**Exhibit 10.4**

 

**PURCHASE AND SALEAGREEMENT**

 

**BY AND BETWEEN**

 

**CONSOLIDATED THEATRES,LLC**

 

**THE OTHER SELLERSIDENTIFIED HEREIN**

 

**AND**

 

**REGAL CINEMAS, INC.**

 

 

**JANUARY 14, 2008**

 

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**TABLE OF CONTENTS**

 
| ** **                                                                | ** **                                     | ** ** | **Page** |
|---------------------------------------------------------------------------|------------------------------------------------|------------|----------|
|                                                                      |                                           |       |     |
| **ARTICLE I PURCHASE AND SALE; CLOSING**                                  | ** **                                     | **1**      |
| SECTION 1.1.                                                              | Transfer of Options and Partnership Interests  |       | 1        |
| SECTION 1.2.                                                              | Closing                                        |       | 2        |
| SECTION 1.3.                                                              | Purchase Price; Closing Cash Payment           |       | 2        |
| SECTION 1.4.                                                              | Closing Deliveries                             |       | 2        |
| SECTION 1.5.                                                              | Adjustment to Purchase Price                   |       | 4        |
| SECTION 1.6.                                                              | Escrow                                         |       | 6        |
| SECTION 1.7.                                                              | Retained Leases                                |       | 6        |
|                                                                      |                                           |       |     |
| **ARTICLE II REPRESENTATIONS AND WARRANTIES  REGARDING THE TRANSACTIONS** | ** **                                     | **6**      |
| SECTION 2.1.                                                              | Organization                                   |       | 6        |
| SECTION 2.2.                                                              | Authority                                      |       | 6        |
| SECTION 2.3.                                                              | No Conflicts; Required Filings; and Consents   |       | 7        |
| SECTION 2.4.                                                              | Ownership of Options and Partnership Interests |       | 8        |
|                                                                      |                                           |       |     |
| **ARTICLE III REPRESENTATIONS AND WARRANTIES  REGARDING THE COMPANIES**   | ** **                                     | **8**      |
| SECTION 3.1.                                                              | Organization and Qualification; Subsidiaries   |       | 8        |
| SECTION 3.2.                                                              | Capitalization                                 |       | 9        |
| SECTION 3.3.                                                              | Financial Statements; Indebtedness             |       | 9        |
| SECTION 3.4.                                                              | Absence of Certain Changes or Events           |       | 10       |
| SECTION 3.5.                                                              | Absence of Litigation                          |       | 10       |
| SECTION 3.6.                                                              | Licenses and Permits; Compliance with Laws     |       | 11       |
| SECTION 3.7.                                                              | Taxes                                          |       | 12       |
| SECTION 3.8.                                                              | Intellectual Property                          |       | 14       |
| SECTION 3.9.                                                              | Material Contracts                             |       | 14       |
| SECTION 3.10.                                                             | Employee Benefit Plans                         |       | 16       |
| SECTION 3.11.                                                             | Properties; Assets                             |       | 17       |
| SECTION 3.12.                                                             | Employees; Labor Relations                     |       | 20       |
| SECTION 3.13.                                                             | Environmental Matters                          |       | 21       |
| SECTION 3.14.                                                             | Insurance                                      |       | 22       |
| SECTION 3.15.                                                             | Affiliate Transactions                         |       | 23       |
| SECTION 3.16.                                                             | Brokers                                        |       | 23       |
| SECTION 3.17.                                                             | Notes and Accounts Receivable                  |       | 23       |
| SECTION 3.18.                                                             | Powers of Attorney                             |       | 23       |
|                                                                      |                                           |       |     |
| **ARTICLE IV REPRESENTATIONS AND WARRANTIES OF  PURCHASER**               | ** **                                     | **23**     |
| SECTION 4.1.                                                              | Organization and Qualification                 |       | 23       |
| SECTION 4.2.                                                              | Authority                                      |       | 23       |
| SECTION 4.3.                                                              | No Conflict; Required Filings and Consents     |       | 24       |
| SECTION 4.4.                                                              | Absence of Litigation                          |       | 25       |

 

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| SECTION 4.5.                                     | Brokers                                                    |   | 25     |
|--------------------------------------------------|------------------------------------------------------------|--------|--------|
| SECTION 4.6.                                     | Financial Ability                                          |   | 25     |
| SECTION 4.7.                                     | Disclaimer of Other Representations and Warranties         |   | 25     |
|                                             |                                                       |   |   |
| **ARTICLE V COVENANTS**                          | ** **                                                 | **26** |
| SECTION 5.1.                                     | Affirmative Covenants of Sellers                           |   | 26     |
| SECTION 5.2.                                     | Restrictive Covenants of Sellers                           |   | 26     |
| SECTION 5.3.                                     | Tax Matters                                                |   | 28     |
|                                             |                                                       |   |   |
| **ARTICLE VI ADDITIONAL AGREEMENTS**             | ** **                                                 | **29** |
| SECTION 6.1.                                     | Access and Information                                     |   | 29     |
| SECTION 6.2.                                     | Confidentiality                                            |   | 29     |
| SECTION 6.3.                                     | Further Action; Efforts Regarding Closing                  |   | 30     |
| SECTION 6.4.                                     | Public Announcements                                       |   | 32     |
| SECTION 6.5.                                     | Employee Matters                                           |   | 32     |
| SECTION 6.6.                                     | Labor Matters; WARN                                        |   | 32     |
| SECTION 6.7.                                     | Information, Etc                                           |   | 33     |
| SECTION 6.8.                                     | Notification                                               |   | 33     |
| SECTION 6.9.                                     | Contacts with Suppliers, Customers and Other Parties       |   | 35     |
| SECTION 6.10.                                    | Kingstowne Litigation                                      |   | 35     |
| SECTION 6.11.                                    | Landlord Approvals, Estoppels; SNDAs; Memoranda of  Leases |   | 36     |
| SECTION 6.12.                                    | Non-Competition Agreement Amendment                        |   | 37     |
| SECTION 6.13.                                    | ABRY Indemnification Letter                                |   | 37     |
|                                             |                                                       |   |   |
| **ARTICLE VII CLOSING CONDITIONS**               | ** **                                                 | **37** |
| SECTION 7.1.                                     | Conditions to Obligations of Purchaser and Sellers         |   | 37     |
| SECTION 7.2.                                     | Additional Conditions to Obligations of Purchaser          |   | 38     |
| SECTION 7.3.                                     | Additional Conditions to Obligations of Sellers            |   | 40     |
| SECTION 7.4.                                     | Frustration of Closing Conditions                          |   | 41     |
|                                             |                                                       |   |   |
| **ARTICLE VIII INDEMNIFICATION**                 | ** **                                                 | **41** |
| SECTION 8.1.                                     | Indemnification of Purchaser                               |   | 41     |
| SECTION 8.2.                                     | Indemnification of Sellers                                 |   | 43     |
| SECTION 8.3.                                     | Notice of Claim                                            |   | 45     |
| SECTION 8.4.                                     | Defense of Third-Party Claims                              |   | 45     |
| SECTION 8.5.                                     | Resolution of Notice of Claim                              |   | 46     |
| SECTION 8.6.                                     | Survival of Covenants, Representations and  Warranties     |   | 48     |
| SECTION 8.7.                                     | Exclusive Remedy; Non-Recourse                             |   | 48     |
|                                             |                                                       |   |   |
| **ARTICLE IX TERMINATION, AMENDMENT AND WAIVER** | ** **                                                 | **49** |
| SECTION 9.1.                                     | Termination                                                |   | 49     |
| SECTION 9.2.                                     | Effect of Termination                                      |   | 50     |
|                                             |                                                       |   |   |
| **ARTICLE X GENERAL PROVISIONS**                 | ** **                                                 | **51** |
| SECTION 10.1.                                    | Notices                                                    |   | 51     |
| SECTION 10.2.                                    | Certain Definitions                                        |   | 52     |
| SECTION 10.3.                                    | Headings; Interpretation                                   |   | 58     |

 

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| SECTION 10.4.  | Severability                                                  |   | 58 |
|----------------|---------------------------------------------------------------|--------|----|
| SECTION 10.5.  | Entire Agreement                                              |   | 58 |
| SECTION 10.6.  | Assignment                                                    |   | 59 |
| SECTION 10.7.  | Third Party Beneficiaries                                     |   | 59 |
| SECTION 10.8.  | Expenses                                                      |   | 59 |
| SECTION 10.9.  | Specific Performance                                          |   | 59 |
| SECTION 10.10. | Amendments; Waiver                                            |   | 59 |
| SECTION 10.11. | Governing Law; Consent to Jurisdiction; Waiver of  Jury Trial |   | 59 |
| SECTION 10.12. | No Recourse                                                   |   | 61 |
| SECTION 10.13. | Counterparts                                                  |   | 61 |
| SECTION 10.14. | Time of Essence                                               |   | 61 |
| SECTION 10.15. | Privilege and Related Matters                                 |   | 61 |

 

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| EXHIBITS       |                                     |
|----------------|------------------------------------------|
|           |                                     |
| Exhibit A | Subsidiaries of the Partnership          |
| Exhibit B | Form of Exercise Notice             |
| Exhibit C | Form of Lessor Estoppel             |
| Exhibit D | Form of ABRY Indemnification Letter |
| Exhibit E | Sellers’ Counsel Opinions           |
| Exhibit F | Form of Escrow Agreement            |

 
| SCHEDULES |                                    |
|-----------|-----------------------------------------|
|      |                                    |
| 1.3(c)    | Closing Cash Consideration Calculation  |
| 2.3       | Consents and Approvals                  |
| 3.1       | Jurisdiction for non-Delaware Companies |
| 3.3(a)    | Financial Statements                    |
| 3.3(b)    | Indebtedness                            |
| 3.3(c)    | Theatre Cash Flow                       |
| 3.4       | Absence of Certain Changes or Events    |
| 3.5       | Litigation                              |
| 3.6(a)    | Permits                                 |
| 3.7(a)    | Taxes                                   |
| 3.7(b)    | Tax Notices                             |
| 3.8(a)    | Intellectual Property Rights            |
| 3.9       | Material Contracts                      |
| 3.10      | Employee Benefit Plans                  |
| 3.11(a)   | Non-Owned Personal Property             |
| 3.11(b)   | Leased Real Property                    |
| 3.11(h)   | Notice of Taking                        |
| 3.11(i)   | Notice of Certain Violations            |
| 3.12(a)   | Highly Compensated Employees            |
| 3.12(b)   | Labor Relations                         |
| 3.13(a)   | Environmental Compliance                |
| 3.13(b)   | Environmental Notice                    |
| 3.13(c)   | Environmental Orders                    |
| 3.13(d)   | Hazardous Substances                    |
| 3.13(e)   | Environmental Permits and Consents      |
| 3.13(f)   | Hazardous Substances                    |
| 3.13(g)   | Environmental Conditions                |
| 3.14(a)   | Insurance Polices                       |
| 3.14(b)   | Other Insurance Matters                 |
| 3.15      | Affiliate Transactions                  |
| 5         | Exceptions to Covenants of Sellers      |
| 5.1       | Certain Employees                       |

 

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Index of Defined Terms

 
| ** **                                        | ** ** | **Section** |
|---------------------------------------------------|------------|-------------|
| AAA                                               |       | 8.5(c)      |
| Adjustment Time                                   |       | 1.3(b)      |
| Affiliate                                         |       | 10.2        |
| Agreement                                         |       | Preamble    |
| Antitrust Division                                |       | 6.3(b)      |
| Audited Financial Statements                      |       | 3.3(a)      |
| Bank Facility                                     |       | 10.2        |
| Benefit Plans                                     |       | 3.10(a)     |
| Business Day                                      |       | 10.2        |
| Claim                                             |       | 8.2(b)(a)   |
| Closing                                           |       | 1.2         |
| Closing Balance Sheet                             |       | 1.5(a)      |
| Closing Cash                                      |       | 10.2        |
| Closing Cash Payment                              |       | 1.3(c)      |
| Closing Date                                      |       | 1.2         |
| Closing Indebtedness                              |       | 10.2        |
| Closing Statement                                 |       | 1.5(a)      |
| Closing Working Capital                           |       | 10.2        |
| Closing Working Capital Adjustment                |       | 10.2        |
| COBRA                                             |       | 3.10(l)     |
| Code                                              |       | 3.10(a)     |
| Company Financial Statements                      |       | 3.3(a)      |
| Companies                                         |       | Recitals    |
| Company Material Adverse Effect                   |       | 10.2        |
| Confidentiality Agreement                         |       | 6.2         |
| Contested Claim                                   |       | 8.5(b)      |
| Control, controlled by, under common control with |       | 10.2        |
| Damages                                           |       | 8.1(a)      |
| Deductible                                        |       | 8.1(c)      |
| Divestiture                                       |       | 10.2        |
| Dispute Notice                                    |       | 1.5(b)      |
| EGTRRA                                            |       | 3.10(g)     |
| Encumbrances                                      |       | 10.2        |
| Enterprise Value                                  |       | 10.2        |
| Environmental Law                                 |       | 10.2        |
| ERISA                                             |       | 3.10(a)     |
| ERISA Affiliate                                   |       | 3.10(a)     |
| ERISA Plan                                        |       | 3.10(a)     |
| Escrow Amount                                     |       | 10.2        |
| Escrow Agent                                      |       | 10.2        |
| Escrow Agreement                                  |       | 10.2        |
| Estimated Closing Statement                       |       | 1.3(b)      |
| Estimated Enterprise Value                        |       | 1.3(b)      |
| Estimated Option Purchase Price                   |       | 1.3(b)      |

 

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| ** **                    | ** ** | **Section** |
|-------------------------------|------------|-------------|
| Estimated Purchase Price      |       | 1.3(b)      |
| Exercise Notice               |       | 1.1         |
| Final Award                   |       | 8.5(f)      |
| Final Cash Payment            |       | 1.5(d)      |
| Final Purchase Price          |       | 1.5(d)      |
| FTC                           |       | 6.3(b)      |
| GAAP                          |       | 1.5(d)      |
| Governmental Entity           |       | 10.2        |
| GUST                          |       | 3.10(g)     |
| Hazardous Substance           |       | 10.2        |
| HSR Act                       |       | 2.3(b)      |
| Indemnified Parties           |       | 8.2(b)      |
| Indemnitee                    |       | 8.2(b)(a)   |
| Indemnitor                    |       | 8.2(b)(a)   |
| Independent Accountants       |       | 1.5(c)      |
| Intellectual Property         |       | 10.2        |
| Interim Balance Sheet         |       | 3.3(a)      |
| J.A.M.S.                      |       | 8.5(c)      |
| Knowledge                     |       | 10.2        |
| Landlord Approval             |       | 10.2        |
| Law                           |       | 10.2        |
| Lease                         |       | 3.11(b)     |
| Leased Real Property          |       | 3.11(b)     |
| Lessor Estoppel               |       | 6.11(b)     |
| Limited-Indemnity Cap         |       | 8.1(c)      |
| Limited-Indemnity Items       |       | 8.1(a)      |
| Material Contracts            |       | 3.9(a)      |
| Notice of Claim               |       | 8.3(a)      |
| Notice of Divestiture         |       | 6.3(c)      |
| Option                        |       | Recitals    |
| Option Exercise Price         |       | Recitals    |
| Order                         |       | 10.2        |
| Pending Claim                 |       | 1.3(a)      |
| Permitted Encumbrances        |       | 10.2        |
| Permits                       |       | 3.6         |
| Person                        |       | 10.2(kk)    |
| Purchase Price                |       | 1.3(a)      |
| Purchaser Indemnified Items   |       | 8.1(a)      |
| Purchaser-Indemnified Persons |       | 8.1(a)      |
| Related Agreement             |       | 10.2        |
| Release                       |       | 10.2        |
| Seller and Sellers            |       | Preamble    |
| Seller Account                |       | 1.4(b)(ii)  |
| Seller COBRA Obligations      |       | 6.15        |
| Seller Parties                |       | 6.1(b)      |
| Subsidiary                    |       | 10.2        |

 

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| ** **                        | ** ** | **Section** |
|-----------------------------------|------------|-------------|
| Supplemental Financial Statements |       | 3.3(a)      |
| Survival Date                     |       | 10.2(oo)    |
| Tax and Taxes                     |       | 10.2        |
| Tax Return                        |       | 10.2        |
| Termination Date                  |       | 9.1(e)      |
| Theatre Level Cash Flow           |       | 10.2        |
| Third-Party Claim                 |       | 8.3(a)      |
| Transactions                      |       | 1.4(a)      |
| Transfer Taxes                    |       | 6.3(e)      |
| Unresolved Items                  |       | 1.5(c)      |
| WARN Act                          |       | 6.6(a)      |

 

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**PURCHASE AND SALEAGREEMENT**

 

This PURCHASE AND SALE AGREEMENT (this “Agreement”)is dated January 14, 2008, and made by and among Consolidated Theatres,LLC, a Delaware limited liability company (“Parent”), the corporations(other than Purchaser) identified on the signature pages hereto(collectively, the “Corporations”, and together with Parent, each a “Seller”and, together, the “Sellers”), Consolidated Theatres Holdings, GP, aNorth Carolina partnership (the “Partnership”), and Regal Cinemas, Inc.,a Tennessee corporation (“Purchaser”). Capitalized terms used but not otherwise defined herein shall have themeanings set forth in Section 10.2.

 

WHEREAS, the Partnership, and its Subsidiariesidentified on Exhibit A hereto (collectively, with the Partnership,the “Companies”) operate a chain of cinemas located in the SoutheasternUnited States;

 

WHEREAS, the Corporations own 100% of the outstandingEquity Securities (excluding the Options (as defined below)) of the Partnership(collectively, the “Partnership Interests”), and Parent owns 100% of theoutstanding capital stock of each of the Corporations;

 

WHEREAS, Parent owns 100% of the outstanding optionsto purchase all of the Partnership Interests (collectively, the “Options”)from the Corporations for an aggregate exercise price (the “Option ExercisePrice”) of $41,910,614.83; and

 

WHEREAS, Purchaser desires to purchase from Sellers,and Sellers desire to sell to Purchaser, all the assets of the Companiesthrough the purchase (1) from Parent of the Options, and (2) from theCorporations of the Partnership Interests upon the exercise of the Options, ineach case subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing andthe respective representations, warranties, covenants and agreements set forthin this Agreement and for other consideration the receipt and sufficiency ofwhich is hereby acknowledged, the parties hereto agree as follows:

 

# **ARTICLE IPURCHASE AND SALE; CLOSING**

 

**SECTION 1.1.              Transfer of Options andPartnership Interests**.

 

Upon the terms and subject to the conditions containedherein, Parent shall sell, convey, transfer, assign and deliver to Purchaser,and Purchaser shall acquire at the Closing, the Options.  Immediately following such purchase and saleof the Options, Purchaser shall exercise the Options by delivering to theCorporations an exercise notice (the “Exercise Notice”) substantially inthe form attached hereto as Exhibit B and paying the OptionExercise Price, and Purchaser and Sellers shall consummate the purchase andsale of the Partnership Interests as set forth herein.  Each Corporation agrees that the exercise bythe Purchaser at the Closing of the Option granted by such Corporation, on theterms of this Agreement instead of pursuant to the procedures set forth in thecontribution agreement pursuant to which such Option was granted, willconstitute a valid exercise of such Option.

 

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**SECTION 1.2.              Closing**.

 

The closing of the purchase and sale of the Optionsand the Partnership Interests pursuant to this Agreement (the “Closing”)shall occur at the offices of Hogan & Hartson L.L.P., 1200 SeventeenthStreet, Suite 1500, Denver, Colorado, at 10:00 a.m. local time on thesecond Thursday following full satisfaction or due waiver of all of the closingconditions set forth in Article VII hereof (other than those to besatisfied by actions to be taken at the Closing), or such other time and placeas may be mutually agreed.  The date uponwhich the Closing actually occurs is referred to herein as the “Closing Date”.

 

**SECTION 1.3.              Purchase Price; Closing CashPayment**.

 

### (a)   Upon theterms and subject to the conditions contained herein, as consideration for thepurchase of the Options, Purchaser shall pay to Parent an aggregate purchaseprice equal to the Enterprise Value less the Option Exercise Price (the “OptionPurchase Price”).  The aggregateconsideration for the Transactions (the “Purchase Price”) shall be anamount equal to (i) the Option Exercise Price plus (ii) theOption Purchase Price, as adjusted in accordance with Section 1.5.

###  

### (b)   Not fewerthan three (3) Business Days prior to the Closing, Parent shall deliver toPurchaser a statement (the “Estimated Closing Statement”) setting forthParent’s good faith estimates of the amounts of Closing Working Capital andClosing Cash as of 11:59 p.m. Eastern Time on the Closing Date (the “AdjustmentTime”), and a calculation of the Enterprise Value and Option Purchase Pricebased on the foregoing estimates (the “Estimated Enterprise Value” and “EstimatedOption Purchase Price,” respectively).

###  

### (c)   At theClosing, the Purchaser shall pay in cash (i) to the Corporations, theOption Exercise Price, (ii) to the Parent, a portion of the EstimatedOption Purchase Price (the “Closing Cash Payment”) equal to theEstimated Option Purchase Price less (A) the amounts paid pursuant toclause (iii) below in respect of the Bank Facility and (B) the EscrowAmount, and (iii) on behalf of the Companies (and each of the Sellers asguarantors), all amounts then due under the Bank Facility (including allprepayment premiums, penalties or other like charges) as set forth in thepayoff letter delivered to Purchaser as provided in Section 7.2(c)(vii),with the effect that the Bank Facility and related documentation shall beterminated effective as of the Closing (other than any provision thereof that,by its terms, survives such repayment). For illustrative purposes only, Schedule 1.3(c) attachedhereto sets forth an example of the calculation of the cash payments to be madeat Closing in accordance with this Section 1.3(c).

###  

**SECTION 1.4.              Closing Deliveries**.

 

### (a)   ClosingDeliveries by Sellers.  To effect thetransactions referred to in Section 1.1 (the “Transactions”),Sellers shall, on the Closing Date, deliver to Purchaser the following:

###  

#### (i)            oneor more instruments transferring to Purchaser the Options and the PartnershipInterests, in form reasonably satisfactory to Purchaser;

 

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#### (ii)           copiesof all consents, approvals, releases, and waivers from Governmental Entitiesand other third parties, including Landlord Approvals, relating to theTransactions that have been obtained; and

####  

#### (iii)          allother documents required to be delivered by Sellers pursuant to Article VIInot specifically mentioned above in this Section 1.4(a).

####  

All instruments and documents executed and deliveredto Purchaser pursuant hereto shall be in form and substance, and shall beexecuted in a manner, reasonably satisfactory to Purchaser and its counsel.

 

### (b)   ClosingDeliveries by Purchaser.  To effectthe Transactions, Purchaser shall, on the Closing Date, deliver the following:

###  

#### (i)            theExercise Notice;

####  

#### (ii)           theClosing Cash Payment by wire transfer of immediately available funds to anaccount (the “Seller Account”) designated by Parent not fewer than three(3) Business Days prior to the Closing Date;

####  

#### (iii)          theOption Exercise Price, by wire transfer of immediately available funds to theSeller Account (for the account of the Corporations);

####  

#### (iv)          theEscrow Amount by wire transfer of immediately available funds to the EscrowAgent; and

####  

#### (v)           allother documents required to be delivered by Purchaser pursuant to Article VIInot specifically mentioned above in this Section 1.4(b).

####  

All instruments and documents executed and deliveredto Sellers pursuant hereto shall be in form and substance, and shall beexecuted in a manner, reasonably satisfactory to Parent and its counsel.

 

### (c)   OtherActions to be Taken prior to and at the Closing.  To further facilitate the Transactions:  (i) not fewer than seven (7) norgreater than fifteen (15) days prior to the Closing Date, Purchaser willdeliver to the Commonwealth 20 Landlord notice of the Closing Date, as requiredby Section 3 of the Commonwealth 20 Landlord Agreement, (ii) on orprior to the Closing Date, Purchaser will cause to be delivered to theCommonwealth 20 Landlord the REG Guaranty (as that term is defined in theCommonwealth 20 Landlord Agreement), duly executed by each of Purchaser, RegalEntertainment Group, a Delaware corporation, Regal Entertainment Holdings andRegal Cinemas Corporation, and Purchaser will cause the Security Deposit (asthat term is defined in the Commonwealth 20 Lease) to be delivered to theCommonwealth 20 Landlord as contemplated by Section 2 of the Commonwealth20 Landlord Agreement, each in accordance with the Commonwealth 20 LandlordAgreement, and (iii) Sellers will complete the list of deferredmaintenance items as set forth on page 3 of the Wells Fargo AnnualProperty Inspection Report relating to the inspection of the Commonwealth 20building on August 19, 2007 prior to the Closing Date, but in no eventlater than 90 days after January 7, 2008.

