PRIVATE PLACEMENT MEMORANDUM

NEW ISSUE

In the opinion of Bond Counsel, under existing law, interest on the Bonds is excluded from gross income for federal income tax
purposes, except for interest on any Bond during any period while it is held by a "substantial user" of the facilities financed with the proceeds of
the Bonds or a "related person" within the meaning of the Internal Revenue Code of 1986, as amended (the "Code"). Interest on the Bonds is,
however, an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. In the opinion
of Bond Counsel, under existing law, the Bonds and the income therefrom are exempt from all state, county and municipal taxation in the state of
Tennessee except inheritance, gift and estate taxes and except that interest on the Bonds may be subject to the Tennessee excise and franchise
taxes. See "TAX EXEMPTION" herein.

$4,250,000
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF KNOXVILLE
Revenue Bonds (Regal Riviera 8 Cinema Project) Series 2007

Dated: Date of Issuance Due: December 1, 2046

The Bonds are being issued by The Industrial Development Board of the City of Knoxville (the "Issuer") to provide
funds with which it will make a loan (the "Loan") to The Industrial Development Board of the City of Knoxville for the
Downtown Cinema, Inc., a public body corporate and politic and an instrumentality of the City of Knoxville, Tennessee (the
"Borrower"), pursuant to a Loan Agreement dated as of April 1, 2007 (the "Loan Agreement") between the Issuer and the
Borrower. The Bonds are payable solely from the payments to be made by the Borrower pursuant to the Loan Agreement and are
issued pursuant to an Indenture of Trust dated as of April 1, 2007 (the "Indenture") between the Issuer and Regions Bank, an
Alabama state bank, as Trustee, pursuant to which the Issuer has assigned its rights under the Loan Agreement.

THE BONDS AND THE INTEREST HEREON SHALL NOT BE DEEMED TO CONSTITUTE A DEBT OR A
PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF TENNESSEE NOR ANY POLITICAL SUBDIVISION
THEREOF, INCLUDING THE CITY OF KNOXVILLE, TENNESSEE AND KNOX COUNTY, TENNESSEE. NEITHER
THE CITY OF KNOXVILLE, TENNESSEE NOR KNOX COUNTY, TENNESSEE SHALL IN ANY EVENT BE LIABLE
FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON ANY OF THE BONDS ISSUED,
OR FOR THE PERFORMANCE OF ANY PLEDGE, MORTGAGE, OBLIGATION OR AGREEMENT OF ANY KIND
WHATSOEVER OF THE ISSUER OR INDEBTEDNESS BY THE ISSUER, AND NONE OF THE BONDS OF THE ISSUER
OR ANY OF ITS AGREEMENTS OR OBLIGATIONS DESCRIBED HEREIN OR OTHERWISE SHALL BE CONSTRUED
TO CONSTITUTE AN INDEBTEDNESS OF THE CITY OF KNOXVILLE, TENNESSEE OR KNOX COUNTY,
TENNESSEE, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION WHATSOEVER.
THE ISSUER HAS NO TAXING AUTHORITY.

The Bonds will be issued in fully registered form in Authorized Denominations, as defined herein, and will mature,
subject to prior redemption, including mandatory sinking fund redemption, as described herein, on December 1, 2046.

The Bonds will bear interest at an annual rate of 5.00%. Interest on the Bonds will be payable semi-annually on June 1
and December 1 of each year, commencing December 1, 2007. The Bonds are issuable as fully registered bonds in the
denomination of $100,000 and integral multiplies of $5,000 in excess thereof.

THE BONDS ARE SUBJECT TO A SIGNIFICANT DEGREE OF RISK. NO RATING FOR THE BONDS HAS
BEEN APPLIED FOR. THE BONDS ARE BEING OFFERED IN A NONPUBLIC OFFERING ONLY TO PROSPECTIVE
INVESTORS WHO QUALIFY AS "ACCREDITED INVESTORS" AND ANY PURCHASER OF THE BONDS WILL BE
REQUIRED TO EXECUTE AND DELIVER AN INVESTMENT LETTER SUBSTANTIALLY IN THE FORM ATTACHED
HERETO AS APPENDIX C. See "PLACEMENT OF BONDS" herein.

The Bonds are being offered when, as and if issued by the Issuer, subject to the approval of their validity by Bass,
Berry& Sims PLC, Knoxville, Tennessee, Bond Counsel. Certain legal matters will be passed upon for the Issuer and the
Borrower by its counsel, Long, Ragsdale & Waters, P.C., Knoxville, Tennessee, for the Borrower. It is expected that the Bonds
in book-entry form will be available for delivery to DTC in New York, New York on or about April 23, 2007.

Date: April 23, 2007

MORGAN KEEGAN & COMPANY, INC.
PLACEMENT AGENT
 No dealer, broker, salesman or other person has been authorized by the Issuer, the Borrower or
the Placement Agent, to give any information or to make any representations, other than those contained
in this Private Placement Memorandum, and, if given or made, such other information or representations
must not be relied upon as having been authorized by any of the foregoing. This Private Placement
Memorandum does not constitute an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby by any person in any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or to any person to whom it is
unlawful to make such offer or solicitation. The information and expressions of opinion contained herein
are subject to change without notice and neither the delivery of this Private Placement Memorandum nor
any sale made hereunder shall under any circumstances create any implication that there has been no
change in the affairs of the Issuer, the Borrower or the Project since the date hereof.

CAUTIONARY STATEMENT REGULATIONS FORWARD-LOOKING STATEMENTS IN

THIS PRIVATE PLACEMENT MEMORANDUM

Certain statements included or incorporated by reference in this Private Placement Memorandum

constitute "forward-looking statements" within the meaning of the United States Private Securities
Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as
amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are
generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget" or other
similar words. Such forward-looking statements include, but are not limited to, certain statements
contained in the information under the caption "THE PROJECT – Projected Revenues."

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED

IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,
PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM
ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY
SUCH FORWARD-LOOKING STATEMENTS. THE ISSUER DOES NOT PLAN TO ISSUE ANY
UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN ITS
EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH STATEMENTS
ARE BASED OCCUR.
 TABLE OF CONTENTS

Page

INTRODUCTORY STATEMENT .................................................................................................1

THE ISSUER ...................................................................................................................................2
THE BORROWER ..........................................................................................................................2
THE PROJECT................................................................................................................................3
PLAN OF FINANCING ..................................................................................................................4
THE BONDS ...................................................................................................................................5
THE PLACEMENT AGENT ..........................................................................................................9
SECURITY FOR THE BONDS.................................................................................................... 10
BONDHOLDERS' RISKS............................................................................................................. 12
LITIGATION................................................................................................................................. 14
TAX EXEMPTION .................................................................................................................................... 14
LEGAL MATTERS.................................................................................................................................... 15
RATING ..................................................................................................................................................... 15
MISCELLANEOUS ................................................................................................................................... 15

Appendix A - Definitions of Certain Terms A-1

Appendix B - Document Summaries B-1
Appendix C – Investment Letter C-1

The Bonds have not been registered under the Securities Act of 1933 nor has the Indenture
been qualified under the Trust Indenture Act of 1939, in reliance upon exemptions contained in
such Acts. In addition, the Bonds have not been registered or qualified under the securities laws of
any state, and the lack of a requirement to so register or qualify the Bonds cannot be regarded as a
recommendation thereof. No states or any of their agencies have passed upon the merits of the
Bonds or the accuracy or completeness of this Private Placement Memorandum. Any
representation to the contrary may be a criminal offense.
 Private Placement Memorandum

$4,250,000
The Industrial Development Board
of the City of Knoxville
Revenue Bonds (Regal Riviera 8 Cinema Project)
Series 2007

INTRODUCTORY STATEMENT

This Private Placement Memorandum, including the cover page and appendices, is furnished in
connection with the offering of $4,250,000 principal amount of Revenue Bonds (Regal Riviera 8 Cinema
Project) Series 2007 (the "Bonds") of The Industrial Development Board of the City of Knoxville (the
"Issuer"). The Bonds will be equally and ratably secured by, and will be issued pursuant to, an Indenture
of Trust dated as of April 1, 2007 (the "Indenture"), between the Issuer and Regions Bank, as trustee (the
"Trustee"). The Bonds are being issued pursuant to Title 7, Chapter 53 of the Tennessee Code Annotated
(the "Act")

The proceeds of the Bonds will be loaned to The Industrial Development Board of the City of
Knoxville for the Downtown Cinema, Inc., a public body corporate and politic and an instrumentality of
the City of Knoxville, Tennessee (the "Borrower"), to be used to provide funds to finance the construction
of a new movie theatre complex (the "Project") to be located in downtown Knoxville, Tennessee and
certain related costs and to pay certain costs of issuing the Bonds. The Issuer and the Borrower will enter
into a Loan Agreement, dated as of April 1, 2007 (the "Loan Agreement") to evidence such loan.
Pursuant to the Loan Agreement, the Borrower is required to make payments in an amount sufficient to
pay the principal of, premium, if any, and interest on the Bonds when due. The Bonds will be secured by
a pledge and assignment to the Trustee pursuant to the Indenture, with certain reservations, of the Issuer's
right, title and interest in the Loan Agreement.

The Borrower will initially lease the Project upon the terms described herein to Regal Cinemas,
Inc. ("Regal") pursuant to a Lease Agreement dated as of December 13, 2006 (the "Regal Lease")
between the Borrower and Regal.

THE BONDS AND THE INTEREST THEREON SHALL NOT BE DEEMED TO

CONSTITUTE A DEBT OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF
TENNESSEE NOR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE CITY OF
KNOXVILLE, TENNESSEE AND KNOX COUNTY, TENNESSEE. NEITHER THE CITY OF
KNOXVILLE, TENNESSEE NOR KNOX COUNTY, TENNESSEE SHALL IN ANY EVENT BE
LIABLE FOR THE PAYMENT OF THE PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON
ANY OF THE BONDS ISSUED, OR FOR THE PERFORMANCE OF ANY PLEDGE, MORTGAGE,
OBLIGATION OR AGREEMENT OF ANY KIND WHATSOEVER OR INDEBTEDNESS BY THE
ISSUER, AND NONE OF THE BONDS OF THE ISSUER ISSUED OR ANY OF ITS AGREEMENTS
OR OBLIGATIONS DESCRIBED HEREIN OR OTHERWISE SHALL BE CONSTRUED TO
CONSTITUTE AN INDEBTEDNESS OF THE CITY OF KNOXVILLE, TENNESSEE OR KNOX
COUNTY, TENNESSEE WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY
PROVISION WHATSOEVER. THE ISSUER HAS NO TAXING AUTHORITY.

This Private Placement Memorandum contains descriptions of, among other matters, the Bonds,
the Project, the Issuer, the Borrower, and in Appendix B attached hereto, the Indenture, Loan Agreement

1
and the Regal Lease. Such descriptions and information do not purport to be comprehensive or definitive.
Definitions of certain words and terms used in this Private Placement Memorandum are set forth
herein or otherwise have the meaning ascribed to such terms in Appendix A - Definitions of Certain
Terms. All references herein to the Indenture, the Loan Agreement, the Regal Lease and all other
documents related thereto are qualified in their entirety by reference to such documents, and references
herein to the Bonds are qualified in their entirety by reference to the form thereof included in the
Indenture. Until the issuance and delivery of the Bonds, copies of the Indenture, the Loan Agreement and
other documents herein described may be obtained from Morgan Keegan & Company, Inc. (the
"Placement Agent"). The address of the Placement Agent is 530 South Gay Street, Suite 800, Knoxville,
Tennessee 37902, and its telephone number is (865) 637-1131. Copies of such documents will be
available for inspection at the principal corporate trust office of the Trustee after delivery of the Bonds.
The address of the corporate trust office of the Trustee is 401 Union Avenue, 11th Floor, Nashville,
Tennessee 37219.

This Private Placement Memorandum is only intended for use in connection with the initial
offering of the Bonds. The delivery of this Private Placement Memorandum after the date hereof shall not
under any circumstances create any implication that there has been no change in the affairs of the Issuer,
the Borrower or the Project since the date hereof.

THE ISSUER

The Issuer is a public, not-for-profit corporation organized pursuant to the Act and is governed by
a board of directors, consisting of seven members. The Issuer is authorized by the Act to finance the
construction and equipping of the Project. The Issuer adopted a resolution on November 14, 2007,
authorizing the issuance of the Bonds.

THE BONDS ARE SPECIAL AND LIMITED OBLIGATIONS OF THE ISSUER AND ARE
PAYABLE SOLELY FROM THE REVENUES AND SECURITY INTERESTS PLEDGED FOR
THEIR PAYMENT AND DO NOT CONSTITUTE A PLEDGE OF THE FAITH AND CREDIT OF
THE STATE OF TENNESSEE OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE
ISSUER, BUT SHALL BE PAYABLE SOLELY AS DESCRIBED HEREIN. NEITHER THE BONDS
NOR ANY OTHER OBLIGATION INCURRED BY THE ISSUER UNDER THE INDENTURE
SHALL CONSTITUTE OR GIVE RISE TO ANY LIABILITY OF THE CITY OF KNOXVILLE,
TENNESSEE, KNOX COUNTY, TENNESSEE, THE STATE OF TENNESSEE OR ANY OF ITS
POLITICAL SUBDIVISIONS. THE ISSUER HAS NO POWER TO LEVY OR COLLECT TAXES.

Neither the Issuer nor the Borrower is permitted pursuant to the Act to operate any project
financed by the Issuer, including the Project, and the responsibility for the operation of the Project will
rest entirely with Regal as long as the Regal Lease is in effect. If the Regal Lease is terminated for any
reason, the Issuer and the Borrower will be required to either lease the Project to another theater operator
or enter into a management contract or similar arrangement with an operator of the Project.

THE BORROWER

The Borrower is a public body corporate and politic and an instrumentality of the City of
Knoxville, Tennessee formed for the purpose of acquiring and developing the Project. The Borrower has
no substantial assets other than the Project and does not intend to acquire any other substantial assets or to
engage in any substantial business activities other than those related to the ownership of the Project. The
Borrower will enter into the Regal Lease, pursuant to which Regal will operate the Project. Neither the
Borrower nor the Issuer have any employees and have no resources to oversee the day-to-day operation of
the Project. The rental payments made by Regal pursuant to the Regal Lease are expected to provide

2
funds with which the Borrower can make payments pursuant to the Loan Agreement. Other than the
payments to be made pursuant to the Regal Lease, the Borrower is not expected to have any other source
of funds, nor will any other source of funds be pledged, to make payments under the Loan Agreement.

THE PROJECT

The Project will consist of an eight-screen, multi-auditorium, stadium-style cinema building,

containing approximately 1,951 auditorium seats and having a floor area of approximately 43,000 square
feet (not including the floor area of the mezzanine, which is projected to be an area of approximately
7,000 square feet). The Project will be located on real property located at 510 South Gay Street in
Knoxville, Knox County, Tennessee.

Construction Management Agreement

The Borrower has entered in to a Construction Management Agreement dated as of May 5, 2006
(the "Construction Management Agreement") with the Public Building Authority of the City of Knoxville
and the County of Knox, Tennessee (the "PBA"). Pursuant to the Construction Management Agreement,
the PBA will manage the construction of the Project.

The management duties of the PBA will include, but not be limited to, design, construction and
related administrative services. The Borrower will be responsible for all costs of constructing and
equipping the Project, any costs of additional development, planning, and design, and all other costs
incurred by the PBA in connection with the Project. The Borrower shall pay directly to the PBA a fee in
an amount equal to $157,765.

Construction Contract

The PBA has entered into a contract with Blaine Construction Corporation (the "Contractor"),
dated as of July 7, 2005 (the "Construction Contract") which provides for the construction of the Project.
Pursuant to the Construction Contract, the Contractor will provide pre-construction services including,
but not limited to, consulting with the Architect to create a preliminary schedule for construction of the
Project and preliminary cost estimates for construction of the Project in exchange for a $10,000 fee. The
Contractor will then construct the Project in exchange for compensation in an amount equal to the Cost of
the Work plus two and three quarters of a percent (2.75%) of the cost of the construction of the Project.

Facility Management Agreement

The Borrower has entered in to an Operating Contract (Cinema Project – Maintenance and
Repair) effective as of July 1, 2007 (the "Facility Management Agreement") with the PBA. Pursuant to
the Facility Management Agreement, the PBA will fulfill the Borrower's continuing maintenance
obligations under the Regal Lease, which are described in more detail in Appendix B hereto.

3
Projected Revenues

Regal has provided the Issuer with the following projection of revenues for the period beginning
May 1, 2007 and ending April 30, 2017:

Year Gross Sales*

2007 $1,850,000.00
2008 1,894,000.00
2009 1,959,000.00
2010 1,959,000.00
2011 1,959,000.00
2012 2,018,000.00
2013 2,018,000.00
2014 2,018,000.00
2015 2,018,000.00
2016 2,018,000.00
2017 2,079,000.00
*"Gross Sales" is defined in the Summary of
Regal Lease in Appendix B hereto.

PLAN OF FINANCING

General

The cost of constructing and equipping the Project will be paid with several sources of funds in
addition to the proceeds of the Bonds. The largest of these additional sources, which will be
approximately $6,850,250.00, will be paid with the proceeds of two loans to the Borrower from MBS-UI
Sub-CDE I, LLC (the "CDE") which will be secured by a second-position deed of trust lien on the
Project. The CDE will receive the funds to make the CDE Loan from a loan from an investment fund.
The investment fund will make the loan to the CDE with funds that it will receive from a loan from the
Issuer in the amount of $4,805,960.00 and from a capital contribution from a tax credit investor in the
amount of $2,202,890.00. The Issuer received the funds to make the loan to the investment fund from an
economic development grant from the City of Knoxville (the "City").

Another source of funds to be used to pay costs of the Project is the proceeds of a tax increment
financing note issued by the Issuer in the amount of $1,000,000.00. The proceeds of the tax increment
financing will be used to reimburse the Issuer for costs incurred in connection with preparing the Project
site for development and for payments of capitalized interest on the tax increment financing note for a
period ending up to two (2) years following completion of the Project.

Other sources of funds to pay Project costs include a contribution by Regal pursuant to the Regal
Lease to pay the cost of equipment for the Project.

4
Sources and Uses of Funds

The estimated sources and uses of Bond proceeds and other funds for the Project are projected to
be approximately as follows:

Sources of Funds

Bond Proceeds $ 4,250,000.00

CDE Loans $ 6,850,250.00
Regal Funds* $ 2,000,000.00
City Reimbursement $ 194,040.00
Tax Increment Financing** $ 866,533.00

Total: $14,160,823.00

Uses of Funds

Construction Costs $ 9,572,146.00

Soft Costs including design
costs $ 931,765.00
PBA Fees $ 157,765.00
CDE Legal Costs $ 100,000.00
FF&E $ 2,000,000.00
Land Cost $ 1,000,000.00
Debt Reserve Fund $ 212,500.00
Reserves*** $ 186,647.00

Total: $ 14,160,823.00

*This amount represents an estimate of Regal's cost to install the FF&E (as
defined in Appendix B hereto). The actual costs incurred by Regal may be less
than or exceed this amount.
**The principal amount of the tax increment financing note will be in an amount
sufficient to apply $866,533.00 to site work related to the Project and to create a
reserve for payment of capitalized interest on the tax increment financing note.
***This amount represents the total of amounts to be reserved in connection with
the CDE Loan and amounts to be held as capital reserves. Amounts in such
reserves will not be available to the Bondholders.

THE BONDS
General

The Bonds shall be initially issued as fully registered bonds without coupons in denominations of
$100,000 or any integral multiple of $5,000 in excess thereof. The Bonds will be dated as of the date of
their issuance, and will bear interest and mature as shown on the cover page hereof. Interest on the Bonds
will be payable semi-annually on June 1, and December 1 of each year ("Interest Payment Date")
beginning December 1, 2007.

The principal of the Bonds shall be payable at the principal corporate trust office of the Trustee
upon surrender of the Bonds at such principal corporate trust office. Interest on the Bonds (other than

5
Defaulted Interest) shall be payable by check drawn upon the Trustee and paid to the Persons in whose
names the Bonds are registered on the Bond Register as of the close of business on the Record Date next
preceding the relevant Interest Payment Date, provided that on written request to the Trustee by any
Person who is the registered owner of Bonds in a principal amount of $1,000,000 or more received by the
Trustee on or before fifteen days prior to such Record Date (which instructions shall remain in effect until
revoked by subsequent written instructions), interest on such Bonds shall be payable by wire transfer of
immediately available funds to an account at a bank located in the continental United States specified by
the Person in whose name such Bonds are registered. Any interest on any Bond which is payable but
which is not punctually paid or duly provided for ("Defaulted Interest") shall cease being payable to the
person in whose name such Bond is registered on the Record Date and instead shall be payable to the
person in whose name such Bond is registered at close of business on a Special Record Date selected by
the Trustee and which shall be at least 10 days but not more than 30 days before the date selected by the
Trustee for payment of such Defaulted Interest. The Trustee shall give Notice by Mail of the Special
Record Date and date for payment of Defaulted Interest at least 10 days before the Special Record Date.

Registration and Transfer of Bonds

The Trustee shall act as the initial bond registrar (the "Bond Registrar") and in such capacity shall
maintain a bond register (the "Bond Register") for the registration and transfer of Bonds. Upon surrender
of any Bonds at the Office of the Trustee, together with an assignment duly executed by the current
Bondholder of such Bonds or such Bondholder's duly authorized attorney or legal representative in such
form as shall be satisfactory to the Trustee, such Bonds may, at the option of the Bondholder, be
exchanged for an equal aggregate principal amount of Bonds of the same Series and maturity, of
Authorized Denominations and bearing interest at the same rate and in the same form as the Bonds
surrendered for exchange, registered in the name or names requested by the assignee of the then
Bondholder; provided the Trustee is not required to exchange or register the transfer of Bonds after the
giving of notice calling such Bond for redemption, in whole or in part. The Issuer shall execute and the
Trustee shall authenticate any Bonds whose execution and authentication is necessary to provide for
exchange of Bonds pursuant to this Section and the Issuer may rely on a representation from the Trustee
that such execution is required.

The Trustee may make a charge to any Bondholder requesting such exchange or registration in
the amount of any tax or other governmental charge required to be paid with respect thereto.

