Document:

Exhibit 10.4

 

MASTER
DEFERRED ISSUANCE STOCK AGREEMENT

FOR
NON-EMPLOYEE DIRECTORS

 

This Master Deferred Issuance Stock Agreement
for Non-Employee Directors (along with the Exhibit hereto, this “Agreement”)
is entered into as of                                           ,
by and between Level 3 Communications, Inc., a Delaware corporation
(the “Company”), and the individual whose name appears on the signature page to
this Agreement (the “Director”), an “Employee” as defined in the Company’s Level
3 Communications, Inc. Stock Plan (as amended from time to time, the “Plan”).

 

The
Company, pursuant to a grant of authority from the Compensation Committee of
the Company’s Board of Directors (the “Committee”), may, from time to time,
grant to the Director the opportunity to acquire a certain number of shares of
its common stock, par value $.01 per share (the “Stock”), in consideration of
the Director’s service as a member of the Company’s Board of Directors,
pursuant to the Plan (an “Award”).

 

The
parties agree as follows:

 

1.                                       Obligation to
Issue Deferred Shares. 
Subject to the terms and conditions of this Agreement,  the Company, from time to
time in its sole discretion, may grant Awards to the Director relating to a
specified number of shares of Stock that, under certain circumstances and in
accordance with the terms hereof, may result in the Director having the right
to receive shares of Stock (the “Deferred Shares”).  Each Award will be evidenced by a Deferred
Issuance Stock Award Letter (an “Award Letter”) in the form attached as Exhibit A
hereto (or such other form, including electronic form, as approved by the
Company), which sets forth the date of the Award (the “Award Date”), the number
of Deferred Shares that are the subject of the Award, and the dates on which
the Company will issue the Deferred Shares to the Director subject to the terms
of this Agreement and any further terms that may be set forth in the applicable
Award Letter (each such date, an “Issuance Date”).

 

2.                                       Acceleration of Issuance of
Deferred Shares. 
Notwithstanding Section 1, the Company will issue all unissued
Deferred Shares to the Director (i) promptly after the death of the Director,
or the Permanent Total Disability of the Director, or (ii) upon or
following a Change in Control, as provided in Section 8.  In addition, the Company will issue all
unissued Deferred Shares to the Director promptly after the date of the
Employee’s Separation from Service (as defined below) on account of retirement
in accordance with the Company’s retirement plan then in effect.  For purposes of this Agreement, “Permanent
Total Disability” means that:  (i) the
Director is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of less
than 12 months.  For purposes of this
Agreement, “Separation from Service” shall mean a separation from service as
defined in Treasury Regulation 1.409A-1(h)(1).

 

3.                                       Forfeiture of
Right to Acquire Deferred Shares.  If the Director ceases to be a member of the
Company’s Board of Directors (other than as a result of death, Permanent Total Disability
or Separation from Service on account of retirement, in accordance with the 

 

 

Company’s
retirement plan then in effect), the Company no longer will be obligated to
issue any unissued Deferred Shares to the Director, and the Director will
forfeit any right to acquire any unissued Deferred Shares from the Company.

 

4.                                       Taxes;
Withholding.  (a) As
of the date of this Agreement, the Director is not subject to Withholding Taxes
(as defined below).  Notwithstanding
anything contained herein to the contrary, other than Section 8 and Section 9,
the Company will not be obligated to issue the Deferred Shares unless the Director
has paid (in cash or by certified or cashier’s check) to the Company all
withholding taxes required as of date after the date of this Agreement to be
collected by the Company under Federal, State, local or foreign law as a result
of the issuance of the Deferred Shares (“Withholding Taxes”); provided, however, that
if the Withholding Taxes are not paid within thirty (30) days following the
date on which the Director is entitled to receive the Deferred Shares, the Director
shall forfeit such Deferred Shares.

 

5.                                       Share
Certificates.  Share certificates
for Deferred Shares will not be issued. 
Upon issuance, Deferred Shares will be deposited into an account for the
Director that is established by the Company.

 

6.                                       Non-Transferability
of Right to Receive Deferred Shares.  Unless specifically permitted by the
Committee, the Director may not transfer, assign, pledge or hypothecate the
right to receive the Deferred Shares, and the right to receive the Deferred
Shares may not be transferred or assigned by operation of law, or be subject to
execution, attachment or similar process other than by will or the laws of
descent and distribution.

 

7.                                       Changes in
Capital Structure.  The number
of Deferred Shares subject to this Agreement is subject to adjustment pursuant
to Section 10.1 of the Plan upon the occurrence of the events described in
that Section.

 

8.                                       Change in
Control.  Notwithstanding Section 1,
upon a Change in Control of the Company that also qualifies as a “change in
control event” as defined in Treasury Regulation 1.409A-3(i)(5)(i) (a “409A
Change in Control”), the Company will, in its sole discretion, either (a) issue
all unissued Deferred Shares to the Director in accordance with Section 10.2
of the Plan or (b) pay the Director in a combination of cash and stock the
value of the Deferred Shares in accordance with Section 10.2 of the Plan.

 

9.                                       Costs.  The Company will pay all original issue and
transfer taxes with respect to, and all other costs, fees and expenses incurred
by the Company in connection with, the issuance of Deferred Shares.  Upon issuance, the Director shall be
responsible for all brokerage expenses associated with the permitted sale of
any Deferred Shares.

 

10.                                 Applicable Law.  No Deferred Shares will be issued and delivered
unless and until, in the opinion of legal counsel for the Company, such
securities may be issued and delivered without causing the Company to be in
violation of or incur any liability under any federal, state or other legal
requirement, including applicable securities laws.

 

 

11.                                 The Plan.  This Agreement is subject to, and the Director
agrees to be bound by, all of the terms and conditions of the Plan.  The Director acknowledges that the Plan may
be amended from time to time, and that under the Plan, the Committee has
conclusive authority to interpret and construe the Plan and this Agreement and
is authorized to adopt rules for carrying out the Plan.  In the event of any inconsistency or
discrepancy between the provisions of this Agreement and the terms and
conditions of the Plan, the provisions of the Plan will govern and
prevail.  No amendment to or
interpretation of the Plan, however, may deprive the Director of any of his or
her rights under this Agreement.

 

12.                                 Miscellaneous.  (a) The Director will not have any
interest in, or any dividend, voting or other rights of a stockholder with
respect to, the Deferred Shares until the Deferred Shares are issued in
accordance with this Agreement.

 

(b)                                 Any notice to
be given to the Company must be in writing addressed to the Company in care of
the Administrator, at its principal office, and any notice to be given to the Director
must be in writing addressed to the Director at the address for the Director in
the records of the Company or by email or other electronic means using a system
maintained by the Company.  Any such
notice will be deemed duly given when delivered by hand, deposited in the
United States mail, registered or certified mail or transmitted electronically
without a notice of failed delivery.

 

(c)                                  This Agreement
must be construed in accordance with the laws of the State of Colorado, other
than choice of law rules thereof calling for the application of laws of
another jurisdiction.

 

(d)                                 Terms used but
not defined in this Agreement have the meanings ascribed to them under the
Plan.

 

(e)                                  Although any
information sent to or made available to the Director concerning the Plan and
this Award is intended to be an accurate summary of the terms and conditions of
the Award, this Agreement and the Plan are the authoritative documents
governing the Award and any inconsistency between the Agreement and the Plan,
on one hand, and any other summary information, on the other hand, shall be
resolved in favor of the Agreement and the Plan.

 

(g)                                 Notwithstanding
anything herein to the contrary, this Agreement may be amended by the Committee
from time to time without the consent of the Director to the extent the
Committee deems it appropriate to cause this Agreement and/or each Award
hereunder to comply with Section 409A of the Internal Revenue Code of
1986, as amended (“Section 409A”) (including the distribution requirements
thereunder) or be exempt from Section 409A and/or the tax penalty under Section 409A(a)(1)(B).  The Company will provide to the Director a
notice of any amendments made to this Agreement pursuant to this subsection.

 

[Signature page follows]

 

 

IN
WITNESS WHEREOF,  this Agreement is
entered into by the Director and by the Company as of the date first above
written.

 

 

	
   

  	
  LEVEL
  3 COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIRECTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

 

EXHIBIT A

 

LEVEL 3 COMMUNICATIONS, INC.

DEFERRED ISSUANCE STOCK AWARD LETTER

 

This
Deferred Issuance Stock Award Letter (the “Award”) when taken together with the
Master Deferred Issuance Stock Agreement for Non-Employee Directors (“Master
Agreement”) constitutes an award to the individual whose name appears on the
signature line below (“Director”) of Deferred Shares with respect to the shares
of common stock of Level 3 Communications, Inc. (the “Common Stock”) under
the Level 3 Communications, Inc. Stock Plan (as amended from time to time).

 

The
terms and conditions of this Award are set forth below and in the Master
Agreement, the provisions of which are incorporated herein by reference.

 

A.                                   The date of
this Award is                     
(the “Award Date”).

 

B.                                     The number of Deferred
Shares with respect to which this Deferred Issuance Award Letter relates
is                     .

 

C.                                     The Issuance
Date(s) for the Deferred Shares are as follows:

 

D.                                    The following
are conditions to the occurrence of the Issuance Date(s):

 

 

	
   

  	
  LEVEL
  3 COMMUNICATIONS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
   

  
	
   

  	
  ITS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:Exhibit 10.1

 

EXECUTION COPY

 

UNIT PURCHASE AGREEMENT

 

AMONG

 

KERASOTES SHOWPLACE THEATRES HOLDINGS, LLC,

 

KERASOTES SHOWPLACE THEATRES, LLC,

 

SHOWPLACE
THEATRES HOLDING COMPANY, LLC,

 

AMC SHOWPLACE HOLDINGS, INC.,

 

AND

 

AMERICAN MULTI-CINEMA, INC.

 

Dated as
of December 9, 2009

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
  DEFINITIONS

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
   

  	
  Definitions

  	
   

  	
  2

  
	
  Section 1.2

  	
   

  	
  Interpretation

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  CONTRIBUTION, PURCHASE
  AND SALE; PURCHASE PRICE

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
   

  	
  Contribution

  	
   

  	
  16

  
	
  Section 2.2

  	
   

  	
  Purchase
  and Sale of the Unit

  	
   

  	
  16

  
	
  Section 2.3

  	
   

  	
  Closing
  Date Payments; Purchase Price

  	
   

  	
  17

  
	
  Section 2.4

  	
   

  	
  Purchase
  Price Adjustments

  	
   

  	
  17

  
	
  Section 2.5

  	
   

  	
  Purchase
  Price Adjustments Payment

  	
   

  	
  19

  
	
  Section 2.6

  	
   

  	
  Allocation
  of Purchase Price

  	
   

  	
  21

  
	
  Section 2.7

  	
   

  	
  Withholding

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
  CLOSING

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
   

  	
  Closing
  Date

  	
   

  	
  22

  
	
  Section 3.2

  	
   

  	
  Payments
  on the Closing Date

  	
   

  	
  22

  
	
  Section 3.3

  	
   

  	
  Buyer’s
  Additional Closing Date Deliveries

  	
   

  	
  22

  
	
  Section 3.4

  	
   

  	
  Seller’s
  Closing Date Deliveries

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES OF PARENT AND SELLER

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
   

  	
  Organization
  and Good Standing

  	
   

  	
  24

  
	
  Section 4.2

  	
   

  	
  Authorization;
  Conflicts

  	
   

  	
  25

  
	
  Section 4.3

  	
   

  	
  Enforceability

  	
   

  	
  26

  
	
  Section 4.4

  	
   

  	
  Capitalization

  	
   

  	
  26

  
	
  Section 4.5

  	
   

  	
  Subsidiaries

  	
   

  	
  27

  
	
  Section 4.6

  	
   

  	
  Reports
  and Financial Statements; Undisclosed Liabilities

  	
   

  	
  28

  
	
  Section 4.7

  	
   

  	
  Absence
  of Certain Developments

  	
   

  	
  29

  
	
  Section 4.8

  	
   

  	
  Title
  to Assets; Liens

  	
   

  	
  29

  
	
  Section 4.9

  	
   

  	
  Transactions
  with Affiliates

  	
   

  	
  29

  
	
  Section 4.10

  	
   

  	
  Insurance

  	
   

  	
  30

  
	
  Section 4.11

  	
   

  	
  Tax
  Matters

  	
   

  	
  30

  
	
  Section 4.12

  	
   

  	
  Material
  Contracts and Obligations

  	
   

  	
  31

  
	
  Section 4.13

  	
   

  	
  Real
  Property — Owned

  	
   

  	
  32

  
	
  Section 4.14

  	
   

  	
  Real
  and Personal Property — Leased

  	
   

  	
  32

  
	
  Section 4.15

  	
   

  	
  Intellectual
  Property

  	
   

  	
  33

  
	
  Section 4.16

  	
   

  	
  Necessary
  Property; Condition of Property

  	
   

  	
  34

  
	
  Section 4.17

  	
   

  	
  Necessary
  Licenses and Permits

  	
   

  	
  34

  
	
  Section 4.18

  	
   

  	
  Compliance
  with Laws and Governmental Permits

  	
   

  	
  34

  
	
  Section 4.19

  	
   

  	
  Environmental
  Compliance

  	
   

  	
  35

  
	
  Section 4.20

  	
   

  	
  Litigation

  	
   

  	
  36

  
	
  Section 4.21

  	
   

  	
  No
  Material Adverse Effect

  	
   

  	
  36

  
	
  Section 4.22

  	
   

  	
  Employee
  Benefit Plans

  	
   

  	
  36

  

 

i

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.23

  	
   

  	
  Withholding;
  Labor Relations

  	
   

  	
  37

  
	
  Section 4.24

  	
   

  	
  No
  Brokers

  	
   

  	
  37

  
	
  Section 4.25

  	
   

  	
  Goodwill
  Passes; Prepaid Tickets

  	
   

  	
  37

  
	
  Section 4.26

  	
   

  	
  Concession
  Inventory

  	
   

  	
  37

  
	
  Section 4.27

  	
   

  	
  ADA
  Compliance

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  V

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES OF BUYER AND GUARANTOR

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
   

  	
  Organization
  and Good Standing

  	
   

  	
  38

  
	
  Section 5.2

  	
   

  	
  Authorization;
  Conflicts

  	
   

  	
  38

  
	
  Section 5.3

  	
   

  	
  Enforceability

  	
   

  	
  38

  
	
  Section 5.4

  	
   

  	
  Litigation

  	
   

  	
  39

  
	
  Section 5.5

  	
   

  	
  Financial
  Capability

  	
   

  	
  39

  
	
  Section 5.6

  	
   

  	
  Investment
  Intent

  	
   

  	
  39

  
	
  Section 5.7

  	
   

  	
  No
  Brokers

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  ACTIONS PRIOR TO THE
  CLOSING DATE

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
   

  	
  Access
  to Information

  	
   

  	
  39

  
	
  Section 6.2

  	
   

  	
  Notification

  	
   

  	
  41

  
	
  Section 6.3

  	
   

  	
  Consents
  of Third Parties; Governmental Approvals

  	
   

  	
  41

  
	
  Section 6.4

  	
   

  	
  Operations
  Prior to the Closing Date

  	
   

  	
  43

  
	
  Section 6.5

  	
   

  	
  Exclusivity

  	
   

  	
  44

  
	
  Section 6.6

  	
   

  	
  Termination
  of Affiliate Transactions

  	
   

  	
  45

  
	
  Section 6.7

  	
   

  	
  Financial
  Information

  	
   

  	
  45

  
	
  Section 6.8

  	
   

  	
  Trademark
  Registration

  	
   

  	
  45

  
	
  Section 6.9

  	
   

  	
  Termination
  of National CineMedia Agreement

  	
   

  	
  46

  
	
  Section 6.10

  	
   

  	
  Services
  Agreement

  	
   

  	
  46

  
	
  Section 6.11

  	
   

  	
  Landlord
  Consents

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  ADDITIONAL AGREEMENTS

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
   

  	
  Tax
  Matters

  	
   

  	
  47

  
	
  Section 7.2

  	
   

  	
  Employee
  Matters

  	
   

  	
  49

  
	
  Section 7.3

  	
   

  	
  Contact
  with Employees, Suppliers and Others

  	
   

  	
  52

  
	
  Section 7.4

  	
   

  	
  Confidentiality

  	
   

  	
  53

  
	
  Section 7.5

  	
   

  	
  Release

  	
   

  	
  54

  
	
  Section 7.6

  	
   

  	
  Change
  of Corporate Name; Removal of Names and Marks

  	
   

  	
  54

  
	
  Section 7.7

  	
   

  	
  Gift
  Cards and Passes

  	
   

  	
  55

  
	
  Section 7.8

  	
   

  	
  Web
  Site Data

  	
   

  	
  55

  
	
  Section 7.9

  	
   

  	
  Web
  Site Operation and Cooperation

  	
   

  	
  55

  
	
  Section 7.10

  	
   

  	
  Termination
  of Blue Light Holdings Lease

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
  CONDITIONS PRECEDENT TO
  OBLIGATIONS OF BUYER AND GUARANTOR

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
   

  	
  No
  Breach of Covenants and Warranties

  	
   

  	
  56

  

 

ii

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.2

  	
   

  	
  No
  Material Adverse Effect

  	
   

  	
  56

  
	
  Section 8.3

  	
   

  	
  No
  Restraint

  	
   

  	
  56

  
	
  Section 8.4

  	
   

  	
  Governmental
  Approvals

  	
   

  	
  57

  
	
  Section 8.5

  	
   

  	
  Contribution

  	
   

  	
  57

  
	
  Section 8.6

  	
   

  	
  Termination
  of Agreements

  	
   

  	
  57

  
	
  Section 8.7

  	
   

  	
  Other
  Deliverables

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
  CONDITIONS PRECEDENT TO
  OBLIGATIONS OF SELLER AND THE COMPANY

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
   

  	
  No
  Misrepresentation or Breach of Covenants and Warranties

  	
   

  	
  57

  
	
  Section 9.2

  	
   

  	
  No
  Restraint

  	
   

  	
  58

  
	
  Section 9.3

  	
   

  	
  Governmental
  Approvals

  	
   

  	
  58

  
	
  Section 9.4

  	
   

  	
  Other
  Deliverables

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1

  	
   

  	
  Indemnification
  by Parent and Seller

  	
   

  	
  58

  
	
  Section 10.2

  	
   

  	
  Indemnification
  by Buyer and Guarantor

  	
   

  	
  60

  
	
  Section 10.3

  	
   

  	
  Notice
  of Claims

  	
   

  	
  60

  
	
  Section 10.4

  	
   

  	
  Resolution
  of Indemnifiable Claims

  	
   

  	
  61

  
	
  Section 10.5

  	
   

  	
  Third
  Person Claims

  	
   

  	
  61

  
	
  Section 10.6

  	
   

  	
  Determination
  of Indemnification Amounts

  	
   

  	
  62

  
	
  Section 10.7

  	
   

  	
  Escrow
  Fund

  	
   

  	
  63

  
	
  Section 10.8

  	
   

  	
  Exclusive
  Remedy

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  	
  TERMINATION

  	
   

  	
  64

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1

  	
   

  	
  Termination

  	
   

  	
  64

  
	
  Section 11.2

  	
   

  	
  Notice
  of Termination

  	
   

  	
  65

  
	
  Section 11.3

  	
   

  	
  Effect
  of Termination; Remedies

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
   

  	
  GENERAL PROVISIONS

  	
   

  	
  66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
   

  	
  Survival
  of Representations, Warranties and Covenants

  	
   

  	
  66

  
	
  Section 12.2

  	
   

  	
  No
  Public Announcement

  	
   

  	
  67

  
	
  Section 12.3

  	
   

  	
  Notices

  	
   

  	
  67

  
	
  Section 12.4

  	
   

  	
  Successors
  and Assigns

  	
   

  	
  68

  
	
  Section 12.5

  	
   

  	
  Access
  to Records after Closing

  	
   

  	
  68

  
	
  Section 12.6

  	
   

  	
  Entire
  Agreement; Amendments

  	
   

  	
  68

  
	
  Section 12.7

  	
   

  	
  Interpretation

  	
   

  	
  69

  
	
  Section 12.8

  	
   

  	
  Waivers

  	
   

  	
  69

  
	
  Section 12.9

  	
   

  	
  Expenses

  	
   

  	
  69

  
	
  Section 12.10

  	
   

  	
  Partial
  Invalidity

  	
   

  	
  70

  
	
  Section 12.11

  	
   

  	
  Execution
  in Counterparts

  	
   

  	
  70

  
	
  Section 12.12

  	
   

  	
  Further
  Assurances

  	
   

  	
  70

  
	
  Section 12.13

  	
   

  	
  Disclaimer
  of Warranties

  	
   

  	
  71

  
	
  Section 12.14

  	
   

  	
  Governing
  Law; Submission to Jurisdiction; Waiver of Jury Trial

  	
   

  	
  72

  

 

iii

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 12.15

  	
   

  	
  Binding Effect

  	
   

  	
  72

  

 

iv

 

EXHIBITS

 

	
  Exhibit A

  	
  Reference Working
  Capital Statement and Deferred Revenue Components

  
	
  Exhibit B

  	
  Form of Escrow Agreement

  

 

v

 

UNIT PURCHASE AGREEMENT

 

UNIT PURCHASE AGREEMENT, dated as of December 9, 2009,
among ShowPlace Theatres Holding Company, LLC, a Delaware limited liability
company (the “Company”), Kerasotes Showplace Theatres, LLC, a Delaware
limited liability company (“Seller”), Kerasotes Showplace Theatres
Holdings, LLC, a Delaware limited liability company (“Parent”), AMC
ShowPlace Holdings, Inc., a Delaware corporation (“Buyer”), and
American Multi-Cinema, Inc., a Delaware corporation (“Guarantor”).

 

PRELIMINARY STATEMENT:

 

WHEREAS, Parent is the owner of all of the issued
and outstanding membership units of Seller and Seller is the owner of all of
the issued and outstanding membership units of the Company; and

 

WHEREAS, Seller desires to sell to Buyer, and
Buyer desires to purchase from Seller, all of the issued and outstanding
membership units of the Company, all on the terms and subject to the conditions
set forth herein;

 

WHEREAS, as an inducement for Buyer and the
Guarantor to enter into this Agreement and the Buyer Ancillary Agreements,
concurrent with execution and delivery of this Agreement, (i) certain
indirect equity holders of Parent are entering into guarantee, exclusivity and
confidentiality agreements, and (ii) certain equity holders of Parent are
entering into exclusivity and confidentiality agreements (collectively, the “Equity
Holder Agreements”) pursuant to which, among other things, certain indirect
equity holders will severally guarantee collectively 100% of the monetary
obligations of Seller and Parent hereunder, and all such direct and indirect
equity holders will agree not to sell or otherwise transfer, or cause to be
sold or otherwise transferred, his, her or its respective direct or indirect
equity interests in Parent prior to the Closing;

 

WHEREAS, each of Buyer and Guarantor, as an
inducement for the Company, Seller and Parent to enter into this Agreement, and
each of Parent, Seller, Kerasotes Theatres, Inc., a Delaware corporation (“KTI”),
Anthony Kerasotes, Dean Kerasotes, and Victoria Constan, as an inducement for
Buyer and the Guarantor to enter into this Agreement, is entering into a
non-competition agreement (the “Buyer Non-Competition Agreement,” in the
case of Buyer and Guarantor, and, in the case Parent, Seller, KTI, Anthony
Kerasotes, Dean Kerasotes, and Victoria Constan, collectively, the “Seller
Non-Competition Agreements”), in each case to be effective as of the
Closing and pursuant to which Buyer and Guarantor, on the one hand, and each of
Parent, Seller, KTI, Anthony Kerasotes, Dean Kerasotes, and Victoria Constan,
on the other hand, agree, subject to the terms and conditions of the Buyer
Non-Competition Agreement or their respective Seller Non-Competition Agreement,
as applicable, during the five-year period following the Closing Date, not to
own, operate, manage or otherwise be involved with the ownership, operation, or
management of any movie theatre in the 5-mile radius surrounding (i) any
theatre that is a Retained Asset, in the case of Buyer and Guarantor, and (ii) any
theatre that is contributed to the Company pursuant to the Contribution in the
case of each of Parent, Seller, KTI, Anthony Kerasotes, Dean Kerasotes, and
Victoria Constan.

 

 

WHEREAS, as an inducement for the Company, Seller
and Parent to enter into this Agreement, Guarantor is entering into this
Agreement; and

 

WHEREAS, immediately prior to the Closing on the
Closing Date, Parent shall cause Seller to contribute to the Company (the “Contribution”)
all of Seller’s right, title and interest in, to and under all of the theatres,
properties, assets and liabilities of Seller other than those theaters,
properties, assets and liabilities set forth on Schedule I (the “Retained
Assets”) and Schedule II (the “Retained Liabilities”).

 

NOW, THEREFORE, in consideration of the mutual covenants
and agreements hereinafter set forth, it is hereby agreed among the Company,
Seller and Buyer as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1         Definitions. 
In this Agreement, the following terms have the meanings specified or
referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms.

 

“Accounting Firm” has the meaning specified in Section 2.4(c).

 

“Acquisition Proposal”  means any offer, proposal or
indication of interest relating to or made in connection with (i) the acquisition of Parent, Seller, the
Company, or any Subsidiary, (ii) a merger, consolidation or other business
combination in which Parent, Seller, the Company, or any Subsidiary, as
applicable, does not survive, (iii) the acquisition of any of the capital
stock of Parent, Seller, the Company or any Subsidiary, or (iv) the sale
of any material assets of Parent, Seller, the Company or any Subsidiary.

 

“Adjustment Indebtedness” means the Indebtedness set forth on Schedule
1.1.

 

“Affiliate” means, with respect to any Person that
is an entity, any other Person that directly or indirectly controls, is
controlled by or is under common control with such Person,  and with respect to any Person that is an individual,
any direct or indirect family member of such Person and any other Person that
directly or indirectly is controlled by such Person, in each case where “control”
(including, with correlative meaning, the terms “controlled by”  and “under common control with”) means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of voting securities,
Contract or otherwise.

 

“Affiliate Transactions” has the meaning specified in Section 4.9.

 

“Agreed Accounting Principles”
means GAAP; provided,
however, with respect to any matter as to which there is more than one
generally accepted accounting principle, Agreed Accounting Principles means the
generally accepted accounting principles applied in the preparation of the
Company’s audited balance sheet dated as of December 31, 2008.

 

“Agreed Adjustments” has the meaning specified in Section 2.4(c).

 

2

 

“Allocation
Schedule” has  the meaning specified in Section 2.6.

 

“Antitrust
Laws” means the Sherman Act, the Clayton Act, the HSR
Act, the Federal Trade Commission Act and all other federal and state
Requirements of Law that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restriction
of trade or business or competition through merger or acquisition.

 

“Assumed Liabilities” has the meanings specified in Section 2.1.

 

“Audited Financial Statements” has the meaning specified in Section 4.6(a).

 

“Balance Sheet Date” has the meaning specified in Section 4.6(a).

 

“Benefits Continuation Period”
has the meaning
specified in Section 7.2(d).

 

“Blue
Light” has the meaning specified in Section 7.10.

 

“Business Day” means any day other than a Saturday,
Sunday or day on which commercial banks located in New York, New York are
required or permitted to be closed.

 

“Buyer” has the meaning specified in the first
paragraph of this Agreement.

 

“Buyer Ancillary Agreements” means all agreements, instruments and
documents being or to be executed and delivered by Buyer or an Affiliate of
Buyer under this Agreement or in connection herewith, including the Escrow
Agreement, Buyer Non-Competition Agreement, Services Agreement, Equity Holder
Agreements, Seller License Agreement, Buyer License Agreement and the Chicago
Office Sublease Agreement.

 

“Buyer Fundamental
Representations” means those representations and warranties contained in Sections 5.1
(Organization and Good Standing), 5.2 (Authorization; Conflicts) (to the
extent such representations and warranties are made with respect to the Buyer’s
organizational documents), 5.3 (Enforceability), and 5.7 (No
Brokers).