 

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**SECTION 1.5.              Adjustment to Purchase Price**.

 

### (a)   No laterthan the 75th day after the Closing Date, Purchaser shall prepare and deliverto Parent a consolidated balance sheet of the Companies as of the AdjustmentTime (the “Closing Balance Sheet”), together with a statement (the “ClosingStatement”) setting forth Purchaser’s determination of Closing WorkingCapital, Closing Cash and Enterprise Value, and a calculation of the PurchasePrice based on the foregoing determinations. Purchaser shall prepare the Closing Balance Sheet and the ClosingStatement (including the determinations included therein) in accordance with Section 1.5(e).

###  

### (b)   During the30-day period immediately following Parent’s receipt of the Closing BalanceSheet and the Closing Statement (or during the 30-day period immediatelyfollowing the 75-day period described in Section 1.5(a), ifPurchaser fails to deliver the Closing Balance Sheet and the Closing Statementto Parent within the 75-day period provided in Section 1.5(a) (inwhich case, for purposes of this Section 1.5(b), the Estimated ClosingCertificate shall be treated as the Closing Balance Sheet and the ClosingStatement and will be deemed to have been delivered to Parent on the 75th dayafter the Closing Date)), Parent and its advisors and representatives (i) shallbe permitted to review, upon reasonable notice, the Companies’ books andrecords and the working papers related to the preparation of the ClosingBalance Sheet and the Closing Statement (including the determinations includedtherein), and (ii) shall be given reasonable access, upon reasonablenotice, to knowledgeable employees and accounting professionals of Purchaserand the Companies in order to facilitate Parent’s review of the Closing BalanceSheet and the Closing Statement; provided that the review and accessdescribed in clauses (i) and (ii) shall be conducted at times and ina manner that does not unreasonably interfere with the operation of Purchaser’sor the Companies’ respective businesses. The Closing Balance Sheet and the Closing Statement (including thedeterminations included therein) shall become final, binding and conclusiveupon Purchaser and Sellers (A) on the 30th day following Parent’s receiptthereof, unless Purchaser receives from Parent prior to such 30th day writtennotice of Parent’s disagreement (a “Dispute Notice”) with any account ordetermination set forth in the Closing Balance Sheet or the Closing Statementor (B) on such earlier date as Parent notifies Purchaser that it does notdispute the Closing Balance Sheet and Closing Statement.  If Parent timely delivers a Dispute Notice,then the determination of the Purchase Price shall become final, binding andconclusive upon Purchaser and Sellers on the first to occur of (x) thedate on which Purchaser and Parent resolve in writing all differences they havewith respect to the disputed items or (y) the date on which all of thedisputed items that are not resolved by Purchaser and Parent in writing arefinally resolved in writing by the Independent Accountants in accordance with Section 1.5(c).

###  

### (c)   During the30 days following delivery of a Dispute Notice, Purchaser and Parent shall seekin good faith to resolve in writing any differences that they have with respectto the disputed items.  Any disputed itemresolved in writing by Purchaser and Parent shall be deemed final, binding andconclusive on Purchaser and Sellers.  IfPurchaser and Parent do not reach agreement on all of the disputed items duringsuch 30-day period (or such longer period as they shall mutually agree), thenat the end of such 30-day (or longer) period Purchaser and Parent shall submitall unresolved disputed items (collectively, the “Unresolved Items”) toErnst & Young LLP (the “Independent Accountants”) to review andresolve such matters and each will specify to the other and to the IndependentAccountant its determination of the amount of the 

 

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### Purchase Price (a party’s “Proposed Price”).  The Independent Accountants will determineeach Unresolved Item in accordance with this Section 1.5(c) andSection 1.5(e) as promptly as may be reasonably practicable,and Purchaser and Parent shall instruct the Independent Accountants to endeavorto complete such process within a period of no more than 60 days.  The Independent Accountants may conduct suchproceedings as the Independent Accountants believe, in their sole discretion,will assist in the determination of the Unresolved Items; provided that,except as Purchaser and Parent may otherwise agree in writing, all communicationsbetween Purchaser and Parent or any of their respective representatives, on theone hand, and the Independent Accountants, on the other hand, shall be inwriting with copies simultaneously delivered to the non-communicating party.  The Independent Accountants’ determination ofthe Unresolved Items shall be final, binding and conclusive on Purchaser andSellers, effective as of the date the Independent Accountants’ writtendetermination is received by Purchaser and Parent.  The fees and expenses of the IndependentAccountants shall be borne as follows:  (x) byParent, in a portion equal to a fraction, the numerator of which is theabsolute difference between Parent’s Proposed Price and the Purchase Pricedetermined by the Independent Accountants and the denominator of which is theabsolute difference between Parent’s Proposed Price and the Purchaser’sProposed Price, and (y) by Purchaser, in a portion equal to one (1) minusthe fraction described in the preceding clause (x).

###  

### (d)   Within five(5) Business Days after the final determination of the Purchase Pricepursuant to Section 1.5(b) or Section 1.5(c) (the“Final Purchase Price”), either (i) if the Estimated Purchase Priceexceeds the Final Purchase Price, then Parent will pay to Purchaser the amount ofsuch excess, or (ii) if the Final Purchase Price exceeds the EstimatedPurchase Price, then Purchaser will pay to Parent the amount of suchexcess.  Any payment to be made pursuantto this Section 1.5(d) will be made by wire transfer ofimmediately available funds to an account specified by the party to receivesuch payment.

###  

### (e)   For thepurposes of this Agreement, each accounting term will have the meaning that isapplied thereto in accordance with United States generally accepted accountingprinciples (“GAAP”) as in effect on December 31, 2006 and, to theextent consistent with GAAP as in effect on December 31, 2006, theaccounting principles, policies, procedures and methodologies applied inpreparing the balance sheet that is part of the Audited Financial Statementsand the accompanying statement of income. Each account included in the Closing Statement and the Closing BalanceSheet shall be (i) calculated in accordance with GAAP as in effect on December 31,2006, and, to the extent consistent with GAAP as in effect on December 31,2006, utilizing the accounting principles, policies, procedures andmethodologies applied in preparing the Company Financial Statements (withoutregard to materiality), including with respect to the nature or classification ofaccounts, and determining levels of reserves or levels of accruals; and (ii) consistentwith the books and records of the Companies and the definitions herein; providedthat in determining current assets and liabilities hereunder, (A) allaccounting entries shall be taken into account regardless of their amount andall known errors and omissions shall be corrected, (B) all known properadjustments shall be made, and (C) appropriate reserves for all known andquantifiable liabilities and obligations for which reserves are appropriate inaccordance with GAAP as in effect on December 31, 2006 shall be included.

 

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**SECTION 1.6.              Escrow.**

 

At the Closing, the Escrow Amount shall be paid to theEscrow Agent as described in Section 1.4 and deposited by theEscrow Agent into an interest-bearing escrow account pursuant to the EscrowAgreement.  On the Business Day after theSurvival Date, the portion of the Escrow Amount then held by the Escrow Agent,plus any interest or other earnings on the Escrow Amount and then held by theEscrow Agent, less the aggregate amount of any unresolved outstanding claims onthe Escrow Account made by the Seller-Indemnified Persons pursuant to Section 8.3,shall be distributed to Parent pursuant to the terms of the EscrowAgreement.  Purchaser shall be entitledto be paid from the Escrow Amount and any interest or other earnings on theEscrow Amount, in each case held by the Escrow Agent from time to time, anyamount that any Seller is required to pay to Purchaser pursuant to thisAgreement that has not been paid to Purchaser in accordance with the provisionshereof and any indemnity payment required to be made by Sellers pursuant to Article VIIIof this Agreement, in each case pursuant to the terms of the Escrow Agreement.

 

**SECTION 1.7.              Retained Leases.**

 

Sellers acknowledge and agree that the Partnership andthe Companies have no right, title or interest in or to that certain (i) LeaseAgreement dated March 18, 2001 by and between Remington San Simeon, L.L.C.and Consolidated Theatres, as amended, and (ii) Lease Agreement dated asof November 8, 1993 by and between Fairview Plaza Associates LimitedPartnership and Consolidated Theatres, Inc., as amended, which leases andall obligations and liabilities associated therewith shall be retained in theirentirety by Sellers.

 

# **ARTICLE IIREPRESENTATIONS AND WARRANTIES REGARDING THE TRANSACTIONS**

 

Sellers and the Partnership hereby jointly andseverally represent and warrant to Purchaser as follows:

 

**SECTION 2.1.              Organization**.

 

Parent is a limited liability company duly organized,validly existing, and in good standing under the Laws of the State of Delaware,and is qualified to do business as a foreign entity in those jurisdictions inwhich it is required to be so qualified in order for it to be able to performits obligations under this Agreement. Each Corporation is a corporation duly organized, validly existing, andin good standing under the laws of the State of Delaware, and is qualified todo business as a foreign entity in those jurisdictions in which it is requiredto be so qualified in order for it to be able to perform its obligations underthis Agreement and the Option it has granted.

 

**SECTION 2.2.              Authority**.

 

Each Seller and the Partnership has the necessarypower and authority to enter into this Agreement and each Related Agreement towhich it is or will become a party, and to perform its obligations hereunderand thereunder and to consummate the Transactions, and each Corporation 

 

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has the necessary power and authority to perform its obligations withrespect to the Option that it has granted. The execution and delivery of this Agreement and each Related Agreementto which it is or will become a party by each Seller and the Partnership andthe consummation by each Seller and the Partnership of the Transactions havebeen duly and validly authorized by all necessary action and no otherproceedings on the part of such Seller or the Partnership is necessary toauthorize this Agreement and each Related Agreement to which it is or willbecome a party or to consummate the Transactions.  This Agreement and each Related Agreement towhich it is or will become a party has been, or will be, duly executed anddelivered by each Seller and the Partnership and, assuming its dueauthorization, execution and delivery by Purchaser, constitutes a legal, validand binding obligation of such Seller and the Partnership, enforceable againstsuch Seller and the Partnership in accordance with its terms, and each Optionconstitutes a legal, valid and binding obligation of the Corporation thatgranted it, except as such enforceability may be limited by bankruptcy,insolvency, reorganization, moratorium and other similar Laws of generalapplicability relating to or affecting creditors’ rights generally and by theapplication of general principles of equity.

 

**SECTION 2.3.              No Conflicts; Required Filings;and Consents**.

 

### (a)   Theexecution and delivery of this Agreement and each Related Agreement by Sellersand the Partnership do not, and the consummation by Sellers and the Partnershipof the Transactions will not, subject to compliance with the requirementsdescribed in Section 2.3(b): (i) conflict with or violate,result in a breach of, or constitute a default under the certificate offormation, partnership or limited liability company agreement or certificate ofincorporation or bylaws (as applicable) of any Seller or any Company, (ii) requireany authorization, consent, approval, exemption or other action or notice underthe provisions of any Seller’s or any Company’s certificate of formation,partnership or limited liability company agreement or certificate ofincorporation or bylaws (as applicable), (iii) conflict with or violateany Law applicable to any Seller or any Company or by which any of theirrespective properties or assets is bound or affected, or (iv) result inany breach of or constitute a default (or an event that with notice or lapse oftime or both would become a breach or a default) under, or give to others anyrights of termination, amendment, acceleration or cancellation of, or result inthe creation of an Encumbrance on any of the properties or assets of any Selleror any Company pursuant to, any note, bond, mortgage, indenture, contract,agreement, lease, license, permit, franchise or other instrument or obligationto which any Seller or any Company is a party or by which any Seller, anyCompany or any of their respective properties or assets is bound, except, inthe case of clauses (iii) and (iv) above for any such conflicts,violations, breaches, defaults or other accelerations or occurrences that inthe aggregate would not have and would not reasonably be expected to have aCompany Material Adverse Effect.

###  

### (b)   Theexecution and delivery of this Agreement and each Related Agreement to which itis or will become a party by any Seller or the Partnership does not, and theconsummation of the Transactions by any Seller or any Company shall not,require any consent, approval, authorization or permit of, or filing with ornotification to, any Governmental Entity except (i) for (A) applicablerequirements of the Hart-Scott-Rodino Antitrust Improvement Act of 1976, asamended (the “HSR Act”) and state blue sky Laws, and (B) applicablerequirements identified on Schedule 2.3, and (ii) where failure toobtain such consents, approvals, authorizations or permits, or to make suchfilings or notifications, individually or in the 

 

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### aggregate would not have and would not reasonably be expected to have aCompany Material Adverse Effect.

###  

**SECTION 2.4.              Ownership of Options andPartnership Interests**.

 

Parent holds all right, title and interest in and tothe Options, free and clear of any restrictions on transfer, Taxes,Encumbrances, options, warrants, purchase rights, contracts, commitments,equities, claims, and demands (other than restrictions under the Securities Actand state securities laws or that shall be terminated effective as of theClosing in connection with the repayment of the indebtedness under the BankFacility).  The Corporations, takentogether, hold all right, title and interest in and to the PartnershipInterests, free and clear of any restrictions on transfer, Taxes, Encumbrances,options, warrants, purchase rights, contracts, commitments, equities, claims,and demands (other than the Options and restrictions under the Securities Actand state securities laws or that shall be terminated effective as of the Closingin connection with the repayment of the indebtedness under the BankFacility).  None of Parent or any of theCorporations is a party to any option, warrant, purchase right, or othercontract or commitment that could require it to sell, transfer, or otherwisedispose any of the Partnership Interests (other than this Agreement and theOptions).  There are no Encumbrances orrestrictions that would prohibit Parent or any Corporation from transferring(or impose any liability on any Person in connection with the transfer of) anyof the Options or the Partnership Interests to Purchaser at the Closing, andthe Partnership has no outstanding Equity Security other than the PartnershipInterests and the Options.  All of theoutstanding Equity Securities of the Partnership have been duly authorized andare validly issued.  No Equity Securitiesof the Partnership are reserved for issuances. There are no distributions that have accrued or been declared but areunpaid on the Equity Securities of the Partnership.  There are no outstanding or authorized unitappreciation, phantom units, unit plans or similar rights with respect to thePartnership.  There are no agreementsamong any members of Parent or shareholders of the Corporations, as applicable,relating to the Partnership (including any agreement related to the managementof the Partnership or any equity interest in the Partnership), other than (i) thepartnership agreement of the Partnership, a true and correct copy of which hasbeen made available to Purchaser, and (ii) agreements to which thePartnership is not a party, that are not binding on the Partnership, and thatcould not otherwise give rise to any liability of the Partnership orPurchaser.  The Options represent theright to purchase one hundred percent (100%) of the Partnership Interests.

 

# **ARTICLE IIIREPRESENTATIONS AND WARRANTIES REGARDING THE COMPANIES**

 

Sellers and thePartnership hereby jointly and severally represent and warrant to Purchaser asfollows:

 

**SECTION 3.1.              Organization and Qualification;Subsidiaries**.

 

The Partnership is a partnership duly organized andvalidly existing in the State of North Carolina.  Each other Company is a limited liabilitycompany validly existing and in good standing under the laws of the State ofDelaware (or the laws of the jurisdiction designated for such Company on theattached Schedule 3.1).  EachCompany is duly qualified to conduct its 

 

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business as a foreign entity, and is in good standing, in eachjurisdiction where the character of its properties owned or leased or thenature of its activities makes such qualification necessary, except where thefailure to be so qualified in the aggregate would not have and would notreasonably be expected to have a Company Material Adverse Effect.  Each Company has the requisite power andauthority to own, operate, lease and otherwise to hold and operate its assetsand properties and to carry on the businesses as now being conducted.  No Company has any Subsidiary, or owns anyEquity Security of any entity, other than another Company.  Sellers have made available to Purchasercomplete and accurate copies of the certificate of formation and limitedliability company agreement of each Company other than the Partnership, and theminutes of the meetings of the partners of the Partnership and members of eachother Company that are in its possession. All actions of the Companies since their inception have been authorized,approved or otherwise ratified by all necessary limited liability companyaction of Parent, partnership action of the Partnership or corporate action ofthe Corporations, as applicable.

 

**SECTION 3.2.              Capitalization**.

 

The Partnership owns all of the outstanding EquitySecurities of each of the other Companies. There are no options, warrants or other rights, agreements, arrangementsor commitments of any character relating to the issued or unissued EquitySecurities of any Company other than the Partnership or obligating any suchCompany to issue or sell any shares of capital stock of, or other EquitySecurities in such Company, including upon the exchange or conversion of anyIndebtedness or security.  There are nooutstanding contractual obligations of any Company to acquire any EquitySecurities in any other Person.

 

**SECTION 3.3.              Financial Statements; Indebtedness**.

 

### (a)   Attached asSchedule 3.3(a) are: (i) the audited consolidated balancesheets of the Companies as of December 31, 2006, and December 31,2005, and the related audited consolidated statements of income and of cashflow for the year ended on such dates (the “Audited Financial Statements”),and (ii) the unaudited consolidated balance sheet of the Companies as of September 30,2007 (the “Interim Balance Sheet”) and the related unauditedconsolidated statement of income for the nine**-**monthperiod then ended (all of the foregoing financial statements and any notesthereto are hereinafter collectively referred to as the “Company FinancialStatements”).  The Company FinancialStatements present fairly (and, when delivered, the financial statements to bedelivered prior to the Closing pursuant to Section 5.1(x) (the “SupplementalFinancial Statements”) will present), in all material respects, thefinancial position of the Companies at their respective dates, and the resultsof operations and cash flows of the Companies for the periods referred totherein, all in accordance with GAAP applied on a basis consistent with priorperiods except, with respect to the unaudited Company Financial Statements orSupplemental Financial Statements, for any absence of required footnotes andsubject to the Companies’ customary year-end adjustments.  During the periods covered by the CompanyFinancial Statements, none of the Corporations (x) conducted any business,(y) owned any asset other than its ownership interest in the Partnership,or (z) incurred any liability other than liabilities for (1) franchiseand similar Taxes, (2) Taxes arising out of the ownership of its interestin the Partnership, (3) liabilities incurred by it by virtue of its 

 

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### status as a general partner of the Partnership, and (4) guarantiesof obligations of one or more of the Companies.

###  

### (b)   TheCompanies have no liabilities of the type required to be reflected on aconsolidated balance sheet prepared in accordance with GAAP, applied on a basisconsistent with the method used in preparation of the Audited FinancialStatements except for (i) the indebtedness, liabilities and obligationsshown on the Interim Balance Sheet (including any notes thereto) or that willconstitute Closing Indebtedness, (ii) current liabilities that have beenincurred by the Companies after the date of the Interim Balance Sheet in theordinary course of their businesses or in connection with the Transactions, and(iii) indebtedness, liabilities and obligations set forth on Schedule 3.3(b).

###  

### (c)   Schedule3.3(c) sets forth the amount of the Theatre Level Cash Flow for eachtheatre operated by the Companies, for the twelve-month period ended September 30,2007.

###  

**SECTION 3.4.              Absence of Certain Changes orEvents**.

 

Since the date of the Interim Balance Sheet andthrough the date of this Agreement, except as set forth on Schedule 3.4,the Companies have conducted their business in all material respects only inthe ordinary course of business and there has not been any:

 

#### (i)            destructionor loss of, or damage to, any of the assets or properties of any Company,whether or not covered by insurance, in excess of $250,000;

####  

#### (ii)           saleor other disposition (other than the sale, use or other disposition ofinventories, collection of accounts receivable, and dispositions of obsolete orreplaced property, in the ordinary course of business) of any asset or propertyof any Company having a value in excess of $250,000;

####  

#### (iii)          cancellationor waiver of any claims or rights with a value to the Companies in excess of$250,000;

####  

#### (iv)          capitalinvestment in, or any loan to, any other Person (other than another Company) bya Company in excess of $250,000;

####  

#### (v)           loanto, or any other transaction with, any of Company’s partners, members,managers, shareholders, directors, officers, and employees or Affiliates, otherany loan to or other transaction with any other Company or any employee of anyCompany in the ordinary course of business; or

####  

#### (vi)          commitmentor contract to do any of the foregoing by a Company.

####  

**SECTION 3.5.              Absence of Litigation**.

 

Except as set forth on Schedule 3.5, there isno action, suit, investigation, or proceeding pending or, to the Sellers’Knowledge, threatened by or against any of the Companies before any court,administrative, governmental, arbitration, mediation or regulatory authority orbody, domestic or foreign, that could reasonably be expected to result inliability or loss to the 

 

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Companies in excess of $250,000 or that couldreasonably be expected to have a Company Material Adverse Effect, or thatchallenges, or that seeks to prevent, delay, make illegal or otherwiseinterfere with, any of the Transactions. To the Sellers’ Knowledge, no event has occurred or circumstance existsthat is reasonably likely to give rise to or serve as a basis for thecommencement of any such action, suit, investigation, or proceeding of a typedescribed in the preceding sentence. Except as set forth on Schedule 3.5, there is no action, suit,investigation, or proceeding with respect to which the defense is not beingprovided by the insurer under the insurance policies referenced in Section 3.14.  Except as set forth on Schedule 3.5,there are no unsatisfied judgments, decrees, injunctions or orders of anyGovernmental Entity or arbitrator outstanding against any Company, and eachCompany is and has been in compliance in all material respects with the termsand requirements of such judgments, decrees, injunctions or orders to which itor any of its assets or properties is or has been subject.

 

**SECTION 3.6.              Licenses and Permits; Compliancewith Laws**.

 

### (a)   TheCompanies hold, and Schedule 3.6(a) sets forth a complete andaccurate list of, all permits, licenses, approvals, certificates,accreditations and other authorizations (except with respect to IntellectualProperty, which is addressed in Section 3.8) from all GovernmentalEntities (collectively, “Permits”) necessary for the Companies to own,lease and operate their respective properties and to carry on their respectivebusinesses as now being conducted, except for Permits the absence of which inthe aggregate would not reasonably be expected to have a Company MaterialAdverse Effect.  Each Permit required tobe listed in Schedule 3.6(a) is valid and in full force andeffect.  Except as set forth in Schedule3.6(a): (i)  each Company is and has been in compliance in allmaterial respects with all of the terms and requirements of each Permitrequired to be identified in Schedule 3.6(a); (ii) no event hasoccurred or circumstance exists that would reasonably be expected to (with orwithout notice or lapse of time) (A) constitute or result directly orindirectly in a material violation of, or a failure to comply in any materialrespect with, any term or requirement of any Permit required to be listed in Schedule3.6(a) or (B) result directly or indirectly in the revocation,withdrawal, suspension, cancellation or termination of, or any modification to,any Permit required to be listed in Schedule 3.6(a); (iii) noCompany has received any written (or to Sellers’ Knowledge, other) notice orother communication from any Governmental Entity or any other Person regarding (A) anyactual or alleged material violation of, or failure to comply in any materialrespect with, any term or requirement of any such Permit or (B) any actualor proposed revocation, withdrawal, suspension, cancellation, termination of ormodification to any such Permit, in each case other than notice of any suchmatter that has been resolved; and (iv) all applications required to havebeen filed for the renewal of the Permits required to be listed in Schedule3.6(a) have been duly filed on a timely basis with the appropriateGovernmental Entities, and all other filings required to have been made withrespect to such Permits have been duly made on a timely basis with theappropriate Governmental Entities.

###  

### (b)   Thebusinesses of the Companies are being, and at all times have been, conducted inall material respects in compliance with all applicable Laws and Permits.  No written (or, to Sellers’ Knowledge, other)notice or other communication has been received by, and to the Sellers’Knowledge no claims have been filed against, any Company alleging any actual oralleged material violation by any Company of, or failure on the part of anyCompany to comply in any material respect with, any Law, other than notice ofany such matter that has been 

 

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### resolved.  No representation orwarranty is made in this Section 3.6 with respect to:  Tax laws; Intellectual Property Laws; Lawsapplicable to the Leased Real Property; Environmental Laws; or Laws related toemployee-related matters.

