EX. 2.1 - AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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Title: EX. 2.1 - AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware Date: 7/23/2004
Industry: Motion Pictures Law Firm: Skadden, Arps, Slate, Meagher & Flom LLP; Latham & Watkins LLP; LLP Sector: Services

EX. 2.1 - AGREEMENT AND PLAN OF MERGER, Parties: amc entertainment inc , marquee inc. , marquee holdings inc.

Exhibit 2.1

EXECUTION COPY

===============================================================================

AGREEMENT AND PLAN OF MERGER

by and among

MARQUEE HOLDINGS INC.,

MARQUEE INC.

and

AMC ENTERTAINMENT INC.

DATED AS OF JULY 22, 2004

===============================================================================

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TABLE OF CONTENTS

<TABLE>

Page

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ARTICLE I THE MERGER

Section 1.1 The Merger..........................................................................2

Section 1.2 Closing.............................................................................2

Section 1.3 Effect of the Merger................................................................2

Section 1.4 Certificate of Incorporation and Bylaws of Surviving Corporation....................3

Section 1.5 Directors and Officers of the Surviving Corporation.................................3

ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

Section 2.1 Conversion of Securities............................................................3

Section 2.2 Exchange of Certificates; Payment of Merger Consideration...........................4

Section 2.3 Stock Transfer Books................................................................6

Section 2.4 Dissenting Shares...................................................................6

Section 2.5 Company Stock Options, Equity Awards and Deferred Cash Awards.......................7

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Section 3.1 Corporate Existence and Power.......................................................7

Section 3.2 Capitalization......................................................................8

Section 3.3 Corporate Authorization............................................................10

Section 3.4 No Conflict; Required Filings and Consents.........................................11

Section 3.5 SEC Filings........................................................................12

Section 3.6 Permits; Compliance With Law.......................................................12

Section 3.7 Financial Statements...............................................................13

Section 3.8 Absence of Certain Changes.........................................................13

Section 3.9 No Undisclosed Liabilities.........................................................13

Section 3.10 Litigation.........................................................................14

Section 3.11 Taxes..............................................................................14

Section 3.12 Contracts and Commitments..........................................................15

Section 3.13 Employee Benefit Plans.............................................................15

Section 3.14 Labor and Employment Matters.......................................................17

Section 3.15 Real Property; Leases..............................................................18

Section 3.16 Environmental Matters..............................................................20

Section 3.17 Insurance..........................................................................21

Section 3.18 Affiliate Transactions.............................................................21

Section 3.19 Intellectual Property..............................................................21

Section 3.20 Title to Assets....................................................................22

Section 3.21 Brokers............................................................................22

Section 3.22 Opinion of Financial Advisor.......................................................22

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Section 4.1 Corporate Existence and Power......................................................23

Section 4.2 Corporate Authorization............................................................23

Section 4.3 No Conflict; Required Filings and Consents.........................................24

Section 4.4 Prior Activities...................................................................24

Section 4.5 Financing..........................................................................24

ARTICLE V COVENANTS

Section 5.1 Conduct of Business by the Company Pending the Closing.............................25

Section 5.2 Tax Covenant.......................................................................28

ARTICLE VI ADDITIONAL AGREEMENTS

Section 6.1 Proxy Statement....................................................................29

Section 6.2 Company Stockholders' Meeting......................................................30

Section 6.3 Access to Information; Confidentiality.............................................30

Section 6.4 No Solicitation by the Company.....................................................31

Section 6.5 Appropriate Action; Consents; Filings..............................................33

Section 6.6 Public Announcements...............................................................34

Section 6.7 Financing..........................................................................34

Section 6.8 [INTENTIONALLY OMITTED]............................................................35

Section 6.9 Employee Matters...................................................................35

Section 6.10 Directors' and Officers' Indemnification and Insurance.............................36

Section 6.11 Certain Notices....................................................................38

Section 6.12 Solvency Matters...................................................................38

Section 6.13 Post-Closing Change of Control Offer...............................................39

Section 6.14 Enforcement of Voting Agreements...................................................39

ARTICLE VII CLOSING CONDITIONS

Section 7.1 Conditions to Obligations of Each Party under this Agreement.......................39

Section 7.2 Additional Conditions to Obligations of Parent and Merger Sub......................40

Section 7.3 Additional Conditions to Obligations of the Company................................41

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER

Section 8.1 Termination........................................................................42

Section 8.2 Effect of Termination..............................................................43

Section 8.3 Amendment..........................................................................44

Section 8.4 Waiver.............................................................................45

Section 8.5 Fees and Expenses..................................................................45

ARTICLE IX GENERAL PROVISIONS

Section 9.1 Non-Survival of Representations and Warranties.....................................46

Section 9.2 Notices............................................................................46

Section 9.3 Certain Definitions................................................................47

Section 9.4 Headings...........................................................................54

Section 9.5 Severability.......................................................................54

Section 9.6 Entire Agreement...................................................................54

Section 9.7 Assignment.........................................................................54

Section 9.8 Parties in Interest................................................................54

Section 9.9 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury....................55

Section 9.10 Specific Performance...............................................................56

Section 9.11 Counterparts.......................................................................56