Prior to due presentment for registration or transfer of any Bond, the Trustee shall treat the Person
shown on the Bond Register as owning a Bond as the Bondholder and the Person exclusively entitled to
payment of principal thereof, redemption premium, if any, and interest thereon and, except as otherwise
expressly provided herein, the exercise of all other rights and powers of the owner thereof, and neither the
Issuer, the Borrower, the Trustee nor any agent of the Issuer, the Borrower or the Trustee shall be affected
by notice to the contrary.

Notwithstanding any other provision of this Indenture, prior to the transfer of any of the
Bonds, any transferee shall be required to execute and deliver an Investor Letter in substantially
the form attached required by the Indenture.

Redemption

Optional Redemption. The Bonds are subject to optional redemption in whole or in part by the
Issuer, upon at least 45 days prior written notice to the Trustee (or such shorter period as shall be
acceptable to the Trustee), on any date on or after December 1, 2007, at a redemption price equal to the

6
principal amount thereof outstanding, together with accrued interest thereon to the date fixed for
redemption.

Extraordinary Optional Redemption. The Bonds are subject to redemption, in whole or in part, at
the direction of the Issuer, on a redemption date which is no later than forty-five (45) days after the
receipt by the Trustee or the Issuer of Net Proceeds, following the occurrence of a casualty or
condemnation to the Project as a result of which the Borrower is required to apply such Net Proceeds to
the redemption of the Bonds pursuant to the Deed of Trust at a redemption price equal to, in the case of a
redemption in whole, 100% of the principal amount of the Bonds then Outstanding, without any
premium, or, in the case of a redemption in part, the maximum principal amount of the Bonds plus
accrued interest thereon which can be redeemed at such price with available Net Proceeds.

Mandatory Redemption Upon Determination of Taxability. The Bonds are subject to mandatory
redemption in the event of a Determination of Taxability, as defined in the next paragraph, in whole (or in
part as provided below) at the principal amount thereof plus interest accrued, without premium to the
redemption date, on the first date on which the Trustee can redeem Bonds following the giving of the
notice of redemption which notice the Trustee shall give within 15 days after a Determination of
Taxability. Fewer than all the Bonds may be redeemed if redemption of fewer than all would result, in
the Opinion of Bond Counsel delivered to the Trustee, in the interest payable on the Bonds remaining
Outstanding being not includable in the gross income of any Bondholder for Federal income tax purposes.
If fewer than all of the Bonds are redeemed, the Trustee shall select the Bonds to be redeemed in the
manner described below or by such other method acceptable to the Trustee as may be specified in an
Opinion of Bond Counsel.

"Determination of Taxability" means either (a) receipt by the Trustee of an Opinion of Bond
Counsel reasonably acceptable to the Trustee to the effect that an Event of Taxability, as defined in the
next paragraph, has occurred with respect to the Bonds, or (b) receipt of a written notice by the Trustee
from any Bondholder or the Commissioner or any District Director of Internal Revenue that the Internal
Revenue Service has issued a written notice of deficiency, proposed notice of deficiency or assessment by
the Commissioner or any District Director of Internal Revenue asserting that the interest paid or payable
on any Bond to any person is or was includable in the gross income of the holder thereof for federal
income tax purposes under Section 103 of the Code; provided that no Determination of Taxability shall be
deemed to have occurred under (b) unless the Issuer has been afforded the reasonable opportunity to
contest any such notice of deficiency or assessment and no Determination of Taxability shall occur until
such contest by the Issuer, if made, has been finally determined (with no further right of appeal); provided
that unless such final determination shall be obtained within two years of the receipt of such notice or
assessment, a Determination of Taxability shall be deemed to occur unless, prior to the end of such two
year period and prior to the end of each subsequent year in which a contest continues, the Trustee shall
have received an Opinion of Bond Counsel reasonably satisfactory to the Trustee to the effect that the
interest on the Bonds is not includable in the gross income of any Holder or former Holder for federal
income tax purposes.

"Event of Taxability" means any event, condition or circumstance (other than an act or omission
of any Bondholder) which has the effect of causing the interest payable on the Bonds to become
includable for Federal income tax purposes, under Section 103 of the Code, in the gross income of any
Bondholder.

Although the Bonds are subject to mandatory redemption in the event of a Determination
of Taxability, the Regal Lease does not contain a provision accelerating rental payments upon a
Determination of Taxability. Therefore, it is not certain that funds will be available to redeem the
Bonds in the event of a Determination of Taxability.

7
 Notice of Redemption

(a) When Bonds (or portions thereof) are to be redeemed, the Borrower shall give or cause to
be given notice of the redemption of the Bonds to the Trustee no later than 45 days prior to the
redemption date or such shorter time as may be acceptable to the Trustee. In the case of an optional
redemption, the notice may state (1) that it is conditioned upon the deposit of moneys, in an amount equal
to the amount necessary to effect the redemption, with the Trustee no later than the date that is five (5)
Business Days prior to the redemption date or (2) that the Issuer retains the right to rescind such notice on
or prior to the scheduled redemption date (in either case, a "Conditional Redemption"), and such notice
and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is
rescinded as described in subsection (d) below. The Trustee, at the expense of the Borrower, shall send
notice of any redemption, identifying the Bonds to be redeemed, the redemption date and the method and
place of payment and the information required by subsection (b) below, by first class mail to each holder
of a Bond called for redemption to the holder's address listed on the Bond Register. Such notice shall be
sent by the Trustee by first class mail between 20 and 60 days prior to the scheduled redemption date. If
notice is given as stated in this paragraph (a), failure of any Bondholder to receive such notice, or any
defect in the notice, shall not affect the redemption or the validity of the proceedings for the redemption
of the Bonds.

(b) In addition to the foregoing, the redemption notice shall contain with respect to each
Bond being redeemed, (1) the date of issue, (2) the interest rate, (3) the maturity date, and (4) any other
descriptive information determined by the Trustee to be needed to identify the Bonds. If a redemption is
a Conditional Redemption, the notice shall so state. If applicable, each redemption notice shall also be
sent to Beneficial Owners.

(c) On or before the date fixed for redemption, subject to the provisions of subsections (a)
and (d) of this section, moneys shall be deposited with the Trustee to pay the principal of, redemption
premium, if any, and interest accrued to the redemption date on the Bonds called for redemption. Upon
the deposit of such moneys, unless the Issuer has given notice of rescission as described in subsection (d)
below, the Bonds shall cease to bear interest on the redemption date and shall no longer be entitled to the
benefits of the Indenture (other than for payment and transfer and exchange) and shall no longer be
considered Outstanding.

(d) Any Conditional Redemption may be rescinded in whole or in part at any time prior to
the fifth Business Day prior to the redemption date if the Borrower delivers an Officer's Certificate to the
Trustee instructing the Trustee to rescind the redemption notice. The Trustee shall give prompt notice of
such rescission to the affected Bondholders. Any Bonds subject to Conditional Redemption where
redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event
of Default. Further, in the case of a Conditional Redemption, the failure of the Issuer or Borrower to
make funds available in part or in whole on or before the date that is five Business Days prior to the
redemption date shall not constitute an Event of Default, and the Trustee shall give written notice in
accordance with the Indenture to the affected Bondholders that the redemption did not occur and that the
Bonds called for redemption and not so paid remain Outstanding.

Partial Redemption of Bonds. If less than all the Bonds are to be redeemed, the particular Bonds
or portions thereof to be redeemed shall be selected by the Trustee by lot or in such other manner as the
Trustee shall deem fair, which shall be deemed to include pro rata redemption of Bonds, and which may
provide for the selection for redemption of portions (equal to Authorized Denominations) of the principal
of Bonds.

8
 Any Bond which is to be redeemed only in part shall be surrendered to the Trustee (a) for
payment of the Redemption Price (including accrued interest thereon to the Redemption Date) of the
portion thereof called for redemption and (b) for exchange for Bonds in any Authorized Denomination or
denominations in aggregate principal amount equal to the unredeemed portion of such Bond, without
charge therefor.

Notwithstanding the foregoing, in the event that the depository for the Bonds is DTC, the Trustee
will follow the procedure for redemption, and selection of Bonds for redemption, prescribed by DTC.

Purchase At Any Time. The Trustee, upon the written request of the Issuer, shall purchase Bonds
as specified by the Issuer from bondholder(s) designated by the Borrower that have indicated a
willingness to sell their Bonds in the open market at a price not exceeding a price set by the Borrower.
Such purchase of Bonds shall be made with funds provided by the Issuer or the Borrower and not with
any portion of the Trust Estate or any Defeasance Obligations. Upon purchase by the Trustee, such
Bonds shall be treated as delivered for cancellation pursuant to the Indenture. Nothing in the Indenture
shall prevent the Issuer or the Borrower from purchasing Bonds without the involvement of the Trustee
and delivering such Bonds to the Trustee for cancellation pursuant to the Indenture. The principal amount
of Bonds to be redeemed by optional redemption under this Indenture may be reduced by the principal
amount of Bonds purchased by the Borrower or the Issuer, at the request of the Borrower, and delivered
to the Trustee for cancellation at least forty-five (45) days prior to the redemption date.

THE PLACEMENT AGENT

The placement of the Bonds is intended to be an exempt transaction under the Securities Act of
1933 (the "Securities Act"), and the offer, sale and delivery of the Bonds do not require registration under
the Securities Act or qualification of the Indenture under the Trust Indenture Act of 1939. Morgan
Keegan & Company, Inc., the Placement Agent, has agreed to place the Bonds with accredited investors
on behalf of the Issuer. The Placement Agent will be compensated by the Borrower pursuant to the terms
of a fee letter agreement between the Placement Agent and the Borrower, a copy of which is available
upon request.

The Bonds are being offered in a nonpublic offering to a limited number of prospective investors
who qualifies as any of the following categories at the time of the sale of Bonds to that person or entity:

(a) Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the "Act"),
or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the
Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered under
the Investment Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act; any Small Business Investment Company licensed by the United States
Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors.

(b) Any private business development company as defined in Section 202(a)(22) of

the Investment Advisers Act of 1940.

9
 (c) Any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total assets in excess of
$5,000,000.

(d) Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $5,000,000.

(e) Any natural person who had an individual income in excess of $500,000 in each
of the two most recent years or joint income with that person's spouse in excess of $600,000 in
each of those years and has a reasonable expectation of reaching the same income level in the
current year.

(f) Any trust with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person
as described in Rule 506(b)(2)(ii).

(g) Any entity in which all of the equity owners are accredited investors.

In connection with the purchase of the Bonds, each purchaser will be required to deliver to the
Issuer, the Borrower and the Placement Agent an investment letter substantially in the form of Appendix
C to this Placement Memorandum relating to the purchaser's status as an investor qualified as any of the
above-listed categories and the suitability of an investment in the Bonds for the purchaser.

SECURITY FOR THE BONDS

General

The Bonds will be issued under and will be equally and ratably secured under the Indenture,
pursuant to which the Issuer will assign and pledge to the Trustee (1) certain rights of the Issuer under the
Loan Agreement, (2) the funds and accounts, including the money and investments in such funds, which
the Trustee holds under the terms of the Indenture, and (3) such other property as may from time to time
be pledged to the Trustee as additional security for the Bonds or which may come into possession of the
Trustee pursuant to the terms of the Loan Agreement.

Limited Obligations

The Bonds and the interest thereon are limited obligations of the Issuer, payable solely from and
secured by certain payments to be made by the Borrower under the Loan Agreement and secured by the
Deed of Trust and certain other funds held by the Trustee under the Indenture for such Bonds and not
from any other fund or source of the Issuer.

THE BONDS WILL NOT BE DEEMED TO CONSTITUTE A DEBT OR LIABILITY OF THE

STATE OF TENNESSEE OR OF ANY POLITICAL SUBDIVISION THEREOF. NEITHER THE
STATE OF TENNESSEE NOR THE ISSUER WILL BE OBLIGATED TO PAY THE PRINCIPAL OF
THE BONDS, OR THE INTEREST THEREON, EXCEPT FROM THE FUNDS PROVIDED UNDER
THE INDENTURE AND THE LOAN AGREEMENT. NEITHER THE FAITH AND CREDIT NOR
THE TAXING POWER OF THE STATE OF TENNESSEE OR OF ANY POLITICAL SUBDIVISION
THEREOF IS PLEDGED TO THE PAYMENT OF PRINCIPAL OF OR INTEREST ON THE BONDS.
THE ISSUER HAS NO TAXING POWER.

10
Deed of Trust and Assignment of Lease

The Borrower will enter into a Deed of Trust and Assignment of Lease dated as of April 1, 2007
(the "Deed of Trust") in favor of a trustee for the benefit of the Issuer to secure its payment obligations
under the Loan Agreement. The Issuer will assign its rights under the Deed of Trust pursuant to the
Indenture to the Trustee to secure the payment of the Bonds. The Deed of Trust will constitute a first
mortgage lien upon the Project. In the event the Borrower defaults on its payment obligations under the
Loan Agreement, the Trustee will be permitted to foreclose upon the Project upon the terms set forth in
the Deed of Trust.

Pursuant to the Deed of Trust, the Borrower will also assign to the Issuer its right to receive rental
payments under the Regal Lease and any subsequent lease of the Project. The Issuer will assign these
rights to the Trustee pursuant to the Indenture.

Debt Service Reserve Fund

The Indenture creates and establishes with the Trustee a Debt Service Reserve Fund (the "Debt
Service Reserve Fund") with respect to the Bonds. Moneys on deposit in the Debt Service Reserve Fund
will be used to provide a reserve for the payment of interest on the Bonds. Pursuant to the Indenture, the
Trustee will deposit into the Debt Service Reserve Fund an amount equal to the amount of interest on the
Bonds scheduled to come due in the current or any future Bond Year, as calculated each December 1 (the
"Debt Service Reserve Requirement"). In addition to the deposit required by the Indenture, there will be
deposited into the Debt Service Reserve Fund all moneys required to be transferred thereto pursuant to the
Indenture, and all other moneys received by the Trustee when accompanied by directions that such
moneys are to be paid into such Debt Service Reserve Fund.

Except as provided in the Indenture, moneys in the Debt Service Reserve Fund will be used for
the payment of interest on the Bonds in the event moneys in the Bond Fund (as defined in the Indenture)
are insufficient to make such payments when due, whether on an interest payment date, redemption date,
maturity date, acceleration date or otherwise. However, provided that payments made by the Borrower
under the Loan Agreement are sufficient to make payments of principal and interest on the Bonds when
due, the Trustee shall release on each December 1 an amount equal to the excess of the amount in the
Debt Service Reserve Fund over the Debt Service Reserve Requirement from the Debt Service Reserve
Fund to be used as part of such payment of principal and interest on the Bonds. Thereafter, the Debt
Service Reserve Requirement (as defined in the Indenture) shall be reduced by the amount released by the
Trustee.

On the final maturity date or redemption date of the Bonds, any moneys in the Debt Service
Reserve Fund relating to the Bonds may be used to pay the principal of, premium, if any, and interest on
the Bonds on the final maturity date or redemption date of the Bonds.

11
 BONDHOLDERS' RISKS

The factors discussed below should be considered in evaluating the ability of the Issuer to make
payments in amounts sufficient to provide for payment of the principal of, premium, if any, and interest
on the Bonds. This discussion of the risk factors involved in purchasing and owning the Bonds is not, and
is not intended to be, exhaustive.

General

The Bonds are limited, not general, obligations of the Issuer payable solely from the payments
made by the Borrower pursuant to the Loan Agreement and other funds, rights and interests of the
Borrower pledged for the payment thereof under the terms of the Indenture. The Bonds are not a debt of
any city, any county, the State or any political subdivision thereof (other than the Issuer), and no city or
county, or the State or any political subdivision thereof (other than the Issuer) is liable thereon, and in no
event shall the Bonds be payable out of any funds or properties other than those of the Borrower pledged
pursuant to the Indenture. The Bonds do not constitute an indebtedness within the meaning of any
constitutional or statutory debt limitation or restriction. The Issuer has no taxing power.

The ability of the Borrower to make payments under the Loan Agreement in amounts sufficient to
provide for payment of the principal of and interest on the Bonds could be adversely affected by the
occurrence of certain events, including, without limitation, the events and circumstances described below.
Any of these events could adversely affect the ability of the Issuer to make payments on the Bonds.

Taxability

The Issuer and the Borrower intend for interest on the Bonds to be exempt from federal income
taxation pursuant to Section 1394 of the Internal Revenue Code of 1986, as amended (the "Code") and the
Treasury Regulations promulgated thereunder (the "Regulations"). Regal will be considered a principal
user of the Project pursuant to Section 1394 of the Code, and for the interest on the Bonds to be exempt
from federal income taxation, Regal will need to qualify as an enterprise zone business within the
meaning of Section 1394(b) of the Code. In order to ensure that Regal qualifies as an enterprise zone
business for the life of the Bonds, Regal has agreed to comply with certain requirements pursuant to the
Regal Lease. The primary requirement that Regal must meet to qualify as an enterprise zone business is
that at least thirty-five percent (35%) of its employees must be residents of the area within the City of
Knoxville, Tennessee designated as an empowerment zone pursuant to Section 1391 of the Code (the
"Empowerment Zone"). Should Regal fail to meet this employment requirement or any other requirement
more specifically described in the Regal Lease, such failure could have a materially adverse effect on the
tax-exempt status of the Bonds.

Although the Bonds are subject to mandatory redemption in the event of a Determination of
Taxability, the Regal Lease does not contain a provision accelerating rental payments upon a
Determination of Taxability. Therefore, it is not certain that funds will be available to redeem the Bonds
in the event of a Determination of Taxability.

Failure or Delay to Complete Construction

Should the Borrower fail to complete construction of the Project or be materially delayed in
completing the Project, there will be no means by which to derive the revenues necessary for the
Borrower to make payments pursuant to the Loan Agreement. Such failure or delay could occur for
numerous reasons, including poor weather, labor or material shortages or breach of the Construction
Contract by the contractor.

12
Termination of the Regal Lease

If after the first three years of the Regal Lease, Gross Sales (as defined in the Summary of Regal
Lease in Appendix B hereto) are less than $1,500,000 for any period of twelve consecutive months
(without a cessation of partial or total use of the Project due to either the occurrence of a casualty,
remodeling of the Project by Regal, or other alterations pursuant to the Regal Lease), then Borrower or
Regal may terminate the term of the Regal Lease upon written notice to the other party. Such termination
would be effective at the end of the twelfth calendar month after receipt of such written notice by the non-
terminating party. Such termination could have a materially adverse affect on Borrower's ability to make
payments pursuant to the Loan Agreement and would therefore be a materially adverse affect Issuer's
ability to make payments on the Bonds. Additionally, should Regal terminate the Regal Lease, there can
be no assurances that an alternative operator for the Project can be engaged.

If Regal does not terminate the Regal Lease as described above, the initial term of the Regal
Lease shall be last day of the last twelve-month period fifteen (15) consecutive twelve-month periods
after the day on which the final use and occupancy permit is issued for the Project and Regal opens for
business in the Project. Regal shall have three options to extend the term of the Regal Lease for
successive and consecutive periods of five (5) twelve-month periods. Such options must be exercised 180
days prior to the last day of the end of the initial term or the preceding option term.

Insufficient Revenues

No assurance can be given as to the future performance of the Project. The economic feasibility
of the Project depends in large part upon attraction to the Project of a sufficient number of patrons. The
Issuer has not independently reviewed the feasibility of the Project and makes no representation, direct or
indirect, that the Project will be able to generate sufficient income for the Borrower to pay costs of
maintaining, repairing and insuring the Project and to make sufficient payments to pay debt service on the
Bonds.

Natural Disaster

The occurrence of natural disasters, including tornadoes, floods or earthquakes, which may
damage the Project, interrupt utility service to the Project, or otherwise impair the operation and
generation of revenues from the Project could adversely affect the operation of the Project.

Competition

The Project is located in an area where other competitive movie theatre facilities exist and may
face additional competition in the future as a result of the construction or renovation of competitive movie
theatre facilities in the primary or secondary market area of the Project.

13
Leasehold Mortgage

Regal shall have the continuing right during the term of the Regal Lease, once or more often,
without obtaining Borrower's consent or approval, to mortgage, grant a deed of trust on, pledge or
otherwise encumber Regal's interest in the Regal Lease. Borrower has subordinated its lien rights in its
capacity as landlord in Regal's property to the lien of any such leasehold mortgagee. If the Trustee
forecloses the Project upon event of default with respect to the Bonds, the existence of a leasehold
mortgage as for Regal's property of the Project may delay or interfere with the prompt exercise of its
right, under the Deed of Trust.

Lack of Marketability for the Bonds

The Bonds are not rated. When any Bondholder attempts to resell its Bonds, this absence of a
rating could adversely affect the market price and marketability thereof.

The Placement Agent has no intention of making a market for the Bonds and there can be no
assurance that there will be a secondary market for the Bonds. The absence of such a market for the
Bonds could result in investors not being able to resell the Bonds should they need to or wish to do so.

Limited Value of Project upon Default

The Project was designed and constructed for use as a movie theatre complex and is not suitable
for many other commercial uses. The number of entities that could be expected to purchase or lease the
Project in the event of default by the Borrower and foreclosure of the Deed of Trust are limited, and thus
the ability of the Trustee to realize funds from the sale of the Project upon an event of default by the
Borrower and foreclosure of the Deed of Trust may be limited, and which could result in a loss, in whole
or in part, of a Bondholder's investment.

LITIGATION

There is no known pending or threatened litigation against the Issuer or the Borrower which in
any way questions or materially affects the validity of the Bonds, or any proceedings or transactions
relating to their issuance, sale or delivery or which may materially affect the Regal Lease or the operation
of the Project.

TAX EXEMPTION

In the opinion of Bass, Berry & Sims PLC, Bond Counsel, under existing law, and assuming
continuing compliance by the Issuer, the Borrower and Regal with the requirements of the Internal
Revenue Code of 1986, as amended (the "Code"), interest on the Bonds is excluded from gross income of
the owners thereof for federal income tax purposes, except for interest on any Bond during any period
while it is held by a "substantial user" of the Project or a "related person" within the meaning of the Code.
Interest on the Bonds is, however, an item of tax preference for the purpose of the federal alternative
minimum tax imposed on individuals and corporations. In addition ownership of the Bonds may result in
certain collateral federal income tax consequences herein described.