###  

**SECTION 3.7.              Taxes**.

 

### (a)   Except asset forth on Schedule 3.7(a), the Companies have prepared andfiled, and will timely file on or before the Closing Date with respect to anytaxable periods ending on or before the Closing Date (to the extent due priorto the Closing Date), with all appropriate Governmental Entities all materialTax Returns in respect of Taxes by the date such returns were due to be filed(after giving effect to extensions timely filed) and all such returns arecorrect and complete in all material respects. Copies of all Tax Returns filed in respect of the last three fiscalyears of each of the Companies have been made available to the Purchaser.  Except as set forth on Schedule 3.7(a),the Companies have paid in full all Taxes (whether or not such Taxes arerequired to be shown on a Tax Return) due prior to the date hereof, will payall Taxes (whether or not such Taxes are required to be shown on a Tax Return)due after the date hereof and prior to the Closing and, in the case of Taxesaccruing on or before the Closing that are not due on or before the Closing,each Company has or will make adequate provision in its books and records forsuch payment.  Except as set forth on Schedule 3.7(a),the Companies have withheld from each payment made to any of its present orformer employees, officers, directors, stockholders and creditors all amountsrequired by Law to be withheld and have, where required, remitted such amountswithin the applicable periods allowed by Law to the appropriate GovernmentalEntities.  All individuals paid forservices by the Companies have been properly classified as either employees orindependent contractors in accordance with the Code and applicable Tax laws.  In addition, except as set forth on Schedule 3.7(a),(i) no assessments for Taxes have been issued against any Company by aGovernmental Entity that remain outstanding and unpaid; (ii) within thelast three (3) years, no Governmental Entity has conducted an audit of anyCompany in respect of Taxes; and (iii) no Company has executed or filedany agreement extending the period for the assessment or collection of anyTaxes.

###  

### (b)   Except asset forth on Schedule 3.7(b), no Company has received from anyforeign, federal, state, or local taxing authority (including jurisdictionswhere any Company has not filed Tax Returns) any (i) notice indicating anintent to open an audit or other review, or (ii) notice of deficiency orproposed adjustment for any amount of Tax proposed, asserted, or assessed byany taxing authority against any Company (excluding any such notices related toTax paid or matters otherwise resolved prior to the date of the Interim BalanceSheet).  Except as set forth on Schedule 3.7(b),no claim has ever been made by a Governmental Entity in a jurisdiction whereany Company does not file Tax Returns that any Company is or may be subject totaxation by that jurisdiction.  There areno Encumbrances for Taxes (other than Taxes not yet due and payable) upon anyof the assets of any Company.  Each Companyhas disclosed in its federal income Tax Returns all positions taken thereinthat could give rise to a substantial understatement of federal income taxwithin the meaning of Code Section 6662.

###  

### (c)   No Companyhas filed a consent under Code § 341(f) concerning collapsiblecorporations.  Neither Parent, anyCompany nor any partner thereof, and no Corporation, is a foreign person withinthe meaning of Section 1445 of the Code. No Company has been (i) a personal holding company within themeaning of Code §542, (ii) a passive foreign investment 

 

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### company within the meaning of Code §1297 or (iii) a foreignpersonal holding company within the meaning of Code § 552.  No Company is a party to or bound by any Taxallocation, indemnification or sharing agreement.  No Company (a) has been a member of anaffiliated group filing a consolidated federal income Tax Return or (b) hasany liability for the Taxes of any Person under Reg. §1.1502-6 (or any similarprovision of state, local, or foreign Law), as a transferee or successor, bycontract, or otherwise.

###  

### (d)   No Companyshall be required to include any item of income in, or exclude any item ofdeduction from, taxable income for any taxable period (or portion thereof)ending after the Closing Date as a result of any: (i) change in method ofaccounting for a taxable period ending on or prior to the Closing Date (and theIRS has not proposed to any Company any such adjustment or change in accountingmethod); (ii) “closing agreement” as described in Code §7121 (or anycorresponding or similar provision of state, local or foreign income Tax Law)executed on or prior to the Closing Date; (iii) intercompany transactionor excess loss account described in Treasury Regulations under Code §1502 (orany corresponding or similar provision of state, local or foreign income TaxLaw); (iv) installment sale or open transaction disposition made on orprior to the Closing Date; or (v) prepaid amount received on or prior tothe Closing Date.  There is noapplication pending with any taxing authority requesting permission for anychanges in accounting methods that relate to the business or operations of anyCompany).

###  

### (e)   No Companyhas executed or entered into (or prior to the close of business on the ClosingDate will execute or enter into) with any taxing authority (i) a closingagreement pursuant to Code Section 7121 or any predecessor provisionthereof or any similar provision of state, local or foreign law that relates tothe assets or operations of any Company or (ii) any agreement, waiver orother document extending or having the effect of extending or waiving theperiod for assessment or collection of any Taxes for which a Company would orcould be liable.

###  

### (f)    No Companyhas made any payments, is obligated to make any payments, or is a party to anyagreement or other arrangement that could obligate it to make any payments thatwould not be deductible under Section 280G of the Code.

###  

### (g)   No Companyhas participated or engaged in any transaction that constitutes a “reportabletransaction” within the meaning of Treasury Regulation Section 1.6011-4(b)(1) orany transaction that constitutes a “listed transaction” within the meaning ofTreasury Regulation Section 1.6011-4(b)(2).

###  

### (h)   The due butunpaid Taxes of the Companies (A) did not, as of the date of the InterimBalance Sheet, exceed the reserves for Tax liability (rather than any reservefor deferred Taxes established to reflect timing differences between book andTax income) set forth on the face of the Interim Balance Sheet and (B) thedue but unpaid Taxes as of the date hereof do not exceed (and as of theClosing, will not exceed) those reserves as adjusted for the passage of timethrough the date hereof (or the Closing Date, as applicable) in accordance withthe past custom and practice of the Companies in filing their Tax Returns.

 

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**SECTION 3.8.              Intellectual Property**.

 

### (a)   Schedule 3.8(a) contains acomplete and accurate list of all (i) patented or registered IntellectualProperty owned by any Company, (ii) patents and pending patentapplications and other registrations and applications for other registrationsof Intellectual Property filed by or on behalf of any Company or in or to whichany of the Companies has any right, title, or interest, and (iii) allother material Intellectual Property in or to which any of the Companies has anyright, title, or interest (other than as a licensee).  Schedule 3.8(a) also contains acomplete and accurate list of all material licenses granted by any Company toany third party with respect to any Intellectual Property owned by any Companyand all material licenses granted by any third party to any Company withrespect to any Intellectual Property (other than licenses of “shrink wrapped”or “off the shelf” software licensed to any Company).  Each registration for or application toregister Intellectual Property listed on Schedule 3.8(a) is validand subsisting, in full force and effect, and has not been canceled, expired orabandoned, except where cancellation, expiration or abandonment would notreasonably be expected to have a Company Material Adverse Effect.  One or more of the Companies owns (or hasvalid rights to use) all Intellectual Property material to or used in thebusiness of the Companies as such business is currently conducted, and suchIntellectual Property constitutes all Intellectual Property necessary for theoperation of the business.  AllIntellectual Property owned by the Companies is owned exclusively by theCompanies free and clear of all Encumbrances (other than PermittedEncumbrances).

###  

### (b)   There have been no written (or, to Sellers’Knowledge, other) claims received or, to the Sellers’ Knowledge, threatenedagainst any Company asserting (i) the invalidity, misuse orunenforceability of any Intellectual Property owned by any Company, or (ii) thatthe operation of the business of any Company infringes any IntellectualProperty of any third party, in each case other than notice of any such matterthat has been resolved, and in respect of which there is no additionalpotential exposure, further obligation or amounts due or payable.  To the Sellers’ Knowledge, no Person iscurrently infringing upon any Intellectual Property owned by any Company.  None of the Companies is infringing in anymaterial respect any Intellectual Property of any third party, nor to theSellers’ Knowledge will any such infringement occur as a result of thecontinued operation of the business of the Companies as currentlyconducted.  The Transactions will notmaterially and adversely affect any Company’s right, title or interest in andto any item of Intellectual Property owned or used by the Companies.  The Companies have taken reasonableprecautions to protect the secrecy, confidentiality and value of theirrespective trade secrets and confidential know-how.  The Companies have at all times complied inall material respects with and are in compliance in all material respects withall applicable Laws relating to privacy, data protection, or the collection,retention, use and disclosure of personal information.

###  

**SECTION 3.9.              Material Contracts**.

 

### (a)   Schedules 3.9, 3.10 and 3.11(b),taken together, set forth a complete and correct list, as of the date of thisAgreement, of all agreements of the following types to which any Company is aparty or is bound (collectively, the “Material Contracts”):  (i) the Leases and any other contractaffecting the ownership of, leasing of, title to, use of or any leasehold orother interest in any real property or the construction of any improvementsthereon (other than the 

 

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### construction of any facility that is now inoperation); (ii) contracts relating to the renovation or construction ofany theatre (other than the construction of any facility that is now inoperation); (iii) any other contract, agreement or legally binding commitmentproviding for payments by or to the Companies in excess of $250,000 at any timeor in the aggregate during any year (other than purchase orders entered into inthe ordinary course of business) or that is material to the business oroperations of the Companies, taken as a whole, or whose default or terminationcould have a Company Material Adverse Effect; (iv) employment, severance,termination and consulting agreements (excluding agreements with at-willemployees and agreements that may be terminated by a Company without penaltyother than customary severance), pension, profit sharing, incentivecompensation, deferred compensation stock/unit purchase, stock/unit option,stock/unit appreciation right, group insurance, severance pay, or retirementplan or agreement or any similar contract; (v) loan agreements,indentures, reimbursement agreements for letters of credit, mortgages, notesand other debt instruments or the guaranty of any obligation for the borrowingof money by a Company; (vi) confidentiality, non-solicitation andnon-compete agreements by which the activities of any Company are restricted; (vii) anyagreement pursuant to which any Company is a party to a partnership or jointventure; (viii) any capitalized lease obligation; (ix) any settlement,conciliation or similar contract that has not been performed; and (x) anylicense, as licensee, of any material Intellectual Property (other thanlicenses of “shrink wrapped” or “off the shelf” software).  Schedule 3.9 contains an accurate andcomplete list of all amendments, modifications, supplements, waivers, renewalsand extensions to the Material Contracts.

###  

### (b)   Each of the Material Contracts is valid andas of the date hereof is in full force and effect; provided no representationor warranty is made in this sentence with respect to any Material Contractthat, as indicated on Schedule 3.9, has not been executed by one or moreof the intended parties thereto.  NoCompany has violated in any material respect any provision of, or committed orfailed to perform any material act that is required to be performed by itunder, any Material Contract or any contract for the construction of anyfacility that is now in operation, and no event has occurred that with orwithout notice, lapse of time or both would constitute a material default,material breach or material event of noncompliance under the provisions of anyMaterial Contract or any contract for the construction of any facility that isnow in operation; and no Company has received any written (or, to Sellers’Knowledge, other) notice of, and to the Sellers’ Knowledge there does notexist, any material breach, cancellation, or intention not to renew, or anyanticipated material breach, cancellation, or intention not to renew, by theother parties to any Material Contract or any contract for the construction ofany facility that is now in operation. True and complete copies of all Material Contracts have been madeavailable to Purchaser.

###  

### (c)   As of the date of this Agreement, except asindicated on Schedule 3.9, no Company is involved in any renegotiationsof or attempts to renegotiate any material amounts paid or payable to suchCompany under a Material Contract or any contract for the construction of anyfacility that is now in operation with any Person having the contractual orstatutory right to demand or require such renegotiation, and no such Person hasmade written demand for such renegotiation.

###  

### (d)   Except for the Landlord Approvals or as setforth on Schedule 2.3, the execution and delivery of this Agreement andeach Related Agreement by Sellers do not, and the 

 

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### consummation by Sellers of the Transactionswill not require any authorization, consent, approval, exemption or otheraction or notice under the provisions of any Material Contract or any contractfor the construction of any facility that is now in operation.

###  

**SECTION 3.10.            Employee Benefit Plans**.

 

### (a)   Schedule 3.10 sets forth a trueand complete list of each “employee benefit plan” (within the meaning of Section 3(3) ofthe Employee Retirement Income Security Act of 1974, as amended (“ERISA”)),and each other employee benefit, fringe, equity based compensation, retention,employment, severance, change in control, or bonus plan, program, policy,agreement or arrangement that is sponsored, maintained, participated in orcontributed to as of the date of this Agreement by any Company or any entityrequired to be aggregated with any Company with respect to which any Companyhas any material liability (collectively, the “Benefit Plans”).

###  

### (b)   With respect to each Benefit Plan, Sellershave made available to Purchaser, to the extent applicable (i) the plandocument, all amendments to the plan document, the summary plan description andany summaries of material modifications; (ii) the most recentdetermination letter from the Internal Revenue Service; (ii) the threemost recent annual reports (Form 5500 series); (iv) the related trustagreements, insurance contract or other funding arrangement, (v) the mostrecent discrimination testing results and (vi) all material correspondencewith the IRS or the Department of Labor.

###  

### (c)   No Company or, to the Sellers’ Knowledge, anyother person has engaged in any non-exempt “prohibited transaction”, as definedin Code Section 4975 or ERISA Section 406, with respect to anyBenefit Plan.  To the Sellers’ Knowledge,no Company has engaged in any transaction that as a result of which any Companywould be subject to any material liability pursuant to Sections 406 and 409 ofERISA or to either a civil penalty assessed pursuant to Section 502(i) or(l) of ERISA or a Tax imposed pursuant to Section 4975 of theCode.  No fiduciary of any Benefit Planhas any liability for breach of fiduciary duty or any other failure to act orcomply in connection with the administration or investment of the assets of anyBenefit Plan.

###  

### (d)   None of the Benefit Plans is a plan subjectto Title IV of ERISA, the minimum funding requirements of Section 302 ofERISA or Section 412 of the Code, and no Company has ever maintained,participated in or contributed to any plan that is subject to Title IV ofERISA, the minimum funding requirements of Section 302 of ERISA or Section 412of the Code.  No Company has incurred anyliability under Title IV of ERISA and no events have occurred and nocircumstances exist that would reasonably be expected to result in suchliability to any Company.  No Company hasany liability or obligation as a consequence of being considered a singleemployer under Section 414 of the Code with any other Person.

###  

### (e)   No Benefit Plan is or ever has been a “multiemployerplan” within the meaning of ERISA Section 3(37).  No Company has any liability for a completeor partial withdrawal from any multiemployer plan or has any liability under orwith respect to any multiemployer plan. No Benefit Plan is a “voluntary employees’ beneficiary association”within the meaning of 

 

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### Code Section 501(c)(9) or a “nonqualifieddeferred compensation plan” within the meaning of Code Section 409A.

###  

### (f)    Each Benefit Plan (and each related trust,insurance contract, or fund) has been maintained, funded and administered inall material respects in compliance with its governing documents and with allprovisions of all applicable Laws, including ERISA and the Code.

###  

### (g)   Each Benefit Plan that is intended to be “qualified”within the meaning of Section 401(a) of the Code has been determinedby the IRS to be so qualified by issuance and receipt of a favorabledetermination letter or reliance upon a prototype opinion letter.  No event has occurred since the date of themost recent determination letter (other than the effective date of certainamendments to the Code the remedial amendment period for which has not expired)that could reasonably be expected to adversely affect the qualified status ofsuch Benefit Plan.

###  

### (h)   There are no claims (other than routineclaims for benefits), proceedings, hearings, actions or lawsuits pending, or tothe Sellers’ Knowledge, threatened, with respect to any Benefit Plan.  There are no audits, investigations orexaminations with respect to any Benefit Plan by the IRS, the Department ofLabor, the PBGC or any other governmental agency (other than a reviewassociated with the application for a determination letter that has been filedwith the IRS) and, to the Sellers’ Knowledge, no such audit, investigation orexamination is threatened or pending.

###  

### (i)    All contributions (including all employercontributions and employee salary reduction contributions) and premium paymentsthat are due with respect to any Benefit Plan have been made within the timeperiods prescribed by ERISA and the Code to each such Benefit Plan.

###  

### (j)    Neither the execution and delivery of thisAgreement nor the consummation of the Transactions will (i) result in thepayment of any money or property to any employee of any Company, (ii) materiallyincrease any benefit otherwise payable under any Benefit Plan; or (iii) acceleratethe time of payment or vesting, or increase the amount of, any compensation duefrom any Company to any employee.

###  

### (k)   There are no agreements to which any Companyis a party that will provide payments to any officer, employee or highlycompensated individual that shall be “parachute payments” under Section 280Gor Section 4999 of the Code for which Purchaser or any Company will havewithholding liability or that will result in loss of Tax deductions under Section 280Gof the Code.

###  

### (l)    No Company has any obligation to providelife insurance, medical or health benefit coverage on or after retirement orother termination of employment to any individual other than continuationcoverage as required by Section 4980B of the Code.

###  

**SECTION 3.11.            Properties; Assets**.

 

### (a)   Except as set forth on Schedule 3.11(a),taken together, the Companies have good and marketable title to all thetangible properties and assets reflected in the Interim Balance Sheet as beingowned by one of the Companies or acquired after the date thereof that are 

 

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### material to the Companies’ business on aconsolidated basis (except assets and properties sold or otherwise disposed ofsince the date thereof in the ordinary course of business) , free and clear ofall Encumbrances except for Permitted Encumbrances.  The Companies’ tangible properties and assetsare in a state of repair that is reasonably sufficient for the purposes forwhich they are used.  As of the date ofthis Agreement, the Companies do not lease (as lessee) any tangible personalproperty.  Except as set forth on Schedule3.11(a), the Companies own all of the material tangible personal propertylocated on the Leased Real Property and used by them in the operation of theirbusiness.

###  

### (b)   Schedule 3.11(b) sets forth theaddress of each leasehold or subleasehold estate and other rights to use oroccupy any land, buildings, structures, improvements, fixtures or otherinterest in real property held by any Company (other than any leasehold forstorage space that is not material to the business of the Companies and that isterminable upon 30 days’ (or less) notice) (the portion(s) thereofoccupied by any Company being the “Leased Real Property”), and a list ofall leases (including all amendments, extensions, renewals, guaranties andother agreements with respect thereto) for each such Leased Real Property (eacha “Lease”).  With respect to eachLease:  (i) no Company owes, or willowe in the future, any brokerage commissions or finder’s fees with respect tosuch Lease; (ii) no Company has subleased, licensed or otherwise grantedany Person the right to use or occupy such Leased Real Property or any portionthereof; and (iii) there are no Encumbrances on the estate or interestcreated by such Lease other than Permitted Encumbrances.  Schedule 3.11(b) contains anaccurate and complete list of all development agreements, redevelopmentagreements, development and disposition agreements and similar agreements, andall amendments, modifications, supplements, waivers, renewals and extensionsthereof to which a Company is a party or by which it is bound as of the date ofthis Agreement.  Complete and correctcopies of the documents set forth on Schedule 3.11(b) have beenmade available to Purchaser by the Companies prior to the date of thisAgreement.

###  

### (c)   No Company owns or has owned any realproperty.

###  

### (d)   The Companies have made available toPurchaser, (i) true and complete copies of all policies of title insurancepreviously issued with respect to the Leased Real Property, or any portionthereof, which are in the Companies’ possession, and (ii) true andcomplete copies of all boundary, land or ALTA surveys of the Leased RealProperty, or any portion thereof, in the Companies’ possession.

###  

### (e)   Except to the extent disclosed on Schedule2.3, execution of this Agreement and the consummation of the Transactions,do not and shall not (i) constitute a default or breach by any Companyunder any Lease, (ii) give rise to a right on the part of any lessor orsublessor or, to the Sellers’ Knowledge, any other person to purchase or toterminate any Lease, or to recapture all or any portion of the Leased RealProperty, (iii) result in the termination or cancellation of any option torenew or extend the term of any Lease, or of any other right or optionotherwise exercisable by the lessee or sublessee, as applicable, under any ofthe Leases or (iv) require any authorization, consent, approval, exemptionor other action or notice, under any Lease.

###  

### (f)    Schedule 3.11(b) accurately andcompletely identifies, as of the date of this Agreement, with respect to eachLease, (i) to the Sellers’ Knowledge, the correct name of the 

 

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### current lessor and each superior lessor withrespect to each Lease which is a sublease; (ii) to the Sellers’ Knowledge,the address or addresses at which such lessor is entitled to receipt of noticesthat must or may be delivered by a Company to such lessor under thecorresponding Lease; (iii) the dates upon which the current terms of theLeases commenced and upon which it will expire not including any extension ortermination rights set forth in the corresponding Lease; (iv) the periodor periods of any remaining renewal or extended terms of the lease which anyCompany has the option to exercise; (v) the current base rent payableunder each Lease, and any scheduled increases in such base rent during theremainder of the current term of each Lease; (vi) the manner in which anypercentage rents payable during the current term of each Lease is determined; (vii) theamounts accrued by the Companies under each Lease for October, 2007 forpassthroughs of common area maintenance costs payable to the lessor and, ifapplicable, property insurance premiums and/or real estate taxes to be paid directlyby each Company under such Lease (in each case, based on estimates provided bythe lessor in question); (viii) the unused or unapplied amount of anysecurity deposit or letter of credit which such lessor holds in connection withthe performance of each Company’s obligations under each Lease; and (ix) thename and the address of any guarantor of or other surety for any Company’sobligations under a Lease.

###  

### (g)   To the Sellers’ Knowledge, Schedule 3.11(b) accuratelyand completely identifies, as of the date of this Agreement, all other materialinstruments and agreements (i.e., other than the instruments and agreementsidentified on Schedule 3. 3.9) which are not recorded in the realproperty records and which relate to the Companies’ occupancy of the LeasedReal Property, including any unrecorded parking agreements, advertisingagreements, merchant association agreements, development agreements,redevelopment agreements, development and disposition agreements.  Complete and correct copies of each documentset forth on Schedule 3.11(b) have been made available to Purchaser.

###  

### (h)   Except as disclosed on Schedule 3.11(h),no Company has received written notice of any proceeding either instituted, orplanned to be instituted, respecting any taking, condemnation, action ineminent domain, or any voluntary conveyance in lieu thereof, of any part of theLeased Real Property, or any interest therein or right accruing thereto or usethereof and (ii) to the Sellers’ Knowledge, no taking or voluntaryconveyance of all or part of any Leased Real Property, or any interest thereinor right accruing thereto or use thereof, as the result of, or in settlementof, any condemnation or other eminent domain proceeding by any GovernmentalEntity affecting the Leased Real Property or any portion thereof has beencommenced, threatened or planned to be instituted with respect to all or anyportion of any Leased Real Property.

###  

### (i)    Except as disclosed on Schedule 3.11(i),(i) no Company has received written notice from any (A) GovernmentalEntity that any of the Leased Real Property is in violation of any OccupationalSafety and Health Law or any other Law, or (B) third party that the LeasedReal Property is in violation of any reciprocal easement, development orsimilar agreement affecting such Real Property; and (ii) to Sellers’Knowledge, no such violations described in clause (i) above exist.  The use being made of all Leased RealProperty is in conformity in all material respects with the Laws pertaining tozoning and building and the related certificate of occupancy and/or such otherpermits, licenses, variances and certificates for such Leased Real Property andany other reciprocal easement, development or similar agreement, orrestrictions, 

 

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### covenants or conditions affecting such RealProperty.  All improvements on the LeasedReal Property are (i) in a state of repair that is reasonably sufficientfor the purposes for which they are used and (ii) in compliance in allmaterial respects with all applicable Laws (including those pertaining tozoning and building).

###  

### (j)    No Person other than a Company has anypossessory interest in any Leased Real Property.

###  

### (k)   All Leased Real Property has adequate rightsof access to public ways to permit the Leased Real Property to be used forpurposes of a motion picture theatre and is served by operating and reasonablyadequate water, electric, telephone, sewer, and storm drain facilities andother utilities.  To the Sellers’Knowledge, all reciprocal easement, development and similar agreementsaffecting any Leased Real Property are in full force and effect and no Companyhas asserted any default against the other parties thereto and has not receivedany written notice of any default thereunder.

