relating
to the operation of the Business, other than to the extent such Losses are
caused by the bad faith, gross negligence or willful misconduct of the
Consultant or any of its shareholders, managers, officers, directors, employees
and other agents, representatives and Affiliates (or the shareholders, members,
managers, officers, directors, employees and other agents, representatives and
Affiliates of such Persons);

(b)    all Consultant Expenses;

(c)    any breach of this Agreement by the Company.

4.2    Indemnification by the Consultant.  The Consultant shall indemnify and
hold harmless the Company, the Company Subsidiaries and the members, managers,
officers, directors, employees and other agents, representatives and Affiliates
thereof (and the members, managers, officers, directors, employees and other
agents, representatives and Affiliates of such Persons) (such indemnified
Persons, the “Company Indemnified Persons”) from, against and in respect of any
and all Losses to the extent such Losses are incurred or suffered by the Company
Indemnified Persons as a result of, arising out of or directly or indirectly
relating to any Third Party Claim that relates to the provision of the Theater
Services under this Agreement to the extent such Losses are caused by the bad
faith, gross negligence or willful misconduct of the Consultant or any of its
shareholders, managers, officers, directors, employees and other agents,
representatives and Affiliates (or the shareholders, members, managers,
officers, directors, employees and other agents, representatives and Affiliates
of such Persons);

4.3    Insurance Recoveries.  The amount of Losses for which indemnification is
available under Section 4.1 and 4.2 shall be calculated net of any amounts
actually recovered by the Company Indemnified Persons or the Consultant
Indemnified Persons, as the case may be, under insurance policies with respect
to such Losses. In the event that any indemnifying person makes any payment
under Section 4.1 or 4.2 in respect of any Losses, such indemnifying person
shall be subrogated, to the extent of such payment, to the rights of such
indemnified person against any insurer or other third Person with respect to
such Losses.

Article V
TERM AND TERMINATION

5.1    Term of Agreement.  This Agreement shall commence on the Effective Date
and shall continue until the tenth (10th) anniversary of the Effective Date,
unless terminated earlier or extended pursuant to Section 5.2 (the term of this
Agreement, as so modified is referred to herein as the “Term”).  

5.2    Modification of Term; Termination.  

(a)    The Consultant shall have the right at any time by giving (i) fifteen
(15) days advance notice in writing to the Company to terminate this Agreement
for non-payment under this Agreement if such non-payment is not resolved within
fifteen (15) business days following

D-6

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written notice or (ii) after the first Facility has been in operation for a full
year, two-hundred and seventy (270) days advance notice to terminate this
Agreement, for any reason, with or without cause; or

(b)    The Company may terminate this Agreement at any time for Cause by giving
fifteen (15) days advance notice in writing to the Consultant; provided that the
Company shall not be permitted to terminate this Agreement without Cause without
the prior written consent of the Consultant at any time prior to the expiration
of the Term; or

(c)    This Agreement shall automatically terminate upon termination of the
Management Agreement and termination of the Transition Services Period (if
applicable).

5.3    Commencement and Termination of Specified Theater Services.  The
provision of the Theater Services under this Agreement shall commence with
respect to each Facility on such date prior to the acquisition of the site for
such Facility (or acquisition of any existing Facility) as the Company may
specify.  After commencement of the Theater Services, the provision of the
Theater Services under this Agreement shall continue in respect of such
Facilities, unless terminated earlier as expressly provided in Section 5.2.  

5.4    Effects of Termination.  The termination of this Agreement in its
entirety (or the termination of any of the Theater Services with respect to the
Facilities), howsoever arising, shall be without prejudice to the rights and
duties of the Parties accrued prior to termination. The covenants, agreements,
terms and conditions of this Agreement which expressly or impliedly have effect
after termination shall continue to be enforceable notwithstanding termination
including all indemnification and confidentiality provisions contained in this
Agreement.  If this Agreement (or the termination of any of the Theater Services
with respect to the Facilities) is terminated for any reason, any amounts
accrued but not yet paid to the Consultant hereunder shall be due and payable
within thirty (30) days after the time of such termination.  