The opinion of Bond Counsel is subject to the condition that the Issuer, the Borrower and Regal
comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds
in order that interest thereon be (or continued to be) excluded from gross income for federal income tax
purposes. Failure to comply with such requirements could cause interest on the Bonds to be so included

14
in the gross income of the holders thereof retroactively to the date of issuance of the Bonds. The Issuer,
the Borrower and/or Regal have covenanted to comply with such requirements.

In addition to the matters addressed above, prospective purchasers of the Bonds should be aware
that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to
certain taxpayers, including without limitation, financial institutions, property and casualty insurance
companies, certain Subchapter S corporations, certain foreign corporations subject to the branch profits
tax, corporations subject to the environmental tax, recipients of Social Security or Railroad Retirement
benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or
carry tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as to
the applicability and impact of such consequences.

Under the existing laws of the State of Tennessee, the Bonds and the income therefrom are
exempt from all present state, county and municipal taxes in Tennessee except (a) inheritance, transfer
and estate taxes, (b) Tennessee excise taxes on all or a portion of the interest on any of the Bonds during
the period such Bonds are held or beneficially owned by any organization or entity, other than a sole
proprietorship or general partnership, doing business in the State of Tennessee, and (c) Tennessee
franchise taxes by reason of the inclusion of the book value of the Bonds in the Tennessee franchise taxes
base of any organization or entity, other than a sole proprietorship or general partnership, doing business
in the State of Tennessee. Each prospective purchaser of the Bonds should consult his own tax advisor as
to the status of interest on the Bonds under the tax laws of any state other than Tennessee.

LEGAL MATTERS

Legal matters incident to the authorization and issuance of the Bonds are subject to the approving
opinion of Bass, Berry & Sims PLC, Knoxville, Tennessee, Bond Counsel, whose approving opinion will
be delivered with the Bonds. Certain legal matters will be passed upon for the Issuer and the Borrower by
Long, Ragsdale & Waters, P.C., Knoxville, Tennessee.

RATING

THE BONDS ARE NOT RATED; THE ISSUER HAS NOT APPLIED TO ANY RATING
SERVICE FOR A RATING OF THE BONDS.

MISCELLANEOUS

The reference herein to the Indenture, the Loan Agreement and other materials are only brief
outlines of certain provisions thereof and do not purpose to summarize or describe all the provisions
thereof. Reference is hereby made to such instruments, documents and other materials, copies of which
will be furnished by the Trustee upon request for further information.

Any statements in this Private Placement Memorandum involving matters of opinion, whether or
not expressly so stated, are intended as such and not as representations of fact.

The attached Appendices A through C are integral parts of this Private Placement Memorandum
and should be read in their entirety together with all of the foregoing statements.

15
 APPENDIX A

DEFINITIONS OF CERTAIN TERMS

The following are definitions of certain of the terms used in this Private Placement Memorandum.
Certain of these terms are defined elsewhere in this Private Placement Memorandum, and the definition
contained in this Appendix is either the same as the definition contained elsewhere in this Private
Placement Memorandum or is a more precise definition of the term in question. To the extent a definition
contained elsewhere in this Private Placement Memorandum is inconsistent with a term defined in this
Appendix, the definition contained in this Appendix should control.

"Act" means Chapter 53 of Title 7, Tennessee Code Annotated, as amended.

"Additional Bonds" means the additional parity bonds authorized to be issued by the Issuer
pursuant to the Indenture.

"Attesting Officer" means the Secretary or Assistant Secretary of the Issuer or of the Borrower, as
the case may be.

"Authorized Denominations" means $100,000 or any integral multiple of $5,000 in excess

thereof.

"Bankruptcy Law" means Title 11 of the United States Code, as it is amended from time to time
and any successor to or replacement of such Title and any other applicable federal or state bankruptcy,
insolvency or other similar law.

"Beneficial Owner" means, for any Bond which is held by a nominee, the beneficial owner of
such Bond.

"Bond Counsel" means, with respect to the Bonds, Bass, Berry & Sims PLC, or any other firm of
attorneys experienced in the matters related to the issuance of debt securities by such entities as the Issuer
selected by the Issuer and acceptable to the Trustee.

"Bondholder," "Owner," "owner," "Holder" or "holder" or any similar term, when used with
reference to any of the Bonds, means (i) in the event that the book-entry system of evidence and transfer
of ownership of the bonds is employed pursuant to the Indenture, Cede & Co., as nominee for DTC, or its
nominee, and (ii) in all other cases, the registered owner or owners of any Bond as shown on the
registration books maintained by the Trustee.

"Bond Fund" means the Bond Fund created by the Indenture.

"Bond Register" and "Bond Registrar" shall have the respective meanings specified in the
Indenture.

"Bond Year" means the 12-month period ending on each December 1; provided the initial Bond
Year shall begin on the date of issuance of the Bonds and end on December 1, 2007.

"Book Entry Bonds" means all or that part of a Series for which a Securities Depository or its
nominee is the Bondholder.

A-1
 "Borrower" means The Industrial Development Board of the City of Knoxville for the Downtown
Cinema, Inc., a public nonprofit corporation and instrumentality of the City of Knoxville, and, to the
extent permitted by the Loan Agreement, its lawful successors and assigns.

"Borrower Representative" means with respect to any matter hereunder or any of Loan
Documents, the Chairman, Vice-Chairman or Secretary of the Borrower.

"Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which banks
located in the city in which the office of the Trustee is located are required or authorized by law to remain
closed, or (c) a day on which The New York Stock Exchange is closed.

"Capitalized Interest Account" means the Capitalized Interest Account of the Bond Fund created
by the Indenture.

"CDE" means MBS-UI Sub-CDE I, LLC, a Delaware limited liability company.

"Code" means the Internal Revenue Code of 1986, as amended, as it applies to the Bonds,
including applicable regulations and revenue rulings thereunder. Reference herein to sections of the Code
are to the sections thereof as they exist on the date of execution of the Indenture, but include any
successor provisions thereof.

"Conditional Redemption" means a redemption where the Borrower has stated in the redemption
notice to the Trustee that (a) the redemption is conditioned upon deposit of funds or (b) the Borrower has
retained the right to rescind the redemption, as further described in the Indenture.

"Costs" or "Costs of the Project" has the meaning set forth in the Indenture.

"Cost of the Work" means costs necessarily incurred by the Contractor in the proper performance
of the construction of the Project.

"Closing Date" means the date of the issuance and delivery of the Bonds.

"Construction Agreement" means the Construction Agreement, dated as of July 7, 2005, between
the PBA and the Contractor.

"Construction Management Agreement" means the Construction Management Agreement, dated

as of May 5, 2006 between the Borrower and the PBA.

"Contractor" means Blaine Construction Company.

"Costs" or "Costs of Project" has the meaning set forth in the Indenture.

"Counsel" means an attorney, or firm thereof, admitted to practice law before the highest court of
any state in the United States of America or the District of Columbia.

"Debt Service Reserve Fund" means the trust fund designated as the Debt Service Reserve Fund
which is created by the Indenture.

"Debt Service Reserve Requirement" means an amount equal to the amount of interest on the
Bonds scheduled to come due in the current or any future Bond Year, as calculated each December 1.

A-2
 "Deed of Trust" means the Deed of Trust, Assignment of Rents and Security Agreement dated as
of April 1, 2007, from the Borrower to the deed of trust trustee named therein for the benefit of the Issuer
and the Trustee.

"Default" means any event which with the giving of notice or lapse of time, or both, would
constitute an Event of Default.

"Defeasance Obligations" means those investments described in clause (a) of the definition of
Permitted Investments.

"Depository Participants" means any Person for which the Securities Depository holds Bonds as
securities depository.

"Determination of Taxability" means either (a) receipt by the Trustee of an Opinion of Bond
Counsel reasonably acceptable to the Trustee to the effect that an Event of Taxability has occurred with
respect to the Bonds, or (b) receipt of a written notice by the Trustee from any Bondholder or the
Commissioner or any District Director of Internal Revenue that the Internal Revenue Service has issued a
written notice of deficiency, proposed notice of deficiency or assessment by the Commissioner or any
District Director of Internal Revenue asserting that the interest paid or payable on any Bond to any person
is or was includable in the gross income of the holder thereof for federal income tax purposes under
Section 103 of the Code; provided that no Determination of Taxability shall be deemed to have occurred
under (b) unless the Issuer has been afforded the reasonable opportunity to contest any such notice of
deficiency or assessment and no Determination of Taxability shall occur until such contest by the Issuer,
if made, has been finally determined (with no further right of appeal); provided that unless such final
determination shall be obtained within two years of the receipt of such notice or assessment, a
Determination of Taxability shall be deemed to occur unless, prior to the end of such two year period and
prior to the end of each subsequent year in which a contest continues, the Trustee shall have received an
Opinion of Bond Counsel reasonably satisfactory to the Trustee to the effect that the interest on the Bonds
is not includable in the gross income of any Holder or former Holder for federal income tax purposes.

"DTC" shall have the meaning given to such term in the Indenture.

"Event of Bankruptcy" means the filing of a petition in bankruptcy (or other commencement of a
bankruptcy or similar proceedings) by or against the Issuer or the Borrower as debtor under Bankruptcy
Law.

"Event of Default" shall, with respect to the Indenture and Loan Agreement, respectively, have
the meanings described under Appendix B-Document Summaries - "The Indenture-Events of Default"
and "The Loan Agreement-Events of Default and Remedies on Default."

"Event of Taxability" means any event, condition or circumstance (other than an act or omission
of any Bondholder) which has the effect of causing the interest payable on the Bonds to become
includable for Federal income tax purposes, under Section 103 of the Code, in the gross income of any
Bondholder.

"Facility Management Agreement" means the Operating Contract (Cinema Project – Maintenance
and Repair), effective as of July 1, 2007, between the Borrower and the PBA, as amended or
supplemented from time to time, and any management agreement for the Project entered into by the
Borrower with a facility manager to manage the operation of the Project in the place of the initial Facility
Management Agreement.

A-3
 "Funds" means (a) the Project Fund, the Debt Service Reserve Fund, the Bond Fund, the
Operating Fund, the Revenue Fund, and the Property Insurance Award Fund, and (b) any other Fund
designated as such with respect to a Series.

"Government Obligations" means direct general obligations of, or obligations the prompt
payment of the principal of and the interest on which are fully and unconditionally guaranteed by, the
United States of America.

"Immediate Notice" means notice transmitted by electronic means, in writing, by telecopier or

other electronic means or by telephone (promptly confirmed in writing), and received by the party
addressed.

"Indenture" means the Trust Indenture by and between the Issuer and the Trustee, dated as of
April 1, 2007, as amended or supplemented from time to time.

"Interest Account" means the Interest Account of the Bond Fund created by the Indenture.

"Interest Payment Date" means (a) the first day of June and December of each year beginning
December 1, 2007 and, for any Additional Bonds, the days designated in the supplemental indenture
authorizing such Additional Bonds, (b) for Bonds subject to redemption in whole or in part on any date,
the date of such redemption, and (c) for all Bonds any date determined pursuant to the Indenture.

"Interest Requirement" means the monthly payment of interest to be paid into the Interest
Account as specified in the Indenture.

"Issuance Costs" means costs incurred by or on behalf of the Borrower in connection with the
making of the Loan by the Issuer to the Borrower including, without limitation, the following: payment of
financial, legal, accounting and appraisal fees, expenses and disbursements, the Issuer's fees and expenses
attributable to the issuance of the Bonds, the cost of printing, engraving and reproduction services, legal
fees and expenses for Bond Counsel, Issuer's counsel, Trustee's counsel and Borrower's counsel relating
to the issuance of the Bonds, the initial or acceptance fee of the Trustee and any purchase discount, rating
agency fees and all other fees, charges and expenses incurred in connection with the issuance of the
Bonds and the preparation and filing or recording of the Indenture and of any document, including the
Loan Documents, relating to the issuance of the Bonds.

"Issue Date" means, with respect to the Bonds, the date of issuance and delivery of the Bonds to
the initial purchasers thereof and, with respect to any Additional Bonds, the date of issuance and delivery
of such Additional Bonds to the initial purchasers thereof.

"Issuer" means The Industrial Development Board of the City of Knoxville and its successors and
assigns.

"Issuer Representative" means the Chairman, Vice-Chairman or Secretary-Treasurer of the Issuer.

"Letter of Representations" means any Letter of Representations of the Issuer relating to a book-
entry system to be maintained by the Securities Depository with respect to the Bonds.

"Loan" means the loan by the Issuer to the Borrower of the proceeds received from the sale of the
Bonds.

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 "Loan Agreement" means the Loan Agreement by and between the Issuer and the Borrower,
dated as of April 1, 2007, as amended or supplemented from time to time.

"Loan Documents" means the Loan Agreement and the Deed of Trust.

"Loan Payments" means the amounts required to be paid by the Borrower in repayment of the
Loan pursuant to the provisions of the Loan Documents, or all amounts realized by the Trustee thereunder
in accordance with the Indenture.

"Management Fee" means the fees payable to the PBA as set forth in the Facility Management
Agreement to manage the maintenance and repair of the Project.

"Maturity" means the date on which the principal of the Bonds becomes due and payable as
therein or as provided in the Indenture, whether at the stated maturity, upon call for redemption or
otherwise.

"Moody's" means Moody's Investors Service, Inc., a corporation organized and existing under the
laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer issue ratings on obligations of a type similar to the Bonds, "Moody's" shall
be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer by
written notice to the Trustee.

"Net Proceeds" means with respect to insurance payments or condemnation award or damages or
awards under any payment and performance bond, completion bond, completion guaranty or similar
surety or damage awards under the Construction Agreement, the amount remaining therefrom after
payment of all reasonable expenses (including reasonable attorneys' fees and any extraordinary fees or
expenses of the Trustee, including fees and disbursements of counsel to the Trustee) incurred in the
collection thereof.

"Notice by Mail" or "notice" of any action or condition "by Mail" means a written notice meeting
the requirements of the Indenture mailed by first-class mail, postage prepaid, to the Holders of specified
Bonds at the addresses shown in the Bond Register. If, because of the temporary or permanent
suspension of mail service or for any other reason, it is impossible or impracticable to mail any such
notice in the manner described, then such notification in lieu thereof as shall be made with the approval of
the Trustee shall constitute a sufficient notice.

"Office of any Paying Agent" means the office of any Paying Agent designated to the Trustee.

"Office of the Trustee" means the designated corporate trust office or offices of the Trustee,
which office or offices at the date of acceptance by the Trustee of the duties and obligations imposed on
the Trustee by the Indenture.

"Officer's Certificate" of the Issuer or the Borrower means, respectively, a written certificate,
statement, request, direction or order signed in the name of the Issuer by an Issuer Representative,
Attesting Officer or such other person as may be designated and authorized in writing to sign for the
Issuer and forwarded to the Trustee, or signed in the name of the Borrower by a Borrower Representative
or any other person or persons as may be designated and authorized in writing to sign for the Borrower,
and forwarded to the Trustee.

"Operating Fund" means the Operating Fund created by the Indenture.

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 "Opinion of Bond Counsel" means a written opinion of Bond Counsel.

"Opinion of Counsel" means a written opinion addressed to the Trustee or an attorney or firm of
attorneys acceptable to the Trustee, who may be counsel for the Issuer, the Trustee or the Borrower.

"Outside Completion Date" means December 31, 2007.

"Outstanding" when used with respect to Bonds means, as of the date of determination, all Bonds
theretofore authenticated and delivered under the Indenture, except:

(a) Bonds theretofore cancelled or delivered to the Trustee or delivered to the

Trustee for cancellation under the Indenture;

(b) Bonds which are deemed to be no longer outstanding in accordance with the
Indenture for whose payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee in trust for the Holders of such Bonds, provided that, if such Bonds are
to be redeemed, notice of such redemption has been duly given pursuant to the Indenture or
provision therefor satisfactory to the Trustee has been made; and

(c) Bonds in substitution for which other Bonds have been authenticated and
delivered pursuant to the Indenture.

In determining whether the owners of a requisite aggregate principal amount of Bonds

outstanding have concurred in any request, demand, authorization, direction, notice, consent or waiver
under the provisions of the Indenture, Bonds which are held by or on behalf of the Borrower (unless all of
the Outstanding Bonds are then owned by Borrower) shall be disregarded for the purpose of any such
determination.

"PBA" means The Public Building Authority of the County of Knox and the City of Knoxville,
Tennessee.

"Paying Agent" or "Co-Paying Agent" means any national banking association, state bank, bank
and trust company or trust company appointed by the Borrower and meeting the qualifications of, and
subject to the obligations of, the Trustee in the Indenture. Initially, the Trustee shall be the Paying Agent.

"Payment Date" means each June 1 and December 1.

"Permitted Investments" means any of the following:

(a) Cash (insured at all times by the Federal Deposit Insurance Corporation) or obligations
of, or obligations guaranteed as to principal and interest by, the United States or any agency or
instrumentality thereof, when such obligations are backed by the full faith and credit of the United States
including:
(i) United States Treasury obligations;

(ii) All direct or fully guaranteed obligations of the United States;

(iii) Farmers Home Administration;

(iv) General Services Administration;

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 (v) Guaranteed Title XI financing;

(vi) Government National Mortgage Association (GNMA); and

(vii) State and Local Government Series

Provided, that, any security used for Defeasance Obligations must provide for the timely payment of
principal and interest and cannot be callable or prepayable prior to maturity or earlier redemption of the
rated debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a
fixed dollar amount at maturity or call date).

(b) Obligations of any of the following federal agencies which obligations represent the full
faith and credit of the United States, including;

(i) Export-Import Bank;

(ii) Rural Economic Community Development Administration;

(iii) U.S. Maritime Administration;

(iv) Small Business Administration;

(v) U.S. Department of Housing & Urban Development (PHAs);

(vi) Federal Housing Administration; and

(vii) Federal Financing Bank.

(c) Direct obligations of any of the following federal agencies which obligations are not fully
guaranteed by the full faith and credit of the United States:

(i) Senior debt obligations issued by the Federal National Mortgage Association
(FNMA) or the Federal Home Loan Mortgage Corporation (FHLMC);

(ii) Obligations of the Resolution Funding Corporation (REFCORP);

(iii) Senior debt obligations of the Federal Home Loan Bank System; and

(iv) Senior debt obligations of other government sponsored agencies rated in the
highest rating category by Moody's or S&P.

(d) U.S. dollar denominated deposit accounts, federal funds and bankers' acceptances with
domestic commercial banks which have a rating on their short term certificates of deposit on the date of
purchase of "P-1" by Moody's and "A-1" or "A-1+" by S&P and maturing not more than 360 calendar
days after the date of purchase.

(e) Commercial paper which is rated at the time of purchase in the single highest
classification, "A-1+" by S&P and "P-1" by Moody's and which matures not more than 270 days after the
date of purchase.

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 (f) Pre-refunded Municipal Obligations defined as follows: any bonds or other obligations of
any state of the United States or of any agency, instrumentality or local governmental unit of any such
state which are not callable at the option of the obligor prior to maturity or as to which irrevocable
instructions have been given by the obligor to call on the date specified in the notice; and

(i) which are rated, based on an irrevocable escrow account or fund, in the highest
rating category of Moody's or S&P or any successors thereto; or

(ii) (a) which are fully secured as to principal and interest and redemption premium,
if any, by an escrow consisting only of cash or obligations described in paragraph (a) above, which
escrow may be applied only to the payment of such principal of and interest and redemption premium, if
any, on such bonds or obligations on the maturity date or dates thereof or the specified redemption date or
dates pursuant to such irrevocable instructions, as appropriate, and (b) which escrow is sufficient, as
verified by a nationally recognized independent certified public accountant, to pay principal of an interest
and redemption premium, if any, on the bonds or other obligations described in this paragraph on the
maturity date or dates specified in the irrevocable instructions referred to above, as appropriate.

(g) Municipal Obligations rated "Aaa/AAA" or general obligations of States with a rating of
"A2/A" or higher by both Moody's and S&P.

(h) Money market funds, including funds of the Trustee, registered under the Federal
Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933,
which at the date of acquisition have a rating by S&P of either "AAAm-G," "AAAm" or "Aam."

The value of the above instruments shall be determined as follows:

(i) For the purpose of determining the amount in any Fund, all Permitted Investments
credited to such Fund shall be valued at fair market value. The Trustee shall determine the fair market
value based on accepted industry standards and from accepted industry providers. Accepted industry
providers shall include but are not limited to pricing services provided by Financial Times Interactive
Data Corporation, Merrill Lynch, Salomon Smith Barney, Bear Stearns, or Lehman Brothers.

(ii) As to certificates of deposit and bankers' acceptances: the face amount thereof, plus
accrued interest thereon.

(iii) As to any investment not specified above, the value thereof established by prior
agreement among the Issuer and the Trustee.

"Person" or "person" means an individual, corporation, firm, association, partnership, limited

liability company, trust or other legal entity or group of entities, including a governmental entity or any
agency or political subdivision thereof.

"Project" means the Project Site and all improvements, equipment and other personal property
constructed or installed on the Project Site by the Borrower pursuant to the Lease including a new movie
theatre complex to be initially occupied by Regal.

"Project Expenses" means all expenses incurred by the Borrower in connection with the Project,
including expenses incurred in connection with repairing, maintaining and insuring the Project pursuant to
the Regal Lease and Facility Management Agreement and all expenses incurred by the Borrower or the
Issuer in connection with the issuance of the Bonds (other than initial costs of issuance which will be paid

A-8
on the Issue Date), including the fees and expenses of the Trustee, provided, however, that Project
Expenses shall not include any capital expenditure in excess of $50,000 unless such capital expenditure is
approved by the holders of a majority of the principal amount of the Outstanding Bonds.

"Project Fund" means the Project Fund created by the Indenture.

"Project Fund Disbursement Request" means the form of requisition for disbursements from the
Project Fund, to be executed by a Borrower Representative, in the form attached to the Indenture.

"Project Site" means the real property described on Exhibit B to the Regal Lease.

"Property Insurance and Award Fund" means the Property Insurance and Award Fund created by
the Indenture.