 

“Buyer Group Member” means (i) Buyer and its Affiliates
(including the Company and the Subsidiaries after the Closing), (ii) the
directors, officers, partners, members, stockholders, employees, agents and
representatives of Buyer and its Affiliates (including of the Company and the
Subsidiaries after the Closing) and (iii) the respective successors and
assigns of each of the foregoing.

 

“Buyer
License Agreement” means the license agreement to be dated as of the Closing Date, by and
between Buyer and Seller, pursuant to which Buyer will, among other things,
provide Seller with an irrevocable, fully-paid, non-exclusive and transferable
license to use the name “ShowPlace” (i) in the Chicago, IL, Minneapolis,
MN and Secaucus, NJ markets, as well as in the markets in which Seller is
permitted to own or operate any other theatre pursuant to the terms of the
applicable Seller Non-Competition Agreement; provided, that Seller shall use
the term “ShowPlace” only in conjunction with the term “Icon” except in the
Secaucus, NJ market, where the name “ShowPlace” may be used alone, and (ii) on
Gift Cards and Passes, 

 

3

 

in the case of
each of clauses (i) and (ii), in the manner set forth in the Buyer License
Agreement.

 

“Buyer Non-Competition
Agreement”
has the meaning specified in the Recitals.

 

“Buyer’s Severance Policy”
has the meaning
specified in Section 7.2(b).

 

“Cap” means an amount equal to $34,375,000.

 

“Cash” means those consolidated current assets
of the Company reflected on the line items of the Company’s balance sheet as “Cash”
and “Short Term Investments” and calculated in accordance with the Agreed
Accounting Principles, consistently applied.

 

“Chicago Office Sublease
Agreement”
means the sublease agreement to be dated as of the Closing Date between the
Company and Seller pursuant to which the Company agrees to sublease from Seller
one floor of office space currently leased by Seller pursuant to the Office
Lease between River Forks, LLC (as successor in interest to Finova Capital
Corporation) and Seller, dated June 15, 1999, as amended on November 4,
2004.

 

“CineMedia
Agreement” has the meaning specified in Section 6.9.

 

“Claim Notice” has the meaning specified in Section 10.3.

 

“Closing” means the closing of the transfer of the
Unit from Seller to Buyer in exchange for the Closing Date Payment Amount.

 

“Closing Date” has the meaning specified in Section 3.1.

 

“Closing Date Cash” has the meaning specified in Section 2.4(c).

 

“Closing Date Balance Sheet” has the meaning specified in Section 2.4(c).

 

“Closing Date Deferred Revenue”
has the meaning
specified in Section 2.4(c).

 

“Closing Date Payment Amount” has the meaning specified in Section 2.3(a).

 

“Closing Date Transaction
Costs” has
the meaning specified in Section 2.4(c).

 

“Closing Date Working Capital” has the meaning specified in Section 2.4(c).

 

“Closing Statement” has the meaning specified in Section 2.4(c).

 

“Code” means the Internal Revenue Code of 1986.

 

“Company” has the meaning specified in the first
paragraph of this Agreement.

 

“Company Employee” has the meaning specified in Section 7.2(a).

 

4

 

“Company Intellectual Property” has the meaning specified in Section 4.15(a).

 

“Confidentiality Agreement” has the meaning specified in Section 6.1(a).

 

“Continuing Employee” has the meaning specified in Section 7.2(d).

 

“Contract” means any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, license,
obligation, plan, practice, restriction, understanding or undertaking of any
kind or character.

 

“Contributed Assets” has the meanings specified in Section 2.1.

 

“Contribution” has the meaning specified in the
Recitals.

 

“Contribution Agreement” means the agreement pursuant to which
the Contribution shall be effected, which shall be in form and substance
reasonably satisfactory to Buyer.

 

“Copyrights” means United States and foreign
registered and unregistered copyrights, and pending applications to register
the same.

 

“Court Order” means any administrative decision,
judgment, order, writ, injunction, ruling, award or decree of any foreign,
federal, state, local or other court, tribunal or other Governmental Body of
competent jurisdiction and any award in any arbitration proceeding.

 

“Covered Taxes” has the meaning specified in Section 4.11(b).

 

“Current Assets” means those consolidated current assets
of Seller reflected on the line items of the balance sheet of Seller set forth
on Exhibit A and calculated in accordance with the Agreed
Accounting Principles, consistently applied.

 

“Current Liabilities” means those consolidated current
liabilities of Seller reflected on the line items of the balance sheet of
Seller set forth on Exhibit A and calculated in accordance with the
Agreed Accounting Principles, consistently applied.

 

“Deferred Revenue” means the consolidated aggregate amount
of deferred revenue of the Seller as set forth on Exhibit A,
including gift cards, “movie money,” premier tickets, discount tickets, advance
sales, internet advance sales and deferred marketing funds, calculated in
accordance with the Agreed Accounting Principles, consistently applied.

 

“Designated Web Sites” has the meaning specified in Section 7.9.

 

“Eligible Seller Employee” has the meaning specified in Section 7.2(b).

 

“Employee
Benefit Plan” means (i) each employee benefit plan, within the
meaning of Section 3(3) of ERISA (including each Multiemployer Plan
and Guaranteed Pension Plan) and (ii) each and every written, unwritten, formal or informal
plan, agreement, program, policy or other arrangement involving direct or
indirect compensation (other than workers’ 

 

5

 

compensation,
unemployment compensation and other government programs), employment,
severance, consulting by an individual, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits, deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation
rights, other forms of incentive compensation, post-retirement insurance
benefits, or other benefits, entered into, maintained or contributed to by
Seller, the Company or any of the Subsidiaries or with respect to which Seller,
the Company or any of the Subsidiaries has any Liability (including any
contingent liability).

 

“Encumbrance” means any lien, claim, charge, security
interest, mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title or other restrictions of a similar kind.

 

“Environmental Laws” means all Requirements of Law concerning
worker exposure to any Hazardous Material and pollution or protection of the
environment (including those relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, Release, threatened Release, control
or cleanup of any Hazardous Material).

 

“Environmental Matter” means any Liability of the Company or
any Subsidiary relating to (i) the Release or threatened Release of a
Hazardous Material or (ii) violations of applicable Environmental Laws.

 

“Environmental Reports” has the meaning specified in Section 4.19(e).

 

“Equity Holder Agreements” has the meaning specified in the
Recitals.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974.

 

“ERISA
Affiliate” means any Person which is treated as a single employer with
the Company or any Subsidiary under subsections (b), (c), (m) or (o) of
Section 414 of the Code.

 

“Escrow Agent” means  SunTrust Bank,
N.A.

 

“Escrow Agreement” means the escrow agreement to be dated as
of the Closing Date, by and among Buyer, Seller and the Escrow Agent, substantially
in the form attached hereto as Exhibit D.

 

“Escrow Fund” means an amount equal to $20,625,000.

 

“Estimated Closing Date Cash” has the meaning specified in Section 2.3(a)(ii).

 

“Estimated Closing Date
Working Capital”
has the meaning specified in Section 2.4(a).

 

“Estimated Deferred Revenue”
has the meaning
specified in Section 2.3(a)(iv).

 

“Estimated Transaction Costs”
has the meaning
specified in Section 2.3(a)(v).

 

6

 

“Excluded Taxes” has the meaning specified in Section 7.1(a)(i).

 

“Expenses” means any and all reasonable
out-of-pocket costs and expenses actually incurred in connection with defending
or asserting any Proceeding incident to any matter indemnified against
hereunder (including court filing fees, court costs, arbitration fees or costs,
witness fees and reasonable fees and disbursements of legal counsel, expert
witnesses, accountants and other professionals).

 

“Filings” has the meaning specified in Section 12.12(b).

 

“Financial Statements” has the meaning specified in Section 4.6(a).

 

“GAAP” means United States generally accepted
accounting principles, consistently applied by the Company.

 

“Gift
Cards and Passes” has the meaning specified in Section 7.7.

 

“Governmental Body” means any foreign, federal, state, local
or municipal or other governmental authority or regulatory body, including any
court, commission, instrumentality, authority, or administrative agency.

 

“Governmental Permits” has the meaning specified in Section 4.17.

 

“Guaranteed Pension Plan” means any
employee pension benefit plan subject to Title IV of ERISA, or a plan subject to the
minimum funding standards of Section 412 of the Code or Section 302
of ERISA.

 

“Guarantor”
has the meaning
specified in the first paragraph of this Agreement.

 

“Hazardous Material” means any waste, pollutant, or hazardous
or toxic substance or waste, as such terms are defined in Environmental Laws
and includes, for purposes of this Agreement, any petroleum or petroleum
wastes.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.

 

“Indebtedness” means the aggregate consolidated
indebtedness of the Company, including, without duplication, (i) any
obligations under any indebtedness for borrowed money (including all
obligations for principal, interest premiums, penalties, fees, expenses,
breakage costs and bank overdrafts thereunder), (ii) any obligations
evidenced by any note, bond, debenture or other debt security, (iii) any
commitment by which a Person assures a financial institution against loss
(including contingent reimbursement obligations with respect to letters of
credit), (iv) any off-balance sheet financing, including synthetic leases
and project financing, (v) all obligations under leases that have been or
should be, in accordance with GAAP, recorded as capital leases, (vi) any
payment obligations in respect of banker’s acceptances or letters of credit, (vii) any
obligations with respect to interest rate swaps, collars, caps and similar
hedging obligations, (viii) all obligations for the deferred and unpaid
purchase price of property or services (other than trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice that are not more than ninety (90) days past due), (ix) any 

 

7

 

obligations
referred to in clauses (i) through (viii) above of any Person which
are either guaranteed or secured by any Encumbrance upon the Company or any
Subsidiary or any of their respective assets or properties and (x) accrued
and unpaid or declared and unpaid interest of any such foregoing obligation.

 

“Indemnified Party” has the meaning specified in Section 10.3.

 

“Indemnitor” has the meaning specified in Section 10.3.

 

“Indemnity Threshold” means an amount equal to $2,750,000.

 

“Intellectual Property” means Copyrights, Patent Rights,
Trademarks and Trade Secrets.

 

“Interim Balance Sheet” has the meaning specified in Section 4.6(a).

 

“Interim Financial Statements” has the meaning specified in Section 4.6(a).

 

“Knowledge of Buyer” means, as to a particular matter, the
actual knowledge of the following persons after reasonable investigation and
inquiry: Kevin Connor and Kelly Schemenauer.

 

“Knowledge of the Company” means, as to a particular matter, the
actual knowledge of the following persons after reasonable investigation and
inquiry: Tony Kerasotes, Dean Kerasotes, Jim DeBruzzi, Tim Johnson, Bill Budig
and Gregg Ferlin.

 

“KTI” has the meaning specified in the
Recitals.

 

“Leased Real Property” has the meaning specified in Section 4.14.

 

“Liability”
means any liability, whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due.

 

“Losses” means any and all liabilities, losses,
costs, settlement payments, awards, judgments, fines, penalties, damages,
expenses, deficiencies or other charges, including such liabilities, losses,
costs, settlement payments, awards, judgments, fines, penalties, damages,
expenses, deficiencies or other charges resulting from, associated with or
comprised of loss of profits, loss of use or revenue and diminution in value,
including reasonable legal fees and expenses, but excluding all other special,
consequential, or punitive damages of any kind, other than any such damages
payable to a third Person.

 

“Material Adverse Effect” means any occurrence, condition, change, event or effect that, individually or in the
aggregate, is or is reasonably likely to be materially adverse to (a) the business, assets,
financial condition or results of operations of Parent, Seller, the Company and
the Subsidiaries (other than with respect to the Retained Assets and the
Retained Liabilities) taken as a whole, or (b) the ability of the Company,
Seller, Parent or any Affiliate (including any direct or indirect equity holder
of Seller) to consummate the transactions 

 

8

 

contemplated
hereby or by any Seller Ancillary Agreement or to perform their respective
obligations hereunder or under any Seller Ancillary Agreement, but shall
exclude any occurrence,
condition, change, event or effect to the extent resulting or arising from: (i) any
change in any Requirement of Law; (ii) any change in interest rates or
general economic conditions in the industry in which the Company and the
Subsidiaries operate or affecting the United States economy in
general; (iii) any change that is generally applicable to the industry in
which Parent, Seller, the Company and the Subsidiaries operate; (iv) any change in GAAP; (v) any outbreak
of hostilities, acts of war, sabotage or terrorism or military actions or any
escalation or material worsening after the date hereof of any such hostilities,
acts of war, sabotage or terrorism or military actions existing or underway as
of the date hereof; (vi) the entry into or
announcement of this Agreement and/or the consummation of the transactions
contemplated hereby; (vii) the taking of any action by Parent, Seller or
the Company required to be taken pursuant to this Agreement (other than any
action taken by Parent, Seller or the Company pursuant to Section 6.4(a)),
or if Buyer fails to consent to the taking of any action that requires Buyer’s
consent under this Agreement, the failure or omission by Parent, Seller or the
Company to take such action; and (viii) any divestures of properties or assets of
the Seller or the Company that are made as required pursuant to Section 6.3(e) in
order for the parties hereto to satisfy the conditions to Closing set forth in
the first sentence of each of Section 8.3 and Section 9.3; provided,
however, that in
the case of each of (i) through (v), inclusive, so long as such effect
does not materially disproportionately affect Seller, the Company or any
Subsidiary in comparison to other participants in the industry in which Seller,
the Company and the Subsidiaries operate.

 

“Material Contract” means any outstanding Contract (whether
in writing or not and whether or not entered into in the ordinary course of
business consistent with past practice, unless otherwise noted below) to which
the Company or any of the Subsidiaries is a party or is bound, or pursuant to
which any assets or properties of the Company or any Subsidiary is subject or
bound, that (a) obligates
or commits the Company or any of the Subsidiaries to expend or otherwise pay an
amount in excess of $100,000 (b) entitles the Company or any of the
Subsidiaries to receive an amount in excess of $100,000, (c) obligates or
commits the Company or any of the Subsidiaries to incur any Indebtedness, (d) restricts
the Company’s or any Subsidiary’s line of business or limits or prevents its
competition with any Person, (e) provides for sharing of profits, revenues
or cash flows, with another Person, (f) subjects any of the Company’s or
any Subsidiary’s properties to an Encumbrance (other than Permitted
Encumbrances), (g) provides for the issue, award or purchase of any
securities of the Company or any of the Subsidiaries (or securities or
obligations that are convertible into or exchangeable or exercisable for
securities of the Company or any of the Subsidiaries), (h) provides for
loans, bonuses, pensions, deferred or incentive compensation, retirement or
severance payments, profit-sharing, insurance or other benefit plans or programs
for any current or former unitholder, stockholder, partner, officer, member,
consultant, director or employee of the Company or any of the Subsidiaries or
relates to any collective bargaining agreement or any other arrangement with
any labor union or employee organization, (i) is an employment agreement,
arrangement or understanding with any current or former unitholder,
stockholder, partner, officer, member, consultant, director or employee of the
Company or any of the Subsidiaries, (j) is a lease agreement pursuant to
which the Company or any Subsidiary leases any real property required to be
disclosed on Schedule 4.14, (k) relates to the purchase or sale of
any material assets, Subsidiary, or business of the Company or any Subsidiary
at any time during the past three (3) 

 

9

 

years (other than
purchases or sales of equipment or other personal property in the ordinary
course of business, consistent with past practice), (l) grants or licenses
to the Company or any of the Subsidiaries any rights in any material
Intellectual Property (other than any agreements pursuant to which the Company
licenses Software commercially available under “shrink-wrap” or “click-through”
license agreements), (m) is an intercompany Contract (involving the
Company or a Subsidiary, as one party, and the Company or another Subsidiary,
as the other party);  (n) involves the Company or a Subsidiary, as
one party, and an Affiliate, officer, director or employee of the Company
or any Subsidiary (including any officers, directors, or employees of Seller,
or any direct or indirect equity holder of Seller and such equity holder’s Affiliates,
but not including the Company or any Subsidiary); (o) is with
any Governmental Body (other than Governmental Permits); (p) grants power
of attorney to any third Person; (q) relates to the licensing of films for
theatrical exhibition where such Contract survives for a period other than such
period related to the display of a particular film; or (r) obligates or
commits the Company or any of the Subsidiaries to receive, expend or otherwise
pay an amount in excess of $100,000 and that is not subject to termination, in
the sole discretion of the Company or a Subsidiary, upon not more than 60 days
notice.  Any reference to a dollar amount
in this definition shall be calculated in the aggregate on an annual basis and
shall include any interest, fees or expenses associated therewith.

 

“Multiemployer Plan” means a “multiemployer plan,” as defined
in Section 4001(a)(3) or 3(37) of ERISA.

 

“Non-Clearance Termination Fee” has the meaning specified in Section 11.3(b).

 

“Outside Date” has the meaning specified in Section 11.1(e).

 

“Owned Real Property” has the meaning specified in Section 4.13.

 

“Parent” has the meaning specified in the first
paragraph of this Agreement.

 

“Patent Rights” means United States and foreign patents
and patent applications, continuations, continuations-in-part, divisions or
reissues.

 

“Payoff Letter” means a written statement from any
holder of Indebtedness to be repaid at Closing, setting forth the amount of
such Indebtedness due or accrued to such Person through the Closing and
acknowledging that upon payment of the amount set forth in such letter at
Closing, such Person will have received all amounts due to such Person from
Seller, the Company and the Subsidiaries, and releasing any and all guarantees
of such Indebtedness and Encumbrances on or against the properties or assets of
Seller, the Company or any Subsidiary that exist under such Indebtedness, in
each case in form and substance reasonably acceptable to Buyer and Seller.

 

“Permitted Acquisition
Proposal”
means any offer, proposal or indication of interest relating to or made in
connection with any proposed issuance, sale, exchange, redemption, conversion
or transfer of capital stock of Parent or Seller after the Closing for
capital raising purposes or as part of any post-Closing recapitalization of
Parent or Seller.

 

10

 

“Permitted Encumbrances” means (i) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, for
which Seller or the Company has appropriate reserves as required by GAAP, as
shown on the Financial Statements, (ii) liens of landlords and liens of
carriers, warehousemen, mechanics and materialmen and other like liens arising
in the ordinary course of business for sums not yet due and payable, (iii) liens
to secure Indebtedness that will be paid off at Closing pursuant to this
Agreement, (iv) Encumbrances expressly identified as Encumbrances on the
Schedules to this Agreement (as the same may be updated pursuant to the terms
of this Agreement), (v) Encumbrances or imperfections on property which
are set forth on or described in documents expressly referred to on Schedule
1.2, (vi) Encumbrances disclosed to Buyer in writing (including
without limitation in any title policy, title commitment, land title survey, or
update to any of the foregoing, delivered or made available to Buyer prior to
the date hereof; provided that, for purposes of this clause (vi), no
Encumbrances caused by Seller or its Affiliates after the date hereof shall be “Permitted
Encumbrances”), (vii) any other Encumbrances or imperfections on property
which, in the aggregate, are not material in amount or do not materially
detract from the value of or materially impair the existing use of the property
affected by such Encumbrance or imperfection and (viii) any Encumbrance
caused directly and solely by Buyer or its agents.

 

“Person” means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or Governmental Body.

 

“Post-Closing Period” has the meaning specified in Section 7.1(a)(ii).

 

“Pre-Closing Period” has the meaning specified in Section 7.1(a)(ii).

 

“Pre-Closing Statement” has the meaning specified in Section 2.4(a).

 

“Preliminary Closing Date
Balance Sheet”
has the meaning specified in Section 2.4(b)(i).

 

“Preliminary Closing Statement” has the meaning specified in Section 2.4(b)(ii).

 

“Proceeding” means any action, lawsuit, proceeding,
investigation or other claim.

 

“Providence” means Providence Equity Partners IV,
L.P. and Providence Equity Operating Partners IV, L.P.

 

“Providence’s Pro Rata Share”
means 61.1% of
any indemnification obligations of Parent or Seller pursuant to Article X.

 

“Purchase Price” has the meaning specified in Section 2.3(a)(i).

 

“Purchase Price Adjustments” has the meaning specified in Section 2.4.

 

11

 

“Real Property” means, collectively, the Owned Real
Property and the Leased Real Property.

 

“Recorded
Intellectual Property” means (a) registered patents and pending patent applications (including provisional
applications); (b) registered trademarks, or service marks, applications
to register trademarks, intent-to-use applications, or other registrations or
applications related to trademarks or service marks; (c) registered
copyrights and applications for copyright registration; and (d) any other
Intellectual Property that is the subject of an application, certificate,
filing, registration or other document issued by, filed with, or recorded by
the United States Patent and Trademark Office, the United States Register of
Copyrights, Network Solutions, Inc. (or other authorized domain name
registration entities) or the corresponding offices of other U.S. and foreign
jurisdictions.

 

“Regulatory Material Adverse
Effect” means
any divestiture of theatres required to be made by Buyer pursuant to Section 6.3(e) that,
individually or in the aggregate, is or is reasonably likely to be materially
adverse to the business, assets, financial condition or results of operations
of Seller, the Company and the Subsidiaries, taken as a whole.  For purposes of determining whether a
Regulatory Material Adverse Effect has occurred, (i) no consideration
shall be given to any divestiture of, or other effect on, any theatre that is a
Retained Asset, (ii) Buyer shall treat the divestiture of any theatres
owned by it or any of its Affiliates as if they were divestitures of theatres
owned by Seller, the Company or any Subsidiary, and (iii) consideration
will be given to any net proceeds (whether in the form of cash or other
property) received by Buyer or its Affiliates or the Company in connection with
any divestiture of theatres required to be made by Buyer pursuant to Section 6.3(e) (or,
if this Agreement is terminated pursuant to Section 11.1(d) or
Section 11.1(e) and any such required divestitures have not
been made, the net proceeds Buyer could reasonably have expected to receive in
connection with any such required divestitures).  The
effect of any such divestitures by Buyer shall be measured by the 2009
operating cash flow of the divested theatres against the consolidated 2009
operating cash flow of the Seller.

 

“Release” means the release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching
or migration of a Hazardous Material into the environment.

 

“Releasees” has the meaning specified in Section 7.5.

 

“Remedial Action” means actions required by any
Environmental Law to (i) clean up, remove, treat or in any other way
address Hazardous Materials in the environment, (ii) prevent the Release
or threatened Release or minimize the further Release of Hazardous Materials or
(iii) investigate and determine if Remedial Action is required, and to
design and implement such Remedial Action, including any necessary
post-remedial investigation, monitoring, operation and maintenance and care.

 

“Retained Assets” has the meaning specified in the
Recitals.

 

“Retained Liabilities” has the meaning specified in the
Recitals.

 

“Retained
Names” has the meaning specified in Section 7.6(a).

 

12

 

“Retained Seller Employees”
has the meaning specified in Section 7.2(b).

 

“Retained Theatre Employee”
means the employees of Seller who are principally employed to provide
services to a Retained Theatre.

 

“Retained Theatres” means each of the theatres identified on Schedule
I as a Retained Asset.

 

“Requirements of Law” means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body, including principles of common
law.

 

“Schedules” means the disclosure schedules delivered
by Seller and the Company to Buyer, which form a part of this Agreement.

 

“Second Request” has the meaning specified in Section 6.3(f).

 

“Securities Act” means the
Securities Act of 1933, as amended, or any successor federal statute, and the rules and
regulations of the Securities and Exchange Commission thereunder, all as the
same shall be in effect at the time.

 

“Seller” has the meaning specified in the first
paragraph of this Agreement.

 

“Seller Ancillary Agreements” means all agreements, instruments and
documents being or to be executed and delivered by any Seller or an Affiliate
of any Seller under this Agreement or in connection herewith, including the
Contribution Agreement, Escrow Agreement, Seller Non-Competition Agreement,
Services Agreement, the Equity Holder Agreements, the Seller License Agreement,
Buyer License Agreement and the Chicago Office Sublease Agreement.

 

“Seller Fundamental Representations”
means those
representations and warranties contained in Sections 4.1 (Organization
and Good Standing), 4.2 (Authorization; Conflicts) (but only to the
extent such representations and warranties are made with respect to the
organizational documents of the Company or any Subsidiary), 4.3
(Enforceability), 4.4 (Capitalization), 4.5 (Subsidiaries), 4.6(e),
(Indebtedness) and 4.24 (No Brokers).

 

“Seller Group Member” means (i) Seller and its Affiliates
(other than the Company and the Subsidiaries after the Closing), (ii) the
directors and officers, partners, members, stockholders, employees, agents or
representatives of Seller and its Affiliates (other than the Company and the
Subsidiaries after the Closing) and (iii) the respective successors and
assigns of each of the foregoing.

 

“Seller Guarantor” means each of Providence Equity Partners
IV, L.P., Providence Equity Operating Partners IV, L.P., Anthony Kerasotes,
Dean Kerasotes, and Victoria Constan.

 

“Seller
License Agreement” means the license agreement to be dated as of the Closing Date, by and
between Buyer and Seller, pursuant to which Seller will, among other 

 

13

 

things, provide
Buyer and its Affiliates with an irrevocable, fully-paid, non-exclusive and
transferable license to use (i) the name “Five Buck Club” in perpetuity in
each market where any theatre acquired by Buyer pursuant to this Agreement is
located, as well as in any market where Buyer or its Affiliates currently, or
at any time in the future, in accordance with the terms of the Buyer
Non-Competition Agreement, owns or operates any theatre, and (ii) the
Retained Names, for a period of 1 year following the Closing Date, on, and in
connection with the management, operation, and advertisement of, any theatre
contributed to the Company and acquired by Buyer on the Closing Date which
bears or uses any Retained Name as of the date of this Agreement.

 

“Seller Non-Competition
Agreement”
has the meaning specified in the Recitals.

 

“Seller Retention Obligations” means (i) all costs, fees and
expenses of the Company and any Subsidiary arising out of or related to any and
all change of control, severance, retention or other transaction bonuses or
payments that are paid or due and payable prior to or at the Closing, and (ii) all
costs, fees and expenses of the Company and any Subsidiary arising out of or
related to any and all change of control, severance, retention or other
transaction bonuses or payments of the Company or any Subsidiary that are due
and payable after the Closing, other than any cash severance amount payable to
a Retained Seller Employee under the Buyer’s Severance Policy and payments or
benefits payable to a Continuing Employee by Buyer or any of its Affiliates
under any plan or agreement of Buyer or any of its Affiliates in which a
Continuing Employee becomes a participant following the Closing.

 

“Seller Unit” has the meaning specified in Section 4.4(b).

 

“Seller
Web Sites” has
the meaning specified in Section 7.8.

 

“Seller’s Dependant FSA Plan” has the meaning specified in Section 7.2(g).

 

“Seller’s Health FSA Plan” has the meaning specified in Section 7.2(g).

 

“Seller’s Pro Rata Share” means 38.9% of any indemnification
obligations of Parent or Seller pursuant to Article X.

 

“Services Agreement” has the meaning specified in Section 6.10.

 

“Software” means computer software programs and
software systems, including all databases, compilations, tool sets, compilers,
higher level “proprietary” languages, related documentation and materials,
whether in source code, object code or human readable form; provided, however,
that Software does not include software that is available generally through
retail stores, distribution networks or is otherwise subject to “shrink-wrap”
or “click-through” license agreements, including any software pre-installed in
the ordinary course of business as a standard part of hardware purchased by the
Company or a Subsidiary.

 

“Straddle Period” means any taxable year or period
beginning before and ending after the Closing Date.

 

14

 

“Subsidiaries” means each of Kerasotes Colorado Cinema
LLC, a Delaware limited liability company and Colorado Cinema Group LLC, a
Delaware limited liability company.

 

“Swap” means the Swap Agreement between Deutsche
Bank AG and Kerasotes Showplace Theatres, LLC dated September 4, 2008.

 

“Swap Termination Costs” means the aggregate of all amounts
payable by Seller or its Affiliates (other than the Company and the
Subsidiaries) in connection with the termination of the Swap, including all
termination, breakage or other fees and expenses arising thereunder or with
respect thereto.