</TABLE>

Exhibits

Apollo Consent Exhibit A

Trust Voting Agreement Exhibit B

Certificate of Incorporation of Merger Sub Exhibit C

<PAGE>

Index of Defined Terms

<PAGE>

2004 Balance Sheet.............................22

Acquisition Proposal...........................47

Affected Employee..............................35

Affiliate......................................47

Agreement.......................................1

Alternative Financing..........................34

Apollo Consent..................................1

Apollo Investment Agreement....................48

Apollo Investors...............................48

Apollo Standstill Agreement....................48

beneficial ownership...........................48

Business Day...................................48

CERCLA.........................................20

Certificate.....................................5

Certificate of Merger...........................2

Change of Control Distribution..................9

Closing.........................................2

Closing Date....................................2

Code............................................6

Commitment Letters.............................25

Common Stock Consideration......................3

Company.........................................1

Company 10-K....................................8

Company Alternative Transaction................48

Company Bylaws..................................8

Company Capital Stock..........................48

Company Certificate of Incorporation............8

Company Common Stock............................3

Company Convertible Security....................9

Company Deferred Cash Award....................48

Company Deferred Stock Unit....................48

Company Disclosure Letter......................49

Company Employee Plans.........................49

Company ERISA Affiliate........................49

Company Financial Statements...................13

Company Independent Committee...................1

Company Insiders...............................49

Company Leased Real Properties.................18

Company Material Contract......................15

Company Owned Intellectual Property............21

Company Owned Real Properties..................18

Company Permits................................12

Company Preferred Stock.........................8

Company Preferred Stock Certificate of

Designations .................................49

Company Real Properties........................18

Company Recommendation.........................32

Company Restricted Stock Award.................49

Company SEC Documents..........................12

Company Stock Option...........................49

Company Stock Option Plans.....................49

Company Stockholder Approval...................10

Company Stockholders' Meeting..................30

Company Subsequent Determination...............32

Company Subsidiaries............................8

Company Voting Debt.............................9

Confidentiality Agreement......................31

Contract.......................................49

control........................................49

Copyrights.....................................51

Debt Commitment Letter.........................25

Debt Financing.................................25

DGCL............................................1

Dissenting Stockholder..........................7

Effective Time..................................2

Environmental Claim............................50

Environmental Laws.............................50

Environmental Permits..........................50

Equity Commitment Letter.......................24

ERISA..........................................50

Escrow Breakage Expenses.......................50

Exchange Act...................................50

Exchange Agent..................................4

Exchange Fund...................................4

Expense Coverage Fee...........................43

Expenses.......................................50

Financing......................................25

GAAP...........................................50

Governmental Entity............................11

group..........................................50

Hazardous Materials............................51

HSR Act........................................51

Improvements...................................20

Indemnifiable Claim............................37

Indemnified Parties............................36

Intellectual Property..........................51

IRS............................................51

Knowledge......................................51

Law............................................51

Leases.........................................18

Lenders........................................25

License Agreements.............................51

Lien...........................................51

Losses.........................................37

Material Adverse Effect........................51

Merger..........................................1

Merger Consideration............................4

Merger Sub......................................1

Notice of Superior Proposal....................32

Outside Date...................................42

Parent..........................................1

Parent Subscription Agreement...................1

Patents........................................51

PBGC...........................................52

Permitted Encumbrances.........................52

Person.........................................52

Preferred Stock Consideration...................4

Proxy Statement................................29

Release........................................52

Representatives................................30

Required Cash Amount...........................25

Schedule 13E-3.................................29

SEC............................................52

Securities Act.................................52

Significant Subsidiary.........................52

Significant Theatre Properties.................52

Software.......................................51

Solvency Opinion...............................39

Solvent........................................52

Space Leases...................................19

Space Tenant...................................19

Subsidiaries...................................53

Subsidiary.....................................53

Superior Proposal..............................53

Surviving Corporation...........................2

Tax Return.....................................53

Taxes..........................................53

Third Party....................................54

Trademarks.....................................51

Treasury Regulations...........................54

Trust..........................................54

Trust Voting Agreement..........................2

WARN Act.......................................54

<PAGE>

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of July 22, 2004

(this "Agreement"), by and among Marquee Holdings Inc., a Delaware corporation

("Parent"), Marquee Inc., a Delaware corporation and a direct wholly-owned

subsidiary of Parent ("Merger Sub"), and AMC Entertainment Inc., a Delaware

corporation (the "Company").

W I T N E S S E T H:

WHEREAS, upon the terms and subject to the conditions of

this Agreement and in accordance with the General Corporation Law of the State

of Delaware (the "DGCL"), Parent, Merger Sub and the Company will enter into a

business combination transaction pursuant to which Merger Sub will merge with

and into the Company (the "Merger");

WHEREAS, a committee of the Board of Directors of the

Company consisting solely of independent directors (the "Company Independent

Committee") has determined that the Merger is advisable to, and in the best

interests of, the holders of Company Common Stock (as defined herein), has

recommended the Merger to the Board of Directors of the Company and has

resolved to recommend that the holders of Company Common Stock vote for the

adoption of this Agreement;

WHEREAS, the respective Boards of Directors of the Company

(taking into account the recommendation of the Company Independent Committee)

and Merger Sub have each determined that the Merger is advisable to, and in

the best interests of, their respective stockholders, have approved this

Agreement and the transactions contemplated hereby (including the Merger) and

have resolved to recommend that their respective stockholders vote for the

adoption of this Agreement;

WHEREAS, Parent, concurrently with the execution of this

Agreement, is approving and adopting this Agreement as the sole stockholder of

Merger Sub;

WHEREAS, as a condition to and as an inducement to each of

Parent's and Merger Sub's willingness to enter into this Agreement, the Apollo

Investors (as defined herein) are concurrently with the execution and delivery

of this Agreement, entering into a voting and consent agreement, in the form

attached hereto as Exhibit A (the "Apollo Consent"), pursuant to which, among

other things, the Apollo Investors are consenting to and agreeing, subject to

the terms and conditions thereof, to vote in favor of certain of the

transactions contemplated herein, including the Merger;

WHEREAS, concurrently with the execution and delivery of

this Agreement and as a condition to the willingness of Parent and Merger Sub

to enter into this Agreement, Parent, certain Affiliates of Parent and the

Apollo Investors are entering into an Subscription Agreement (the "Parent

Subscription Agreement"), pursuant to which such entities will make equity

contributions to Parent;

WHEREAS, as a condition to and as an inducement to each of

Parent's and Merger Sub's willingness to enter into this Agreement, the Trust

(as defined herein) is, concurrently with the execution and delivery of this

Agreement, entering into a voting agreement, in the form attached hereto as

Exhibit B (the "Trust Voting Agreement"), pursuant to which, among other

things, the Trust is agreeing, subject to the terms and conditions thereof, to

vote in favor of the Merger; and

WHEREAS, concurrently with the execution and delivery of

this Agreement, each of Peter Brown and Philip Singleton has agreed to affirm

his existing employment agreement with the Company and to waive, subject to

the terms and conditions contained therein, certain provisions thereof with

respect to, and subject to and effective upon, the consummation of the Merger.

NOW, THEREFORE, in consideration of the foregoing and the

respective representations, warranties, covenants and agreements set forth in

this Agreement and intending to be legally bound hereby, the parties hereto

agree as follows:

ARTICLE I

THE MERGER

Section 1.1 The Merger. Upon the terms and subject to the

satisfaction or waiver of the conditions set forth in this Agreement, and in

accordance with the DGCL, at the Effective Time, Merger Sub shall be merged

with and into the Company. As a result of the Merger, the separate corporate

existence of Merger Sub shall cease and the Company shall continue as the

surviving corporation of the Merger (the "Surviving Corporation").

Section 1.2 Closing. The closing of the Merger (the

"Closing") shall take place on the third Business Day after the satisfaction

or waiver (subject to applicable Law) of the conditions (excluding conditions

that, by their nature, cannot be satisfied until the Closing) set forth in

Article VII, unless this Agreement has been theretofore terminated pursuant to

its terms or unless another time or date is agreed to in writing by the

parties hereto; provided that in no event shall the Closing occur before

October 1, 2004 (the actual date of the Closing being referred to herein as

the "Closing Date"). The Closing shall be held at the offices of Latham &

Watkins LLP, 885 Third Avenue, New York, New York 10022, unless another place

is agreed to in writing by the parties hereto. On the Closing Date, the

parties hereto shall cause the Merger to be consummated by filing a

certificate of merger relating to the Merger (the "Certificate of Merger")

with the Secretary of State of the State of Delaware, in such form as required

by, and executed in accordance with the relevant provisions of, the DGCL (the

date and time of such filing, or if another date and time is specified in such

filing, such specified date and time, being the "Effective Time").

Section 1.3 Effect of the Merger. The Merger will have the

effects provided in the applicable provisions of the DGCL. Without limiting

the generality of the foregoing, at the Effective Time, except as otherwise

provided herein, all the property, rights, privileges, powers and franchises

of the Company and Merger Sub shall vest in the Surviving Corporation, and all

debts, liabilities and duties of the Company and Merger Sub shall become the

debts, liabilities and duties of the Surviving Corporation.

Section 1.4 Certificate of Incorporation and Bylaws of

Surviving Corporation.

(a) Certificate of Incorporation. At the Effective Time, the

certificate of incorporation of the Surviving Corporation shall be amended and

restated in its entirety to read as the certificate of incorporation attached

hereto as Exhibit C, until thereafter changed or amended as provided therein

or by applicable Law, except that Article I thereof shall be amended to read

as follows: "The name of the Corporation is AMC Entertainment Inc."