###  

### (l)    No building or structure on any Leased RealProperty or any appurtenance thereto or equipment thereon, or the use,operation or maintenance thereof, violates any restrictive covenant orencroaches on any easement or on any property owned by others, which violationor encroachment materially interferes with the use or could materiallyadversely affect the value of such building, structure or appurtenance andwhich violation or encroachment is necessary for the operation of the businessat any Leased Real Property.

###  

### (m)  To Sellers’ Knowledge, each theatre located onthe Leased Real Property has adequate available parking to meet legalrequirements (after taking into account reciprocal easements and othereasements on nearby or adjoining land).

###  

### (n)   Except as set forth on Schedule 3.9, 3.11(b) or3.11(g), neither any Company, nor to the Sellers’ Knowledge, any otherPerson which is a party to or is bound by any reciprocal easement, developmentor similar agreement that is material to any Leased Real Property, or ispresently in default of breach in any material respect of any obligation underany such reciprocal easement, development or similar agreement.

###  

**SECTION 3.12.            Employees; Labor Relations**.

 

### (a)   Schedule 3.12(a) lists (i) eachcurrent employee of any Company who received from the Companies during the yearended on the date of the Interim Balance Sheet wages and/or cash bonuses inexcess of $50,000 in the aggregate and (ii) the amount of suchcompensation.

###  

### (b)   No Company is a party to any collective bargainingagreement or other contract or agreement with any labor organization or othercollective bargaining representative of any of the employees of anyCompany.  Except as set forth on Schedule 3.12(b),(i) each Company is in compliance with all Laws relating to the employmentor the workplace, including provisions relating to wages, hours, collectivebargaining, safety and health, work authorization, equal employmentopportunity, immigration, unemployment compensation, worker’s compensation,employee privacy and right to know and social security contributions, exceptfor such noncompliance that in the aggregate is not reasonably likely to have aCompany Material Adverse Effect; (ii) there has not been, there is notpresently pending or existing, and to the 

 

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### Sellers’ Knowledge there is not threatened,any strike, slowdown, picketing, work stoppage or employee grievanceprocess involving any Company; (iii) to the Sellers’ Knowledge, no eventhas occurred or circumstance exists that could reasonably be expected toprovide the basis for any work stoppage or other labor dispute byemployees of any Company; (iv)  other than as set forth on Schedule3.5, there is not pending or, to the Sellers’ Knowledge, threatened againstor affecting any Company any proceeding relating to the alleged violation ofany Law pertaining to labor relations or employment matters, including anycharge or complaint filed with the National Labor Relations Board or anycomparable Governmental Entity, and to Sellers’ Knowledge, there is noorganizational activity or other labor dispute involving employees of anyCompany; (v) there is no lockout of any employees by any Company, and nosuch action is contemplated by any Company; and (viii) to the Sellers’Knowledge, there has been no pending charge of discrimination filed against orthreatened against any Company with the Equal Employment Opportunity Commissionor similar Governmental Entity.

###  

**SECTION 3.13.            Environmental Matters**.

 

### (a)   Except as set forth on Schedule 3.13(a),the Companies have complied in all material respects with applicableEnvironmental Laws.

###  

### (b)   (i) Except as set forth on Schedule3.13(b)(i), the Companies have not received any written notices from anyGovernmental Entity or any other Person alleging the violation of anyEnvironmental Law or any liability or potential responsibility under anyEnvironmental Law, other than notice of any such matter that has been resolved,and to the Sellers’ Knowledge, no action, investigation, complaint, suit orproceeding is threatened against the Companies under any Environmental Law; and(ii) except as set forth on Schedule 3.13(b)(ii), there are nofacts, circumstances, or conditions existing, initiated or occurring prior toClosing, which have or will result in liability to any Company or any Sellerunder Environmental Law.

###  

### (c)   Except as set forth on Schedule 3.13(c),the Companies are not the subject of any Order arising under any EnvironmentalLaw.

###  

### (d)   Except as set forth on Schedule 3.13(d),the Companies have not generated, managed, stored, transported, treated,Released, emitted, discharged or disposed of any Hazardous Substance except aswould not reasonably be expected to give rise to any material liability underEnvironmental Laws.

###  

### (e)   A list of all Permits issued to the Companiespursuant to Environmental Laws is set forth on Schedule 3.13(e)(i), andsuch Permits will not be adversely affected by the consummation of theTransactions, except as set forth on Schedule 3.19(e)(ii).

###  

### (f)    Except as set forth on Schedule3.13(f)(i), (i) no Company has (A) manufactured, treated, stored,disposed of, arranged for or permitted the treatment or disposal of,transported, handled or Released, or permitted persons to be exposed to, anyHazardous Substance, noise, odor or radiation, or (B) owned or operatedany property or facility, in a manner that has given or will give rise tomaterial liabilities under Environmental Law; and (ii) except as set forthon Schedule 3.13(f)(ii) and cleaning supplies maintained in theordinary course of business and in compliance with applicable Laws, there areno Hazardous Substances present at, and no 

 

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### Hazardous Substances have been Released at,on, under or from, any facility or property leased or operated by any Company,or any of their respective predecessors or Affiliates.

###  

### (g)   Except as set forth on Schedule 3.13(g),no Company has installed, used, removed or remediated, and none of thefollowing are present, at any Leased Real Property: (i) undergroundimprovements, including treatment or storage tanks, or underground pipingassociated with such tanks, used currently or in the past for the management ofHazardous Substances; (ii) any dump or landfill or other unit for thetreatment or disposal of Hazardous Substances; (iii) filled in land orwetlands; (iv) PCBs; (v) toxic mold; (vi) lead-based paint; or (vii) asbestos-containingmaterials.

###  

### (h)   Sellers have made available to Purchaseraccurate and complete copies of all environmental assessments, reports, auditsand other documents in their or the Companies’ possession or under their or theCompanies’ control that relate to the Companies’ compliance with EnvironmentalLaws or the environmental condition of any real property that the Companiescurrently or formerly have owned, operated, or leased.

###  

### (i)    Notwithstanding any other provision of thisAgreement other than Sections 3.3 (Financial Statements; Indebtedness), 3.4(Absence of Certain Changes or Events), 3.9 (Material Contracts), 3.11(b)(iii) and3.11(c) (Properties; Assets), and 3.14 (Insurance), this Section 3.13constitutes the sole representations and warranties of Sellers with respect toany matters covered by representations and warranties in this Section.

###  

**SECTION 3.14.            Insurance**.

 

### (a)   Schedule 3.14(a) contains alist of all material policies of title, property, fire, casualty, liability,life, workmen’s compensation, and other forms of insurance in force at the datethereof with respect to the Companies.

###  

(b)   Exceptas set forth in Schedule 3.14(b): (i) all policies of insurancelisted on Schedule 3.14(a) are valid and outstanding; (ii) thepolicies of insurance to which any Company is a party or that provide coverageto any Company, taken together, are sufficient for compliance in all materialrespects with all Laws applicable to the Companies, and the provisions ofMaterial Contracts, relating to insurance coverage; (iii) as to any matterthat is pending, no Company has received (A) any refusal of coverage orany notice that a defense will be afforded with reservation of rights (otherthan any matter described on Schedule 3.5) or (B) any notice ofcancellation or any other indication that any policy of insurance is no longerin full force or effect or that the issuer under any policy of insurance is notwilling or able to perform its obligations thereunder; (iv) the Companieshave paid all premiums due, and have otherwise performed all in all materialrespects their obligations, under each policy of insurance to which they areparty, and (v) the Companies have given notice to the insurer of allclaims of which a Company has knowledge that may be insured thereby.  Schedule 3.14(b) describes anyself-insurance arrangements maintained by the Companies, other than retentionamounts under insurance policies.

 

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**SECTION 3.15.            Affiliate Transactions**.

 

Except as set forth on Schedule 3.15, there are noliabilities or obligations between any Company, on the one hand, and anycurrent or former officer, director, 5% or greater stockholder or Affiliate ofany Seller or any Affiliate of any such officer, director, 5% or greaterstockholder (other than another Company), on the other hand, other than as setforth in an employment contract with any such person.  The Companies do not provide or cause to beprovided any assets, services or facilities to any such current or formerofficer, director, stockholder or Affiliate.

 

**SECTION 3.16.            Brokers**.

 

Other than UBS Securities, LLC, no broker, finder or investment bankeris entitled to any brokerage, finder’s or other fee or commission in connectionwith the Transactions based upon arrangements made by or on behalf of anySeller, any Company or any of their Affiliates.

 

**SECTION 3.17.            Notes and Accounts Receivable**.

 

All notes and accounts receivable of the Companies as of the ClosingDate will be valid receivables subject to no setoffs or counterclaims except asreflected in any related reserve that will be part of the Closing WorkingCapital used to compute the Final Purchase Price, and will be collectible inaccordance with their terms at their recorded amounts, subject only to suchreserve.

 

**SECTION 3.18.            Powers of Attorney**.

 

There are no outstanding powers of attorney granted by any Company infavor of any third-party attorney-in-fact, except as shall have been terminatedor revoked by such Company prior to the Closing.

 

# **ARTICLE IVREPRESENTATIONS AND WARRANTIES OF PURCHASER**

#  

Purchaser represents and warrants to Sellersas follows:

 

**SECTION 4.1.              Organization and Qualification**.

 

Purchaser is a corporation duly organized, validly existing and in goodstanding under the Laws of the State of Tennessee, and is qualified to dobusiness as a foreign entity in those jurisdictions in which it is required tobe so qualified in order for it to be able to perform its obligations underthis Agreement.

 

**SECTION 4.2.              Authority**.

 

Purchaser has the necessary corporate power and authority to enter intothis Agreement and each Related Agreement to which it is or will become aparty, to perform its obligations hereunder and thereunder, and to consummatethe transactions contemplated hereby and thereby.  

 

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The execution and delivery ofthis Agreement and each Related Agreement to which it is or will become a partyby Purchaser and the consummation by Purchaser of the transactions contemplatedhereby and thereby have been duly and validly authorized by all necessarycorporate action and no other corporate proceedings on the part of Purchaserare necessary to authorize this Agreement and each Related Agreement to whichit is or will become a party or to consummate the transactions contemplatedhereby and thereby.  This Agreement andeach Related Agreement to which it is or will become a party has been, or willbe, duly executed and delivered by Purchaser and, assuming its dueauthorization, execution and delivery by Sellers, constitutes a legal, validand binding obligation of Purchaser, enforceable against Purchaser inaccordance with its terms, except as such enforceability may be limited bybankruptcy, insolvency, reorganization, moratorium and other similar Laws ofgeneral applicability relating to or affecting creditors’ rights generally andby the application of general principles of equity.

 

**SECTION 4.3.              No Conflict; Required Filings and Consents**.

 

### (a)   The execution and delivery of this Agreementand each Related Agreement to which it is or will become a party by Purchaserdo not, and the performance by Purchaser of its obligations under thisAgreement will not, subject to compliance with the requirements described in Section 4.3(b):(i) conflict with or, result in a breach of, constitute a default under,or violate the articles of incorporation or bylaws of Purchaser, (ii) requireany authorization, consent, approval, exemption or other action or notice underthe provisions of Purchaser’s articles of incorporation or bylaws, (iii) conflictwith or violate any Law applicable to Purchaser or by which any of itsproperties is bound, or (iv) result in any breach of or constitute adefault (or an event that with notice or lapse of time or both would become abreach or a default) under, or give to others any rights of termination,amendment, acceleration or cancellation of, or result in the creation of anyEncumbrance on any of the properties or assets of Purchaser pursuant to, anynote, bond, mortgage, indenture, contract, agreement, lease, license, Permit,Lease or other instrument or obligation to which Purchaser is a party or bywhich Purchaser or any of its properties or assets is bound, except, in thecase of clauses (iii) and (iv) above for any such conflicts,violations, breaches, defaults, accelerations or occurrences that would notreasonably be expected to prevent the consummation of the Transactions or delaysame in any material respect or otherwise reasonably be expected to preventPurchaser from performing its obligations under this Agreement or any suchRelated Agreement.

###  

### (b)   The execution and delivery of this Agreementand each Related Agreement to which it is or will become a party by Purchaserdoes not, and the performance of this Agreement and such Related Agreements byPurchaser shall not, require any consent, approval, authorization or permit of,or filing with or notification to, any Governmental Entity, except (i) forapplicable requirements of the HSR Act and state blue sky Laws, and (ii) wherefailure to obtain such consents, approvals, authorizations or permits, or tomake such filings or notifications, individually or in the aggregate would notreasonably be expected to prevent the consummation of the Transactions or delaythe same in any material respect or otherwise reasonably be expected to preventPurchaser from performing its obligations under this Agreement or any suchRelated Agreement.

 

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**SECTION 4.4.              Absence of Litigation**.

 

There are (i) no actions, suits, investigations, or proceedingspending or, to Purchaser’s knowledge, threatened by or against Purchaser or anyof its properties or assets before any court, administrative, governmental,arbitral, mediation or regulatory authority or body, domestic or foreign, thatchallenge or seek to prevent, enjoin, alter or materially delay thetransactions contemplated hereby, and (ii) no unsatisfied judgments,decrees, injunctions or orders of any Governmental Entity or arbitratoroutstanding against Purchaser that would reasonably be expected to prevent theconsummation of the transactions contemplated hereby or delay the same in anymaterial respect or otherwise reasonably be expected to prevent Purchaser fromperforming its obligations under this Agreement and each Related Agreement towhich it is or will become a party.

 

**SECTION 4.5.              Brokers**.

 

No broker, finder or investment banker is entitled to any brokerage,finder’s or other fee or commission in connection with the Transactions basedupon arrangements made by or on behalf of Purchaser or any of its Affiliates.

 

**SECTION 4.6.             ****FinancialAbility.**

 

As of the date of this Agreement, Purchaser has, and on the ClosingDate, Purchaser will have, cash on hand and/or funds readily available to itfrom committed financing sources (without the satisfaction of any condition notset forth in Section 7.1 or 7.2) that will enable Purchaserto fulfill all of its obligations under this Agreement to be performed by it ator after the Closing.

 

**SECTION 4.7.              Disclaimer of Other Representations and Warranties**.

 

PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTHIN ARTICLE II AND ARTICLE III OR IN THE RELATED AGREEMENTS,NEITHER ANY SELLER NOR ANY SELLER’S AFFILIATES OR REPRESENTATIVES MAKES ANYREPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT LAW OR IN EQUITY INRESPECT OF THE OPTIONS, THE EQUITY SECURITIES OF THE COMPANIES, OR ANY OF THEIRRESPECTIVE ASSETS, LIABILITIES, BUSINESSES OR OPERATIONS, INCLUDING WITHRESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCHOTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED.  PURCHASER ACKNOWLEDGES AND AGREES THAT,EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN ARTICLE II AND ARTICLE III,PURCHASER IS ACQUIRING THE OPTIONS AND THE PARTNERSHIP INTERESTS ON AN “ASIS, WHERE IS” BASIS.

 

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# **ARTICLE VCOVENANTS**

#  

**SECTION 5.1.              Affirmative Covenants of Sellers**.

 

Sellers hereby covenant and agree that, priorto the Closing, except as set forth on Schedule 5 or as otherwiseexpressly contemplated by this Agreement or consented to in writing byPurchaser (which consent Purchaser will not unreasonably withhold, delay orcondition), Sellers shall cause each Company to (i) operate its businessin the usual and ordinary course consistent with past practices; (ii) usecommercially reasonable efforts to preserve substantially intact its businessorganization, maintain its rights, retain the services of its respectiveprincipal officers and key employees and maintain its relationship with itsrespective principal customers and suppliers, landlords, creditors, employees,agents and others having business relationships with it; (iii) use itscommercially reasonable efforts to maintain and keep its tangible propertiesand assets in as good repair and condition as at present, ordinary wear andtear excepted, and replace any material item of equipment that shall be wornout, broken, lost, stolen or destroyed, to the extent such equipment would havebeen replaced in the ordinary course or business consistent with pastpractices; (iv) keep in full force and effect insurance comparable inamount and scope of coverage to that currently maintained by it; (v) asPurchaser may reasonably request from time to time, confer with Purchaserconcerning the status of such Company’s business, operations and finances (solong as the same does not unreasonably interfere with the conduct of Sellers’and the Companies’ respective businesses); (vi) provide Purchaser copiesof theatre renovation or construction plans and any material change ordersrelated to the Leased Real Property under construction or renovation and anymaterial changes to such plans; (vii) use commercially reasonable effortsto keep in full force and effect, without amendment, all material rightsrelating to such Company’s business; (ix) use commercially reasonableefforts to comply with all Laws and contractual obligations applicable to theoperations of such Company’s business; (x) deliver to Purchaser within 30days after the end of each month and within 45 days after the end of eachfiscal quarter an unaudited consolidated balance sheet of the Companies as ofthe end of such month or quarter, and the related consolidated statements ofincome and cash flow of the Companies for such month or quarter, prepared asdescribed in the second sentence of Section 3.3(a); (xi) maintainall books and records of such Company relating to such Company’s business inall material respects in the ordinary course of business; and (xii) notterminate the employment of any individual identified on the attached Schedule5.1, other than for cause (as reasonably determined by Parent).

 

**SECTION 5.2.              Restrictive Covenants of Sellers**.

 

Except as expressly contemplated by this Agreement or as set forth on Schedule5 or otherwise consented to in writing by Purchaser (which consentPurchaser will not unreasonably withhold, condition or delay), from the datehereof until the Closing, Sellers shall cause each Company to operate in theordinary course of business and specifically not to do any of the following:

 

### (a)   (i) increase the compensation payable toor to become payable to any of its directors, officers or employees except forincreases in salary, wages, bonuses or commissions payable or 

 

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### to become payable pursuant to existingcontracts or increases payable or to become payable in the ordinary course ofbusiness; (ii) grant any severance or termination pay (other than pursuantto existing severance agreements and arrangements or policies or in theordinary course of business) to, or enter into any new employment (other thanthe hiring of at-will employees in the ordinary course of business) orseverance agreement with, any of its directors, officers or employees; (iii) adoptany new employee benefit plan, benefit arrangement or other pension, profitsharing, deferred compensation or similar policy, except as may be required byapplicable Law; or (iv) enter into any collective bargaining agreement;

###  

### (b)   (i) redeem, repurchase or otherwisereacquire any of its Equity Securities; (ii) effect any reorganization orrecapitalization; or (iii) split, combine or reclassify any of its EquitySecurities or issue or authorize or propose the issuance of any othersecurities in respect of, in lieu of, or in substitution for, any of its EquitySecurities;

###  

### (c)   issue, deliver, award, grant or sell, orauthorize or propose the issuance, delivery, award, grant or sale of, any ofits Equity Securities (including shares held in treasury);

###  

### (d)   acquire or agree to acquire, by merging orconsolidating with, by purchasing an equity interest in or a material portionof the assets of, or by any other manner, any business or any corporation,partnership, association or other business organization or division thereof ofany other Person other than the acquisition of assets in the ordinary course ofbusiness;

###  

### (e)   sell, lease, exchange, transfer, license,mortgage, pledge or impose a security interest on or otherwise dispose of, oragree to sell, lease, exchange, transfer, license, mortgage, pledge or impose asecurity interest on or otherwise dispose of any of its material assets; providedthat the foregoing shall not be deemed to restrict the sale, lease, exchange,transfer, license or other disposition of assets with value in the aggregate of$250,000 or less, or the sale, use or other disposition of inventories ordispositions of obsolete or replaced property in the ordinary course ofbusiness;

###  

### (f)    adopt any amendments to its organizationaldocuments;

###  

### (g)   (i) change any of its methods ofaccounting in effect at the date of the Interim Balance Sheet; or (ii) settleor compromise any claim, action, suit, litigation, proceeding, arbitration,investigation, audit or controversy relating to Taxes (except where the amountof such settlements or controversies, individually or in the aggregate, doesnot exceed $100,000), or change any of its methods of reporting income ordeductions for federal income Tax purposes from those employed in thepreparation of the federal income Tax returns for the taxable year ending on December 31,2006, except, in the case of clause (i) or clause (ii), as may be requiredby Law or GAAP;

###  

### (h)   enter into, or become obligated under, anyindividual contract, lease, agreement, arrangement or commitment involvingconsideration in excess of $250,000 at any time or during any year, orterminate or otherwise change, amend or modify in any material respect, orterminate or cancel, any Material Contract or Lease;

###  

### (i)    directly or indirectly enter into anytransaction, agreement or arrangement with any of such Company’s members,managers, partners, directors, officers or employees or any of 

 

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### their respective Affiliates, except (A) inconnection with the Transactions, (B) with any other Company, or (C) withany employee of any Company in the ordinary course of business;

###  

### (j)    cancel any debts or waive any claims orrights of substantial value (including the cancellation, compromise, release orassignment of any indebtedness owed to, or claims held by, such Company),except for cancellations made or waivers granted in the ordinary course ofbusiness;

###  

### (k)   make any loan or advance to any Person; or

###  

### (l)    agree in writing or otherwise to do any ofthe foregoing.

###  

**SECTION 5.3.              Tax Matters**

 

### (a)   Cooperation on Tax Matters.  Purchaser and Sellers shall cooperate fullyand assist each other (and cause their respective Affiliates to assist), as andto the extent reasonably requested by any other party, in connection with thefiling of Tax Returns of the Companies and any audit, litigation or otherproceeding or disputes with taxing authorities with respect to any Tax Returnsor Taxes of the Companies.  Suchcooperation shall include the retention and (upon the other party’s request andat the other Party’s expense) the provision of all relevant books, records andinformation relating to Tax Returns or Taxes of the Companies and reasonablyrelevant to any such audit, litigation, or other proceeding and makingemployees available on a mutually convenient basis to provide additionalinformation and explanation of any material provided hereunder.  The Companies, Sellers and Purchaser shallretain all books and records with respect to Tax matters pertinent to theCompanies relating to any taxable period beginning before the Closing Dateuntil thirty days following the expiration of the applicable Tax statute oflimitations (including any extension thereof) (and, to the extent notified byPurchaser or Sellers, any extensions thereof) of the respective taxableperiods, and to abide by all record retention agreements entered into with anytaxing authority; provided, however, that in the event a proceeding has beeninstituted prior to the expiration of the applicable statute of limitations forwhich the information may be requested, the information will be retained untilthere is a final determination with respect to such proceeding.

###  

### (b)   Tax Sharing Agreements.  All Tax sharing agreements or similaragreements with respect to or involving the Companies shall be terminated as ofthe Closing Date and, after the Closing Date, no such party shall be boundthereby or have any liability thereunder.

###  

### (c)   754 Election.  The Partnership shall make, and shall causethe Companies to make, an election under Section 754 of the Code inconnection with the filing of the Companies’ federal income Tax Return for thetaxable period ending on the Closing Date.

###  

### (d)   Preparation of Returns.  The Sellers shall be responsible forpreparing and filing all income, sales and use Tax Returns for the Companiesfor all Tax periods ending on or prior to the Closing Date.

 

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# **ARTICLE VIADDITIONAL AGREEMENTS**

#  

**SECTION 6.1.              Access and Information**.

 

### (a)   From the date hereof to the Closing, Sellersshall, and shall cause each Company to, afford to Purchaser and its officers,employees, accountants, consultants, legal counsel, financing sources and otherrepresentatives, upon reasonable prior notice, reasonable access during normalbusiness hours to (i) the management and key employees of the Companiesand (ii) the business, properties, contracts and records of the Companiesand all information concerning any of the foregoing and employees of theCompanies as Purchaser may reasonably request to conduct such examination andinvestigation of the business and business assets as is reasonably necessary forthe purpose of consummating the transactions contemplated by this Agreement,including using reasonable efforts to permit Purchaser to conduct anyreasonable environmental investigations at the Leased Real Property; providedthat that:  (x) such examination andinvestigation shall be conducted at times and in a manner that does notunreasonably interfere with the operation of the Companies’ respectivebusinesses, and (y) if any such examination or investigation results indamage to or alteration of any land or other premises, Purchaser (at Purchaser’sexpense) shall restore the same to substantially the condition as existed priorto such examination or investigation.

