-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E6s9dxZBGndQLoptEUj8LMWLpMhxlvwKiCj9IUjB/u7Sf6BJ+y6aGHfSdSd2O6mU TGawmkEVi3K8wJKztZQ/6Q== 0000950144-99-005061.txt : 19990430 0000950144-99-005061.hdr.sgml : 19990430 ACCESSION NUMBER: 0000950144-99-005061 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19990429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARMIKE CINEMAS INC CENTRAL INDEX KEY: 0000799088 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 581469127 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-77333 FILM NUMBER: 99604673 BUSINESS ADDRESS: STREET 1: 1301 FIRST AVE CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 4045763400 MAIL ADDRESS: STREET 1: P O BOX 391 CITY: COLUMBUS STATE: GA ZIP: 31994 S-4 1 CARMIKE CINEMAS, INC. 1 As filed with the Securities and Exchange Commission on April 29, 1999 Registration No. 333-_______ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- CARMIKE CINEMAS, INC. (Exact name of registrant as specified in its charter) DELAWARE 7830 58-1469127 (State or other jurisdiction (Primary Standard Industrial I.R.S. Employer of incorporation or organization) Classification Code Number) Identification No.)
(For Co-Registrants, please see "Table of Co-Registrants" on the following page) 1301 FIRST AVENUE COLUMBUS, GEORGIA 31901 (706) 576-3400 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) F. LEE CHAMPION, III SENIOR VICE PRESIDENT AND GENERAL COUNSEL CARMIKE CINEMAS, INC. 1301 FIRST AVENUE COLUMBUS, GEORGIA 31901 (706) 576-3891 (Name, address, including zip code, and telephone number, including area code, of Agent for Service) A copy of all communications, including communications sent to the Agent for Service, should be sent to: PATRICIA A. WILSON, ESQ. KIRK A. DAVENPORT, ESQ. TROUTMAN SANDERS LLP LATHAM & WATKINS 600 PEACHTREE STREET, N.E. 885 THIRD AVENUE SUITE 5200, NATIONSBANK PLAZA SUITE 1000 ATLANTA, GEORGIA 30308-2216 NEW YORK, NEW YORK 10022 (404) 885-3242 (212) 906-1200 --------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: As soon as practicable following the effectiveness of this registration statement and satisfaction of all other conditions to the exchange offer described in the prospectus included herein. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] CALCULATION OF REGISTRATION FEE
================================================================================================================================= TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT OFFERING PRICE (1) REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------------- 9 3/8% Series B Senior Subordinated Notes due 2009...... $200,000,000 100% $200,000,000 $55,600 - --------------------------------------------------------------------------------------------------------------------------------- Guarantees of the 9 3/8% Series B Senior Subordinated Notes due 2009 (2)......................... N/A N/A N/A N/A =================================================================================================================================
2 (1) The registration fee has been calculated pursuant to Rule 457(a) and Rule 457(f)(2) under the Securities Act. The Proposed Maximum Aggregate Offering Price is estimated solely for the purpose of calculating the registration fee. (2) Represents the guarantees of the 9 3/8% Series B Senior Subordinated Notes due 2009 to be issued by the co-registrants. Pursuant to Rule 457(n) under the Securities Act, no additional registration fee is being paid in respect of the guarantees. The guarantees are not traded separately. --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. TABLE OF CO-REGISTRANTS
EXACT NAME OF (STATE OR OTHER (PRIMARY STANDARD CO-REGISTRANT AS JURISDICTION INDUSTRIAL (I.R.S. EMPLOYER SPECIFIED IN ITS CHARTER OF INCORPORATION OR CLASSIFICATION NUMBER) IDENTIFICATION NO.) ORGANIZATION) Eastwynn Theatres, Inc. Alabama 7830 58-2184195 Wooden Nickel Pub, Inc. Delaware 5800 58-1364384
The address, including zip code, and telephone number, including area code, of each of the co-registrant's principal executive offices is c/o Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, (706) 576-3400. The name, address, including zip code, and telephone number, including area code, of agent for service for each of the co-registrants is F. Lee Champion, III, Esq., Senior Vice President and General Counsel, 1301 First Avenue, Columbus, Georgia 31901, (706) 576-3891. EXPLANATORY NOTE This registration statement covers the registration of an aggregate principal amount of $200,000,000 of 9 3/8% Series B Senior Subordinated Notes due 2009 of Carmike Cinemas, Inc., which will have been registered under the Securities Act pursuant to a registration statement of which this prospectus is a part, that may be exchanged for equal principal amounts of Carmike's outstanding 9 3/8% Series A Senior Subordinated Notes due 2009. This registration statement also covers the registration of the exchange notes for resale by Goldman, Sachs & Co. in market-making transactions. The complete prospectus relating to the exchange offer follows immediately after this explanatory note. Following the exchange offer prospectus are some pages of the prospectus relating solely to these market-making transactions, including alternate outside and inside front cover pages, a section entitled "Risk Factors - -- Trading Market for the Exchange Notes" to be used instead of the section entitled "Risk Factors -- No Prior Market for Exchange Notes," an alternate section entitled "Use of Proceeds" and an alternate section entitled "Plan of Distribution." In addition, the market-making prospectus will not include the following captions, or the information set forth under these captions, in the exchange offer prospectus: "Prospectus Summary -- The Exchange Offer," "Risk Factors -- Exchange Offer Procedures," "-- Consequences of Failure to Exchange Original Notes" and "-- Restrictions Applicable to Participating Broker-Dealers," "The Exchange Offer," and "Certain United States Federal Income Tax Considerations." All other sections of the exchange offer prospectus will be included in the market-making prospectus. 2 3 SUBJECT TO COMPLETION, DATED APRIL 29, 1999 PROSPECTUS CARMIKE CINEMAS, INC. OFFER TO EXCHANGE $200,000,000 OF 9 3/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2009 FOR $200,000,000 OF 9 3/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 THE EXCHANGE OFFER We previously issued $200,000,000 aggregate principal amount of our 9 3/8% Series A Senior Subordinated Notes due 2009. These original notes were not registered under the Securities Act of 1933. We are now offering you the opportunity to exchange these original notes for an equal amount of our 9 3/8% Series B Senior Subordinated Notes due 2009, which are registered under the Securities Act. TERMS OF THE EXCHANGE OFFER - - In the exchange offer, we are offering to exchange, for all outstanding original notes that are validly tendered and not validly withdrawn before the expiration of the exchange offer, an equal amount of exchange notes. - - The terms of the exchange notes to be issued are substantially identical to the original notes, except for some of the transfer restrictions and registration rights relating to the original notes. - - The exchange offer will expire at 5:00 p.m., New York City time, on [___________], 1999, unless extended. - - You may withdraw tenders of original notes at any time before the expiration of the exchange offer. - - The exchange of notes should not be a taxable event for U.S. federal income tax purposes. - - The exchange offer is subject to customary conditions, including the condition that the exchange offer not violate applicable law or any applicable interpretation of the Staff of the Securities and Exchange Commission. - - We do not intend to apply for listing of the exchange notes on any securities exchange or for inclusion of these notes in any automated quotation system. The original notes have been designated as eligible for trading in the Private Offerings, Resales and Trading through Automated Linkages (PORTAL) Market of the National Association of Securities Dealers, Inc. - - We will not receive any proceeds from the exchange offer. INVESTING IN THE EXCHANGE NOTES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF SOME FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THIS EXCHANGE OFFER AND AN INVESTMENT IN THE EXCHANGE NOTES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE NOTES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS [_________], 1999. 4 TABLE OF CONTENTS
PAGE ---- Where You Can Find More Information.................................................................... i Prospectus Summary..................................................................................... 1 Risk Factors........................................................................................... 12 Incorporation by Reference............................................................................. 23 Information About Carmike.............................................................................. 24 The Exchange Offer..................................................................................... 28 Use of Proceeds........................................................................................ 40 Capitalization......................................................................................... 41 Selected Financial and Operating Data.................................................................. 43 Description of Other Indebtedness...................................................................... 45 Description of the Exchange Notes...................................................................... 49 Plan of Distribution................................................................................... 95 Certain United States Federal Income Tax Considerations................................................ 96 Legal Matters.......................................................................................... 101 Experts................................................................................................ 101
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT CARMIKE THAT IS NOT INCLUDED IN OR DELIVERED WITH THE PROSPECTUS. SEE "INCORPORATION BY REFERENCE" FOR INFORMATION REGARDING DOCUMENTS THAT HAVE BEEN INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO HOLDERS OF THE NOTES UPON WRITTEN OR ORAL REQUEST. REQUESTS SHOULD BE DIRECTED TO: CARMIKE CINEMAS, INC., ATTENTION: CORPORATE SECRETARY, 1301 FIRST AVENUE, COLUMBUS, GEORGIA 31901, TELEPHONE NUMBER (706) 576-3400. TO OBTAIN TIMELY DELIVERY, NOTEHOLDERS MUST REQUEST THE INFORMATION NO LATER THAN [____________]. WHERE YOU CAN FIND MORE INFORMATION We file reports, proxy statements and other information electronically with the SEC. The public may read and copy any materials Carmike files with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We are required by the indenture that governs the original notes and which will govern the exchange notes to furnish the trustee for the notes with annual reports containing consolidated financial statements audited by our independent auditors and with quarterly reports containing unaudited condensed consolidated financial statements for each of the first three quarters of each fiscal year. The trustee for the notes is The Bank of New York. i 5 PROSPECTUS SUMMARY In this prospectus, the words "Company," "Carmike," "we," "our," "ours," and "us" refer to Carmike Cinemas, Inc. and our subsidiaries. The following summary highlights selected information from this prospectus and may not contain all the information that is important to you. You should read the entire prospectus, including our financial statements and notes and other financial data contained or incorporated by reference in this prospectus. You should carefully consider the factors set forth under "Risk Factors" and you should read the entire letter of transmittal. This prospectus contains or incorporates by reference statements that are forward-looking in nature. Forward-looking statements can be identified by the use of terminology such as "believes," "expects," "may," "will," "should" or "anticipates," or comparable terminology or by discussions of strategy. You are cautioned that our business and operations are subject to a variety of risks and uncertainties and, consequently, our actual results may materially differ from those projected by any forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this prospectus are discussed below in "Risk Factors" and elsewhere in this prospectus. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any forward-looking statement is made. In this prospectus, we sometimes use the term notes to refer to the exchange notes together with the original notes. Information in this prospectus as to the number of theatres and screens operated by us and average screens per theatre as of December 31, 1998 and March 31, 1999 is net of theatres scheduled to be closed during 1999 under our restructuring plan announced in December 1998. CARMIKE We are the largest motion picture exhibitor in the United States in terms of number of theatres operated and the third largest in terms of the number of screens operated. As of March 31, 1999, we operated 463 theatres with an aggregate of 2,653 screens located in 36 states. We were incorporated in April, 1982 in connection with the leveraged buy-out of our predecessor, the Martin Theatres circuit, by present management. Our principal executive offices are located at 1301 First Avenue, Columbus, Georgia 31901, and the telephone number is (706) 576-3400. We maintain an Internet site at http://www.carmike.com. The reference to our web address does not constitute incorporation by reference of the information contained at the site. 1 6 RECENT DEVELOPMENTS Subordinated Debt Placement On February 3, 1999, we sold in a private placement $200.0 million in principal amount of our 9 3/8% Series A Senior Subordinated Notes due 2009 to initial purchasers Goldman, Sachs & Co., First Union Capital Markets, a division of Wheat First Securities, Inc., and ING Baring Furman Selz LLC. This prospectus relates to an exchange offer for these original notes in exchange for registered notes. The proceeds from the sale of the original notes were used in part to redeem three series of our senior notes held by some institutional investors. In connection with the redemption of these senior notes and the amendment to our revolving credit facility described below, we recognized an extraordinary charge of approximately $10.1 million, or approximately $6.3 million after income taxes, in the first quarter of 1999 to reflect the prepayment premiums associated with the retirement of the senior notes and the write-off of deferred financing costs. Refinancing Arrangements On January 29, 1999, we amended and restated our revolving credit facility. In addition, on February 25, 1999, we entered into a $75.0 million term loan, the proceeds of which were applied to repay revolving credit borrowings. Following application of the proceeds of this term loan, the maximum available borrowings under our revolving credit facility was reduced from $275.0 million to $200.0 million. The revolving credit facility also has an increased interest rate on borrowings and revised and additional financial covenants. In connection with the amendment and restatement of our revolving credit facility, we also amended and restated our master lease with Movieplex Realty Leasing, L.L.C. to provide for security interests and guarantees and to amend some covenants. 2 7 Recent Results of Operations Recent results of operations for the quarter ended March 31, 1999 are as follows:
THREE MONTH PERIOD ENDED MARCH 31, ---------------------------------- 1999 1998 ------------- -------------- (in thousands) Revenues............................................... $ 97,716 $ 117,142 Operating income....................................... 3,525 12,435 Net income (loss) before extraordinary charge.............................................. (2,344) 3,794 Net income (loss)...................................... (8,635) 3,794 Preferred stock dividend............................... 756 -- Net income (loss) allocable to common stock............................................... (9,391) 3,794 Income (loss) per diluted common share before extraordinary charge......................... (.27) .33 Income (loss) per diluted common share................. (.83) .33
Due to an absence of product acceptance comparable to that of the same period of 1998, revenues for the first quarter were approximately $97.7 million, down 16% from revenues of approximately $117.1 million achieved in the first quarter of 1998, which included revenues from the release of "Titanic." This revenue decrease, combined with an extraordinary charge of $6.3 million (net of income taxes of $3.8 million) from the early extinguishment of debt, resulted in a net loss of approximately $9.4 million, or $.83 per diluted common share, compared to a net income of approximately $3.8 million, or $.33 per diluted common share, in the first quarter of 1998. Preferred stock dividends of $756,000 were accrued in the quarter ended March 31, 1999 related to the preferred stock we issued in November 1998. 3 8 THE EXCHANGE OFFER The Exchange Offer............... We previously issued $200.0 million aggregate principal amount of our 9 3/8% Series A Senior Subordinated Notes due 2009. These original notes were not registered under the Securities Act. In this exchange offer, we are offering to exchange for the original notes up to $200.0 million aggregate principal amount of our 9 3/8% Series B Senior Subordinated Notes due 2009, which exchange notes have been registered under the Securities Act. The original notes may be exchanged only in multiples of $1,000. Exchange and Registration Rights Agreement................. At the time we issued the original notes, we entered into an exchange and registration rights agreement which obligates us to make this exchange offer. Required Representations......... In order to participate in the exchange offer, you will be required to make some representations in a letter of transmittal, including (1) that you are not affiliated with us, (2) that you are not a broker-dealer who bought your original notes directly from us, (3) that you will acquire the exchange notes in the ordinary course of business, and (4) that you have not agreed with anyone to distribute the exchange notes. If you are a broker-dealer that purchased original notes for your own account as part of market-making or trading activities, you may represent to us that you have not agreed with us or our affiliates to distribute the exchange notes. If you make this representation, you need not make the representation provided for in clause (4) above. Resale of the Exchange Notes............................ We believe that the exchange notes acquired in this exchange offer may be freely traded without compliance with the provisions of the Securities Act that call for registration and delivery of a prospectus, except as described in the following paragraph. If you are a broker-dealer that purchased original notes for your own account as part of market-making or trading activities, you must deliver a prospectus
4 9 when you sell exchange notes. We have agreed in the exchange and registration rights agreement relating to the original notes to allow you to use this prospectus for this purpose during the 180-day period following completion of the exchange offer (subject to our right under some circumstances to restrict your use of this prospectus). Accrued Interest on the Original Notes............................ The exchange notes will bear interest at an annual rate of 9 3/8%. Any interest that has accrued on the original notes before their exchange in this exchange offer will be payable on the exchange notes on the first interest payment date after the conclusion of this exchange offer. Procedures for Exchanging Notes............................ The procedures for exchanging original notes in this exchange offer involve notifying the exchange agent before the expiration date of your intention to do so. The procedures for properly making notification are described in this prospectus under the heading "The Exchange Offer -- Procedures for Tendering Original Notes." Expiration Date.................. 5:00 p.m., New York City time, on [___________], 1999, unless the exchange offer is extended. Exchange Date.................... We will notify the exchange agent of the date of acceptance of the original notes for exchange. Withdrawal Rights................ If you tender your original notes for exchange in this exchange offer and later wish to withdraw them, you may do so at any time before 5:00 p.m., New York City time, on the day this exchange offer expires. Acceptance of Original Notes and Delivery of Exchange Notes................... We will accept any original notes that are properly tendered for exchange before 5:00 p.m., New York City time, on the day this exchange offer expires. The exchange notes will be delivered promptly after expiration of this exchange offer. Tax Consequences................. You should not incur any material federal income tax consequences from your participation in this exchange offer.
5 10 Use of Proceeds.................. We will not receive any cash proceeds from this exchange offer. Exchange Agent................... The Bank of New York is serving as the exchange agent. Their address and telephone number are provided in this prospectus under the heading "The Exchange Offer -- Exchange Agent." Effect on Holders of Original Notes............................ Any original notes that remain outstanding after this exchange offer will continue to be subject to restrictions on their transfer. After this exchange offer, holders of original notes will not (with limited exceptions) have any further rights under the exchange and registration rights agreement. Any market for original notes that are not exchanged could be adversely affected by the conclusion of this exchange offer.
SUMMARY OF TERMS OF THE EXCHANGE NOTES This exchange offer applies to $200.0 million aggregate principal amount of the original notes. The terms of the exchange notes will be essentially the same as the original notes, except that the exchange notes will not contain language restricting their transfer, and holders of the exchange notes generally will not be entitled to further registration rights under the exchange and registration rights agreement. The exchange notes issued in the exchange offer will evidence the same debt as the outstanding original notes, which they will replace, and both the original notes and the exchange notes are governed by the same indenture. Securities Offered............... $200.0 million in principal amount of 9 3/8% Series B Senior Subordinated Notes due 2009, which have been registered under the Securities Act. Maturity......................... February 1, 2009. Interest Payment Dates........... Interest will be payable semi-annually in arrears on February 1 and August 1 of each year, commencing August 1, 1999. Guarantors....................... The exchange notes are guaranteed on a senior subordinated basis by our current and future wholly-owned United States subsidiaries. Ranking.......................... The exchange notes are unsecured senior
6 11 subordinated debt, which means they are subordinated in right of payment to all our existing and future senior debt. The guarantees are unsecured senior subordinated obligations of the guarantors, which means they are subordinated in right of payment to all the existing and future senior debt of the guarantors. As of March 31, 1999, our senior debt was $207.7 million. Optional Redemption.............. On or after February 1, 2004, we may redeem some or all of the exchange notes at any time at the redemption prices specified in this prospectus. In addition, before February 1, 2002, we may redeem up to 35% of the exchange notes at the prices specified in this prospectus, but only with the proceeds from certain equity offerings. Mandatory Offer to Repurchase.................... If we experience specific kinds of changes of control, we must offer to repurchase the exchange notes at 101% of their principal amount, plus accrued interest. Basic Covenants of Indenture..................... The indenture relating to the notes contains covenants. Some of these covenants restrict our ability to: - borrow money; - pay dividends on stock or repurchase stock; - sell all, or substantially all, of our assets or merge with or into other companies; and - engage in transactions with affiliates. These covenants, however, are subject to important exceptions.
RISK FACTORS You should carefully consider all of the information in this prospectus. In particular, you should evaluate the specific risk factors under "Risk Factors." 7 12 SUMMARY FINANCIAL DATA The following tables present summary historical and pro forma consolidated financial data about us. You should read this information together with "Selected Financial and Operating Data" included elsewhere in this prospectus. The following data were derived from our audited consolidated financial statements: - our summary historical consolidated statement of income data for the fiscal years ended December 31, 1994, December 31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998; and - our summary historical consolidated balance sheet data as of December 31, 1994, December 31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998. The pro forma unaudited consolidated financial data presents our pro forma consolidated stockholders' equity as of December 31, 1998 and our pro forma consolidated interest expense and ratio of earnings to fixed charges for the year ended December 31, 1998 giving effect to: - (a) our sale of $200.0 million aggregate principal amount of original notes in February 1999; (b) the net proceeds of approximately $54.0 million from our sale in November 1998 of our Series A Preferred Stock; (c) borrowings in February 1999 under our term loan; (d) the change in interest rates under our revolving credit facility; (e) the application of the proceeds from (a), (b) and (c) to the repayment of existing bank debt and other long-term debt, and payment of related transaction fees and expenses; - the February 1999 write-off of certain unamortized deferred financing fees; - the February 1999 payment of prepayment premiums in connection with the retirement of the existing senior notes; and - the income tax effects of the preceding transactions; all as if they had occurred, for purposes of the pro forma unaudited consolidated stockholders' equity, as of December 31, 1998 and, for purposes of the pro forma unaudited consolidated interest expense and ratio of earnings to fixed charges, as of January 1, 1998. These pro forma unaudited consolidated financial data do not purport to represent what our actual results of operations would have been had these events occurred on the aforementioned dates and should not serve as a forecast of our results of operations for any future 8 13 periods. The pro forma adjustments are based upon currently available information and upon certain assumptions that management believes are reasonable under the circumstances.
