Exhibit 10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of the 31st day of January, 2002 (the
"Effective Date"), among CARMIKE CINEMAS, INC., a Delaware corporation (the
"Company"), and XXXXXXX X. XXXXXXX, 0000 Xxxxxxxx Xxx Xxxx, Xxxxxxxx, XX 00000
(the "Executive"), sometimes hereinafter referred to collectively as the
"Parties".
W I T N E S S E T H :
WHEREAS, Employee is Chief Executive Officer of the Company;
WHEREAS, on August 8, 2000, the Company and certain of its affiliates
and subsidiaries commenced cases under title 11 of the United States Code (the
"Bankruptcy Code") by filing petitions with the Bankruptcy Court and continue to
operate their businesses as debtors and debtors in possession;
WHEREAS, the Bankruptcy Court confirmed a plan of reorganization and
disclosure statement on January 4, 2002 both of which contemplated this
Agreement as the Reorganized Carmike Employment Agreement;
WHEREAS, this Agreement provides for a grant of restricted stock,
subject to the approval of the Board of Directors of the Company, on the terms
described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto covenant and
agree as follows:
1. EMPLOYMENT: (a) The Company agrees to employ the Executive as its
chief executive officer, and the Executive agrees to work for the Company for a
period (hereinafter called the "Employment Period") commencing on the date of
this Agreement and ending at the expiration of five (5) years from said date;
provided, however, that on December 31 of each year hereof, the term hereof
shall be extended for one (1) year providing that neither the Company nor the
Executive shall have given written notice to the other during the thirty (30)
days prior to such anniversary date of its or his wish not to so extend this
Agreement. (b) The Executive shall during the Employment Period have the duties
as are consistent with his position and as are prescribed by the Board of
Directors to whom he shall report.
2. COMPENSATION: (a) The Company will continue to pay the Executive
during the Employment Period a base salary of $850,000 per year. The base
salary, as may be increased from time to time, is the Executive's "Base Salary"
for purposes of this Agreement. Salary shall be payable semi-monthly in arrears,
and shall be subject to such payroll and withholding deductions as are required
by law. (b) The Executive will during the term of the Employment Period be
entitled to participate in all welfare benefit plans (as such term is defined by
Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended,
(such plans, the "Welfare Benefit Plans")) and such
other employee and fringe benefit plans offered by the Company, pursuant to the
terms of such plans and on such terms and on the same basis as other similarly
situated senior executive officers. (c) The Executive shall be eligible to
receive during the term of the Employment Period an annual bonus of up to fifty
percent (50%) of his base salary for such year (such bonus, the "Target Bonus"),
based on his achievement of targets based on performance criteria established
from time to time by the Board of Directors. (d) On each of the third, fourth
and fifth anniversary dates of the Effective Date, the Company shall issue
and/or deliver to the Executive and the Executive shall receive from the Company
that number of shares of the Company's Common Stock and associated other
property and securities which, as appropriately adjusted to reflect any
intervening non-cash dividends, stock splits, reorganizations,
recapitalizations, mergers, changes in capital, stock exchanges and similar
transactions, would be equivalent to 260,000 shares of the Company's Common
Stock if issued and owned continuously from the Effective Date to the date of
each such installment, provided, however, that no such installment delivery
shall be made if earlier thereto the Executive's employment has been terminated
by the Company for Cause (as hereinafter defined) or the Executive has breached
his obligations set forth in Sections 7(d), (e), (f) and (g) hereof; and,
provided, further, that all such installment deliveries which have not
theretofore been made or cancelled pursuant to the foregoing proviso shall be
made immediately upon the happening of Executive's death or a Change in Control
(as hereinafter defined), except, at the Executive's option, a Change in Control
defined in Section 6(b)(2) or in the proviso set forth in Section 6(b)(1).