"Record Date" means (a) with respect to any Interest Payment Date described in subsection (a) of
that defined term, (1) in the case of Bonds which are not Book Entry Bonds the fifteenth day of the
calendar month prior to the date such Interest Payment Date occurs, regardless of whether such day is a
Business Day, and (2) in the case of Book Entry Bonds, the Trustee's close of business on the Business
Day preceding the Interest Payment Date, and (b) with respect to any other Interest Payment Date, a date
selected by the Trustee.

"Redemption Date" when used with respect to any Bond to be redeemed means the date on which
it is to be redeemed pursuant hereto.

"Redemption Price" when used with respect to any Bond to be redeemed means the price at
which it is to be redeemed pursuant thereto.

"Regal Lease" means the Lease Agreement, dated as of December 13, 2006, between the
Borrower and Regal, as amended or supplemented from time to time.

"Rent" shall have the meaning given to such term in the Regal Lease.

"Rent Term Commencement Date" shall have the meaning given to such term in the Regal Lease.

"Responsible Officer" when used with respect to the Trustee, means any officer in the corporate
trust department (or any successor thereto) of the Trustee, or any other officer or representative of the
Trustee customarily performing functions similar to those performed by any of such officers and also
means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such
matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Revenue Fund" means the Revenue Fund created by the Indenture.

"Revenues" means (a) the Loan Payments, (b) any other amounts payable to the Trustee with
respect to the principal of, redemption premium, if any, or interest on, the Bonds (1) by the Borrower as
required under the Loan Agreement and (2) upon deposit in the Debt Service Fund from the proceeds of
the Bonds or otherwise payable to the Trustee pursuant to the terms of the Indenture, the Loan Agreement
or the Regal Lease, (c) all amounts received by the Trustee from the exercise of any remedies under the
Deed of Trust, the Assignment of Leases and Rents and the other Loan Documents, (d) all other amounts
receivable by the Issuer or the Borrower in respect of the Regal Lease and any successor lease agreement
or agreements with respect to the Project, including but not limited to, all Rent payable thereunder and (e)

A-9
investment income with respect to any moneys held by the Trustee in any of the funds or accounts created
under this Indenture.

"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, a
corporation organized and existing under the laws of the State of New York, its successors and assigns,
and, if such corporation shall be dissolved or liquidated or shall no longer issue ratings on obligations of a
type similar to the Bonds, "S&P" shall be deemed to refer to any other nationally recognized securities
rating agency designated by the Issuer by written notice to the Trustee.

"Securities Depository" means a person that is registered as a clearing agency under Section 17A
of the Securities Exchange Act of 1934 or whose business is confined to the performance of the functions
of a clearing agency with respect to exempted securities, as defined in Section 3(a)(12) of such Act for the
purposes of Section 17A thereof.

"State" means the State of Tennessee.

"Trust Estate" shall have the meaning given to such term in the Granting Clauses of the
Indenture.

"Trustee" means Regions Bank, an Alabama state bank, and any successor trustee under this
Indenture, acting in its trust capacity.

"Unassigned Issuer's Rights" means Unassigned Issuer's Rights as defined in the Loan
Agreement.

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 APPENDIX B

DOCUMENT SUMMARIES

Set forth below are summaries of certain sections of the Indenture, the Loan Agreement, Regal
Lease, the Construction Management Agreement and the Construction Agreement. These summaries do
not purport to be complete, and reference is made to the respective documents, copies of which will be on
file with the Trustee after delivery of the Bonds, for a complete statement of the rights, duties and
obligations of the parties hereto. The headings below are not part of the respective documents but have
been added for ease of reference only. Capitalized, undefined terms used herein may be found under
"Definitions" in Appendix A to this Private Placement Memorandum. Some capitalized, undefined terms
unique to the Regal Lease are found in the last subsection of the Section of this Appendix B entitled "THE
REGAL LEASE."

THE INDENTURE

Trust Estate

Under the Indenture, the Issuer, as security for payment of the principal of, premium, if any, and
interest on the Bonds and for the funds which may be advanced by the Trustee pursuant to the Indenture,
has pledged and assigned without recourse to the Trustee, and granted a lien on and security interest in the
following described property:

All right, title, interest and privilege of the Issuer now owned or hereafter acquired in, to and
under the Loan Agreement and any agreement, supplementing, extending or modifying the same,
including, without limitation, all present and future rights of the Issuer to make claim for, collect and
receive any income, revenues, issues, profits, insurance proceeds and other sums of money payable to or
for the account of or receivable by the Issuer under the Loan Agreement (whether payable pursuant to the
Loan Agreement or otherwise), to bring actions and proceedings under the Loan Agreement or for the
enforcement thereof, to pursue the remedies provided in the Loan Agreement upon the occurrence of an
event of default thereunder, and to do any and all things that the Issuer is or may become entitled to do
under the Loan Agreement, but excluding the rights of the Issuer (a) to receive payment of expenses and
attorneys' fees under the Loan Agreement, (b) for indemnification under the Loan Agreement, (c) to
receipt of notices and other documents under the Loan Agreement, and (d) to inspect the Project pursuant
to the Loan Agreement;

All right, title, interest and privilege of the Issuer under the Deed of Trust and all other Loan
Documents, including, without limitation, all present and future rights of the Issuer to exercise all rights
and remedies under the Deed of Trust and all other Loan Documents;

All right, title, interest and privilege of the Issuer or the Borrower to any Revenues or the receipt
thereof;

All monies and securities held by the Trustee in any of the funds or accounts established under
the Indenture, subject, however, to the application thereof to the uses and in the manner set forth in the
Indenture;

All property which is by the express provisions of the Indenture required to be subject to the lien
hereof and any additional property that may, from time to time hereafter, by delivery or by writing of any

B-1
kind, be subjected to the lien hereof, by the Issuer or by anyone in its behalf, and the Trustee is hereby
authorized to receive the same at any time as additional security under the Indenture.

Under the granting clause of the Indenture described in (b) above, the Issuer has pledged and
assigned to the Trustee, among other things, the Deed of Trust and the rights and properties pledged
thereunder.

Registration of Bonds; Persons Treated as Bondholders; Exchange

The Trustee shall act as the initial bond registrar and shall maintain registration books for the
registration and the registration of transfer of the Bonds. The transfer of any Bond may be registered only
upon the books kept for the registration and registration of transfer of the Bonds upon surrender thereof to
the bond registrar together with an assignment duly executed by the registered Owner in person or by his
duly authorized attorney or legal representative. Upon any such transfer the Issuer shall execute and the
Trustee shall authenticate and deliver in exchange for such Bond a new registered bond or bonds,
registered in the name of the transferee, of any denomination or denominations authorized by the
Indenture.

Prior to due presentment for registration of transfer of any Bond, the Trustee shall treat the Person
shown on the Bond Register as owing a Bond as the Bondholder and the Person exclusively entitled to
payment of principal thereof, redemption premium, if any, and interest thereon and, except as otherwise
expressly provided herein, the exercise of all other rights and powers of the owner thereof, and neither the
Issuer, the Borrower, the Trustee nor any agent of the Issuer, the Borrower or the Trustee shall be affected
by notice to the contrary.

Notwithstanding any other provision of the Indenture, prior to the transfer of any of the Bonds,
any transferee shall be required to execute and deliver an Investor Letter substantially in the form of
Investor Letter attached to the Indenture as an exhibit.

Upon surrender of the Bonds at the principal corporate trust office of the Trustee, together with
an assignment duly executed by the registered Owner or his duly authorized attorney or legal
representative, Bonds may, at the option of the Borrower, be exchanged for an equal aggregate principal
amount of Bonds of the same maturity of and having a minimum denomination of $100,000 and any
amount in excess thereof (or, in the event the Bonds are subject to amortizing principal payments or other
scheduled prepayment of principal having a minimum denomination equal to the remaining principal
amount per $100,000 of original par amount of such Bonds) as requested by the Borrower thereof or his
duly authorized attorney or legal representative. The Issuer shall execute and the Trustee shall
authenticate any Bonds whose execution and authentication is necessary to provide for exchange of
Bonds.

Mutilated, Lost or Destroyed Bonds

Should any Bond become mutilated or be lost or destroyed, the Issuer shall cause to be executed,
and the Trustee shall authenticate and deliver, a new Bond of like date and tenor in exchange and
substitution for, and upon cancellation of, such mutilated Bond or in lieu of and in substitution for such
lost or destroyed Bond; provided, however, that the Issuer and the Trustee shall so execute, authenticate
and deliver only if the holder has paid the reasonable expenses and charges of the Issuer and the Trustee
in connection therewith and, in the case of a lost or destroyed Bond, has furnished to the Issuer and the
Trustee indemnity satisfactory to the Trustee. If any such Bond shall have matured, instead of
authenticating and delivering a new Bond, the Trustee may pay the same without surrender thereof.

B-2
Additional Bonds

The Issuer will not issue any other bonds or obligations having a lien on the Trust Estate except
for Additional Bonds issued pursuant to the Indenture. Additional Bonds may be issued only for the
purposes of (i) refunding in part Outstanding Bonds; (ii) financing any costs necessary to complete the
Project in accordance with the plans and specifications therefor; (iii) expanding and/or improving the
Project or for replacing all or any portion of the Project which is damaged or destroyed by fire or other
casualty; and (iv) any combination of the foregoing. The Trustee shall authenticate and deliver such
Additional Bonds when there have been filed with it the following:

(a) A copy certified by the Secretary of the Issuer of the resolution of the Board of
Directors of the Issuer authorizing (1) the execution and delivery of any amendments to the Loan
Documents required by the issuance of such Additional Bonds, (2) the execution and delivery of a
supplemental indenture providing for, among other things, the date, rate or rates of interest on,
interest payment dates, maturity dates and redemption provisions of such Additional Bonds, and
(3) the issuance, sale, execution and delivery of the Additional Bonds;

(b) An original executed counterpart of the supplemental indenture;

(c) Original executed counterparts of any amendments or supplements to the Loan

Agreement and the other Loan Documents;

(d) An opinion of Counsel to the Borrower, addressed to the Issuer, the Trustee and
Bond Counsel, to the effect that the amendments to the Loan Documents have been duly
authorized, executed and delivered by the Borrower and are enforceable against the Borrower,
subject to bankruptcy and equitable principles;

(e) An opinion or opinions of Bond Counsel, addressed to the Issuer and the Trustee,
to the effect that issuance of the Additional Bonds is permitted under the Indenture, the
supplemental indenture and the Additional Bonds have each been validly authorized, are binding
and enforceable against the Issuer, subject to bankruptcy and equitable principles, and the
issuance of the Additional Bonds has been duly authorized;

(f) A request and authorization of the Issuer, signed by an Issuer Representative, to

the Trustee to authenticate and deliver the Additional Bonds to such person or persons named
therein after confirmation of payment to the Trustee for the account of the Issuer of a specified
sum with directions as to the disposition of such of such sum;

(g) A certificate of the Issuer, signed by an Issuer Representative, that the Issuer is
not in default under the Indenture, and evidence satisfactory to the Trustee that upon issuance of
the Additional Bonds amounts will be deposited in the Funds hereunder adequate for the
necessary balances therein after issuance of the Additional Bonds; and

(h) The written consent to the issuance of such Additional Bonds by the holders of a
majority of the principal amount of the Bonds.

Simultaneously with the delivery of the Series 2007 Bonds, the Trustee shall apply, or arrange for
the application of, the proceeds thereof in accordance with an Officer's Certificate of the Issuer dated the
Issue Date.

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 Notwithstanding any provision of the Indenture to the contrary, the payment of any Series of
Additional Bonds may be secured by credit enhancement provided by a third party, such as bond
insurance, letters of credit and/or similar instruments, without such credit enhancement securing any other
Series, and the providers of any such credit enhancement may obtain reimbursement rights under the
Indenture on a parity with any or all other Bonds then Outstanding.

Establishment of Funds

The Indenture establishes with the Trustee the following trust funds:

(a) The Project Fund;

(b) The Revenue Fund;

(c) The Bond Fund, with an Interest Account, a Principal Account and a Capitalized Interest
Account;

(d) The Operating Fund;

(e) The Debt Service Reserve Fund; and

(f) The Property Insurance Award Fund.

The Trustee is authorized to establish and maintain for so long as necessary other funds and
accounts under the indenture.

Payments

Except as otherwise specifically provided in the Indenture, all payments or deposits received from
the Borrower pursuant to the Loan Agreement, unless otherwise designated, shall be deposited in the
Revenue Fund. In addition, any other income that the Issuer directs shall be deposited in the Revenue
Fund. All Net Proceeds received as a reimbursement or payment for damage, destruction or
condemnation of the Project will be deposited in the Property Insurance Award Fund.

Revenue Fund

If amounts are on deposit in the Revenue Fund, as of the first Business Day of each month, but
not later than the tenth day of such month, the Trustee will make the following transfers from the
Revenue Fund in the following order, listed in order of priority:

(a) To the Operating Fund, an amount certified in accordance with the Loan Agreement by
the Borrower as necessary to pay Project Expenses for that month;

(b) Beginning May 1, 2007, to the Interest Account, the Interest Requirement for such
month; provided, however, that if there is an amount on deposit in the Interest Account at least equal to
the Interest Requirement due on the next Interest Payment Date, no amount shall be transferred from the
Revenue Fund. Until all amounts in the Capitalized Interest Account have been transferred, the Trustee
shall transfer moneys on deposit in the Capitalized Interest Account to the Interest Account in the amount
of the Interest Requirement for each month;

B-4
 (c) To such account as may be designated by the Borrower, the amounts payable by the
Borrower to the CDE pursuant to that certain $4,805,960.00 Promissory Note dated as of the date hereof
executed by the Borrower in favor of the CDE, as originally entered into and pursuant to that certain
$2,202,890.00 Promissory Note dated as of the date hereof, executed by the Borrower in favor of the
CDE, as originally entered into and as set forth on a schedule first provided by the Borrower prior to June
15, 2007 as such schedule may be amended and supplemented by the Borrower from time to time; and

(d) To the Debt Service Reserve Fund, the amount of any deficiency therein;

(e) To the Principal Account, any amount remaining in the Revenue Fund in excess of
$10,000.00.

Bond Fund

(a) Interest Account. The Trustee shall use amounts in the Interest Account on each Interest
Payment Date to pay interest on the Bonds as the same becomes due.

(b) Principal Account. The Trustee shall use amounts in the Principal Account on each
December 1 to pay the principal of the Bonds then due, whether by maturity, call for redemption or
scheduled principal payment.

(c) Capitalized Interest Account. Until all amounts in the Capitalized Interest Account have
been transferred, the Trustee shall transfer moneys into the Interest Account from the Capitalized Interest
Account in an amount equal to the Interest Requirement for each month.

Debt Service Reserve Fund

An amount equal to the Debt Service Reserve Requirement shall be deposited in the Debt Service
Reserve Fund pursuant to the Indenture. Amounts deposited in the Debt Service Reserve Fund shall be
used to make transfers to the Bond Fund to the extent necessary to pay the interest on the Bonds as the
same becomes due if the amounts on deposit therein are insufficient therefor. On each December 1, the
Trustee shall release any amounts in the Debt Service Reserve Fund above the amount necessary to
maintain the Debt Service Reserve Requirement in the Debt Service Reserve Fund, and such amounts
shall be transferred to the Bond Fund (first to the Interest Account to the extent necessary and then to the
Principal Account). In the event of any deficiency in the Debt Service Reserve Requirement, amounts
shall be transferred to the Debt Service Reserve Fund from the Revenue Fund pursuant to the Indenture
until no such deficiency in the Debt Service Reserve Requirement exists.

When the balances in the Bond Fund and the Debt Service Reserve Fund are sufficient to redeem
or pay all the Bonds then outstanding, the balance in the Debt Service Reserve Fund shall be transferred
to the Bond Fund to be held for redemption or payment of the Bonds at the earliest practicable date and
for no other purpose.

Property Insurance and Award Fund

(a) The Issuer and the Trustee shall deposit to the Property Insurance and Award Fund all
Net Proceeds with respect to the Project. Amounts in the Property Insurance and Award Fund, other than
proceeds of business interruption insurance, shall be used in the event of the damage, destruction or
condemnation of the Project, as follows:

B-5
 (i) if such proceeds are permitted under the Deed of Trust to be used for the
restoration, repair or replacement of the Project, such proceeds (together with any other available
moneys to be used for such purpose) shall be used for such purpose. Following receipt of deposits
to the Property Insurance Award Fund that may be used for such purpose, such deposits shall be
transferred to the Project Fund and such moneys shall be requisitioned therefrom in accordance
with the provisions of the Indenture; and

(ii) otherwise to pay for the redemption of Bonds pursuant to the Indenture.

(b) Notwithstanding the foregoing, Net Proceeds of business interruption insurance or rental
interruption insurance shall be deposited into the Revenue Fund and shall be applied as provided in the
Indenture.

Earnings on amounts in the Property Insurance and Award Fund shall be deposited therein. Any
amounts remaining in the Property Insurance and Award Fund, after the payment of the costs of
restoration, repair or replacement of the Project, shall be transferred to the Revenue Fund.

Moneys to Be Held in Trust

All moneys required to be deposited with or paid to the Trustee for the account of any fund or
account under any provision of the Indenture (including any temporary trust fund or account) received by
the Trustee shall be held by the Trustee in trust, and, except for moneys deposited with or paid to the
Trustee for the redemption of Bonds, notice of the redemption of which has been duly given shall, while
held by the Trustee, constitute part of the Trust Estate and be subject to the lien of the Indenture.

Final Balances

Following payment of the Bonds and after payment of the fees and expenses of the Trustee and
any other paying agent, if any, and other amounts required to be paid under the Indenture, all amounts
remaining in any fund or account under the Indenture shall be paid to or at the direction of the Borrower
in accordance with the Loan Agreement.

Payments into Project Fund

Amounts shall be deposited in the Project Fund upon issuance of the Bonds and used by the
Trustee in the manner provided for in the Indenture for the payment of the Costs of the Project. In
addition, to the extent that there is an increase in the scope of the Project for which moneys are not
available in the Project Fund, the Borrower may make or direct deposits into the Project Fund to pay for
the increased costs associated therewith. Earnings from the investment of all accounts in the Project Fund
shall be deposited in the Project Fund for payment of the Costs of the Project.

Cost of Project

The Cost of the Project shall include the following:

(a) The cost of the building being designed, developed and constructed as part of the Project;

(b) The actual cost of labor, materials, machinery and equipment as payable to contractors,
builders and materialmen in connection with the construction of the Project or for the acquisition of
furniture, fixtures and equipment as payable to the sellers thereof (including for contractors, builders,
materialmen or sellers, savings or incentive fees);

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 (c) Governmental charges and premiums on insurance in connection with the Project during
construction and for one year following the final Rent Term Commencement Date;

(d) Interest on the Bonds during construction of the Project and for up to six (6) months
thereafter to the extent the Capitalized Interest Account has been exhausted;

(e) Fees and expenses of architects, engineers and consultants for estimates, surveys and
other preliminary investigations, preparation of plans, drawings and Borrower specifications and
supervision of rehabilitation and modification, as well as for the performance of all other duties of
architects and engineers in relation to the acquisition, construction, reconstruction, renovation and
equipping of the Project or the issuance of the Bonds;

(f) Expenses of administration, supervision and inspection properly chargeable to the

Project, abstracts and reports on titles to real estate, title insurance premiums, premiums for property and
casualty insurance, and all other items or expense, including those of the Issuer and the Borrower and the
fees and expenses of the PBA incurred for the design, development, construction and delivery of the
Project, not elsewhere specified in this section incident to the acquisition, construction and financing of
the Project and placing the Project in operation;

(g) Premiums or other costs for payment or performance bonds in connection with the
Project;

(h) Fees and expenses incurred by the PBA, including reasonable attorneys' fees, arbitration
and/or litigation expenses, expert witness fees, deposition costs and court costs in connection with the
enforcement of the Construction Agreement and/or the enforcement of any performance or payment
bonds provided by the contractor under the Construction Agreement;

(i) Any other cost relating to the Project; and

(j) Reimbursement to the Issuer, the Borrower or the PBA for any of such costs paid by any
of them, whether before or after the execution of the Indenture.

If the Project is to be repaired or reconstructed after damage or destruction, "Cost of the Project"
shall include the corresponding costs of such repair or reconstruction.

Payments from Project Fund

The Trustee shall use all moneys in all accounts of the Project Fund solely to pay the Costs of the
Project, as evidenced by requisitions and certificates as provided in the Indenture, except amounts for
issuance expenses shall be disbursed from the Project Fund. Before any payment shall be made from the
Project Fund to pay the Cost of the Project, there shall be filed with the Trustee a requisition, in the form
attached to the Indenture as an exhibit, signed by a Borrower Representative. Upon receipt of each such
requisition, the Trustee shall make payment from the Project Fund in accordance with such requisition not
later than seven (7) days after delivery of the requisition to it.

Disposition of Balance in Project Fund

When construction of the Project shall have been completed and the Trustee shall have been
notified in writing that Regal has opened for business in accordance with Article 13 of the Regal Lease

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and the Borrower has notified the Trustee in writing of what items, if any, have not been paid and for the
payment of which moneys should be reserved in the Project Fund, including, but not limited to
"punchlist" items as agreed to by the Borrower (with any remaining balance of such amount being
disbursed in the manner provided below), the balance of any moneys remaining in the Project Fund in
excess of the amount to be reserved for payment of unpaid items of the Cost of the Project shall be
transferred to the Principal Account of the Bond Fund.

Operating Fund

Amounts deposited in the Operating Fund shall be disbursed at the written direction of the
Borrower to the Borrower (or its designee) by no later than the tenth (10th) day of each month to permit
the Borrower to pay Project Expenses coming due in such month, provided, however, that the Trustee
shall be permitted to pay from the Operating Fund its reasonable fees and expenses without further
direction from the Borrower.

Investment of Funds

The Trustee shall separately invest and reinvest the moneys held in the funds and amounts under
the Indenture at the request of and as directed in writing by the Borrower Representative in Permitted
Investments.

Any such investments shall be held by or under the control of the Trustee and while so held shall
be deemed a part of the fund or account in which such moneys were originally held. Except as otherwise
set forth in the Indenture, the interest accruing thereon and any profit realized from the investments of
amounts in any Fund shall be credited to the Project Fund prior to the final Rent Term Commencement
Date and thereafter, to the Revenue Fund. Any loss resulting from such investments shall be charged to
such fund or account. The Trustee shall sell and reduce to cash a sufficient amount of such investments
whenever the cash balance in any fund is insufficient for the purposes thereof.