 

“Target Deferred Revenue
Amount”
means, (i) $5,500,000, in the event that the Closing Date is on or prior
to March 31, 2010, and (ii) $4,000,000, in the event that the Closing
Date is after March 31, 2010.

 

“Tax” means (i) any federal, state, local
or foreign income, gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value added, transfer or excise tax, windfall profit, severance,
production, stamp or environmental tax or (ii) any other tax, custom,
duty, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any taxing authority of any Governmental Body.

 

“Tax Return” means any return, report or similar
statement required to be filed (or that is voluntarily filed) with respect to
any Tax (including any attached schedules), including any information return,
claim for refund, amended return or declaration of estimated Tax.

 

“Third-Person Claim” has the meaning specified in Section 10.5(a).

 

“Trademarks” means all registered and unregistered
United States federal, state and foreign trademarks, service marks and trade
names, and pending applications to register the foregoing.

 

“Trade Secrets” means confidential ideas, trade secrets,
know-how, concepts, methods, processes, formulae, reports, data, customer
lists, mailing lists, business plans, or other proprietary information that
provides the owner with a competitive advantage.

 

“Transaction Costs” means (a) all costs, fees and
expenses of the Company, any Subsidiary, Seller, Parent or any Affiliate
(including any direct or indirect equity holder) of any of the foregoing, in
each case to the extent payable by the Company or any Subsidiary, including all
legal, investment banking, and management and advisory fees, costs and expenses,
in each case to the extent incurred in connection with or related to the
transactions contemplated by this Agreement or any Seller Ancillary Agreement; (b) all
Seller Retention Obligations; and (c) 50% of (i) any fees associated
with filings made by the parties pursuant to the terms hereof under the HSR
Act, (ii) any transfer Taxes payable as a result of the consummation of
the transactions contemplated by this Agreement or the Contribution Agreement,
and (iii) all costs, fees or other expenses incurred by any party hereto
or their respective Affiliates to obtain replacement title insurance policies
with respect to any Owned Real Property for which any existing title 

 

15

 

insurance policy
terminates (or is otherwise not transferable to the Company) as a result of the
Contribution (it being acknowledged and agreed that all such replacement title
insurance policies shall be obtained from a reputable insurance provider and on
terms and conditions reasonably equivalent to the policies currently held by
Seller or any of its Affiliates with respect to each parcel of Owned Real
Property).

 

“Unit” means the issued and outstanding
membership unit of the Company.

 

“Updated Schedule” has the meaning specified in Section 6.2(b).

 

“Web
Site Data”  has the meaning specified in Section 7.8.

 

“Working Capital” means Current Assets minus Current
Liabilities.

 

Section 1.2                                   Interpretation. 
For purposes of this Agreement, (i) the words “include”, “includes”
and “including” shall be deemed to be followed by the words “without limitation”,
(ii) the word “or” is not exclusive and (iii) the words “herein”, “hereof”,
“hereby”, “hereto” and “hereunder” refer to this Agreement as a whole.  Unless the context otherwise requires,
references herein: (i) to Articles, Sections, Exhibits and Schedules mean
the Articles and Sections of, and the Exhibits and Schedules attached to, this
Agreement; (ii) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and by this
Agreement; and (iii) to a statute means such statute as amended from time
to time and includes any successor legislation thereto and any regulations
promulgated thereunder.  The Schedules
and Exhibits referred to herein shall be construed with and as an integral part
of this Agreement to the same extent as if they were set forth verbatim herein.  Titles to Articles and headings of Sections
are inserted for convenience of reference only and shall not be deemed a part
of or to affect the meaning or interpretation of this Agreement.

 

ARTICLE II

 

CONTRIBUTION, PURCHASE AND SALE; PURCHASE PRICE

 

Section 2.1                                   Contribution. 
Immediately prior to the Closing, Seller shall (a) contribute,
transfer, convey, assign and deliver to the Company, on a going concern basis,
all of Seller’s right, title and interest in, to and under all of the assets,
rights and properties of Seller of every kind, character and description,
whether tangible or intangible, whether real, personal or mixed, whether
accrued or contingent, and wherever located, which are owned or held as of the
date thereof by Seller, including the equity interests in the Subsidiaries but
excluding the Unit and the Retained Assets (collectively, the “Contributed
Assets”), and (b) transfer and assign, and cause the Company to assume
and agree to pay, perform and fully discharge when due, all Liabilities of
Seller other than the Retained Liabilities (collectively, the “Assumed
Liabilities”) pursuant to the terms of the Contribution Agreement.

 

Section 2.2                                   Purchase and Sale of the
Unit.  Upon the terms and subject to the conditions
of this Agreement, on the Closing Date, Seller shall sell, transfer, assign,
convey and deliver to Buyer, and Buyer shall purchase and accept from Seller,
the Unit, free and clear of all Encumbrances.

 

16

 

Section 2.3                                   Closing Date Payments;
Purchase Price.  (a)  The amount payable by Buyer on the
Closing Date for the Unit (the “Closing Date Payment Amount”) shall be
equal to:

 

(i)                                     Two Hundred and Seventy Five Million
dollars ($275,000,000) in cash (the “Purchase Price”);

 

(ii)                                  plus an amount equal to the estimated amount of Cash as of
the Closing (as determined pursuant to Section 2.4(a)) (the “Estimated
Closing Date Cash”);

 

(iii)                               as applicable, (A) plus the
amount by which Estimated Closing Date Working Capital is greater than
($22,500,000), or (B) minus the amount by which Estimated Closing
Date Working Capital is less than ($27,500,000);

 

(iv)                              minus, the amount, if any, by which the estimated amount of
Deferred Revenue as of the Closing (“Estimated Deferred Revenue”)
exceeds the Target Deferred Revenue Amount;

 

(v)                                 minus an amount equal to the estimated Transaction Costs
(to the extent not paid prior to Closing or included in the calculation of
Estimated Closing Date Working Capital) (the “Estimated Transaction Costs”);

 

(vi)                              minus the Escrow Fund; and

 

(vii)                           plus the Swap Termination Costs.

 

(b)                                 Buyer shall pay the Closing Date Payment
Amount to Seller at Closing in accordance with Section 3.2.

 

Section 2.4                                   Purchase Price Adjustments. 
The Purchase Price is to be adjusted pursuant to the procedures set
forth in Section 2.3 and this Section 2.4 (the “Purchase
Price Adjustments”):

 

(a)                                  Not more than three (3) days prior
to the Closing Date, Seller shall deliver to Buyer a certificate (the “Pre-Closing
Statement”) executed on behalf of Seller by its Chief Executive Officer and
Chief Financial Officer, dated the date of its delivery, stating that there has
been conducted under the supervision of such officers a review of all relevant
information and data then available and setting forth the best estimate by
Seller of (i) Working Capital (the “Estimated Closing Date Working
Capital”), (ii) Estimated Closing Date Cash, (iii) Estimated
Transaction Costs, and (iv) Estimated Deferred Revenue (in the case of
clauses (i), (ii) and (iv), as of 11:59 p.m. Central Standard Time on
the day immediately preceding the Closing Date, provided that all transactions
contemplated by this Agreement occurring on the Closing Date but prior to
Closing, including the payments made pursuant to Sections 3.2(b) and
(c), shall be deemed to have occurred as of 11:58 p.m. Central
Standard Time on the day immediately preceding the Closing Date), and any
adjustment in the Purchase Price required pursuant to Sections 2.3(a)(ii),
(iii), (iv), or (v) all in reasonable detail prepared
in accordance with the Agreed Accounting Principles, as applicable.

 

17

 

(b)                                 As promptly as practicable (but not later
than 30 days) following the Closing Date, Buyer shall:

 

(i)                                     prepare, in accordance with the Agreed
Accounting Principles, a consolidated balance sheet of the Company as of 11:59 p.m.
Central Standard Time on the day immediately preceding the Closing Date (the “Preliminary
Closing Date Balance Sheet”); and

 

(ii)                                  deliver to Seller the Preliminary Closing
Date Balance Sheet and a written statement setting forth in reasonable detail
Buyer’s calculation of (A) Working Capital, (B) Cash, (C) Transaction
Costs, and (D) Deferred Revenue, in the case of clauses (A), (B) and
(D), as of 11:59 p.m. Central Standard Time on the day immediately preceding
the Closing Date (provided that all transactions contemplated by this Agreement
occurring on the Closing Date but prior to Closing, including the payments made
pursuant to Sections 3.2(b) and (c), shall be deemed to have
occurred as of 11:58 p.m. Central Standard Time on the day immediately
preceding the Closing Date (the “Preliminary Closing Statement”).

 

(c)                                  Seller may, within 30 days after the date
of receipt of the Preliminary Closing Date Balance Sheet and Preliminary
Closing Statement, deliver to Buyer a written statement setting forth its
objections thereto, together with a summary of the reasons therefor and
calculations which, in its view, are necessary to eliminate such
objections.  In the event Seller does not
so object within such 30 day period, the Preliminary Closing Date Balance
Sheet, the Preliminary Closing Statement, and the calculations of Working
Capital, Cash, Transaction Costs and Deferred Revenue set forth in the
Preliminary Closing Statement shall be final and binding for purposes of this
Agreement as the “Closing Date Balance Sheet,” the “Closing Statement,”
“Closing Date Working Capital,” “Closing Date Cash,” “Closing
Date Transaction Costs,” and “Closing Date Deferred Revenue”
respectively.  In the event Seller so
objects within such 30-day period, Buyer and Seller shall use their reasonable
efforts to resolve by written agreement (the “Agreed Adjustments”) any
differences as to the Preliminary Closing Date Balance Sheet, the Preliminary
Closing Statement and the calculations of Working Capital, Cash, Transaction
Costs and Deferred Revenue set forth in the Preliminary Closing Statement and,
in the event Seller and Buyer so resolve any such differences, the Preliminary
Closing Date Balance Sheet and Preliminary Closing Statement, and the
calculations of Working Capital, Cash, Transaction Costs and Deferred Revenue
set forth in the Preliminary Closing Statement, shall be final and binding for
purposes of this Agreement as the “Closing Date Balance Sheet,” the “Closing
Statement,” “Closing Date Working Capital,” “Closing Date Cash,” “Closing Date
Transaction Costs,” and “Closing Date Deferred Revenue” respectively, in each
case as adjusted by the Agreed Adjustments. 
In the event any objections raised by Seller are not resolved by Agreed
Adjustments within 15 days after Seller advises Buyer of Seller’s objections,
then Buyer and Seller shall submit the objections that are then unresolved to a
national accounting firm acceptable to both Buyer and Seller, and such firm
(the “Accounting Firm”) shall be directed by Buyer and Seller to resolve
the unresolved objections (solely as to whether any disputed matter had been
determined in a manner inconsistent with the Agreed Accounting Principles and
whether there exist any mathematical errors) as promptly as reasonably
practicable and to deliver written notice to each of Buyer and Seller setting
forth its resolution of the disputed matters. 
The Preliminary Closing Date Balance Sheet and Preliminary Closing
Statement, and the calculations of Working Capital, Cash, Transaction Costs and
Deferred Revenue set forth in the Preliminary Closing Statement, shall be final
and binding for purposes of this Agreement as the “Closing 

 

18

 

Date Balance Sheet,” the “Closing Statement,” “Closing
Date Working Capital,” “Closing Date Cash,” “Closing Date Transaction Costs,”
and “Closing Date Deferred Revenue,” respectively, in each case after giving
effect to any Agreed Adjustments and to the resolution of disputed matters by
the Accounting Firm.

 

(d)                                 The parties hereto shall make available
to Buyer, Seller and, if applicable, the Accounting Firm, such books, records
and other information (including work papers) as any of the foregoing may
reasonably request in order to prepare or review the Preliminary Closing Date
Balance Sheet and Preliminary Closing Statement, respectively, or any matters
submitted to the Accounting Firm.  The
fees and expenses of the Accounting Firm shall be paid 50% by Buyer and 50% by
Seller.

 

Section 2.5                                   Purchase Price Adjustments
Payment.  The Purchase Price shall be subject to
adjustment as follows:

 

(a)                                  Working Capital Adjustment:

 

(i)                                     If Closing Date Working Capital is
greater than ($22,500,000), then:

 

A.           if the Purchase Price was adjusted
downward at Closing pursuant to Section 2.3(a)(iii) (i.e., the
Estimated Closing Date Working Capital was less than ($27,500,000)), the
Purchase Price shall be increased on a dollar for dollar basis by an amount
equal to the amount by which Closing Date Working Capital is greater than the
sum of (1) the Estimated Closing Date Working Capital and (2) $5,000,000;
for purposes of illustration, if Closing Date Working Capital is ($20,000,000),
and the Estimated Closing Date Working Capital was ($35,000,000) resulting in a
downward adjustment to the Purchase Price of $7,500,000, then the Purchase
Price should be increased by $10,000,000 (($20,000,000) - ($30,000,000), which
would negate the $7,500,000 reduction and apply the $2,500,000 increase);

 

B.             if the Purchase Price was adjusted upward
at Closing pursuant to Section 2.3(a)(iii) (i.e., the Estimated
Closing Date Working Capital was greater than ($22,500,000), the Purchase Price
shall be increased or decreased on a dollar for dollar basis by an amount equal
to the amount by which Closing Date Working Capital is greater or less than
Estimated Closing Date Working Capital; for purposes of illustration, if
Closing Date Working Capital is $(20,000,000) and Estimated Closing Date
Working Capital was ($21,000,000), then the Purchase Price shall be adjusted
upward by $1,000,000, and if Closing Date Working Capital is ($22,000,000),
then the Purchase Price shall be adjusted downward by $1,000,000; and

 

C.             if the Purchase Price was not adjusted at
Closing pursuant to Section 2.3(a)(iii), the Purchase Price shall be
increased dollar for dollar by the 

 

19

 

amount by which Closing Date Working Capital exceeds
($22,500,000);

 

(ii)                                  if Closing Date Working Capital is less
than ($27,500,000), then:

 

A.           if the Purchase Price was adjusted upward
at Closing pursuant to Section 2.3(a)(iii) (i.e., the Estimated
Closing Date Working Capital was greater than ($22,500,000), the Purchase Price
shall be reduced on a dollar for dollar basis by an amount equal to the amount
by which Closing Date Working Capital is less than the amount equal to (1) the
Estimated Closing Date Working Capital minus (2) $5,000,000; for purposes
of illustration, if Closing Date Working Capital is ($35,000,000), and the
Estimated Closing Date Working Capital was ($15,000,000) resulting in an upward
adjustment to the Purchase Price of $7,500,000, then the Purchase Price should
be decreased by $15,000,000 (($35,000,000) - ($20,000,000), which would negate
the $7,500,000 increase and apply the $7,500,000 reduction);

 

B.             if the Purchase Price was adjusted
downward at Closing pursuant to Section 2.3(a)(iii) (i.e., the
Estimated Closing Date Working Capital was less than ($27,500,000), the
Purchase Price shall be increased or decreased on a dollar for dollar basis by
an amount equal to the amount by which Closing Date Working Capital is greater
or less than Estimated Closing Date Working Capital; for purposes of
illustration, if Closing Date Working Capital is $(28,000,000) and Estimated
Closing Date Working Capital was ($29,000,000), then the Purchase Price shall
be adjusted upward by $1,000,000, and if Closing Date Working Capital is
($30,000,000), then the Purchase Price shall be adjusted downward by
$1,000,000; and

 

C.             if the Purchase Price was not adjusted at
Closing pursuant to Section 2.3(a)(iii), then the Purchase Price shall be
decreased dollar for dollar by the amount by which Closing Date Working Capital
is less than ($27,500,000); and

 

(iii)                               if Closing Date Working Capital is in the
range of ($22,500,000) and ($27,500,000), then:

 

A.           if the Purchase Price was adjusted upward
at Closing pursuant to Section 2.3(a)(iii), then the Purchase Price
shall be reduced by the amount of such upward adjustment; and

 

B.             if the Purchase Price was adjusted
downward at Closing pursuant to Section 2.3(a)(iii), then the
Purchase Price shall be increased by the amount of such downward adjustment.

 

(b)                                 Cash Adjustment: (i) If Estimated Closing Date Cash
exceeds Closing Date Cash, then the Purchase Price shall be decreased on a
dollar-for-dollar basis by an amount 

 

20

 

equal to such deficit, and (ii) if Closing Date
Cash exceeds Estimated Closing Date Cash, then the Purchase Price shall be
increased on a dollar-for-dollar basis by an amount equal to such excess.

 

(c)                                  Transaction Cost
Adjustment: (i) If
Estimated Transaction Costs exceed Closing Date Transaction Costs, then the
Purchase Price shall be increased on a dollar-for-dollar basis by an amount
equal to such excess, and (ii) if Closing Date Transaction Costs exceed
Estimated Transaction Costs, then the Purchase Price shall be reduced on a
dollar-for-dollar basis by an amount equal to such deficit.

 

(d)                                 Deferred Revenue
Adjustment: In
the event that (i) Estimated Closing Date Deferred Revenue exceeds Closing
Date Deferred Revenue, then the Purchase Price shall be increased by an amount
equal to such excess, provided that in no event shall any adjustment pursuant
to this Section 2.5(d) exceed the amount by which the Purchase
Price was decreased pursuant to Section 2.3(a)(iv), and (ii) Closing
Date Deferred Revenue exceeds Estimated Closing Date Deferred Revenue, then the
Purchase Price shall be decreased by an amount equal to such excess.

 

(e)                                  If the aggregate amount by which the
Purchase Price is required to be increased pursuant to Sections 2.5(a), (b),
(c) and (d) is greater than the aggregate amount by
which the Purchase Price is required to be decreased pursuant to Sections
2.5(a), (b), (c), and (d), Buyer shall pay to Seller
by wire transfer of immediately available funds an amount equal to such excess,
promptly, but in any case within five (5) Business Days following such
determination.  If the aggregate amount
by which the Purchase Price is required to be increased pursuant to Sections
2.5(a), (b), (c) and (d) is less than the
aggregate amount by which the Purchase Price is required to be decreased
pursuant to Sections 2.5(a), (b), (c), and (d) Seller
shall pay to Buyer by wire transfer of immediately available funds an amount
equal to such deficit, promptly, but in any case within five (5) Business
Days following such determination; provided, however, that Buyer
may, in its sole discretion, direct the Escrow Agent to pay such amount to
Buyer out of the Escrow Fund in accordance with the terms of the Escrow
Agreement.

 

Section 2.6                                   Allocation of Purchase
Price. Within
30 days following completion of the Closing Date Balance Sheet, Buyer and
Seller shall work together in good faith to prepare a schedule (the “Allocation
Schedule”) allocating the Purchase Price (as adjusted pursuant to Section 2.4
and including any other consideration paid to Seller, including the Assumed
Liabilities) among the assets of the Company. 
Buyer and Seller each agrees to file Internal Revenue Service Form 8594,
and all federal, state, local and foreign Tax Returns, in accordance with the
Allocation Schedule. Buyer and Seller each agrees to provide the other promptly
with any other information required to complete Form 8594.

 

Section 2.7                                   Withholding. Buyer (and any other Person required to
withhold any Tax with respect to any payment of Purchase Price or other payment
made under this Agreement) shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement such
amounts as required to be deducted or withheld therefrom under any provision of
U.S. federal, state, local or foreign Tax law. 
To the extent such amounts are so deducted or withheld, such amounts
shall be treated for all purposes under this 

 

21

 

Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.

 

ARTICLE III

 

CLOSING

 

Section 3.1                                   Closing Date. 
The Closing shall be consummated on a date and at a time agreed upon by
Buyer and Seller, but in no event later than the second Business Day after the
conditions set forth in Articles VIII and IX have been satisfied
or waived (to the extent permitted), at the offices of Sidley Austin LLP, One
South Dearborn Street, Chicago, Illinois, or at such other time and place as
shall be agreed upon by Buyer and Seller. 
The time and date on which the Closing is actually held is referred to
herein as the “Closing Date.”

 

Section 3.2                                   Payments on the Closing
Date.  At the Closing, Buyer shall pay:

 

(a)                                  to Seller, an amount equal to the Closing
Date Payment Amount by wire transfer of immediately available funds to the bank
account(s) identified by Seller in writing on or before the Closing Date; provided,
however, that Seller shall be entitled to direct Buyer to pay a portion
of the Closing Date Payment Amount to any third Persons to satisfy the payment
of the Adjustment Indebtedness and the Swap Termination Costs, in each case as
set forth in any applicable Payoff Letters with respect to such Adjustment
Indebtedness or Swap Termination Costs (provided that copies of such Payoff
Letters shall be delivered to Buyer not less than 2 Business Days prior to
Closing);

 

(b)                                 to such account or accounts as Seller
shall specify, an amount sufficient to pay in full the aggregate Estimated
Transaction Costs, to the extent not paid prior to Closing or included in the
calculation of Estimated Closing Date Working Capital; and

 

(c)                                  to the Escrow Agent, the Escrow Fund by
wire transfer of immediately available funds to the bank account(s) identified
in the Escrow Agreement.

 

Section 3.3                                   Buyer’s Additional Closing
Date Deliveries.  Subject to fulfillment or waiver (where
permissible) of the conditions set forth in Article VIII, at the
Closing, Buyer shall deliver to Seller all of the following:

 

(a)                                  a copy of Buyer’s Certificate of
Incorporation certified as of a recent date by the Secretary of State of the
State of Delaware;

 

(b)                                 a certificate of good standing of Buyer
issued as of a recent date by the Secretary of State of the State of Delaware;

 

(c)                                  a certificate of the secretary or an
assistant secretary of Buyer, dated the Closing Date, in form and substance
reasonably satisfactory to Seller, as to: (i) no amendments to the
Certificate of Incorporation of Buyer since the date of the certificate
specified in clause (a) above; (ii) the By-laws of Buyer in effect as
of the Closing Date; and (iii) the resolutions of the board of directors
of Buyer authorizing the execution and performance of this Agreement, each 

 

22

 

Buyer Ancillary Agreement to which Buyer is a party
and the transactions contemplated hereby and thereby;

 

(d)                                 the certificate contemplated by Section 9.1,
duly executed by a duly authorized officer of Buyer and Guarantor; and

 

(e)                                  each other Buyer Ancillary Agreement to
which Buyer is a party, duly executed by Buyer.

 

Section 3.4                                   Seller’s Closing Date
Deliveries.  Subject to fulfillment or waiver (where
permissible) of the conditions set forth in Article IX, at the
Closing, Seller shall deliver to Buyer all of the following:

 

(a)                                  a copy of the Certificate of Formation of
the Company certified as of a recent date by the Secretary of State of the
State of Delaware;

 

(b)                                 certificates of good standing of Seller
and the Company issued as of a recent date by the Secretary of State of the
State of Delaware;

 

(c)                                  a certificate of the secretary or an
assistant secretary of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, as to: (i) no amendments to
the Certificate of Formation of the Company since the date specified in clause
(a); (ii) the Limited Liability Company Agreement of the Company in effect
as of the Closing Date; and (iii) the resolutions of the Board of Managers
of the Company authorizing the execution and performance of this Agreement,
each Seller Ancillary Agreement to which the Company or any Subsidiary is a
party and the transactions contemplated hereby and thereby;

 

(d)                                 a certificate of the secretary or an
assistant secretary of Seller, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer, as to: (i) the Certificate of Formation
of Seller in effect as of the Closing Date; (ii) the Third Amended and
Restated Limited Liability Company Agreement of Seller in effect as of the
Closing Date; and (iii) the resolutions of the Board of Managers of Seller
authorizing the execution and performance of this Agreement, each Seller
Ancillary Agreement to which Seller is a party and the transactions
contemplated hereby and thereby;

 

(e)                                  all consents, waivers or approvals
required to be obtained by the Company with respect to the consummation of the
transactions contemplated by this Agreement or any Seller Ancillary Agreement
and set forth on Schedule 3.4(e);

 

(f)                                    the certificate contemplated by Section 8.1,
duly executed by a duly authorized officer of Parent, the Company or Seller, as
applicable;

 

(g)                                 the written resignations of each manager
of the Company’s and each Subsidiary’s Board of Managers;

 

(h)                                 [Intentionally omitted];

 

23

 

(i)                                     Payoff Letters with respect to all
Indebtedness to be repaid at Closing as set forth on Schedule 3.4(i),
including under the Swap and the
Third Amended and Restated Credit Agreement, dated as of October 29, 2004,
among the Company, Seller and the other parties appearing on the signature pages thereto;

 

(j)                                     each other Seller Ancillary Agreement to
which the Company, Seller or any direct or indirect equity holder of Seller is
a party, duly executed by Seller, the Company, and/or such other parties, as
applicable;

 

(k)                                  a certificate representing the Unit, duly
endorsed for transfer or with unit powers affixed thereto executed in blank in
proper form for transfer;

 

(l)                                     a certificate, duly executed and
acknowledged, in form and substance reasonably satisfactory to the Buyer, to
the effect that Seller is not a foreign Person for purposes of Sections 897 and
1445 of the Code; and

 

(m)                               all books and records of Parent, Seller,
the Company and each Subsidiary except as set forth on Schedule I
hereto.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER

 

As an inducement to Buyer
to enter into this Agreement and to consummate the transactions contemplated
hereby, except as set forth on the Schedules, Parent and Seller hereby jointly
and severally represent and warrant to Buyer, as of the date hereof, as
follows:

 

Section 4.1                           Organization
and Good Standing.

 

(a)                                  Parent is a limited liability company
duly organized, validly existing and in good standing in the State of Delaware,
with full limited liability company power to own, lease and operate its assets
and properties and carry on its business as presently owned or conducted or
proposed to be conducted.

 

(b)                                 Seller is a limited liability company
duly organized, validly existing and in good standing in the State of Delaware,
with full limited liability company power to own, lease and operate its assets
and properties and carry on its business as presently owned or conducted or
proposed to be conducted.  Seller is licensed or qualified to transact
business and is in good standing as a foreign limited liability company in each
jurisdiction listed on Schedule 4.1(b). 
Seller is not required to be so qualified and authorized to do business
in any jurisdiction other than those listed on Schedule 4.1(b), except
where the failure to so qualify would not, individually or in the aggregate,
have or reasonably be expected to have a Material Adverse Effect.

 

(c)                                  The Company is a limited liability
company duly organized, validly existing and in good standing in the State of
Delaware, with full limited liability company power to own, lease and operate
its assets and properties and carry on its business as presently owned or
conducted or proposed to be conducted. 
As of the Closing Date, the Company shall be licensed 

 

24

 

or qualified to transact business and shall be in good
standing as a foreign limited liability company in each jurisdiction listed on Schedule
4.1(c).  As of the date hereof, the
Company is not required to be so qualified and authorized to do business in any
foreign jurisdiction, and as of the Closing, the Company will not be required
to be so qualified and authorized to do business in any jurisdiction other than
those listed on Schedule 4.1(c), except where the failure to so qualify
would not, individually or in the aggregate, have or reasonably be expected to
have a Material Adverse Effect.

 

(d)                                 Each Subsidiary is a limited liability
company duly organized, validly existing and in good standing in the State of
Delaware, with full limited liability company power to own, lease and operate
its assets and properties and carry on its business as presently owned or
conducted or proposed to be conducted.  
Each Subsidiary is licensed or qualified to transact business and is in
good standing as a foreign limited liability company in each jurisdiction
listed on Schedule 4.1(d).  No
Subsidiary is required to be so qualified and authorized to do business in any
jurisdiction other than those listed on Schedule 4.1(d), except where
the failure to so qualify would not, individually or in the aggregate, have or
reasonably be expected to have a Material Adverse Effect.

 

(e)                                  Prior to the date hereof, Seller has
delivered or made available to Buyer true and complete copies of the
certificates of formation, limited liability company agreements (or similar
organizational documents), minute books, and other organizational documents of
each of Parent, Seller, the Company, and the Subsidiaries, and any and all
equity holders or members agreements, voting agreements, registration rights
agreements, and any similar agreements, in each case with respect to Parent,
Seller, the Company or any Subsidiary, to which any of Parent, Seller, the
Company, any Subsidiary, or any of their respective Affiliates or equity
holders are party, in each case as amended through the date of this Agreement.