Notwithstanding the installment delivery dates set forth above, Executive may at
his option extend any such installment delivery date to a later date or dates
selected by Executive provided that the Executive gives the Company written
notice of such extension date(s) no later than twelve months prior to the date
then scheduled for such installment delivery, and such extension date or dates
shall thereafter be treated for all purposes as though it or they were the
installment date or dates originally set forth in this Agreement. This award
shall also be subject to the terms of the award agreement issued under the
Carmike Cinemas, Inc. 2002 Stock Plan; provided that if there are any conflicts
between this Section 2(d) and the award agreement, the provisions of this
Section 2(d) shall control.
3. INSURANCE-DEATH BENEFIT. (a) If the Executive dies during the term of the
Employment Period, the Company shall pay to the surviving spouse of the
Executive, or to such other person as the Executive may designate in writing the
sum of one (1) year's Base Salary, which payment shall be made monthly for
twelve (12) months following the date of his death. (b) The Executive
understands that the Company has purchased Key Man insurance on the life of the
Executive, of which the Company shall be the designated beneficiary.
Accordingly, the Executive herewith agrees to submit to such physical
examination as may be required by any insurance company to bind the amount of
insurance the Company wishes to purchase on Executive's life.
4. TRAVEL AND ENTERTAINMENT EXPENSE ALLOWANCES. (a) In addition to the
compensation to be paid to the Executive, the Company shall, during the
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Employment Period, reimburse the Executive for all reasonable and necessary
expenses actually incurred by him in performance of his duties. In addition, the
Company during the Employment Period shall reimburse the Executive consistent
with past practice of the Company with respect to paying or reimbursing the
Executive for certain items. (b) The Company shall during the Employment Period
provide the Executive with a car and driver for use by the Executive in the
performance of his duties.
5. EMPLOYMENT PERIOD. (a) The "Employment Period" shall commence on the
date set forth above; provided, however, that should the Executive's employment
by the Company be earlier terminated as hereinafter set forth in this section,
the Employment Period shall end on the date of such earlier termination. (b) The
Employment Period shall be terminated (i) upon the death of the Executive; (ii)
in the event that because of any physical or mental disability, the Executive is
unable to perform, does not perform for a continuous period of six (6) months
his duties as a senior executive officer, by written notice therefor, (iii) by
the Company for Cause, by delivery to the Executive of a written notice
specifying such termination and the reasons therefor. During the period after
notice is given and before termination of employment becomes effective, the
Executive shall continue to be a regular employee of the Company, and shall be
entitled to receive his salary and perquisites to the extent of his
participation prior to the giving of such notice. (c) For the purpose of this
Agreement, "Cause" shall mean willful malfeasance.
6. CHANGE IN CONTROL.
(a) In General: In the event there is a Change in Control (as
defined in this paragraph) of the Company, this Agreement shall, in order to
help to eliminate the uncertainties and concerns which may arise at such time,
be automatically extended for a period of five (5) years, beginning on the first
day of the month during which such Change in Control shall occur, upon all the
same terms and provisions contained herein.