Investment of moneys held in the funds created by the Indenture shall be subject to the following
limitations which shall be observed by the Issuer in directing such investments (and such direction may
be relied on by the Trustee for such purposes):

(a) for the Project Fund, investment in securities and obligations maturing not later than the
dates on which such moneys are expected to be needed for payment of the Cost of the Project;

(b) for the Bond Fund (including any temporary trust funds and accounts established
pursuant to the Indenture), investment securities and obligations maturing not later than the dates on
which such moneys will be needed to pay principal of and interest on the Bonds;

(c) for the Debt Service Reserve Fund, investment in securities and obligations maturing not
later than the earlier of five years or the final maturity of the Outstanding Bonds;

(d) for the Revenue Fund, and the Property Insurance and Award Fund investment in
securities and obligations maturing not later than the dates on which such moneys will be needed for the
purposes thereof.

For the purpose of determining compliance with the previous paragraph, repurchase agreements
or guaranteed investment contracts shall be deemed to have a maturity equal to the next permitted draw
date thereon. For the purpose of determining the amount on deposit to the credit of any such fund or

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account, obligations purchased as an investment of moneys therein shall be valued semiannually at the
market price thereof, inclusive of accrued interest.

The Trustee may make any such investment through its own bond department or trusts investment
department.

Payment of Bonds; Security

(a) Payment of Principal, Interest and Redemption Premium. The Issuer will pay all principal
of, redemption premium, if any, and interest on the Bonds or cause them to be paid, solely from the
sources provided in the Indenture, on the dates, at the places and in the manner provided in the Indenture
and the Loan Agreement; provided, however, that such obligations are not general obligations of the
Issuer but are limited obligations payable solely from the revenues and receipts derived from the Loan
Agreement and the security for the Loan Agreement, which revenues and receipts are pledged to such
purposes in the manner and to the extent provided for in the Indenture. The Bonds and interest thereon
shall not be deemed to constitute a debt or a pledge of the faith and credit of the State or any political
subdivision thereof, including the Issuer and the City of Knoxville, Tennessee. Neither the State nor any
political subdivision thereof, including the Issuer and the City of Knoxville, Tennessee shall be obligated
to pay the principal of or interest on the Bonds or other costs incident thereto except from the revenues
and receipts pledged therefore, and neither the faith and credit nor the taxing power of the State or any
political subdivision thereof, in the Issuer and the City of Knoxville, Tennessee, is pledge to the payment
of the principal of or interest on the Bonds or other costs incident thereto.

(b) Revenues and Assignment of Revenues. The Issuer will not assign the Revenues or create
or authorize to be created any debt, lien or charge thereon, other than the assignment thereof under the
Indenture.

(c) Recordings and Filings. At the expense of the Borrower, the Issuer will cooperate with
the Borrower in performing the Borrower's obligation to cause the Indenture, or any related instruments
or documents relating to the assignment made by the Issuer under the Indenture to secure the Bonds, to be
recorded and filed in the manner and in the places which may be required by law in order to preserve and
protect fully the security of the holders of the Bonds and the rights of the Trustee under the Indenture.

(d) Inspection of Project Books. All books, instruments and documents in the Issuer's
possession relating to the Project and the Revenues shall be open to inspection at all times during the
Issuer's regular business hours by any accountants or other agents of the Trustee which the Trustee may
designate from time to time or by the holders of 10% or more in principal amount of any Series of the
Bonds then Outstanding, or a designated representative thereof.

(e) Register. At reasonable times and under reasonable regulations established by the Bond
Registrar, the Bond Register may be inspected and copied by or delivered to the Borrower, the Issuer, the
Trustee, by holders of 10% or more in principal amount of any Series of the Bonds then Outstanding, or a
designated representative thereof.

(f) Rights and Enforcement of the Loan Agreement. The Trustee may enforce, in its name or
in the name of the Issuer, all rights of the Issuer for and on behalf of the Bondholders, except for
Unassigned Issuer's Rights, and may enforce all covenants, agreements and obligations of the Borrower
under and pursuant to the Loan Agreement, regardless of whether the Issuer is in default in the pursuit or
enforcement of those rights, covenants, agreements or obligations. The Issuer, however, will do all things
and take all actions on its part necessary to comply with covenants, agreements, obligations, duties and

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responsibilities on its part to be observed or performed under the Loan Agreement, and will take all
actions within its authority to keep the Loan Agreement in effect in accordance with the terms thereof.

Performance of Issuer's Covenants

The Issuer agrees to observe and perform at all times all covenants, agreements, authority,
actions, undertakings, stipulations and provisions to be observed or performed on its part under the Loan
Agreement, the Indenture and the Bonds which are executed, authenticated and delivered under the
Indenture.

The Issuer represents and warrants that:

(i) It is duly authorized by the Constitution and laws of the State, including
particularly and without limitation the Act, to issue the Bonds, to execute and deliver the
Indenture and the Loan Documents to which it is a party and to provide the security for payment
of the principal of, redemption premium, if any, and interest on the Bonds in the manner and to
the extent set forth in the Indenture.

(ii) All actions required on its part to be performed for the issuance, sale and delivery
of the Bonds and for the execution and delivery of the indenture and the Loan Documents to
which it is a party have been or will be taken duly and effectively; provided no representation is
made as to compliance with any state securities or "Blue Sky" laws.

(iii) The Bonds will be valid and enforceable limited obligations of the Issuer
according to their terms, subject to bankruptcy and equitable principles.

Enforcement of Issuer's Obligations

So long as no Event of Default under the Indenture shall have occurred and be continuing, the
Issuer may exercise all its rights under the Loan Documents or any other lease, agreement or contract, or
supplement or amendment thereto, provided that, except as permitted by the Indenture or by the Loan
Documents, the Issuer shall not amend any of the same so as to affect adversely the Issuer's ability to
perform its covenants under the Indenture or change the payments or term of the Loan Documents or the
security interest thereby created. The Issuer shall file with the Trustee copies of the Loan Agreement,
together with all amendments or supplements thereto, whether or not the Trustee's consent is required
thereto, and shall give prompt notice to the Trustee of any default by any of the parties thereto of which it
has actual knowledge.

Events of Default

Each of the following events shall be an "Event of Default" under the Indenture:

(a) Default in the payment of any installment of interest on any Bond when it becomes due
and payable;

(b) Default in the payment of the principal of (or redemption premium, if any, on) any Bond
when it becomes due and payable;

(c) Subject to a corrective period as described in the Indenture, default in the observance or
performance of any of the other covenants, conditions or agreements of the Issuer under the Indenture;

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 (d) The occurrence of any Event of Default under the Loan Documents; or

(e) (i) An Event of Bankruptcy; (ii) the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator or other similar official of the Issuer, the Borrower or the PBA or of any
substantial portion of their property; or (ii) the ordering of the winding up or liquidation of the affairs of
the Issuer or the Borrower.

Remedies Upon Default

If an Event of Default as described above occurs and is continuing, the Trustee may and, upon
written notice from the holder or holders of not less than a majority in aggregate principal amount of
Bonds then outstanding, shall, by notice delivered to the Issuer and the Borrower, declare the principal of
all Bonds and the interest accrued to the date of such acceleration immediately due and payable, anything
in the Indenture or the Bonds to the contrary notwithstanding.

At any time after such a declaration of acceleration has been made and before the entry of a
judgment or decree for payment of the money due, the Trustee may, with consent or at the written
direction of the holders of not less than a majority in aggregate principal amount of the Bonds then
Outstanding, may by written notice to the Issuer and the Trustee, and subject to the requirements of the
Indenture, direct the Trustee to, rescind and annul such declaration and its consequences if:

(i) there has been paid to or deposited with the Trustee by or for the account of the
Issuer, or provision satisfactory to the Trustee has been made for the payment of a sum sufficient
to pay: (A) all overdue installments of interest on the Bonds; (B) the principal of, and redemption
premium, if any, on any Bonds which have become due other than by such declaration of
acceleration and interest thereon; (C) to the extent lawful, interest upon overdue installments of
interest and redemption premium, if any; and (D) all sums paid or advanced by the Trustee
hereunder, together with the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and Counsel prior to the date of notice of rescission; and

(ii) all Events of Default, other than the nonpayment of principal of, redemption
premium, if any, and interest on the Bonds which have occasioned such acceleration, have been
cured or waived.

No such rescission and annulment shall affect any subsequent default or impair any consequent
right.

Additional Remedies

The Trustee, upon the occurrence of an Event of Default may, upon the written request of the
holders of not less than a majority in aggregate principal amount of the Bonds Outstanding, and subject to
the requirements of the Indenture, shall: (a) exercise any or all rights of the Issuer under the Loan
Documents; and (b) proceed to protect and enforce its rights and the rights of the holders of the Bonds
under the Indenture by a suit or suits in equity or at law, either for the specific performance of any
covenant or agreement contained in the Indenture or in the Loan Documents or in aid of the execution of
any power herein or therein granted, or for the enforcement of any other appropriate legal or equitable
remedy, and the Trustee in reliance upon the advice of Counsel may deem most effective to protect and
enforce any of the rights or interests of the holders of the Bonds under the Bonds or the Indenture.

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 Without limiting the generality of the foregoing, the Trustee shall at all times have the power to
institute and maintain such proceedings as it may deem expedient: (1) to prevent any impairment of the
Trust Estate by any acts which may be unlawful or in violation of the Indenture or the Loan Documents,
and (2) to protect its interests and the interests of the Bondholders in the Trust Estate and in the issues,
profits, revenues and other income arising therefrom, including the power to maintain proceedings to
restrain the enforcement of or compliance with any governmental enactment, rule or order which may be
unconstitutional or otherwise invalid, if the enforcement of, or compliance with, such enactment, rule or
order would impair the Trust Estate or be prejudicial to the interests of the Bondholders or the Trustee.

Marshaling of Assets

Upon the occurrence of an Event of Default, all moneys in all Funds shall be available to be
utilized by the Trustee in accordance with the Indenture. The rights of the Trustee under the Indenture
shall be applicable. During the continuance of any such Event of Default, all provisions of the Indenture
relating to the utilization of Funds shall be superseded by the provisions of this part. Subsequent to the
curing or waiver of any such Event of Default, the provisions of the Indenture relating to utilization of
Funds shall be reinstated.

Trustee May File Proofs of Claim

(a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy,

reorganization, arrangement, adjustment, composition or other judicial proceeding under the Bankruptcy
Code relating to the Issuer or the Borrower, any other obligor upon the Bonds or any property of the
Issuer or Borrower, the Trustee (whether or not the principal of the Bonds shall then be due and payable
by acceleration or otherwise, and whether or not the Trustee shall have made any demand upon the Issuer
or the Borrower for the payment of overdue principal, redemption premium, if any, and interest) shall be
entitled and empowered, by intervention in such proceeding or other means:

(i) to file and prove a claim for the whole amount of the principal, redemption
premium, if any, and interest owing and unpaid in respect of the Bonds then Outstanding or for
breach of the Indenture or the Loan Documents and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
Counsel) and of the holders allowed in such proceeding; and

(ii) to collect and receive any moneys or other property payable or deliverable on any
such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial
proceeding is hereby authorized by each holder to make such payments to the Trustee, and, in the event
that the Trustee shall consent to the making of such payments directly to the holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and Counsel, and any other amounts due the Trustee under the Indenture.

(b) No provision of the Indenture empowers the Trustee to authorize or consent to or accept
or adopt on behalf of any holders of the Bonds any plan of reorganization, arrangement, adjustment or
composition affecting any of the Bonds or the rights of any holder thereof, or to authorize the Trustee to
vote in respect of the claim of any holder in any proceeding described in subsection (a) of this Section.

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Notice and Opportunity to Cure Certain Defaults

No default under (c) in the definition of Events of Default shall constitute an Event of Default
until written notice of such default shall have been given to the Borrower by the Trustee or by the holders
of at least 25% in aggregate principal amount of the Bonds Outstanding, and the Borrower shall have had
thirty (30) days after receipt of such notice to correct such default or cause such default to be corrected,
and shall have failed to do so. In the event, however, that the default be such that it cannot be corrected
within such thirty (30) day period, it shall not constitute an Event of Default if corrective action is
instituted by the Borrower within such period and diligently pursued (as determined by the Trustee) until
the default is corrected. The Trustee shall send a copy of each such notice to the Issuer, but receipt of such
notice by the Issuer shall not be a condition precedent to further action by the Trustee.

Priority of Payment Following Event of Default

If at any time after the occurrence of an Event of Default the moneys held by the Trustee under
the Indenture shall not be sufficient to pay the principal of and interest on the Bonds as the same become
due and payable, such moneys, together with any moneys then available or thereafter becoming available
for such purpose, whether through the exercise of remedies in the Indenture or otherwise, shall, subject to
the Indenture, be applied by the Trustee as follows:

First, to the payment of all amounts due the Trustee under the Indenture;

Second, to the payment of all installments of interest on the Bonds then due and payable
in the order in which such installments became due and payable, and, if the amount available
shall not be sufficient to pay in full any particular installment, then to the payment, ratably,
according to the amounts due on such installments, without discrimination or preference;

Third, to the payment of the unpaid principal amount of any of the Bonds which shall
have become due and payable, in the order of due dates (other than Bonds called for redemption
or contracted to be purchased for the payment of which moneys are held pursuant to the
provisions of the Indenture), with interest upon the principal amount of the Bonds from the
respective dates upon which they shall have become due and payable, and, if the amount
available shall not be sufficient to pay in full the principal of such Bonds due and payable on any
particular due date, together with such interest, then to the payment first of such interest, ratably,
according to the amount of principal due on such date, without any discrimination or preference;

Fourth, to the payment of principal of, interest on and redemption premium if any, on
Bonds called for redemption, if any.

If the principal of all Bonds shall have become due and payable, whether by their terms or by a
declaration of acceleration, and subject to the provisions of the Indenture regarding payment to the
Trustee, all such moneys shall be applied to the payment of the principal and interest then due and unpaid
upon the Bonds, without preference or priority of principal over interest or of interest over principal, or of
any installment of interest over any other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due respectively for principal and interest, without any discrimination
or preference.

Whenever moneys are to be applied pursuant to the provisions of this Section, the Trustee may, in
its discretion, establish and maintain a reserve for future fees and expenses, and may apply moneys to be
distributed at such times, and from time to time, as the Trustee shall determine, having due regard for the
amount of such moneys available for application and the likelihood of additional moneys becoming

B-13
available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix a
date (which shall be an Interest Payment Date unless it shall deem another date more suitable) upon
which such application is to be made and upon such date interest on the amounts of principal to be paid
on such dates, and for which moneys are available, shall cease to accrue, The Trustee shall also select a
Record Date for such payment date. The Trustee shall give such notice as it may deem appropriate of the
deposit with it of any moneys and of the fixing of any such Record Date and payment date, and shall not
be required to make payment to the holder of any Bond until such Bond shall be presented to the Trustee
for appropriate endorsement or for cancellation if fully paid.

Bondholders May Direct Proceedings

The owners of a majority in aggregate principal amount of the Bonds Outstanding shall, subject
to the requirements of the Indenture, have the right, by an instrument or instruments in writing executed
and delivered to the Trustee, to direct the method and place of conducting all remedial proceedings by the
Trustee hereunder, provided that such direction shall not be in conflict with any rule of law or the
Indenture and that the Trustee shall have the right to decline to follow any such direction which in the
opinion of the Trustee would be unduly prejudicial to the rights of Bondholders not parties to such
direction or would subject the Trustee to personal liability or expense. Notwithstanding the foregoing, the
Trustee shall have the right to select and retain Counsel of its choosing to represent it in any such
proceedings. The Trustee may take any other action which is not inconsistent with any direction under the
Indenture.

Limitations on Rights of Bondholders

No Bondholder shall have any right to pursue any other remedy under the Indenture or the Bonds
unless: (1) an Event of Default shall have occurred and is continuing; (2) the owners of not less than a
majority in aggregate principal amount of all Bonds then Outstanding have requested the Trustee, in
writing, to exercise the powers hereinabove granted or to pursue such remedy in its or their name or
names; (3) the Trustee has been offered indemnity satisfactory to it against costs, expenses and liabilities
reasonably anticipated to be incurred; (4) the Trustee has declined to comply with such request, or has
failed to do so, within sixty (60) days after its receipt of such written request and offer of indemnity; and
(5) no direction inconsistent with such request has been given to the Trustee during such 60-day period by
the holders of a majority in aggregate principal amount of the Bonds Outstanding.

The provisions of subsection (a) of the Indenture are conditions precedent to the exercise by any
Bondholder of any remedy hereunder. The exercise of such rights is further subject to the provisions of
the Indenture. No one or more Bondholders shall have any right in any manner whatever to enforce any
right under the Indenture, except in the manner herein provided. All proceedings at law or in equity with
respect to an Event of Default shall be instituted and maintained in the manner herein provided for the
equal and ratable benefit of the Bondholders of all Bonds Outstanding.

Unconditional Right of Bondholder to Receive Payment

Notwithstanding any other provision of the Indenture, any Bondholder shall have the absolute and
unconditional right to receive payment of principal of, redemption premium, if any, and interest on the
Bonds on and after the due date thereof, and to institute suit for the enforcement of any such payment.

Restoration of Rights and Remedies

If the Trustee or any Bondholder has instituted any proceeding to enforce any right or remedy
under the Indenture or the Loan Documents, and any such proceeding has been discontinued or

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abandoned for any reason, or has been determined adversely to the Trustee or such Bondholder, then the
Borrower, the Trustee and the Bondholders shall, subject to any determination in such proceeding, be
restored to their former positions hereunder, and all rights and remedies of the Trustee and the
Bondholders shall continue as though no such proceeding had been instituted.

Rights and Remedies Cumulative

No right or remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of
any other right or remedy, but each such right or remedy shall, to the extent permitted by law, be
cumulative of and in addition to every other right or remedy given hereunder or now or hereafter existing
at law, in equity or otherwise. The assertion or employment of any right or remedy hereunder shall not
prevent the concurrent assertion or employment of any other appropriate right or remedy.

Delay or Omission Not Waiver

No delay or omission by the Trustee or any Bondholder to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy or constitute a waiver of such Event of
Default. Every right and remedy given by the Indenture or by law to the Trustee or the Bondholders may
be exercised from time to time, and as often as may as deemed expedient, by the Trustee or the
Bondholders, as the case may be.

Waiver of Defaults

The holders of a majority in aggregate principal amount of the Outstanding Bonds may, by
written notice to the Trustee and subject to the requirements of the Indenture, waive any existing default
or Event of Default and its consequences, except an Event of Default under subsections (a) and (b) of the
Section hereof entitled "Event of Default". Upon any such waiver, the default or Event of Default shall be
deemed cured and shall cease to exist for all purposes. No waiver of any default or Event of Default shall
extend to or effect any subsequent default or Event of Default or shall impair any right or remedy
consequent thereto.

Notice of Events of Default

If an Event of Default occurs of which the Trustee has or is deemed to have notice pursuant to the
Indenture, the Trustee shall give Immediate Notice thereof to the Issuer and the Borrower.

Right to Cure

If the Issuer shall, for whatever reason, at any time fail to pay any amount or perform any act
which it is obligated to pay or perform and, as a result, a default or Event of Default occurs or may occur,
the Borrower shall have the right to perform such act or pay such amount on behalf of the Issuer and
thereby cure or prevent such default or Event of Default.

Other Rights

Notwithstanding anything else herein to the contrary, the exercise by the Trustee of its rights as
an assignee of the Issuer's rights under the Deed of Trust and the Regal Lease shall be subject to the
conditions stated in such documents.

Duties and Responsibilities of the Trustee

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 (a) Prior to the occurrence of an Event of Default of which it has or is deemed to have notice
thereunder, and after the curing or waiver of any Event of Default which may have occurred:

(i) the Trustee undertakes to perform such duties and only such duties as are
specifically set forth in the Indenture, and no implied covenants or obligations shall be read into
the Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee that conform to the requirements of the Indenture; but the
Trustee is under a duty to examine such certificates and opinions to determine whether they
conform to the requirements of the Indenture.

(b) In case an Event of Default of which the Trustee has or is deemed to have notice
thereunder has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested
in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent person
would exercise or use in the conduct of such person's own affairs.

(c) No provision of the Indenture shall be construed to relieve the Trustee from liability for
its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct,
except that:

(i) this subsection shall not be construed to limit the effect of subsection (a)
described above;

(ii) the Trustee is not liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proven that the Trustee was grossly negligent in ascertaining the
pertinent facts;

(iii) the Trustee is not liable with respect to any action it takes or omits to be taken by
it in good faith in accordance with the direction of the Bondholders under any provision of the
Indenture relating to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the Trustee under the
Indenture; and

(iv) no provision of the Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any liability in the performance of any of its duties thereunder, or in the
exercise of any of its rights or powers, if it has reasonable grounds for believing that the
repayment of such funds or adequate indemnity against such risk or liability is not reasonably
assured to it.

(d) The Trustee shall maintain records of all investments and disbursements of proceeds in
the funds and accounts established pursuant to the Indenture through the date ending six (6) years
following the date on which all the Bonds and Additional Bonds have been retired.

(e) Whether or not expressly so provided, every provision of the Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee is subject to the provisions
described above.