FOR THE YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 1994 1995 (1) 1996 (1) 1997 (1) 1998 (2) ---------- ---------- ---------- ---------- ---------- (IN MILLIONS EXCEPT PERCENTAGES, RATIOS AND OPERATING DATA) STATEMENT OF INCOME DATA: Revenues: Admissions................................ $ 232.1 $ 253.7 $ 296.6 $ 319.2 $ 330.5 Concessions and other..................... 95.5 111.0 130.1 139.4 151.1 ---------- ---------- ---------- ---------- ---------- Total revenues....................... 327.6 364.7 426.7 458.6 481.6 Costs and expenses: Film exhibition costs..................... 123.6 135.6 157.0 169.7 177.8 Concession costs.......................... 12.2 15.0 17.3 18.3 19.9 Other theatre operating costs............. 119.0 143.7 164.1 175.1 187.9 General and administrative................ 5.1 5.5 6.0 6.4 7.1 Depreciation and amortization............. 22.5 27.2 28.4 33.4 37.5 Impairment of long-lived assets........... -- -- 45.4 -- 38.3 Restructuring charge...................... -- -- -- -- 34.7 ---------- ---------- ---------- ---------- ---------- 282.4 327.0 418.2 402.9 503.2 ---------- ---------- ---------- ---------- ---------- Operating income (loss).............. 45.2 37.7 8.5 55.7 (21.6) Interest expense.............................. 17.0 16.0 20.3 23.1 27.2 ---------- ---------- ---------- ---------- ---------- Income (loss) before income taxes............. 28.2 21.7 (11.8) 32.6 (48.8) Income tax expense (benefit).................. 11.2 8.7 (4.5) 12.4 (18.2) ---------- ---------- ---------- ---------- ---------- Net income (loss)............................. $ 17.0 $ 13.0 $ (7.3) $ 20.2 $ (30.6) ========== ========== ========== ========== ========== Weighted average common shares outstanding: Basic......................................... 8,312 11,161 11,174 11,277 11,356 ========== ========== ========== ========== ========== Diluted....................................... 8,477 11,260 11,174 11,366 11,356 ========== ========== ========== ========== ========== Earnings (loss) per common share: Basic......................................... $ 2.04 $ 1.17 $ (0.65) $ 1.79 $ (2.73) ========== ========== ========== ========== ========== Diluted....................................... $ 2.00 $ 1.16 $ (0.65) $ 1.78 $ (2.73) ========== ========== ========== ========== ========== PRO FORMA FINANCIAL DATA: Interest expense (3).......................... $ 31.6 Ratio of earnings to fixed charges (4)............................... --
9 14
AS OF DECEMBER 31, ---------------------------------------------------------- 1994 1995 1996 1997 1998 ---------------------------------------------------------- (in millions, except operating data) BALANCE SHEET DATA: Cash and cash equivalents..................... $ 17.9 $ 11.3 $ 5.6 $ 16.5 $ 17.8 Property and equipment, net................... 294.0 371.9 388.0 497.1 573.6 Total assets.................................. 377.6 478.0 489.4 620.0 697.5 Total long-term obligations, including current maturities........................ 153.3 230.5 268.3 360.7 351.8 Total shareholders' equity.................... 172.0 185.1 178.0 202.9 226.3 Pro forma shareholders' equity................ 220.0 OPERATING DATA: Theatre locations............................. 445 519 519 520 468 Screens....................................... 1,942 2,383 2,518 2,720 2,658 Average screens per location.................. 4.4 4.6 4.9 5.2 5.7 Total attendance (in thousands)............... 59,660 64,496 74,213 75,336 77,763 Total average screens in operation............ 1,852 2,151 2,476 2,644 2,733 Average ticket price.......................... $ 3.89 $ 3.93 $ 4.00 $ 4.24 $ 4.25 Average concession per patron................. $ 1.46 $ 1.59 $ 1.62 $ 1.68 $ 1.79
- ------------------ (1) Our results reflect the following acquisitions: 1997--19 theatres with 104 screens; 1996--14 theatres with 79 screens; and 1995--83 theatres with 377 screens. (2) Preferred stock dividends on our Series A Preferred Stock totaled $332,000 for the period of November 22, 1998 through December 31, 1998. (3) Gives effect to the completion of the offering of the original notes, borrowings under our term loan, the use of proceeds of each of the foregoing, and our revolving credit facility as though these transactions had occurred at January 1, 1998. Pro forma interest expense is calculated as follows (in millions):
YEAR ENDED DECEMBER 31, INTEREST RATE 1998 ----------------- ----------------------- Revolving credit facility.................................. 7.6% to 8.2% $ 5.7 Term loan.................................................. 8.05% 6.0 Senior notes due 2009...................................... 9.375% 18.8 Amortization of deferred financing costs................... 1.1 ----- 31.6 =====
Pro forma interest expense has been calculated based on Carmike's average month-end revolving credit balances for the year ended December 31, 1998 as reduced for the reductions from the use of proceeds of the term loan and the original notes. Based on this computation, the average 10 15 amount outstanding under the revolving credit facility for the year ended December 31, 1998 was $73.1 million. The effective interest rates for our revolving credit facility reflect the impact of our $70.0 million of interest rate swaps. (4) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, "earnings" include net income (loss) before income taxes and fixed charges (adjusted for interest capitalized during the period). "Fixed charges" include interest, whether expensed or capitalized, amortization of debt expenses and the portion of rental expense that is representative of the interest factor in these rentals. For the year ended December 31, 1998, pro forma earnings before fixed charges were insufficient to cover fixed charges by approximately $57.7 million. 11 16 RISK FACTORS You should carefully consider the following risks as well as the other information contained or incorporated by reference in this prospectus before deciding to tender original notes in the exchange offer. The risks factors set forth below are generally applicable to the old notes as well as the exchange notes. SUBSTANTIAL LEVERAGE -- OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR NOTES. We have now and will continue to have a significant amount of indebtedness. If the offering of the original notes had occurred on December 31, 1998, we would have had $369.9 million of indebtedness outstanding, $169.9 million of which would have been senior debt, and pro forma earnings before pro forma fixed charges would have been insufficient to cover pro forma fixed charges by approximately $57.7 million. Our substantial indebtedness could have important consequences to you. For example, it could: - make it more difficult for us to satisfy our obligations with respect to the notes; - increase our vulnerability to general adverse economic and industry conditions; - limit our ability to fund future working capital, capital expenditures for theatre construction, expansion, renovation or acquisition, and other general corporate requirements; - require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which would reduce the availability of our cash flow to fund working capital, capital expenditures, and other general corporate purposes; - limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; - place us at a competitive disadvantage compared to our competitors that have less debt; and - limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds. And, failing to comply with those covenants could result in an event of default which, if not cured or waived, could have a material adverse effect on us. 12 17 ADDITIONAL BORROWINGS AVAILABLE -- DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE TO INCUR SUBSTANTIALLY MORE DEBT. THIS COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE. We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indenture do not fully prohibit us or our subsidiaries from doing so. As of March 31, 1999, our revolving credit facility would permit additional borrowings of up to approximately $115.7 million and all of those borrowings would be senior to the notes and the subsidiary guarantees. If new debt is added to our and our subsidiaries' current debt levels, the related risks that we and they now face could intensify. ABILITY TO SERVICE DEBT -- TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL. Our ability to make scheduled payments of principal of, or to pay the interest (including special interest, as defined) on, or to refinance our indebtedness, including the notes, or to fund planned capital expenditures for theatre construction, expansion and renovation or theatre acquisition will depend on our future performance. Our future performance is, to a certain extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Based upon our current level of operations and anticipated increases in revenues and cash flow as a result of our theatre construction, expansion and renovation program, and the scheduled closing of some underperforming theatres, we believe that cash flow from operations and available cash, together with available borrowings under our revolving credit facility, lease financing arrangements and/or sales of additional debt or equity securities, will be adequate to meet our future liquidity needs for at least the next year. We cannot assure you, however, that our business will generate sufficient cash flow from operations, that currently anticipated revenue growth and operating improvements will be realized or that future capital will be available to us from the sale of debt or equity securities, additional bank financings, other long-term debt or lease financings in an amount sufficient to enable us to pay our indebtedness, including the notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, including the notes, on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our revolving credit facility, our term loan and these notes, or raise additional capital through other means, on commercially reasonable terms or at all. SUBORDINATION -- YOUR RIGHT TO RECEIVE PAYMENTS ON THE NOTES IS JUNIOR TO OUR EXISTING INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE BORROWINGS. FURTHER, THE SUBSIDIARY GUARANTEES OF THE NOTES ARE JUNIOR TO ALL OUR GUARANTORS' EXISTING INDEBTEDNESS AND POSSIBLY TO ALL THEIR FUTURE BORROWINGS. The notes and the subsidiary guarantees rank behind all of our and the guarantors' existing indebtedness, including trade payables, and all of our and their future borrowings, including trade payables, except any future indebtedness that expressly provides that it ranks 13 18 equal with, or subordinated in right of payment to, the notes and the subsidiary guarantees. As a result, upon any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors or our or their property, the holders of senior debt of Carmike and the guarantors will be entitled to be paid in full in cash before any payment may be made with respect to the notes or the subsidiary guarantees. In addition, all payments on the notes and the subsidiary guarantees will be blocked in the event of a payment default on senior debt and may be blocked for up to 179 of 360 consecutive days in the event of certain non-payment defaults on senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to Carmike or the guarantors, holders of the notes will participate with trade creditors and all other holders of subordinated indebtedness of Carmike and the guarantors in the assets remaining after we and the guarantors have paid all of the senior debt. However, because the indenture requires that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead, holders of the notes may receive less, ratably, than holders of trade payables in any of these proceedings. In any of these cases, we and the guarantors may not have sufficient funds to pay all of our creditors and holders of these notes may receive less, ratably, than the holders of senior debt. As of March 31, 1999, these notes and the subsidiary guarantees would have been subordinated to $207.7 million of senior debt and approximately $115.7 million would have been available for borrowings under our revolving credit facility as additional senior debt. We will be permitted to borrow substantial additional indebtedness, including senior debt, in the future under the terms of the indenture. EXPANSION PLANS -- WE HAVE IN THE PAST EXPANDED OUR OPERATIONS THROUGH THEATRE ACQUISITIONS AND NEW THEATRE OPENINGS. DEVELOPING NEW THEATRES POSES A NUMBER OF RISKS. We intend to continue pursuing an expansion strategy by: - developing new theatres; - expanding our existing theatres; and - selectively acquiring existing theatres and theatre circuits. Construction of new theatres may result in cost overruns, delays or unanticipated expenses related to zoning or tax law considerations. Desirable sites for new theatres may be unavailable or expensive, and the market locations for new theatres may deteriorate over time. Additionally, the market potential of new theatre sites cannot be precisely determined, and our theatres may face competition in new markets from unexpected sources. Newly constructed theatres may not perform up to management's expectations. Additionally, there is a risk that we 14 19 may not be able to manage growth as effectively as we have in the past if we expand our