 

Section 4.2                                   Authorization; Conflicts.

 

(a)                                  The execution, delivery and performance
by Parent of this Agreement and each Seller Ancillary Agreement to which it is
a party (i) are within Parent’s limited liability company power and
authority, (ii) have been duly authorized by all necessary limited
liability company and equity holder actions and proceedings, (iii) do not
and will not require the approval or consent of, or any filing with, any
Governmental Body, except in connection, or in compliance, with the provisions
of the HSR Act and such approvals, consents and filings set forth on Schedule
4.2(a), and (iv) do not and will not (A) conflict with, result in
a violation of, or result in a breach of the terms, conditions or provisions
of, (B) constitute a default under (whether with or without the passage of
time, the giving of notice or both), (C) result in the creation of any
Encumbrance (other than Permitted Encumbrances) upon the properties or assets
of Seller, the Company or any Subsidiary (or the equity interests in the
Company held by Seller or in Seller held by Parent) pursuant to, or (D) give
any third party the right to modify, terminate or accelerate any obligation
under (x) the Third Amended and Restated Limited Liability Company
Agreement of Parent (or similar organizational documents), (y) any
Requirements of Law to which Parent or its properties or assets is subject or
bound, or (z) any Contract to which Parent or its properties or assets is
subject or bound, except, in the case of clauses (y) and (z), for any such
conflicts, defaults, creations, rights, violations or requirements that would
not, 

 

25

 

individually or in the aggregate, adversely affect, or
reasonably be expected to adversely affect, Seller, the Company and the
Subsidiaries, taken as a whole, in any material respect.

 

(b)                                 The execution, delivery and performance
by Seller and the Company of this Agreement and each Seller Ancillary Agreement
to which each is a party (i) are within each party’s respective limited
liability company power and authority, (ii) have been duly authorized by
all necessary limited liability company and equity holder actions and
proceedings, (iii) do not and will not require the approval or consent of,
or any filing with, any Governmental Body, except in connection, or in
compliance, with the provisions of the HSR Act and such approvals, consents and
filings set forth on Schedule 4.2(b), and (iv) do not and will not (A) conflict
with, result in a violation of, or result in a breach of the terms, conditions
or provisions of, (B) constitute a default under (whether with or without
the passage of time, the giving of notice or both), (C) result in the
creation of any Encumbrance (other than Permitted Encumbrances) upon the
properties or assets of Seller, the Company or any Subsidiary (or the equity
interests in the Company held by Seller or in Seller held by Parent) pursuant
to, or (D) give any third party the right to modify, terminate or
accelerate any obligation under (x) the Limited Liability Company
Agreement (or similar organizational documents) of Seller, the Company or any
Subsidiary, (y) any Requirements of Law to which Seller, the Company or
any Subsidiary, or any of their respective properties, assets or employees, is
subject or bound, or (z) any Material Contract, except, in the case of
clauses (x) and (y), for any such conflicts, defaults, creations, rights,
violations or requirements that would not, individually or in the aggregate,
adversely affect, or reasonably be expected to adversely affect, Seller, the
Company and the Subsidiaries, taken as a whole, in any material respect.

 

Section 4.3                                   Enforceability.  The execution,
delivery and performance by Parent, Seller and the Company of this Agreement
and each Seller Ancillary Agreement to which each is a party will result in
valid and binding obligations of Parent, Seller and the Company, respectively,
enforceable against each in accordance with the respective terms and provisions
hereof and thereof, except to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
Requirements of Law relating to creditors’ rights generally and subject to
general principles of equity (regardless of whether such enforceability is
considered in a Proceeding in equity or at law).

 

Section 4.4                                   Capitalization.

 

(a)                                  Parent is authorized to
issue 75,000 Class A units, 175,000 Class B units and
10,417 Class C units, each of which has been issued and is outstanding as
of the date hereof and is held and beneficially owned by the record holders
thereof, free and clear of all Encumbrances. 
Each holder of units of Parent, and the amount and class of units of
Parent held by each holder, are set forth on Schedule 4.4(a).  Other than the Class A units, Class B units,
and Class C units, there are no equity securities or other securities of
Parent that have been issued or are outstanding.  Each of the Class A units, Class B
units and Class C units has been duly authorized and validly issued, is
fully paid and non-assessable and has been offered, issued, sold and delivered
to the record holders thereof in compliance with all applicable Requirements of
Law, including the Securities Act.

 

26

 

(b)                                 Seller is authorized to issue one
membership unit (the “Seller Unit”), which has been issued and is
outstanding as of the date hereof and is held of record and beneficially owned
by Parent, free and clear of all Encumbrances. 
Other than the Seller Unit, no equity securities or other securities of
Seller have been issued or are outstanding. 
The Seller Unit is owned of record and beneficially by Parent, free and
clear of all Encumbrances, has been duly authorized and validly issued, is
fully paid and non-assessable and has been offered, issued, sold and delivered
to Parent in compliance with all applicable Requirements of Law, including the
Securities Act.

 

(c)                                  The Company is authorized to issue one
membership unit, which has been issued and is outstanding as of the date hereof
and is held of record and beneficially owned by Seller, free and clear of all
Encumbrances.  Other than the Unit, no equity
securities or other securities of the Company have been issued or are
outstanding.  The Unit is owned of record
and beneficially by Seller, free and clear of all Encumbrances, has been duly
authorized and validly issued, is fully paid and non-assessable and has been
offered, issued, sold and delivered to Seller in compliance with all applicable
Requirements of Law, including the Securities Act.

 

(d)                                 Except for this Agreement, there are no
agreements, arrangements, warrants, options, puts, calls, preemptive or other
rights, subscriptions, instruments convertible into or exchangeable for, or
other commitments, plans or understandings of any character assigned or granted
by Parent, Seller, the Company or any Subsidiary or to which Parent, Seller,
the Company or any Subsidiary is a party, relating to the issuance, sale,
purchase, redemption, conversion, exchange, registration, voting or transfer of
any of (i) the Class A units, Class B units, Class C units
of Parent, (ii) the Seller Unit, (iii) the Unit, or (iv) any
other securities of Parent, Seller, the Company or the Subsidiaries.  No bonds, debentures, notes or other
indebtedness of Parent, Seller, the Company or the Subsidiaries entitling the
holders thereof to vote on any matters on which the holders of voting equity of
Parent, Seller, the Company or the Subsidiaries may vote are issued and
outstanding.  There are no outstanding or
authorized equity appreciation, phantom equity, profit participation or other
similar rights with respect to capital units of, or other equity or voting
interests in, Parent, Seller, the Company or any Subsidiary.

 

Section 4.5                                   Subsidiaries. 
Other than
the Company and the Subsidiaries, Seller does not have any direct or indirect
subsidiaries and does not hold of record or beneficially own, directly or
indirectly through any other Person, and has not agreed to purchase or
otherwise acquire, the capital stock or other equity or voting interests of, or
any interest convertible into or exchangeable for, such capital stock or such equity
or voting interests of, any Person.  Schedule
4.5 sets forth for each Subsidiary the amount of its authorized and
outstanding membership interests, and there are no other membership interests
or other securities of any Subsidiary issued or outstanding.  As of the date hereof, all of the outstanding
membership interests of each Subsidiary are owned of record and beneficially by
Seller, free and clear of all Encumbrances, have been duly authorized and
validly issued, are fully paid and non-assessable, and have been offered,
issued, sold and delivered to Seller in compliance with all applicable
Requirements of Law, including the Securities Act.  As of the Closing, all of the outstanding
membership interests of each Subsidiary will be owned of record and beneficially
by the Company, free and clear of all Encumbrances, will have been duly
authorized and validly issued, will be fully paid and non-assessable, and will
have been offered, issued, sold and delivered to the Company in compliance with
all applicable Requirements of Law, including the Securities Act.  Parent does 

 

27

 

not have any direct or indirect subsidiaries other
than Seller, the Company and the Subsidiaries and does not hold of record or
beneficially own, directly or indirectly through any other Person, and has not
agreed to purchase or otherwise acquire, the capital stock or other equity or
voting interests of, or any interest convertible into or exchangeable for, such
capital stock or such equity or voting interests of, any Person other than
Seller, the Company and the Subsidiaries.

 

Section 4.6                                   Reports and Financial
Statements; Undisclosed Liabilities.

 

(a)                                  Attached hereto as Schedule 4.6(a) are
(i) the audited consolidated balance sheet of Seller as of December 31,
2008, December 31, 2007, and December 31, 2006 and the related
audited consolidated statements of income, retained earnings and cash flows for
the fiscal years ended December 31, 2008, December 31, 2007, and December 31,
2006 (the “Audited Financial Statements”) and (ii) the unaudited
consolidated balance sheet (the “Interim Balance Sheet”) of Seller as of
October 31, 2009 (the “Balance Sheet Date”) and the related
consolidated statements of income, retained earnings and cash flows for the
nine months ended October 31, 2009 (the “Interim Financial Statements”,
and together with the Audited Financial Statements, the “Financial
Statements”).

 

(b)                                 The Financial Statements (i) have
been prepared from, and are consistent with, the books and records of Seller
(which, to the extent transferred to Buyer hereunder, are true and correct in
all material respects) and have been prepared in accordance with GAAP, applied
on a basis consistent with prior periods except as otherwise stated therein and
except, with respect to the Interim Financial Statements, for the absence of
footnotes and normal year-end audit adjustments and (ii) present fairly,
in all material respects, the consolidated financial position of Seller as of
the dates indicated and the consolidated results of operations and cash flows
of Seller for the respective periods covered thereby.

 

(c)                                  Neither Seller
nor the Company has any material Liabilities except for (i) Liabilities
that are required under GAAP to be reflected or reserved against in the
Financial Statements, (ii) Liabilities set forth in the Financial
Statements, (iii) Liabilities that have arisen in the ordinary and usual
course of the Seller’s business consistent (in amount and kind) with past
practices (none of which is a Liability resulting from breach of Contract,
breach of warranty, tort, infringement claim or lawsuit or violation of any
Requirements of Law) since the Balance Sheet Date, (iv) Liabilities under
the Material Contracts set forth on Schedule 4.12(a), and (v) Liabilities set forth on Schedule
4.6(c).

 

(d)                                 Seller maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i) transactions
engaged in by Seller or any of the Subsidiaries are executed in material
compliance with the general policies of Seller and the Subsidiaries and/or the
general or specific authorizations of management of Seller and the
Subsidiaries, (ii) access to assets of Seller and the Subsidiaries is
permitted only in accordance with the general policies of Seller and the
Subsidiaries and/or the general or specific authorizations of management of
Seller and the Subsidiaries, and (iii) all intercompany transactions,
charges and expenses among or between Seller, any of the Subsidiaries, Parent
and/or their respective Affiliates are accurately reflected at fair arms’
length value on the books and records of Seller and the Subsidiaries.

 

28

 

(e)                                  All Indebtedness of Seller, the Company
and the Subsidiaries is set forth on Schedule 4.6(e).

 

Section 4.7                                   Absence of Certain
Developments.  Except for entering into this Agreement and
the Seller Ancillary Agreements, from the Balance Sheet Date until the date of
this Agreement, neither the Company, Seller nor any Subsidiary has, whether or
not in the ordinary course of business consistent with past practice, done any
of the following:

 

(a)                                  declared, set aside, paid to a reserve
fund or made any dividend of cash or property or any other distribution in
respect of the Seller’s, Company’s or any of the Subsidiaries’ securities;

 

(b)                                 purchased, redeemed or otherwise retired
any securities of Seller, the Company or any of the Subsidiaries, directly or
indirectly;

 

(c)                                  implemented a material increase in the
base compensation, commission compensation or bonuses of Seller’s, the Company’s
or any of the Subsidiaries’ directors, officers, members or employees, except
for normal periodic increases in the ordinary course of business, consistent
with past practice;

 

(d)                                 suffered any substantial damage,
destruction or other casualty loss, or forfeiture of, any property or assets,
whether or not covered by insurance, or waived any valuable right or cancelled
any material Indebtedness;

 

(e)                                  except as set forth on Schedule 4.7(e),
entered into, amended or terminated any Material Contract, or had any Contract
of a type that would be classified as a “Material Contract” terminated by a
third party;

 

(f)                                    made any change in accounting procedures,
policies or practices, except as required by GAAP;

 

(g)                                 entered into any agreement or
understanding to do any of the foregoing; or

 

(h)                                 taken any action of the
type prohibited by Section 6.4.

 

Section 4.8                                   Title to Assets; Liens.  Except for
assets disposed of in accordance with the terms of this Agreement, as of the
date hereof, Seller or a Subsidiary has, and as of the Closing Date, the
Company or a Subsidiary will have, good and marketable title to the following,
in each case free and clear of all Encumbrances, except for Permitted
Encumbrances: (i) all of the material assets reflected on the Closing Date
Balance Sheet and (ii) each material item of equipment and other tangible
personal property reflected on the Interim Financial Statements as owned by
Seller or a Subsidiary.

 

Section 4.9                                   Transactions with Affiliates.  Except for
those transactions or agreements set forth on Schedule 4.9 (“Affiliate
Transactions”), (i) neither Parent, Seller, the Company nor any
Subsidiary is indebted to any director, officer, member, unitholder,
stockholder, employee or consultant of or to Parent, Seller, the Company or to
any Affiliate of Parent, Seller or the Company except with respect to amounts
due as normal salaries, wages or 

 

29

 

reimbursement of ordinary business expenses or routine
employee advances for expenses, (ii) no director, officer, member, direct
or indirect unitholder, stockholder, employee or consultant of or to Parent,
Seller, the Company or any Subsidiary, nor any Affiliate of Parent, Seller or
the Company, is now indebted to Parent, Seller or the Company or any
Subsidiary, except for business expense advances incurred in the ordinary
course of business consistent with past practices, (iii) neither Parent,
Seller, the Company, any Subsidiary nor any of their respective Affiliates
holds of record or beneficially owns, directly or indirectly, any securities of
any Person with which Parent, Seller, the Company or a Subsidiary had a vendor,
customer, service provider, consulting, creditor, supplier, representative or
other business relationship, and (iv) neither Parent nor any of its
Affiliates (other than Seller, the Company or any Subsidiary, but including its
or their direct or indirect equity holders) (A) have, own, or lease, or
have had, owned, or leased, any economic or other interest in any asset,
tangible or intangible, that is used by or intended for use by Seller, the
Company, any Subsidiary, or any of their respective employees in carrying out
the business of Seller, the Company or any Subsidiary, or (B) provides any
services to, or is party to any Contract or policies the benefits or burdens of
which are for or borne by Seller, the Company, any Subsidiary, or any of their
respective employees.

 

Section 4.10                            Insurance.  A list of all
policies of title, liability, fire, worker’s compensation and other forms of
insurance (including bonds) insuring Parent’s, Seller’s and the Subsidiaries’
properties, assets, operations and employees as of the date hereof is set forth
on Schedule 4.10.  As of the date
of this Agreement, all such policies are in full force and effect.  Neither Parent, Seller nor any Subsidiary is
in material default with respect to its obligations under any such insurance
policy.  Each such insurance policy (a) is
legal, valid, binding and enforceable as to Seller or a Subsidiary, as
applicable, and to the Company’s Knowledge, the other Persons that are parties
thereto and (b) will be legal, valid, binding, enforceable as to the
Company or a Subsidiary, as applicable, and to the Company’s Knowledge, the
other Persons named as parties thereto, and in full force and effect on
identical terms, immediately following the consummation of the transactions
contemplated hereby and by any Seller Ancillary Agreement.  Schedule 4.10 attached hereto sets
forth a list of all material claims, if any, made by Parent, Seller or any
Subsidiary since January 1, 2007 against an insurer in respect of coverage
under an insurance policy listed or required to be listed on Schedule 4.10.  There have been no denials of claims or
reservation of rights letters with regard to such claims.  Except as set forth on Schedule 4.10
attached hereto, neither Parent, Seller nor any Subsidiary has and, since January 1,
2007 neither Parent, Seller not any Subsidiary has had (or been subject to),
any self-insurance or co-insurance programs.

 

Section 4.11                            Tax Matters.

 

(a)                                  None of the Company or any Subsidiary has
ever elected to be treated as an association taxable as a corporation for U.S.
federal, state and local tax purposes, and each of the Company and the
Subsidiaries has, at all times since its formation, been treated as an entity
disregarded from its owner for U.S. federal, state and local income tax
purposes.

 

(b)                                 The Company and each Subsidiary has filed
all material Tax Returns and all related reports that are required by
applicable law to be filed with any foreign, federal, provincial, state or
local Governmental Body.  All material
Taxes of the Company and any Subsidiary and any other Taxes with respect to the
Retained Assets (the “Covered Taxes”)

 

30

 

(whether or not shown to be due on such Tax Returns)
have been paid in full.  No material Tax
Return filed by the Company or any Subsidiary has been audited during the past
three (3) years and, to the Knowledge of the Company, no audit or review
has been threatened in writing with respect to such Tax Returns.

 

(c)                                  None of the Company nor any Subsidiary
has been notified in writing of any deficiencies or assessments in connection
with any Tax Return of the Company or any Subsidiary, or relating to Covered Taxes
and, to the Knowledge of the Company; there are no pending Tax audits and no
waivers of statutes of limitations have been given or requested with respect to
the Company or the Subsidiaries, or relating to Covered Taxes.

 

(d)                                 None of the Company nor any Subsidiary
has incurred any material Liability for Taxes from and after the Balance Sheet
Date other than Taxes incurred in the ordinary course of business consistent
with previous years and past practices.

 

(e)                                  The Company and each Subsidiary has
complied in all material respects with all applicable laws relating to the
collection or withholding of Taxes (such as sales Taxes or withholding of Taxes
from the wages of employees or payments to other third parties).

 

(f)                                    No claim has ever been made in writing by
any Taxing authority in a jurisdiction in which the Company or any Subsidiary
does not file Tax Returns that any such Person is or may be subject to taxation
by that jurisdiction.

 

(g)                                 None of the Company nor any Subsidiary
has earned income or gain that (i) has been accrued or accounted for
financial accounting purposes, or that is reflected on the Financial Statements
and (ii) has been deferred and will be recognized after the Closing Date
for Tax purposes.

 

(h)                                 None of the Company nor any Subsidiary is
a party to any Tax sharing indemnity or similar agreement allocating Tax
Liability that will not be terminated on the Closing Date without any future
Liability to the Company or Subsidiary, as applicable (including for past
Taxes).

 

(i)                                     To the Knowledge of the Company, none of
the assets of the Company or any Subsidiary are (i) tax-exempt use
property under Section 168(h) of the Code; (ii) tax-exempt bond
financed property under Section 168(g) of the Code; (iii) limited
use property under Revenue Procedure 2001-28; or (iv) treated as owned by
any Person under Section 168 of the Code.

 

(j)                                     Except as set forth on Schedule
4.11(j), the Company nor any Subsidiary has any Liability under any
unclaimed property, escheat or similar Requirements of Law.

 

Section 4.12                            Material Contracts and
Obligations.

 

(a)                                  Attached hereto as Schedule 4.12(a) is
a true, complete and accurate list of all Material Contracts as of the date
hereof.

 

31

 

(b)                                 All Material Contracts required to be
disclosed pursuant to this Section 4.12 are valid, binding and in
full force and effect as to Seller, the Company or a Subsidiary, as applicable,
and to the Company’s Knowledge, the other Persons named as parties
thereto.  Neither Seller, the Company nor
any Subsidiary nor, to the Company’s Knowledge, any other party thereto, is in
material breach or violation of, or material default under, nor is there any
reasonable basis for a claim of such breach, violation or default by Seller,
the Company or a Subsidiary or, to the Company’s Knowledge, any other party
thereto, under the terms of any such Material Contract.  No event has occurred that constitutes or,
with the lapse of time or the giving of notice or both, would constitute, a
material breach, violation or default of a Material Contract by Seller, the
Company, any Subsidiary or, to the Company’s Knowledge, any other party
thereto.  Except as set forth on Schedule
4.12(b), neither Seller, the Company nor any Subsidiary has received, since
December 31, 2008, any written notice of the intention of any Person to
terminate any Material Contract.  Prior
to the date hereof, Seller has made a true and complete copy of all Material
Contracts available to Buyer, including all amendments thereto.

 

Section 4.13                            Real Property — Owned.  Schedule
4.13 sets forth a description of each tract, parcel or subdivided lot of
real property owned by Seller, the Company or any of the Subsidiaries (together
with all improvements thereon and fixtures therein and all other rights
appurtenant thereto but excluding all owned real property, if any, included in
the Retained Assets, the “Owned Real Property”).  As of the date hereof Seller or a Subsidiary
has, and as of the Closing the Company or a Subsidiary will have, fee simple,
and good, marketable and valid, title to the Owned Real Property identified on Schedule
4.13, free and clear of all Encumbrances (other than Permitted
Encumbrances).  None of the Owned Real
Property is subject to any lease or occupancy agreement, and, except as set
forth on Schedule 4.13, none of such Owned Real Property currently is or
has been subject to any material lease or occupancy agreement at any time
during the past three (3) years. 
All of Seller’s, the Company’s and the Subsidiaries’ facilities located
on the Owned Real Property are supplied with utilities and other material
public services reasonably necessary for the operation by Seller, the Company
or such Subsidiary of such facilities, all of which services are adequate in
all material respects in accordance with all applicable Requirements of
Law.  All of the Owned Real Property that
is currently vacant or on which there is a vacant or non-operating theatre is
set forth on Schedule 4.13(b), along with a description of each such
Owned Real Property including (i) the purpose for which the property has
been used prior to the date hereof (by Parent, Seller, the Company, any
Subsidiary or any of their respective Affiliates, or, if not used by any such
party, by the Person from which the property was acquired), (ii) a
description of all material structures on the property, and (iii) the
material reasons why such Owned Real Property is not currently in use.

 

Section 4.14                            Real and Personal Property
— Leased.  Set forth on Schedule 4.14 is a true
and accurate description of all real and material personal property leased by
Seller, the Company or any Subsidiary. 
The leased real property set forth on Schedule 4.14, together
with all improvements thereon and fixtures therein and other rights appurtenant
thereto but excluding any leased real property included in the Retained Assets
is referred to herein as the “Leased Real Property”.  Prior to the date hereof, Seller has made
available to Buyer true and complete copies of the leases in effect at the date
hereof relating to the Leased Real Property and all material leased personal
property.  With respect to such leases,
the property described in each lease is presently used by Seller, the Company
or the Subsidiary indicated on Schedule 4.14 as lessee under such lease,
and such leases are in full force and effect and neither Seller, the 

 

32

 

Company nor any Subsidiary has assigned or transferred
any rights under any such lease (except for collateral assignments that will be
released at Closing and except pursuant to the Contribution).    Neither Seller, the Company nor any
Subsidiary is in material default under the terms of any such lease, nor, to
the Company’s Knowledge, is the lessor in material default under any such
lease, and no events have occurred that, with the giving of notice or the lapse
of time, or both, would be a material default under any such lease by Seller,
the Company or any Subsidiary, or to the Company’s Knowledge, by any such
lessor.  With respect to the Leased Real
Property: (i) neither Seller, the Company nor the applicable Subsidiary
shares any space with or sublets any space to any other Person, (ii) Seller,
the Company or the applicable Subsidiary enjoys peaceful and quiet possession,
in all material respects, of such Leased Real Property; (iii) each real
property lease listed on Schedule 4.14 is legal, valid, binding and
enforceable on Seller, the Company or the applicable Subsidiary and, to the
Knowledge of the Company, on the other party thereto in accordance with its
terms (except in each case to the extent that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
Requirements of Law relating to creditors’ rights generally and subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law)), and is in full force and
effect, (iv) all of Seller’s, the Company’s and the Subsidiaries’
facilities have received all material Governmental Permits required in
connection with the operation thereof by Seller, the Company or such Subsidiary
and have been operated and maintained by Seller, the Company or such
Subsidiary, in all material respects, in accordance with applicable Requirements
of Law; and (v) all of Seller, the Company’s and the Subsidiaries’
facilities located on the Leased Real Property are supplied with utilities and
other services necessary for the operation by Seller, the Company or such
Subsidiary of such facilities, including gas, electricity, water, telephone,
sanitary sewer, and storm sewer, all of which services are adequate in
accordance with all applicable Requirements of Law and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefiting such
Leased Real Property.  All of the Owned
Real Property and Leased Real Property constitute all or substantially all of
the real property used in connection with the operation of the business of Seller,
the Company and the Subsidiaries as currently conducted (other than the
Retained Assets).  Notwithstanding the
foregoing, neither Parent nor Seller makes any representations or warranties
under this Section 4.14 with respect to the Retained Assets and
Retained Liabilities.

 

Section 4.15                            Intellectual Property.

 

(a)                                  All Recorded Intellectual Property owned
by or licensed to Seller, the Company or any Subsidiary in connection with its
respective business as presently conducted is set forth on Schedule 4.15(a) (collectively,
the “Company Intellectual Property”). 
The Company Intellectual Property is in force, in good standing and has
been properly maintained and renewed, in all material respects, including,
without limitation, the timely payment of all maintenance fees, in accordance
with all applicable provisions of applicable Requirements of Law.

 

(b)                                 All material unregistered Trademarks
owned by Seller, the Company or any Subsidiary are set forth on Schedule
4.15(b).

 

(c)                                  Seller, the Company or a Subsidiary owns
or has a valid license interest in the Company Intellectual Property without
any infringement upon or misappropriation of the Intellectual Property rights
of any third Person.  No royalties or
fees are payable by Seller, the 

 

33

 

Company or any Subsidiary to any Person by reason of
the use, ownership or license of any of the Company Intellectual Property or
any other Intellectual Property.  Neither
Seller, the Company nor any Subsidiary has entered into any licenses,
sublicenses or agreements relating to the use by any other Person of any
Company Intellectual Property or other Intellectual Property.

 

(d)                                 To the Knowledge of the Company, no other
Person is infringing or misappropriating any Intellectual Property used, owned
by or licensed to Seller, the Company or any Subsidiary.  No charge or claim is pending or, to the
Knowledge of the Company, threatened, nor has any charge or claim been made
since January 1, 2007 against Seller, the Company or any Subsidiary to the
effect that, nor does the operation of the business of Seller, the Company or
any Subsidiary or the sale of their products or services, infringe upon or
misappropriate in any way any Intellectual Property owned or held by any other
Person.

 

(e)                                  To the Knowledge of the Company, Seller’s,
the Company’s and each Subsidiary’s respective business do not use or in any
way make use of any Trade Secrets of any third Person that it does not have the
right to use.

 

(f)                                    Seller and each Subsidiary has used
commercially reasonable efforts to protect the confidentiality of all Trade
Secrets held by Seller, the Company and the Subsidiaries.

 

Section 4.16                            Necessary Property;
Condition of Property.  The properties and assets owned, leased by,
or licensed to Seller, the Company and the Subsidiaries (a) constitute all
of the properties and assets, real and personal, tangible and intangible, that
are used or intended for use in the conduct of Seller’s, the Company’s and the
Subsidiaries’ respective businesses in the manner and to the extent presently conducted,
and (b) are in good operating condition and repair (subject to normal wear
and tear) and are adequate for the uses to which they are being put.  Notwithstanding the foregoing, neither Parent
nor Seller makes any representations or warranties under this Section 4.16
with respect to the Retained Assets and Retained Liabilities.