 

Article VI
MISCELLANEOUS

6.1    Exclusions and Limitations of Liability.

(a)    All warranties, representations, guarantees, conditions and terms, other
than those expressly set out in this Agreement, whether express or implied by
statute, common law, trade usage or otherwise and whether written or oral are
hereby expressly excluded to the fullest extent permissible by Law.

(b)    None of the Parties shall in any circumstances be liable for any claim,
whether arising in contract, tort or otherwise, for consequential, economic,
special or other indirect loss of any other Party, including losses calculated
by reference to lost profits, contracts, business, goodwill, income, production
or accruals of any such other Party (it being understood that if in connection
with any Proceeding a Party is required to pay damages to a third party based on
consequential, economic, special or other indirect losses of such third party,
such liability for such damages shall be deemed to be a direct loss of the Party
that is required to pay such amounts to such third party).

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(c)    The Company acknowledges and agrees that the Consultant shall not have
any liability to the Company for any Losses made, suffered or incurred by the
Company as a result of (i) the Consultant’s complying with the terms of this
Agreement or any directions or authorizations that are provided to the
Consultant by the Company or the Manager as specifically contemplated by this
Agreement or (ii) if the Consultant requests in writing an authorization from
the Company or the Manager (together with a reasonably detailed written
explanation of the reasons for such request) in order to take a specified action
but the Company or the Manager does not provide such requested authorization,
the consequences of not taking the actions that were the subject matter of such
authorization request.

(d)    The Consultant, its directors, agents, officers, employees, subsidiaries
and Affiliates, as agents of the Company, shall not be liable to the Company or
to any other Person for any act or omission committed in the performance of this
Agreement unless such act constitutes bad faith, gross negligence, fraud or
willful and wanton misconduct.  Notwithstanding any other provision in this
Agreement, in no event shall the Company make any claims against the Consultant
or its Affiliates on account of any alleged errors of judgment made in good
faith in the development or operation of the Auditoriums in accordance with the
terms of this Agreement.

(e)    The Parties accept that the limitations and exclusions set out in this
Section 6.1 are reasonable having regard to all the circumstances.

6.2    Company Subsidiaries.  The Parties acknowledge that the Company may cause
one or more Facilities to be owned by a Company Subsidiary.  The Consultant
agrees that the Company may designate one or more Company Subsidiaries to
receive the Theater Services to be performed by the Consultant with respect to
any Facility and all references herein to the Company shall be construed to
include any such Company Subsidiary; provided however, that the Company and any
Company Subsidiary receiving any Theater Services from the Consultant shall be
jointly and severally liable for the Consulting Fee, Consultant Expenses and
indemnification obligations payable under this Agreement.  

6.3    Succession and Assignment; No Third‑Party Beneficiaries.  This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns.  No Party may assign, delegate,
sub‑contract or otherwise transfer either this Agreement or any of its rights,
interests or obligations hereunder without the prior written approval of the
Company (in the case of a transfer by the Consultant) or the Consultant (in the
case of a transfer by the Company); provided, that the Consultant shall be
entitled to (a) designate one or more Affiliates of the Consultant to perform
its obligations hereunder and/or (b) sub‑contract with third parties (other than
a Class B Competing Business) the performance of its duties with respect Theater
Services provided that no such designation or sub‑contract arrangement shall
relieve any Party of its obligations under this Agreement; provided, further,
that the Consultant shall not be entitled to assign this Agreement to a Class B
Competing Business without the Company’s and Manager’s prior written consent
(except where such assignment is a result of the change in Control of
Consultant).  The Manager is intended to be a third party beneficiary of this
Section 6.3.  Except as expressly provided herein, this Agreement is for the
sole benefit of the Parties and nothing in this Agreement (whether expressed or
implied) will give or be construed to give any Person, other than the Parties,
any legal or equitable rights in connection with this Agreement.  Any purported
assignment in breach of this Section 6.3 shall be void and confer no rights on
the purported assignee.

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6.4    Transaction Costs.  Except as otherwise specified herein, the Company
shall bear the costs and expenses in connection with the preparation,
negotiation, execution and performance of this Agreement.