(b) Definition: A "Change in Control" shall be deemed to have
occurred upon the happening of any one of the following circumstances:
(1) Any person, group (as used in Section 13(d)(3) of
the Securities Exchange Act of 1934) or organization, other than a Signatory to
the Stockholders' Agreement, dated as of January 31, 2002, by and among the
Company, the Executive, GS Capital Partners III, L.P., GS Capital Partners III
Offshore, L.P., Xxxxxxx Xxxxx & Co. Xxxxxxxxxxx Xxxx, Xxxxxx Xxxxxx Xxxx 0000,
L.P., Stone Street Fund 1998, L.P., the Jordan Trust, TJT(B), TJT(B) (Bermuda)
Investment Company Ltd., Xxxxx X. Xxxxxxxxx and Xxxxxxx Xxxxxxxxx, jt ten,
Leucadia Investors, Inc. and Leucadia National Corporation (each a "Signatory")
(the "Stockholders' Agreement"), becomes the beneficial owner, directly or
indirectly, of 50% or more of the combined voting power of the Company's
outstanding stock, provided that a Change in Control under this subsection (1)
shall be deemed to have occurred regardless of whether such
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person, group or organization is a Signatory if such person, group or
organization becomes the beneficial owner of 50% or more of the combined voting
power of the Company's outstanding stock and the Executive gives the Company
written notice that Good Reason (as hereinafter defined) has occurred subsequent
to such event;
(2) Breach by any party other than the Executive to
the Stockholders' Agreement of the provisions of Section 1 of the Stockholders'
Agreement, which, without Executive's written consent has, or will have, the
effect of (1) removing from the Board of Directors the Executive, Xxxx Xxxxxxx,
Xx. or the independent director designated by the Executive or (2) reducing the
percentage voting power of the Executive, Xxxx Xxxxxxx, Xx. or the independent
director designated by the Executive on the Board of Directors;
(3) The stockholders of the Company have approved a
merger in which the Company is not the surviving company or sale of all or
substantially all of the assets of the Company, or the consummation of a
complete liquidation or dissolution of the Company;
(4) The Company combines with another company and is
the surviving company, but, immediately after the combination, the shareholders
of the Company immediately prior to the combination hold, directly or
indirectly, less than 50% of the voting control of the combined company.
Notwithstanding the foregoing provisions of this Section 6(b), a Change in
Control shall not be deemed to have occurred as a result of the Company's
commencement of a case under the Bankruptcy Code or any action taken in
accordance with and as explicitly provided in any plan under chapter 11 approved
by the Bankruptcy Court with respect to the Company.
(c) No Requirement to Seek Employment and No Offset: The
Company agrees that if the Executive's employment is terminated by the Company
during the term of this Agreement, following a Change in Control, the Executive
is not required to seek other employment or attempt in any way to reduce the
amounts payable to the Executive by the Company pursuant to the applicable terms
of this Agreement or extensions hereof; it being understood and agreed that the
amount of any payment or benefit to the Executive provided for hereunder shall
not be reduced by any compensation earned by the Executive as a result of his
employment by another employer, by any retirement benefits or by the Company's
attempt to offset any amount claimed to be owed by the Executive to the Company
or otherwise.
(d) Executive's Termination for "Good Reason": If following a
Change in Control, the Executive terminates his employment hereunder for "Good
Reason", as hereinafter defined, the Executive shall be entitled to all of the
compensation and benefits provided for under this Agreement, or any extension
hereto as if the Company had
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terminated the Executive "Without Cause." Termination by the Executive for "Good
Reason" shall mean the occurrence of any one or more of the following events:
(1) Any breach by the Company of the terms and
conditions of this Agreement, or any extensions hereof, effecting the
Executive's salary and bonus compensation, employee benefits, stock awards or
the loss of any of the Executive's titles or positions with the Company;
(2) A significant diminution of the Executive's
duties and responsibilities;
(3) The assignment to the Executive of any duties
inconsistent with his duties and responsibilities existing at the time of a
Change in Control;
(4) Any purported termination of the Executive's
employment by the Company other than as permitted by this Agreement;
(5) The relocation of the Company's principal office
or the Executive's own office to any place outside an area which is within
twenty-five (25) miles of the current principal office of the Company in
Columbus, Georgia;
(6) The failure of any successor to the Company to
expressly assume and agree to discharge the Company's obligations to the
Executive under this Agreement or any extensions hereof, in form and substance
satisfactory to the Executive.
Notwithstanding the foregoing provisions of this Section 6(d), the Executive
shall not have Good Reason solely as a result of the Company's commencement of
proceedings under chapter 11 of the Bankruptcy Code.