existing operations. We face significant competition for potential theatre locations and for opportunities to acquire existing theatres and theatre circuits. Because of this competition, we may be unable to make acquisitions on terms we consider acceptable. ACCOUNTING FOR IMPAIRMENT OF ASSETS -- IF WE DETERMINE THAT ASSETS ARE IMPAIRED, WE WILL BE REQUIRED TO RECOGNIZE A CHARGE TO EARNINGS. The opening of large multiplexes and theatres with stadium seating by us and some of our competitors has tended to, and is expected to continue to, draw audiences away from some older theatres, including theatres operated by us. In addition, demographic changes and competitive pressures can lead to the impairment of a theatre. We review for impairment of long-lived assets and goodwill related to those assets to be held and used in the business whenever events or changes in circumstances indicate that the carrying amount of an asset or a group of assets may not be recoverable. We also periodically review and monitor our internal management reports and the competition in our markets for indicators of impairment of individual theatres. In the fourth quarter of 1998, we identified impairments of asset values for some of our theatres. As a result, we recognized a non-cash impairment charge of approximately $38.3 million in the fourth quarter of 1998 to reduce the carrying value of approximately 145 theatres with approximately 610 screens. We also recorded an impairment charge, effective January 1, 1996, upon our adoption of FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. There can be no assurance that we will not take additional charges in the future related to the impairment of our assets. FUTURE CAPITAL REQUIREMENTS -- WE MAY NOT HAVE, OR BE ABLE TO OBTAIN, THE SIGNIFICANT AMOUNTS OF CAPITAL WE NEED TO EXPAND OUR BUSINESS. Our industry is undergoing a transition as newer theatres with stadium seating are attracting moviegoers away from older theatres. As of December 31, 1998 we have 152 screens under construction, and we expect to add an aggregate of 382 screens during 1999. We anticipate that all of the theatres scheduled to be added in 1999 will provide stadium seating. We also anticipate that our construction, expansion and renovation program will require capital expenditures of approximately $129.0 million, net of lease financings, in 1999, and approximately $75.0 million, net of lease financings, in 2000. Like others in our industry, we have been required to recognize charges associated with the write-down and closing of underperforming theatres primarily as a result of the emergence of new competition in the marketplace. The opening of large multiplexes by our competitors and the opening of newer theatres with stadium seating in some of our markets have led us to reassess a number of our theatre locations to determine whether to renovate or to dispose of underperforming locations. Under our restructuring plan adopted in December 1998, we will close 28 theatres in 1999 having an aggregate of 116 screens. The opening of new multiplexes 15 20 by our competitors will likely continue to draw audiences away from our older theatres unless we continue to make significant capital expenditures. We have budgeted for 1999 approximately $6.2 million to retrofit approximately 83 screens to strengthen our market position in some markets. We will lose revenue from those theatres while they are being renovated. Further advances in theatre design may also require us to make substantial capital expenditures in the future, or to close older theatres that cannot be economically renovated, to compete with new developments in theatre design. We cannot assure you that our business will generate sufficient cash flow from operations, that we will satisfy the requirements for borrowing under our revolving credit facility, that currently anticipated revenue growth and operating improvements will be realized or that future capital will be available to us to enable us to fund our capital expenditure needs. DEPENDENCE UPON MOTION PICTURE PRODUCTION AND PERFORMANCE -- OUR BUSINESS WILL BE ADVERSELY AFFECTED IF THERE IS A DECLINE IN THE QUALITY AND NUMBER OF MOTION PICTURES AVAILABLE FOR SCREENING. Our business depends on the availability of suitable motion pictures for screening in our theatres and the appeal of these motion pictures in our theatre markets. We mainly license first-run motion pictures. Our results of operations will vary from period to period based upon the quantity and quality of the motion pictures we show in our theatres. For example, in the first quarter of 1998, we benefited from the unexpectedly long run and success of "Titanic," while in the second quarter of 1998 our results were adversely impacted by the disappointing performance of certain "event" films. A disruption in the production of motion pictures, lack of motion pictures or poor performance of motion pictures in theatres could adversely affect our business and results of operations. RELATIONSHIPS WITH MOTION PICTURE DISTRIBUTORS -- A DETERIORATION IN OUR RELATIONSHIPS WITH ANY OF THE MAJOR FILM DISTRIBUTORS COULD ADVERSELY AFFECT OUR ACCESS TO COMMERCIALLY SUCCESSFUL FILMS AND COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS. Our business depends to a significant degree on maintaining good relations with the major film distributors that license films to our theatres. While there are numerous motion picture distributors, that provide quality first-run movies to the motion picture exhibition industry, the following nine distributors accounted for approximately 92% of our admission revenues for the year ended December 31, 1998 -- Buena Vista, Dreamworks, Fox, New Line Cinema, Paramount, Sony, United Artists, Universal and Warner Brothers. No single distributor dominates the market. 16 21 GOVERNMENT REGULATION -- WE ARE SUBJECT TO CERTAIN FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS WHICH LIMIT THE MANNER IN WHICH WE MAY CONDUCT OUR BUSINESS. The distribution of motion pictures is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. As a result of these laws and cases, we cannot ensure a supply of motion pictures by entering into long term arrangements with major distributors. Instead, we must compete for film licenses on a film by film and theatre by theatre basis. Our theatre operations are also subject to federal, state and local laws governing matters such as construction, renovation and operation of our theatres, as well as wages, working conditions, citizenship, and health and sanitation requirements and licensing. We believe that our theatres are in material compliance with these requirements. At March 31, 1999, approximately 70.6% of our employees were paid at the federal minimum wage and, accordingly, the minimum wage largely determines our labor costs for those employees. The Americans with Disabilities Act (ADA) and certain state statutes and local ordinances, among other things, require that places of public accommodation, including both existing and newly constructed theatres, be accessible to customers with disabilities. The ADA may require that certain modifications be made to existing theatres in order to make these theatres accessible to certain theatre patrons and employees who are disabled. The ADA requires that theatres be constructed to permit persons with disabilities full use of a theatre and its facilities and reasonable access to work stations. We are aware of several recent lawsuits that have been filed against other exhibitors by disabled moviegoers alleging that some stadium seating designs violated the ADA. We have established a program to review and evaluate our theatres and to make changes that may be required by law. Although we believe that the cost of complying with the ADA will not adversely affect our business and results of operations, we cannot predict the extent to which the ADA or any future laws or regulations regarding the needs of the disabled will impact our operations. SEASONALITY -- OUR REVENUES ARE DEPENDENT UPON THE TIMING OF MOTION PICTURE RELEASES BY DISTRIBUTORS. Our business is generally seasonal, with higher revenues generated during the summer and holiday seasons. While motion picture distributors have begun to release major motion pictures evenly throughout the year, the most marketable motion pictures are usually released during the summer and the year-end holiday periods. Additionally, the unexpected emergence of a hit film may occur in these or other periods. As a result, the timing of motion picture releases affects our results of operations, which may vary significantly from quarter to quarter. Moreover, to the extent that certain "event" films are distributed more widely than in the past, our margins may be hurt as a result of the higher film licensing fees payable during the early period of a film's run. For the year ended December 31, 1998, the percentages of our admissions revenue by quarter were as follows: first quarter 24.4%; second quarter 23.0%; third quarter 27.9%; and fourth quarter 24.7%. 17 22 DEPENDENCE UPON SENIOR MANAGEMENT -- OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL. We believe that our success is due to our experienced management team. We depend in large part on the continued contribution of our senior management, including Michael W. Patrick, our President. Losing the services of one or more members of our senior management could adversely affect our business and results of operations. We have an employment agreement with Michael W. Patrick which is automatically renewed each year, and we maintain key man life insurance covering him. CERTAIN INTERESTS OF GOLDMAN, SACHS & CO. -- GOLDMAN, SACHS & CO. MAY BE CONSIDERED AN AFFILIATE OF CARMIKE AND MAY HAVE CERTAIN INTERESTS WHICH CONFLICT WITH THE INTERESTS OF NOTEHOLDERS. Goldman, Sachs & Co. and its affiliates have certain interests in Carmike. Richard A. Friedman and Elizabeth C. Fascitelli, who are managing directors of Goldman Sachs, were elected as directors of Carmike under a stock purchase agreement relating to the November 1998 sale of our Series A Preferred Stock to several affiliates of Goldman Sachs. In the event of certain defaults, holders of the Series A Preferred Stock will be entitled to elect two additional directors until any such default is cured. As a result of their ownership of the Series A Preferred Stock and shares of Carmike's Class A Common Stock, Goldman Sachs and its affiliates currently hold approximately 9.9% of the total voting interest in Carmike. Goldman, Sachs & Co. may be deemed to be an affiliate of Carmike and, as such, may be required to deliver a market-maker prospectus in connection with its market-making activities in the exchange notes. Pursuant to an exchange and registration rights agreement, Carmike has agreed to file a registration statement that would allow Goldman, Sachs & Co. to engage in market-making transactions in the exchange notes. Carmike has agreed to keep the market-making registration statement effective for as long as Goldman, Sachs & Co. may be required to deliver a prospectus in connection with its secondary transactions in the exchange notes. Carmike has agreed to pay substantially all the costs and expenses related to the registration statement. There can be no assurance that the interests of Goldman Sachs will not conflict with the interests of the holders of the notes. COMPETITION -- OUR BUSINESS IS SUBJECT TO SIGNIFICANT COMPETITIVE PRESSURES. The opening of large multiplexes and theatres with stadium seating by us and some of our competitors has tended to, and is expected to continue to, draw audiences away from some older theatres, including theatres we operate. In addition, demographic changes and competitive pressures can lead to the impairment of a theatre. In addition to competition from other motion picture exhibitors, we face competition from other forms of entertainment. We face varying degrees of competition with respect to licensing films, attracting customers, obtaining new theatre sites and acquiring theatre circuits. There have been a number of recent consolidations in the movie theatre industry, and the impact of these consolidations could have an adverse effect on our business. Even where we are the only exhibitor in a film licensing zone, we may still experience competition for moviegoers from theatres in a neighboring zone. In addition, our 18 23 theatres compete with a number of other types of motion picture delivery systems, such as pay television, pay-per-view, satellite and home video systems. While the impact of these delivery systems on the motion picture industry is difficult to determine precisely, there is a risk that they could adversely affect attendance at motion pictures shown in theatres. Movie theatres also face competition from a variety of other forms of entertainment competing for the public's leisure time and disposable income, including sporting events, concerts, live theatre and restaurants. FINANCING CHANGE OF CONTROL OFFER -- WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE OF CONTROL OFFER REQUIRED BY THE INDENTURE. Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes. However, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of these notes or that restrictions in our revolving credit facility and our term loan will not allow these repurchases. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the level of our indebtedness, would not constitute a "Change of Control" under the indenture. See "Description of the Exchange Notes -- Repurchase at the Option of Holders." A change of control may result in a default under our revolving credit facility and our term loan and may cause acceleration of this senior indebtedness and any other senior indebtedness then outstanding, in which case the subordination provisions of the notes would require payment in full of our revolving credit facility, our term loan and any such other senior indebtedness before repurchase of the notes. FRAUDULENT CONVEYANCE MATTERS -- FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID THE SUBSIDIARY GUARANTEES AND REQUIRE NOTEHOLDERS TO RETURN PAYMENTS RECEIVED FROM THE GUARANTORS. Under the federal bankruptcy law and comparable provisions of state fraudulent transfer laws, a guarantee could be voided, or claims in respect of a guarantee could be subordinated to all other debts of that guarantor if, among other things, the guarantor, at the time it incurred the indebtedness evidenced by its guarantee: - received less than reasonably equivalent value or fair consideration for the incurrence of such guarantee; and - was insolvent or rendered insolvent by reason of such incurrence; or - was engaged in a business or transaction for which the guarantor's remaining assets constituted unreasonably small capital; or - intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. 19 24 In addition, any payment by that guarantor under its guarantee could be voided and required to be returned to the guarantor, or to a fund for the benefit of the creditors of the guarantor. The measures of insolvency for purposes of these fraudulent transfer laws will vary depending upon the law applied in any proceeding to determine whether a fraudulent transfer has occurred. Generally, however, a guarantor would be considered insolvent if: - the sum of its debts, including contingent liabilities, were greater than the fair salable value of all of its assets, or - if the present fair salable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature, or - it could not pay its debts as they become due. On the basis of historical financial information, recent operating history and other factors, we believe that each guarantor subsidiary, after giving effect to its guarantee of these notes, will not be insolvent, will not have unreasonably small capital for the business in which it is engaged and will not have incurred debts beyond its ability to pay such debts as they mature. There can be no assurance, however, as to what standard a court would apply in making such determinations or that a court would agree with our conclusions in this regard. NO PRIOR MARKET FOR EXCHANGE NOTES -- YOU CANNOT BE SURE THAT AN ACTIVE TRADING MARKET WILL DEVELOP FOR THE NOTES. There is currently no trading market for the exchange notes. We do not intend to apply for listing of the exchange notes on any national securities exchange or quotation of the exchange notes on the Nasdaq National Market. Goldman, Sachs & Co. has advised us that they currently intend to make a market in the exchange notes, but they are not obligated to do so, and any market-making for the exchange notes may be discontinued at any time without notice. We cannot guarantee that a market for the exchange notes will develop. In addition, if a trading market for the exchange notes were to develop, the liquidity of the trading market in the exchange notes and the market price quoted for the exchange notes may be adversely affected by factors such as changes in prevailing interest rates, our operating results and prospects for companies in our industry generally. 20 25 CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES -- IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES, YOUR OUTSTANDING NOTES WILL REMAIN SUBJECT TO TRANSFER RESTRICTIONS. Any original notes that remain outstanding after this exchange offer will continue to be subject to restrictions on their transfer. After this exchange offer, holders of original notes will not (with limited exceptions) have any further rights under the exchange and registration rights agreement. Any market for original notes that are not exchanged could be adversely affected by the conclusion of this exchange offer. EXCHANGE OFFER PROCEDURES -- LATE DELIVERIES OF NOTES AND OTHER REQUIRED DOCUMENTS COULD PREVENT A HOLDER FROM EXCHANGING ITS notes. You are responsible for complying with all exchange offer procedures. Issuance of exchange notes in exchange for original notes will only occur upon completion of the procedures described in this prospectus under the heading "The Exchange Offer -- Procedures for Tendering Original Notes." Therefore, holders of original notes who wish to exchange them for exchange notes should allow sufficient time for timely completion of the exchange procedure. We are not obligated to notify you of any failure to follow the proper procedure. RESTRICTIONS APPLICABLE TO PARTICIPATING BROKER-DEALERS -- IF YOU ARE A BROKER-DEALER, YOUR ABILITY TO TRANSFER THE NOTES MAY BE RESTRICTED. A broker-dealer that purchased original notes for its own account as part of market-making or trading activities must deliver a prospectus when it sells the exchange notes. Our obligation to make this prospectus available to broker-dealers is limited. Consequently, we cannot guarantee that a proper prospectus will be available to broker-dealers wishing to resell their exchange notes. RISKS ASSOCIATED WITH THE YEAR 2000 -- FAILURE TO OBTAIN YEAR 2000 COMPLIANCE MAY HAVE ADVERSE EFFECTS ON OUR BUSINESS OR OPERATIONS. The Year 2000 issue refers generally to the data structure problem that may prevent systems from properly recognizing dates after the year 1999. The Year 2000 issue affects information technology (IT) systems, such as computer programs and various types of electronic equipment that process date information by using only two digits rather than four digits to define the applicable year, and thus may recognize a date using "00" as the year 1900 rather than the year 2000. The issue also affects some non-IT systems, such as devices which rely on a microcontroller to process date information. The Year 2000 issue could result in system failures or miscalculations, causing disruptions of a company's operations. Moreover, even if a company's systems are Year 2000 compliant, a problem may exist to the extent that the data that these systems process is not. 21 26 Carmike's State of Readiness. We have implemented a Year 2000 compliance program designed to ensure that our computer systems and applications will function properly beyond 1999. Our Year 2000 compliance program has three phases: (1) identification, (2) remediation (including modification, upgrading and replacement) and (3) testing. Our Year 2000 compliance program is an ongoing process involving continual evaluation and may be subject to a change in response to new developments. We have three material internal IT systems: (1) our accounting system, (2) our proprietary IQ-Zero point-of-sale system and (3) a film system through which we manage the booking of the films shown in our theatres. We have completed the identification, remediation and testing phases with respect to our accounting system. Although we have completed the identification and remediation phases with respect to our IQ-Zero and film systems, the testing phase will not be completed until after the first quarter of 1999. We have conducted a survey of our theatres and have not identified any non-IT systems the failure of which to be Year 2000 compliant would have a material adverse effect on our business, operating results or financial condition. We have surveyed our material vendors and suppliers, including concession, technical and film suppliers, and the financial institutions with whom we have material relationships. Based on this survey, we are not aware of any material third-party Year 2000 risks. Costs to Address Carmike's Year 2000 Issues. We estimate that the cost of remediation of problems related to Year 2000 issues will be less than $50,000. This cost includes the cost of upgrading our film system. Carmike's Contingency Plan. If our internal IT systems are not Year 2000 compliant on a timely basis, we plan to operate these systems manually until any Year 2000 issues are remediated. In addition, remediation of Year 2000 issues may result in loss of data and information and increased costs of operations. In addition, if the IQ-Zero system failed to operate properly due to Year 2000 problems, local management staff may not be able to focus their attention on their customers and theatre needs. We expect to maintain close contact with the third parties with whom we have material relationships, such as vendors, suppliers and financial institutions, to ensure that these third parties' Year 2000 issues do not affect our operations. The Risks of Carmike's Year 2000 Issues. In light of our compliance efforts, we do not believe that the Year 2000 issue will materially adversely affect our operations or results of operations, and do not expect implementation to have a material impact on our financial statements. However, there can be no assurance that our systems will be Year 2000 compliant before December 31, 1999, or that the failure of a system due to Year 2000 problems will not have a material adverse effect on our business, operating results and financial condition. To the extent the Year 2000 problem has a material adverse effect on the business, operations or financial condition of third parties with whom we have material relationships, such as vendors, suppliers and financial institutions, the Year 2000 problem could also have a material adverse effect on our business, results of operations and financial condition. 22 27 INCORPORATION BY REFERENCE We have filed with the SEC a registration statement on Form S-4 under the Securities Act. This prospectus, which is part of this registration statement, does not contain all of the information contained in the registration statement. In addition, the SEC allows us to "incorporate by reference" the documents that we file with the SEC. This means that we can disclose important information to you by referring you to those documents. Any information we incorporate in this manner is considered part of this prospectus. Any information we file with the SEC after the date of this prospectus and until this offering is completed will automatically update and supersede the information contained in this prospectus. We incorporate by reference the following documents that we have filed with the SEC and any filings that we will make with the SEC in the future under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this offering is completed: - Our Annual Report on Form 10-K for the year ended December 31, 1998; - Our Current Report on Form 8-K dated March 12, 1999; and - Our Proxy Statement dated March 26, 1999 for the 1999 Annual Meeting of Stockholders. We will provide, without charge, upon written or oral request, a copy of any or all of the documents which are incorporated by reference into this prospectus. Requests should be directed to: Carmike Cinemas, Inc., Attention: Corporate Secretary, 1301 First Avenue, Columbus, Georgia 31901, telephone number (706) 576-3400. For further information about us and the exchange notes, you should refer to the registration statement. This prospectus summarizes material provisions of contracts and other documents to which we refer you. Since this prospectus may not contain all of the information that you may find important, you should review the full text of these documents. These documents are exhibits to our registration statement. 