6.5    Notices and Communications.

(a)    All notices, requests, demands, claims and other communications required
or permitted to be delivered, given or otherwise provided under this Agreement
must be in writing and must be either personally delivered, mailed by first
class mail (postage prepaid and return receipt requested), sent by electronic
mail with confirmation of transmission by the transmitting equipment or sent by
reputable overnight courier service (charges prepaid) to the recipient at the
address below indicated:

If to the Company or a Company Subsidiary:

FE Concepts, LLC
12400 Coit Road, Suite 800
Dallas, TX 75251
Attention:    Gary Witherspoon
E‑mail:    gw@cbcap.com

If to the Consultant:

CNMK Texas Properties, LLC
3900 Dallas Parkway
Plano, Texas  75093
Attention:     Michael Cavalier, General Counsel

E Mail:    mcavalier@cinemark.com

(b)    Each of the Parties may specify an address or email address different
than that set forth in Section 6.5(a) by giving notice in accordance with
Section 6.5 (a) to the other Parties.

6.6    Severability.  Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction will not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.  In the event that any provision hereof would, under
applicable Law, be invalid or unenforceable in any respect, each Party hereto
intends that such provision will be construed by modifying or limiting it so as
to be valid and enforceable to the maximum extent compatible with, and possible
under, applicable Law.

6.7    Amendments, Waivers and Remedies.

(a)    No amendment or waiver of any provision of this Agreement will be valid
and binding unless it is in writing and signed, in the case of an amendment, by
each of the Parties hereto, or in the case of a waiver, by the Party against
whom the waiver is to be effective; provided, that Section 6.3 may not be
amended without the consent of the Manager.

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(b)    No waiver by any Party of any breach or violation of, or default under or
inaccuracy in, any representation, warranty or covenant hereunder, whether
intentional or not, will extend to any prior or subsequent breach or violation
of, or default under or inaccuracy in, any such representation, warranty or
covenant or affect in any way any rights arising by virtue of any such prior or
subsequent occurrence.  No delay or omission on the part of any Party in
exercising any right, power or remedy under this Agreement will operate as a
waiver thereof.

6.8    Confidentiality.

(a)    Subject to Section 6.8(b), the Parties shall treat as strictly
confidential all information received or obtained as a result of entering into
or performing this Agreement which relates to:  (i) the provisions of this
Agreement, or any document entered into pursuant to this Agreement; (ii) the
negotiations relating to this Agreement; (iii) the provision of the Theater
Services or the Business; and/or (iv) any of the other Parties, or their
respective businesses, operations, assets, liabilities, financial condition or
results of operations.

(b)    The restrictions in Section 6.8(a) shall not apply to prevent the use or
disclosure of any confidential information if the relevant use or
disclosure:  (i) is required by applicable Law or any Governmental Authority of
competent jurisdiction, subject to the condition that the disclosing Party will
provide notice of such requirement to the non‑disclosing Parties prior to
disclosing any confidential information; (ii) is made to any legal, financial or
other adviser, auditor, financing source, shareholder or other Affiliate of the
disclosing Party, subject to the condition that the Party making the disclosure
shall be responsible for ensuring that such Persons comply with this Section 6.8
as if they were parties to this Agreement; (iii) is made to the officers or
employees of the disclosing Party or any Affiliate thereof who need to know the
information for the purposes of the transactions effected or contemplated by
this Agreement, subject to the condition that the Party making the disclosure
shall be responsible for ensuring that such Persons comply with this Section 6.8
as if they were parties to this Agreement; (iv) is in or becomes part of the
public domain other than through an action of any Party; or (v) is approved in
writing in advance by the Company (in the case of a disclosure by the
Consultant) or the Consultant (in the case of a disclosure by the Company), as
the case may be.  For the avoidance of doubt, it is understood and agreed that
the Consultant and/or its Affiliates are required to make public disclosures of
material facts and events under U.S. federal securities law and that nothing
contained in this Agreement shall be construed to prevent the Consultant or such
Affiliates from making such public disclosures (including, without limitation,
public filings or disclosures relating to this Agreement, the Company, or the
Business of the Company) as they determine, in their sole and absolute
discretion, is required by applicable law or regulations.

6.9    Counterparts.  This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute but one and the same instrument.

6.10    Entire Agreement.  This Agreement constitutes the entire agreement among
the Parties hereto with respect to the subject matter hereof and supersedes any
and all prior discussions, negotiations, proposals, undertakings, understandings
and agreements, whether written or oral, with respect to such subject matter.