(b) Bylaws. At the Effective Time, Parent shall take all

actions necessary such that the bylaws of Merger Sub shall become the bylaws

of the Surviving Corporation, until thereafter changed or amended as provided

therein or by applicable Law.

Section 1.5 Directors and Officers of the Surviving

Corporation. At the Effective Time, Parent shall take all actions necessary

such that the directors of Merger Sub immediately prior to the Effective Time

shall be the initial directors of the Surviving Corporation, each to hold

office in accordance with the certificate of incorporation and bylaws of the

Surviving Corporation. The officers of the Company immediately prior to the

Effective Time shall be the initial officers of the Surviving Corporation,

each to hold office in accordance with the certificate of incorporation and

bylaws of the Surviving Corporation.

ARTICLE II

CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES

Section 2.1 Conversion of Securities. At the Effective Time,

by virtue of the Merger and without any action on the part of Merger Sub, the

Company or the holders of any of the following securities:

(a) Conversion Generally. Each share of common stock, par

value $0.66 2/3 per share, of the Company (the "Company Common Stock") and

each share of Company Class B Stock, par value $0.66 2/3 per share, in each

case issued and outstanding immediately prior to the Effective Time, shall be

converted into the right to receive an amount in cash equal to $19.50 (the

"Common Stock Consideration"). Each share of Company Preferred Stock (as

defined in Section 3.2) issued and outstanding immediately prior to the

Effective Time not owned of record by Parent or Merger Sub shall be converted

into the right to receive an amount in cash equal to $2,727.27 (the "Preferred

Stock Consideration"). The consideration described in this section and payable

with respect to a particular share of Company Capital Stock is referred to

herein as the "Merger Consideration." Except as provided in this Section 2.1,

at the Effective Time, by virtue of the Merger, all shares of Company Capital

Stock shall no longer be outstanding and shall automatically be canceled and

retired and shall cease to exist, and each certificate previously representing

any such shares shall thereafter represent the right to receive the Merger

Consideration payable in respect of such shares of Company Capital Stock.

(b) Cancellation of Company Treasury Shares. Each share of

Company Capital Stock, if any, held by the Company as treasury stock or held

by any Subsidiary of the Company immediately prior to the Effective Time shall

not be affected by the Merger and shall remain outstanding as capital stock of

the Surviving Corporation except that the number of such shares shall be

adjusted in the Merger to maintain relative ownership percentages.

Each share of Company Capital Stock, if any, held by Parent or Merger Sub

immediately prior to the Effective Time shall be canceled, and no payment

shall be made with respect thereto.

(d) Capital Stock of Merger Sub. Each share of common stock

of Merger Sub issued and outstanding immediately prior to the Effective Time

shall be converted into and be exchanged for one newly and validly issued,

fully paid and nonassessable share of common stock of the Surviving

Corporation.

(e) Change in Shares. If, between the date of this Agreement

and the Effective Time, the outstanding shares of Company Capital Stock shall

have been changed into, or exchanged for, a different number of shares or a

different class, by reason of any stock dividend, subdivision,

reclassification, recapitalization, split, combination or exchange of shares,

the Merger Consideration shall be correspondingly adjusted to provide the

holders of Company Capital Stock the same economic effect as contemplated by

this Agreement prior to such event. For avoidance of doubt, the conversion of

Company Preferred Stock into Company Common Stock pursuant to the Company

Preferred Stock Certificate of Designations shall not give rise to any

adjustment to the Merger Consideration pursuant to this Section 2.1(e).

Section 2.2 .Exchange of Certificates; Payment of Merger

Consideration.

(a) Exchange Agent. Prior to the Effective Time, Parent

shall deposit, or shall cause to be deposited, with a bank or trust company

designated by Parent that is reasonably acceptable to the Company (the

"Exchange Agent"), for the benefit of the holders of shares of Company Capital

Stock for exchange in accordance with this Article II through the Exchange

Agent, cash sufficient to make the cash payments payable pursuant to this

Article II (the "Exchange Fund"). The Exchange Agent shall, pursuant to

irrevocable instructions, deliver the cash to be paid pursuant to Section

2.1(a) out of the Exchange Fund. Except as contemplated by Section 2.2(d)

hereof, the Exchange Fund shall not be used for any other purpose.

(b) Exchange Procedures. As soon as reasonably practicable

after the Effective Time, Parent shall cause the Exchange Agent to mail to

each person who was, at the Effective Time, a holder of record of shares of

Company Capital Stock entitled to receive the Merger Consideration pursuant to

Section 2.1(a): (i) a letter of transmittal (which shall be in customary form

and shall specify that delivery shall be effected, and risk of loss and title

to the certificates that formerly evidenced the shares of Company Capital

Stock (each a "Certificate") shall pass, only upon proper delivery of the

Certificates to the Exchange Agent) and (ii) instructions for use in effecting

the surrender of the Certificates pursuant to such letter of transmittal.

Subject to the following sentence, upon surrender to the Exchange Agent of a

Certificate for cancellation, together with such letter of transmittal, duly

completed and validly executed in accordance with the instructions thereto,

and such other documents as may be required pursuant to such instructions, the

holder of such Certificate shall be entitled to receive in exchange therefor a

check for the cash which such holder has the right to receive in respect of

such shares of Company Capital Stock formerly represented by such Certificate,

and the Certificate so surrendered shall forthwith be cancelled. Parent's

agreement with the Exchange Agent shall provide that, upon surrender of a

Certificate for cancellation to the Exchange Agent or to such other agent or

agents as may be appointed by Parent, the Apollo Investors and the Trust shall

be entitled to receive payment of the cash portion of the Merger Consideration

in respect of the shares of Company Capital Stock held by them by wire

transfer of immediately available funds as promptly as practicable after the

Effective Time on the Closing Date, to the account(s) designated by such

stockholder. No interest will be paid or will accrue on any cash payable

pursuant to Section 2.1(a). In the event of a transfer of ownership of shares

of Company Capital Stock that is not registered in the transfer records of the

Company, a check for the cash which such holder has the right to receive in

respect of such holder's shares of Company Capital Stock formerly represented

by such Certificate may be issued to a transferee if the Certificate

representing such shares of Company Capital Stock is presented to the Exchange

Agent, accompanied by all documents required to evidence and effect such

transfer and by evidence that any applicable stock transfer taxes have been

paid. Until surrendered as contemplated by this Section 2.2, each Certificate

shall be deemed at all times after the Effective Time to represent only the

right to receive upon such surrender the applicable Merger Consideration.

paid and Shares issued upon conversion of shares of Company Capital Stock in

accordance with the terms of this Article II shall be deemed to have been paid

and issued in full satisfaction of all rights pertaining to such shares of

Company Capital Stock.

(d) Termination of Exchange Fund. Any portion of the

Exchange Fund (including any interest received with respect thereto) that

remains undistributed to the holders of Company Capital Stock nine (9) months

after the Effective Time shall be delivered to Parent, upon demand, and any

holders of Company Capital Stock who have not theretofore complied with this

Article II shall thereafter look solely to Parent with respect to the Merger

Consideration payable or issuable upon due surrender of their Certificates,

without any interest thereon. Any portion of the Exchange Fund remaining

unclaimed by holders of shares of Company Capital Stock as of a date which is

immediately prior to such times as such amounts would otherwise escheat to or

become property of any government entity shall, to the extent permitted by

applicable Law, become the property of Parent free and clear of any claims or

interest of any person previously entitled thereto.