###  

### (b)   Until the fifth anniversary of the Closing,Purchaser shall permit Sellers and their Affiliates and representatives(collectively, the “Seller Parties”) to have reasonable access andduplicating rights during normal business hours, upon reasonable prior noticeto Purchaser, to the books, records and personnel relating to the business ofthe Companies, to the extent that such access may be reasonably required inconnection with (i) the preparation of any Seller’s Tax returns or withany audit thereof, (ii) any Seller Party’s financial reporting related tothe operations of the Companies prior to the Closing, or (iii) any suit,claim, action, proceeding, investigation or regulatory filing relating to theoperation of the business of the Companies prior to the Closing; providedthat any such Seller Parties shall reimburse Purchaser promptly for allreasonable out-of-pocket costs and expenses incurred by Purchaser in connectionwith any such request.  Purchaser shallattempt in good faith to maintain such books and records in an easilyaccessible format and at accessible locations.

###  

### (c)   Following the Closing, Purchaser shall, andshall cause its and its Affiliates’ employees to, at any Seller’s reasonablerequest, cooperate with Sellers as may be reasonably required in connectionwith the investigation and defense of any suit, claim, action, proceeding orinvestigation relating to the business of the Companies that is brought againstany Seller or any of their Affiliates at any time after the Closing; providedthat Sellers shall reimburse Purchaser for all reasonable out-of-pocket costsand expenses incurred by Purchaser in connection with any such request.

###  

**SECTION 6.2.              Confidentiality**.

 

Purchaser acknowledges and agrees that all information received from oron behalf of any Seller or any of the Companies in connection with theTransactions shall be deemed received 

 

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pursuant to the confidentialityagreement, dated as of June 8, 2007, between Consolidated Theatres, LLCand Regal Entertainment Group (the “Confidentiality Agreement”) andPurchaser shall, and shall cause its officers, directors, employees,Affiliates, financial advisors and agents, to comply with the provisions of theConfidentiality Agreement with respect to such information and the provisionsof the Confidentiality Agreement are hereby incorporated herein by referencewith the same effect as if fully set forth herein.

 

**SECTION 6.3.              Further Action; Efforts Regarding Closing**.

 

### (a)   Each party shall use its best efforts totake, or cause to be taken, all actions, and to do, or cause to be done, and toassist and cooperate with the other party in doing, all things necessary oradvisable under applicable Laws (including the HSR Act) to consummate and makeeffective the Transactions and to cause the conditions to the Transactions setforth in Section 7.1 to be satisfied, including: (i) obtainingall necessary actions or nonactions, consents and approvals from GovernmentalEntities or other Persons that are necessary in connection with theconsummation of the Transactions; (ii) making all necessary registrationsand filings and taking all reasonable steps as may be necessary to obtain anapproval from, or to avoid an action or proceeding by, any Governmental Entityor other Person that is necessary in connection with the consummation of theTransactions; (iii) defending any lawsuits or other legal proceedings,whether judicial or administrative, that challenge this Agreement or theconsummation of the Transactions in accordance with the terms of thisAgreement, including seeking to have any stay or temporary restraining Orderentered by any court or other Governmental Entity vacated or reversed; (iv) executingand delivering any additional instruments necessary to consummate theTransactions in accordance with the terms of this Agreement and to fully carryout the purposes of this Agreement; and (v) obtaining necessary approvalsunder any Law or Contract that may be required in connection with anyDivestiture.

###  

### (b)   Each of Sellers and Purchaser undertakes andagrees to file or cause to be filed within ten (10) Business Days afterthe date of this Agreement a Notification and Report Form with respect tothe Transactions under the HSR Act with the United States Federal TradeCommission (the “FTC”) and the Antitrust Division of the United StatesDepartment of Justice (the “Antitrust Division”).  Purchaser shall be responsible for all filingfees under the HSR Act and shall promptly reimburse Sellers and theirAffiliates for any and all such filing fees. Each party shall request an accelerated review from any GovernmentalEntity in connection with such filings. Each party shall respond as promptly as practicable to any inquiriesfrom the FTC, the Antitrust Division or any Governmental Entity Laws foradditional information or documentation and to all inquiries and requests fromany Governmental Entity.  Each party willconsult with counsel for the other party as to, and will permit such counsel toparticipate in, any litigation referred to in Section 6.3(a).  Each party will (i) promptly notify theother parties of any written communication to that party from any GovernmentalEntity and permit the outside counsel for the other parties to review inadvance any proposed written communication to any such Governmental Entity, (ii) notagree to participate in any substantive meeting or discussion with any suchGovernmental Entity in respect of any filing, investigation or inquiryconcerning this Agreement or the Transactions unless it consults with theoutside counsel for the other parties in advance and, to the extent permittedby such Governmental Entity, gives the other parties the opportunity to attendthe same, and (iii) furnish the outside counsel of the other 

 

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### parties with copies of all correspondence, filingsand written communications with any Governmental Entity with respect to thisAgreement.

###  

### (c)   Purchaser agrees to take any and all stepsnecessary to avoid or eliminate each and every impediment and obtain allconsents under any Antitrust Law that may be required by any GovernmentalEntity of competent jurisdiction, so as to enable the parties to close theTransactions expeditiously, but in no case later than the Termination Date,including committing to or effecting, by consent decree, hold separate orders,trust, or otherwise, any Divestiture(s) or licenses of such assets orbusinesses as may be required in order to obtain the expiration of the HSRwaiting period, or avoid the entry of, or to effect the dissolution of orvacate or lift, any Order, that would otherwise have the effect of preventingor materially delaying the consummation of the Transactions.  Notwithstanding anything to the contrary inthis Section 6.3, nothing in this Agreement will require Purchaserto take any action, including entering into any consent decree, hold separateorders or other arrangements, that requires the Divestiture of any assets that,in the aggregate, accounted for greater than $3,500,000 in Theatre Level CashFlow during the trailing twelve fiscal months of the entity or entities inquestion ended nearest to September 30, 2007.

###  

### (d)   Each of Sellers and Purchaser shall give (orshall cause their respective Affiliates to give) any notices to other Persons,and shall use, and cause each of their respective Affiliates to use, itsreasonable best efforts to obtain any third-party consents not covered by Sections 6.3(a) through6.3(c), that are necessary, proper or advisable to consummate theTransactions and to cause the conditions to the Transactions set forth in Sections7.2 and 7.3 to be satisfied. Each of the parties hereto will furnish to the others such necessaryinformation and reasonable assistance as the other may request in connectionwith the preparation of any required governmental filings or submissions andwill cooperate in responding to any inquiry from a Governmental Entity,including immediately informing the other party of such inquiry, consulting inadvance before making any presentations or submissions to a GovernmentalEntity, and supplying each other with copies of all material correspondence,filings or communications between any party and any Governmental Entity withrespect to this Agreement.  The partiesshall have the right to review in advance, and to the extent reasonablypracticable each will consult the other on, all information relating to theother and each of their respective Subsidiaries and Affiliates that appears inany filing made with, or written materials submitted to, any third party or anyGovernmental Entity in connection with the Transactions.  The parties and their respectiverepresentatives shall have the right to participate, to the extent reasonablypracticable, in any meeting or discussion with any Governmental Entity inrespect of any filing, investigation or inquiry concerning this Agreement orany of the Transactions.

###  

(e)   Allsales and transfer taxes, recording charges and similar taxes, fees or chargesimposed as a result of the sale and transfer of the Options and the PartnershipInterests to Purchaser (collectively, the “Transfer Taxes”) togetherwith any interest, penalties or additions to such Transfer Taxes shall be paidone-half by Sellers and one-half by Purchaser. Sellers and Purchaser shall cooperate in timely making all filings,returns, reports and forms necessary or appropriate to comply with theprovisions of all applicable laws in connection with the payment of suchTransfer Taxes, and shall cooperate in good faith to minimize, to the fullestextent possible under such laws, the amount of any such Transfer Taxes payablein connection therewith.

 

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###  

### (f)            Priorto the Closing, Sellers will not, and will cause each of its Subsidiaries andits and their respective Affiliates, officers, directors and employees to not,directly or indirectly (i) solicit, initiate or encourage any AcquisitionProposal, (ii) enter into any agreement with respect to any AcquisitionProposal or (iii) continue or participate in any discussions ornegotiations regarding, or furnish to any Person any information with respectto, or take any other action to facilitate any inquiries or the making of anyproposal that constitutes, or may reasonably be expected to lead to, anyAcquisition Proposal.

###  

## **SECTION 6.4.**                                          PublicAnnouncements.

## ** **

Prior to the Closing, Purchaser and Sellers shallconsult with each other prior to issuing any press release or otherwise makingany public statements with respect to the Transactions and neither party shallissue any such press release or make any such public statement without theother party’s written approval, except as may be required by Law, in which casethe other party shall be advised and the parties shall use reasonable effortsto cause a mutually agreeable release or announcement to be issued to theextent practicable.

 

## **SECTION 6.5.**                                          EmployeeMatters.

## ** **

Purchaser shall be responsible for all obligationsarising under or pursuant to COBRA for all “M & A qualified beneficiaries”as defined under Treas. Reg. §54.4980B-9, and Purchaser agrees that theemployees of Consolidated Theatres Management, LLC as of the Closing Date (andthe COBRA-eligible former employees of Consolidated Theatres Management, LLC asof the Closing Date) shall be considered such “M&A qualified beneficiaries”regardless of whether they technically satisfy the definition of “M&Aqualified beneficiary” set forth in Treas. Reg. Sec. 54.4980B-9.  For the avoidance of doubt, it is understoodthat any “M&A qualified beneficiary” who elects to receive COBRA coveragefrom Purchaser must pay (or have paid on his or her behalf) the COBRA premiumamount in order to obtain such coverage. Nothing in this Agreement shall beconstrued to limit the ability of Purchaser, or any Company to terminate theemployment of any employee of any Company at any time and for any or no reasonon or after the Closing.  No provision ofthis Section 6.5 shall create any third party beneficiary rights inany Person, including any employee or former employee of any Company or anybeneficiary or dependent of any such employee or former employee.  In addition, nothing contained in thisAgreement, express or implied:  (i) shallbe construed to establish, amend, or modify any benefit plan, program,agreement or arrangement; (ii) shall alter or limit the ability ofPurchaser, the Companies, or any of their Affiliates to amend, modify orterminate any benefit plan, program, agreement or arrangement at any timeassumed, established, sponsored or maintained by any of them; or (iii) isintended to confer upon any current or former employee of any Company or anyother Person any right to employment or continued employment for any period oftime by reason of this Agreement, or any right to a particular term orcondition of employment.

 

## **SECTION 6.6.**                                          LaborMatters; WARN.

## ** **

### (a)          Purchasershall not, and shall cause the Companies not to, at any time prior to the 61stday following the Closing Date, without fully complying with the notice andother requirements of the Worker Adjustment and Retraining Notification Act of1988 (“WARN Act”), effectuate (i) a “plant closing” (as defined inthe WARN Act) affecting any site of 

 

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employment or one or morefacilities or operating units within any site of employment of the Companies,or (ii) a “mass layoff” (as defined in the WARN Act) affecting any site ofemployment of the Companies.

###  

### (b)         IfPurchaser takes any action within 180 days after the Closing Date thatindependently, or in connection with any reduction in the size of the Companies’work force occurring within the ninety day period prior to the Closing Date,could be construed as a “plant closing” or “mass layoff,” as those terms aredefined in the WARN Act, Purchaser shall be solely responsible for providingany notice required by the WARN Act and for making payments, if any, and payingall penalties and costs, if any, that may result from any failure to providesuch notice.

###  

## **SECTION 6.7.**                                          Information,Etc.

## ** **

Purchaser acknowledges and agrees that neither anySeller nor any Affiliate or representative of any Seller has made anyrepresentation or warranty, expressed or implied, as to any Company or as tothe accuracy or completeness of any information regarding any Company furnishedor made available to Purchaser and its representatives, except as expressly setforth in Articles II and III, or any Related Agreement, andSellers shall not have or be subject to any liability to Purchaser or any otherPerson resulting from the distribution to Purchaser, or Purchaser’s use of orreliance on, any such information or any information, documents or materialmade available to Purchaser in any data room, presentations or in any otherform (including the Confidential Information Memorandum dated Summer 2007prepared by “UBS Investment Bank” concerning the Companies) in expectation of,or in connection with, the transactions contemplated hereby.

 

## **SECTION 6.8.**                                          Notification.

## ** **

(a)  Between the date of this Agreement and theClosing Date, Sellers shall notify Purchaser in writing if Sellers acquireKnowledge of any fact or condition that causes or constitutes a breach of anyof Sellers’ representations and warranties as of the date of this Agreement, orif Sellers acquire Knowledge of the occurrence of any fact or condition thatwould (except as expressly contemplated by this Agreement) cause or constitutea breach of any such representation or warranty had such representation orwarranty been made as of the time of occurrence or discovery of such fact orcondition.  Should any such fact orcondition require any change in Sellers’ Schedules (or the addition of one ormore schedules to describe one or more exceptions to the representations andwarranties set forth in Articles II and III) if such Scheduleswere dated the date of the occurrence or discovery of any such fact orcondition, Sellers shall promptly deliver to Purchaser a supplement to theSchedules specifying such change(s).

 

(b) If matters disclosed in a notification orsupplement delivered pursuant to Section 6.8(a) (and in anyother notification(s) or supplement(s) theretofore delivered pursuantto Section 6.8(a)) could reasonably be expected to result inDamages (including for the purposes of this Section 6.8(b),consequential damages, lost profits, indirect damages, punitive damages andexemplary damages) in an aggregate amount that exceeds $12,000,000 (and Sellersso state in writing when they deliver such notification or supplement andinclude a written description in reasonable detail of Sellers’ basis for suchdetermination), then Purchaser shall have the right to 

 

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terminate this Agreementby giving written notice to that effect to Sellers not later than the tenth(10th) Business Day after the delivery of such notification or supplement (and,if necessary, the Closing will be postponed to such tenth (10th) Business Day);provided that if Purchaser has the right to, but does not, so elect toterminate this Agreement within such ten (10) Business Day period andsubsequently Sellers deliver to Purchaser one or more additional notificationsor supplements pursuant to Section 6.8(a), then Purchaser shallhave the right to terminate this Agreement within ten (10) Business Daysafter the delivery of each such additional notification or supplement.

 

(c) If matters disclosed in a notification orsupplement delivered pursuant to Section 6.8(a) (and in anyother notification(s) or supplement(s) theretofore delivered pursuantto Section 6.8(a)) could reasonably be expected to result inDamages (including for the purposes of this Section 6.8(c),consequential damages, lost profits, indirect damages, punitive damages andexemplary damages, but excluding for purposes of this Section 6.8(c) allsuch extent actual or anticipated Damages to the extent they arise out of orare anticipated to arise out of acts or omissions of any Seller or thePartnership that are material violations or breaches of any covenant oragreement set forth in this Agreement) in an aggregate amount that exceeds$21,000,000 (and Sellers so state in writing when they deliver suchnotification or supplement and include a written description in reasonabledetail of Sellers’ basis for such determination), then Sellers shall have theright to terminate this Agreement by giving written notice to that effect toPurchaser not later than the tenth (10th) Business Day after the delivery ofsuch notification or supplement; provided that if Sellers have the right to,but do not, so elect not to terminate this Agreement within such ten (10) BusinessDay period and subsequently Sellers deliver to Purchaser one or more additionalnotifications or supplements pursuant to Section 6.8(a), thenSellers shall have the right to terminate this Agreement within ten (10) BusinessDays after the delivery of each such additional notification or supplement.

 

(d)  Whether or not Purchaser has the right toterminate this Agreement pursuant to Section 6.8(b), then thedelivery of such notification(s) or supplement(s) shall not be deemedto amend or supplement Seller’s Schedules for purposes of Article VIIIor prevent or cure any such breach for purposes of Article VIII orotherwise affect any rights of Purchaser under Article VIII (except asprovided in the proviso in the first sentence of Section 8.1(c)).  If Purchaser does not have the right toterminate this Agreement pursuant to Section 6.8(b), then thedelivery of such notification(s) and supplement(s) shall not bedeemed to amend or supplement Seller’s Schedules for purposes of ArticlesVII and IX or prevent or cure any breach for purposes of suchArticles or otherwise affect any rights of Purchaser under Articles VIIand IX.

 

(e) If Purchaser has the right to terminate thisAgreement pursuant to Section 6.8(b) following the delivery ofany notification or supplement pursuant to Section 6.8(a) anddoes not do so within the ten (10) Business Day period referred totherein, then all such disclosures included in such notification or supplementor any other notification or supplement delivered pursuant to Section 6.8(a)delivered to Purchaser prior to the first day of such ten (10) BusinessDay period shall be deemed accepted by Purchaser (other than for purposes of Article VIII),the condition to Closing set forth in Section 7.2(a) shall bedeemed waived with respect to the matters so disclosed in any such notificationor supplement, and the disclosure relative to Sellers’ representations andwarranties shall be deemed modified or supplemented as indicated in all suchnotifications and supplements for purposes of Article IX.

 

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(f) ****In addition to the foregoing, betweenthe date of this Agreement and the Closing Date, Sellers shall promptly notifyPurchaser of the occurrence of any breach of any covenant of Sellers or theCompanies in Article V or this Article VI of theoccurrence of any event that may make the satisfaction of the conditions in Article VIIimpossible or unlikely.

 

## **SECTION 6.9.**                                          Contactswith Suppliers, Customers and Other Parties.

## ** **

Without the prior written consent of Sellers, whichshall not be unreasonably withheld or delayed, prior to the Closing, Purchasershall not, and shall cause its Affiliates and representatives not to, contactany suppliers or independent contractors to, or customers of or any of theCompanies, any employees of any of the Companies, counterparties to anymanagement agreement or other contract to which any Company is a party, or anyGovernmental Entity (other than in connection with any filings made under theHSR Act or in connection with other consents, approvals or waivers required tobe obtained by Purchaser from Governmental Entities in connection with thetransactions contemplated hereby or as required by applicable Law) inconnection with or pertaining to the transactions contemplated by thisAgreement.

 

**SECTION6.10.****                                   KingstowneLitigation**.

## ** **

If the Kingstowne Litigation has not been resolved inits entirety by one or more Final Judgments as of the Adjustment Time, thenParent shall use reasonable efforts to cause the Companies to assign, prior tothe Closing, all of the Companies’ right, title and interest in and withrespect to the Kingstowne Litigation to Parent or Parent’s designee (other thanthe Companies), without any consideration to the Companies.  In the event that the Companies areprohibited from assigning the Kingstowne Litigation to Parent or its designeeprior to the Closing, or Parent reasonably concludes that such an assignmentcould adversely affect the validity or value of such claim, then from and afterthe Closing, Purchaser shall cause the Companies to use commercially reasonableefforts to pursue the claims that are the subject of the Kingstowne Litigation,including by means of an appeal of any judgment rendered in connectiontherewith, and to collect any amount that becomes payable to any Company inrespect of such claims.  In such event,at any Seller’s written request, Purchaser shall permit Sellers to conduct thepursuit of such claims (including the settlement or other compromise and/or thecollection of any such amount) on behalf of the Companies using legal counselselected by Sellers that is reasonably acceptable to Purchaser, and will causethe Companies to cooperate with Sellers in the pursuit of such claims and thecollection of any such amount as any Seller may reasonably request.  In the event that Sellers elect to conduct thepursuit of such claims and/or the collection of any such amount:

 

### (a)          Purchasershall not, and shall not cause or permit any Company to, settle or otherwisecomprise any such claim (including by consenting to the entry of any judgment)without Parent’s prior written consent;

###  

### (b)         Sellerswill (i) reimburse Purchaser for any out-of-pocket expenses incurred byany Company in connection with the pursuit of such claims and/or the collectionof any such 

 

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amount that becomespayable to any Company, within five (5) Business Days after such entity’spayment thereof and notice to Sellers and (ii) pay to Purchaser reasonablecompensation for man-hours expended in the pursuit of such claims; and

###  

### (c)          Purchaserwill cause the Companies to pay over to Sellers any amount delivered to theCompanies in respect of such claims, within five (5) Business Days aftersuch entity’s receipt thereof.

###  

Without limiting the foregoing, if an assignment ofthe type described in the first sentence of this Section 6.10 doesnot occur at or prior to the Closing, then after the Closing, at Parent’sexpense, Purchaser will take such actions as Parent may reasonably request toeffectuate such an assignment.

 

## **SECTION 6.11.**                                   LandlordApprovals, Estoppels; SNDAs; Memoranda of Leases.

## ** **

### (a)          Withrespect to each Lease for which a Landlord Approval is required, Sellers shallpromptly after the date of this Agreement request that the lessor thereundergrant such Landlord Approval.  Inconnection with such request, Purchaser shall furnish to such landlord allmaterials required by the related Lease as a condition to or in connection withsuch a request, and such other information as such landlord may reasonablyrequest from time to time.  Purchaser andSellers shall use reasonable best efforts to promptly obtain each LandlordApproval.  Within five (5) calendardays of receipt of any Landlord Approval executed by any such lessor, Sellersshall deliver a true and complete copy thereof to Purchaser.

###  

### (b)         Withrespect to each Lease, Sellers shall promptly after the date of this Agreementrequest that the lessor thereunder execute an estoppel (a “Lessor Estoppel”)in the form of Exhibit C attached hereto.  Sellers and Purchaser shall use reasonablebest efforts to promptly obtain such a Lessor Estoppel from each suchlessor.  Sellers and Purchaser shall makesuch modifications to the forms attached hereto as Exhibit C assuch lessors shall reasonably request. Within five (5) calendar days of receipt of any Lessor Estoppelexecuted by any such lessor, Sellers shall deliver a true and complete copythereof to Purchaser.

###  

### (c)          Withrespect to each Lease which is a sublease, Sellers shall promptly after thedate of this Agreement request that each superior lessor execute a commerciallyreasonable non-disturbance agreement in form and substance reasonably requestedby Purchaser.  Sellers and Purchasershall use reasonable best efforts to promptly obtain such a non-disturbanceagreement, and in form and substance reasonably satisfactory to Purchaser; providedthat Sellers shall have no such obligation with respect to any superior lessorthat has previously executed such a commercially reasonable non-disturbanceagreement in form and substance reasonably acceptable to Purchaser.

###  

### (d)         Withrespect to each Lease which is, or may be, subordinate to a mortgage or deed oftrust executed by the lessor, or by a superior lessor, Sellers shall promptlyafter the date of this Agreement request that the mortgagee or beneficiary ofeach such deed of trust execute a non-disturbance agreement in form andsubstance reasonably requested by Purchaser. Sellers and 

 

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Purchaser shall usereasonable best efforts to promptly obtain such a non-disturbance agreement; providedthat Sellers shall have no such obligation with respect to any mortgagee orbeneficiary that has previously executed such a non-disturbance agreement inform and substance reasonably satisfactory to Purchaser.

###  

### (e)          Withrespect to each Lease for which a memorandum of lease is not recorded in theofficial real property records in which the Leased Real Property is located,Sellers shall promptly after the date of this Agreement request that the lessorthereunder execute a memorandum of lease in form and substance reasonablyrequested by Purchaser.  Sellers andPurchaser shall use reasonable best efforts to promptly obtain such memorandaof lease, duly executed and acknowledged by such lessor and otherwise inrecordable form.  Within five (5) calendardays of receipt by Sellers of any such memorandum executed by any such lessor,Sellers shall deliver a true and complete copy thereof to Purchaser.

###  

### (f)            Purchasermay refuse to approve a lessor consent or estoppel on any reasonablegrounds.  Purchaser shall use reasonablebest efforts to obtain releases of all guaranties of any Company’s obligationsgiven by any Person under any Lease, including furnishing any guaranties,additional deposits, letters of credit or other security for performance of thelessee’s obligations under any of the Leases that any landlord may reasonablyrequest.

###  

### (g)         Notwithstandinganything set forth in any estoppel, consent, non-disturbance agreement or othermemorandum which is executed or delivered pursuant to this Section 6.11,as between Purchaser and Sellers, this Agreement shall govern the rights,interests, obligations and liabilities under and with respect to the Leases.

###  

## **SECTION 6.12.**                                   Non-CompetitionAgreement Amendment.

## ** **

Prior to the Closing, Sellers shall use theirreasonable best efforts to cause Section 7(a) of the ExecutiveEmployment Agreement dated as of November 1, 2003 between ConsolidatedTheatres Management, L.L.C. and E. Casey Brock II (the “Brock EmploymentAgreement”) to be amended to delete the proviso to the second sentencethereof.