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6.11    No Partnership, Etc..  Nothing in this Agreement or any document
referred to in it or any arrangement contemplated by it shall be construed as
creating a joint venture or partnership between the Parties for any purpose
whatsoever and no Party shall have the power or authority to bind any other
Party or impose any obligations on it to the benefit of any third party.

6.12    Construction.  The Parties 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 will be construed as if drafted jointly
by the Parties and no presumption or burden of proof will arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.  Except as otherwise explicitly specified to the contrary,
(a) references to a Section, Article or Schedule mean a Section or Article of,
or Schedule to, this Agreement, (b) the word “including” will be construed as
“including without limitation,” (c) references to a particular statute or
regulation include all rules and regulations thereunder and any predecessor or
successor statute, rules or regulation, in each case as amended or otherwise
modified from time to time and any reference to a document is to that document
as varied, supplemented or replaced from time to time by agreement between the
parties thereto, (d) the headings contained in this Agreement are for
convenience purposes only and will not in any way affect the meaning or
interpretation of this Agreement, (e) words in the singular or plural form
include the plural and singular form, respectively, (f) use of any gender
includes the other genders, (g) any reference to writing shall include any modes
of reproducing words in a legible and non‑transitory form, (h) references to a
particular Person include such Person’s successors and assigns to the extent not
prohibited by this Agreement, and (i) the Schedules and Recitals hereto form
part of this Agreement and shall have effect as if set out in full in the body
of this Agreement, and any reference to this Agreement includes the Schedules
and Recitals hereto.

6.13    Governing Law.  This Agreement, the rights of the Parties hereunder and
all Proceedings arising in whole or in part under or in connection herewith,
will be governed by and construed in accordance with the domestic substantive
laws of the State of Texas, without giving effect to any choice or conflict of
law provision or rule that would cause the application of the laws of any other
jurisdiction.

6.14    Arbitration.  Any claim, dispute or other matter in question between the
Parties hereto arising out of or relating to this Agreement, the rights of the
Parties hereunder or the breach hereof, shall be decided by arbitration in
accordance with the rules of the American Arbitration Association in effect on
the Effective Date before three arbitrators; one designated by the Company, one
designated by the Consultant and the third designated in accordance with the
Rules of the American Arbitration Association.  Any such arbitration shall be
conducted in Dallas, Texas, unless the Parties mutually agree to another
location.  The arbitrators shall be qualified by education, training or
experience as may be appropriate according to the nature of the claim, dispute
or other matter in question.  The foregoing agreement to arbitrate and any other
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law.  The award rendered by the arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable Law in any court
having jurisdiction thereof.  To the extent permitted by law, by agreeing to
engage in the arbitration provided for in this Section 6.14, the Parties waive
their right to appeal any decision made by the arbitrators.  The demand for
arbitration shall be made within a reasonable time after the claim, dispute or
other matter in question has arisen; and in no event shall it be made after the
date when institution of legal or equitable proceedings

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based on such claim, dispute or other matter in question would be barred by the
applicable statute of limitations.  All costs and expenses (including reasonable
attorneys’ fees and costs) incurred in connection with any such arbitration
shall be borne in the manner which the arbitrators making the determination
shall direct.  Notwithstanding the provisions of this Section 6.14, either Party
may seek appropriate injunctive relief for any threatened breach.

6.15    Affiliate Transactions.  In connection with the provision of the
Services under this Agreement, the Consultant may purchase necessary goods,
supplies, rights and services (a) from or through any of its Affiliates or
(b) pursuant to arrangements Consultant Related Facilities so long as (i) any
such transaction, series of transactions or arrangement is disclosed to the
Company and approved by the Board including at least one Board member not
affiliated with the Consultant, (ii) in respect of any such Affiliate
transaction or series of transactions, the terms and conditions thereof are
competitive with the prices and terms of goods, supplies, rights and services of
like quality available from non‑Affiliated third parties in an arm’s length
transaction, and (iii) in respect of such shared arrangements, the allocations
of costs with respect thereto are fair and reasonable and, if applicable,
consistent with the methodology used by the Consultant and its subsidiaries and
Affiliates to allocate similar costs among the Consultant Related Facilities.