(e) Severance. In the event of the Executive's involuntary
termination of employment with the Company (other than by reason of death,
disability or for Cause) or resignation for Good Reason, the Executive shall be
entitled to a lump sum payment equal to the Executive's Base Salary and, if
applicable, the Target Bonus for the year of termination, multiplied by the
number of full and partial years remaining in the Employment Period. In
addition, the Company shall afford the Executive the ability to continue to
participate in the Welfare Benefit Plans for the period remaining in the
Employment Period. If continued participation in such Welfare Benefit Plans is
not permitted by law or the terms of the Benefit Plans, the Company shall
provide the Executive with an amount sufficient to permit the Executive to
purchase comparable coverage.
7. RESTRICTIVE COVENANTS.
(a) Definitions. As used in Section 7, the following
definitions will apply:
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(1) "Company" means Carmike Cinemas, Inc. and its
subsidiaries and includes the successors and assigns of Carmike Cinemas, Inc.
(2) "Business" means the business of owning and/or
managing motion picture theaters.
(3) "Material Contact" means personal contact with a
vendor (which, for purposes of this Section 7, specifically and without
limitation includes film suppliers) or customer of the Company, the supervision
of the efforts of those who have direct personal contact with such vendor or
customer, or access to confidential information concerning such vendor or
customer.
(4) "Confidential Information" means information
about the Company and its business practices, employees, customers and/or
vendors to the extent not generally known outside of the Company, which
Executive learns of in connection with Executive's employment with the Company,
and which would be useful to competitors of the Company or which might harm the
Company's image or reputation, including but not limited to: (i) business and
employment policies, marketing methods and the targets of those methods,
finances, business plans, promotional materials and price lists; (ii) the terms
upon which the Company obtains products or services from its vendors; (iii) the
nature, origin, composition and development of the Company's products; (iv) the
way in which the Company provides products and services to customers; (v)
information provided by third parties which the Company has a duty to protect
from disclosure.
(5) "Trade Secrets" means Confidential Information
which meets the additional requirements of the Uniform Trade Secrets Act or
similar state law.
(b) Duty of Confidentiality. Executive agrees that for a
period of two (2) years after the cessation of his employment for any reason,
Executive shall not directly or indirectly divulge or make use of any
Confidential Information or Trade Secrets belonging to the Company, so long as
the information remains a Trade Secret or remains confidential. This provision
does not limit the remedies available under common or statutory law, which may
impose longer duties of non-disclosure.
(c) Return of Property and Information. Executive agrees to
return all of the Company's property in his possession within seven (7) days
following the cessation of his employment unless otherwise agreed by the
Company.
(d) Non-Competition Covenant. Executive agrees that for a two
(2)-year period following the cessation of employment for any reason, Executive
will not compete with the Business by performing activities of the type
performed by Executive for the Company within one year prior to Executive's
termination. Likewise, Executive will not
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perform activities of the type which in the ordinary course of business would
involve the utilization of Confidential Information or Trade Secrets protected
from disclosure by Section 7(b) of this Agreement. This paragraph restricts
competition only within the geographic area listed on Schedule 1 which is
attached to this Agreement and incorporated herein by reference.
(e) Non-Solicitation Covenant. Executive agrees that for a
period of two (2) years following the cessation of his employment for any
reason, he will not directly or indirectly solicit or attempt to solicit any
business in competition with the Business from any of the Company's customers or
vendors with whom Executive had Material Contact during the last year of
Executive's employment with the Company.
(f) Non-Recruitment of Company Employees. Executive agrees
that for a period of two (2) years following the cessation of his employment for
any reason, Executive will not directly or indirectly solicit or attempt to
solicit any employee of the Company for the purpose of encouraging, enticing, or
causing said employee to terminate employment with the Company.
(g) Duties Prior to Cessation of Employment. Nothing contained
in Section 7 of this Agreement shall limit or diminish Executive's fiduciary
duty and duty of loyalty to act in the Company's best interests at all times
while acting as its Chief Executive Officer.