 

## **SECTION 6.13.**                                   ABRYIndemnification Letter.

## ** **

Prior to the Closing, Sellers shall obtain theagreement of ABRY Partners, LLC or an affiliate thereof reasonably acceptableto Purchaser (“ABRY”) to execute and deliver at Closing anindemnification letter for the benefit of Purchaser substantially in the formof Exhibit D attached hereto (the “ABRY Indemnification Letter”).

 

# **ARTICLEVIICLOSING CONDITIONS**

# ** **

## **SECTION 7.1.**                                          Conditionsto Obligations of Purchaser and Sellers.

## ** **

The respective obligations of Purchaser and Sellers toeffect the Transactions at the Closing shall be subject to the satisfaction ator prior to the Closing of the following conditions, 

 

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any or all of which maybe waived, in whole or in part, to the extent permitted by applicable Law:

 

### (a)          NoOrder.  No Governmental Entity orfederal or state court of competent jurisdiction shall have pending or haveenacted, issued, promulgated, enforced or entered any statute, rule,regulation, executive order, decree, judgment, injunction or other order(whether temporary, preliminary or permanent), in any case that is in effectand that prevents or prohibits consummation of the Transactions or would causeany material liability to be imposed on Purchaser or any Seller if theTransactions were consummated.

###  

### (b)         HSRAct.  Any waiting period and anyextensions thereof under the HSR Act shall have expired or been terminated.

###  

## **SECTION 7.2.**                                          AdditionalConditions to Obligations of Purchaser.

## ** **

The obligations of Purchaser to effect theTransactions are also subject to the following conditions, any or all of whichmay be waived, in whole or in part, by Purchaser to the extent permitted byapplicable Law:

 

### (a)          Representationsand Warranties of Sellers.  Takentogether, the representations and warranties of Sellers set forth in Article IIand Article III (disregarding, for purposes of this Section 7.2(a),all materiality qualifications therein) shall be true and correct as of theClosing (or, if made as of a specified date, then as of such specified date),in each case except in such respects as, taken as a whole, have not had andwould not reasonably be expected to have a Company Material Adverse Effect.

###  

### (b)         Agreementsand Covenants of Sellers.  Theagreements and covenants of Sellers required to be performed on or before theClosing shall have been performed in all material respects.

###  

### (c)          Deliveries.  Sellers shall have delivered or caused to bedelivered each of the following:

###  

#### (i)                                     acertificate signed by Sellers dated the Closing Date, stating that theconditions specified in Section 7.2(a) and Section 7.2(b) havebeen satisfied;

####  

#### (ii)                                  resignationsof the officers, directors or similar governing individuals of the Companies(other than any officers, directors or other such individuals identified byPurchaser in writing);

####  

#### (iii)                               a certificate of goodstanding of each Seller and each Company (other than the Partnership) from theSecretary of State of Delaware dated within ten (10) days of the ClosingDate;

####  

#### (iv)                              certifiedcopies of the partnership agreement, certificate of formation and limitedliability company agreement, as applicable, of each of the Companies;

 

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#### (v)                                 certifiedcopies of the resolutions duly adopted by each Seller’s board of directors (orsimilar governing body) and the shareholders of each of the Corporationsauthorizing its execution, delivery and performance of this Agreement and theother agreements contemplated hereby to which it is a party and theconsummation of all transactions contemplated hereby and thereby;

####  

#### (vi)                              anopinion of Sellers’ counsel, dated the Closing Date, as to the mattersdescribed in Exhibit E attached hereto;

####  

#### (vii)                           a payoff demand letter forthe outstanding amount of the Bank Facility on the Closing Date stating that,upon payment of the amounts specified therein in accordance with theinstructions specified therein, all Encumbrances securing the amounts payablethereunder shall be released;

####  

#### (viii)                        **[*intentionally omitted*]**;

####  

#### (ix)                                **[*intentionallyomitted*]**;

####  

#### (x)                                   executedcounterparts of an amendment to the Brock Employment Agreement of the typedescribed in Section 6.12, signed by Casey Brock;

####  

#### (xi)                                executedcounterparts of the ABRY Indemnification Letter; and

####  

#### (xii)                             the Estimated ClosingCertificate.

####  

### (d)         RequiredConsents.  Each of the LandlordApprovals shall have been obtained in form and substance reasonablysatisfactory to Purchaser and shall be in full force and effect.

###  

### (e)          EscrowAgreement.  The Escrow Agent and Parentshall have each executed and delivered signatures to the Escrow Agreement toPurchaser.

###  

### (f)            NoMaterial Adverse Effect.  Since thedate of this Agreement, there shall have not been a change, event or conditionthat has had or would reasonably be expected to have a Company Material AdverseEffect.

###  

### (g)         BankFacility.  Concurrently with theClosing, the Bank Facility shall be satisfied in full as described in Section 1.3(c)and any and all Encumbrances related thereto released in their entirety.

###  

If the Closing occurs, all closing conditions setforth in this Section 7.2 that have not been fully satisfied as ofthe Closing shall be deemed to have been fully waived by Purchaser; providedthat such waiver will not affect any right to indemnification pursuant to Article VIIIin respect of any inaccuracy in any certification made pursuant to Section 7.2(c)(i).

 

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## **SECTION 7.3.**                                          AdditionalConditions to Obligations of Sellers.

## ** **

The obligations of the Sellers to effect theTransactions and the other transactions contemplated in this Agreement are alsosubject to the following conditions any or all of which may be waived, in wholeor in part, by Sellers to the extent permitted by applicable Law:

 

### (a)          Representationsand Warranties of Purchaser.  Takentogether, the representations and warranties of Purchaser in Article IV(disregarding, for purposes of this Section 7.3(a), all materialityqualifications therein) shall be true and correct as of the Closing (or, if madeas of a specified date, then as of such specified date), in each case except insuch respects as, taken as a whole, have not had and would not reasonably beexpected to have a material adverse effect on Purchaser’s ability to performits obligations under this Agreement or any Related Agreement to which it is orwill become a party.

###  

### (b)         Agreementsand Covenants of Purchaser.  Theagreements and covenants of Purchaser required to be performed on or before theClosing shall have been performed in all material respects.

###  

### (c)          **[*intentionally omitted*]**;

###  

### (d)         Deliveryof Consideration.  Purchaser shallhave delivered the Closing Cash Payment, the Option Exercise Price and theEscrow Amount in accordance with Section 1.3(b).

###  

### (e)          OtherDeliveries.  Purchaser shall havedelivered or caused to be delivered to Sellers each of the following:

###  

#### (i)                                     acertificate signed by Purchaser dated the Closing Date stating that theconditions specified in Section 7.3(a) and Section 7.3(b) havebeen satisfied; and

####  

#### (ii)                                  certifiedcopies of the resolutions duly adopted by Purchaser’s board of directors orequivalent governing body authorizing its execution, delivery and performanceunder this Agreement and the other agreements contemplated hereby to which itis a party, and the consummation of all transactions contemplated hereby andthereby.

####  

### (f)            EscrowAgreement.  The Escrow Agent andPurchaser shall have each executed and delivered signatures to the EscrowAgreement to Parent.

###  

### (g)         Commonwealth20 Landlord Agreement.  The Commonwealth20 Landlord Agreement shall be in full force and effect or Parent shall havebeen released by a written agreement of the Commonwealth 20 Landlord, in formand substance reasonably satisfactory to Parent, from its obligations under the“Lease,” the “Premises” and the “Consolidated Guaranty” (as each such term isdefined in the Commonwealth 20 Landlord Agreement).

###  

If the Closing occurs, all closing conditions setforth in this Section 7.3 that have not been fully satisfied as ofthe Closing shall be deemed to have been fully waived by Sellers;****provided that such waiver will notaffect any right to indemnification pursuant to Article VIII inrespect of any inaccuracy in any certification made pursuant to Section 7.3(e)(i).

 

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## **SECTION 7.4.**                                          Frustrationof Closing Conditions.

## ** **

No party may rely on the failure of any condition setforth in this Article VII to be satisfied if such failure wascaused by such Party’s failure comply with this Agreement or to act in goodfaith to endeavor to consummate the transactions provided for herein.

 

# **ARTICLEVIIIINDEMNIFICATION**

# ** **

## **SECTION 8.1.**                                          Indemnificationof Purchaser.

## ** **

### (a)          Sellersagree that, after the Closing, subject to the limitations set forth in this Article VIII,Sellers shall indemnify, defend and hold harmless Purchaser and its officers,directors, agents and representatives (each hereinafter referred toindividually as a “Seller-Indemnified Person” and collectively as “Seller-IndemnifiedPersons”), from and against any and all claims, demands, suits, actions,causes of actions, losses, costs, damages, liabilities and out-of-pocketexpenses incurred or paid, including reasonable attorneys’ fees, costs ofinvestigation or settlement, other professionals’ and experts’ fees, and courtor arbitration costs but specifically excluding (except to the extent the samemay be awarded to a third party in a Third-Party Claim) consequential damages,lost profits, indirect damages, punitive damages and exemplary damages(collectively referred to as “Damages”), to have arisen out of or tohave resulted from, in connection with, or by virtue of (i) facts orcircumstances that constitute an inaccuracy, misrepresentation, breach of,default in, or failure to perform, any of the representations, warranties orcovenants given or made by Sellers in this Agreement or in the certificatedelivered pursuant to Section 7.2(c)(i) (collectively, the “Limited-IndemnityItems”), (ii) the High Point Litigation, (iii) ClosingIndebtedness, (iv) the leases retained by Sellers pursuant to Section 1.7,or (v) any action, suit, investigation, or proceeding disclosed on Schedule3.5 with respect to which the defense is not being provided or paid for bythe insurer (collectively with the Limited-Indemnity Items, the High PointLitigation, Closing Indebtedness and the retained leases, the “SellerIndemnified Items”).  For theavoidance of doubt, no Seller-Indemnified Person shall be entitled to beindemnified pursuant to this Section 8.1 for any liability to theextent such liability is actually reflected in the Closing Working Capital usedto determine the Final Purchase Price.

###  

### (b)         Anyclaim for indemnification made by a Seller-Indemnified Person under this Section 8.1in respect of the Limited-Indemnity Items must be asserted in a writingdelivered to Sellers no later than the Survival Date and, if asserted by suchdate, such claim shall survive the Survival Date until final resolutionthereof.  The right to indemnification,reimbursement or other remedy based upon such representations, warranties,covenants and obligations shall not be affected by any investigation (includingany environmental investigation or assessment) conducted with respect to, orany knowledge acquired (or capable of being acquired) at any time, whetherbefore or after the execution and delivery of this Agreement or the ClosingDate.  Except as provided in the provisoto the first sentence of Section 8.1(c), the waiver of any covenantor condition will not affect the right to indemnification, reimbursement orother remedy.

 

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###  

### (c)          Theaggregate liability of Sellers on account of all Limited-Indemnity Itemspursuant to Section 8.1 shall be limited to $12,000,000 (the “Limited-IndemnityCap”), and claims for Damages in respect of Limited-Indemnity Items shallbe limited to such amount, whether the Seller-Indemnified Person in question isthe Purchaser or another Seller-Indemnified Person; provided that, if Purchaserhas the right to terminate this Agreement pursuant to Section 6.8 prior tothe Closing and does not do so, then the Limited-Indemnity Cap will be reducedby the amount, if any, of the Limited 6.8 Liabilities included in determiningthe Closing Working Capital Adjustment (but not by an amount that exceeds theClosing Working Capital Adjustment). Without limiting the foregoing, the Seller-Indemnified Persons’ solerecourse in respect of Limited-Indemnity Items shall be to the amounts heldfrom to time by the Escrow Agent and not theretofore released pursuant to theEscrow Agreement.  In addition, theindemnification provided for in this Section 8.1 in respect of theLimited-Indemnity Items shall not apply unless and until the aggregate Damagesdetermined to be due for which one or more Seller-Indemnified Persons seeks orhas sought indemnification hereunder in respect of Limited-Indemnity Itemsexceeds a cumulative aggregate of $2,500,000 (the “Deductible”), inwhich event the Seller-Indemnified Persons shall, subject to the otherlimitations herein, be indemnified for such Damages to the extent in excess ofthe Deductible.  Notwithstanding theforegoing limitations, Sellers shall indemnify Purchaser from and against theentirety of any Damages arising from facts or circumstances that constitutefraud or willful breach of any covenant by Sellers.

###  

### (d)         Inview of the Deductible, and solely for purposes of determining the amount ofany Damages, the representations and warranties of Sellers set forth in thisAgreement (or in any instrument, certificate or affidavit delivered at theClosing with respect thereto) shall be considered without regard to anyqualification based on materiality or “Material Adverse Effect” set forththerein.

###  

### (e)          Theamount to which a Seller-Indemnified Person may become entitled under this Article VIIIshall be net of any actual recovery (whether by way of payment, discount,credit, off-set, counterclaim or otherwise) received from a third party(including any insurer) less any cost associated with receiving such recoveryin respect of a claim.  To the extentthat insurance, “pass-through” warranty coverage from a manufacturer or otherform of recovery or reimbursement from a third party is available to anySeller-Indemnified Person to cover any item for which indemnification may besought hereunder, Purchaser shall, or shall cause each other Seller-IndemnifiedPerson to, on a timely and expeditious basis, use commercially reasonableefforts to effect recovery under applicable insurance policies, and usecommercially reasonable efforts to pursue to conclusion available remedies orcauses of action to recover the amount of its claim as may be available fromsuch other party; provided that the availability of a potential recoveryagainst such a third party shall not affect Purchaser’s right to make a claimfor indemnity pursuant to this Section 8.1.  To the extent of any indemnification withrespect to any claim referred to in the previous sentence, Purchaser shallassign, and Purchaser shall cause each other Seller-Indemnified Person toassign, to Sellers, to the fullest extent allowable, its claim against suchinsurance, warranty coverage or third-party claim, or in the event assignmentis not permissible, but Purchaser or the other Seller-Indemnified Person inquestion is nonetheless permitted to pursue such claim on Sellers’ behalf,Purchaser shall pursue, or shall cause such other Seller-Indemnified Person topursue, such claim, at Sellers’ direction and expense and without additionalout-of-pocket expense to any Seller-Indemnified Person, with 

 

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any recovery thereon tobe transmitted promptly to Sellers upon receipt.  To the extent that indemnification has notbeen paid on account of any such claim, any Seller-Indemnified Person maypursue recovery against such insurance warranty coverage or third party andshall be entitled to retain all recoveries made as a result of any suchaction.  Purchaser shall, and shall causethe Companies to, furnish Sellers with such information respecting the assets,business and financial records of Purchaser and the Companies relating to anysuch claims as Sellers may, from time to time, reasonably request and at thesole cost and expense of Sellers.  Afterthe Closing, Purchaser shall maintain in effect, or will cause the Companies tomaintain in effect, in each case until the Survival Date, or for such longertime as there remains a Contested Claim, insurance coverage in amounts, andwith coverage, not materially less favorable to the Companies than theinsurance coverage as maintained by the Companies as of the date of thisAgreement.  In addition, the amount towhich the Seller-Indemnified Persons may become entitled under this Article VIIIshall be net of any Tax benefits theretofore realized by Purchaser and itsAffiliates (including the Companies, after the Closing) in respect of Damagesto be indemnified hereunder, and as and when Purchaser or any of its Affiliatesrealizes any Tax benefits in respect of Damages theretofore indemnifiedhereunder, Purchaser shall pay Parent an amount equal to the amount of such Taxbenefit so realized.

###  

### (f)            EachSeller-Indemnified Person shall be responsible for taking or causing to betaken reasonable steps to mitigate its Damages upon and after becoming aware ofany event that could reasonably be expected to give rise to Damages that may beindemnifiable under this Article VIII.

###  

**SECTION 8.2.****                                          Indemnificationof Sellers**.

 

### (a)          Purchaseragrees that, after the Closing, subject to the limitations set forth in this Article VIII,Purchaser shall indemnify, defend and hold harmless Sellers, their officers,directors, agents, representatives, and respective successors and assigns, andHerman Stone and any Affiliate of Herman Stone with respect to clause (iii) ofthis Section 8.2(a) (the “Purchaser-Indemnified Persons”),from and against any and all Damages arising out of or resulting from (i) anybreach of any representation, warranty or covenant made by Purchaser in thisAgreement or in any of the certificates or other instruments or documentsfurnished by Purchaser pursuant to Section 7.3(e)(i), (ii) theabsence of any Landlord Approval (whether or not such Landlord Approval isdeemed to have been obtained for purposes of Section 7.2(d)), or (iii) anyguaranty entered into prior to the date of this Agreement, or any Lease enteredinto prior to the date of this Agreement as a co-tenant with a Company, by anySeller, Herman Stone or any Affiliate of Herman Stone, to the extent relatingto any liability or other obligation of a Company arising after the Closing orreflected in the Closing Working Capital as finally determined pursuant to thisAgreement (the “Purchaser Indemnified Items”).  Any claim for indemnification made by aPurchaser-Indemnified Person under clause (i) of this Section 8.1in respect of the Purchaser Indemnified Items must be asserted in a writingdelivered to Purchaser by no later than the Survival Date.  The aggregate liability of Purchaser onaccount of all Purchaser Indemnified Items pursuant to clause (i) of this Section 8.2(a) shallbe limited to the amount of the Limited Indemnity Cap, and claims for Damagesin respect of Purchaser Indemnified Items shall be limited to such amount,whether the Purchaser-Indemnified Person in question is a Seller or anotherPurchaser-Indemnified Person.  Inaddition, the indemnification provided for in clause (i) of this Section 8.2(a) inrespect of the Purchaser Indemnified Items shall not apply unless 

 

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and until the aggregateDamages determined to be due for which one or more Purchaser-IndemnifiedPersons seeks or has sought indemnification hereunder in respect of PurchaserIndemnified Items exceeds the Deductible, in which event thePurchaser-Indemnified Persons shall, subject to the other limitations herein,be indemnified for such Damages to the extent in excess of the Deductible.

###  

### (b)         Inview of the Deductible, and solely for purposes of determining the amount ofany Damages, the representations and warranties of Purchaser set forth in thisAgreement (or in any instrument, certificate or affidavit delivered at theClosing with respect thereto) shall be considered without regard to anyqualification based on materiality or “material adverse effect” set forththerein.

###  

### (c)          Theamount to which a Purchaser-Indemnified Person may become entitled under this Article VIIIshall be net of any actual recovery (whether by way of payment, discount,credit, off-set, counterclaim or otherwise) received from a third party(including any insurer) less any cost associated with receiving such recoveryin respect of a claim.  To the extentthat insurance, “pass-through” warranty coverage from a manufacturer or otherform of recovery or reimbursement from a third party is available to anyPurchaser-Indemnified Person to cover any item for which indemnification may besought hereunder, Sellers shall, or shall cause each otherPurchaser-Indemnified Person to, on a timely and expeditious basis, usecommercially reasonable efforts to effect recovery under applicable insurancepolicies and warranties, and use commercially reasonable efforts to pursue toconclusion available remedies or causes of action to recover the amount of itsclaim as may be available from such other party; provided that theavailability of a potential recovery against such a third party shall notaffect any Seller’s right to make a claim for indemnity pursuant to this Section 8.2.  To the extent of any indemnification withrespect to any claim referred to in the previous sentence, Sellers shallassign, and Sellers shall cause each other Purchaser-Indemnified Person toassign, to Purchaser, to the fullest extent allowable, its claim against suchinsurance, warranty coverage or third-party claim, or in the event assignmentis not permissible, but Sellers or the other Purchaser-Indemnified Person inquestion is nonetheless permitted to pursue such claim on Purchaser’s behalf,Sellers shall pursue, or shall cause such other Purchaser-Indemnified Person topursue, such claim, at Purchaser’s direction and expense and without additionalout-of-pocket expense to any Purchaser-Indemnified Person, with any recoverythereon to be transmitted promptly to Purchaser upon receipt.  To the extent that indemnification has notbeen paid on account of any such claim, any Purchaser-Indemnified Person maypursue recovery against such insurance warranty coverage or third party andshall be entitled to retain all recoveries made as a result of any suchaction.  In addition, the amount to whichthe Purchaser-Indemnified Persons may become entitled under this Article VIIIshall be net of any Tax benefits theretofore realized by Sellers and theirAffiliates in respect of Damages to be indemnified hereunder, and as and when aSeller or any of its Affiliates realizes any Tax benefits in respect of Damagestheretofore indemnified hereunder, Sellers shall pay Purchaser an amount equalto the amount of such Tax benefit so realized. Sellers shall furnish Purchaser with such information respecting theassets, business and financial records of Sellers relating to any such claimsas Purchaser may, from time to time, reasonably request and at the sole costand expense of Purchaser.

###  

### (d)         EachPurchaser-Indemnified Person shall be responsible for taking or causing to betaken reasonable steps to mitigate its Damages upon and after becoming aware ofany event that 

 

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could reasonably beexpected to give rise to Damages that may be indemnifiable under this Article VIII.

###  

**SECTION 8.3.****                                          Noticeof Claim**.

 

### (a)          Asused herein, the term “Claim” means a claim for indemnification by anySeller-Indemnified Person or any Purchaser-Indemnified Person, as the case maybe, for Damages under this Article VIII (such Person making aClaim, an “Indemnitee”).  AnIndemnitee shall give notice of a Claim under this Agreement, whether for itsown Damages or for Damages incurred by any other Seller-Indemnified Person orPurchaser-Indemnified Person, as applicable, pursuant to written notice of suchClaim executed by an officer of Purchaser or Parent, as applicable (a “Noticeof Claim”), and delivered to Parent or Purchaser, as applicable (suchreceiving party, the “Indemnitor”), promptly after such Indemniteebecomes aware of the existence of any potential claim by such Indemnitee forindemnification under this Article VIII (but in any event not laterthan the Survival Date, in the case of a Claim relating to a Limited-LiabilityItem) arising out of or resulting from:  (i) anyitem subject to indemnification pursuant to the terms of Section 8.1or Section 8.2; or (ii) the assertion, whether orally or inwriting, against any Indemnitee of a claim, demand, suit, action, arbitration,investigation, inquiry or proceeding brought by a third party against anyIndemnitee (in each such case, a “Third-Party Claim”) that arises out ofor results from any item subject to indemnification pursuant to the terms of Section8.1 or Section 8.2; provided that no failure or delay in thegiving of such notice (so long as such notice is given not later than theSurvival Date, in the case of a Claim relating to a Limited-Liability Item)shall adversely affect the Indemnitee’s rights with respect to such claim,unless (and then only to the extent that) the Indemnitor is materiallyprejudiced by such failure or delay.

###  

### (b)         EachNotice of Claim by an Indemnitee shall contain the following information:

###  

#### (i)                                     thatIndemnitee has incurred or paid or, in good faith, believes it shall have toincur or pay, Damages in an aggregate stated amount (where practicable) arisingfrom such Claim (which amount may be the amount of damages claimed by a thirdparty in an action brought against any Indemnitee based on alleged facts, thatif true, would give rise to liability for Damages to such Indemnitee under thisArticle VIII); and

####  

#### (ii)                                  abrief description, in reasonable detail (to the extent reasonably available toIndemnitee), of the facts, circumstances or events giving rise to the allegedDamages based on Indemnitee’s good faith belief thereof, including the identityand address of any third-party claimant (to the extent reasonably available toIndemnitee).  Following delivery of theNotice of Claim (or at the same time if the Indemnitee so elects) theIndemnitee shall deliver copies of any demand or complaint, the amount ofDamages, the date each such item was incurred or paid, or the basis for suchanticipated liability, and the specific nature of the breach to which such itemis related.

####  

**SECTION 8.4.****                                          Defenseof Third-Party Claims**.

 

### (a)          Subjectto the provisions hereof, the Indemnitor on behalf of the Indemnitee shall havethe right to elect to defend any Third-Party Claim, and the costs and expensesincurred by 

 

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the Indemnitor inconnection with such defense by the Indemnitor (including attorneys’ fees, otherprofessionals’ and experts’ fees and court or arbitration costs) shall be paidby the Indemnitor; provided that Sellers shall be deemed to have electedto defend the High Point Litigation.  Ifthe Indemnitor so elects, then the Indemnitee may participate, through counselof its own choice and at its own expense, in the defense of such Third-PartyClaim.