6.16    Authority; Binding Agreement.  Each Party represents and warrants that
(a) it is a corporation, limited liability company, partnership or other entity,
as applicable, duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, (b) it has the requisite power and
authority to execute, deliver and perform this Agreement, (c) the execution,
delivery and performance by it of this Agreement has been duly and validly
authorized by all necessary actions on its part, and (d) this Agreement
constitutes the legal, valid and binding obligations of such Party, enforceable
against such Party in accordance with its terms.

6.17    Further Assurances.  Each Party hereto shall further execute and deliver
all such other appropriate supplemental agreements and other instruments and
take such other action as may be necessary to make this Agreement fully and
legally effective, binding and enforceable as between the Parties and as against
third parties, or as the other Parties may reasonably request.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, each of the undersigned has executed this Theater Services
Agreement as of the date first above written.

 

THE COMPANY:

 

 

 

FE CONCEPTS, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

THE Consultant:

 

 

 

CNMK TEXAS PROPERTIES, LLC

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

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EXHIBIT E

 

FORM OF CAPITAL NOTE

 

$[___]

Dallas, Texas

[___], 201__

FOR VALUE RECEIVED, the undersigned [Joint Venture], LLC, a Texas limited
liability Company (“Borrower”), whose address is 12400 Coit Road, Suite 800,
Dallas, Texas 75251, promises to pay to the order of [___] (“Lender”), whose
address is [___], on demand the principal sum of [___] Dollars and [___]/100
($[___]), with interest as specified herein, at [___], or at such other place as
Lender may, from time to time, designate in writing.

This Capital Note (this “Note”) evidences a loan by Lender made to Borrower
pursuant to Section 4.1(c)(ii) of the Limited Liability Company Agreement of
Borrower and is subject to the following additional provisions, terms and
conditions:

1.    Principal.  The entire unpaid principal balance hereof plus all accrued
but unpaid interest thereon shall be due and payable on demand or it no demand
is made prior to [_______], 20___ on [_______], 20__.  Borrower may at any time
and from time to time prepay all or any part of the unpaid principal balance of
this Note without premium or penalty.  All principal payments shall be
accompanied by accrued interest on the principal amount being repaid to the date
of payment.

2.    Interest.

(a)    Borrower agrees to pay interest in respect of the unpaid principal amount
of this Note from the date hereof to maturity (whether by acceleration or
otherwise) at a rate per annum equal to the lesser of (i) [___]% per annum (the
“Base Rate”) and (ii) the maximum nonusurious interest rate permitted by
applicable law (the “Maximum Rate”).  Overdue principal shall bear interest,
before and after judgment, for each day that such amounts are overdue at a rate
per annum equal to the lesser of (i) the Base Rate plus [___]% per annum and
(ii) the Maximum Rate.

(b)    Interest on the principal of this Note shall accrue from and including
the date hereof and shall be payable on demand.  Interest shall be calculated on
the basis of a 360-day year consisting of twelve 30-day months.

(c)    All payments under this Note shall be made without defense, setoff or
counterclaim to Lender not later than 12:00 noon (Dallas, Texas time) on the
date when due and shall be made in lawful money of the United States of America
in immediately available funds.  Whenever any payment to be made under this Note
shall be stated to be or otherwise due on a day that is not a Business Day, the
due date thereof shall be extended to the next succeeding Business Day, and,
with respect to payments of principal, interest thereon shall accrue on and be
payable at the applicable rate during such extension.  Each payment received by
Lender shall be applied first to late charges and collection expenses, if any,
then to the payment of accrued but unpaid interest due hereunder, and then to
the reduction of the unpaid principal balance hereof.  As used in this Note,
“Business Day” shall mean any day of the week except Saturday, Sunday or any
other day on which commercial banks in Dallas, Texas are authorized or required
by law to close.