Certain Rights of the Trustee

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 Except as otherwise provided in the Indenture:

(a) the Trustee may rely and is protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order,
approval, bond, debenture or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;

(b) any request, direction, order or demand of the Borrower under the Indenture shall be
sufficiently evidenced by an Officer's Certificate (unless other evidence thereof is specifically prescribed)
and any resolution of the board of directors of the Borrower may be sufficiently evidenced by a copy
thereof certified by a Borrower Representative, an Issuer Representative or an Attesting Officer of the
Borrower, as appropriate;

(c) whenever in the administration of the Indenture the Trustee deems it desirable that a
matter be proved or established prior to taking, suffering or omitting any action thereunder, the Trustee
(unless other evidence thereof is specifically prescribed) may, in the absence of bad faith on its part, rely
upon an Officer's Certificate;

(d) the Trustee may consult with Counsel and the written advice of such Counsel or an
opinion of Counsel shall be full and complete authorization and protection for any action taken, suffered
or omitted by it in good faith and in accordance with such advice or opinion;(e)

(e) the Trustee is under no obligation to exercise any of the rights or powers vested in it by
the Indenture at the request or direction of any of the Bondholders unless such holders have offered to the
Trustee security or indemnity satisfactory to the Trustee as to its terms, coverage, duration, amount and
otherwise with respect to the costs, expenses and liabilities which may be incurred by it in compliance
with such request or direction, and the provision of such indemnity shall be mandatory for any remedy
taken upon direction of the holders of a majority in aggregate principal amount of the Bonds;

(f) the Trustee is not required to make any inquiry or investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, approval, bond, debenture or other paper or document but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it may see fit and, if the
Trustee determines to make such further inquiry or investigation, it is entitled to examine the books,
records and premises of the Issuer and the Borrower, in person or by agent or attorney;

(g) the Trustee may execute any of its trusts or powers or perform any duties under the
Indenture either directly or by or through agents or attorneys, and may in all cases pay, subject to
reimbursement as provided in the Indenture, such reasonable compensation as it deems proper to all such
agents and attorneys reasonably employed or retained by it, and the Trustee shall not be responsible for
any misconduct or negligence of any agent or attorney appointed with due care by it;

(h) the Trustee is not required to take notice or deemed to have notice of any default or Event
of Default thereunder, except Events of Default involving nonpayment, unless a Responsible Officer of
the Trustee has actual knowledge thereof or has received notice in writing of such default or Event of
Default from the Issuer, the Borrower or the holders of at least 25% in aggregate principal amount of the
Outstanding Bonds, and in the absence of any such notice, the Trustee may conclusively assume that no
such default or Event of Default exists;

(i) the Trustee is not required to give any bond or surety with respect to the performance of
its duties or the exercise of its powers under the Indenture;

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 (j) in the event the Trustee receives inconsistent or conflicting requests and indemnity from
two or more groups of holders of Bonds, each representing less than a majority in aggregate principal
amount of the Bonds Outstanding, pursuant to the provisions of the Indenture, the Trustee, in its sole
discretion, may determine what action, if any, shall be taken;

(k) the Trustee's immunities and protections from liability and its right to indemnification in
connection with the performance of its duties under the Indenture shall extend to the Trustee's officers,
directors, agents, attorneys and employees. Such immunities and protections and right to indemnification,
together with the Trustee's right to compensation, shall survive the Trustee's resignation or removal, the
defeasance or discharge of the Indenture and final payment of the Bonds;

(l) the permissive right of the Trustee to take the actions permitted by the Indenture shall not
be construed as an obligation or duty to do so; and

(m) except for information provided by the Trustee concerning the Trustee, the Trustee shall
have no responsibility for any information in any offering memorandum or other disclosure material
distributed with respect to the Bonds, and the Trustee shall have no responsibility for compliance with
any state or federal securities laws in connection with the Bonds

Qualifications of Trustee

There shall at all times be a trustee hereunder which shall be a trust company, corporation or
banking association organized and doing business under the laws of the United States of America or of
any state, authorized under such laws to exercise corporate trust powers, which has a combined capital
and surplus of at least $75,000,000, or is an affiliate of or has a contractual relationship with, a
corporation or banking association meeting such capital and surplus requirement which guarantees the
obligations and liabilities of the proposed trustee, and which is subject to supervision or examination by
federal or state banking authority. If such trust company, corporation or banking association publishes
reports of condition at least annually, pursuant to law or the requirements of any supervising or examining
authority above referred to, then for purposes of the Indenture, the combined capital and surplus of such
corporation or banking association shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of the Indenture, it shall resign promptly in the manner and with the effect
specified in the Indenture.

Resignation or Removal of Trustee; Appointment of Successor Trustee

No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to

the Indenture shall become effective until the acceptance of appointment by the successor Trustee under
the Indenture.

The Trustee may resign at any time by giving written notice to the Issuer and the Borrower. Upon
receiving such notice of resignation, the Issuer shall promptly appoint a successor Trustee by an
instrument in writing. If an instrument of acceptance has not been delivered to the resigning Trustee
within 30 days after the giving of such notice of resignation, the resigning Trustee or any holder of a
Bond then Outstanding may petition a court of competent jurisdiction for the appointment of a successor
Trustee.

Prior to the occurrence and continuance of an Event of Default hereunder, or after the curing or
waiver of any such Event of Default, the Issuer or the holders of a majority in aggregate principal amount

B-18
of the Outstanding Bonds may remove the Trustee and shall appoint a successor Trustee, In the event
there shall have occurred and be continuing an Event of Default hereunder, the holders of a majority in
aggregate principal amount of the Outstanding Bonds may remove the Trustee and shall appoint a
successor Trustee. In each instance such removal and appointment shall be accomplished by an
instrument or concurrent instruments in writing signed by the Issuer or such holders, as the case may be,
and delivered to the Trustee, the Issuer, the Borrower and holders of the Outstanding Bonds.

If at any time: (1) the Trustee shall cease to be eligible and qualified under the term of the
Indenture and shall fail or refuse to resign after written request to do so by the Issuer or the holder of any
Bond, or (2) the Trustee shall become incapable of acting or shall be adjudged insolvent, or a receiver of
the Trustee or its property shall be appointed, or any public officer shall take charge or control of the
Trustee, its property or affairs for the purpose of rehabilitation, conservation or liquidation, then in either
such case (A) the Issuer may remove the Trustee and appoint a successor Trustee in accordance with the
provisions of subsection (c) of this Section; or (B) any holder of a Bond then Outstanding may, on behalf
of the holders of all Outstanding Bonds, petition a court of competent jurisdiction for removal of the
Trustee and appointment of a successor Trustee.

The Issuer shall give written notice of each resignation or removal of the Trustee and each
appointment of a successor Trustee to each holder of Bonds then Outstanding as listed in the Bond
Register. Each such notice shall include the name and address of the applicable corporate trust office of
the successor Trustee.

Notwithstanding any other provision of the Indenture, the Trustee may be removed at any time, at
the request of the Issuer, for any breach of the trusts set forth herein.

Notwithstanding any other provision of the Indenture, no removal, resignation or termination of

the Trustee shall take effect until a successor shall be appointed.

Acceptance of Appointment by Successor Trustee

Every successor Trustee appointed under the Indenture shall execute, acknowledge and deliver to
the Issuer, the Borrower and the predecessor Trustee an instrument accepting its appointment. The
resignation or removal of the retiring Trustee shall thereupon become effective, and the successor Trustee
shall, without further act, deed or conveyance become vested with all the estates, properties, rights,
powers and duties of the predecessor Trustee. Upon the request of the Issuer, the Borrower or the
successor Trustee, the predecessor Trustee shall execute and deliver an instrument transferring to the
successor Trustee all the estates, properties, rights, powers and duties of the predecessor Trustee under the
Indenture, and shall duly assign, transfer, deliver and pay over to the successor Trustee all the Trust Estate
and moneys and other property then held under the Indenture, subject, however, to the lien provided for in
the Indenture. The successor Trustee shall promptly give written notice of its appointment to the holders
of all Bonds Outstanding in the manner prescribed therein, unless such notice has previously been given.

No successor Trustee shall accept appointment as provided above unless, as of the date of such
acceptance, it is eligible and qualified under the provisions of the Indenture.

Discharge of Indenture

If (a) the principal of all Series of Bonds and the interest due or to become due thereon together
with any redemption premium required by redemption of any of the Bonds prior to maturity shall be paid,
or is caused to be paid, or is provided for under the Indenture, at the times and in the manner to which

B-19
reference is made in the Bonds, according to the true intent and meaning thereof, or the outstanding
Bonds shall have been paid and discharged in accordance with the Indenture, and,

(b) all of the covenants, agreements, obligations, terms and conditions of the Issuer under the
Indenture shall have been kept, performed and observed and there shall have been paid to the Trustee, the
Bond Registrar and the Paying Agents all sums of money due or to become due to them in accordance
with the terms and provisions hereof,

then the right, title and interest of the Trustee in the Trust Estate shall thereupon cease and the Trustee, on
request of the Issuer and at the expense of the Borrower, shall release the Indenture and the Trust Estate
and shall execute such documents to evidence such release as may be reasonably required by the Issuer
and shall turn over to the Borrower, or to such other Person as may be entitled to receive the same, all
balances remaining in any Funds under the Indenture except for amounts required to pay such Bonds or
held pursuant to the Indenture.

If the Issuer or the Borrower deposits with the Trustee moneys or Defeasance Obligations which,
together with the earnings thereon, are sufficient to pay the principal of and redemption premium on any
particular Bond or Bonds, or portions thereof, becoming due, either at maturity or by call for optional
redemption or otherwise, together with all interest accruing thereon to the due date or Redemption Date,
and pays or makes provision for payment of all fees, costs and expenses of the Issuer and the Trustee due
or to become due with respect to such Bonds, all liability of the Issuer with respect to such Bond or Bonds
(or portions thereof) shall cease, such Bond or Bonds (or portions thereof) shall be deemed not to be
Outstanding under the Indenture and the holder or holders of such Bond or Bonds (or portions thereof)
shall be restricted exclusively to the moneys or Defeasance Obligations so deposited, together with any
earnings thereon, for any claim of whatsoever nature with respect to such Bond or Bonds (or portions
thereof), and the Trustee shall hold such moneys, Defeasance Obligations and earnings in trust
exclusively for such holder or holders and such moneys, Defeasance Obligations and earnings shall not be
a part of the Trust Estate securing any other Bonds under the Indenture. In determining the sufficiency of
the moneys and Defeasance Obligations deposited pursuant to the Indenture, the Trustee shall receive, at
the expense of the Borrower, and may rely upon: (a) a verification report of a firm of nationally
recognized independent certified public accountants or other qualified firm acceptable to the Issuer and
the Trustee; and (b) an opinion of Bond Counsel to the effect that all conditions set forth in the Indenture
have been satisfied. Upon such defeasance all rights of the Issuer, including its right to provide for
optional redemption of Bonds on dates other than planned pursuant to such defeasance, shall cease unless
specifically retained by filing a written notification thereof with the Trustee on or prior to the date the
Defeasance Obligations are deposited with the Trustee.

When a Bond is deemed to be paid under the Indenture, as aforesaid, it shall no longer be secured
by or entitled to the benefits of the Indenture, except for the purposes of any such payment from such
money or Defeasance Obligations and except for certain provisions of the Indenture and the Borrower
shall continue to be subject to the provisions of the Indenture.

If moneys or Defeasance Obligations have been deposited with the Trustee pursuant to the
Indenture for payment of less than all Bonds of a Series and maturity, the Bonds of such Series and
maturity to be so paid from such deposit shall be selected by the Trustee by lot by such method as shall
provide for the selection of portions (in Authorized Denominations) of the principal of Bonds of such
Series and maturity of a denomination larger than the smallest Authorized Denomination. Such selection
shall be made within 7 days after the moneys or Defeasance Obligations have been deposited with the
Trustee. This selection process shall be in lieu of the selection process otherwise provided with respect to
redemption of Bonds under the Indenture. After such selection is made, Bonds that are to be paid from
such deposit (including Bonds issued in exchange for such Bonds pursuant to the transfer or exchange

B-20
provisions of the Indenture) shall be identified by a separate CUSIP number or other designation
satisfactory to the Trustee. The Trustee shall notify Bondholders whose Bonds (or portions thereof) have
been selected for payment from the moneys or Defeasance Obligations on deposit and shall direct such
Bondholders to surrender their Bonds to the Trustee in exchange for Bonds with the appropriate
designation. The selection of Bonds for payment from such deposit pursuant to this subsection shall be
conclusive and binding on the Issuer and the Borrower.

The Issuer shall give to the Trustee in form satisfactory to it irrevocable instructions to give
notice of the deposit of moneys or Defeasance Obligations, the selection of Bonds to be redeemed
including CUSIP numbers and the anticipated date of redemption. The Trustee shall promptly give such
notice to the Bondholders including the information required under the Indenture.

In case any of the Bonds, for the payment of which moneys or Defeasance Obligations have been
deposited with the Trustee pursuant to the Indenture, are to be redeemed on any date prior to their
maturity, the Issuer, in addition to any notice required under subsection (a) above, shall give to the
Trustee in form satisfactory to it irrevocable instructions to give notice of redemption of such Bonds on
the redemption date for such Bonds as provided in the Indenture.

In addition to the foregoing notice, in the event such Bonds to be redeemed are not by their terms
subject to redemption within the next succeeding 65 days, the Trustee shall give further notice to the
Bondholders that the deposit required by the Indenture has been made with the Trustee and that said
Bonds are deemed to have been paid in accordance with the Indenture and stating the maturity or
redemption date or dates upon which moneys are to be available for the payment of the principal of and
redemption premium, if any, on said Bonds; such further notice shall be given promptly following the
making of the deposit required by the Indenture; and such further notice also shall be given in the manner
set forth in the Indenture; but no defect in said further notice nor any failure to give all or any portion of
such further notice shall in any manner defeat the effectiveness of the deposit.

If the Issuer or the Borrower has retained any rights pursuant to the last sentence of the above
section, notice thereof shall be sent to Bondholders of such Bonds as soon as practicable and not later
than any notice required by the Indenture as described therein.

Supplemental Indentures Without Bondholders' Consent

The Issuer and the Trustee may from time to time and at any time enter into trust indentures
supplemental to this Indenture, without the consent of or notice to any Bondholder, to effect any one or
more of the following:

(a) cure any ambiguity or defect or omission or correct or supplement any provision therein
or in any supplemental indenture;

(b) grant to or confer upon the Trustee for the benefit of the Bondholders any additional
rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the
Bondholders or the Trustee which are not contrary to or inconsistent with the Indenture as then in effect
or to subject to the pledge and lien of the Indenture additional revenues, properties or collateral including
Defeasance Obligations;

(c) add to the covenants and agreements of the Issuer in the Indenture other covenants and
agreements thereafter to be observed by the Issuer or to surrender any right or power therein reserved to
or conferred upon the Issuer which are not contrary to or inconsistent with the Indenture as then in effect;
permit the appointment of a co-trustee under the Indenture;

B-21
 (d) modify, alter, supplement or amend the Indenture in such manner as shall permit the
qualification of the Indenture, if required, under the Trust Indenture Act of 1939 or, the Securities Act of
1933, as from time to time amended, or any similar federal statute hereafter in effect;

(e) make any other change therein that is determined by the Trustee (which may be in
reliance upon an Opinion of Counsel ) to be not materially adverse to the interests of the Bondholders;

(f) implement the issuance of Additional Bonds as provided by the Indenture; or

(g) if a Series of Bonds are all Book Entry Bonds, amend, modify, alter or replace the Letter
of Representations as provided in the Indenture or other provisions relating to Book Entry Bonds.

The Trustee shall not be obligated to enter into any such supplemental indenture which adversely
affects the Trustee's own rights, duties or immunities under the Indenture.

Supplemental Indentures Requiring Consent of Bondholders

The Issuer and the Trustee, at any time and from time to time, may execute and deliver a
supplemental indenture for the purpose of making any modification or amendment to the Indenture, but
only with the written consent, given as provided in the Indenture, of the holders of at least a majority in
aggregate principal amount of the Bonds Outstanding at the time such consent is given, and in case less
than all of the Bonds then Outstanding are affected by the modification or amendment, of the holders of at
least a majority in aggregate principal amount of the Bonds so affected and Outstanding at the time such
consent is given; provided, however, that if such modification or amendment will, by its terms, not take
effect so long as any Bonds so affected remain Outstanding, the consent of the holders of such Bonds
shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any
calculation of Outstanding Bonds under the Indenture.

Notwithstanding the foregoing, no modification or amendment contained in any such

supplemental indenture shall permit any of the following, without the consent of each Bondholder whose
rights are affected thereby: (a) a change in the terms of stated maturity or redemption of any Bond or of
any installment of interest thereon; (b) a reduction in the principal amount of or redemption premium on
any Bond or in the rate of interest thereon or a change in the coin or currency in which such Bond is
payable; (c) the creation of a lien on or a pledge of any part of the Trust Estate, or the money or assets
pledged under the Indenture or any part thereof; (d) the granting of a preference or priority of any Bond or
Bonds over any other Bond or Bonds; (e) a reduction in the aggregate principal amount of Bonds of
which the consent of the Bondholders is required to effect any such modification or amendment; or (f) a
change in the provisions of the Indenture concerning the waiver of defaults. Notwithstanding the
foregoing, the holder of any Bond may extend the time for payment of the principal of or interest on such
Bond; provided, however, that upon the occurrence of an Event of Default, funds available thereunder for
the payment of the principal of and interest on the Bonds shall not be applied to any payment so extended
until all principal and interest payments which have not been extended have first been paid in full. Notice
of any supplemental indenture executed pursuant to the Indenture shall be given to the Bondholders
promptly following the execution thereof by the Issuer.

Consents of Bondholders and Opinions

Each supplemental indenture executed and delivered pursuant to the provisions of the Indenture
requiring Bondholder consent shall take effect only when and as provided in below. A copy of such
supplemental indenture (or brief summary thereof or reference thereto in form approved by the Trustee),

B-22
together with a request to Bondholders for their consent thereto in form satisfactory to the Trustee, shall
be sent by the Trustee to Bondholders, at the expense of the Borrower, by registered or certified/first class
mail, postage prepaid, provided that a failure to mail such request shall not affect the validity of the
supplemental indenture when consented to as provided thereinafter. Such supplemental indenture shall
not be effective unless and until there shall have been filed with the Trustee (a) the written consents of
Bondholders of the percentage of Bonds specified in the Indenture, and (b) an opinion of Counsel to the
effect that the execution of such supplemental indenture is authorized or permitted by the Indenture and
that all conditions precedent to the execution and delivery, of such supplemental indenture have been
complied with. Any such consent shall be binding upon the Bondholder giving such consent and upon any
subsequent holder of such Bonds and of any Bonds issued in exchange therefor or in lieu thereof (whether
or not such subsequent Bondholder has notice thereof), unless such consent is revoked in writing by the
Bondholder giving such consent or a subsequent holder of such Bonds by filing such revocation with the
Trustee prior to the date the Trustee receives the material required in subsections (a) and (b) above.

Notwithstanding anything else therein, if a supplemental indenture is to become effective with

Bondholder consent on the same date as the date of issuance of Additional Bonds, the consents of the
underwriters or purchasers of such Additional Bonds shall be counted for purposes of the Indenture.

Amendments to Other Documents

Without the consent of or notice to the Bondholders, the Issuer and the Trustee may consent to
any amendment, change or modification of the Loan Documents as may be required (a) by the provisions
of the Loan Agreement or the Indenture, (b) for the purpose of curing any ambiguity, inconsistency or
defect or omission in the Loan Documents, (c) in connection with an amendment or to effect any purpose
for which there could be an amendment of the Indenture pursuant to the terms thereof, (d) in connection
with implementing the issuance of Additional Bonds, or (e) in connection with any other change therein
which is not to the material prejudice of the Trustee or the Bondholders.

Except for the amendments, changes or modifications contemplated in the above paragraph,
neither the Issuer nor the Trustee shall consent to:

any amendment, change or modification of the Loan Documents which would change the
amount or time as of which Loan Payments are required to be paid, without the giving of notice
as provided in the Indenture of the proposed amendment, change or modification and receipt of
the written consent thereto of the Bondholders of all of the then Outstanding Bonds; or

any other amendment, change or modification of the Loan Documents without the giving
of notice as provided in the Indenture of the proposed amendment, change or modification and
receipt of the written consent thereto of the Bondholders of not less than a majority in aggregate
principal amount of the Bonds then Outstanding.

The notices to and consent of the Bondholders to any amendments shall be obtained as provided
in the Indenture with respect to supplemental indentures. Notice of any amendment pursuant to the
Indenture shall be given to the Bondholders promptly following the execution thereof. In consenting to
any amendment of the Loan Documents, the Issuer and the Trustee are entitled to receive an opinion of
Counsel as described in the Indenture.

Limitation of Rights

With the exception of rights expressly conferred in the Indenture, nothing expressed or mentioned
in or to be implied from the Indenture or the Bonds is intended or shall be construed to give to any person

B-23
or company other than the parties to the Indenture and the owners of the Bonds any legal or equitable
right, remedy or claim under or in respect to the Indenture or any covenants, conditions and agreements
contained in the Indenture and all of the covenants, conditions and agreements thereof being intended to
be and being for the sole and exclusive benefit of the parties thereto and the owners of the Bonds as
therein provided.

Security Agreement; Financing Statements

In addition to the assignment by the Issuer of its rights in the Trust Estate to the Trustee, the
Issuer hereby acknowledges that, in order to more fully protect, perfect and preserve the rights of the
Trustee and the Bondholders in the Trust Estate, the Issuer grants to the Trustee a security interest in the
Trust Estate and the proceeds thereof. The Issuer agrees to cause the borrower to file financing
statements, and continuations thereof, in such manner and in such places as may be required by law and
the Loan Documents in order to perfect such security interest. The Trustee shall cooperate with the Issuer
and the Borrower as necessary, including the execution of any necessary financing statements and
continuations thereof.

Payments Due on Non-Business Days

If the date for making any payment or the last date for performance of any act or the exercising of
any right, as provided in the Indenture, is not a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day with the same force and effect as if
done on the nominal date provided in the Indenture and no interest shall accrue on the payment so
deferred during the intervening period.

Limitation of Liability of Officers, Directors, etc., of Issuer

No covenant, agreement or obligation contained in the Indenture shall be deemed to be a

covenant, agreement or obligation of any present or future officer, manager, employee or agent of the
Issuer in his individual capacity, and neither the members of the Board of the Issuer nor any officer
thereof executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability
or accountability by reason of the issuance thereof.

THE LOAN AGREEMENT

Issuance of the Bonds

In order to obtain funds to lend to the Borrower to finance the Project, the Issuer will, at the
request of the Borrower, issue, sell and cause to be delivered to the purchaser thereof its Bonds. The
Bonds shall bear interest and mature on the dates and in the amounts and be subject to redemption as set
forth in the Indenture. The Issuer will cause the proceeds received from the sale of the Bonds to be
deposited with the Trustee as provided in the Indenture.