23 28 INFORMATION ABOUT CARMIKE Carmike is the largest motion picture exhibitor in the United States in terms of number of theatres operated and is the third largest in terms of the number of screens operated. As of March 31, 1999, Carmike operated 463 theatres with an aggregate of 2,653 screens located in 36 states. Our theatres are located in small to mid-sized communities ranging in population size from approximately 7,700 to 456,000. As of March 31, 1999, we believe that we were the sole exhibitor in approximately 65% of our film licensing zones and the leading exhibitor in approximately 83% of our film licensing zones. We believe that by focusing on these secondary markets, we can reduce our exposure to competition for customers and film product. We have grown substantially over the past several years. With 2,658 screens at the end of 1998, we have almost tripled our number of screens from 979 in 1990. During the same period, we have also nearly tripled our attendance, from 26.2 million in 1990 to 77.8 million in 1998. Over the five year period ended December 31, 1998, concessions revenue per patron has grown 4.1% per year, while margins on concessions sales have averaged 85.6%. We focus on developing and operating multi-screen theatres. Nearly all of our 2,653 screens as of March 31, 1999 were located in multi-screen theatres, with an average of 5.7 screens per theatre. Our theatres are sized to reflect the demographics and competitive landscape of the communities in which we operate. Our smaller markets have fewer screens per theatre, while our mid-sized markets have theatres with a higher average screen count per theatre. In 1998, we built 16 new theatres with an average of 11.4 screens per theatre. We are in the process of expanding and improving our theatre base, adding new stadium seating auditoriums to some existing theatres and retrofitting some existing theatres with stadium seating and digital stereo surround sound. We intend to open 22 new theatres with an aggregate of 334 screens and an average of 15.2 screens per theatre in 1999. In addition, in 1999 we intend to add 48 stadium seating auditoriums to existing theatres and to retrofit approximately 83 existing auditoriums with stadium seating and digital stereo surround sound. BUSINESS STRATEGY Operating Strategy. We believe that the following are the key elements of our operating strategy: Concentration in Secondary Markets. We primarily operate in secondary markets which are underscreened or served by older theatres and offer less intense competition for both customers and film product. Our theatres are located in small to mid-sized communities ranging in size from Silsbee, Texas, which has a population of approximately 7,700, to Nashville, Tennessee, which has a population of approximately 456,000. These communities generally offer lower real estate prices and build-out costs and do not require as high a screen count per theatre as larger markets. Sole or Leading Exhibitor. The majority of our theatres are located in markets in which we are the sole or leading exhibitor within a particular film licensing zone. A film licensing zone is a geographic area, established by film distributors, where they allocate a given film to only one 24 29 theatre. We currently serve approximately 360 film licensing zones located in 36 states. As of March 31, 1999, we believe that we were the sole exhibitor in approximately 65% of our film licensing zones and the leading exhibitor (operating 50% or more of the screens in a given zone) in approximately 83% of our film licensing zones. We believe that our position as the sole or leading exhibitor in a film licensing zone provides us with negotiating leverage among film producers and studios and contributes to our strong relationship with motion picture distributors. Highly Efficient, Low Cost Operations. We focus on centralized, tight cost control measures to drive our operating margins, which we believe are among the highest in the movie exhibition industry. Our focus on cost control extends from theatre development through operation of our theatres. We believe that we are able to reduce construction and operating costs by designing prototype theatres adaptable to a variety of locations and by actively supervising all aspects of construction. In addition, through the use of detailed daily management reports, we closely monitor theatre-level costs. Emphasis on Customer Satisfaction and Quality Control. We emphasize customer satisfaction by providing convenient locations, comfortable seating, spacious lobbies and concession areas and a wide variety of film selections. Our theatre complexes feature clean, modern auditoriums with high quality projection and sound systems. As of March 31, 1999, approximately 42.2% of our auditoriums were equipped with digital stereo surround sound. We have added stadium seating to some of our existing theatres and plan to include stadium seating in all of our new theatres. As of March 31, 1999, after giving effect to our 1999 construction, expansion and renovation program, approximately 25.4% of our auditoriums featured stadium seating. We believe that all of these features serve to enhance customers' movie-going experience and help build customer loyalty. In addition, we promote customer loyalty though specialized marketing programs for our theatres and feature films. We have implemented an incentive bonus program for theatre-level management which provides for bonuses based upon reports of quality of service, presentation and cleanliness at individual theatres. Centralized Cost Control and Theatre Management Through Proprietary Management Information System. Our proprietary computer system, IQ-Zero, which is installed in all of our theatres, allows us to centralize most theatre-level administrative functions at corporate headquarters, creating significant operating leverage. IQ-Zero allows corporate management to monitor ticket and concessions sales and box office and concession staffing on a daily basis. Our integrated management information system, centered around IQ-Zero, also coordinates payroll, tracks theatre invoices and generates operating reports analyzing film performance and theatre profitability. Accordingly, there is active communication between the theatres and corporate headquarters, which allows senior management to react to vital profit and staffing information on a daily basis and perform the majority of the theatre-level administrative functions, thereby enabling the theatre manager to focus on the day-to-day operations of the theatre. Growth Strategy. We believe that the following are the key elements of our growth strategy: Build State-of-the-Art Multiplex Theatres. We believe that there are substantial opportunities to build new multiplex theatres in secondary markets that are currently 25 30 underscreened or served by older theatres. We actively target markets having a population size ranging from 75,000 to 250,000, which can support the development of multiplex theatres. We have designed a prototype multiplex theatre which has been tailored to the demographics of a particular location, resulting in construction and operating cost savings. We intend to open 22 new theatres with an aggregate of 334 screens and an average of 15.2 screens per theatre in 1999. Our new multiplex theatres feature state-of-the-art technology in projection, digital stereo surround sound and stadium seating. We believe that our multiplex theatres promote increased attendance and maximize operating efficiencies through reduced labor costs and improved utilization of theatre capacity. Multiplex theatres enable us to present a variety of films appealing to several segments of the movie-going public while serving customers from common support facilities, such as the box office, concession areas, restrooms and lobby. This strategy increases attendance, utilization of theatre capacity and operating efficiencies (relating to theatre staffing, performance scheduling and space and equipment utilization), and thereby improves revenues and profitability. Staggered scheduling of starting times minimizes staffing requirements for crowd control, box office and concession services while reducing congestion at the concession area. Addition of New Screens and Retrofitting of Existing Theatres. To enhance profitability and to maintain competitiveness at existing theatres, we continue to add screens and retrofit our existing theatres, which encompasses the addition of stadium seating to some existing theatres. We believe that through the addition of screens and the renovation and retrofitting of our facilities we can leverage the favorable real estate locations of some of our theatres and thereby improve operating margins at those theatres. In 1998, we retrofitted 114 auditoriums and added 16 auditoriums to existing theatres. As of December 31, 1998, we had 14 new screens under construction at two existing theatres and anticipate that we will add a total of 48 stadium seating auditoriums to some existing theatres and retrofit approximately 83 existing auditoriums with stadium seating and digital stereo surround sound during 1999. Drive Revenue Growth and Profitability through Concessions Sales. In 1998, 29.0% of our sales were derived from concessions, which averaged a margin of 85.7%. Our concessions strategy emphasizes quick and efficient service built around a limited menu primarily focused on higher margin items such as popcorn, candy and soft drinks. We actively seek to promote concessions sales through the design and appearance of our concession stands, the training of our employees to cross-sell products, the introduction of promotional programs such as "super-size value deals" and the selective introduction of new products, such as bottled water, coffee and ice cream, at some locations. Develop Additional Revenue Streams. We actively engage in efforts to develop revenue streams in addition to admissions and concessions revenues. Some of our theatres include electronic video games located adjacent to or in the lobby, and on-screen advertising is provided on a number of our screens, each of which provides additional revenues. Since 1997, we have opened five family entertainment centers under the name Hollywood Connection(R), including three which were developed under a joint venture with Wal-Mart, and which feature multiplex theatres and other forms of entertainment. We are currently evaluating this concept and are also exploring alternate revenue sources such as advertising and marketing programs on beverage and popcorn containers. 26 31 Selective Acquisition of Theatres. While we believe that a significant portion of our future growth will come through the development of new theatres, we will continue to consider strategic acquisitions of complementary theatres or theatre companies. In addition, we may enter into joint ventures, which could serve as a platform for further expansion. We currently have no letters of intent or other written agreements for any specific acquisitions or joint ventures. 27 32 THE EXCHANGE OFFER PURPOSE OF THE EXCHANGE OFFER In connection with the sale of the original notes, Carmike and its wholly-owned subsidiaries entered into an exchange and registration rights agreement with the initial purchasers. Under the exchange and registration rights agreement, Carmike and the subsidiary guarantors agreed to use their reasonable best efforts to effect the exchange offer and to file and cause to become effective with the SEC a registration statement with respect to the exchange of the original notes for exchange notes. The form and terms of the exchange notes are the same as the form and terms of the original notes except that the exchange notes have been registered under the Securities Act and will not be subject to some restrictions on transfer applicable to the original notes. In that regard, the original notes provide, among other things, that if a registration statement relating to the exchange offer has not been filed and declared effective within certain specified periods, the interest rate on the original notes will increase by 0.25% per annum each 90-day period that such additional interest rate continues to accrue under any such circumstance, up to an aggregate maximum increase equal to 1% per annum, until the registration statement is filed or declared effective, as the case may be. Upon completion of the exchange offer, holders of original notes will not be entitled to any further registration rights under the exchange and registration rights agreement, except under limited circumstances. See "Risk Factors -- Consequences of Failure to Exchange Original Notes" and "Description of the Exchange Notes." The exchange offer is not being made to holders of original notes in any jurisdiction in which the exchange offer or the acceptance of the notes would not be in compliance with the securities or blue sky laws of such jurisdiction. Unless the context requires otherwise, the term "holder" with respect to the exchange offer means any person who has obtained a properly completed bond power from the registered holder, or any person whose original notes are held of record by The Depository Trust Company (DTC) who desires to deliver such original notes by book-entry transfer at DTC. Carmike will exchange as soon as practicable after the expiration date of the exchange offer the original notes for a like aggregate principal amount of the exchange notes and the subsidiary guarantors will exchange as soon as practicable after the expiration date of the exchange offer the original notes guarantee for the exchange notes guarantee, which have also been registered under the Securities Act. TERMS OF THE EXCHANGE OFFER Carmike hereby offers, upon the terms and subject to the conditions described in this prospectus and in the accompanying letter of transmittal, to exchange up to $200.0 million aggregate principal amount of exchange notes for a like aggregate principal amount of original notes properly tendered on or before the expiration date of the exchange offer and not properly withdrawn in accordance with the procedures described below. Carmike will issue, promptly after the expiration date of the exchange offer, an aggregate principal amount of up to $200.0 million of exchange notes in exchange for a like principal amount of outstanding original notes tendered and accepted in connection with the exchange offer. Carmike will pay all charges and 28 33 expenses, other than certain applicable taxes described below, in connection with the exchange offer. See "-- Fees and Expenses." Holders may tender their original notes in whole or in part in any integral multiple of $1,000 principal amount. The exchange offer is not conditioned upon any minimum principal amount of original notes being tendered. As of the