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3.    Remedies.  Lender may at any time declare the entire unpaid principal
balance of this Note, together with all accrued but unpaid interest thereon,
immediately due and payable. Upon such demand, the entire unpaid principal
balance of this Note, together with all accrued but unpaid interest thereon,
shall automatically and immediately become due and payable, and thereafter
Lender may proceed to enforce payment of the same and to exercise any and all of
the rights and remedies afforded herein as well as all other rights and remedies
possessed by Lender by law or otherwise.  The entire unpaid principal balance
of, and all accrued and unpaid interest on, this Note shall immediately be due
and payable upon the occurrence of Borrower’s (a) commencement of a voluntary
case under Title 11 of the United States Code, or (b) filing an answer or other
pleading admitting or failing to deny the material allegations of a petition
filed against Borrower commencing an involuntary case under said Title 11 or
failure to controvert timely the material allegations of such petition.

4.    No Waiver by Lender.  No failure or delay on the part of Lender in
exercising any right, power or privilege hereunder and no course of dealing
between Borrower and Lender shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.

5.    Waivers.  Except as otherwise expressly provided for herein, the makers,
signers, sureties, guarantors and endorsers of this Note severally waive notice
of acceptance of this Note, notice of extension of credit, demand, presentment,
notice of presentment, notice of dishonor, notice of intent to demand or
accelerate payment hereof, notice of demand, notice of acceleration, diligence
in collecting, grace, notice and protest, and agree to one or more renewals or
extensions for any period or periods of time, partial payments and releases or
substitutions of security, in whole or in part, with or without notice, before
or after maturity.  If this Note shall be collected by legal proceedings or
through a bankruptcy court, or shall be placed in the hands of an attorney for
collection after default or maturity, Borrower agrees to pay all costs of
collection, including reasonable attorneys’ fees.

6.    Limitation on Interest.  Notwithstanding any other provision of this Note,
interest on the indebtedness evidenced by this Note is expressly limited so that
in no contingency or event whatsoever, whether by acceleration of the maturity
of this Note or otherwise, shall the interest contracted for, charged or
received by Lender exceed the maximum amount permissible under applicable
law.  If from any circumstances whatsoever fulfillment of any provisions of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances Lender shall ever receive
anything of value as interest or deemed interest by applicable law under this
Note or any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby or otherwise an amount that would exceed the
highest lawful rate, such amount that would be excessive interest shall be
applied to the reduction of the principal amount owing under this Note or on
account of any other indebtedness of Borrower to Lender, and not to the payment
of interest, or if such excessive interest exceeds the unpaid balance of
principal of this Note and such other indebtedness, such excess shall be
refunded to Borrower.  In determining whether or not the interest paid or
payable with respect to any indebtedness of Borrower to Lender, under any

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specific contingency, exceeds the highest lawful rate, Borrower and Lender
shall, to the maximum extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, (c) amortize,
prorate, allocate and spread the total amount of interest throughout the full
term of such indebtedness so that the actual rate of interest on account of such
indebtedness does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of such indebtedness, to the end
that no such portion shall bear interest at a rate greater than that permitted
by applicable law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of this Note and all other
agreements between Borrower and Lender.

7.    Negative Covenants.  So long as this note or any portion hereof remains
outstanding and unpaid, including principal and accrued unpaid interest hereon,
Borrower shall not, without prior approval of Lender:

(a)    incur any indebtedness or enter into or consummate any other financing
transaction or capital lease or create any lien against the assets of the
Company, in any case senior to or on party with the indebtedness evidenced by
this Note;  or

(b)    make any distributions to the members or equity holder of Borrower.

8.    Choice of Law; Venue.  This Note and the validity and enforceability
hereof shall be governed by and construed in accordance with the laws of the
State of Texas other than the conflicts of laws rules thereof.  Exclusive venue
for any action under this Note shall be the state and federal courts located in
Collin County or Dallas County, Texas.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
above written.

 

FE CONCEPTS, LLC

a Texas limited liability Company

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

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EXHIBIT F

ASSIGNMENT OF MEMBERSHIP UNITS

FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer unto
______________________________________________________________________________
all of the Membership Units in FE Concepts, LLC standing in the undersigned’s
name on the books of said limited liability company and does hereby irrevocably
constitute and appoint ____________________________________ Attorney to transfer
the said Membership Units on the books of said limited liability company with
full power of substitution in the premises.

 

Dated:  

 

 

 

HOLDER OF MEMBERSHIP UNITS

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

Spouse

 

F-1