The liability of the Issuer under the Bonds shall be enforceable only to the extent of its rights
under the Loan Agreement and other funds, assets, rights or properties pledged and assigned for such
purpose under the Indenture. The Bonds shall be payable solely from payments made by or on behalf of
the Borrower to the Trustee pursuant to the terms of the Loan Agreement and as provided in the
Indenture.

Loan

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 Upon the sale and delivery of the Bonds, the proceeds of the Bonds in the amount of $4,250,000
will be loaned to the Borrower in the manner set forth in the Loan Agreement.

Use of Proceeds by the Borrower

The Borrower will use the funds loaned to it by the Issuer for the purposes of making the deposits
into the Funds described in the Indenture which shall be applied as described therein.

Disbursements from the Project Fund

The Issuer and the Borrower authorize and direct the Trustee to disburse moneys from the Project
Fund to pay the Costs of the Project and to pay Issuance Costs. All disbursements from the Project Fund
shall be in the manner provided in the Indenture.

Investment of Funds; Application of Investment Earnings

Any moneys held by the Trustee in any fund created pursuant to the Indenture shall be invested or
reinvested by the Trustee in investments as described in the Indenture. Any such investments shall be held
by or under the control of the Trustee and shall be deemed at all times a part of the fund or the account, in
which such moneys were held, and the interest accruing thereon and any profit realized from such
investments shall be credited to such fund or account as described in the Indenture.

Principal and Interest Payments

The Borrower agrees to pay to the Trustee, for the account of the Issuer, without notice or
demand, on or before the last Business Day of each month, until no Bonds are Outstanding all Rent
received under the Regal Lease and any other income, rents, revenue, or funds of any kind whatsoever
received by the Borrower since the last Business Day of the prior month from or relating to the operation
of the Project, provided, however, that the Borrower shall arrange for all Rent payable under the Regal
Lease to be paid directly to the Trustee for deposit in the Revenue Fund. The Borrower shall provide
written directions to the Trustee designating the funds and/or accounts created under the Indenture in
which such amount should be deposited whenever such payments are to be deposited in any fund other
than the Revenue Fund.

Payments Assigned

It is understood and agreed that the rights of the Issuer under the Loan Agreement (except
Unassigned Issuer Rights), are assigned to the Trustee pursuant to the Indenture. The Borrower consents
to such assignment, and agrees to pay to the Trustee all amounts payable by the Borrower that are so
assigned. All such assigned payments shall be made directly to the Trustee and shall be deposited as
provided in the Indenture.

Obligation of Borrower Unconditional

The obligation of the Borrower to make payments under the Loan Agreement and to perform and
observe all other covenants, conditions and agreements thereunder shall be absolute and unconditional
until payment of all Borrower obligations thereunder, irrespective of any defense or any rights of setoff,
recoupment or counterclaim which any Borrower might otherwise have against the Issuer or the Trustee.
Until payment of all Borrower obligations under the Loan Agreement, the Borrower shall not suspend or
discontinue any such payment thereunder or fail to observe and perform any of their other covenants,
conditions and agreements thereunder for any cause, including without limitation failure of consideration,

B-25
failure of title to any part or all of the Project, or commercial frustration of purpose, or any damage to or
destruction or condemnation of all or any part of the Project, or any change in the tax or other laws of the
United States of America, the State of Tennessee or any political subdivision of either, or any failure of
the Issuer or the Trustee to observe and perform any covenant, condition or agreement, whether express
or implied, or any duty, liability or obligation arising out of or in connection with any document in
connection with the financing of the Project. Nothing contained in the Loan Agreement shall be
construed to release the Issuer from the performance of any of its respective obligations hereunder or
under any documents related thereto, and in the event the Issuer should fail to perform any such
obligation the Borrower may institute such action as the Borrower may deem advisable to compel
performance or recover damages for non-performance so long as such action is consistent with the
preceding sentence.

Payment of Principal, Interest and Redemption Premium

The Borrower will pay all payments under the Loan Agreement solely from the sources provided
therein, on the dates, at the places and in the manner provided in the Loan Agreement and the Indenture,
provided, however, that such obligations are not general obligations of the Borrower but are limited
obligations payable solely from the revenues and receipts derived from the Project, which revenues and
receipts are hereby specifically pledged to such purposes in the manner and to the extent provided in the
Indenture. The payments due under the Loan Agreement shall not be deemed to constitute a debt or a
pledge of the faith and credit of the State or any political subdivision thereof, including the Borrower and
the City of Knoxville, Tennessee. Neither the State nor any political subdivision thereof, including the
Borrower and the City of Knoxville, Tennessee, shall be obligated to pay the obligations of the Borrower
under the Loan Agreement or other costs incident thereto except from the revenues and receipts pledged
therefor, and neither the faith and credit nor the taxing power of the State or any political subdivision
thereof, including the Borrower and the City of Knoxville, Tennessee, is pledged to the payment of the
Borrower's obligations under the Loan Agreement or other costs incident thereto.

Limitation of Liability of Officials of the Borrower

Notwithstanding anything to the contrary contained in the Loan Agreement, for payment of the
obligations of the Borrower under the Loan Agreement and any other party entitled to seek payment from
the Borrower under or to enforce the Loan Agreement will be entitled to look solely to amounts on
deposit with and held by the Trustee for the benefit of the Bondholders, subject to the terms of the
Indenture, the Project and such collateral, if any, as may now or hereafter be given to secure the payment
of the obligations of the Borrower under the Loan Agreement and the Bonds, and no other property or
assets of the Borrower or any officer or director of the Borrower shall be subject to levy, execution or
other enforcement procedure for the satisfaction of the remedies hereunder, or for any payment required
to be made under the Loan Agreement, or for the performance of any of the covenants or warranties
contained herein.

No covenant, condition or agreement contained herein shall be deemed to be a covenant,

agreement or obligation of any present or future officer, director, employee or agent of the Borrower in
his or her individual capacity, and neither the officers, directors, employees or agents of the Borrower
executing the Loan Agreement shall be liable personally on the Bonds or under the Loan Agreement or be
subject to any personal liability or accountability by reason of the issuance of the bonds or the execution
of the Loan Agreement.

THE REGAL LEASE

B-26
Lease of the Project

Pursuant to the Regal Lease, the Borrower will lease the Project to Regal.

Permitted Use of the Project

The Project shall be used for the operation of a first-class, multi-auditorium, motion picture
theatre and, incidental thereto: the operation of a video arcade with game machines for use by theatre
patrons; the sale of popcorn, drinks, candy, specialty café items, other foods and various items sold in
motion picture theatres; the making available of facilities and devices to further the operation of the
Project, including, without limitation, satellite dish transmission and reception facilities, pay telephones,
change machines, vending machines and automated teller machines; such uses as may become
appropriate due to changes in the circumstances of the motion picture theatre business; depiction of
advertising; meeting rooms; style shows; and presentations of concerts, sporting events, simulcast events
via satellite, hard lines and recorded transmissions, subject to the provision that the Project shall not be
used for display, presentation or advertisement of "x" rated or pornographic movies.

Term

The initial term of the Regal Lease shall be last day of the last twelve-month period fifteen (15)
consecutive twelve-month periods after the day on which the final use and occupancy permit is issued for
the Project and Regal opens for business in the Project. Regal shall have three options to extend the term
of the Regal Lease for successive and consecutive periods of five (5) twelve-month periods. Such options
must be exercised 180 days prior to the last day of the end of the initial term or the preceding option term.

Rent

For each calendar month of the term of the Regal Lease until Borrower's indebtedness related to
the Project is repaid, Regal shall pay to Borrower rental payments in the amount of seventeen percent
(17%) of Gross Sales. For each calendar month of the term of the Regal Lease after the Borrower's
indebtedness related to the Project is repaid, Regal shall pay to Borrower rental payments in the amount
of twelve percent (12%) of Gross Sales.

For that purpose, "Gross Sales" means the aggregate amount of Box Office Receipts, Concessions
Receipts, Game Machine Receipts and Other Receipts of Regal's business at the Project, which are
defined as follows:

(a) "Box Office Receipts" means the aggregate amount of the actual sale price of all tickets
and other admissions to the Project after excluding therefrom all federal, state and local
admission, sales, value-added, excise, luxury and gross receipts taxes, and taxes of the
same or similar nature, and any rebates to charitable organizations in connection with
benefits sponsored by them.

(b) "Concession Receipts" means, with respect to the Project, after excluding therefrom all
federal, state and local sales, value-added luxury, excise and gross receipts taxes, and
taxes of the same or similar nature: (A) all proceeds received from the sale of
refreshments, unless sold from vending machines; (B) all proceeds received from the sale
of records, books, magazines, toys or novelties sold in connection with a particular
presentation (except that if Regal receives only a commission on such sales, only the
commission shall be included); (C) all proceeds received from the sale of video cassettes
and video discs; (D) all proceeds received from any vending machines, pay telephones,

B-27
 change machines and automated teller machines owned by Regal or by any entity which
is a subsidiary, affiliate or parent of Regal, after excluding all royalty fees; and (E) the net
proceeds received as commissions or otherwise by Regal from vending machines, pay
telephones, change machines and automated teller machines not owned by Regal or any
entity which is related to Regal or in which Regal has an interest.

(c) "Game Machine Receipts" means, after excluding therefrom all federal, state and local
sales, value-added, luxury, excise, gross receipts taxes, and taxes of the same or similar
nature and all royalty fees: (A) all proceeds received with respect to the Project from any
mechanical, electronic, video or token operated amusement, entertainment or game
machine or device owned by Regal or by any entity which is a subsidiary, affiliate or
parent of Regal; and (B) the net proceeds received as commissions or otherwise by Regal
from any mechanical, electronic, video or token operated amusement, entertainment or
game machine or device not owned by Regal or by an entity which is related to Regal or
in which Regal has an interest.

(d) "Other Receipts" means with respect to the Project, after excluding therefrom all federal,
state and local sales, value-added luxury, excise and gross receipts taxes, and taxes of the
same or similar nature all receipts from all other business done in, at or from the Project,
or allocated to the Project, other than the business covered by subsections (a), (b) and (c)
above.

However, the following shall be deducted and excluded from Gross Sales:

(a) discounts, allowances or cash or credit refunds made to customers in the ordinary course
of business;

(b) goods returned to sources or transferred to another theatre or warehouse owned, leased,
or operated by, or affiliated with, Regal when such return or transfer is not related to a
sale of merchandise in the Project or is made solely for the convenient operation of
Regal's business;

(c) sums and credits received in the settlement of claims for loss of or damage to food or
merchandise;

(d) interest, service or service carrying charges or other charges, however denominated, paid
by customers for extension of credit on sales where those charges are not included in the
ticket or merchandise sales price;

(e) sales taxes, excise taxes, gross receipts tax or other similar taxes now or hereafter
imposed by federal, state and local governmental bodies upon the sale of tickets, concessions,
food, merchandise or services;

(f) sales of any item of Regal's Property; and

(g) the amount by which any sales to employees are discounted.

Any allocation made by Regal to its various theatres on receipts procured at the corporate level
shall include an appropriate allocation for the Theatre, based upon the Theatre receiving the same
treatment as other comparable theatres.

B-28
Construction of the Project

Borrower's Work. Pursuant to the Regal Lease, Borrower is primarily responsible for
construction of the entire Project. Such construction shall be in conformity with the Approved
Construction Plans, in a good and workmanlike manner, with use of new materials, in compliance with all
applicable governmental requirements. The improvements for which Borrower is responsible shall
generally include the following:

(a) Demolition and removal of any structures or improvements occupying the site for the
Project, including removal and disposal of all debris;

(b) All excavation, grading, filling, preparation of elevations, compaction, soil preparation,
environmental remediation, and other work necessary to prepare the site for construction
of the Project;

(c) Construction of the pad (structural or non-structural) or foundation system for the Project
in conformity with the specifications set forth in the Approved Construction Plans;

(d) Installation and extension of all lines, conduits and facilities for all utilities to serve the
Project (including water with a rate of flow and pressure sufficient to meet the
requirements set forth in the Approved Construction Plans, sanitary sewer, gas, electric,
telephone and storm sewer in the quantities indicated in the Approved Construction
Plans);

(e) Termite control (if required);

(f) Landscaping;

(g) Concrete, including, without limitation, stadium seating steel, stadium seating
framing/deck, stadium seating fill, stadium seating steps, interior and exterior stair,
stadium stairs, mezzanine fill, rooftop equipment ads acoustical fill, housekeeping pads,
access to parking facilities, all entry canopy and signage structural foundations,
acoustical floating slabs, roof fill, light weight insulating concrete and piers;

(h) Masonry, including exterior block walls and exterior finishes;

(i) Steel backing and supports, including, without limitation, for railings, toilet partitions,
poster case furnished by Regal, signage and speakers and signage and in walls, partitions
or other systems;

(j) Structural steel, including, without limitation, stadium seating structure, mezzanine
structure, roof structure, roof and mezzanine openings with supplemental framing,
embeds for Fitout or the furniture, fixture and equipment, including balcony railings,
MEP curb supports, exterior sign structure, interior sign structure, entry canopy structure,
metal grille work and structure, roof screens, stairs, blocking for signs, hand rails, etc. per
the Approved Construction Plans;

(k) Metal bar joist for decking and structural deck;

(l) Miscellaneous steel;

B-29
 (m) Metal decking, including, without limitation, entry canopies and roof/mezzanine;

(n) Rough carpentry;

(o) Finish carpentry within the Project;

(p) Insulation, including, without limitation acoustical insulation;

(q) Fireproofing;

(r) Roofing;

(s) Sheet metal;

(t) Moisture control;

(u) Doors, frames and related hardware, including, without limitation, exterior doors and
interior non-demising partitions, doors and hardware;

(v) Glass and glazing;

(w) Drywall and framing;

(x) Tile;

(y) Interior resilient flooring;

(z) Painting and wallcovering;

(aa) Toilet partitions and accessories;

(bb) Fire extinguishers and cabinets;

(cc) Pneumatic tubing system;

(dd) Fire sprinklers;

(ee) Plumbing;

(ff) HVAC;

(gg) Electrical; and

(hh) Various other requirements described in more detail in Exhibit C of the Regal Lease.

Such work shall be completed at the sole cost of the Borrower. Such costs will include payment
of the Project's architect.

Borrower shall also be responsible for applying for, paying all costs for (including without
limitation any fees, taxes and assessments), and obtaining any and all development approvals, which
include, without limitation, all applicable governmental zoning, zoning variance, development plan, site
plan, environmental impact, utility impact, development impact, or related approvals, consents, permits

B-30
and authorizations that are necessary for the Project, and all approvals or consents by any other parties
which are necessary for the Project pursuant to any restrictive covenant, lease, exclusive right, agreement
or other arrangement. Borrower shall also be responsible for applying for, paying all costs for (including,
without limitation, fees, taxes and assessments) all governmental permits, consents and approvals which
are necessary for commencement of performance and the performance of the construction work for which
Borrower is responsible.

Regal's Work. Regal shall be responsible for some costs of equipping the Project. Such costs are
further described herein as the FF&E.

Borrower's Maintenance and Repair Responsibilities

Throughout the term of the Regal Lease, Borrower shall maintain, repair and replace as necessary
or appropriate in a good, safe, functioning and usable condition, at the sole cost and expense of Borrower,
and in compliance with applicable governmental regulations, the following: all capital improvements, the
entire Project, including without limitation, the roof, roof membrane and roofing, the exterior walls, the
structural flooring, the structural ceiling, all structural components, the stairways which are part of the
Project, the elevators which are part of the Project, if any, the escalators which are part of the Project, if
any, any ramps from the exits of the Theatre which are part of the Project, the heating, ventilation and air
conditioning system ("HVAC") (including the HVAC controls), the mechanical systems, the marquee, the
utility systems for gas, electrical, water, sanitary sewer, storm drainage, and any other utility, fire safety
equipment and facilities, and any item which is not part of Regal's maintenance and repair responsibility,
except with respect to any maintenance, repair or replacement which becomes necessary or appropriate
due to the occurrence of an event of casualty.

Regal's Maintenance and Repair Responsibilities

Throughout the term of the Regal Lease, Regal shall provide routine maintenance of the various
utility fixtures, plumbing and plumbing facilities within the interior walls, floor and ceiling of the Project,
the theatre marquee, and the non-structural, interior portions of the Project, and Regal shall remodel and
replace restroom fixtures, from time to time as Regal determines to be necessary or appropriate, all
subject to the provision that Regal's responsibility for such routine maintenance, remodel and replacement
shall not exceed the amount of Two Thousand Dollars ($2,000.00) per occurrence or the amount of
Twenty-four Thousand Dollars ($24,000.00) in the aggregate per Rent Year. In the event that the total
cost for a necessary or appropriate item of routine maintenance, remodel or replacement, as described
above, is reasonably projected to exceed Two Thousand Dollars ($2,000.00), then upon notice thereof
from Regal to Borrower, Borrower shall be responsible for the payment of all costs and the performance
of such item of routine maintenance, remodel or replacement. For each Rent Year, from and after Regal's
expenditure of Twenty-four Thousand Dollars ($24,000.00) for items of routine maintenance, remodel or
replacement, then upon notice thereof from Regal to Borrower, Borrower shall be responsible for the
payment of all costs and the performance of all items of routine maintenance, remodel or replacement
which thereafter occur during such Rent Year.

Termination Rights

(a) Commencing after the expiration of the third year in the initial term of the Regal Lease, in the
event that the total amount of Gross Sales for the most recent period of twelve (12) consecutive months
(without a cessation of partial or total use of the Project due to either the occurrence of a casualty,
remodeling of the Project by Regal, or alterations pursuant to the Regal Lease) (each such 12-month
period being referred to herein as a "Triggering 12-month Period") is less than One Million Five Hundred
Thousand Dollars ($1,500,000.00), as indicated on a report of all Gross Sales for such Triggering 12-

B-31
month Period certified as accurate by an officer of Regal, at any time during the period of twelve (12)
consecutive months next occurring after the Triggering 12-month Period, each of Borrower and Regal
shall have the right to terminate the term of the Regal Lease by providing written notice of such
termination to the other party, with such termination being effective at the end of the twelfth (12th)
complete calendar month occurring after the other party's receipt of such written notice (the "Early
Termination Date"). Each month of a Triggering 12-month Period must occur after the expiration of the
third year in the initial term of the Regal Lease.

(b) In the event of a termination of the term of the Regal Lease described in subsection (a) above by
Borrower at any time during the initial term of the Regal Lease, Regal shall have the right, exercisable by
written notice to Borrower within one hundred eighty (180) days of Regal's receipt of Borrower's notice
of termination, to purchase ownership of and the right to remove the FF&E by paying to Borrower within
ninety (90) days from and after the Early Termination Date the amount equivalent to the then existing,
depreciated book basis of the FF&E. For the period of ninety (90) days from and after the Early
Termination Date, Regal shall leave the FF&E in the Project, provided that Borrower provides full and
continuous utility and HVAC operations within the Project, at Borrower's sole cost and expense, thereby
enabling the prevention of microspore infestation of the FF&E and the Project, and provides Regal
reasonable access to the FF&E. Upon expiration of such 90-day period, Regal shall be entitled to remove
the FF&E from the Project at Regal's sole expense; provided that Regal shall complete the removal of the
FF&E within a one hundred eighty (180) day period from and after the Early Termination Date, and
provided further that upon removal of the FF&E, Regal shall, at its own expense, repair any damage to
the Project caused by such removal.

(c) In the event of a termination of the term of the Regal Lease described in subsection (a) above by
Regal at any time during the initial term of the Regal Lease, Borrower shall have the right, exercisable by
written notice provided to Regal within one hundred eighty (180) days after Borrower's receipt of the
termination notice, to elect to have Regal continue to operate the theatre business within the Project, as a
manager of such business for Borrower, in exchange for a fee of Eight Percent (8%) of Gross Sales per
month to be paid by Borrower to Regal, for a period of twelve (12) consecutive months from and after the
Early Termination Date, with such management arrangement to be on reasonable terms negotiated in
good faith by Borrower and Regal at such time, but which provides that Regal shall operate the theatre in
at least the same manner as prior to the termination. In the event of a termination of the Rent Term
pursuant to subsection (a) above by Regal, Regal shall leave the FF&E in the Project both throughout the
12-month management period and any period thereafter until all indebtedness incurred by Borrower to
finance the construction of the Project is paid in full and retired and ownership of the FF&E is returned to
Regal as provided in the Regal Lease, at which time Regal shall be entitled to remove the FF&E from the
Project.

Assignment

Consent of Borrower not Required. Provided that Regal is not in material default under the
terms of the Regal Lease and that the Project continues to be used for the permitted use described above,
Regal (or Regal's leasehold mortgagee, if such mortgagee succeeds to the interest of Regal under the
Regal Lease) may, without the prior specific consent of the Borrower, assign Regal's right, title and
interest in the Regal Lease to any individual or entity which by written instrument assumes all obligations
of Regal under the Regal Lease and either (a) operates and owns movie theatres containing no less than
200 hundred auditoriums; (b) is acquiring in connection with the assignment of the Regal Lease or
otherwise owns an interest of fifty percent (50%) or more of the corporation (or entity) which is Regal; or
(c) is acquiring no less than twenty (20) of Regal's motion picture theatres in a single transaction or at
approximately the same time. In addition to meeting one of the criteria listed in subsections (a) through
(c) above, such assignee must have a book net worth of no less than $40,000,000 at the approximate time

B-32
of the assignment as determined pursuant to generally accepted accounting principles. In the event that
these requirements are met, Regal shall be released from its obligations under the Regal Lease accruing
subsequent to the effective date of the transfer. If these requirements are not met, Regal shall remain
liable under the Regal Lease for the initial 15 year term of the Regal Lease; the assignee tenant shall only
be entitled to exercise options to extend the Regal Lease upon written consent of Borrower and Regal
shall not remain liable under the Regal Lease for the term of such extensions.

Provided that Regal is not in material default under the Regal Lease, Regal may, without
Borrower's consent, sublet in whole or in part, or assign all of Regal's right, title and interest in the Regal
Lease to any entity which: (a) is a subsidiary of the entity which is Regal and is wholly owned by Regal;
(b) any entity which has the lawful power to direct Regal's management and operation; (c) any entity
whose management and operation is controlled by Regal or by a majority of Regal's shareholders,
partners, joint venturers or equity owners, or (d) any entity which is wholly owned by the same person(s)
or entity(ies) which wholly owns Regal, as the case may be, provided that Regal continues to be obligated
under the Regal Lease. Additionally, Regal may, without prior written consent of Borrower, sublet or
license the concessions operations of the Project.