###  

### (b)         Indemniteeshall give prompt written notice of any Third-Party Claim to the Indemnitor; providedthat (so long as such notice is given on or prior to the Survival Date, in thecase of a Claim relating to a Limited-Indemnity Item) the failure timely togive such notice shall not limit or reduce the Indemnitee’s right to indemnityhereunder unless (and then only to the extent that) the Indemnitor is prejudicedthereby.  The Indemnitor shall beentitled to assume the defense thereof utilizing legal counsel reasonablyacceptable to the Indemnitee; provided that the Indemnitor shall not beentitled to assume control of such defense and shall pay the fees and expensesof counsel retained by the Indemnitee if the claim for indemnification relatesto or arises in connection with any criminal proceeding, action, indictment,allegation or investigation.

###  

### (c)          Ifthe Indemnitor has the right to and does elect to defend any Third-Party Claim,the Indemnitor shall, at the Indemnitee’s request, permit the Indemnitee andits counsel to confer on the conduct of the defense thereof.  Purchaser and Sellers shall make available toeach other and each other’s counsel and accountants, without charge, all of itsor their books and records relating to the Third-Party Claim, and each partywill render to the other party such assistance as may be reasonably required inorder to insure the proper and adequate defense thereof and shall furnish suchrecords, information and testimony and attend such conferences, discoveryproceedings, hearings, trials and appeals as may be reasonably requested by theother party in connection therewith.

###  

### (d)         Ifthe Indemnitor has the right to and does elect to defend any Third-Party Claim,the Indemnitor shall have the right to enter into any settlement of aThird-Party Claim without the consent of the Indemnitee; provided that (i) suchsettlement does not involve any injunctive or other equitable relief bindingupon the Indemnitee or any of its Affiliates, and (ii) such settlementexpressly and unconditionally releases the Indemnitee from all liability withrespect to such claim, without prejudice, other than the obligation to pay anyamount that the Indemnitor pays or causes to be paid.

###  

**SECTION 8.5.****                                          Resolutionof Notice of Claim**.

 

Each Notice of Claim given by an Indemnitee shall beresolved as follows:

 

### (a)          AdmittedClaims.  If, within 20 Business Daysafter a Notice of Claim is delivered to the Indemnitor, the Indemnitor agreesin writing that liability for such Claim is indemnified under Section 8.1or Section 8.2, as applicable, the full amount of the Damagesspecified in the Notice of Claim is agreed to, and that such Notice of Claim istimely, the Indemnitor shall be conclusively deemed to have consented to therecovery by the Indemnitee of the full amount of Damages specified in theNotice of Claim in accordance with this Article VIII.

 

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### (b)         ContestedClaims.  If the Indemnitor does notagree in writing to such Notice of Claim or gives the other party writtennotice contesting all or any portion of a Notice of Claim (a “ContestedClaim”) within the 20 Business Day period specified in Section 8.5(a),then such Contested Claim shall be resolved by either (i) a writtensettlement agreement executed by Purchaser and Sellers or (ii) in theabsence of such a written settlement agreement within 45 days of such notice orsuch longer period as is mutually agreed upon by the parties, by bindingarbitration between Purchaser and Sellers in accordance with the provisions ofthis Section 8.5.

###  

### (c)          Arbitrationof Contested Claims.  Any ContestedClaim that is not settled by the parties as set forth in Section 8.5(b)shall be submitted to mandatory, final and binding arbitration beforeJ.A.M.S./ENDISPUTE or its successor (“J.A.M.S.”) pursuant to the UnitedStates Arbitration Act, 9 U.S.C., Section 1 et seq., and that any sucharbitration shall be conducted in Delaware. If J.A.M.S. ceases to provide arbitration service, then the term “J.A.M.S.”shall thereafter mean and refer to the American Arbitration Association (“AAA”).  Either Purchaser or Parent may commence thearbitration process called for by this Agreement by filing a written demand forarbitration with J.A.M.S. and giving a copy of such demand to each of the otherparty to this Agreement.  The arbitrationshall be conducted in accordance with the provisions of J.A.M.S’ StreamlinedArbitration Rules and Procedures in effect at the time of filing of thedemand for arbitration (or, if J.A.M.S. then means the AAA, the commercialarbitration rules of the AAA then in effect), subject to the provisions ofthis Section 8.5(c).  Theparties shall cooperate with J.A.M.S. and with each other in promptly selectingan arbitrator from J.A.M.S.’ panel of neutrals and in scheduling thearbitration proceedings in order to fulfill the provisions, purposes and intentof this Agreement.  The parties covenantthat they shall participate in the arbitration in good faith and that theyshall share in its costs in accordance with this Agreement.  The provisions of this Section 8.5(c) maybe enforced by any court of competent jurisdiction, and the party seekingenforcement shall be entitled to an award of all costs, fees and expenses,including attorneys’ fees, to be paid by the party against whom enforcement isordered.  Judgment upon the awardrendered by the arbitrator may be entered in any court having competentjurisdiction.

###  

### (d)         Paymentof Costs.  Purchaser, on the onehand, and Sellers, on the other hand, shall each bear one-half of the expenseof deposits and advances required by the arbitrator, but any party may advancesuch amounts, subject to recovery as an addition or offset to any award.  For the avoidance of doubt, the monetaryrecovery owed to the prevailing party or parties to the arbitration proceedingshall include reimbursement of such advances.

###  

### (e)          Burdenof Proof.  Except as may be otherwiseexpressly provided herein, for any Contested Claim submitted to arbitration,the burden of proof shall be as it would be if the claim were litigated in ajudicial proceeding governed exclusively by the internal Laws of the State ofDelaware applicable to contracts executed and entered into within the State ofDelaware, without regard to the principles of choice of law or conflicts of lawof any jurisdiction.

###  

### (f)            Award.  Upon the conclusion of any arbitrationproceedings hereunder, the arbitrator shall render findings of fact andconclusions of law and a final written arbitration award setting forth thebasis and reasons for any decision reached (the “Final Award”) and shalldeliver such documents to Sellers and Purchaser, together with a signed copy ofthe Final Award.  Subject to theprovisions of this Agreement, the Final Award shall constitute a conclusivedetermination of 

 

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all issues in question,binding upon Sellers and Purchaser, and shall include an affirmative statementto such effect.

###  

### (g)         Timing.  Sellers, Purchaser and the arbitrator shallconclude each arbitration pursuant to this Section 8.5 as promptlyas possible for the Contested Claim being arbitrated.

###  

### (h)         Termsof Arbitration.  The arbitratorchosen in accordance with these provisions shall not have the power to alter,amend or otherwise affect the terms of these arbitration provisions or theprovisions of this Agreement.

###  

### (i)             ExclusiveRemedy.  Following the Closing,except as specifically otherwise provided in this Agreement, arbitrationconducted in accordance with this Agreement shall be the sole and exclusiveremedy of the parties for any Contested Claim made pursuant to this Article VIII;provided that this sentence shall not be deemed a waiver by any party ofits right to seek specific performance or injunctive relief in the case ofanother party’s failure to comply with the covenants made by such other party.

###  

**SECTION 8.6.****                                          Survivalof Covenants, Representations and Warranties**.

 

All representations and warranties of Sellerscontained in this Agreement, as qualified by the Schedules hereto as updatedfrom time to time in accordance with the terms of this Agreement, shall remainoperative and in full force and effect until that date that is the earlier of (i) thetermination of this Agreement in accordance with Article IX, and (ii) theSurvival Date; provided, however, that if the Closing occurs anda claim or proceeding with respect to breach of any such representation orwarranty has been instituted prior to the Survival Date, such representation orwarranty shall survive for purposes of such claim until there has been a finaldetermination with respect to such claim or proceeding.  All representations and warranties ofPurchaser set forth in this Agreement shall remain operative and in full forceand effect until that date that is the earlier of (i) the termination ofthis Agreement in accordance with Article IX and (ii) theSurvival Date; provided, however, that if the Closing occurs anda claim or proceeding with respect to breach of any such representation orwarranty has been instituted prior to the Survival Date, such representation orwarranty shall survive for purposes of such claim until there has been a finaldetermination with respect to such claim or proceeding.  All covenants of the parties shall surviveaccording to their respective terms.

 

**SECTION 8.7.****                                         ****Exclusive Remedy; Non-Recourse**.

 

### (a)    Afterthe Closing, the indemnification rights set forth in this Article VIIIare and shall be the sole and exclusive remedies of Purchaser, the otherSeller-Indemnified Persons, Sellers and the other Purchaser-Indemnified Personswith respect to this Agreement and the Transactions contemplated hereby.

###  

### (b)   Purchaser,for itself, its successors and assigns including the other Seller-IndemnifiedPersons, acknowledges and agrees that this Agreement and the transactionscontemplated hereby are non-recourse as to any Seller or any otherPurchaser-Indemnified Person and that they shall have no recourse against anySeller or any other 

###  

### 48

### 

###  

Purchaser-IndemnifiedPerson for or on account of any matter, cause, claim or thing of or relating tothis Agreement or the Transactions, other than as expressly provided in this Article VIII.

###  

### (c)    Infurtherance of the foregoing, Purchaser for itself, its successors and assigns,and the other Seller-Indemnified Persons, covenant and agree that neitherPurchaser nor any other Seller-Indemnified Person shall sue or initiate ormaintain any action, suit or cause of action against any Seller or any otherPurchaser-Indemnified Person as a result of this Agreement or the Transactions,except as expressly provided hereunder.

###  

### (d)   Notwithstandingthe foregoing, this Section 8.7 shall not be deemed a waiver by anyparty of its right to seek specific performance or injunctive relief in thecase of another party’s failure to comply with the covenants made by such otherparty to be performed after the Closing, or any remedy of any party in respectof any fraud committed by any other party. In addition, the parties agree that the limitations set forth in this Article VIIIshall not apply to any fraud or willful breach of any covenant committed by anyparty.

###  

### (e)    Theprovisions of Article VIII were specifically bargained for andreflected in the amounts payable to Sellers in connection with the Transactionspursuant to Section 1.3.

###  

# **ARTICLEIXTERMINATION, AMENDMENT AND WAIVER**

# ** **

**SECTION 9.1.****                                          Termination**.

 

This Agreement may be terminated at any time prior tothe Closing:

 

### (a)          bywritten consent of each of Purchaser and Parent;

###  

### (b)         byPurchaser if (i) any Seller shall have breached, or failed to comply with,in any material respect any of its obligations under this Agreement or (ii) anyrepresentation or warranty made by any Seller shall have been incorrect in anymaterial respect when made or shall have since ceased to be true and correct inany material respect, and such breach, failure or misrepresentation is notcured within twenty (20) days after written notice thereof is delivered to thebreaching party and either (x) such breaches, failures ormisrepresentations render the closing conditions of the non-breaching partyincapable of being satisfied or (y) such breach or failure is a failure orrefusal to consummate the Transactions as required pursuant to Section 1.2(provided that, in the case of any action or inaction described in thisclause (y), the 20-day period described in clause (ii) above shall insteadbe a two (2) Business Day period);

###  

### (c)          bySellers if (i) Purchaser shall have breached, or failed to comply with, inany material respect any of its obligations under this Agreement or (ii) anyrepresentation or warranty made by Purchaser shall have been incorrect in anymaterial respect when made or shall have since ceased to be true and correct inany material respect, and such breach, failure or misrepresentation is notcured within twenty (20) days after written notice thereof is delivered to thebreaching party and either (x) such breaches, failures ormisrepresentations render the closing conditions of the non-breaching partyincapable of being satisfied or (y) such breach or failure is a failure orrefusal to consummate the Transactions as required pursuant to Section 1.2

 

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(provided that, inthe case of any action or inaction described in this clause (y), the 20-dayperiod described in clause (ii) above shall instead be a two (2) BusinessDay period);

###  

### (d)         bySellers or Purchaser if any decree, permanent injunction, judgment, order orother action by any court of competent jurisdiction or any Governmental Entitypreventing or prohibiting consummation of the Transactions shall have becomefinal and nonappealable; provided that no party may terminate thisAgreement pursuant to this Section 9.1(d) unless such partyhas used commercially reasonable efforts to oppose any such decree, permanentinjunction, judgment, order or other action or to have any of the foregoingvacated or made inapplicable to the transactions contemplated by thisAgreement, and has complied with its obligations under Section 6.3;

###  

### (e)          bySellers or Purchaser if the Transactions shall not have been consummated on orbefore July 14, 2008 (the “Termination Date”); provided thatthe right to terminate this Agreement under this Section 9.1(e) shallnot be available to any party if such party’s failure to fulfill any obligationunder this Agreement has been the cause of, or resulted in, the failure of theClosing to occur on or before the Termination Date; or

###  

### (f)            bySellers or Purchaser, as provided in Section 6.8.

###  

A party seeking to terminate this Agreement inaccordance with this Section 9.1 shall deliver written noticethereof as provided under Section 10.1.  Notwithstanding the provisions of Section 9.1(c),Section 9.1(d) or Section 9.1(e), Sellers may notterminate this Agreement (other than pursuant the Section 9.1(f))if any Seller is in material violation or breach of a representation, warranty,covenant or agreement set forth in this Agreement. Notwithstanding theprovisions of Section 9.1(b), Section 9.1(d) or Section 9.1(e),Purchaser may not terminate this Agreement (other than pursuant the Section 9.1(f))if Purchaser is in material violation or breach of a representation, warranty,covenant or agreement set forth in this Agreement.

 

**SECTION 9.2.****                                          Effectof Termination**.

 

### (a)          Ifthis Agreement is terminated under Section 9.1(a), Section 9.1(d) orSection 9.1(e) at a time when no party is in materialviolation or breach of a representation, warranty, covenant or agreement thenall further liabilities and obligations of Sellers to Purchaser and Purchaserand of Purchaser to Sellers will terminate without further liability of anyparty hereto.

###  

### (b)         Ifthis Agreement is terminated under Section 9.1 (other than under Section 9.1(a))at a time when a party is in material violation or breach of a representation,warranty, covenant or agreement, then the liabilities and obligations of theparty not in such violation or breach shall terminate and the party or partiesthat are in violation or breach of this Agreement shall remain liable thereforand nothing in this Agreement shall be deemed to limit the remedies availableagainst such party.  Notwithstanding theforegoing, Sellers will only be liable for its willful breach of any covenantor fraud.

###  

### (c)          Ifthe Agreement is terminated as provided in Section 9.1, the partiesshall use commercially reasonable efforts to cause, to the extent practicable,all filings, applications and other submissions made pursuant to this Agreementto be withdrawn from the agency or other Person to which they were made.

 

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# **ARTICLEXGENERAL PROVISIONS**

# ** **

**SECTION 10.1.****                                   Notices**.

 

All notices and other communications given or madepursuant hereto shall be in writing and shall be deemed to have been duly givenor made as of the date delivered, mailed or transmitted, and shall be effectiveupon receipt, if delivered personally or Federal Express (or other reputable overnightcourier), mailed by registered or certified mail (postage prepaid, returnreceipt requested) to the parties at the following addresses (or at such otheraddress for a party as shall be specified by like changes of address) or sentby electronic transmission to the telecopier number specified below:

 
| (a) If to any Seller: |
|-----------------------|
|                  |
|                  | c/o ABRY Partners, LLC |
|                  | 111 Huntington Avenue, 30th Floor |
|                  | Boston, MA 02199 |
|                  | Fax No.: (617) 859-7205 |
|                  | Attention: Jay Grossman |
|                  |   |
|                  | With a copy (which shall not constitute notice) to: |
|                  |   |
|                  | Kirkland & Ellis LLP |
|                  | Citigroup Center |
|                  | 153 E. 53rd Street |
|                  | New York, NY 10022 |
|                  | Fax No.: (212) 446-4900 |
|                  | Attention: John L. Kuehn, Esq. |
|                  |   |
| (b) If to Purchaser:  |
|                  |
|                  | Regal Cinemas, Inc. |
|                  | 7132 Regal Lane |
|                  | Knoxville, TN 37918 |
|                  | Fax No.: (865) 922-6085 |
|                  | Attention: Chief Executive Officer and General  Counsel |
|                  |   |
|                  | With a copy (which shall not constitute notice) to: |
|                  |   |
|                  | Hogan & Hartson L.L.P. |
|                  | 1200 17th Street, Suite 1500 |
|                  | Denver, CO 80202 |
|                  | Fax No.: (303) 899-7333 |
|                  | Attention: Richard J. Mattera |

 

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**SECTION 10.2.****                                   CertainDefinitions**.

## ** **

For purposes of this Agreement, the term:

 

### (a)          “AcquisitionProposal” means any offer, proposal or indication of interest relating to (i) theacquisition of any or all of the Companies by, (ii) a merger,consolidation or other business combination involving any or all of theCompanies with, or (iii) any sale of securities or substantial assets ofthe Companies, or any or all of the Options, to, any Person other thanPurchaser or an Affiliate or assignee thereof.

###  

### (b)         “Affiliate”means a Person that directly or indirectly, through one or more intermediaries,Controls, is controlled by, or is under common control with, the firstmentioned Person.

###  

### (c)          “AntitrustLaws” means any applicable U.S. or foreign competition, antitrust, mergercontrol or investment Laws, including the HSR Act.

###  

### (d)         “BankFacility” means that certain Amended and Restated Loan Agreement among thePartnership, the financial institutions whose names appear as Lenders on thesignature pages thereof and CIT Lending Services Corporation (Illinois),as Agent for the Lenders, dated as of June 5, 2006, as the same may beamended from time to time.

###  

### (e)          “BusinessDay” shall mean any day other than a day on which banks in the Commonwealthof Massachusetts or the State of New York are authorized or obligated to beclosed.

###  

### (f)            “ClosingCash” means the amount of cash and cash equivalents of the Companies,determined on a consolidated basis as of the Adjustment Time (but withoutgiving effect to any action by Purchaser or any of its Affiliates, includingthe Companies, after the Closing) in accordance with Section 1.5(e).

###  

### (g)         “ClosingIndebtedness” means, without duplication, and subject to Section 1.5(e):  (i) all liabilities of the Companies forTaxes arising prior to the Closing Date, (ii) all indebtedness of theCompanies for borrowed money (including all principal, interest, premiums,penalties, and breakage fees), excluding amounts payable in respect of the BankFacility, which shall be paid in full at Closing pursuant to Section 7.2(g),(iii) all obligations of the Companies evidenced by notes, bonds,debentures or similar instruments or pursuant to any guaranty, and (iv) allmonetary obligations of the Companies under capital leases or for deferredpurchase price of property or services (it being agreed by the parties that,for purposes of this Agreement, no Lease will be deemed to be a capital lease),in each case exclusive of deferred revenue, deferred rent obligations and theportion(s) of any of the foregoing included in determining the currentliabilities that are reflected in the Closing Working Capital, determined as ofthe Adjustment Time in accordance with Section 1.5(e).  Notwithstanding the foregoing ClosingIndebtedness shall not include any liability in respect of any amount allegedin the High Point Litigation to be payable by any Company, whether or not aFinal Judgment (as defined in Section 10.2(h) below) exists inrespect thereof.

 

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###  

### (h)   “ClosingWorking Capital” means the aggregate amount of the current assets ofCompanies (excluding Closing Cash and excluding deferred tax benefits) less theaggregate amount of the current liabilities of the Companies (exclusive ofdeferred rent obligations, deferred tax liabilities and all amounts payable inrespect of the Bank Facility), in each case determined as of the AdjustmentTime after giving effect to theTransactions (but without giving effect to any action by Purchaser or any ofits Affiliates, including the Companies, after the Closing) and in accordancewith Section 1.5(e) ; provided that, if Purchaser has theright to terminate this Agreement pursuant to Section 6.8 prior tothe Closing and does not do so, then the aggregate amount of Limited 6.8Liabilities that will be included as current liabilities for purposes ofcomputing of the Closing Working Capital shall not be greater than *the sum of* (x) the amount (if any) bywhich the Closing Working Capital (determined without taking into account anyLimited 6.8 Liabilities) exceeds negative $8,500,000 *plus* (y) the amount (if any) by which $12,000,000exceeds the aggregate amount (if any) of Damages with respect toLimited-Indemnity Items for which the Seller-Indemnified Persons have been indemnifiedpursuant to Section 8.1 prior to the date upon which the FinalPurchase Price is determined.  *For example,* if the amount of the ClosingWorking Capital (determined without taking into account any Limited 6.8Liabilities) were negative $5,500,000 and the aggregate amount of Damages withrespect to Limited-Indemnity Items for which the Seller-Indemnified Persons areindemnified pursuant to Section 8.1 prior to the date upon whichthe Final Purchase Price is determined were $1,000,000, then the amountsdescribed in clauses (x) and (y) above would be $3,000,000 and$11,000,000, respectively, and the maximum aggregate amount of Limited 6.8Liabilities that could be included as current liabilities for purposes ofcomputing of the Closing Working Capital would be $14,000,000.  The amount of the Closing Working Capitalwill be determined in light of the facts and circumstances existing as of theClosing Date and (except as provided in the preceding proviso with respect toindemnified liabilities) without reference to events or circumstances occurringor arising after the Closing Date. Notwithstanding the foregoing Closing Working Capital shall not include (i) anyliability in respect of any amount alleged in the High Point Litigation to bepayable by the Companies, except to the extent of any amount payable by theCompanies as of the Adjustment Time pursuant to the terms of any judgment thatas of the Adjustment Time has become final and is not then subject to anyappeal that is pending or that may be made, or any written settlement agreemententered into by any of the Companies (in either case, a “Final Judgment”);or (ii) any amount alleged in the Kingstowne Litigation to be payable toany Company, except to the extent of any amount payable to any Company as ofthe Adjustment Time pursuant to the terms of any Final Judgment.

###  

### (i)    “ClosingWorking Capital Adjustment” means the amount (if any) by which ClosingWorking Capital is less than negative $8,500,000.

###  

### (j)    “Code”means the Internal Revenue Code of 1986, as amended.

###  

### (k)   “Commonwealth20 Landlord” means Movie (VA) QRS 14-24, Inc, a Delaware corporation.

###  

### (l)    “Commonwealth20 Landlord Agreement” means the Agreement Regarding Lease dated as of January 14,2008 among the Commonwealth 20 Landlord, Richmond I Cinema, 

 

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L.L.C., a Delaware limited liability company, Purchaser, Parent andCorporate Property Associates 14 Incorporated, as in effect from time to time.

###  

### (m)  “CompanyMaterial Adverse Effect” means any effect or change that would bematerially adverse to the business, properties, assets, liabilities, financialcondition or results of operations of the Companies, taken as a whole, or onthe ability of Sellers to consummate timely the Transactions or perform any ofits other obligations under this Agreement or any Related Agreement; providedthat none of the following shall be deemed to constitute, or shall be takeninto account in determining whether there has been or may be, a CompanyMaterial Adverse Effect: (i) any adverse change, event, development oreffect arising from or relating to (A) general business or economicconditions (including those in one or more of the geographic markets in whichthe Companies conduct business), including such conditions related to thebusiness of the Companies, (B) national or international political orsocial conditions, including the engagement by the United States inhostilities, whether or not pursuant to the declaration of a national emergencyor war, or the occurrence of any military or terrorist attack upon anywhere inthe world, (C) financial, banking, or securities markets (including anydisruption thereof and any decline in the price of any security or any marketindex), (D) changes in GAAP, (E) changes in Law, rules, regulations,orders, or other binding directives issued by any Governmental Entity, or (F) theexecution or announcement of this Agreement or the taking of any actioncontemplated by this Agreement, unless in the case of clauses (A), (B), (C), (D) and(E), such change, event, development or effect has had a disproportionateeffect on the Companies as compared to other Persons in the industry in whichthe Companies operate, and (ii) any adverse change in or effect on thebusiness of the Companies that is cured before the earlier of (A) theClosing Date and (B) the date on which this Agreement is terminatedpursuant to Article IX.

###  

### (n)   “Control”(including the terms “controlled by” and “under common control with”)means the possession, directly or indirectly or as trustee or executor, of thepower to direct or cause the direction of the management or policies of aPerson, whether through the ownership of stock or as trustee or executor, bycontract or credit arrangement or otherwise.

###  

### (o)   “Divestiture”means (i) any sale, transfer, separate holding, divestiture or otherdisposition, or any prohibition of, or any limitation on, the acquisition,ownership, operation, effective control or exercise of full rights ofownership, of any asset(s) or business(es) of any Company, Purchaser orany of Purchaser’s Affiliates or (ii) the termination or amendment of anyexisting or contemplated governance structure or contractual or governancerights of any Company, Purchaser or any of Purchaser’s Affiliates.