date of this prospectus, $200.0 million aggregate principal amount of the original notes is outstanding. Holders of original notes do not have any appraisal or dissenters' rights in connection with the exchange offer. Original notes which are not tendered for or are tendered but not accepted in connection with the exchange offer will remain outstanding and be entitled to the benefits of the indenture, but will not be entitled to any further registration rights under the exchange and registration rights agreement, except under limited circumstances. See "Risk Factors -- Consequences of Failure to Exchange Original Notes" and "Description of the Exchange Notes." If any tendered original notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, appropriate book-entry transfer will be made, without expense, to the tendering holder of the notes promptly after the expiration date of the exchange offer. Holders who tender original notes in connection with the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of original notes in connection with the exchange offer. NEITHER CARMIKE NOR THE BOARD OF DIRECTORS OF CARMIKE MAKES ANY RECOMMENDATION TO HOLDERS OF ORIGINAL NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF ORIGINAL NOTES MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE AGGREGATE AMOUNT OF ORIGINAL NOTES TO TENDER BASED ON SUCH HOLDERS' OWN FINANCIAL POSITIONS AND REQUIREMENTS. EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "expiration date" means 5:00 p.m., New York City time, on [__________], 1999. However, if the exchange offer is extended by Carmike, the term "expiration date" shall mean the latest date and time to which the exchange offer is extended. Carmike expressly reserves the right in its sole and absolute discretion, subject to applicable law, at any time and from time to time: - to delay the acceptance of the original notes for exchange, - to extend the expiration date of the exchange offer and retain all original notes tendered pursuant to the exchange offer, subject, however, to the right of holders of original notes to withdraw their tendered original notes as described under "-- Withdrawal Rights," and - to waive any condition or otherwise amend the terms of the exchange offer in any respect. 29 34 If the exchange offer is amended in a manner determined by Carmike to constitute a material change, Carmike will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered holders of the original notes, and Carmike will extend the exchange offer to the extent required by Rule 14e-1 under the Securities Exchange Act. Carmike will promptly notify the exchange agent by making an oral or written public announcement of any delay in acceptance, extension, termination or amendment. This announcement in the case of an extension will be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Without limiting the manner in which Carmike may choose to make any public announcement and, subject to applicable law, Carmike will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to an appropriate news agency. ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE NOTES Upon the terms and subject to the conditions of the exchange offer, Carmike will exchange, and will issue to the exchange agent, exchange notes for original notes validly tendered and not withdrawn promptly after the expiration date. In all cases, delivery of exchange notes in exchange for original notes tendered and accepted for exchange pursuant to the exchange offer will be made only after timely receipt by the exchange agent of: - original notes or a book-entry confirmation of a book-entry transfer of original notes into the exchange agent's account at DTC, including an Agent's Message (as defined below) if the tendering holder has not delivered a letter of transmittal, - the letter of transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees or (in the case of a book-entry transfer) an Agent's Message instead of the letter of transmittal, and - any other documents required by the letter of transmittal. The term "book-entry confirmation" means a timely confirmation of a book-entry transfer of original notes into the exchange agent's account at DTC. The term "Agent's Message" means a message, transmitted by DTC to and received by the exchange agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the tendering DTC participant, which acknowledgment states that such participant has received and agrees to be bound by the letter of transmittal and that Carmike may enforce the letter of transmittal against such participant. Subject to the terms and conditions of the exchange offer, Carmike will be deemed to have accepted for exchange, and thereby exchanged, original notes validly tendered and not withdrawn as, if and when Carmike gives oral or written notice to the exchange agent of Carmike's acceptance of such original notes for exchange pursuant to the exchange offer. The exchange agent will act as agent for Carmike for the purpose of receiving tenders of original 30 35 notes, letters of transmittal and related documents, and as agent for tendering holders for the purpose of receiving original notes, letters of transmittal and related documents and transmitting exchange notes to validly tendering holders. Such exchange will be made promptly after the expiration date. If for any reason whatsoever, acceptance for exchange or the exchange of any original notes tendered pursuant to the exchange offer is delayed (whether before or after Carmike's acceptance for exchange of original notes) or Carmike extends the exchange offer or is unable to accept for exchange or exchange original notes tendered pursuant to the exchange offer, then, without prejudice to Carmike's rights set forth herein, the exchange agent may, nevertheless, on behalf of Carmike and subject to Rule 14e-1(c) under the Exchange Act, retain tendered original notes and such original notes may not be withdrawn except to the extent tendering holders are entitled to withdrawal rights as described under "-- Withdrawal Rights." Pursuant to the letter of transmittal or Agent's Message in lieu thereof, a holder of original notes will warrant and agree in the letter of transmittal that it has full power and authority to tender, exchange, sell, assign and transfer original notes, that Carmike will acquire good, marketable and unencumbered title to the tendered original notes, free and clear of all liens, restrictions, charges and encumbrances, and the original notes tendered for exchange are not subject to any adverse claims or proxies. The holder also will warrant and agree that it will, upon request, execute and deliver any additional documents deemed by Carmike or the exchange agent to be necessary or desirable to complete the exchange, sale, assignment, and transfer of the original notes tendered pursuant to the exchange offer. PROCEDURES FOR TENDERING ORIGINAL NOTES Valid Tender. Except as set forth below, in order for original notes to be validly tendered pursuant to the exchange offer, a properly completed and duly executed letter of transmittal (or facsimile thereof), with any required signature guarantees, or (in the case of a book-entry tender) an Agent's Message instead of the letter of transmittal, and any other required documents, must be received by the exchange agent at one of its addresses set forth under "-- Exchange Agent." In addition, either: - tendered original notes must be received by the exchange agent, - such original notes must be tendered pursuant to the procedures for book-entry transfer set forth below and a book-entry confirmation, including an Agent's Message if the tendering holder has not delivered a letter of transmittal, must be received by the exchange agent, in each case on or before the expiration date, or - the guaranteed delivery procedures set forth below must be complied with. If less than all of the original notes are tendered, a tendering holder should fill in the amount of original notes being tendered in the appropriate box on the letter of transmittal. The entire amount of original notes delivered to the exchange agent will be deemed to have been tendered unless otherwise indicated. 31 36 THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT REQUESTED, PROPERLY INSURED OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Book-Entry Transfer. The exchange agent will establish an account with respect to the original notes at DTC for purposes of the exchange offer within two business days after the date of this prospectus. Any financial institution that is a participant in DTC's book-entry transfer facility system may make a book-entry delivery of the original notes by causing DTC to transfer such original notes into the exchange agent's account at DTC in accordance with DTC's procedures for transfers. However, although delivery of original notes may be effected through book-entry transfer into the exchange agent's account at DTC, the letter of transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message instead of the letter of transmittal, and any other required documents, must in any case be delivered to and received by the exchange agent at its address set forth under "-- Exchange Agent" on or before the expiration date, or the guaranteed delivery procedure set forth below must be complied with. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. Signature Guarantees. Certificates for the original notes need not be endorsed and signature guarantees on the letter of transmittal are unnecessary unless (1) a certificate for the original notes is registered in a name other than that of the person surrendering the certificate or (2) such holder completes the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" in the letter of transmittal. In the case of (1) or (2) above, such certificates for original notes must be duly endorsed or accompanied by a properly executed bond power, with the endorsement or signature on the bond power and on the letter of transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as an "eligible guarantor institution," including (as such terms are defined therein): - a bank; - a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; - a credit union; - a national securities exchange, registered securities association or clearing agency; or - a savings association that is a participant in a Securities Transfer Association (an "Eligible Institution"), unless surrendered on behalf of such Eligible Institution. See Instruction 1 to the letter of transmittal. 32 37 Guaranteed Delivery. If a holder desires to tender original notes pursuant to the exchange offer and the certificates for such original notes are not immediately available or time will not permit all required documents to reach the exchange agent on or before the expiration date, or the procedures for book-entry transfer cannot be completed on a timely basis, such original notes may nevertheless be tendered, provided that all of the following guaranteed delivery procedures are complied with: (1) such tenders are made by or through an Eligible Institution; (2) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form accompanying the letter of transmittal, is received by the exchange agent, as provided below, on or before the expiration date; and (3) the certificates (or a book-entry confirmation) representing all tendered original notes, in proper form for transfer, together with a properly completed and duly executed letter of transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message instead of the letter of transmittal, and any other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand, or transmitted by facsimile or mail to the exchange agent and must include a guarantee by an Eligible Institution in the form shown in such notice. Notwithstanding any other provision hereof, the delivery of exchange notes in exchange for original notes tendered and accepted for exchange pursuant to the exchange offer will in all cases be made only after timely receipt by the exchange agent of original notes, or of a book-entry confirmation with respect to such original notes, and a properly completed and duly executed letter of transmittal (or facsimile thereof), together with any required signature guarantees, or an Agent's Message instead of the letter of transmittal, and any other documents required by the letter of transmittal. Accordingly, the delivery of exchange notes might not be made to all tendering holders at the same time, and will depend upon when original notes, book-entry confirmations with respect to original notes and other required documents are received by the exchange agent. Carmike's acceptance for exchange of original notes tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering holder and Carmike upon the terms and subject to the conditions of the exchange offer. Determination of Validity. All questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tendered original notes will be determined by Carmike, in its sole discretion. The interpretation by Carmike of the terms and conditions of the exchange offer, including the letter of transmittal and the instructions thereto, will be final and binding. Carmike reserves the absolute right, in its sole and absolute discretion, to reject any and all tenders determined by it not to be in proper form or the acceptance