(e) No Liability. Neither the Exchange Agent nor any party

hereto shall be liable to any holder of Certificates for any Shares or cash

delivered to a public official pursuant to any abandoned property, escheat or

similar Law.

(f) Withholding Rights. Each of the Surviving Corporation,

Parent and the Exchange Agent shall be entitled to deduct and withhold from

the Merger Consideration otherwise payable pursuant to this Agreement to any

holder of shares of Company Capital Stock such amounts as it is required to

deduct and withhold with respect to the making of such payment under the

Internal Revenue Code of 1986, as amended (the "Code"), or any provision of

state, local or foreign Tax Law. To the extent that amounts are so withheld by

the Surviving Corporation, Parent or the Exchange Agent, as the case may be,

and duly paid over to the appropriate Governmental Entity, such withheld

amounts shall be treated for all purposes of this Agreement as having been

paid to the holder of the shares of Company Capital Stock in respect to which

such deduction and withholding was made by the Surviving Corporation, Parent

or the Exchange Agent, as the case may be.

(g) Lost Certificates. If any Certificate shall have been

lost, stolen or destroyed, upon the making of an affidavit of that fact by the

person claiming such Certificate to be lost, stolen or destroyed and, if

required by the Surviving Corporation, the posting by such person of a bond,

in such reasonable amount as the Surviving Corporation may direct, as

indemnity against any claim that may be made against it with respect to such

Certificate, the Exchange Agent will issue in exchange for such lost, stolen

or destroyed Certificate, the Merger Consideration, without any interest

thereon.

Section 2.3 Stock Transfer Books. At the Effective Time, the

stock transfer books of the Company shall be closed and thereafter, there

shall be no further registration of transfers of shares of Company Capital

Stock theretofore outstanding on the records of the Company. From and after

the Effective Time, the holders of certificates representing shares of Company

Capital Stock outstanding immediately prior to the Effective Time shall cease

to have any rights with respect to such shares of Company Capital Stock except

the right to receive the Merger Consideration.

Section 2.4 Dissenting Shares. Notwithstanding anything in

this Agreement to the contrary, shares of Company Capital Stock that are

issued and outstanding immediately prior to the Effective Time and that are

held by stockholders of the Company who have demanded and perfected their

demands for appraisal of such shares in the time and manner provided in

Section 262 of the DGCL and, as of the Effective Time, have neither

effectively withdrawn nor lost their rights to such appraisal and payment

under the DGCL (each such stockholder, a "Dissenting Stockholder") shall not

be converted into or represent the right to receive the Merger Consideration

as described in Section 2.1(a), but shall, by virtue of the Merger, be

entitled to only such rights as are granted by Section 262 of the DGCL;

provided, however, that if any such stockholder shall have failed to perfect

or shall have effectively withdrawn or lost such stockholder's right to

appraisal and payment under the DGCL, such stockholder's shares of Company

Capital Stock shall be deemed to have been converted at the Effective Time

into the right to receive the Merger Consideration as described in Section

2.1(a), without any interest thereon. The Company shall give Parent notice of

all demands for appraisal and Parent shall have the right to participate in

all negotiations and proceedings with respect to all Dissenting Stockholders.

Neither the Company nor the Surviving Corporation shall, except with the prior

written consent of Parent, which consent shall not be unreasonably withheld or

delayed, voluntarily make any payment with respect to, or settle or offer to

settle, any demand for payment from any Dissenting Stockholder.

Section 2.5 Company Stock Options, Equity Awards and

Deferred Cash Awards.

(a) Each Company Stock Option which is outstanding

immediately prior to the Effective Time, whether or not then exercisable,

shall be canceled as of the Effective Time and the holder thereof shall be

entitled to receive an amount in cash in lieu of such cancelled Company Stock

Option equal to the excess of (i) the product of (A) the excess, if any, of

(x) the Common Stock Consideration over (y) the per share exercise price of

such Company Stock Option multiplied by (B) the number of shares of Company

Common Stock subject to such Company Stock Option over (ii) any income tax or

employment tax withholding required under Code with respect to the amounts

referred to in clause (i). Parent shall cause the Surviving Corporation to

make such payments as soon as practicable following the Effective Time.

(b) Each Company Deferred Stock Unit which is outstanding

immediately prior to the Effective Time, whether or not then vested, shall be

canceled as of the Effective Time and the holder thereof shall be entitled to

receive an amount in cash in lieu of such cancelled Company Deferred Stock

Unit equal to the excess of (i) Common Stock Consideration over (ii) any

income tax or employment tax withholding required under the Code with respect

to the amounts referred to in clause (i).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and

Merger Sub that except as set forth in the Company Disclosure Letter delivered

to Parent and Merger Sub concurrently with the execution of this Agreement:

Section 3.1 Corporate Existence and Power.

(a) The Company is a corporation duly organized, validly

existing and in good standing under the Laws of the State of Delaware. Each

Subsidiary of the Company (collectively, the "Company Subsidiaries") is duly

organized, validly existing and in good standing (with respect to

jurisdictions that recognize such concept) under the Laws of the jurisdiction

in which it is organized, except where the failure to be so organized,

existing or in good standing would not, individually or in the aggregate,

reasonably be expected to have a Material Adverse Effect (as defined below) on

the Company. Each of the Company and the Company Subsidiaries has the

requisite corporate power and authority and all necessary governmental

approvals to own, lease and operate its properties and to carry on its

business as it is now being conducted, except where the failure to have such

power and authority would not, individually or in the aggregate, reasonably be

expected to have a Material Adverse Effect on the Company. Each of the Company

and the Company Subsidiaries is duly qualified or licensed to do business, in

each jurisdiction where the character of the properties owned, leased or

operated by it or the nature of its business makes such qualification or

licensing necessary, except for such failures to be so qualified or licensed

that would not, individually or in the aggregate, reasonably be expected to

have a Material Adverse Effect on the Company. The Company has heretofore made

available to Parent true, correct and complete copies of the Company's

Restated and Amended Certificate of Incorporation (the "Company Certificate of

Incorporation"), Bylaws (the "Company Bylaws") and minute books and the

certificates of incorporation, bylaws and minute books of each of the Company

Subsidiaries, all as currently in effect.

(b) Exhibit 21 to the Company's annual report on Form 10-K

for the fiscal year ended April 1, 2004 filed on June 23, 2004 (the "Company

10-K") sets forth a true, correct and complete list of all Company

Subsidiaries and their respective jurisdictions of incorporation. All of the

issued and outstanding shares of capital stock of each of the Company

Subsidiaries are owned by the Company or by a Company Subsidiary free and

clear of all Liens and are validly issued, fully paid and nonassessable, and

there are no outstanding subscriptions, options, calls, contracts, voting

trusts, proxies or other commitments, understandings, restrictions,

arrangements, rights or warrants with respect to any such Subsidiary's capital

stock, including any right obligating any such Subsidiary to issue, deliver or

sell additional shares of its capital stock.

and each of the Company Subsidiaries reflect all material actions taken and

authorizations made at meetings of such companies' boards of directors or any

committees thereof and at any stockholders' meetings thereof, in each case

since January 1, 1999.

Section 3.2 Capitalization.