 

Section 4.17                            Necessary Licenses and
Permits.  Seller, the Company and each Subsidiary has
all material licenses, franchises, permits, privileges, immunities, approvals
and other authorizations from a Governmental Body (collectively, “Governmental
Permits”) that are necessary to entitle them to own or lease, operate and
use their assets and to carry on and conduct their respective businesses
substantially as conducted immediately prior to the date of this
Agreement.  A list of all Governmental
Permits is set forth on Schedule 4.17. 
None of the Governmental Permits limits in any material respect the
operation of Seller’s, the Company’s or any Subsidiary’s business as presently
conducted.  The Governmental Permits have
been validly issued or assigned to Seller, the Company or a Subsidiary and are,
and at all times during the past three (3) years have been, in good
standing and in full force and effect. 
The execution and delivery of this Agreement and each Seller Ancillary
Agreement by Parent, Seller and the Company, and the consummation of the
transactions contemplated hereby and thereby, shall not conflict with, result
in a violation of, constitute a default under or result in the termination or
revocation of any material Governmental Permit.

 

Section 4.18                            Compliance with Laws and
Governmental Permits.  Seller, the Company and each Subsidiary is,
and at all times during the past three (3) years has been, in compliance,
in all material respects, with all Requirements of Laws and Governmental
Permits, 

 

34

 

and is not now, and at all times during the past three
(3) years has not been, in default under or in violation of, in any material
respect, any Requirements of Law (including Requirements of Laws relating to
the issuance or sale of securities, antitrust, zoning and building codes and
ordinances, occupational safety and transportation), Governmental Permit or
Court Order, in each case applicable to its business or any of its properties,
assets or employees.  Neither Seller, the
Company nor any Subsidiary has received any written, or, to the Knowledge of
the Company, other notification alleging any violations of any of the foregoing
since January 1, 2007 with respect to which adequate corrective action has
not been taken.  Notwithstanding anything
in this Section 4.18, the representations contained in Section 4.11
(Tax Matters), Section 4.19 (Environmental Compliance), Section 4.22
(Employee Benefit Plans) and Section 4.23 (Withholding; Labor
Relations) are the exclusive representations and warranties of Parent and
Seller with respect to compliance with Requirements of Law applicable to the
subject matters of such Sections.

 

Section 4.19                            Environmental Compliance.

 

(a)                                  The operations of Seller, the Company and
the Subsidiaries comply and have at all times since January 1, 2007
complied, in all material respects, with all applicable Environmental Laws and
all Governmental Permits issued pursuant to Environmental Laws, and, to the
Knowledge of the Company, neither Seller, the Company nor any Subsidiary has
contracted for, authorized, allowed or suffered any operations or activities
involving the handling, treatment, processing, storage, use, generation,
release, discharge, emission, or disposal of any Hazardous Materials, except in
compliance, in all material respects, with all applicable Environmental Laws.

 

(b)                                 To the Knowledge of the Company, any
asbestos-containing material present within any Owned Real Property or Leased
Real Property is not, and is not reasonably likely to become, friable and no
underground storage tank is located at any Owned Real Property.

 

(c)                                  There is no, and during the past three (3) years
there has not been any, action, lawsuit, proceeding, claim or, to the Company’s
Knowledge, investigation pending, or to Company’s Knowledge, threatened,
alleging any Environmental Matter on the part of Seller, the Company or any
Subsidiary, including with respect to any Real Property.

 

(d)                                 Except as set forth on Schedule 4.19,
there have been no Releases or threatened Releases of Hazardous Materials at
any Owned Real Property, or to the Knowledge of the Company, at any Leased Real
Property or any formerly owned or leased real property, that could require
Remedial Action by, or otherwise result in any material Environmental Matter
to, Seller, the Company or any Subsidiary.

 

(e)                                  Prior to the date hereof, Seller has made
available to Buyer copies of the most recent environmental assessment reports
(including so called Phase I or Phase II environmental assessment reports or
asbestos surveys) in its possession (“Environmental Reports”) relating
to any Owned Real Property or Leased Real Property.

 

35

 

(f)                                    The representations and warranties
contained in this Section 4.19 and, to the extent related to any
Governmental Permit required by any Environmental Law, Section 4.17,
are the exclusive representations and warranties in this Agreement in respect
of Seller’s, the Company’s and the Subsidiaries’ compliance with Environmental
Laws.

 

Section 4.20                            Litigation.  There is no
Proceeding pending or, to the Knowledge of the Company, threatened against
Parent, Seller, the Company or any Subsidiary, or any of their respective
assets or properties, at law or in equity, before any Governmental Body or
arbitrator of any kind, or against any director, officer, member or, to the
Knowledge of the Company, employee or direct or indirect equity holder of
Parent, Seller, the Company or any Subsidiary, as the case may be, that relates
to or affects Seller, the Company, any Subsidiary or the operation of their
respective businesses as now conducted or the consummation of the transactions
contemplated hereby or by any Seller Ancillary Agreement.  During the three (3) years immediately
preceding the date of this Agreement, there has been no Proceeding against
Parent, Seller, the Company or any Subsidiary, or any of their respective
assets or properties, at law or in equity, before any Governmental Body or
arbitrator of any kind, or against any director, officer, member or, to the
Knowledge of the Company, employee or direct or indirect equity holder of
Parent, Seller, the Company or any Subsidiary, as the case may be, that had or,
if adversely determined would have been reasonably likely to have had, a
Material Adverse Effect.

 

Section 4.21                            No Material Adverse Effect.  From December 31,
2008 until the date of this Agreement, there has not been a Material Adverse
Effect.

 

Section 4.22                            Employee Benefit Plans.

 

(a)                                  Schedule 4.22(a) contains a true and complete list
of each material Employee Benefit Plan. 
With respect to each Employee Benefit Plan identified on Schedule
4.22(a), Seller has provided or  made
available to Buyer a current copy (or to the extent no such copy exists, a
description) thereof (including, without limitation, all amendments thereto)
that is accurate and complete in all material respects and, to the extent
applicable, the most recent summary plan description and summary of material
modifications thereto, if any.

 

(b)                                 During the six-year period prior to the
Closing Date, none of Seller, the Company, any of its Subsidiaries, or any of
their respective ERISA Affiliates has ever, and none of their former ERISA Affiliates
has, while an ERISA Affiliate, maintained, sponsored, contributed to or been
required to contribute to a Guaranteed Pension Plan or Multiemployer Plan or a
plan maintained in connection with any trust described in Section 501(c)(9) of
the Code.

 

(c)                                  Each Employee Benefit Plan intended to
qualify under Section 401(a) of the Code and each trust intended to
be exempt under Section 501(a) of the Code either (i) has
obtained a currently effective favorable determination letter issued by the
Internal Revenue Service as to its qualified status under the Code or (ii) such
plan is a prototype plan or a volume submitter plan for which an opinion letter
has been issued by the IRS and, to the Knowledge of the Company, no event or
omission has occurred which would cause any such Employee Benefit Plan to lose
its qualification under the applicable Code section.

 

36

 

Section 4.23                            Withholding; Labor
Relations.  Seller has delivered or made available to
Buyer prior to the date hereof a list containing the title, length of service,
and annual salary or wage rates and bonuses paid during the prior twelve month
period of all  employees of Seller.  Seller and the Company are, and each
Subsidiary is, and at all times during the past
three (3) years has been, in compliance, in all material respects,
with all applicable Requirements of Law relating to its employees, including
Requirements of Law relating to
employment, employment practices, wages, hours, and occupational safety and
health, and are not, and have not been during the past three (3) years,
liable in any material respect for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.  There are not, and have not been at any time
during the past three (3) years, any collective bargaining agreements
covering any of the employees of Seller, the Company or any Subsidiary.  No consent of any union (or any similar group
or organization) is or was required in connection with the consummation of the
transactions contemplated by this Agreement. 
There are no pending, or, to the Knowledge of the Company, threatened (i) material
employment discrimination or other employment charges, claims, or complaints
against or involving Seller, the Company or any Subsidiary before any
Governmental Body or arbitrator of any kind; (ii) unfair labor practice
charges or complaints, disputes or grievances affecting Seller, the Company or
any Subsidiary; (iii) union representation petitions respecting the employees
of Seller, the Company or any Subsidiary; (iv) efforts being made to
organize any of the employees of Seller, the Company or any Subsidiary; or (v) strikes,
slow downs, work stoppages, or lockouts or threats thereof affecting Seller,
the Company or any Subsidiary.

 

Section 4.24                            No Brokers.  Except with
respect to the services of Peter J. Solomon Company, neither Parent, Seller,
the Company nor any Person acting on the behalf of either has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement or any
Seller Ancillary Agreement.

 

Section 4.25                            Goodwill Passes; Prepaid
Tickets.  As of the Closing Date, except as set forth
on Schedule 4.25 or included in Closing Date Deferred Revenue, with
respect to the Company or any Subsidiary, there does not exist any unexpired
and outstanding (i) tickets, or entitlements to tickets, donated, given,
issued, sold, or awarded (including in connection with any settlement or
otherwise) to consumers entitling the holder thereof to admission without
charge, (ii) coupons or rights in any media entitling consumers to
purchase theater admission tickets at a discount from the regular public
theater admission price, or (iii) motion picture theater admission
tickets, gift cards, or gift certificates which have been purchased by or
donated, given, issued or awarded (including in connection with any settlement
or otherwise) to consumers and which entitle such ticketholders to admission
without any further consideration or at a discount after the Closing Date.

 

Section 4.26                            Concession Inventory.

 

(a)                                  As of the date hereof, the concession
inventories of Seller and each Subsidiary (i) are, in all material
respects, accurately valued and properly reflected on the Financial Statements
consistent with past practices, (ii) consist, in all material respects, of
items of a quality, quantity and condition useable and saleable in the ordinary
course of business consistent with past practices, (iii) were acquired and
have been maintained at normal levels in 

 

37

 

the ordinary course of business consistent with past
practice, and (iv) are not subject to any material write-down or
write-off.

 

(b)                                 As of the Closing, the concession
inventories of the Company and each Subsidiary (i) will be, in all
material respects, accurately valued and properly reflected on the Financial
Statements consistent with past practices, (ii) will consist, in all
material respects, of items of a quality, quantity and condition useable and
saleable in the ordinary course of business consistent with past practices, (iii) will
have been acquired and maintained at normal levels in the ordinary course of
business consistent with past practice, and (iv) will not be subject to
any material write-down or write-off.

 

Section 4.27                            ADA Compliance.  There are, and
for the past three (3) years there have been, no Proceedings of any kind
pending, or to the Company’s Knowledge, threatened, alleging the Seller’s or
the Company’s failure to comply with Titles I and III of the Americans With
Disabilities Act of 1990, as amended from time to time, Public Law 101-336; 42
U.S.C. §§12101, et seq., or any similar Federal, state or local statute; rule,
ordinance or regulation governing access for the disabled or handicapped, with
respect to any Real Property.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF BUYER AND GUARANTOR

 

As an inducement to
Seller and the Company to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer and Guarantor hereby jointly and
severally represent and warrant to Seller and the Company, as of the date
hereof, as follows:

 

Section 5.1                                   Organization and Good
Standing.  Each of Buyer and Guarantor is a corporation
duly organized, validly existing and in good standing in the State of Delaware,
with full corporate power to own, lease and operate its assets and properties
and carry on its business as presently owned or conducted or proposed to be
conducted.

 

Section 5.2                                   Authorization; Conflicts.  The execution,
delivery and performance by each of Buyer and Guarantor of this Agreement and
of each Buyer Ancillary Agreement to which Buyer and/or Guarantor is a party (i) are
within Buyer’s of Guarantor’s (as the case may be) corporate power and
authority, (ii) have been duly authorized by all necessary corporate and
shareholder actions and proceedings and (iii) do not and will not conflict
in any material respect with, or result in any material breach of, any provision
of Buyer’s Certificate of Incorporation or By-Laws, any material agreement to
which Buyer or Guarantor is a party or any Requirements of Law to which or by
which Buyer or its assets is subject or bound.

 

Section 5.3                                   Enforceability.  The execution,
delivery and performance by Buyer and Guarantor of this Agreement and of each
Buyer Ancillary Agreement will result in valid and binding obligations of Buyer
and Guarantor enforceable against such Buyer and Guarantor in accordance with
the respective terms and provisions hereof and thereof, except to the extent
that such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar Requirements of Law relating to
creditors’ rights generally and 

 

38

 

subject to general principles of equity (regardless of
whether such enforceability is considered in a Proceeding in equity or at law).

 

Section 5.4                                   Litigation.  There is no
Proceeding pending or, to the Knowledge of Buyer, threatened against Buyer or
Guarantor  or any of their assets or
properties, at law or in equity, before any Governmental Body or arbitrator of
any kind, or, to Buyer’s Knowledge, against any unitholder, stockholder,
director, officer, member or employee of Buyer, that would, or would  reasonably be expected to, materially impair
the ability of Buyer or Guarantor to perform its obligations under this
Agreement or consummate the transactions contemplated by this Agreement or any
Buyer Ancillary Agreement.

 

Section 5.5                                   Financial
Capability. 
Buyer has, and at all times prior to the Closing Date will have,
sufficient immediately available U.S. funds to enable Buyer to pay the Closing
Date Payment Amount at Closing in accordance with Section 3.2, to
permit Buyer to perform in a timely manner all of its obligations under this
Agreement, and to consummate the transactions contemplated by this Agreement,
in accordance with the terms and subject to the conditions herein.

 

Section 5.6                                   Investment Intent.  Buyer is
acquiring the Unit as an investment for its own account and not with a view to
the distribution thereof.  Buyer
acknowledges that the Unit has not been registered under the Securities Act and
agrees not to sell, transfer, assign, pledge or hypothecate the Unit in the
absence of registration under, or pursuant to an applicable exemption from,
federal and applicable state securities laws.

 

Section 5.7                                   No Brokers.  Neither Buyer
nor Guarantor or any other Person acting on its behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement.

 

ARTICLE VI

 

ACTIONS PRIOR TO THE CLOSING DATE

 

Buyer, Seller and the
Company covenant and agree to take the following actions between the date
hereof and the Closing Date:

 

Section 6.1                                   Access to Information.

 

(a)                                  The Company shall afford to the officers,
employees and authorized representatives of Buyer (including agents,
contractors, independent public accountants and attorneys) reasonable access
during normal business hours, upon reasonable advance notice, at Buyer’s sole
cost and expense, to the officers, employees, properties, books, and business,
financial and other records of the Company and the Subsidiaries to the extent
Buyer reasonably deems necessary or desirable, and shall furnish to Buyer or
its authorized representatives such additional information concerning the
Company and the Subsidiaries as Buyer or its authorized representatives shall
reasonably request, including financial statements, pro forma financial
information, financial data, audit reports and other information as may be
required to prepare any filings under any applicable federal or state
securities laws; provided,
however, that: (i) neither the Company nor any Subsidiary shall be
required to disclose to Buyer or any representative of 

 

39

 

Buyer information the disclosure of which is precluded
by any Requirement of Law and, (ii) any information provided to Buyer or
any of its representatives pursuant to this Agreement shall be held by Buyer
and its representatives in accordance with, and shall be subject to the terms
of, the Confidentiality Agreement, dated as of July 17, 2009, between
Buyer and Seller (the “Confidentiality Agreement”).  Buyer agrees that such investigation shall be
conducted in such a manner as not to interfere unreasonably with the operations
of the Company and the Subsidiaries. 
Buyer and Seller agree that Buyer’s right to enter onto and into any
Real Property shall be governed by Section 6.1(b).

 

(b)                                 Without limiting Section 6.1(a),
Buyer and its agents and contractors shall have the right, at Buyer’s sole cost
and expense, to enter onto and into the Real Property at reasonable times and in
a reasonable manner as agreed to with Seller prior to such entry for the
purpose of making such tests and inspections as Buyer deems necessary in
connection with this Agreement and as otherwise in accordance with this
Agreement; provided, however, that (i) Seller may require,
as a condition to any such entry, that any such Person is accompanied by a
representative of Seller during such entry and (ii) no such Person shall
conduct any test in connection with a Phase II environmental report or any
other test that involves drilling, boring or similar intrusive or invasive
action on, in or under the Real Property without Seller’s prior written
consent, which may be granted or withheld in Seller’s sole and absolute
discretion. Buyer agrees that such tests and inspections shall be conducted in
such a manner as not to interfere unreasonably with the operations of the
Company and the Subsidiaries, and consistent with Seller’s obligations under
any leases regarding any Leased Real Property. 
Prior to any entry on any Real Property by Buyer, its agents or
contractors pursuant to this Section 6.1(b), Buyer shall provide to
Seller evidence, reasonably satisfactory to Seller, demonstrating that Buyer or
its agents and contractors, as applicable, have and maintain comprehensive
general liability insurance coverage covering any and all Liabilities with
respect to or arising out of any work or investigations at the Real Property to
be performed by or for Buyer or its agents or contractors as set forth in this
Agreement, and thereafter Buyer shall maintain, or shall cause its agents and
contractors to maintain, as applicable, such insurance in full force and
effect.  The policy of insurance shall
have limits of not less than $2,000,000 combined single limit per occurrence,
shall be issued by a reputable insurance company qualified to do business in
the states in which the Real Property is located and shall name Seller as an
additional named insured.  After making
such tests and inspections, Buyer, at Buyer’s sole cost and expense, shall
restore, or cause to be restored, the Real Property to substantially the same
condition as existed prior to such tests and inspections.  Further, Buyer shall deliver to Seller a
true, correct and complete copy of any report of the results of any tests,
inspections and/or analyses of the Real Property not later than two (2) Business
Days after any termination of this Agreement; provided, however,
that with respect to any such report not yet received by Buyer as of the date
of such termination, Buyer shall deliver the same to Seller within two (2) Business
Days after Buyer’s receipt thereof.

 

(c)                                  Without limiting Section 6.1(a) or
Section 6.1(b), Buyer and its agents and contractors shall have the
right, at Buyer’s sole cost and expense, and subject to the conditions
described in Section 6.1(b), to enter onto and into the Owned Real
Property at reasonable times and in a reasonable manner as agreed to with
Seller in connection with (i) Buyer’s efforts to obtain a policy of title
insurance for each parcel of Owned Real Property, in favor of Buyer or its
designee in the amount of the fair market value of each parcel of Owned Real
Property, (ii) having an ALTA/ACSM “As Built” Survey prepared with respect
to each parcel of Owned Real

 

40

 

Property, and (iii) obtaining any other information or documents
Buyer reasonably requests so that it may comply with the requirements of Buyer’s
existing credit facility.

 

Section 6.2            Notification.  (a) 
Seller, on the one hand, and Buyer, on the other hand, shall each promptly
notify the other in writing upon the occurrence of any development that would
or would reasonably be expected to result in a condition to Closing not being
satisfied.

 

(b)           Seller may, at any time prior to the date
that is two (2) Business Days prior to Closing, update or supplement those
Schedules to the representations and warranties contained in Article IV of
this Agreement (other than those Schedules to the representations and
warranties in Section 4.21) (any such updated or supplemented
Schedule, an “Updated Schedule”) to account for any material variances
from the representations and warranties contained in Article IV
that arise after the date hereof; provided, that the Schedules shall not
be updated or supplemented (i) to correct errors or omissions that were
known by the Company or Seller prior to the date of this Agreement, (ii) to
account for developments or matters that relate to or arise out of events that
occurred prior to the date of this Agreement or (iii) to account for
developments or matters that arise from a violation of any covenant or
agreement contained herein.

 

Section 6.3            Consents of Third Parties;
Governmental Approvals.  (a)  The
Company, Seller and Buyer will act diligently and reasonably in attempting to
secure, before the Closing Date, each consent, approval or waiver, in form and
substance reasonably satisfactory to the other party, required to be obtained
from any party (other than a Governmental Body) to consummate the transactions
contemplated by this Agreement or any Seller Ancillary Agreement, and Seller
will, upon request of Buyer, use commercially reasonable efforts to seek
estoppel letters in form and substance reasonably acceptable to Buyer from any
lessors of Leased Real Property; provided, however, that neither
the Company, Seller nor any of their respective Affiliates shall be required to
expend money, commence or participate in any litigation or offer or grant any
accommodation (financial or otherwise) to any third Person in connection with
the obligations described in this Section 6.3.

 

(b)           Buyer shall act diligently and
reasonably, and Seller and the Company, upon the request of Buyer, shall use
their respective commercially reasonable efforts to cooperate with Buyer, in
attempting to secure any consents and approvals of any Governmental Body
required to be obtained by Buyer in order to permit the consummation of the
transactions contemplated by this Agreement or any Seller Ancillary Agreement.

 

(c)           As promptly as practicable after the date hereof (at a
date to be agreed by the parties), each of the parties hereto shall file with
the Federal Trade Commission and the Antitrust Division of the Department of
Justice the notifications and other information required to be filed under the
HSR Act with respect to the transactions contemplated hereby.  Each party warrants that all such filings by
it will be, as of the date filed, true and accurate in all material respects
and in material compliance with the requirements of the HSR Act.  Each of the parties hereto agrees to file any
additional information requested by such agencies under the HSR Act and to make
available to the other parties such information relative to its business,
assets and property as such other parties may be required to file pursuant to
the HSR Act or at the request of 

 

41

 

such agencies.  Each of the
parties hereto will provide to the other parties copies of all correspondence
between it (or its advisors) and any such agency relating to this Agreement or
any of the matters described in this Section 6.3(c); provided
that such correspondence may be provided only to outside counsel of the parties
if it contains or reveals confidential information of Buyer, Seller, the
Company or their respective Affiliates.

 

(d)           The parties agree to promptly notify each
other of any oral or written communication they receive from any Governmental
Body relating to the matters that are subject of this Agreement, permit each
other to review in advance any communication proposed to be made by such party
to any Governmental Authority and provide each other with copies of all
correspondence, filings or other communications between them or any of their
representatives, on the one hand, and any Governmental Body of members of its
staff, on the other hand; provided that such communications may be
provided only to outside counsel of the parties to the extent that they contain
or reveal confidential information of Buyer, Seller, the Company or their
respective Affiliates.  The parties agree
not to participate in any meeting, or engage in any substantive conversation,
with any Governmental Body in respect of such filings, investigation or other
inquiry unless they consult with the other party in advance and, to the extent
permitted by such Governmental Body, give the other party the opportunity to
attend and participate at such meeting or conversation.

 

(e)           Without limiting the generality of Buyer’s
undertaking pursuant to Section 6.3(c), Buyer agrees to take any
and all steps necessary to avoid or eliminate each and every impediment under
any Antitrust Law that may be asserted by any Governmental Body so as to enable
the parties hereto to expeditiously consummate the transactions contemplated by
this Agreement no later than the Outside Date (as such date may be extended
pursuant to Section 11.1(e)) including proposing, negotiating,
committing to and effecting, by consent decree, hold separate orders or
otherwise, the sale, divesture or disposition of such of its (or, following the
Closing, the Company’s or any Subsidiaries’) assets, properties or businesses
as may be required to be divested in order to avoid the entry of, or to effect
the dissolution of, any injunction, temporary restraining order or other order
in any suit or proceeding, which would otherwise have the effect of materially
delaying or preventing the consummation of the transactions contemplated by
this Agreement; provided, however, that Buyer shall not be
required to take any actions that would or would be reasonably expected to
result in a Regulatory Material Adverse Effect. In addition, Buyer shall defend
through litigation any claim asserted in court by any Person in order to avoid
entry of, or to have vacated or terminated, any decree, order or judgment (whether
temporary, preliminary or permanent) that would prevent the Closing by the
Outside Date.  Seller and the Company will each use their commercially reasonable efforts to cooperate with Buyer in
obtaining any such authorizations, consents, orders and approvals.
Seller shall not, without the Buyer’s prior written consent in the Buyer’s sole
discretion, discuss or commit to any divestiture transaction, or discuss or
commit to alter their business or commercial practices in any way, or otherwise
discuss, take or commit to take any action that limits the Buyer’s freedom of
action with respect to, or the Buyer’s ability to retain any of the business,
product lines or assets of, the Business or otherwise receive the full benefits
of this Agreement.

 

(f)            In the event the parties receive a
request for information and documentary materials (a “Second Request”)
following the HSR Act filing, the parties will use their respective reasonable
best efforts to respond to such Second Request as promptly as possible.

 

42

 

Section 6.4            Operations Prior to the
Closing Date.  (a)  Except
as set forth in Schedule 6.4 or as otherwise contemplated by this
Agreement or consented to in writing by Buyer, each of the Seller and the Company
shall (and shall cause each Subsidiary to) conduct its business in the
ordinary course and shall use its commercially reasonable efforts to (i) preserve
intact, in all material respects, the current business organization and ongoing
operations of Seller, the Company and the Subsidiaries (including the
relationships between Seller, the Company and the Subsidiaries and their
respective directors, officers, executives, and managers, although neither
shall be required to pay, or promise to pay, any consideration (other than
compensation to which such individuals are currently entitled as directors or
employees, subject to any changes in compensation in accordance with existing
compensation policies, practices or procedures) as an inducement to continue their
employment with Seller, the Company or any Subsidiary); (ii) maintain
relations and goodwill with suppliers, customers, landlords, employees,
creditors, and movie studios with whom Seller, the Company and the Subsidiaries
have relationships; (iii) perform in all material respects its obligations
under the Material Contracts; (iv) maintain the properties and assets of
Seller, the Company and the Subsidiaries in good repair and condition
(excluding normal wear and tear); (v) maintain the insurance policies of Seller, the Company
and the Subsidiaries in a manner consistent with past practice; and (vi) pay
all Taxes as such Taxes become due and payable consistent with past practice.

 

(b)           Except as set forth in Schedule 6.4
or as otherwise contemplated by this Agreement (including with respect to the
Contribution) or consented to in writing by Buyer (which Buyer agrees shall not
be unreasonably withheld or delayed with respect to the matters set forth in
clauses (vi), (x), (xi), (xii), (xv) or (xviii) of this Section 6.4(b)),
Buyer agrees shall not be unreasonably withheld or delayed), Seller and the
Company shall not (and shall not permit any Subsidiary to): (i) issue,
sell or deliver any equity interest or any securities convertible into, options
with respect to, warrants to purchase or rights to subscribe for, any equity
interest; (ii) effect any recapitalization, reclassification, unit or
equity interest dividend, unit split or like change in its capitalization or
otherwise make any change in its capital structure; (iii) amend its
Certificate of Formation or Limited Liability Company Agreement (or equivalent
organizational documents); (iv) merge with or into, consolidate with or
acquire all or substantially all of the stock or assets of any other Person; (v) create,
incur or assume any Indebtedness, other than (x) trade payables in the
ordinary course of business consistent with past practice or (y) borrowings
under Seller’s, the Company’s or any of the Subsidiaries’ existing credit
facilities (to the extent such amounts are to be taken into account in the
calculation of the Closing Date Payment Amount); (vi) make any material
loans to any Person or advances to employees of Seller, the Company or any
Subsidiary not, in the case of advances, in the ordinary course of business
consistent with past practice; (vii) make any capital contributions to, or
investments in, or acquire the securities of, any other Person; (viii) make
any change in any accounting or auditing practice, other than those required by
GAAP; (ix) make or change any material Tax election, change any annual Tax
accounting period, adopt or change any material method of Tax accounting, file
any amended Return, enter into any closing agreement, consent to the extension
or waiver of the limitations period applicable to any Tax claim or assessment,
surrender any right to claim a Tax refund or take or omit to take any other
action, if any such change, adoption, filing, consent, surrender, action or
omission would have the effect of materially increasing the Tax liability of
Seller, the Company or any of the Subsidiaries; (x) enter into any
Contract of the type that would be required to be disclosed on Schedule 4.12(a) if
entered into prior to the date hereof; (xi) terminate, cause the termination
of, amend, renew or extend any Material Contract, 

 

43

 

or waive or release any material rights or claims thereunder; (xii)
pay, discharge, or satisfy any material claims or Liabilities, other than in
the ordinary course of business consistent with past practice, or fail to pay
or otherwise satisfy (except if being contested in good faith) any material
accounts payable, Liabilities, or obligations when due and payable; (xiii)
create any new subsidiary; (xiv) adopt a plan of complete or partial
liquidation or dissolution; (xv) make any material change in the compensation
of the directors, officers or salaried employees of Seller, the Company or any
Subsidiary (other than employees who will not be Company Employees) and except
for (A) salary increases to salaried employees (other than officers and
directors) made in the ordinary course of business) and (B) the adoption
of a retention bonus and/or severance benefit plan established by Seller for
the benefit of employees of Seller, the Company or any Subsidiaries, solely to
the extent that all bonuses, benefits, or other amounts payable thereunder are
deemed to constitute Seller Retention Obligations and are otherwise for the
sole account of Parent or Seller; (xvi) dispose of or acquire any assets
outside the ordinary course of business consistent with past practice; (xvii)
grant any material licenses under any material Company Intellectual Property
other than in the ordinary course of business; (xviii) make any change in any accounting,
auditing, billing or collection practice, except as required by GAAP or
Requirements of Law; (xix) make any material change to its ordinary course cash
management practices; (xx) mortgage, pledge, or subject to any Encumbrance any
asset or property of Seller, the Company or any Subsidiary, whether tangible or
intangible, except Permitted Encumbrances; or (xxi) agree to do any of the
foregoing.