###  

### (p)   “Encumbrances”means liens, security interests, charges, mortgages, claims, restrictions,pledges and encumbrances of any nature whatsoever.  For the avoidance of doubt, “Encumbrance”shall not be deemed to include any license of Intellectual Property enteredinto in the ordinary course of business.

###  

### (q)   “EnterpriseValue” means $210,000,000, increased by the amount of the Closing Cash, anddecreased by the amount (if any) of the Closing Working Capital Adjustment.

###  

### 54

### 

###  

### (r)    “EnvironmentalLaw” means any Law or Order of any Governmental Entity relating to theprotection of human health or the environment (including air, water, soil, andnatural resources) or the generation, use, storage, transport, handling, Release,exposure to or disposal of any Hazardous Substance, noise, odor, or radiationas in effect on or prior to the date hereof.

###  

### (s)   “EquitySecurities” of any Person means capital stock or partnership, membership orother ownership interest in or of such Person, or any other securities orsimilar rights with respect to such Person (including securities directly orindirectly convertible into or exchangeable or exercisable for any such stockor interest, any phantom stock or stock appreciation right, or options,warrants, calls, commitments or rights of any kind to acquire any such stock orinterest).

###  

### (t)    “EscrowAccount” means the account established by the Escrow Agent pursuant to theEscrow Agreement.

###  

### (u)   “EscrowAgent” means a financial institution reasonably acceptable to and mutuallyagreed upon by Parent and Purchaser.

###  

### (v)   “EscrowAmount” means the amount deposited at the Closing in the Escrow Accountwith the Escrow Agent pursuant to the terms and conditions of the EscrowAgreement, which shall be $12,000,000.00.

###  

### (w)  “EstimatedPurchase Price” means an amount equal to the Option Exercise Price plusthe Estimated Option Purchase Price.

###  

### (x)    “EscrowAgreement” means the Escrow Agreement to be dated as of the Closing Date byand among Sellers, Purchaser and the Escrow Agent, in substantially the form asset forth in Exhibit F attached hereto, as the same may be amended,modified or waived from time to time.

###  

### (y)   “GovernmentalEntity” means any national, federal, state, provincial, county, municipalor local government, foreign or domestic, or any political subdivision thereofor any court, administrative or regulatory agency, department, instrumentality,body or commission or other governmental authority or agency, domestic orforeign.

###  

### (z)    “HazardousSubstance” means any substance, material or waste that is hazardous, toxicor radioactive, and also includes petroleum and any derivative or by productsthereof, and any other environmental contaminant, pollutant, waste, orpesticide and any material listed, regulated or defined under any EnvironmentalLaw.

###  

### (aa) “IntellectualProperty” means all intellectual property and proprietary rights includingall (i) patents, patent applications, patent disclosures and inventions,whether foreign or domestic, including all reissues, continuations, divisions,continuations in part and extensions thereof, (ii) internet domain names,trademarks, service marks, trade dress, trade names, slogans, logos andcorporate names and registrations and applications for registration thereoftogether with all goodwill symbolized by the foregoing, (iii) copyrightableworks and registrations and applications for registration thereof, (iv) computersoftware (including both 

###  

### 55

### 

###  

source and object code), and (v) trade secret rights, productplans, technology, drawings, process engineering, know-how, and confidentialinformation.

###  

### (bb) “HighPoint Litigation” means the action presently captioned “*Majestic Cinema Holdings, LLC vs. High Point Cinema,LLC d/b/a Consolidated Theatres*” (File No. 06 CVS 1014),pending in the Superior Court Division in the county of Guilford, NorthCarolina, and any direct or indirect appeal relating thereto.

###  

### (cc) “IRS”means the Internal Revenue Service.

###  

### (dd) “KingstowneLitigation” means the actions presently captioned “*Kingstowne Movie Theater LP v. Kingstowne Cinema, LLC*”(Case No. 2007 1778) and *“KingstowneCinema, L.L.C. v. Kingstowne Movie Theater, LP”* (Case No. 2007-2258),pending in the Circuit Court of Fairfax County, Virginia, and any direct orindirect appeal relating thereto.

###  

### (ee) “Knowledge”(a) of Sellers means the actual knowledge or conscious awareness of CaseyBrock, Chuck Latham, Herman Stone or Dale Coleman after reasonable inquiry ofthe headquarters employees of Sellers or the Companies, and (b) ofPurchaser means the actual knowledge or conscious awareness of MichaelCampbell, Gregory Dunn or Amy Miles after reasonable inquiry of the officers,directors and employees of Purchaser.

###  

### (ff)   “LandlordApproval” means any consent, approval or waiver required by the expressterms of any Lease identified on Schedule 2.3 to be obtained from thelandlord thereunder with respect to the transfer or change in control of anyCompany to Purchaser that will result from the consummation of theTransactions.

###  

### (gg) “Laws”means all foreign, federal, state and local statutes, laws, ordinances,regulations, rules, resolutions, orders, determinations, writs, injunctions,common law rulings, awards (including awards of any arbitrator), judgments,decrees, and any requirements imposed pursuant to any permit, license orauthorization issued by a Governmental Entity.

###  

### (hh) “Limited6.8 Liability” means any actual or anticipated Damages of the Companies(including for the purposes of definition, consequential damages, lost profits,indirect damages, punitive damages and exemplary damages) arising out of oranticipated to arise out of matters disclosed in notifications or supplementsdelivered by Sellers pursuant to Section 6.8(a), but only (a) tothe extent such Damages relate to or arise from Limited-Indemnity Items, and (b) ifPurchaser had the right to, but did not, terminate this Agreement pursuant to Section 6.8.

###  

### (ii)   “Order”means any injunction, judgment, ruling, assessment, order or decree of anyGovernmental Entity or arbitrator having competent jurisdiction.

###  

### (jj)   “PermittedEncumbrances” means (i) Encumbrances related to statutory lienssecuring real property Tax or assessment payments not yet due and payable, (ii) Encumbrancesarising pursuant to or securing Closing Indebtedness, (iii) Encumbrancesnot related to indebtedness for borrowed money that do not, individually or inthe aggregate, materially interfere with the use, occupancy or operation of thereal property leased by the Companies, (iv) statutory Encumbrancesincurred or deposits made in the ordinary course of business in 

 

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connection with workers’ compensation, employment insurance and othersocial security legislation, and (v) any Encumbrance arising as a resultof this Agreement.

###  

### (kk)   “Person”means an individual, corporation, partnership, association, trust,unincorporated organization, other entity or group.

###  

### (ll)     “RelatedAgreement” means the Escrow Agreement and any other document or instrumentexecuted in connection with this Agreement or the Transactions.

###  

### (mm) “Release” means any presence, emission,spill, seepage, leak, escape, leaching, discharge, injection, pumping, pouring,emptying, dumping, disposal, migration, or release of Hazardous Substances fromany source into or upon the environment.

###  

### (nn)   “Subsidiary”means, with respect to any Person, any corporation, limited liability company,partnership, joint venture or other legal entity of which such Person (eitheralone or through or together with any Subsidiary) (i) owns, directly orindirectly, fifty percent (50%) or more of the stock, limited liability companyinterests, partnership interests or other equity interests the holders of whichare generally entitled to vote for the election of the board of directors orother governing body of such corporation, limited liability company,partnership, joint venture or other legal entity; or (ii) possesses,directly or indirectly, Control over the direction of management or policies ofsuch corporation, limited liability company, partnership, joint venture orother legal entity (whether through ownership of voting securities, byagreement or otherwise).

###  

### (oo)   “SurvivalDate” means March 31, 2009.

###  

### (pp)   “Tax”means (i) any federal, state, local, or foreign income, gross receipts,license, payroll, employment, excise, severance, stamp, occupation, premium,windfall profits, environmental (including taxes under Code §59A), customsduty, capital stock, franchise, profits, withholding, social security (orsimilar), unemployment, disability, real property, personal property, sales,escheat or abandoned property, use, transfer, transaction, registration, valueadded, alternative or add-on minimum, estimated or other tax, duties, chargesor levies of any kind whatsoever, including any interest, penalty, or additionthereto, whether disputed or not, (ii) any liability for an amountdescribed in (i) by reason of being a member of any combined,consolidated, affiliated, unitary or other group and (iii) any liabilityfor an amount described in (i) or (ii) by contract, as a successor ininterest or otherwise.

###  

### (qq)   “TaxReturn” means any return, declaration, report, claim for refund, orinformation return or statement relating to Taxes, including any schedule orattachment thereto, and including any amendment thereof.

###  

### (rr)     “TheatreLevel Cash Flow” for any theatre for any period means the net income ofsuch theatre for such period plus, to the extent deducted in determining suchnet income, and without duplication, net interest expense, Taxes relating toincome, depreciation, amortization, provision for straight-line rent andallocations of corporate overhead, all determined in accordance with GAAP andin good faith from (i) the accounting records of the Companies and in amanner consistent with their past practices, if such theatre is operated by oneor more of the Companies, or (ii) the accounting records of Purchaser andits Affiliates and in a manner 

 

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consistent with their past practices, if such theatre is operated byone or more of Purchaser and its Affiliates.

###  

## **SECTION 10.3.            Headings; Interpretation**.

 

The headings contained in this Agreement are forreference purposes only and shall not affect in any way the meaning orinterpretation of this Agreement.  As allparties to this Agreement have participated in the drafting of this Agreement,no ambiguity shall be construed against any party as the drafter.  In this Agreement, unless a clear contraryintention appears (i) the singular number includes the plural number andvice versa; (ii) reference to any Person includes such Person’s successorsand assigns but, if applicable, only if such successors and assigns are notprohibited by this Agreement, and reference to a Person in a particularcapacity excludes such Person in any other capacity or individually; (iii) referenceto any agreement, document or instrument means such agreement, document orinstrument as amended or modified and in effect from time to time in accordancewith the terms thereof; (iv) reference to any Law means such Law asamended, modified, codified, replaced or reenacted, in whole or in part, and ineffect from time to time, including rules and regulations promulgatedthereunder, and reference to any section or other provision of any Law meansthat provision of such Legal Requirement from time to time in effect andconstituting the substantive amendment, modification, codification, replacementor reenactment of such section or other provision; (v) “hereunder,” “hereof,”“hereto,” and words of similar import shall be deemed references to thisAgreement as a whole and not to any particular Article, Section or otherprovision hereof; (vi) “including” (and with correlative meaning “include”)means including without limiting the generality of any description precedingsuch term; (vii) references to “$” shall be references to United Statesdollars; and (viii) references to documents, instruments or agreementsshall be deemed to refer as well to all addenda, exhibits, schedules oramendments thereto.

 

## **SECTION 10.4.            Severability**.

 

If any term or other provision of this Agreement isinvalid, illegal or incapable of being enforced by any rule of law orpublic policy, all other conditions and provisions of this Agreement shallnevertheless remain in full force and effect so long as the economic or legalsubstance of the transactions contemplated hereby is not affected in any mannermaterially adverse to any party.  Uponsuch determination that any term or other provision is invalid, illegal orincapable of being enforced, the parties hereto shall negotiate in good faithto modify this Agreement so as to effect the original intent of the parties asclosely as possible in an acceptable manner to the end that transactionscontemplated hereby are fulfilled to the extent possible.

 

## **SECTION 10.5.            Entire Agreement**.

 

This Agreement (together with the Exhibits, Schedulesand the other documents delivered pursuant hereto or contemporaneouslyherewith) and the Confidentiality Agreement constitute the entire agreement ofthe parties and supersede all prior agreements and undertakings, both writtenand oral, between the parties, or any of them, with respect to the subjectmatter hereof and, except as otherwise expressly provided herein, are notintended to confer upon any other Person any rights or remedies hereunder.

 

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## **SECTION 10.6.    Assignment**.

 

Neither this Agreement nor any of the rights,interests or obligations hereunder shall be assigned by any party hereto(whether by operation of law or otherwise) without the prior written consent ofthe other party.  Subject to thepreceding sentence, this Agreement shall be binding upon, inure to the benefitof and be enforceable by the parties and their respective successors andassigns.

 

## **SECTION 10.7.    ThirdParty Beneficiaries**.

 

This Agreement shall be binding upon and inure solelyto the benefit of each party hereto, and nothing in this Agreement, express orimplied, is intended to or shall confer upon any other Person any right,benefit or remedy of any nature whatsoever under or by reason of this Agreementexcept for the Indemnified Parties under Article VIII.

 

## **SECTION 10.8.    Expenses**.

 

Except as otherwise expressly provided herein, allexpenses incurred by the parties hereto shall be borne solely by the party thathas incurred such expenses.  For theavoidance of doubt, all fees and expenses payable to UBS Securities, LLC as aresult of the Transactions will be payable by Sellers.

 

## **SECTION 10.9.    SpecificPerformance**.

 

Each party agrees that irreparable damage would occurand that the parties would not have any adequate remedy at law in the eventthat any of the provisions of this Agreement were not performed in accordancewith their specific terms or were otherwise breached.  It is accordingly agreed that each of theparties shall be entitled to seek an injunction or injunctions to preventbreaches of this Agreement and to enforce specifically the terms and provisionsof this Agreement in any Federal court located in the State of Delaware or inDelaware state court, this being in addition to any other remedy to which theyare entitled at law or in equity.

 

## **SECTION 10.10. Amendments; Waiver**.

 

No amendment of any provision of this Agreement shallbe effective, unless the same shall be in writing and signed by Purchaser andParent.  Except as otherwise expresslyset forth herein, any failure of a party to comply with any provision hereofmay only be waived in a writing executed by the other party.  No such waiver shall operate as a waiver of,or estoppel with respect to, any subsequent or other failure.  No failure by any party to take any actionagainst any breach of this Agreement or default by any other party shallconstitute a waiver of such party’s right to enforce any provision hereof or totake any such action.

 

## **SECTION 10.11. GoverningLaw; Consent to Jurisdiction; Waiver of Jury Trial**.

 

### (a)   GoverningLaw; Consent to Jurisdiction.  THIS AGREEMENTSHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATEOF DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE 

 

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GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.  SUBJECT TO SECTION 8.5, EACHPARTY HERETO, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, IRREVOCABLY AGREESTHAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT MAY BE INSTITUTED IN THE UNITED STATES DISTRICT COURT FOR THEDISTRICT OF DELAWARE, UNITED STATES OF AMERICA OR IN THE ABSENCE OFJURISDICTION, THE STATE COURTS LOCATED IN WILMINGTON, DELAWARE, AND GENERALLYAND UNCONDITIONALLY ACCEPTS AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVEJURISDICTION OF THE AFORESAID COURTS AND IRREVOCABLY AGREES TO BE BOUND BY ANYFINAL JUDGMENT RENDERED THEREBY FROM WHICH NO APPEAL HAS BEEN TAKEN OR ISAVAILABLE IN CONNECTION WITH THIS AGREEMENT. EACH PARTY, FOR ITSELF AND ITS SUCCESSORS AND ASSIGNS, IRREVOCABLYWAIVES ANY OBJECTION IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THEVENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, INCLUDING, WITHOUT LIMITATION,ANY OBJECTION BASED ON THE GROUNDS OF FORUM NON CONVENIENS, IN THE AFORESAIDCOURTS.  EACH OF THE PARTIES, FOR ITSELFAND ITS SUCCESSORS AND ASSIGNS, IRREVOCABLY AGREES THAT ALL PROCESS IN ANY SUCHPROCEEDINGS IN ANY SUCH COURT MAY BE EFFECTED BY MAILING A COPY THEREOF BYREGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SECTION 10.1 ORAT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTY SHALL HAVE BEEN NOTIFIED INACCORDANCE WITH THE PROVISIONS OF SECTION 10.1, SUCH SERVICE BEINGHEREBY ACKNOWLEDGED BY THE PARTIES TO BE EFFECTIVE AND BINDING SERVICE IN EVERYRESPECT.  NOTHING HEREIN SHALL AFFECT THERIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

###  

### (b)   WAIVEROF JURY TRIAL.  TO THE EXTENT NOTPROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, EACH PARTY HERETO HEREBYWAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANTOR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUEOR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE)INQUIRY, PROCEEDING OR INVESTIGATION ARISING OUT OF OR BASED UPON THIS AGREEMENTOR THE SUBJECT MATTER HEREOF OR IN ANY WAY CONNECTED WITH OR RELATED ORINCIDENTAL TO THE TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOWEXISTING OR HEREAFTER ARISING.  EACHPARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTY HERETOTHAT THIS 10.11(b) CONSTITUTES A MATERIAL INDUCEMENT UPON WHICH THEY ARERELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT.  ANY PARTY HERETO MAY FILE AN ORIGINALCOUNTERPART OR A COPY OF THIS 10.11(b) WITH ANY COURT ASWRITTEN EVIDENCE OF THE CONSENT OF EACH SUCH PARTY TO THE WAIVER OF ITS RIGHTTO TRIAL BY JURY.

###  

### 60

### 

###  

## **SECTION 10.12.         No Recourse**.

 

Notwithstanding anything that may be expressed orimplied in this Agreement, Purchaser agrees and acknowledges that no recourseunder this Agreement or any documents or instruments delivered in connectionwith this Agreement shall be had against any current or future direct orindirect director, officer, employee, general or limited partner or member ofany Seller or of any Affiliate or assignee thereof, as such, whether by theenforcement of any assessment or by any legal or equitable proceeding, or byvirtue of any statute, regulation or other applicable Law, it being expresslyagreed and acknowledged that no personal liability whatsoever shall attach to,be imposed on or otherwise be incurred by any current or future officer, agentor employee of Seller or any current or future member of Seller or any currentor future director, officer, employee, partner or member of any Seller or ofany Affiliate or assignee thereof, as such, for any obligation of any Sellerunder this Agreement or any documents or instruments delivered in connectionwith this Agreement for any claim based on, in respect of or by reason of suchobligations or their creation.

 

## **SECTION 10.13.         Counterparts**.

 

This Agreement may be executed and delivered in one ormore counterparts, and by the different parties hereto in separatecounterparts, each of which when executed and delivered shall be deemed to bean original but all of which taken together shall constitute one and the sameagreement.  This Agreement and all otheragreements, certificates, instruments and other documents contemplated by thisAgreement may be executed and delivered in counterpart signature pages executedand delivered via facsimile, pdf or other electronic transmission, and any suchcounterpart executed and delivered via facsimile, pdf or other electronictransmission shall be deemed an original for all intents and purposes.  After the Closing the parties shallreasonably promptly exchange original versions of this Agreement and all otheragreements, certificates, instruments and other documents contemplated by thisAgreement that were so executed and exchanged by electronic transmission.

 

## **SECTION 10.14.         Time of Essence**.

 

With regard to all dates and time periods set forth orreferred to in this Agreement, time is of the essence.

 

## **SECTION 10.15.         Privilege and Related Matters**.

 

Purchaser acknowledges that Sellers and the Companieshave been represented by the law firms of Kirkland & Ellis LLP andKennedy Covington Lobdell & Hickman, L.L.P. (the “Firms”) inconnection with the transactions contemplated by this Agreement.  The parties agree that, while therepresentation by the Firms in such transactions has, in part, nominally beenof the Companies, the true clients have been Parent, certain of its members andthe other Sellers.  As a consequence, theparties agree that: (i) the holder of the privilege with respect to anydiscussions with any client of either Firm relative to such transactions on orprior the Closing Date will be Sellers and such members and no Company shallhave no rights thereto; and (ii) that none of the parties hereto shalltake any action to attempt to disqualify either Firm from representing anySeller in connection with any dispute relating to this Agreement, any relatedagreement or any 

 

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such transactions based on the representation by such Firm of anyCompany in connection therewith on or prior to the Closing Date.

 

*  * *  *  *

 

 

**[The remainder of this page is intentionally leftblank.]**

 

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IN WITNESS WHEREOF, the parties hereto have causedthis Purchase and Sale Agreement to be executed and delivered as of the datefirst written above.

 

 
|   | **CONSOLIDATED  THEATRES, LLC**                      |
|--------|------------------------------------------------------|
|   | **CONSOLIDATED  THEATRES HOLDINGS, GP**              |
|   | **APEX  CINEMA HOLDINGS, INC.**                      |
|   | **ARBORETUM  CINEMA HOLDINGS, INC.**                 |
|   | **CARY  CINEMA HOLDINGS, INC.**                      |
|   | **CHERRYDALE  CINEMA HOLDINGS, INC.**                |
|   | **CINEMA  6 HOLDINGS, INC.**                         |
|   | **COLUMBIA  CINEMA HOLDINGS, INC.**                  |
|   | **CONSOLIDATED  THEATRES MANAGEMENT HOLDINGS, INC.** |
|   | **GARNER  CINEMA HOLDINGS, INC.**                    |
|   | **GREENSBORO  I THEATRE HOLDINGS, INC.**             |
|   | **GREENVILLE  CINEMA HOLDINGS, INC.**                |
|   | **HIGH  POINT CINEMA HOLDINGS, INC.**                |
|   | **HYATTSVILLE  CINEMA HOLDINGS, INC.**               |
|   | **KINGSTOWNE  CINEMA HOLDINGS, INC.**                |
|   | **LOUDOUN  COUNTY CINEMA HOLDINGS, INC.**            |
|   | **MOUNT  PLEASANT CINEMA HOLDINGS, INC.**            |
|   | **MT.  JULIET CINEMA HOLDINGS, INC.**                |
|   | **NEWNAN  CINEMA HOLDINGS, INC.**                    |
|   | **PARK  CINEMA HOLDINGS, INC.**                      |
|   | **PHILLIPS  PLACE HOLDINGS, INC.**                   |
|   | **RALEIGH  16 HOLDINGS, INC.**                       |
|   | **RICHMOND  I CINEMA HOLDINGS, INC.**                |
|   | **ROANOKE  CINEMA HOLDINGS, INC.**                   |
|   | **ROCK  HILL CINEMA HOLDINGS, INC.**                 |
|   | **SILVER  SPRING CINEMA HOLDINGS, INC.**             |
|   | **SPARTANBURG  CINEMA HOLDINGS, INC.**               |
|   | **SUFFOLK  CINEMA HOLDINGS, INC.**                   |
|   | **US 8  HOLDINGS, INC.**                             |
|   | **WILLIAMSBURG  CINEMA HOLDINGS, INC.**              |
|   | **WILMINGTON  CINEMA HOLDINGS, INC.**                |

 
|   |   /s/    C.J.  BRUCATO |
|--------|------------------------------------------------------|
|   | By:                                                  |    C.J.  Brucato |
|   | Title:                                               |  Vice  President |
|   |                                                 |
|   |                                                 |
|   | **REGAL  CINEMAS, INC.**                             |
|   | ** **                                           |
|   |   /s/  MICHAEL  L. CAMPBELL      |
|   | By:                                                  |  Michael L.  Campbell |
|   | Title:                                               | Chairman and  Chief Executive Officer |
|        |                                                      |  |  |  |

 

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Exhibit A

 

Subsidiaries ofthe Partnership

 

Apex Cinema, L.L.C.Arboretum Cinema, L.L.C.Asheville Cinema, L.L.C.Cary Cinema, L.L.C.(f/k/a Cary Cinemas, L.L.C.)Cherrydale Cinema, L.L.C.Cinema 6, L.L.C.Columbia Cinema, L.L.C.Consolidated Theatres Management, L.L.C.Garner Cinema, L.L.C.Greenville Cinema, L.L.C.Greensboro I Theatre, L.L.C.(f/k/a Greensboro I Cinema, L.L.C.)High Point Cinema, L.L.C.Hyattsville Cinema, L.L.C.Kingstowne Cinema, L.L.C.Laurel Cinema, L.L.C.Lynchburg Cinema, L.L.C.Loudoun County Cinema, L.L.C.Mount Pleasant Cinema, L.L.C.Mt. Juliet Cinema, L.L.C.Newnan Cinema, L.L.C.Park Cinema, L.L.C.Phillips Place, L.L.C.Raleigh 16, LLCRaleigh 16 Holdings, L.L.C.(f/k/a Raleigh 16, L.L.C.)Richmond I Cinema, L.L.C.Roanoke Cinema, L.L.C.Rock Hill Cinema, L.L.C.Silver Spring Cinema, L.L.C.Spartanburg Cinema, L.L.C.Suffolk Cinema, L.L.C.US 8, L.L.C.Williamsburg Cinema, L.L.C.Wilmington Cinema, L.L.C.

 

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