The authorized capital stock of the Company consists of (i)

200,000,000 shares of Company Common Stock, (ii) 30,000,000 shares of Company

Class B Stock, and (iii) 10,000,000 shares of Preferred Stock, par value $0.66

2/3 per share (the "Company Preferred Stock") of which shares of Company

Preferred Stock 2,000,000 shares have been designated Series A Convertible

Preferred Stock and 2,000,000 shares have been designated Series B

Exchangeable Preferred Stock. As of the close of business on July 1, 2004,

there were outstanding (i) 34,017,161 shares of Company Common Stock, (ii)

3,051,597 shares of Company Class B Stock, (iii) 305,548 shares of Company

Series A Convertible Preferred Stock, (iv) no shares of series B Convertible

Preferred Stock and no other shares of capital stock of Company were then

outstanding. All shares of capital stock of the Company have been duly

authorized and validly issued and are fully paid and nonassessable and were

not issued in violation of any preemptive rights. No bonds, debentures, notes

or other indebtedness of the Company having the right to vote on any matters

on which the holders of capital stock of the Company may vote ("Company Voting

Debt") are issued or outstanding. Except for Company Stock Options, Company

Restricted Stock Awards and Company Deferred Stock Units to acquire no more

than 2,009,308 shares of Company Common Stock issued pursuant to Company Stock

Option Plans, and except as provided by the Certificate of Designations for

the Company Preferred Stock, as of the close of business on July 1, 2004,

there were no outstanding options, warrants or other rights to acquire capital

stock from the Company, and no preemptive or similar rights, calls,

agreements, commitments, arrangements, subscriptions or other rights,

convertible or exchangeable securities, agreements, arrangements or

commitments of any character, relating to the capital stock of the Company,

obligating the Company to issue, deliver, transfer or sell, any capital stock,

voting securities or securities convertible into or exchangeable for capital

stock or voting securities of the Company or obligating the Company to grant,

extend or enter into any such option, warrant, subscription or other right,

convertible or exchangeable security, agreement, arrangement or commitment

(each of the foregoing, a "Company Convertible Security"). Section 3.2 of the

Company Disclosure Letter sets forth a true, correct and complete list of all

outstanding options to purchase shares of Company Capital Stock, Company

Restricted Stock Awards and Company Deferred Stock Units, granted pursuant to

any Company Stock Option Plan or otherwise as of the date hereof, which list

sets forth the name of the holders thereof and, to the extent applicable, the

exercise price or purchase price thereof, the number of shares of Company

Capital Stock subject thereto, the governing Company Stock Option Plan or

other arrangement with respect thereto and the expiration date thereof. Since

the close of business on July 1, 2004 the Company has not issued any shares of

capital stock or any Company Convertible Securities other than the issuance of

Company Common Stock in connection with the exercise of Company Stock Options,

Company Restricted Stock Awards or Company Deferred Stock Units described

above. Except as required by the terms of any Company Stock Options, there are

no (i) outstanding agreements or other obligations of the Company or any

Company Subsidiary to repurchase, redeem or otherwise acquire (or cause to be

repurchased, redeemed or otherwise acquired) any shares of Company Capital

Stock or (ii) voting trusts or other agreements or understandings to which the

Company or any Company Subsidiary or, to the Knowledge of the Company, any of

the Company's directors or executive officers is a party with respect to the

voting of capital stock of the Company or any Company Subsidiary. Holders of

the Company Preferred Stock shall be entitled to receive a one-time

distribution of shares of Company Preferred Stock pursuant to Section 2(a)(5)

of the Company Preferred Stock Certificate of Designations in connection with

the consummation of the Merger (such distribution, the "Change of Control

Distribution"); assuming the "Change of Control" (as defined in the Company

Preferred Stock Certificate of Designations) resulting from the Merger occurs

(x) on or after October 1, 2004 and on or before December 31, 2004, the

aggregate number of shares of Company Preferred Stock issuable as a result of

the Change of Control Distribution will be 33,411.757 shares; and (y) on or

after January 1, 2005 and on or before the Outside Date, the aggregate number

of shares of Company Preferred Stock issuable as a result of the Change of

Control Distribution will be 27,786.736 shares. From and after the payment of

the Change of Control Distribution and until the Effective Time, each share of

Company Preferred Stock (including the shares of Company Preferred Stock

issued pursuant to the Change of Control Distribution) shall be convertible

into the right to receive 139.860 shares of Company Common Stock in accordance

with the terms of the Company Preferred Stock Certificate of Designations

(subject, in the case of shares of Company Preferred Stock held by the Apollo

Investors, to the restrictions on conversion contained in the Apollo

Standstill Agreement). The "Conversion Price" as defined in the Company

Preferred Stock Certificate of Designations is $7.15.

Section 3.3 Corporate Authorization.

(a) The execution, delivery and performance by the Company

of this Agreement and the consummation by the Company of the transactions

contemplated hereby are within the corporate powers of the Company, and,

except for the Company Stockholder Approval, have been duly authorized by all

necessary corporate action. The affirmative vote of a majority of the votes

represented by the outstanding shares of Company Common Stock, Company Class B

Stock and the outstanding shares of Company Preferred Stock not held by the

Apollo Investors, voting together as a single class (the "Company Stockholder

Approval"), is the only vote required to adopt this Agreement and the Merger.

This Agreement constitutes a valid and binding agreement of the Company,

enforceable against the Company in accordance with its terms, except as such

enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,

reorganization, moratorium and other similar laws of general applicability

relating to or affecting creditors' rights, and to general equitable

principles.

(b) The Company Independent Committee at a meeting duly

called and held, and (subject to Section 6.4) not subsequently rescinded or

modified in any way, has duly (i) determined that this Agreement and the

transactions contemplated hereby (including the Merger) are advisable, fair to

and in the best interests of the holders of Company Common Stock (other than

Parent, Merger Sub, the Apollo Investors, the holders of Company Class B Stock

and their respective Affiliates), (ii) recommended this Agreement to the Board

of Directors of the Company and (iii) resolved (subject to Section 6.4) to

recommend that the holders of Company Common Stock (other than Parent, Merger

Sub, the Apollo Investors, the holders of Company Class B Stock and their

respective Affiliates) vote for adoption of this Agreement. The Board of

Directors of the Company (after taking into account the recommendation of the

Company Independent Committee), at a meeting duly called and held, and

(subject to Section 6.4) not subsequently rescinded or modified in any way,

has duly (i) determined that this Agreement and the transactions contemplated

hereby (including the Merger) are advisable, fair to and in the best interests

of the stockholders of the Company, (ii) approved and adopted this Agreement

and (iii) resolved (subject to Section 6.4) to recommend that the Company

stockholders vote for the adoption of this Agreement.

the restrictions on business combinations contained in Section 203 of the DGCL

will not apply with respect to or as a result of this Agreement, the Parent

Subscription Agreement, the Apollo Consent, the Trust Voting Agreement and the

transactions contemplated hereby and thereby, including the Merger, without

any further action on the part of the stockholders or the Board of Directors

of the Company. True, correct and complete copies of all resolutions of the

Board of Directors of the Company reflecting such actions have been previously

provided to Parent. No other state takeover statute or similar statute or

regulation is applicable to or purports to be applicable to the Merger or any

other transaction contemplated by this Agreement.