 

(c)           Notwithstanding anything to the contrary
in this Section 6.4 (but otherwise subject to the terms of this
Agreement, including, for the avoidance of doubt, Section 6.5), Sections
6.4(a) and 6.4(b) shall not in any way apply to the
Retained Assets or Retained Liabilities; provided, that (i) title
to the Retained Assets and Retained Liabilities shall remain with Seller or
Parent, as applicable, and (ii) any actions taken by Parent or Seller with
respect to the Retained Assets and Retained Liabilities shall not interfere
with the consummation of the transactions contemplated by this Agreement or
adversely effect the Company, any Subsidiary, or the businesses, theatres,
properties, assets or liabilities thereof (other than de minimis adverse
effects).

 

Section 6.5            Exclusivity. 
Until such time, if any, as this Agreement is terminated pursuant to Article XI,
each of Parent, Seller and the Company agrees that it shall not, and shall
cause the Subsidiaries and the Affiliates, directors, officers, employees,
direct and indirect equity holders and representatives of Parent, Seller, the
Company and the Subsidiaries not to directly or indirectly solicit, initiate or
knowingly encourage any inquiries or proposals from, discuss or negotiate with,
provide any information to, or consider the merits of any inquiries or
proposals from, any Person (other than Buyer) relating to any Acquisition
Proposal other than a Permitted Acquisition Proposal.  Parent, the Company and Seller shall, and
shall cause their Affiliates, direct and indirect equity holders, and
representatives to, immediately cease any such discussions or negotiations
related to any Acquisition Proposal currently in progress with any Person other
than Buyer and shall cease providing any such Person information regarding
Parent, Seller, the Company, or any Subsidiary. 
As soon as reasonably practicable (and in any event within one Business
Day) after receipt by Parent, Seller, the Company or any of the Subsidiaries
(including through a notification by its representatives) of any Acquisition
Proposal or any request for information or inquiry which it reasonably believes
could lead to an Acquisition Proposal, Seller shall provide Buyer with written
notice of the 

 

44

 

material terms and conditions of such Acquisition Proposal, request or
inquiry, the identity of the Person making any such Acquisition Proposal,
request or inquiry and a copy of such proposal, request or inquiry, if in
writing (or, where such proposal, request or inquiry was not in writing, a
description of the terms of such proposal, request or inquiry), and any written
material submitted in connection with such proposal, request or inquiry.  Notwithstanding the foregoing, until the
earlier of (i) the Closing and (ii) the termination of this Agreement
pursuant to Article XI, neither Parent, Seller nor the Company
shall enter into, or cause the Subsidiaries to enter into, any definitive
agreement with respect to a Permitted Acquisition Proposal without Buyer’s
prior written consent, which shall not be unreasonably withheld to the extent
that such transactions would not materially interfere with the consummation of
the transactions contemplated by this Agreement or any Seller Ancillary Agreement. 
Without limiting any of the terms, conditions, or rights provided for in
this Agreement, Parent, Seller and the Company acknowledge and agree that Buyer
shall have the right to seek specific performance of the provisions of this Section 6.5
pursuant to the terms and conditions of Section 11.3(d). Each of
Parent, Seller and the Company acknowledge and agree that any violation of (A) the
restrictions set forth in this Section 6.5 by any of their
respective Affiliates, directors, officers, employees, direct or indirect
equity holders or representatives, or the Subsidiaries, or (B) Section 1.1
or 2.1 (Exclusivity), as applicable, of any Equity Holder Agreement by
any Affiliate of Parent, Seller, or the Company party thereto, whether or not
such Person is purporting to act on behalf of Parent, Seller, the Company or
otherwise, shall be deemed a breach of this Section 6.5.

 

Section 6.6            Termination of Affiliate
Transactions.  Each of Parent, Seller and the Company shall
take, and shall cause their respective Affiliates, including the Subsidiaries,
to take, such action as may be necessary so that, as of the Closing Date, the
Affiliate Transactions and the other rights or obligations between the Company
or any Subsidiary, on the one hand, and Seller or any of its Affiliates (other
than the Company and any Subsidiary), on the other hand, identified on Schedule
6.6 shall be terminated and of no further or continued force or effect.

 

Section 6.7            Financial Information.  Seller shall
provide Buyer (i) from the date hereof until the Closing, within 15
Business Days after the end of each month, with an unaudited consolidated
balance sheet and related consolidated statements of income, changes in
stockholder’s equity and cash flow of Seller as of and for the month then ended
and (ii) as soon as reasonably practicable following December 31,
2009, with the audited consolidated balance sheet of Seller as of December 31,
2009, and the related audited consolidated statements of income, retained
earnings and cash flows for the fiscal year ended December 31, 2009,
prepared, in the case of both (i) and (ii) above, on the same basis
as the Financial Statements.

 

Section 6.8            Trademark Registration.  As soon as
practicable following the date hereof, Buyer shall prepare, and Parent and
Seller shall use commercially reasonable efforts to file, or cause the Company
and the Subsidiaries to file, as directed in writing by Buyer, a U.S. federal
trademark registration for the “ShowPlace Theatres” common law trademark. Buyer
shall pay all Expenses incurred in connection with preparing such filing and
shall promptly pay or reimburse Seller, the Company and the Subsidiaries, as
applicable, for any reasonably documented expenses incurred thereby in
connection with filing such registration. 
Seller shall use commercially reasonable efforts to assist Buyer in the
preparation of such filing with respect to the details of such application. For
the avoidance of doubt, any failure to file such registration 

 

45

 

with, or to obtain the approval of such registration from, any
applicable Governmental Body, other than any such failure resulting from the
failure of Seller, the Company, or any Subsidiary to use its commercially
reasonable efforts in accordance with the terms of this Section 6.8,
shall not be deemed a breach of this Section 6.8.

 

Section 6.9            Termination of National
CineMedia Agreement.  Seller shall cause the Network
Affiliate Agreement between Seller and National CineMedia LLC, dated August 8,
2007 (the “CineMedia Agreement”), to be transferred and assigned to the
Company immediately prior to the Closing, and, immediately following such
transfer and assignment, Seller and Buyer recognize that the CineMedia
Agreement will terminate effective immediately at the Closing in accordance
with the self-operative terms set forth in Section 9.2(d) of the
CineMedia Agreement upon acquisition by a “Founding Member.”  Buyer and Guarantor shall be responsible (and
shall reimburse Seller or its Affiliates, if necessary) for all Losses and
Expenses arising in connection with the transfer, assignment or termination of
the CineMedia Agreement pursuant to this Section 6.9.

 

Section 6.10         Services Agreement. 
Prior to
the Closing, Buyer and Seller shall enter into
a services agreement (the “Services Agreement”) to be effective as of
the Closing Date, by and between Buyer and Seller, upon terms reasonably
agreeable to each party.  The parties
acknowledge and agree that all services provided by Buyer to Seller under the
Services Agreement shall be provided at Buyer’s cost plus 2%, payable by Seller
in accordance with the terms of the Services Agreement.

 

Section 6.11         Landlord Consents.  Each of
Parent, Seller and the Company hereby acknowledges and agrees that within five (5) Business
Days following receipt of written notice from Buyer, it shall send to the
landlords under each of the leases set forth on Schedule 6.11 written
consents to the assignment of such leases to the Company in connection with the
Contribution, and/or to the change in control of the Company upon the
consummation of the transactions contemplated by this Agreement, as applicable.  Such consents shall be in form and substance
satisfactory to Buyer.  Each of Parent,
Seller and the Company shall use reasonable best efforts to obtain such
consents under such leases as soon as possible following the date hereof; provided,
however, that, for purposes of this Section 6.11, “reasonable
best efforts” shall not include any obligation of any of Parent, Seller or the
Company to commence or participate in any litigation or expend any amount of
money other than de minimis amounts in connection with requesting such
consents. Each of Parent, Seller and the Company shall coordinate with and
obtain the prior consent and input from Buyer prior to contacting via mail,
telephone or otherwise any such landlord in connection with its obligations
under this Section 6.11.  In
the event that any such landlord proposes to condition the execution by such
landlord of any such consent upon any amendment, modification or waiver of any
term under such underlying lease, or any other agreement regarding the
operation of the business of the Company, any Subsidiary, Buyer, or its
Affiliates, Parent, Seller or the Company, as applicable, shall promptly, and
in any event within three (3) Business Days following receipt of such
request, inform Buyer in writing of such request and shall not respond to any
such request without first speaking with and obtaining the consent of Buyer as
to how to respond to any such request. 
In the event Parent, Seller, the Company or any Subsidiary receives any
notification or information from any such landlord in connection with any such
consent to assignment, Seller shall promptly, and in any event within three (3) Business
Days following receipt thereof, provide written copies of such 

 

46

 

notifications or information (or written summaries of such
notifications or information if provided orally) to Buyer.  In no event shall Seller execute, or cause
the Company or any Subsidiary to execute, any such consent without the prior
written consent of Buyer, which consent may be withheld, conditioned or delayed
in Buyer’s sole discretion.

 

ARTICLE VII

 

ADDITIONAL AGREEMENTS

 

Section 7.1            Tax Matters.

 

(a)           Liability for Taxes.

 

(i)            Parent and Seller shall be liable for and
pay, and pursuant to Article X (and subject to the limitations
thereof) agree to indemnify and hold harmless Buyer from and against, any Taxes
imposed in respect of the Company for any taxable year or period that ends on
or before the Closing Date and, with respect to any Straddle Period, the
portion of such Straddle Period ending on and including the Closing Date; provided,
however, that Parent and Seller shall not be liable for or pay, and
shall not indemnify or hold harmless Buyer from and against, (A) any Taxes
shown as a liability or reserve on the Closing Date Balance Sheet, to the
extent that any such liability or reserve reduces Working Capital and (B) any
Taxes imposed in respect of the Company or for which the Company may otherwise
be liable as a result of transactions occurring on the Closing Date that are
properly allocable to the portion of the Closing Date after the Closing (Taxes
described in this proviso, hereinafter “Excluded Taxes”). Buyer and
Seller agree that, with respect to any transaction described in clause (B) of
the preceding sentence, the Company and all persons related to the Company
under Section 267(b) of the Code immediately after the Closing shall
treat the transaction for all federal income Tax purposes, and (to the extent
permitted) for other income Tax purposes, as occurring at the beginning of the
day following the Closing Date.  Seller
shall be entitled to any refund of (or credit for) Taxes allocable to any
taxable year or period that ends on or before the Closing Date and, with
respect to any Straddle Period, the portion of such Straddle Period ending on
and including the Closing Date.

 

(ii)           For purposes of Sections
7.1(a)(i), whenever it is necessary to determine the Liability for Taxes in
respect of the Company for a Straddle Period, the determination of such Taxes
for the portion of the Straddle Period (A) ending on and including (the “Pre-Closing
Period”), and (B) the portion of the Straddle Period beginning after
(the “Post-Closing Period”), in each case, the Closing Date, shall be
determined by assuming that the Straddle Period consisted of two taxable years
or periods, one which ended at the close of the Closing Date and the other
which began at the beginning of the day following the Closing Date, and items
of income, gain, deduction, loss or credit of the Company or with respect to
the Unit for the Straddle Period shall be allocated between such two taxable
years or periods on a “closing of the books basis” by assuming that the books
of the Company were closed at the close of the Closing Date, provided, however,
that (i) Liability for Taxes in respect of real and personal property
shall be apportioned to the Pre-Closing Period based on the number of days in
such Pre-Closing Period divided by the number of days in the entire Straddle
Period; and (ii) exemptions, 

 

47

 

allowances or deductions that are calculated on an
annual basis, such as the deduction for depreciation, shall be apportioned
between such two taxable years or periods on a daily basis.

 

(iii)          If,
as a result of any action, suit, investigation, audit, claim, assessment or
amended Tax Return, there is any change after the Closing Date in an item of
income, gain, loss, deduction, credit or amount of Tax that results in an
increase in a Tax Liability for which Parent and Seller would otherwise be
liable pursuant to Section 7.1(a)(i), and such change results in a
decrease in the Tax Liability of the Company, Buyer or any Affiliate or
successor thereof (including any Affiliate or successor thereof that holds any
interests in the Company that is a limited liability company or partnership for
tax purposes) for any taxable year or period beginning after the Closing Date
or for the portion of any Straddle Period beginning after the Closing Date,
Parent and Seller shall not be liable pursuant to such Section 7.1(a)(i) with
respect to such increase to the extent of such decrease.

 

(iv)          Notwithstanding anything herein to the
contrary, each of Buyer and Seller shall pay, and shall indemnify the other
party against, fifty percent (50%) of any real property transfer or gains Tax,
sales Tax, use Tax, stamp Tax, stock, unit or asset transfer Tax, or other
similar Tax imposed on the transactions contemplated by this Agreement.

 

(v)           Seller shall pay Buyer for the Taxes that
Seller is liable pursuant to this Section 7.1(a) but which are
payable with any Tax Return to be filed by Buyer or its Affiliates upon the
written request of Buyer, setting forth in detail the computation of the amount
owed by Seller or Buyer, but in no event earlier than 10 Business Days prior to
the due date for paying such Taxes.

 

(b)           Contest Provisions.

 

(i)            Buyer shall promptly notify Seller in
writing upon receipt by Buyer, any of its Affiliates or the Company of notice
of any pending or threatened federal, state, local or foreign Tax audits,
examinations or assessments affecting or which might reasonably be expected to
affect the Tax liabilities for which Parent and Seller may be liable pursuant
to this Section 7.1.

 

(ii)           Buyer shall have the sole right to
represent the Company’s interests in any Tax audit or administrative or court
Proceeding, whether or not relating to any Straddle Period or taxable periods
ending on or before the Closing Date, and to employ counsel of its choice at
its expense.  Seller shall be entitled to
participate at its expense in any Tax audit or administrative or court
Proceeding relating (in whole or in part) to periods ending on or before the
Closing Date and the portion of any Straddle Period ending on and including the
Closing Date and, with the written consent of Buyer, and at Seller’s sole
expense, may assume the entire control of such audit or Proceeding.  None of Buyer, any of its Affiliates or the
Company may settle any Tax claim for any Taxes for which Parent and Seller may
be liable pursuant to Section 7.1(a), without the prior written
consent of Seller, which consent may be withheld in the sole discretion of
Seller.

 

(c)            Assistance and Cooperation. 
After the Closing Date, Seller and Buyer shall (and shall cause their
respective Affiliates to):

 

48

 

(i)            assist the other party in preparing any
Tax Returns which such other party is responsible for preparing and filing;

 

(ii)           cooperate fully in preparing for any audits
of, or disputes with taxing authorities regarding, any Tax Returns of the
Company;

 

(iii)          make
available to the other and to any taxing authority as reasonably requested all
information, records, and documents relating to Taxes of the Company;

 

(iv)          provide timely notice to the other in
writing of any pending or threatened Tax audits or assessments of the Company
for taxable periods for which the other may have a Liability under this Section 7.1,
provided that a party’s failure to timely provide such notice in accordance
with this Section 7.1(b)(iv) does not limit any indemnity
provided for under this Agreement, except to the extent that the party entitled
to receive such notice hereunder is actually prejudiced by such failure;

 

(v)           furnish the other with copies of all
material correspondence received from any taxing authority in connection with
any material Tax audit or information request with respect to any such taxable
period;

 

(vi)          timely sign and deliver such certificates
or forms as may be reasonably requested, and are necessary or appropriate to
establish an exemption from (or otherwise reduce), or file Tax Returns or other
reports with respect to, Taxes described in Section 7.1(a)(v) (relating
to sales, transfer and similar Taxes); and

 

(vii)         timely
provide to the other powers of attorney or similar authorizations necessary to
carry out the purposes of this Section 7.1.

 

Section 7.2            Employee Matters.

 

(a)           Immediately prior to the Closing on the
Closing Date, Seller shall transfer to the Company the employment of all
employees of Seller, other than Anthony Kerasotes, Dean Kerasotes, the Retained
Theatre Employees and the Retained Seller Employees (such transferred
employees, the “Company Employees”).

 

(b)           Seller shall determine in its sole
discretion and provide to Buyer, in accordance with this Section 7.2(b),
a written schedule setting forth the names of designated executive-level Seller
employees and exempt, non-executive administrative staff Seller employees, in
each case whose employment shall not be transferred by Seller to the Company
immediately prior to the Closing on the Closing Date (the “Retained Seller
Employees”).  Seller shall provide to
Buyer (i) a preliminary schedule of the Retained Seller Employees not
later than 45 days after the date of this Agreement, (ii) an updated
schedule of the Retained Seller Employees not later than 90 days after the date
of this Agreement and (iii) any final modifications to such updated
schedule as soon as practicable prior to the Closing, provided that such
modifications made pursuant to this clause (iii) shall not increase the
number of Retained Seller Employees by more than 10% or change the names of
more than 15% of the Company Employees on the schedule provided pursuant to
clause (ii). Seller shall identify on such finalized schedule not more than
seven executive-level Retained Seller Employees and not more 

 

49

 

than five exempt, non-executive administrative staff Retained Seller
Employees to receive a cash transaction bonus (each, an “Eligible Seller
Employee”) in an amount equal to the cash severance benefit that would have
been payable to such Eligible Seller Employee pursuant to Buyer’s severance
policy set forth on Schedule 7.2(b) (“Buyer’s Severance Policy”)
if such Eligible Seller Employee was a participant in the Buyer’s Severance
Policy and was entitled to severance pay due to a termination of employment by
Buyer as of the Closing, and for each such Eligible Seller Employee, a true and
correct schedule of the number of years of service to be credited for each such
Eligible Seller Employee for purposes of calculating the applicable transaction
bonus for such Eligible Seller Employee. 
Buyer shall pay to Seller on the Closing Date an amount equal to the
aggregate transaction bonus amount for the Eligible Seller Employees determined
under this Section 7.2(b) and Seller shall pay to each
Eligible Seller Employee as soon as practicable after the Closing Date the
applicable transaction bonus amount determined under this Section 7.2(b) for
such Eligible Seller Employee.  For
purposes of calculating the transaction bonus for each Eligible Seller
Employee, such Eligible Seller Employee shall be given credit for all service
with Seller, the Company and any Subsidiary (or all service credited by Seller,
the Company or a Subsidiary) to the same extent as if rendered to Buyer.  Notwithstanding anything in this Section 7.2(b),
but except as provided in any Seller Ancillary Agreement, Seller shall not be
prohibited from hiring any Company Employee that is terminated by Buyer
following the Closing.

 

(c)           For the six-month period following the
Closing Date, Seller agrees to make available to Buyer the services of the
Retained Seller Employees, to the extent they are then employed by Seller, to
perform transition services to Buyer as Buyer and Seller shall reasonably agree
from time to time, provided that such services do not materially interfere with
the Retained Seller Employees’ obligations to Seller and its Affiliates.  In consideration for such transition services
provided by a Retained Seller Employee, Buyer agrees to pay Seller an amount
equal to the hourly rate of the Retained Seller Employee’s base salary paid by
Seller, pro-rated for any quarter hour of such service, and shall reimburse
Seller for reasonable out-of-pocket expenses incurred in connection with
providing such transition services. 
Seller shall submit monthly invoices in a form reasonably acceptable to
Buyer for any such transition services performed pursuant to this Section 7.2(c).  The reasonably documented transition services
fees and out-of-pocket reasonable expenses, if any, incurred for any particular
month pursuant to this Section 7.2(c) shall be paid by Buyer
no later than 30 days after the date on which Seller sends an invoice to Buyer.

 

(d)           Buyer agrees that each Company Employee
who is employed by Buyer, the Company, any Subsidiary or any of their
respective Affiliates on or after the Closing (a “Continuing Employee”)
shall be provided, for a period commencing on the Closing Date and ending on
the earlier of the termination of such Continuing Employee’s employment with
such entities or the first anniversary of the Closing Date (the “Benefits
Continuation Period”), with (i) base salary that is not less than the
base salary paid by Seller or any Subsidiary immediately prior to the Closing
Date and (ii) other compensation and benefits, including without
limitation incentive compensation, vacation, sick leave and paid time off
benefits, that are not less favorable to such employee than the compensation
and benefits provided by Buyer to similarly situated employees of Buyer
(provided that for purposes of determining the amount of incentive compensation
under any Buyer plan, no Continuing Employee shall be given credit for periods
of service on or prior to the Closing Date). 
Buyer shall provide severance benefits to each

 

50

 

Continuing Employee whose employment is terminated by Buyer at or
following the Closing pursuant to and in accordance with Buyer’s severance
plans and policies that are applicable to similarly situated employees of
Buyer, and for purposes of calculating severance benefits for each such
Continuing Employee, such Continuing Employee shall be given credit for all
service with Seller, the Company and any Subsidiary (or all service credited by
Seller, the Company or a Subsidiary) to the same extent as if rendered to
Buyer; provided, however, that no such service recognition shall result in any
duplication of benefits.  For purposes of calculating the amount of the
transaction bonuses payable to Eligible Seller Employees pursuant to Section 7.2(b) and
for purposes of providing severance benefits to Continuing Employees pursuant
to this Section 7.2(d), the Seller employees listed on Schedule
7.2(d) shall be deemed to be eligible for the level of severance
benefits provided to “executives” within the meaning of such policy.

 

(e)                                  Buyer shall, or shall cause the Company
and each Subsidiary to, credit to Continuing Employees and honor the amount of
accrued but unused vacation and sick leave that such employees had accrued
under Seller’s paid time off policy as of the Closing Date.

 

(f)                                    Buyer shall ensure that, for all purposes
under any employee benefit plan maintained or assumed by Buyer or any of its
Affiliates in which any Continuing Employee becomes a participant as of or
after the Closing Date (other than for purposes of calculating benefits under a
defined benefit pension plan or calculating benefits under an incentive
compensation plan), such Continuing Employee shall be given credit for all
service with Seller, the Company and any Subsidiary (or all service credited by
Seller, the Company or a Subsidiary) to the same extent as if rendered to
Buyer, provided, however, that no such service recognition shall result in any
duplication of benefits.  Buyer shall, or
shall cause the Company and each Subsidiary to (i) waive all limitations
as to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Continuing Employees
under any welfare or fringe benefit plan in which the Continuing Employees may
be eligible to participate on or after the Closing Date, and (ii) provide
each Continuing Employee with credit under any welfare plans of Buyer, the
Company, any Subsidiary or any of their respective Affiliates in which such
Continuing Employee becomes eligible to participate on or after the Closing
Date for any co-payments and deductibles paid by such Continuing Employee for
any out-of-pocket expenditures paid by such Continuing Employee during the plan
year in which the Closing Date occurs under corresponding welfare plans
maintained by Seller or any Subsidiary prior to the Closing Date as though such
amounts had been paid in accordance with the terms and conditions of the
applicable plan maintained by Buyer, the Company, any Subsidiary or any of
their respective Affiliates, as applicable, for the plan year in which the
Closing Date occurs; provided, however, that in the case of any
such plan that is not a self-insured plan, the foregoing treatment shall be
subject to any required approval of the applicable insurance provider, which
approval Buyer shall use all commercially reasonable efforts to obtain.

 

(g)                                 To the extent that any Continuing
Employee participated in the health flexible spending account plan under the
Kerasotes ShowPlace Theatres, LLC Flexible Spending Plan (“Seller’s Health
FSA Plan”) during the calendar year that includes the Closing Date,
effective as of the Closing Date, Seller shall transfer to the corresponding
health flexible spending plan of Buyer the account balances and elections of
the Continuing Employees for such Plan Year under the Seller’s Health FSA Plan,
regardless of whether the balance is positive or negative, in accordance with
the requirements of Revenue Ruling 2002-32. 
To the extent that 

 

51

 

any Continuing Employee participated in Seller’s dependent care
flexible spending account plan under the Kerasotes ShowPlace Theatres, LLC
Flexible Spending Plan (“Seller’s Dependent Care FSA Plan”) during the
calendar year that includes the Closing Date, effective as of the Closing Date,
Seller shall transfer to the corresponding dependent care flexible spending
plan of Buyer the account balances of the Continuing Employees for such
calendar year under Seller’s Dependent Care FSA Plan.  As soon as reasonably practicable after the
Closing Date, Seller shall cause all records relating to the Continuing
Employees’ participation in the Seller’s Health FSA Plan and Seller’s Dependent
Care FSA Plan to be transferred to Buyer. 
For avoidance of doubt, Buyer and its Affiliates shall have no Liability
under the Kerasotes ShowPlace Theatres, LLC Flexible Spending Plan for any
calendar year prior to the year in which the Closing Date occurs and shall not
assume or have any Liability under the Kerasotes ShowPlace Theatres, LLC
Flexible Spending Plan following the Closing except as expressly set forth in
this Section 7.2(g).

 

(h)                                 Seller shall pay to each Company Employee
who is participating in an annual bonus plan of Seller immediately prior to
Closing, a bonus with respect to the portion of the bonus determination period
ending on the Closing Date.  For
avoidance of doubt, Buyer and its Affiliates shall have no obligation to pay or
provide, or have any Liability for, any bonus to any Company Employee with
respect to any performance or bonus determination period ending on a date prior
to the Closing Date.

 

(i)                                     Notwithstanding anything herein to the
contrary, the parties to this Agreement do not intend for this Agreement to
amend any Employee Benefit Plans or arrangements or create any rights or
obligations except between the parties to this Agreement.  No Company Employee or other current or
former employee of the Company or any Subsidiary, including any beneficiary or
dependent thereof, or any other person not a party to this Agreement, shall be
entitled to assert any claim hereunder. 
For avoidance of doubt, except for any cash transaction bonus
obligations paid to Seller with respect to any Eligible Seller Employee
pursuant to Section 7.2(b), Buyer and its Affiliates shall have no
obligation to pay or provide, or have any Liability for, any compensation or
benefits to any Retained Seller Employee.

 

(j)                                     Nothing in this
Agreement shall create any obligation on the part of Buyer, Company or any of
the Subsidiaries to continue the employment of any Continuing Employee for any
definite period following the Closing Date, and, except as set forth in this Section 7.2,
nothing in this Agreement shall be construed to preclude Buyer, Company or any
of its Subsidiaries from altering, amending, or terminating any employee
benefit plan, or the participation of any of their respective employees in such
plans, at any time.

 

Section 7.3                                   Contact with Employees,
Suppliers and Others.  Buyer hereby agrees that it is
not authorized to and shall not (and shall not permit any of its employees,
agents, representatives or Affiliates to) contact any officer, director,
employee, franchisee, supplier, customer, distributor or other material
business relation of the Company or any Subsidiary prior to the Closing with
respect to matters relating to the Company, Seller, this Agreement, or the
transactions contemplated hereby without the prior written consent of Seller; provided,
however, to the extent reasonably requested by Buyer prior to the
Closing, Buyer may make inquiries of and have meetings and discussions with,
those Persons having business relationships with Parent, Seller or the
Subsidiaries (including those Persons set forth on Schedule 7.3), and
Parent and 

 

52

 

Seller shall use commercially reasonable efforts to facilitate, and
shall cooperate with Buyer in connection with, such inquires, meetings and
discussions.