Regal shall not be restricted in any way from merging or consolidating with any other corporation
or corporations, if such merger or consolidation is conducted in accordance with applicable law, and the
surviving corporation of such merger or consolidation shall become the tenant under the Regal Lease.

Consent of Borrower Required. Except for the assignments, subleases or other transfers
described in the preceding section, Regal may not sell, assign or in any manner transfer its interest in the
Regal Lease without the prior written consent of Borrower.

Mortgage of Leasehold. Regal shall have the continuing right during the term of the Regal
Lease, once or more often, without obtaining Borrower's consent or approval, to mortgage, grant a deed
of trust on, pledge or otherwise encumber Regal's interest in the Regal Lease. Borrower has subordinated
its lien rights in its capacity as landlord in Regal's property to the lien of any such leasehold mortgagee.

Regal's Default

The following shall constitute an "Event of Default" under the Regal Lease:

(a) Failure of Regal to pay, within ten (10) days after written notice from Borrower to Regal
that same is delinquent, the full amount of any installment of rental payments;

(b) Except for cases subject to subsections (a) and (c) of this section, failure of Regal to
comply fully with any requirement, covenant, term or condition in the Regal Lease binding upon Regal or
to perform fully any obligation of Regal under the Regal Lease, in either case within thirty (30) days
following written notice from Borrower to Regal of noncompliance or nonperformance, or if such
compliance or performance cannot with diligence occur within such time, then failure of Regal within
such time to initiate and at all times thereafter, until such compliance or performance occurs, to diligently
prosecute and pursue all steps reasonably necessary to effect such compliance or performance;

(c) The taking of Regal's leasehold estate on execution or other process of law, except
through action taken by or on behalf of the holder of a leasehold mortgage (leasehold deed to secure debt
or leasehold deed of trust) of Regal's leasehold estate.

Borrower's Remedies

B-33
 (a) In addition to any and all other rights or remedies of Borrower expressly stated in the
Regal Lease, upon the occurrence of an Event of Default, Borrower shall have the right:

(1) To terminate the Regal Lease by providing written notice thereof to Regal, to re-
enter the Project and take possession thereof and to recover damages for the Event of Default, and upon
such termination of the Regal Lease, neither Borrower nor Regal shall have any obligation pursuant to
this Lease to the other for the period from and after such termination, but each of Borrower and Regal
shall remain liable to the other for damages applicable to the period preceding the termination, and
Borrower shall be entitled to the damages specified in subsection (c) below; and

(2) Upon written notice to Regal, to permit the Regal Lease to continue in effect,
with Regal in possession of the Project, to collect Rent as it becomes due and to recover damages for the
Event of Default.

(b) During the period from the occurrence of an Event of Default until such Event of Default
ceases to exist, Regal shall have no right to early termination of the term of the Regal Lease and no right
to remove the FF&E from the Project.

(c) Upon the occurrence of an Event of Default, Borrower shall be entitled to recover the
following damages:

(1) the worth at the time of judgment of any unpaid Rent which became due for
payment pursuant to the Regal Lease prior to the effective date of the termination of the Regal Lease
based upon an Event of Default; plus

(2) the worth at the time of judgment of the amount by which the unpaid Rent which
would have become due for payment pursuant to the Regal Lease from and after the effective date of the
termination of the Regal Lease until the time of judgment exceeds the amount of Rent loss which was
avoided by re-letting of the Project by Borrower or the amount of Rent which Regal proves could have
been reasonably avoided by re-letting of the Project by Borrower, all subject to the Default Rent
Limitation; plus

(3) the worth at the time of judgment of the amount by which the unpaid Rent which
would become due for payment pursuant to this Lease from and after the time of judgment exceeds the
amount of Rent loss that Regal proves could have been reasonably avoided, with the worth at the time of
judgment computed by discounting the determined amount at the discount rate of seven percent (7%), all
subject to the Default Rent Limitation; plus

(4) an amount to compensate Borrower for reasonable attorneys' fees and litigation
costs incurred as a result of the Event of Default; plus

(5) interest on the damages at the Default Rate applicable from and after the
effective date of termination until paid by Regal to Borrower.

Borrower's Default

Borrower shall be in default under this Lease if: (a) Borrower fails to execute and deliver to Regal
the Memorandum of Lease; (b) Borrower fails to execute, obtain execution thereof by the appropriate
holder and deliver to Regal each required Non-disturbance Agreement; or (c) if Borrower fails to comply
with its obligations with respect to maintenance of the Project under the Regal Lease. With respect to all
other matters, Borrower shall be in default under the Regal Lease if Borrower fails to perform any of

B-34
Borrower's obligations under the Regal Lease and said failure continues for a period of thirty (30) days
after written notice thereof from Regal to Borrower (subject to the provision that the 30-day period shall
be extended for the reasonable time necessary if such failure cannot reasonably be cured within thirty (30)
days and Borrower shall have commenced to cure said failure within said thirty (30) days and continues
diligently to pursue the curing of the same). With respect to any default under the Regal Lease by
Borrower other than Borrower's failure to comply with the requirements with respect to maintenance of
the Project under the Regal Lease, in addition to any rights Regal may have under the Regal Lease or by
law or in equity, including (without limitation) the right to terminate the Regal Lease based upon a default
thereunder by Borrower, at its option and upon written notice to Borrower, without waiving any rights or
remedies (including without limitation the right to recover damages, reasonable attorneys' fees and
litigation costs incurred in seeking such damages), Regal may incur any reasonable expense necessary to
perform the obligation of Borrower specified in such notice, and, unless Borrower reimburses Regal the
reasonable costs therefor within fifteen (15) days following notice thereof from Regal, Regal shall have
the right to take a credit in the amount of such reasonable expense together with interest at the Default
Rate (defined in the Regal Lease) from the Rent as it comes due, but nevertheless be credited as having
paid such credited amount as Rent. If Borrower shall be in default under the Regal Lease and, if, as a
consequence of such default, Regal shall incur any expense as aforesaid or recover a money judgment
against Borrower, or both, the amount of any reasonable expense incurred until recovered by credit taken
against Rent coming due or such judgment, or both, shall bear interest at the Default Rate, and may be
satisfied by levy and execution upon and out of the proceeds of the sale of Borrower's title to the Project
and the real property on which the Project are located. If Borrower has mortgaged its right, title and
interest in the Project and Borrower's mortgagee has executed and delivered to Regal a Non-disturbance
Agreement as provided in the Regal Lease, thereafter such Borrower's mortgagee shall have the same
time frame as provided herein for Borrower to cure Borrower's defaults and Regal shall not exercise the
remedy of terminating the Regal Lease or exercise the remedy of off setting against Rent until after
providing such Borrower's mortgagee notice and a cure period equal in duration to the cure period
Borrower is entitled to receive pursuant to the Regal Lease.

Covenants, Conditions and Restrictions

The Borrower has informed Regal that the Borrower intends to finance a portion of the cost of the
Theatre through the issuance of revenue bonds by an industrial development corporation and a loan of the
proceeds of such revenue bonds to the Borrower. It is the expectation of the Borrower that the interest on
such bonds will be exempt from federal income taxation because such bonds will be issued as tax-exempt
enterprise zone facility bonds pursuant to Section 1394 of the Internal Revenue Code of 1986, as
amended (the "Code"). For the bonds to qualify as tax-exempt enterprise zone facility bonds, Regal will
be required to operate the Theatre as an enterprise zone business, within the meaning of Section 1394(b)
of the Code. In order to provide assurances to the Borrower and the purchasers of the bonds that Regal
will operate the Theatre as an enterprise zone business, Regal agrees to execute and deliver to the
Borrower contemporaneously with the issuance of the bonds, a tax certificate and agreement ("Tax
Exemption and Agreement"). Regal agrees that a default in the performance of its obligations under such
Tax Exemption and Agreement shall constitute an Event of Default under the Regal Lease. The Borrower
has informed Regal that the form of Tax Exemption and Agreement was prepared based upon the laws
and regulations in effect at the time of execution of the Regal Lease and that modifications may need to
be made to such form based upon any changes in the law or regulations that may occur between the
execution of this Lease and the issuance of the bonds.

Definitions

For purposes of this summary of the Regal Lease, the following terms shall have the following
definitions:

B-35
 "Approved Construction Plans" means the plans and specifications prepared by TK Architects,
Inc. and submitted on November 29, 2005 for permit, as such plans and specifications were amended as
of January 31, 2007, and the Approved Construction Plans have been provided to both Borrower and
Regal and approved by Borrower and Regal.

"Default Rate" means the Prime Rate per annum as published in the Wall Street Journal under the
heading of "Money Rates" or if such interest rate is deemed unlawful because it exceeds the highest rate
permitted under the laws of the State of Tennessee, then the highest rate permitted under the laws of the
State of Tennessee.

"FF&E" means all of the following items, which are to be provided by Regal and installed in or
about the Project as either part of Regal's Work or as part of Borrower's Work, as indicated, and any items
installed by Regal under Exhibit C to the Regal Lease (except for any items of Proprietary Property)
together with any replacements of such items, from time to time, as such replacement occurs:

(a) Floor carpet (installed as part of Borrower's Work);

(b) "One Sheet" poster cases, both interior and exterior (installed as part of Borrower's
Work);

(c) Mini-marquees (L.E.D and/or mylar) (installed as part of Borrower's Work);

(d) Concession menu boards (installed as part of Borrower's Work);

(e) Box Office marquee (L.E.D. and/or mylar) (installed as part of Borrower's Work);

(f) Lobby directional marquees (L.E.D. and/or mylar) (installed as part of Borrower's Work);

(g) Directional Signage (installed as part of Borrower's Work);

(h) Safe (2,000 pound estimate) in Count Room (installed as part of Borrower's Work);

(i) CO2 filler box (installed as part of Borrower's Work);

(j) Speaker brackets (installed as part of Borrower's Work);

(k) Concession equipment (installed as part of Borrower's Work);

(l) Condensers for Ice Machines (installed as part of Borrower's Work);

(m) Stainless Steel 3-compartment sink and faucets (installed as part of Borrower's Work);

(n) Projection and slide port window units (installed as part of Borrower's Work);

(o) Mop Room Cleaning System (installed as part of Borrower's Work);

(p) Slide Projectors, except for blocking and shelf, which will be provided as part of
Borrower's Work (installed as part of Borrower's Work);

B-36
(q) Auditorium Acoustical Panels (installed as part of Borrower's Work);

(r) Guest Services Signage (installed as part of Borrower's Work);

(s) Trash Compactor, except for electrical power, which will be provided as part of
Borrower's Work (installed as part of Borrower's Work);

(t) Exterior Building Identification Signage (installed as part of Borrower's Work);

(u) Poster Cases (installed as part of Borrower's Work);

(v) Storage Racks (installed as part of Borrower's Work);

(w) Projection, Sound racks, Automatic Consoles and Dimmers (installed as part of =
Borrower's Work);

(x) Aisle Lights (L.E.D.) (installed as part of Borrower's Work);

(y) Acoustical Panels or Wall Drapes in Auditoriums (installed as part of Regal's Work);

(z) Fiber Optics (installed as part of Regal's Work);

(aa) Auditorium Projection Screens, Frames and Masking (installed as part of Regal's Work);

(bb) Theatre speakers (installed as part of Regal's Work);

(cc) Bathroom Vanities and Countertops (installed as part of Regal's Work);

(dd) Auditorium seats (installed as part of Regal's Work);

(ee) CCTV system devices, except for conduit and wiring which will be provided as part of
Borrower's Work (installed as part of Regal's Work);

(ff) Film Transports (installed as part of Regal's Work);

(gg) Soda equipment (installed as part of Regal's Work);

(hh) Bulk CO2 system, except conduit, rough-in and enclosure which will be provided as part
of Borrower's Work (installed as part of Regal's Work);

(ii) Paging and Music System Head End Amplifier, except for conduit, speakers, and wiring
which will be provided as part of Borrower's Work (installed as part of Regal's Work);

(jj) Neon/Plexi-Neon as coordinated with the sign contractor, except for electric power,
junction boxes, devices, conduits, wire breakers, and similar items which will be
provided as part of Borrower's Work (installed as part of Regal's Work);

(kk) Concession Casework, except for hand sink which will be provided as part of Borrower's
Work (installed as part of Regal's Work);

B-37
 (ll) Box Office Casework, except for front wall and glass which will be provided as part of
Borrower's Work (installed as part of Regal's Work);

(mm) Guest Services Casework, except for blocking and electrical which will be provided as
part of Borrower's Work (installed as part of Regal's Work);

(nn) Count/Vault, Cash Rooms and Managers Office Casework, except for blocking and
electrical which will be provided as part of Borrower's Work (installed as part of Regal's
Work);

(oo) Auditorium Waste Receptacles, except light fixture, sprinkler head, finished floor and
ceiling which will be provided as part of Borrower's Work (installed as part of Regal's
Work);

(pp) Party Room Casework, including coat rack and shelf, except for blocking, sink and faucet
which will be provided as part of Borrower's Work (installed as part of Regal's Work);

(qq) Auditorium Speakers, except for blocking and support, conduit and wiring which will be
provided as part of Borrower's Work (installed as part of Regal's Work);

(rr) Infrared listening devices, except for electric power and blocking which will be provided
as part of Borrower's Work (installed as part of Regal's Work); and

(ss) Speaker Support Shelves behind projection screens (installed as part of Regal's Work).
The FF&E shall not include any item of Proprietary Property, although such item may be
installed as part of Regal's Work.

"Proprietary Property" means all of the following categories of property which may be installed
in or about the Project:

(A) All property which is owned by a person or entity other than Borrower, Regal or
an "Affiliate of Regal" (defined as an entity which is owned by Regal in part or in whole; a
person or entity which owns Regal in part or in whole, either directly or indirectly; or an entity
which is owned in part or in whole by a person or entity which owns Regal in part or in whole,
either directly or indirectly) and is either leased or licensed for use in or about the Project, such as
(without limitation) an automatic teller machine, a telephone for public use, soft drink dispensing
equipment, concessions food coolers, freezers, heating apparatus, displays, vending machines,
water coolers, and video games;

(B) All property bearing the logo or trade name of Regal or of any Affiliate of Regal,
including without limitation the following logos or trade names: Regal Entertainment Group,
Regal Cinemas, United Artists, Regal CineMedia, Edwards Theatres, Act III, R. C. Cobb, and
Hoyts, and including without limitation the following types of property: uniforms, cups, bags,
boxes, clocks, and certain signs; and

(C) The box office ticket system, point of sale systems, employee training DVDs,
video tapes and manuals, employee information files, concessions supplies, cleaning supplies,
spare projector bulbs, inventory or stock in trade of saleable items, film, DVDs, and computer
software.

B-38
 "Rent Year" means each successive twelve (12) month period occurring during the term of the
Regal Lease.

THE CONSTRUCTION MANAGEMENT AGREEMENT

The Borrower and the City have engaged the PBA to provide design, construction and related
administrative services with respect to the Project. Such services will include, but will not be limited to,
assistance, advice and other administrative services relating to a review of the Project planning, including
needs assessment, programming and scheduling, review and monitoring of the Project budget, supervision
of construction as the Borrower's representative, and the processing of payment authorizations and
warranty requests to architects, contractors, subcontractors, suppliers, consultants and other parties
involved in the Project. The Borrower shall remain responsible for the costs of the Project and will
reimburse the PBA for costs incurred on behalf of the Borrower. In addition, the Borrower will pay to
PBA a fee of $157,765.00 in exchange for PBA's services. The City has guaranteed the Borrower's
performance under the agreement.

CONSTRUCTION AGREEMENT

The PBA has entered into a contract with the Contractor whereby the Contractor has agreed to
construct the Project. Prior to beginning construction of the Project, the Contractor will consult with the
PBA and the Architect regarding site use and improvements, and the selection of materials, building
systems and equipment. The Contractor will also provide guidance to the PBA regarding labor and
material shortages, time requirements and factors related to construction costs. When the drawings and
specifications are sufficiently complete, the Contractor will provide a detailed cost estimate and begin
developing subcontractor interest in the Project. When the drawings and specifications are finalized, the
Contractor will provide a "Guaranteed Maximum Price" which shall be the sum of the Cost of the Work
and the Contractor's Fee. The Contractor shall update the Guaranteed Maximum Price from time to time.
The PBA shall pay the Contractor a fee of $10,000 for these pre-construction services.

The Contractor will use a competitive bidding process approved by and acceptable to the PBA for
procurement of all elements of the Project. The PBA, with the advice of the Contractor, will determine
which bids are accepted. The Contractor shall receive a fee in the amount of two and three quarters
percent (2.75%) of the Cost of the Work plus the Cost of the Work. The "Cost of the Work" will include
reimbursements for the following items, including, but not limited to: labor costs, subcontract costs, costs
of materials and equipment incorporated in the completed construction, costs of other materials and
equipment, temporary facilities and related items, premiums for insurance and bonds and other
miscellaneous costs. The Contractor shall keep full and detailed accounts. The Contractor shall furnish
bonds covering faithful performance of the Construction Contract and the payment of obligations arising
thereunder; the cost of such bonds shall be including the Cost of the Work.

B-39
 APPENDIX C

Form of Investment Letter

Re: $4,250,000 The Industrial Development Board of the City of Knoxville Revenue Bonds
(Regal Riviera 8 Cinema Project) Series 2007

The undersigned purchaser of the above-captioned Bonds (the "Purchaser") hereby certifies to
The Industrial Development Board of the City of Knoxville (the "Issuer"), Morgan Keegan & Company,
Inc. (the "Placement Agent") and The Industrial Development Board of the City of Knoxville for the
Downtown Cinema, Inc. (the "Borrower"):

(a) The Purchaser has received the Private Placement Memorandum dated April 23,
2007, provided in connection with the Bonds and has been afforded the opportunity conduct its own
investigation regarding the Bonds and to ask questions of and receive answers from the Placement Agent
and the Issuer concerning the terms and conditions of the Bonds and any other information the Purchaser
has requested in connection with determining whether to purchase the Bonds.

(b) The Purchaser is relying solely on information contained in the Private

Placement Memorandum with respect to the Bonds and any information obtained independently by the
Purchaser in making a decision to purchase the Bonds.

(c) The Purchaser understands that the Bonds will be issued in minimum authorized
denominations of $100,000 and may not be divided, resold or otherwise disposed of in any manner which
results in any portion of the Bonds being held in a denomination less than $100,000.

(d) The Purchaser acknowledges and understands that the data presented in the
Private Placement Memorandum with respect to projections of operating revenues was prepared by Regal
Cinemas, Inc., which based such projections on the performance of similarly sized movie theatre
complexes and other methods standard in the movie theatre industry. Neither the Issuer, the Borrower,
nor the Placement Agent make any representation of any kind with respect to the reasonableness of these
projections. The Purchaser acknowledges and understands that no feasibility study has been made with
respect to results of operations of the movie theatre complex to be constructed with the proceeds of the
Bonds (the "Project") or the economy of the City of Knoxville, both of which would directly and
indirectly impact the projections. The Purchaser acknowledges and confirms that the projections used to
calculate the data in the Private Placement Memorandum, which purports to project revenues pledged to
the Bonds are based on information from third party sources; that the reasonableness of the projections
has not been independently verified by, and is not warranted by the Issuer, the Borrower, the Placement
Agent or their advisors; that the Purchaser is not relying on the Issuer, the Borrower, the Placement Agent
or their advisors as to the reasonableness of the projections; and that none of the Issuer, the Borrower, the
Placement Agent or their advisors will be liable to the Purchaser with respect to the reasonableness of
such projections.

(e) The Purchaser has sufficient knowledge and experience in financial and business
matters, including the purchase and ownership of tax-exempt obligations, to be able to evaluate the merits
and risks of an investment in the Bonds, including the illiquidity thereof, and such Purchaser is able to
bear any and all economic risks associated with such Purchaser's investment in the Bonds.

(f) The Purchaser has adequate means of providing for its current needs and possible
contingencies, and has no need of liquidity of its investment in the Bonds.

C-1
 (g) The Purchaser acknowledges that the Placement Agent has advised the Purchaser
that (i) no assurance can be given that the Project will generate sufficient income for the Borrower to
make payments to the Issuer under the Loan Agreement for the Issuer to use to repay the Bonds, (ii)
Regal Cinemas, Inc., the initial tenant of the Project, has the option to terminate its lease of the Project
prior to the maturity of the Bonds, (iii) should Regal Cinemas, Inc. terminate its lease of the Project, there
can be no assurances that an alternative operator of the Project can be engaged, (iv) the term of the lease
to Regal Cinemas, Inc. expires prior to the maturity date of the Bonds, and (v) the Project will be
designed and constructed for use as a movie theatre complex and is not suitable for many other
commercial uses, therefore, the ability to realize funds from the sale of the Project is limited.

(h) The Purchaser qualifies as one of the following (circle the appropriate category):

(i) Any bank as defined in Section 3(a)(2) of the Securities Act of 1933 (the "Act"),
or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the
Act, whether acting in its individual or fiduciary capacity; any broker or dealer registered under
the Investment Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act; any Small Business Investment Company licensed by the United States
Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors;

(ii) Any private business development company as defined in Section 202(a)(22) of

the Investment Advisers Act of 1940;

(iii) Any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with total assets in excess of
$5,000,000;

(iv) Any natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $5,000,000;

(v) Any natural person who had an individual income in excess of $500,000 in each
of the two most recent years or joint income with that person's spouse in excess of $600,000 in
each of those years and has a reasonable expectation of reaching the same income level in the
current year;

(vi) Any trust with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person
as described in Rule 506(b)(2)(ii); and

(vii) Any entity in which all of the equity owners are accredited investors.

C-2
 (i) The Purchaser will not offer, sell or otherwise dispose of all or any part of or
interest in the Bonds, except to another investor who qualifies as at least one category described in
subsection (h) hereof and that will have made to the Placement Agent, the Issuer and the Borrower the
same representations and covenants with respect to it as set forth herein, and will comply with all
applicable Federal and state securities laws in connection with any such offer, sale or other disposition.

(PURCHASER)

By:

Title:

6137912.18 C-3