Section 3.4 No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement by the

Company do not, and the performance by the Company of its obligations

hereunder will not, (i) conflict with or violate any provision of the Company

Certificate of Incorporation or Company Bylaws or any equivalent

organizational documents of any Company Subsidiary (assuming the Company

Stockholder Approval is obtained), (ii) assuming that all consents, approvals,

authorizations and permits described in Section 3.4(b) have been obtained and

all filings and notifications described in Section 3.4(b) have been made and

any waiting periods thereunder have terminated or expired, conflict with or

violate any Law applicable to the Company or any Company Subsidiary or by

which any property or asset of the Company or any Company Subsidiary is bound

or affected or (iii) except for the Apollo Consent, require any consent or

approval under, result in any breach of or any loss of any benefit under, or

constitute a change of control or default (or an event which with notice or

lapse of time or both would become a default) under, or give to others any

right of termination, vesting, amendment, acceleration or cancellation of, or

result in the creation of a Lien or other encumbrance on any property or asset

of the Company or any Company Subsidiary pursuant to, any Contract, Company

Permit or other instrument or obligation, except, with respect to clauses (ii)

and (iii), for any such conflicts, violations, breaches, defaults or other

occurrences which would not, individually or in the aggregate, reasonably be

expected to (x) have a Material Adverse Effect on the Company or (y) prevent

or materially delay the performance of this Agreement by the Company or the

ability of the Company to take any action necessary to consummate the Merger.

(b) The execution and delivery of this Agreement by the

Company do not, and the performance of this Agreement by the Company will not,

require any consent, approval, authorization or permit of, or filing with, or

notification to, any domestic or foreign governmental, administrative,

juridicial or regulatory authority (a "Governmental Entity") or any other

Person (assuming the Company Stockholder Approval is obtained), except (i)

under the Exchange Act, the Securities Act, any applicable Blue Sky Law, the

rules and regulations of the American Stock Exchange, (ii) under the HSR Act

and, if and to the extent necessary, foreign or supranational antitrust and

competition Laws, (iii) the filing and recordation of the Certificate of

Merger as required by the DGCL and (iv) for such other consents, approvals,

authorizations, permits, filings or notifications, the failure of which to

make or obtain, would not, individually or in the aggregate, reasonably be

expected to (x) have a Material Adverse Effect on the Company or (y) prevent

or materially delay the performance of this Agreement by the Company or the

ability of the Company to take any action necessary to consummate the Merger.

Section 3.5 SEC Filings.

(a) The Company has timely filed all forms, reports and

documents (including all Exhibits, Schedules and Annexes thereto) required to

be filed by it under the Securities Act or the Exchange Act, as the case may

be, with the SEC since January 1, 1999, including any amendments or

supplements thereto (collectively, the "Company SEC Documents"). The Company

SEC Documents, as of their respective filing dates, (i) did not contain any

untrue statement of a material fact or omit to state a material fact required

to be stated therein or necessary in order to make the statements therein, in

the light of the circumstances under which they were made, not misleading, and

(ii) complied in all material respects with the Securities Act or the Exchange

Act, each as in effect on the date so filed. No Company Subsidiary is subject

to the periodic reporting requirements of the Exchange Act. The Company has

previously provided to Parent a true, correct and complete copy of any

amendment or modification which has not yet been filed with the SEC to any

agreement, document or other instrument which previously had been filed by the

Company with the SEC pursuant to the Securities Act or the Exchange Act, to

the extent such amendment or modification is required to be filed thereunder.

(b) The management of the Company has (i) implemented

disclosure controls and procedures (as defined in Rule 13a-15(e) of the

Exchange Act) to ensure that material information relating to the Company,

including the Company Subsidiaries, is made known to the management of the

Company by others within those entities, and (ii) disclosed, based on its most

recent evaluation, to the Company's outside auditors and the audit committee

of the Board of Directors of the Company (A) all significant deficiencies and

material weaknesses in the design or operation of internal control over

financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that,

in its good faith judgment, are reasonably likely to materially affect the

Company's ability to record, process, summarize and report financial data and

(B) any fraud, whether or not material, known to management that involves

management or other employees who, in each case, have a significant role in

the Company's internal control over financial reporting.

Section 3.6 Permits; Compliance With Law. Each of the

Company and the Company Subsidiaries is in possession of all authorizations,

licenses, permits (including Environmental Permits), certificates, approvals

and clearances, and has submitted notices to, all Governmental Entities

necessary for the Company or any Company Subsidiary to develop, construct,

own, lease and operate its properties or other assets and to carry on their

respective businesses in the manner described in the Company SEC Documents

filed prior to the date hereof and as it is being conducted as of the date

hereof (the "Company Permits"), and all such Company Permits are valid, and in

full force and effect, except where the failure to have, or the suspension or

cancellation of, or failure to be valid or in full force and effect of, any of

the Company Permits would not, individually or in the aggregate, reasonably be

expected to have a Material Adverse Effect on the Company. Neither the Company

nor any Company Subsidiary is in conflict with, or in default or violation of,

(i) any Law applicable to the Company or any Company Subsidiary or by which

any property or asset of the Company or any Company Subsidiary is bound or

affected or (ii) any Company Permits, except, with respect to clauses (i) and

(ii), for any such conflicts, defaults or violations that would not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect on the Company.

Section 3.7 Financial Statements. The audited and unaudited

financial statements, including all related notes and schedules, contained in

the Company SEC Documents (or incorporated therein by reference)

(collectively, the "Company Financial Statements") (i) when filed, complied in

all material respects with all applicable accounting requirements and with the

published rules and regulations of the SEC with respect thereto; (ii) present

fairly in all material respects the consolidated financial position of the

Company and the consolidated Company Subsidiaries as of their respective dates

and the consolidated results of operations, retained earnings and cash flows

of the Company and the consolidated Company Subsidiaries for the respective

periods indicated; and (iii) were prepared in accordance with GAAP applied on

a consistent basis throughout the periods involved (except for changes in

accounting principles disclosed in the notes thereto and subject, in the case

of unaudited statements, to normal year end adjustments which were not and are

not expected to be material in amount and the absence of related notes).

Section 3.8 Absence of Certain Changes.

(a) Since April 1, 2004, except as specifically contemplated

by, or as disclosed in, this Agreement, the Company and the Company

Subsidiaries have conducted their respective businesses in all material

respects in the ordinary course consistent with past practice, and there has

not been any event, occurrence or development which, (i) individually or in

the aggregate, has had or would reasonably be expected to have a Material

Adverse Effect on the Company, or (ii) would, individually or in the

aggregate, reasonably be expected to prevent or materially delay the

performance of this Agreement by the Company or the ability of the Company to

take any action necessary to consummate the Merger.

(b) Since April 1, 2004, except as specifically contemplated

by, or as disclosed in, this Agreement, neither the Company nor any Company

Subsidiary has taken any action that, if taken during the period of this

Agreement through the Effective Time, would require the consent of Parent

under Section 5.1.

Section 3.9 No Undisclosed Liabilities. There are no

liabilities or obligations of any nature (whether accrued, absolute,

contingent or otherwise) of the Company or any Company Subsidiary of the kind

required to be reflected in the Company Financial Statements in accordance

with GAAP, other than (i) liabilities disclosed or provided for in the Company

Financial Statements, (ii) liabilities incurred since April 1, 2004, in the

ordinary course of business, and (iii) liabilities which would not,

individually or in the aggregate, reasonably be expected to be material to the

Company.