 

Section 7.4                                   Confidentiality.

 

(a)                                  Buyer agrees and acknowledges that it
remains bound by the Confidentiality Agreement from and after the date hereof
until the Closing.  If this Agreement is
terminated prior to Closing in accordance with the terms and conditions of Article XI,
the Confidentiality Agreement shall remain in full force and effect in
accordance with its terms.

 

(b)                                 Each of Seller and Buyer acknowledges and
agrees that it and its Affiliates possess and have had access to confidential
information related to the business, properties, assets and liabilities of the
Company and the Subsidiaries and their respective Affiliates.  For a period of five (5) years from the
Closing Date, each of Seller and Buyer agrees to use the same degree of care,
but no less than reasonable care, to protect confidential information related
to the business, properties, assets and liabilities of the Company and the
Subsidiaries as it uses, as of the date hereof, to protect its own confidential
information and that of its Affiliates. Each of Seller and Buyer acknowledges
and agrees that, during such 5-year period after the Closing, it shall not use
or disclose such confidential information for any purpose or to any party
without the prior written consent of the other party; provided, however,
that (i) Seller shall be entitled to use any Retained Assets in connection
with the operation of the Retained Theatres or any other theatres owned or
operated by Seller in accordance with the Seller Non-Competition Agreement; and
(ii) either party may disclose such confidential information to the extent
such confidential information is required to be disclosed pursuant to a valid
Court Order, in which case, such party shall promptly notify, to the extent
possible, the other party, and take all commercially reasonable steps to assist
such other party in contesting such Court Order or in protecting such other
party’s rights prior to disclosure (and in any event, the disclosing party
shall only disclose such confidential information to the extent required by
such Court Order). Each of Parent and Seller acknowledges and agrees that any
violation of (x) the restrictions set forth in this Section 7.4
by any of their respective Affiliates, directors, officers, employees, direct
or indirect equity holders or representatives, or the Subsidiaries, or (y) Section 3.1
of any Equity Holder Agreement by any Affiliate or direct or indirect equity
holder of Parent or Seller party thereto, whether or not such Person is
purporting to act on behalf of Parent or Seller or otherwise, shall be deemed a
breach of this Section 7.4.

 

(c)                                  Notwithstanding anything to the contrary
in this Agreement, the parties hereto acknowledge and agree that Buyer shall
have sole ownership of, and the exclusive right, title and interest in and to,
all customer lists, data, and other customer information of any kind, and in
any format (whether stored physically, electronically or otherwise) related to
all theatres owned by Seller; provided that Seller shall be entitled to
retain a copy of any customer lists maintained by Seller, and Seller shall be entitled
to use such customer lists in connection with the operation of the Retained
Theatres and any other theatre owned or operated by Seller in accordance with
the terms of the applicable Seller Non-Competition Agreement.  For the avoidance of doubt, except as set
forth in Section 7.8, Buyer will not provide, and Seller shall not
be entitled to retain or use, any other customer lists or customer data of any
type following the Closing.

 

53

 

Section 7.5                                   Release. 
As a material inducement to Buyer to enter into this Agreement,
effective as of the Closing, each of Parent and Seller agrees not to sue, and
fully releases and discharges Buyer, the Company, the Subsidiaries and each of
their respective Affiliates, representatives, directors, officers, employees,
successors and assigns (collectively, the “Releasees”), with respect to
and from any and all claims, demands, rights, liens, Contracts, covenants,
causes of action, obligations, debts, and Losses of whatever kind or nature in
law, equity or otherwise, whether now known or unknown, which such party now
owns or holds or has at any time owned or held against the Releasees with
respect to the operations of the Company and the Subsidiaries and in Seller’s
and Parent’s capacity as direct and indirect equity holders of the Company; provided,
however, that nothing in this Section 7.5 will be deemed to
constitute a release by either Parent or Seller of (i) any claim, demand
or cause of action for which the facts and circumstances giving rise thereto
first arise following the Closing, (ii) any right that Parent or Seller may have to enforce
its rights under this Agreement or any Seller Ancillary Agreement or Buyer
Ancillary Agreement or (iii) any claim, demand or cause of
action in connection with or arising out of the transactions contemplated by
this Agreement or any Seller Ancillary Agreement or Buyer Ancillary Agreement. 
It is the intention of each of Parent and Seller that such release be
effective as a bar to each and every claim, demand and cause of action
hereinabove specified, except with respect to the foregoing exceptions.  In furtherance of this intention, each of
Parent and Seller hereby expressly waives, effective as of the Closing, to
extent permitted by Requirements of Law and subject to the exceptions set forth
in this Section 7.5, any and all rights and benefits conferred upon
such party by Requirements of Law, and expressly consents that this release
will be given full force and effect according to each and all of its express
terms and provisions, including those related to unknown claims, demands and
causes of action, if any, and those relating to any other claims, demands and
causes of action hereinabove specified.

 

Section 7.6                                   Change of Corporate Name; Removal
of Names and Marks.

 

(a)                                  Subject to and except as permitted by the
terms of the Seller License Agreement, following the Closing, Buyer shall not
represent that it or its Affiliates (including the Company and the
Subsidiaries) retain any connection with Parent or Seller (other than as set
forth herein or in any Buyer Ancillary Agreement) and, within 9 months
following the Closing, shall cause the Company and the Subsidiaries to remove
the names “Kerasotes” and “Icon” and associated logos, including the “K”
logo (collectively, the “Retained Names”) from their respective
advertisements, signs, purchase orders, invoices, sales orders, labels,
letterheads, shipping documents, catalogues, publicity materials, and all other
items and materials whatsoever, and Buyer agrees that the Retained Names,
including all trademark rights and goodwill therein, are retained by Seller and
not transferred to Buyer in the transactions contemplated by this Agreement.

 

(b)                                 Subject to and except as permitted by the
terms of the Buyer License Agreement, following the Closing, neither Parent nor
Seller shall represent that it or its Affiliates retain any connection with the
Company or the Subsidiaries (other than as set forth herein or in any Buyer
Ancillary Agreement) and, within 60 days following the Closing, shall ensure
that it and its Affiliates have removed the phrase “ShowPlace Theatres” and all
variations thereof and terms similar thereto, as well as any other name, brand,
logo, and other marks associated with or used by any theatre or other property
or asset of the Company or any Subsidiary to be transferred 

 

54

 

to Buyer (except for the Retained Names), from their respective
advertisements, signs, purchase orders, invoices, sales orders, labels,
letterheads, shipping documents, catalogues, publicity materials, and all other
items and materials whatsoever.

 

Section 7.7                                   Gift Cards and Passes. 
Buyer and Seller each hereby acknowledge and agree that following the
Closing neither party nor any of their respective Affiliates shall have any
obligation to honor or accept any gift cards, gift certificates, discount
tickets, coupons, complimentary admission passes or prepaid passes
(collectively, “Gift Cards and Passes”) issued by the other party or its
Affiliates.  To the extent that either Buyer or Seller does elect to honor any such Gift
Cards and Passes issued by the other party or its Affiliates, it shall do so at
its own cost and without any right to reimbursement from the other party.

 

Section 7.8                                   Web Site Data. 
Buyer and Seller hereby acknowledge and agree that all information
gathered by Parent, Seller, the Company and the Subsidiaries with respect to
all web sites hosted or operated by or for Parent, Seller, the Company or any
Subsidiary (the “Seller Web Sites”), including all customer information
and other information relating to customer usage and traffic patterns relating
to the Seller Web Sites (the “Web Site Data”) are Contributed Assets to
which Buyer has all right, title and interest; provided that Seller
shall have the right to access and use such Web Site Data in accordance with
the terms of Section 7.4(b) and 7.9.

 

Section 7.9                                   Web Site Operation and
Cooperation.  For a period of one year immediately
following the Closing Date, Buyer and Seller each agree that they will
cooperate to facilitate the administration, operation and maintenance of the
Seller Web Sites included in Section 10 of Schedule 1 other than
showplaceicon.com, showplaceicon.org, showplaceicon.biz, showplaceicon.org (the
“Designated Web Sites”) in a mutually beneficial manner and to promote
the successful implementation of the transactions contemplated by this
Agreement, including by taking all steps reasonably necessary or desirable to
modify the Designated Web Sites to direct web site user visits and inquiries
regarding (a) theatres that are Contributed Assets to such web site as
Buyer may designate and (b) the Retained Theatres to such web site as
Seller may designate, as applicable.  During such one-year period, Buyer
will provide to Seller, on a monthly basis, a copy of all customer data
collected on the Designated Web Sites that relate to any of the Retained
Theatres, and Seller shall have the right to use such data in accordance with
the terms of Section 7.4(b).

 

Section 7.10                            Termination of Blue
Light Holdings Lease.  Seller acknowledges and agrees that (i) Seller
is party to that certain Lease Agreement between Seller and Blue Light
Holdings, LLC (“Blue Light”), dated as of August 18, 2008 (the “Blue
Light Lease”), pursuant to which Blue Light agrees to deliver to Seller,
and Seller agrees to lease from Blue Light, the premises as described therein
on the terms and conditions set forth therein, and (ii) the Blue Light
Lease is subject to termination by Seller upon the failure by Blue Light to
deliver to Seller such premises, subject to the terms and conditions of the
Blue Light Lease, on or before February 28, 2010.  Seller shall,
without the requirement of any further action or notice by Buyer, Guarantor, or
any of their respective Affiliates, provide written notice to Buyer and
Guarantor within two (2) Business Days following the date on which Seller’s
right to terminate the Lease becomes effective in accordance with its terms and
shall, at Buyer’s sole discretion and 

 

55

 

pursuant to the written instructions of Buyer, take all actions
reasonably requested by Buyer to terminate the Blue Light Lease in accordance
with its terms.

 

ARTICLE VIII

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND
GUARANTOR

 

The obligations of Buyer
and Guarantor under this Agreement shall, at the option of Buyer, be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions:

 

Section 8.1                                   No Breach of Covenants and
Warranties.

 

(a)                                  There shall not have been any material
breach by Parent, the Company or Seller in the performance of any of their
respective covenants and agreements herein (other than the covenants and
agreements in Section 6.11) that has not been remedied or cured.
There shall not have been any breach by Parent, the Company or Seller in the
performance of any of their respective covenants and agreements in Section 6.11
hereof that has not been remedied or cured.

 

(b)                                 Each of the
representations and warranties of Parent and Seller contained in this Agreement
(as modified by the Schedules but excluding any Updated Schedules delivered to
Buyer pursuant to Section 6.2) shall have been true and correct as
of the date hereof (except to the extent that such representations and
warranties expressly relate to (i) the Closing or the Closing Date or (ii) an
earlier date, in which case they shall have been true and correct as of such
earlier date) and shall be true and correct on the Closing Date as though made
on the Closing Date (except to the extent that such representations and
warranties expressly relate to an earlier date, in which case they shall have
been true and correct as of such earlier date), except, in each case hereunder,
where such failure to be true and correct (in each case hereunder, without
giving effect to any limitation or qualification in such representation or
warranty as to “materiality” including the word “material” or “Material Adverse
Effect”, other than with respect to Section 4.21 and the definition
of “Material Contract” for purposes of Section 4.12(a)), would not,
and would not reasonably be expected to, have a Material Adverse Effect.

 

(c)                                  There shall have been delivered to Buyer
one or more certificate as to the satisfaction of the conditions described in Sections
8.1(a) and 8.1(b), dated the Closing Date, signed by a duly
authorized officer of Parent, the Company or Seller, as applicable.

 

Section 8.2                                   No Material Adverse Effect. 
Between the date hereof and the Closing Date, there shall have been no
Material Adverse Effect and there shall have been delivered to Buyer a
certificate as to the satisfaction of the condition described in this Section 8.2,
dated the Closing Date and signed by a duly authorized officer of Seller.

 

Section 8.3                                   No Restraint. 
The waiting period under the HSR Act, and any agreement with any
Governmental Body not to consummate the transactions contemplated by this
Agreement, shall have expired or been terminated.  No Court Order shall be in effect which
restrains or prohibits any material transaction contemplated hereby or in any
Seller Ancillary Agreement or Buyer Ancillary Agreement and no Requirement of
Law shall have been adopted 

 

56

 

that makes consummation of the transactions contemplated hereby or in
any Seller Ancillary Agreement or Buyer Ancillary Agreement illegal or
otherwise prohibited.

 

Section 8.4                                   Governmental Approvals. 
All approvals and actions of or by all Governmental Bodies required to
be obtained prior to the Closing by applicable Requirements of Law and
necessary to consummate the transactions contemplated hereby or by any Buyer
Ancillary Agreement shall have been obtained.

 

Section 8.5                                   Contribution. 
The Contribution shall have been consummated on terms and pursuant to
definitive documentation reasonably satisfactory to Buyer.

 

Section 8.6                                   Termination of Agreements. 
The agreements set forth on Schedule 8.6 shall have been
terminated and Buyer shall have received reasonably satisfactory proof thereof.

 

Section 8.7                                   Other Deliverables. 
Each of the items specified in Section 3.4 shall have been
duly executed, as applicable, and delivered by Seller, the Company, and each
other party thereto in form and substance reasonably acceptable to Buyer.

 

                                                Buyer and Guarantor may proceed with the
Closing notwithstanding the failure of any one or more of the foregoing
conditions without satisfaction, in whole or in part, thereof and without
providing a written waiver.  If, at any
time prior to the Closing, Seller or the Company delivers to Buyer and
Guarantor a written notice specifying in reasonable detail the failure of any
of the conditions described in this Article VIII or the breach by
Seller or the Company of any of the representations, warranties or covenants of
Seller or the Company contained herein and Buyer and Guarantor proceeds with
the Closing nevertheless, Buyer and Guarantor shall be deemed to have waived,
for all purposes, any rights or remedies it may have against Seller and the Company
with respect to the failure or breach described in such notice.

 

ARTICLE IX

 

CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND THE
COMPANY

 

The obligations of Seller
and the Company under this Agreement shall, at the option of Seller, be subject
to the satisfaction, on or prior to the Closing Date, of the following
conditions:

 

Section 9.1                                   No Misrepresentation or
Breach of Covenants and Warranties.

 

(a)                                  There shall not have been any material
breach by Buyer or Guarantor in the performance of any of its covenants and
agreements herein that has not been remedied or cured.

 

(b)                                 Each of the
representations and warranties of Buyer contained in this Agreement shall be
true and correct on the Closing Date shall have been true and correct as of the
date hereof (except to the extent that such representations and warranties
expressly relate to an earlier date, in which case they shall have been true
and correct as of such earlier date) and shall be true and correct on the
Closing Date as though made on the Closing Date (except to the 

 

57

 

extent that such representations and warranties expressly relate to an
earlier date, in which case they shall have been true and correct as of such
earlier date), except, in each case hereunder, 
where such failure to be true and correct (in each case hereunder,
without giving effect to any limitation or qualification in such representation
or warranty as to “materiality” (including the word “material”)), would not,
and would not reasonably be expected to, have, individually or in the
aggregate, a material adverse effect on Buyer’s ability to consummate the
transactions contemplated hereby or by any Seller Ancillary Agreement.

 

(c)                                  There shall have been delivered to Seller
one or more certificate as to the satisfaction of the conditions described in Sections
9.1(a) and 9.1(b), dated the Closing Date, signed by a duly
authorized officer of Buyer and Guarantor.

 

Section 9.2                                   No Restraint. 
The waiting period under the HSR Act, and any agreement with any
Governmental Body not to consummate the transactions contemplated by this
Agreement, shall have expired or been terminated. No Court Order shall be in
effect which restrains or prohibits any material transaction contemplated
hereby or in any Seller Ancillary Agreement or Buyer Ancillary Agreement and no
Requirement of Law shall have been adopted that makes consummation of the
transactions contemplated hereby or in any Seller Ancillary Agreement or Buyer
Ancillary Agreement illegal or otherwise prohibited.

 

Section 9.3                                   Governmental Approvals. 
All approvals and actions of or by all Governmental Bodies required to
be obtained prior to the Closing by applicable Requirements of Law and
necessary to consummate the transactions contemplated hereby shall have been
obtained.

 

Section 9.4                                   Other Deliverables. 
Each of the items specified in Section 3.3 shall have been
duly executed, as applicable, and delivered by Buyer and Guarantor and each
other party thereto in form and substance reasonably acceptable to Seller.

 

Seller and the Company may proceed with the Closing
notwithstanding the failure of any one or more of the foregoing conditions
without satisfaction, in whole or in part, thereof and without providing a
written waiver.  If, at any time prior to
the Closing, Buyer or Guarantor deliver to Seller a written notice specifying
in reasonable detail the failure of any of the conditions described in this Article IX
or the breach by Buyer or Guarantor of any of the representations, warranties
or covenants of Buyer or Guarantor contained herein and Seller and the Company
proceed with the Closing nevertheless, Seller and the Company shall be deemed
to have waived, for all purposes, any rights or remedies it may have against
Buyer or Guarantor with respect to the failure or breach described in such
notice.

 

ARTICLE X

 

INDEMNIFICATION

 

Section 10.1                            Indemnification by Parent
and Seller.  (a)  From and after the Closing, Parent
and Seller agree to jointly and severally indemnify and hold harmless each
Buyer Group Member from and against any and all Losses and Expenses incurred by
such Buyer Group Member in connection with or arising from:

 

58

 

(i)            (A) any breach or failure by Parent
or Seller to perform any of their respective covenants or obligations contained
in this Agreement, (B) any breach or failure by the Company to perform any
covenant or agreement of the Company contained in this Agreement that is
required to be performed by it at or prior to the Closing, or (C) any
breach or failure by Parent or Seller to perform any of their respective
covenants or obligations contained in the applicable Seller Non-Competition
Agreement;

 

(ii)           any inaccuracy or breach of any
representation or warranty of Parent or Seller contained in Article IV
of this Agreement, without regard, other than with respect to Section 4.21
and to the definition of “Material Contract” for purposes of Section 4.12(a), to any “materiality,” “Material Adverse
Effect,” or other similar qualifiers contained in any such representation or
warranty, (as modified by the Schedules including, subject to the terms and
conditions of Section 6.2, any Updated Schedules delivered to Buyer
pursuant to Section 6.2) or in the certificate(s) delivered by
or on behalf of Parent, Seller and the Company pursuant to Section 8.1(c);

 

(iii)          any Taxes that Seller has agreed to pay
pursuant to Section 7.1(a); and

 

(iv)          the Retained Liabilities.

 

provided, however, that, other than with
respect to Seller Fundamental Representations and the representations and
warranties in Section 4.11 (Tax Matters), inaccuracies or breaches
of which shall be subject to indemnification without limitation, Seller and
Parent shall be required to indemnify and hold harmless Buyer Group Members
under clause (ii) of this Section 10.1(a) with
respect to Losses and Expenses incurred by Buyer Group Members only to the
extent that:

 

(x)           the amount of such Losses and Expenses
suffered by Buyer Group Members related to each individual claim exceeds
$15,000 (it being understood that such amount shall be a deductible for which
Seller and Parent shall bear no indemnification responsibility);

 

(y)           the aggregate amount of such Losses and
Expenses (other than Losses and Expenses excluded by clause (x) above)
exceeds the Indemnity Threshold (it being understood that such amount shall be
a deductible for which Seller and Parent shall bear no indemnification
responsibility); and

 

(z)           the aggregate amount required to be paid by Seller and
Parent pursuant to Section 10.1(a)(ii) shall not exceed the
Cap.

 

(b)           The indemnification provided for in Section 10.1(a) shall
terminate upon the expiration of the applicable survival period set forth in Section 12.1
hereof (and no claims shall be made by any Buyer Group Member under Section 10.1(a) thereafter),
except that the indemnification by Seller shall continue as to any Losses or
Expenses with respect to which any Buyer Group Member has validly given a Claim
Notice to Seller in accordance with the requirements of Section 10.3
on or prior to the date such indemnification would otherwise terminate in
accordance with this Section 10.1(b), as to which the obligation of
Seller shall continue solely with respect to the specific matters described in
such Claim Notice until the liability of Seller shall have been determined
pursuant to this Article X and Seller shall have 

 

59

 

reimbursed all Buyer Group Members for the full amount of such Losses
and Expenses that are payable with respect to such Claim Notice in accordance
with this Article X.

 

Section 10.2                            Indemnification by Buyer
and Guarantor.  (a) From and after the Closing, Buyer
and Guarantor agree to jointly and severally indemnify and hold harmless each
Seller Group Member from and against any and all Losses and Expenses incurred
by such Seller Group Member in connection with or arising from:

 

(i)            (A) any breach or failure by Buyer
or Guarantor to perform any of their respective covenants or obligations
contained in this Agreement or (B) any breach or failure by Buyer or
Guarantor to perform any of their respective covenants or obligations contained
in the Buyer Non-Competition Agreement;

 

(ii)           any inaccuracy or breach of any
representation or warranty of Buyer or Guarantor contained in Article V
of this Agreement or the certificate delivered by or on behalf of Buyer
pursuant to Section 9.1(c); and

 

(iii)          inspections or other activities for or by
Buyer or its agents or contractors at or on any Real Property (including as
described in Sections 6.1(a), (b) and (c)), or any
acts or omissions of Buyer or its agents or contractors with respect to any
Real Property, including any actual physical damage to any Real Property or
injury to Persons thereon; provided, however, that in no event shall the
terms of this Section 10.2(a)(iii) in any way be deemed to
modify the ability of a Buyer Group Member to bring a claim for indemnification
under Section 10.1(a) or to recover Losses from Seller with
respect thereto.

 

(b)           The indemnification provided for in Section 10.2(a) shall
terminate upon the expiration of the applicable survival period set forth in Section 12.1
hereof (and no claims shall be made by any Seller Group Member under Section 10.2(a) thereafter),
except that the indemnification by Buyer shall continue as to any Losses or
Expenses with respect to which any Seller Group Member has validly given a
Claim Notice to Buyer in accordance with the requirements of Section 10.3
on or prior to the date such indemnification would otherwise terminate in
accordance with this Section 10.2(b), as to which the obligation of
Buyer shall continue solely with respect to the specific matters described in
such Claim Notice until the liability of Buyer shall have been determined
pursuant to this Article X and Buyer shall have reimbursed all
Seller Group Members for the full amount of such Losses and Expenses that are
payable with respect to such Claim Notice in accordance with this Article X.

 

Section 10.3                            Notice of Claims. 
Any party hereto seeking indemnification hereunder (the “Indemnified
Party”) shall promptly give to the party obligated to provide
indemnification to such Indemnified Party (the “Indemnitor”) a written
notice (a “Claim Notice”) describing in reasonable detail the facts
giving rise to the claim for indemnification hereunder and shall include in
such Claim Notice (if then known) the amount, or the method of computation of
the amount, of such claim and a reference to the provision of this Agreement or
any other agreement, document or instrument executed hereunder or in connection
herewith upon which such claim is based.

 

60

 

Section 10.4                            Resolution of
Indemnifiable Claims.  After the giving of any Claim
Notice pursuant to Section 10.3, the amount of indemnification to
which an Indemnified Party shall be entitled under this Article X
shall be determined: (i) by written agreement between the Indemnified
Party and the Indemnitor; (ii) by a final judgment or decree of any court
of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree in writing.  The judgment or decree of a court shall be
deemed final when the time for appeal, if any, shall have expired and no appeal
shall have been taken or when all appeals taken shall have been finally
determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Losses and Expenses suffered by it.

 

Section 10.5                            Third Person Claims.  (a) 
Any Indemnified Party seeking indemnification in respect of, arising out of or
involving a claim or demand made by a third Person against the Indemnified
Party (a “Third Person Claim”) shall notify the Indemnitor in writing,
and in reasonable detail, of such Third Person Claim within 10 days after the
Indemnified Party’s receipt of written notice thereof.  Thereafter, the Indemnified Party shall
deliver to the Indemnitor, within five Business Days after the Indemnified
Party’s receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnified Party relating to the Third Person
Claim.  Any Claim Notice involving a
Third Person Claim shall refer to the provision of this Agreement upon which
the claim described in such Claim Notice is based and describe in reasonable
detail the facts giving rise to an alleged basis for such claim and the amount,
if known, of the Liability asserted against the Indemnitor by reason of such
claim.  The failure to give notice in
accordance with this Section 10.5 shall not relieve the Indemnitor
of its obligations hereunder except to the extent it shall have been materially
prejudiced by such failure.

 

(b)                                 The Indemnitor shall, subject to the
limitations set forth in this Section 10.5(b), have the sole and
absolute right, after the receipt of notice, at its option and at its own
expense, to be represented by counsel of its choice and to control and defend
against, negotiate or otherwise deal with any Proceeding which relates to any
Third Person Claim; provided, however, that if the Indemnitor
elects to control the Proceeding, such counsel shall be reasonably acceptable
to the Indemnified Party and the Indemnified Party may participate in any such
Proceeding with counsel of its choice and at its own expense (other than in the
case of fees and expenses that are incurred prior to the date the Indemnitor
effectively assumes control of such defense), and provided  further,
that if in the reasonable opinion of the Indemnified Party’s counsel, a
conflict of interest exists or may arise in the event the Indemnitor elects to
control or defend any Third Person Claim, the Indemnified Party may, at its
sole election, solely control and defend against, negotiate or otherwise deal
with any such claim and such fees and expenses will be born by the Indemnitor
to the extent such fees and expenses were incurred in connection with defending
against those elements of the Proceeding with respect to which such conflict
exists.  Additionally, to the extent that
(i) the Indemnitor elects not to defend such Third Person Claim, or (ii) the
claim for indemnification relates to or arises in connection with any criminal
Proceeding, the Indemnified Party may defend against, deal with and otherwise
control such Third Person Claim using counsel of its choosing, at the expense
of the Indemnitor; provided, however, that the Indemnitor shall
be obligated pursuant to this Section 10.5(b) to pay for only
one firm of counsel (and one local or special counsel in each applicable
jurisdiction or to the extent reasonably engaged by the Indemnified Party) for
all Indemnified Parties.  The parties
hereto agree to cooperate fully with each other in connection with the defense,
negotiation or 

 

61

 

settlement of any Third Person Claim; provided, however,
that neither the Indemnitor nor the Indemnified Party may settle or compromise
any such Third Person Claim without the written consent of the Indemnified
Party or the Indemnitor, as applicable, which consent shall not be unreasonably
withheld, or delayed; provided, further, that the Indemnitor may
settle or compromise any Third Party Claim without the consent of the Indemnified
Party if (A) the Indemnitor pays or agrees to pay or cause to be paid all
amounts arising out of such settlement or compromise, (B) such settlement
or compromise would not encumber any of the material assets of any Indemnified
Party or impose any restriction or condition that would apply to or materially
adversely affect any Indemnified Party or the conduct of any Indemnified Party’s
business, (C) the Indemnitor obtains, as a condition of such settlement or
compromise, a complete release of any Indemnified Party that could reasonably
be affected by such Third-Party Claim, and (D) such settlement or
compromise does not involve any admission of liability or wrongdoing by any
Indemnified Party or any of its Affiliates.

 

(c)                                  To the extent of any inconsistency
between this Section 10.5 and Section 7.1(b) (relating
to Tax contests), the provisions of Section 7.1(b) shall
control with respect to Tax contests.

 

Section 10.6                            Determination of
Indemnification Amounts.  (a)  The
amount of any and all Losses and Expenses under this Article X
shall be determined net of (i) any Tax benefits actually realized by the
Indemnified Party arising from the deductibility of any such Losses and
Expenses or otherwise and (ii) any amounts actually recovered by the
Indemnified Party under insurance policies, indemnities or other reimbursement
arrangements with respect to such Losses and Expenses.  Each party hereby waives, to the extent
permitted under its applicable insurance policies, any subrogation rights that
its insurer may have with respect to any indemnifiable Losses and Expenses.

 

(b)                                 Any indemnification payment under this
Agreement shall be treated as an adjustment to the Purchase Price for Tax
purposes.