8. INDEMNIFICATION. The Company shall, to the fullest extent permitted
by its certificate of incorporation and by-laws, indemnify Employee and hold him
harmless for any acts or decisions made by him in good faith while performing
his duties for the Company Entities with respect to any claims, regardless of
whether such claims arose on, prior to, or after August 8, 2000. The Company
represents that it has maintained and will continue to maintain appropriate
directors and officers' liability insurance to satisfy its obligations under
this Section 8, but the Company acknowledges that its obligations under this
Section 8 are not dependent on the availability of either such insurance or
payments thereunder.
9. ASSIGNMENT. The rights and obligations of the Executive and the
Company under this Employment Agreement shall inure to the benefit of the
parties and shall be binding upon the Company and upon the successors and
assigns of the Company. The Executive may not assign his rights or obligations
hereunder.
10. NOTICES. All notices and requests hereunder shall be in writing and
shall be delivered in person, or by certified mail, return receipt requested,
postage prepaid, to the Company with a copy to Chief Financial Officer, Carmike
Cinemas, Inc., X.X. Xxx 000, Xxxxxxxx, XX 00000-0000 and if to the Executive,
addressed to him at P. O. Box 391, 0000 Xxxxx Xxxxxx, Xxxxxxxx, XX 00000-0000.
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Such notices and requests shall be deemed delivered on the
date on which personally delivered, or if delivered by certified mail, return
receipt requested, the date sent. Either party may change his or its address for
receipt of notices and requests hereunder by notice duly given to the other
party in accordance with the provisions of this Section.
11. GOVERNING LAW. The laws of the State of Georgia shall govern all
questions relative to the interpretation and construction of this Employment
Agreement, and to the performance hereof.
12. SEVERABILITY. In case any one or more of the provisions or part(s)
of a provision contained in this Employment Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part(s)
of a provision of this Employment Agreement, but this Employment Agreement shall
be reformed and construed as if such invalid, illegal or unenforceable provision
or part(s) of a provision had never been contained herein, and such provision or
part(s) reformed so that it would be valid, legal and enforceable to the maximum
extent permitted.
13. WAIVER. No waiver by either party of any default hereunder, or by
the other shall in any way prejudice the waiving party with respect to any
subsequent default hereunder (whether or not similar) by the other party.
14. HEADINGS OF NO EFFECT. The headings and captions hereof have been
inserted solely for convenience of reference, and shall in no way define, limit
or describe any of the provisions of this Employment Agreement.
15. ENTIRE AGREEMENT. This instrument contains the entire Agreement of
the parties; it may not be changed orally, but only by an instrument in writing,
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
16. ARBITRATION. The exclusive procedure for resolution of any dispute
under this Agreement shall be by arbitration in Atlanta, GA before one
arbitrator, in accordance with the rules then existing of the American
Arbitration Association. The award of the arbitrator shall be final and binding
upon the parties, and judgment upon the award may be entered in any court having
jurisdiction thereof. The cost of arbitration, if any, shall be divided equally
between the parties. Each party shall otherwise bear its or his own expense.
17. PRIOR AGREEMENTS. This Employment Agreement supersedes any previous
employment agreement, and same are null and void, and of no legal effect
whatsoever.
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18. SURVIVAL. The provisions of Sections 2(d), 6(e), 7 and 8 shall
specifically survive termination of the Employment Period.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first above written.
THE COMPANY:
CARMIKE CINEMAS, INC.
BY: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Authorized Signature
THE EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------
XXXXXXX X. XXXXXXX
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SCHEDULE 1 TO
EMPLOYMENT AGREEMENT
WITH XXXXXXX XXXXXXX
GEOGRAPHIC AREA SUBJECT TO SECTION 7(d)
Alabama
Arkansas
Colorado
Delaware
Florida
Georgia
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Minnesota
Missouri
Montana
Nebraska
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Utah
Xxxxxxxx
Xxxxxxxxxx
West Xxxxxxxx
Wisconsin
Wyoming
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