Section 3.10 Litigation. There is no action, suit,

investigation or proceeding pending against, or to the Knowledge of the

Company threatened against or affecting, the Company or any Company

Subsidiaries or any of their respective properties or any of their respective

officers or directors, or for which the Company or any Company Subsidiary is

obligated to indemnify a Third Party, before any court or arbitrator or any

governmental body, agency or official except as would not, individually or in

the aggregate, reasonably be expected to (x) have a Material Adverse Effect on

the Company or (y) prevent or materially delay the performance of this

Agreement by the Company. There is no judgment, decree, injunction, rule, writ

or order of any governmental entity or arbitrator outstanding against the

Company or any Company Subsidiary which would, individually or in the

aggregate, reasonably be expected to (x) have a Material Adverse Effect on the

Company or (y) prevent or materially delay the performance of this Agreement

by the Company.

Section 3.11 Taxes.

(a) Each of the Company and each Company Subsidiary has

timely filed or caused to be timely filed with the appropriate Tax authorities

all material Tax Returns that are required to be filed by, or with respect to,

the Company and the Company Subsidiaries on or prior to the Closing Date. All

such Tax Returns are true, correct and complete in all material respects.

There are no material Liens for Taxes upon the assets of the Company or any

Company Subsidiary, except Liens for Taxes not yet due.

(b) All material Taxes and Tax liabilities of the Company

and the Company Subsidiaries have been timely paid or fully provided for as a

liability on the financial statements of the Company and the Company

Subsidiaries in compliance with GAAP.

has been a party to any distribution occurring during the two years preceding

the date of this Agreement in which the parties to such distribution treated

the distribution as subject to Section 355 of the Code.

(d) No deficiencies for material Taxes have been claimed, proposed or assessed

in writing against the Company or any of the Company Subsidiaries by any Tax

authority that have not been finally resolved, and neither the Company nor any

Company Subsidiary has Knowledge of any pending or threatened claim, proposal

or assessment against the Company or any Company Subsidiary for any such

deficiency for material Taxes. There are no pending audits, investigations or

other proceedings relating to any liability of the Company or any Company

Subsidiary in respect of any material Taxes.

Section 3.12 Contracts and Commitments.

(a) Except as filed as exhibits to the Company SEC Documents

filed prior to the date of this Agreement, or as disclosed in Section 3.12 of

the Company Disclosure Letter, none of the Company or any Company Subsidiary

is a party to or bound by any Contract which (i) as of the date hereof, is a

"material contract" (as such term is defined in Item 601(b)(10) of Regulation

S-K promulgated by the SEC) or (ii) except for Leases for Company Leased Real

Properties, (A) involves aggregate expenditures in excess of $5 million, (B)

involves annual expenditures in excess of $5 million and is not cancelable

within one year, (C) which would prohibit or materially delay the consummation

of the Merger or (D) contains any non-compete or exclusivity provisions with

respect to any line of business or geographic area with respect to the

Company, any Company Subsidiary or any of the Company's current or future

Affiliates, or which restricts the conduct of any line of business by the

Company, any Company Subsidiary or any of the Company's current or future

Affiliates or any geographic area in which the Company, any Company Subsidiary

or any of the Company's current or future Affiliates may conduct business, in

each case in any material respect. Each Contract of the type described in

Section 3.12, whether or not set forth in Section 3.12 of the Company

Disclosure Letter, is referred to herein as a "Company Material Contract").

(b) Each Company Material Contract is valid and binding on

the Company or a Company Subsidiary party thereto and, to the Company's

Knowledge, each other party thereto, and is in full force and effect, and the

Company and each of the Company Subsidiaries have performed in all respects

all obligations required to be performed by them to the date hereof under each

Company Material Contract and, to the Company' Knowledge, each other party to

each Company Material Contract has performed in all respects all obligations

required to be performed by it under such Company Material Contract, except,

in each case, as would not, individually or in the aggregate, reasonably be

expected to have a Material Adverse Effect on the Company.

Section 3.13 Employee Benefit Plans.

(a) Section 3.13(a) of the Company Disclosure Letter

contains a true, correct and complete list of each Company Employee Plan. With

respect to each Company Employee Plan, the Company has made available to

Parent true, correct and complete copies of the Company Employee Plan and any

amendments thereto (or if the Company Employee Plan is not a written plan, a

written description thereof). Each Company Employee Plan has been established

and maintained in material compliance with its terms and with the requirements

prescribed by any and all statutes, orders, rules and regulations (including

but not limited to ERISA, the Sarbanes-Oxley Act of 2002, as amended, and the

Code) which are applicable to such Company Employee Plan, except for such

exceptions that would not, individually or in the aggregate, reasonably be

expected to have a Material Adverse Effect on the Company.

(b) Neither the Company nor any Company Affiliate has

incurred any liability under Title IV of ERISA that has not been satisfied in

full, and no condition exists that presents a material risk to the Company or

any Company Affiliate of incurring any such liability other than liability for

premiums due the PBGC (which premiums have been paid when due).

pension plan) which is intended to be qualified under Section 401(a) of the

Code is so qualified, each trust forming a part thereof is exempt from federal

income tax pursuant to Section 501(a) of the Code and, to the Knowledge of the

Company, no circumstances exist which will adversely affect such qualification

or exemption.

(d) The consummation of the transactions contemplated by

this Agreement will not, either alone or in combination with any other event,

(i) entitle any current or former employee, officer, director or consultant of

the Company, any Company Subsidiary or any Company ERISA Affiliate to

severance pay, unemployment compensation or any other similar termination

payment, or (ii) accelerate the time of payment or vesting, or increase the

amount of, or otherwise enhance, any benefit due to any such employee,

officer, director or consultant. No amounts payable under Company Employee

Plans will fail to be deductible for federal income tax purposes by virtue of

Section 280G of the Code.

(e) No Company Employee Plan is a "multiemployer pension

plan," as defined in Section 3(37) of ERISA, nor is any Company Employee Plan

a plan described in Section 4063(a) of ERISA. As of the date of this

Agreement, the Company has no unpaid withdrawal liability with respect to any

"multiemployer pension plan" to which the Company or any Company Affiliate has

contributed or been obligated to contribute. In the event the Company or any

Company Affiliate withdrew in a "complete withdrawal" from all "multiemployer

pension plans" to which the Company or any Company Affiliate has contributed,

or been obligated to contribute, as of the Effective Time, the aggregate

withdrawal liability incurred by the Company or such Company Affiliate would

not have a Material Adverse Effect on the Company.

(f) No Company Employee Plan provides benefits, including,

without limitation, death or medical benefits (whether or not insured), with

respect to any current or former employees of the Company or any Company

Subsidiary for periods extending beyond their retirement or other termination

of service (other than (i) coverage mandated by applicable law, (ii) death

benefits or retirement benefits under any "employee pension plan," as that

term is defined in Section 3(2) of ERISA, or (iii) benefits the full cost of

which is borne by the current or former employee (or his or her beneficiary)).

There are no pending, or, to the Knowledge of the Company, threatened or

anticipated claims by or on behalf of any Company Employee Plan, by any

employee or beneficiary covered under any such Company Employee Plan, or

otherwise involving any such Company Employee Plan (other than routine claims

for benefits or claims that would not, individually or in the aggregate,

reasonably be expected to have a Material Adverse Effect on the Company).