 

(c)                                  If an Indemnified Party recovers from any
third Person an amount in respect of a matter for which such Indemnified Party
has been indemnified pursuant to this Article X, such Indemnified
Party shall promptly remit to the appropriate Indemnitor the amount so
recovered (after deducting therefrom the full amount of the expenses actually
incurred by the Indemnified Party in procuring such recovery, including
insurance premiums paid and insurance deductibles applied), but not in excess
of the sum of (i) any amount paid by the Indemnitor to or on behalf of the
Indemnified Party in respect of such matter and (ii) any amount expended
by the Indemnitor in pursuing or defending any claim arising out of such
matter.

 

(d)                                 Each of the parties agrees to take all
commercially reasonable steps to mitigate their respective Losses and Expenses
upon and after becoming aware of any event or condition which could or could
reasonably be expected to give rise to any Losses and Expenses for which they
may be entitled to indemnification hereunder; provided, however,
that no party hereto or their respective Affiliates shall be required to make
any material monetary expenditure, commence or participate in any Proceeding,
offer or grant any material accommodation to any Person, or take, or refrain
from taking, any action that would or would reasonably be expected to 

 

62

 

adversely affect the business, operations, results or condition
(financial or otherwise) of such party or its Affiliates in any material
respect in connection with such mitigation.

 

(e)                                  Neither Parent nor Seller shall be
obligated to indemnify any Buyer Group Member with respect to any matter to the
extent that such matter was included in the calculation of Closing Date Working
Capital.

 

(f)                                    Notwithstanding anything to the contrary
set forth in this Agreement, if any Indemnified Party seeks recovery pursuant
to this Article X for Losses constituting a loss of profits or loss
of use or revenue, such Indemnified party shall, prior to recovering against
any Indemnitor, be required to use commercially reasonable efforts to seek
recovery from all policies of insurance, including business disruption or
similar policies, that are then-maintained by such
Indemnified Party or its Affiliates (in the case of Affiliate insurance
policies, only to the extent such policies are applicable to Losses suffered by
such Indemnified Party), and pursuant to all rights of indemnification against
third party landlords that such Indemnified Party or its Affiliates, as
applicable, may have under applicable lease agreements with respect to such
Losses; provided, however, that (i) in no event shall the
terms of this Section 10.6(f) be deemed to require any Person
to obtain any new or maintain any existing insurance policies, (ii) any
Losses or Expenses incurred by such Indemnified Party in connection with its
efforts to seek recovery against such third parties shall be Losses subject to
indemnification pursuant to this Article X, and (iii) any
amounts not covered by applicable insurance policies or any other contract or
agreement (whether in the form of deductibles, amounts in excess of applicable
caps, or otherwise), and any increase in rent, insurance premiums, or other
Losses or Expenses of any kind resulting from such Indemnified Party’s efforts
to seek recovery against such third parties shall be Losses subject to
indemnification pursuant to this Article X.  Notwithstanding anything to the contrary in
this Agreement, for purposes of this Section 10.6, the term “Affiliate”
shall not include any investment fund (or any officer, director, employee,
equity holder, or general or limited partner thereof, or any portfolio company
owned, in whole or in part, thereby (other than AMC Entertainment, Inc., a
Delaware corporation) that, directly or indirectly, owns any equity securities
of Guarantor.

 

Section 10.7                            Escrow Fund.  From and after
the Closing, any indemnification obligations of Seller or Parent shall be paid first,
from the Escrow Fund pursuant to the terms of the Escrow Agreement; second,
after the entire Escrow Fund has been paid to a Buyer Group Member or released
and returned to Seller pursuant to the terms of the Escrow Agreement, directly
by Seller or Parent (provided that Providence shall pay directly its Pro Rata
Share of Seller’s and Parent’s indemnification obligations pursuant to
Providence’s Equity Holder Agreement); provided, that upon or after the
occurrence of any of (a) the voluntary or involuntary dissolution,
liquidation or winding up of Seller or Parent, (b) the transfer of more
than 25% in value (based on book value calculated as of the Closing) of the
assets of Seller or Parent to any third party (unless such third party agrees
in writing to assume its pro rata share, based on the book value of the
transferred assets calculated as of the Closing, of the obligations of Seller
and Parent under this Article X (for which Parent and Seller shall
remain fully liable), or (c) the failure of Seller or Parent to pay any
amounts required to be paid thereby pursuant to this Agreement within 30 days
of such amount becoming due and payable by the Seller or Parent, then any
indemnification obligations of Seller and Parent not paid to a Buyer Group
Member pursuant to this Section 10.7 shall be paid (to the extent
of Seller’s Pro Rata Share) by 

 

63

 

each Seller Guarantor (other than Providence Equity Partners IV, L.P.
and Providence Equity Operating Partners IV, L.P.) in accordance with such
Seller Guarantor’s Equity Holder Agreement.

 

Section 10.8                            Exclusive Remedy.  Each of the
parties hereto acknowledges and agrees that, from and after the Closing, its
sole and exclusive monetary remedy against the other party or any Affiliates of
the other party with respect to any and all claims relating (directly or
indirectly) to the subject matter of this Agreement or the transactions
contemplated hereby (other than for a claim of knowing fraud, willful
misconduct or intentional misrepresentation) shall be pursuant to the
indemnification provisions set forth in this Article X.  Notwithstanding the foregoing, nothing in
this Section 10.8 shall be deemed to limit the rights of Parent and
Seller under Section 11.3(b) or the rights of Buyer under Section 11.3(d) hereof.

 

ARTICLE XI

 

TERMINATION

 

Section 11.1                            Termination. 
Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated at any time prior to the Closing Date:

 

(a)                                  by the mutual consent of Buyer and
Seller;

 

(b)                                 by Buyer, if there has been a breach by
Parent, Seller, or the Company of any of their respective representations,
warranties, covenants or agreements contained in this Agreement, or any breach
by any direct or indirect equity holder of Parent of any covenant or agreement
contained in any Equity Holder Agreement to which such equity holder is a party
that is to be performed prior to the Closing, in each case that would or would
reasonably be expected to give rise to the failure of a condition set forth in Article VIII
and Parent, Seller or the Company, as applicable, fails to cure such breach
within thirty (30) Business Days after receipt of written notice thereof
(except no cure period shall be provided for a breach which by its nature
cannot be cured); provided, that neither Buyer nor Guarantor is then in
material breach of any representation, warranty, covenant or agreement
contained herein;

 

(c)                                  by Seller, if there has been a breach by
Buyer or Guarantor of any of their respective representations, warranties,
covenants or agreements contained in this Agreement which would or would
reasonably be expected to give rise to the failure of a condition set forth in Article IX
and Buyer or Guarantor, as applicable, fails to cure such breach within thirty
(30) Business Days after receipt of written notice thereof (except no cure
period shall be provided for a breach which by its nature cannot be cured); provided,
that neither Parent, Seller nor the Company is then in material breach of any
representation, warranty, covenant or agreement contained herein;

 

(d)                                 by Buyer or Seller if any final and
non-appealable Court Order shall have been issued permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; or

 

64

 

(e)                                  by Buyer or Seller if the Closing shall
not have occurred on or before June 7, 2010, or such later date as may be
mutually agreed in writing by Buyer and Seller (the “Outside Date”); provided,
that, in the event that all conditions to Closing set forth in Article VIII
have been satisfied (other than the condition set forth in the first sentence
of Section 8.3 and those conditions in Article VIII
that, by their terms, may only be satisfied as of the Closing) on or prior to
such date, the Outside Date shall, automatically and without further notice or
other action by the parties hereto, be extended to December 9, 2010; provided,
however, that the right to terminate this Agreement under this Section 11.1(e) shall
not be available to any party who is in material breach of this Agreement as of
the date of such proposed termination.

 

Section 11.2                            Notice of Termination. 
Any party desiring to terminate this Agreement pursuant to Section 11.1
shall give written notice of such termination, which notice shall specify the Section of
this Agreement pursuant to which it is being terminated, to the other party to
this Agreement.

 

Section 11.3                            Effect of Termination;
Remedies.

 

(a)                                  If this Agreement shall be terminated
pursuant to this Article XI, all further obligations of the parties
under this Agreement (other than the obligations described in the last sentence
of Section 6.1(b), Section 7.4, Section 10.2(a)(iii),
this Section 11.3, and Article XII, each of which shall
survive any such termination) shall be terminated without further Liability of
any party to the other; provided, however, that nothing herein
shall relieve any party from Liability for fraud, intentional misconduct or
willful and wanton breach of this Agreement.

 

(b)                                 In the event
that this Agreement is terminated by Buyer or Seller pursuant to Section 11.1(d) or
11.1(e) and, in each case, at the time of such termination, (i) the
conditions set forth in Article IX (other than (A) the
conditions set forth in Sections 9.2 and 9.3 (but only to the
extent the Court Order is issued or brought, or the approvals required to be
obtained, are under applicable Antitrust Laws), (B) the delivery of
certificates which (in light of the underlying facts as of the time of such
termination and any waiver of the condition set forth in Section 9.1(a) deemed
made pursuant to Section 11.1(e)) would be capable of being
delivered but are to be delivered on the Closing Date and (C) such other
conditions the failure of which to be satisfied by such date has been
principally caused by a material breach by Buyer or Guarantor of any
representation, warranty or covenant hereunder or the facts or circumstances
underlying such breach), have been satisfied or (to the extent permitted by
Requirements of Law) waived, (ii) Buyer does not have the right to
terminate this Agreement pursuant to Section 11.1(b), and (iii) neither
Buyer nor Seller has the right to terminate this Agreement pursuant to Section 11.1(d) for
any reason other than that consummation of the transactions contemplated hereby
would violate any Antitrust Law (or would have the right to so terminate
assuming that the relevant Court Order referenced in Section 11.1(d) has
become final and non-appealable at the time of such termination), then Buyer or
Guarantor shall pay Seller a fee equal to $5,500,000 (the “Non-Clearance
Termination Fee”) by wire transfer of immediately available funds on the
third Business Day following the date of such termination of this Agreement.

 

(c)                                  Buyer and the
Guarantor each acknowledges that the provisions contained in Section 11.3(b) constitute
an integral part of the transactions contemplated by this Agreement, and that,
without these agreements, neither Parent nor Seller would have entered into
this 

 

65

 

Agreement.  Accordingly, if Buyer
or the Guarantor fails to promptly pay the Non-Clearance Termination Fee
pursuant to Section 11.3(b), and, in order to obtain such payment
Parent, Seller or the Company, as the case may be, commences a suit which
results in a judgment against Buyer or the Guarantor, as applicable, for any of
the amounts set forth in Section 11.3(b), then Buyer or the
Guarantor shall pay to the Company its Expenses in connection with such suit,
together with interest on the amount of the Non-Clearance Termination Fee at
the prime rate of JPMorgan Chase Bank, N.A. in effect on the date plus 2% per
annum from the date such amount was required to be paid until the date actually
received by the Company.

 

(d)                                 Each of Parent, Seller, the Company,
Buyer and Guarantor acknowledges and agrees that any breach or failure to
perform any of the provisions of this Agreement or any Buyer Ancillary Agreement or Seller Ancillary Agreement in
accordance with their specific terms would result in immediate and irreparable
harm or injury for which money damages would not be an adequate remedy.  Accordingly, each of Parent, Seller, the
Company, Buyer and Guarantor agrees that, unless and until this Agreement has
been terminated in accordance with its terms, each party shall be entitled, for
any violation or threatened violation of the provisions of this Agreement or
any Buyer Ancillary Agreement or Seller
Ancillary Agreement, an injunction or injunctions to restrain such
violation or threatened violation and to
specifically enforce the terms and provisions of thereof without the necessity
of posting a bond or other form of security. 
In the event that any action should be brought in equity to enforce the
provisions of this Agreement or any Buyer
Ancillary Agreement or Seller Ancillary Agreement, no party hereto or
any of their respective Affiliates, will allege, and each party hereby waives
the defense, that there is an adequate remedy at law.

 

ARTICLE XII

 

GENERAL PROVISIONS

 

Section 12.1                            Survival of
Representations, Warranties and Covenants.  The
representations, warranties and covenants contained in this Agreement and in
any certificate delivered pursuant hereto shall, in each case, survive the
consummation of the transactions contemplated by this Agreement, as follows:

 

(a)                                  The indemnification provided for in Section 10.1(a)(ii) shall
(i) with respect to Seller Fundamental Representations, survive
indefinitely; (ii) with respect to the representations and warranties
contained in Section 4.11 (Tax Matters), survive until the date
that is six months after the expiration of the latest applicable statute of
limitations period; (iii) with respect to the representations and
warranties contained in Section 4.19 (Environmental Compliance)
survive until the date that is three (3) years after the Closing Date; and
(iv) with respect to all other representations and warranties contained in
Article IV, survive until the earlier of (A) eighteen (18)
months after the Closing Date and (B) the date that is 90 days after the
receipt of the Company of audited consolidated financial statements of the
Company as of and for the 12 month period ended December 31, 2010
(prepared in accordance with the Agreed Accounting Principles);

 

(b)                                 The indemnification provided for in Section 10.2(a)(ii) shall
(i) with respect to Buyer Fundamental Representations, survive
indefinitely; and (ii)  with respect to all 

 

66

 

other representations and warranties contained in Article V,
survive until the earlier of (A) eighteen (18) months after the Closing
Date and (B) the date that is 90 days after the receipt of the Company of
audited consolidated financial statements of the Company as of and for the 12
month period ended December 31, 2010 (prepared in accordance with the
Agreed Accounting Principles);

 

(c)                                  The indemnification provided for in Section 10.1(a)(i) and
Section 10.2(a)(i) shall survive until such covenant or
obligation is performed or was required to have been performed;

 

(d)                                 The indemnification provided for Section 10.1(a)(iii),
Section 10.1(a)(iv), and Section 10.2(a)(iii) shall
survive indefinitely.

 

Section 12.2                            No Public Announcement. 
None of Buyer, Seller or the Company shall, without the approval of the
others (including with respect to both timing and content), make or permit any
of their respective Affiliates to make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by Requirements
of Law, in which case the other parties shall be advised and shall use their
reasonable efforts to cause a mutually agreeable release or announcement to be
issued; provided, however, that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and the Securities and Exchange
Commission disclosure obligations or the rules of any stock exchange.

 

Section 12.3                            Notices. 
All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered when delivered
personally or when actually received when sent by registered or certified mail
or by private courier addressed as follows:

 

If to
Buyer or Guarantor, to:

 

American
Multi-Cinema, Inc.

920
Main Street,

Kansas
City, Missouri  64105

Attention:  General Counsel and Chief Financial Officer

Facsimile:  816-480-4700

 

with a copy to:

 

O’Melveny & Myers LLP

Times Square Tower

7 Times Square

New York, New York 10036

Attention: John Scott and Douglas A. Ryder

Facsimile: 212-326-2061

 

67

 

If to
Parent, Seller or the Company, to:

 

Kerasotes ShowPlace Theatres, LLC

224 N. Des Plaines, Suite 200

Chicago, Illinois 60661-1134

Attention: Anthony Kerasotes

Facsimile:  312-258-9943

 

with a copy to:

 

Sidley Austin LLP

One South Dearborn

Chicago, Illinois 60603

Attention: Chris E. Abbinante

Facsimile:  312-853-7036

 

or to such other address as such party may indicate by
a notice delivered to the other party hereto.

 

Section 12.4                            Successors and Assigns. 
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns; provided,
however, that no party to this Agreement may assign its rights prior to
the Closing or delegate its obligations under this Agreement without the
express prior written consent of the other parties to this Agreement.  Following the Closing, any party may assign
any of its rights hereunder, but no such assignment shall relieve it of its
obligations hereunder.

 

Section 12.5                            Access to Records after
Closing.  For a period of six (6) years after the
Closing Date, Seller and its representatives, on the one hand, and Buyer and
its Affiliates on the other hand, shall have reasonable access to all of the
books and records of the Company and the Subsidiaries in the possession of the
other party (including those books and records of the Company primarily related
to the Retained Assets and the Retained Liabilities to the extent such retained
books and records relate to any of the theatres, properties, assets or
Liabilities transferred to Buyer at Closing) to the extent that such access may
reasonably be required by Seller or Buyer, as applicable, including in
connection with any Proceeding before any Governmental Body or with respect to
Taxes, in each case to the extent related to the operations of the Company and
the Subsidiaries on or prior to the Closing Date.  Such access shall be afforded by Buyer or
Seller, as applicable, upon receipt of reasonable advance notice and during
normal business hours.  Buyer or Seller,
as applicable, shall be solely responsible for any costs or expenses incurred
by it pursuant to this Section 12.5.  If Seller, on the one hand, or Buyer or the Company
on the other hand, shall desire to dispose of any of such books and records
prior to the expiration of such 6-year period, such party shall, prior to such
disposition, give the other party a reasonable opportunity, at such other party’s
expense, to segregate and remove such books and records as such other party may
select.

 

Section 12.6                            Entire Agreement;
Amendments.  This Agreement, the Exhibits and Schedules
referred to herein, the documents delivered pursuant hereto (including the
Seller Ancillary Agreements and Buyer Ancillary Agreements) and the
Confidentiality Agreement 

 

68

 

contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all other prior
representations, warranties, agreements, understandings or letters of intent
between or among any of the parties hereto. 
This Agreement shall not be amended, modified or supplemented except by
a written instrument signed by Buyer, the Company and Seller.

 

Section 12.7                            Interpretation. 
Disclosure of any fact or item in any Schedule hereto referenced by a
particular section in this Agreement shall be deemed to have been disclosed
with respect to every other section in this Agreement to which such fact’s or
item’s relevance is reasonably apparent. Unless this Agreement specifically
provides otherwise, (i) neither the specification of any dollar amount in
any representation or warranty contained in this Agreement nor the inclusion of
any specific item in any Schedule hereto shall be deemed to imply that such
amount, or higher or lower amounts, or the item so included or other items, are
or are not material, and no party shall use the fact of the setting forth of
any such amount or the inclusion of any such item in any dispute or controversy
between the parties as to whether any obligation, item or matter not described
herein or included in any Schedule is or is not material for purposes of this
Agreement; (ii) except for those items specified in Section 6.4(b) or
included in any schedule related to Section 6.4, neither the
specification of any item or matter in any representation or warranty contained
in this Agreement nor the inclusion of any specific item in any Schedule hereto
is intended to imply that such item or matter, or other items or matters, are
or are not in the ordinary course of business, and no party shall use the fact
of the setting forth or the inclusion of any such item or matter in any dispute
or controversy between the parties as to whether any obligation, item or matter
not described herein or included in any Schedule is or is not in the ordinary
course of business for purposes of this Agreement.  Pursuant to Section 6.2, Seller
and the Company may, from time to time prior to the Closing, deliver written
Updated Schedules to Buyer.  No such
Updated Schedule shall be evidence, in and of itself, that the representations
and warranties in the corresponding section are no longer true and correct in
all material respects.  No such Updated
Schedules shall be deemed to cure any breach that exists as of the date hereof
for purposes of Section 8.1. 
If, however, the Closing occurs, any such Updated Schedules will be
effective to cure and correct for purposes of Article X, any breach
of any representation or warranty which would have existed if Seller or the
Company had not delivered such Updated Schedules, and all references to any
Schedule which is supplemented or amended as provided in Section 6.2
shall for purposes after the Closing be deemed to be a reference to such
Schedule as so supplemented or amended by such Updated Schedule.

 

Section 12.8                            Waivers. 
Any term or provision of this Agreement may be waived, or the time for
its performance may be extended, by the party or parties entitled to the
benefit thereof.  Any such waiver shall
be validly and sufficiently authorized for the purposes of this Agreement if,
as to any party, it is authorized in writing by an authorized representative of
such party.  The failure of any party
hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision.  No waiver of any breach of this Agreement
shall be held to constitute a waiver of any other or subsequent breach.

 

Section 12.9                            Expenses. 
Except as expressly set forth herein, each party hereto will pay all
costs and expenses incident to its negotiation and preparation of this
Agreement and 

 

69

 

to its performance and compliance with all agreements
and conditions contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and independent
public accountants; provided, however, that all Transaction Costs
shall be the responsibility of Buyer to the extent included in Closing Date
Working Capital.  Notwithstanding
anything herein to the contrary, in the event that any Transaction Costs
are either not paid prior to Closing or not reflected in the Closing Date
Working Capital, any and all such Transaction Costs shall be payable solely by
Seller and none of Buyer, the Company or any Subsidiary shall have
any Liability therefor.

 

Section 12.10                     Partial Invalidity. 
Wherever possible, each provision hereof shall be interpreted in such
manner as to be effective and valid under applicable law, but in case any one
or more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such provision shall be
ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating the remainder of such
invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.

 

Section 12.11                     Execution in Counterparts. 
This Agreement may be executed in counterparts, each of which shall be
considered an original instrument, but all of which shall be considered one and
the same agreement, and shall become binding when one or more counterparts have
been signed by each of the parties hereto and delivered to Seller, the Company
and Buyer.

 

Section 12.12                     Further Assurances.

 

(a)                                  Each of the parties hereto agrees to use
its commercially reasonable efforts to take or cause to be taken all action, to
do or cause to be done, and to assist and cooperate with the other party in
doing, all things reasonably necessary, proper or advisable under applicable
Requirements of Law or otherwise to consummate and make effective, the
transactions contemplated by this Agreement, including:  (i) the satisfaction of the conditions
precedent to the obligations of such party; and (ii) the execution and
delivery of such instruments, and the taking of such other actions as may
reasonably be requested in order to carry out the intent of this Agreement;
provided, however, that notwithstanding the foregoing, no party hereto or their
respective Affiliates shall be required to make any material monetary
expenditure, commence or participate in any Proceeding before any Government
Body or offer or grant any material accommodation (financial or otherwise) to
any Person in connection with the obligations described in this Section 12.12.
Notwithstanding the foregoing, in the event (and to the extent) of any
inconsistency between the terms and conditions of this Section 12.12
and the terms and conditions of any other Section of this Agreement,
including Section 6.3, the terms and conditions of such other Section shall
control.

 

(b)                                 Following the
Closing, Seller shall, and shall cause its Affiliates (including its
direct and indirect equity holders) to (i) provide to the Buyer and
its advisors and representatives, upon reasonable advance notice and
without undue interruption to Seller’s business, access during normal business
hours to the books and records of the Company pertaining to the operation of
the Company’s business, properties and personnel prior to the Closing (to the
extent retained by Seller) and (ii) assist and cooperate with the
Buyer, its 

 

70

 

auditors, and, if different from Buyer’s auditors, the auditors of the
Financial Statements, to the extent reasonably requested by the Buyer or
such auditors (including, without limitation, by providing customary
documentation, including representation letters, to the Buyer or such
auditors), in each case, in connection with (a) the preparation of the
financial statements of the Buyer and its Affiliates, (b) the use and
disclosure of the Financial Statements, any other financial information of
the Company and the Subsidiaries relating to the period prior to Closing, and
of any successor financial statements and other information derived therefrom,
in connection with any Filings, (c) the Buyer obtaining customary
comfort letters from its auditors or, if different, the auditors of the
Financial Statements in connection with any Filings, (d) the Buyer
obtaining such auditor’s consent to use their audit reports and comfort letters
in connection with any Filings and (e) conforming the Financial Statements
for use in any Filings; provided that the Buyer will reimburse Seller
for any and all of its expenses reasonably incurred by it and its
Affiliates and representatives in connection with providing such cooperation; provided
further that none of Parent, Seller or any of their respective
Affiliates shall be deemed to have made any representation or warranty with
respect to any information provided pursuant to this Section 12.12
except as specifically set forth in Article IV hereof.  “Filings”
means, with respect to the Buyer and/or its Affiliates, any (i) issuance
of securities in transactions registered under the Securities Act, or in
transactions exempt from the registration requirements thereunder, (ii) filings
with, or reporting obligations under, the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (or similar filings
or reporting obligations in other relevant jurisdictions or
under Requirements of Law), and (iii) the provision of information to
investors and Governmental Bodies in connection with such securities.

 

Section 12.13                     Disclaimer of Warranties. 
Buyer acknowledges that it has conducted an independent investigation
and verification of the financial condition, results of operations, assets,
liabilities, properties and projected operations of Seller, the Company and the
Subsidiaries, taken as a whole, and, in making its determination to proceed
with the transactions contemplated by this Agreement, Buyer has relied on the
results of its own independent investigation and verification and the
representations and warranties of Parent and Seller expressly and specifically
set forth in Article IV, as qualified by the Schedules and Updated
Schedules.  Neither Parent nor Seller nor
the Company make any representations or warranties with respect to any
projections, forecasts or forward-looking information provided to Buyer, except
as set forth in Article IV. 
There is no assurance that any projected or forecasted results will be
achieved.  EXCEPT AS TO
THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS
AGREEMENT AND THE CERTIFICATES DELIVERED BY PARENT, SELLER AND THE COMPANY
PURSUANT TO SECTION 8.1, (i) SELLER IS SELLING THE UNIT (AND
THE BUSINESS AND ASSETS OF THE COMPANY REPRESENTED THEREBY) ON AN “AS IS, WHERE
IS” BASIS AND PARENT, SELLER AND THE COMPANY DISCLAIM ALL OTHER WARRANTIES,
REPRESENTATIONS AND GUARANTEES WHETHER EXPRESS OR IMPLIED AND (ii) 
NEITHER PARENT NOR SELLER NOR THE COMPANY MAKE ANY REPRESENTATION OR WARRANTY
AS TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND NO IMPLIED
WARRANTIES WHATSOEVER.  Buyer
acknowledges that neither Parent nor Seller, except as set forth in Article IV,
nor the Company or any of their respective representatives or Affiliates or any
other Person has made any representation or warranty, express or implied, as to
the accuracy or completeness of any memoranda, charts or summaries 

 

71

 

heretofore made available by Parent, Seller, the Company or their
representatives or Affiliates to Buyer or any other information which is not
included in this Agreement or the Schedules (including any Updated Schedules
delivered to Buyer pursuant to Section 6.2), and none of Parent,
Seller, the Company or any of their representatives or Affiliates or any other
Person will have or be subject to any Liability to Buyer, any Affiliate of
Buyer or any other Person resulting from the distribution of any such
information to, or use of any such information by, Buyer, any Affiliate of
Buyer or any of their agents, consultants, accountants, counsel or other
representatives.

 

Section 12.14                     Governing Law; Submission
to Jurisdiction; Waiver of Jury Trial.

 

(a)                                  This Agreement and all matters arising
out of or in connection with the subject matter hereof shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Delaware  or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.

 

(b)                                 By the execution and delivery of this
Agreement, Buyer, Seller and the Company submit to the personal jurisdiction of
any state or federal court in the State of Illinois in any suit or Proceeding
arising out of or relating to this Agreement. 
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 12.15                     Binding Effect. 
This Agreement will be binding on and inure solely to the benefit of
each party hereto, and, except as expressly set forth in Article X,
nothing in this Agreement, express or implied, is intended to or will confer
upon any other Person any right, benefit, or remedy of any nature whatsoever
under or by reason of this Agreement.

 

[Remainder of page intentionally left blank;
signature pages follow.]

 

72

 

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.

 

	
   

  	
  KERASOTES SHOWPLACE THEATRES HOLDINGS, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY KERASOTES

  
	
   

  	
   

  	
  Name:

  	
  Anthony Kerasotes

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KERASOTES SHOWPLACE THEATRES, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY KERASOTES

  
	
   

  	
   

  	
  Name:

  	
  Anthony Kerasotes

  
	
   

  	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHOWPLACE THEATRES HOLDING COMPANY, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ANTHONY KERASOTES

  
	
   

  	
   

  	
  Name:

  	
  Anthony Kerasotes

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMC SHOWPLACE HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GERARDO I. LOPEZ

  
	
   

  	
   

  	
  Name:

  	
  Gerardo I. Lopez

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICAN MULTI-CINEMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GERARDO I. LOPEZ

  
	
   

  	
   

  	
  Name:

  	
  Gerardo I. Lopez

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  

 

[Signature Page to Unit Purchase
Agreement]

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