(g) There are no pending or, to the Knowledge of the

Company, threatened or anticipated claims by or on behalf of any Company

Employee Plan (which is not a multiemployer pension plan), by any employee or

beneficiary under any such plan or otherwise involving any such plan (other

than routine claims for benefits or claims that would not, individually or in

the aggregate, reasonably be expected to have a Material Adverse Effect on the

Company). No Company Employee Plan is under audit or investigation by, nor has

the Company been contacted with respect to any Company Employee Plan by, the

IRS, the PBGC or the Department of Labor. No such audit, investigation or

contact is pending or, to the Knowledge of the Company, threatened as of the

date of this Agreement.

(h) As of April 1, 2004, with respect to each Company

Employee Plan (which is not a multiemployer pension plan) that is a defined

benefit plan, the projected benefit obligations under all such plans, whether

or not qualified, including, but not limited to, the Defined Benefit

Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc.,

the AMC Supplemental Executive Retirement Plan and the American Multi-Cinema,

Inc. Retirement Enhancement Plan, utilizing actuarial methods and assumptions

set forth in the Company 10-K, did not exceed the fair market value of the

assets of such plans as of such date by more than $30 million. As of the date

hereof and as of the Effective Time, the aggregate increase in any such

underfunding since April 1, 2004 (taking into account only such plans for

which there is any increase) would not, if all such plans were then

terminated, have a Material Adverse Effect on the Company.

(i) There is no Contract, plan or arrangement with any

current or former employee, officer or director of the Company to which the

Company or any Company Subsidiary is a party as of the date of this Agreement

that, individually or in the aggregate and as a result of the Merger (whether

alone or upon the occurrence of additional or subsequent events) or otherwise,

is reasonably likely to give rise to the payment of any amount that would not

be deductible pursuant to Section 162(m) of the Code or any corresponding or

similar provision of state, local or foreign income Tax law.

Section 3.14 Labor and Employment Matters.

(a) Except as set forth in Section 3.14 of the Company

Disclosure Letter, there are no collective bargaining agreements with any

union covering employees of the Company or any of the Company Subsidiaries. As

of the date of this Agreement, (i) there is no labor strike, dispute,

slowdown, stoppage or lockout actually pending or, to the Knowledge of the

Company or any of the Company Subsidiaries, threatened against the Company or

any of the Company Subsidiaries; (ii) to the Knowledge of the Company or any

of the Company Subsidiaries, no union organizing campaign with respect to the

employees of the Company or any of the Company Subsidiaries is threatened or

underway; (iii) there is no unfair labor practice charge or complaint against

the Company or any of the Company Subsidiaries pending or, to the Knowledge of

the Company or any of the Company Subsidiaries, threatened before the National

Labor Relations Board or any similar state or foreign agency; (iv) there is no

written grievance pending relating to any collective bargaining agreement or

other grievance procedure; and (v) to the Knowledge of the Company or any of

the Company Subsidiaries, no charges with respect to or relating to the

Company or any of the Company Subsidiaries are pending before the Equal

Employment Opportunity Commission or any other agency responsible for the

prevention of unlawful employment practices, except for such exceptions to the

foregoing clauses (iii), (iv) and (v) which would not, individually or in the

aggregate, reasonably be expected to have a Material Adverse Effect on the

Company.

(b) The Company has made available to Parent true, correct

and complete copies of each of the Company's material written personnel

policies or rules applicable to employees of the Company or of the Company

Subsidiaries in effect as of the date hereof. The Company and the Company

Subsidiaries are, and have at all times been, in compliance with all

applicable Laws respecting employment and employment practices, terms and

conditions of employment, wages, hours of work and occupational safety and

health, except for such failures to be in compliance as would not,

individually or in the aggregate, reasonably be expected to have a Material

Adverse Effect on the Company.

Company and the Company Subsidiaries have not effectuated (i) a "plant

closing" (as defined in the WARN Act) affecting any site of employment or one

or more facilities or operating units within any site of employment or

facility of the Company or any of the Company Subsidiaries, or (ii) a "mass

layoff" (as defined in the WARN Act) affecting any site of employment or

facility of the Company or any of the Company Subsidiaries; nor has the

Company or any of the Company Subsidiaries been affected by any transaction or

engaged in layoffs or employment terminations sufficient in number to trigger

application of any similar state or local Law.

Section 3.15 Real Property; Leases.

(a) Section 3.15(a) of the Company Disclosure Letter

contains a true, correct and complete list, by location, of all real property

owned by the Company and the Company Subsidiaries (the "Company Owned Real

Properties"). Except for (x) such exceptions which would not, individually or

in the aggregate, reasonably be expected to have a Material Adverse Effect on

the Company, (y) any matters of public record affecting the use of such

properties and disclosed in writing in title insurance policies with respect

to the Company Owned Real Properties made available to Parent prior to the

date hereof and (z) Permitted Encumbrances, (i) the Company and the Company

Subsidiaries have good and marketable title to the Company Owned Real

Properties and (ii) the Company Owned Real Properties are free and clear of

all mortgages, Liens, leases, tenancies, security interests, options to

purchase or lease or rights of first refusal. Section 3.15(a) of the Company

Disclosure Letter contains a true, correct and complete list of all title

insurance policies relating to the Company Owned Real Properties.

(b) Section 3.15(b) of the Company Disclosure Letter

contains a true, correct and complete list, by address, of all material real

property leased by the Company and the Company Subsidiaries (the "Company

Leased Real Properties", and, together with the Company Owned Real Properties,

the "Company Real Properties"). The Company has made available to Parent true,

correct and complete copies of all lease agreements (the "Leases") with

respect to the Company Leased Real Properties. With respect to (A) the Company

Leased Real Properties other than Significant Theatre Properties, except for

such exceptions which would not, individually or in the aggregate, reasonably

be expected to have a Material Adverse Effect on the Company and (B) the

Significant Theatre Properties:

(i) each Lease is valid and binding upon the Company or

a Company Subsidiary and upon the landlord thereunder and in full force

and effect and grants the lessee under the Lease the exclusive right to

use and occupy the premises, and the Company or Company Subsidiary enjoys

peaceful and undisturbed possession of the premises;

(ii) the Company or a Company Subsidiary has good,

valid and marketable title to the leasehold estate or other interest

created under its respective Leases;

(iii) there is no, nor has the Company or any Company

Subsidiary received notice of any, default (or condition or event which,

after notice or lapse of time or both, would constitute a default)

thereunder by the lessee or (to the Knowledge of the Company) by the

landlord thereunder;

(iv) with respect to any Leases that were assigned to

the Company or any Company Subsidiary by a Third Party, to the Knowledge

of the Company, all consents to such assignments or sublease have been

obtained which may have been required with respect to such assignments or

sublease; and

(v) none of the rights of the Company or any Company

Subsidiary under any of the Leases will be subject to termination or

modification as the result of the consummation of the transactions

contemplated by this Agreement, and upon the consummation of the Merger,

Parent will have succeeded to all of the rights, title and interest of

the Company or Company Subsidiary under each of such Leases.

material adverse impact on the financial condition of the Company, (i) each

lease, sublease, license or other agreement granting to any Third Party any

right to the use, occupancy or enjoyment of any Company Real Properties or any

portion thereof that has an annual base rent equal to or greater than $100,000

(collectively, the "Space Leases") is valid, binding and in full force and

effect, (ii) all rent and other sums and charges payable by the tenant or

occupant thereunder (the "Space

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