of which, or exchange for, may, in the opinion of counsel to Carmike, be unlawful. Carmike also reserves the absolute right, subject to applicable law, to waive any condition or irregularity in any tender of original notes of 33 38 any particular holder whether or not similar conditions or irregularities are waived in the case of other holders. No tender of original notes will be deemed to have been validly made until all irregularities with respect to such tender have been cured or waived. Neither Carmike, any affiliates or assigns of Carmike, the exchange agent nor any other person will be under any duty to give any notification of any irregularities in tenders or incur any liability for failure to give any such notification. If any letter of transmittal, endorsement, bond power, power of attorney, or any other document required by the letter of transmittal is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and unless waived by Carmike, proper evidence satisfactory to Carmike, in its sole discretion, of such person's authority to so act must be submitted. A beneficial owner of original notes that are held by or registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian is urged to contact such entity promptly if such beneficial holder wishes to participate in the exchange offer. RESALES OF EXCHANGE NOTES Carmike is making the exchange offer for the exchange notes in reliance on the position of the staff of the Division of Corporation Finance of the SEC as defined in certain interpretive letters addressed to third parties in other transactions. However, Carmike did not seek its own interpretive letter and there can be no assurance that the staff of the Division of Corporation Finance of the SEC would make a similar determination with respect to the exchange offer as it has in such interpretive letters to third parties. Based on these interpretations by the staff of the Division of Corporation Finance of the SEC, and subject to the two immediately following sentences, Carmike believes that exchange notes issued pursuant to this exchange offer in exchange for original notes may be offered for resale, resold and otherwise transferred by a holder thereof (other than a holder who is a broker-dealer) without further compliance with the registration and prospectus delivery requirements of the Securities Act, provided that such exchange notes are acquired in the ordinary course of such holder's business and that such holder is not participating, and has no arrangement or understanding with any person to participate, in a distribution (within the meaning of the Securities Act) of such exchange notes. However, any holder of original notes who is an "affiliate" of Carmike or who intends to participate in the exchange offer for the purpose of distributing exchange notes, or any broker-dealer who purchased original notes from Carmike to resell pursuant to Rule 144A or any other available exemption under the Securities Act, (a) will not be able to rely on the interpretations of the staff of the Division of Corporation Finance of the SEC defined in the above-mentioned interpretive letters, (b) will not be permitted or entitled to tender such original notes in the exchange offer and (c) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any sale or other transfer of such original notes unless such sale is made pursuant to an exemption from such requirements. In addition, as described below, if any broker-dealer holds original notes acquired for its own account as a result of market-making or other trading activities and exchanges such original 34 39 notes for exchange notes, then such broker-dealer must deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of such exchange notes. Each holder of original notes who wishes to exchange original notes for exchange notes in the exchange offer will be required to represent that: - it is not an "affiliate" of Carmike, - any exchange notes to be received by it are being acquired in the ordinary course of its business, - it has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of such exchange notes, and - if such holder is not a broker-dealer, such holder is not engaged in, and does not intend to engage in, a distribution (within the meaning of the Securities Act) of such exchange notes. In addition, Carmike may require such holder, as a condition to such holder's eligibility to participate in the exchange offer, to furnish to Carmike (or an agent thereof) in writing information as to the number of "beneficial owners" (within the meaning of Rule 13d-3 under the Exchange Act) on behalf of whom such holder holds the original notes to be exchanged in the exchange offer. Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it acquired the original notes for its own account as the result of market-making activities or other trading activities and must agree that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. The letter of transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. Based on the position taken by the staff of the Division of Corporation Finance of the SEC in the interpretive letters referred to above, Carmike believes that participating broker-dealers who acquired original notes for their own accounts as a result of market-making activities or other trading activities may fulfill their prospectus delivery requirements with respect to the exchange notes received upon exchange of such original notes (other than original notes which represent an unsold allotment from the initial sale of the original notes) with a prospectus meeting the requirements of the Securities Act, which may be the prospectus prepared for an exchange offer so long as it contains a description of the plan of distribution with respect to the resale of such exchange notes. Accordingly, this prospectus, as it may be amended or supplemented from time to time, may be used by a participating broker-dealer in connection with resales of exchange notes received in exchange for original notes where such original notes were acquired by such participating broker-dealer for its own account as a result of market-making or other trading activities. See "Plan of Distribution." Subject to certain provisions contained in the exchange and registration rights agreement, Carmike has agreed that this prospectus, as it may be amended 35 40 or supplemented from time to time, may be used by a participating broker-dealer in connection with resales of such exchange notes for a period not exceeding 180 days after the expiration date. However, a participating broker-dealer who intends to use this prospectus in connection with the resale of exchange notes received in exchange for original notes pursuant to the exchange offer must notify Carmike, or cause Carmike to be notified, on or before the expiration date, that it is a participating broker-dealer. Such notice may be given in the space provided for that purpose in the letter of transmittal or may be delivered to the exchange agent at one of the addresses set forth herein under "-- Exchange Agent." Any participating broker-dealer who is an "affiliate" of Carmike may not rely on such interpretive letters and must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. In that regard, each participating broker-dealer who surrenders original notes pursuant to the exchange offer will be deemed to have agreed, by execution of the letter of transmittal or delivery of an Agent's Message in lieu thereof, that upon receipt of notice from Carmike of the occurrence of any event or the discovery of (1) any fact which makes any statement contained or incorporated by reference in this prospectus untrue in any material respect or (2) any fact which causes this prospectus to omit to state a material fact necessary in order to make the statements contained or incorporated by reference herein, in light of the circumstances under which they were made, not misleading, or (3) of the occurrence of certain other events specified in the exchange and registration rights agreement, such participating broker-dealer will suspend the sale of exchange notes pursuant to this prospectus until Carmike has amended or supplemented this prospectus to correct such misstatement or omission and has furnished copies of the amended or supplemented prospectus to such participating broker-dealer, or Carmike has given notice that the sale of the exchange notes may be resumed, as the case may be. As set forth above, affiliates of Carmike are not entitled to rely on the foregoing interpretations of the staff of the Commission with respect to resales of the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. In connection with the offering of the original notes, Carmike entered into an exchange and registration rights agreement pursuant to which Carmike agreed to file and maintain, subject to certain limitations, a registration statement that would allow Goldman Sachs to engage in market-making transactions with respect to the exchange notes. Carmike has agreed to bear all registration expenses incurred under such agreement, including printing and distribution expenses, reasonable fees of counsel, blue sky fees and expenses, reasonable fees of independent accountants in connection with the preparation of comfort letters, and Commission and the National Association of Securities Dealers, Inc. filing fees and expenses. 36 41 WITHDRAWAL RIGHTS Except as otherwise provided herein, tenders of original notes may be withdrawn at any time on or before the expiration date. In order for a withdrawal to be effective a written, telegraphic, telex or facsimile transmission of such notice of withdrawal must be timely received by the exchange agent at its address set forth under "-- Exchange Agent" on or before the expiration date. Any such notice of withdrawal must specify the name of the person who tendered the original notes to be withdrawn, the aggregate principal amount of original notes to be withdrawn, and, if certificates for such original notes have been tendered, the name of the registered holder of the original notes as set forth on the original notes, if different from that of the person who tendered such original notes. If original notes have been delivered or otherwise identified to the exchange agent, then before the physical release of such original notes, the tendering holder must submit the serial numbers shown on the particular original notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of original notes tendered for the account of an Eligible Institution. For original notes tendered pursuant to the procedures for book-entry transfer described in "-- Procedures for Tendering Original Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of original notes, in which case a notice of withdrawal will be effective if delivered to the exchange agent by written, telegraphic, telex or facsimile transmission. Withdrawals of tenders of original notes may not be rescinded. Original notes properly withdrawn will not be deemed validly tendered for purposes of the exchange offer, but may be retendered at any subsequent time on or before the expiration date by following any of the procedures described above under "-- Procedures for Tendering Original Notes." All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by Carmike, in its sole discretion, whose determination shall be final and binding on all parties. Neither Carmike, any affiliates or assigns of Carmike, the exchange agent nor any other person shall be under any duty to give any notification of any irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any original notes which have been tendered but which are withdrawn will be returned to the holder thereof promptly after withdrawal. INTEREST ON EXCHANGE NOTES Interest on the notes is payable semi-annually on February 1 and August 1 of each year, commencing on August 1, 1999, at the rate of 9 3/8% per annum. The exchange notes will bear interest from and including the last interest payment date on the original notes (or, if none, has yet occurred, the date of issuance of such original notes). Accordingly, holders of original notes that are accepted for exchange will not receive accrued but unpaid interest on such original notes at the time of tender, but such interest will be payable in respect of such exchange notes delivered in exchange for such original notes on the first interest payment date after the expiration date. 37 42 ACCOUNTING TREATMENT The exchange notes will be recorded at the same carrying value as the original notes for which they are exchanged, which is the aggregate principal amount of the original notes, as reflected in Carmike's accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized in connection with the exchange offer. The cost of the exchange offer will be amortized over the term of the exchange notes. CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS The following is a general discussion of certain U.S. federal income tax consequences of the exchange offer. This discussion is based on the current provisions of the Internal Revenue Code of 1986, applicable Treasury regulations, judicial authority and administrative rulings and practice. This discussion is generally limited to the tax consequences to holders that hold the exchange notes as capital assets within the meaning of Section 1221 of the Internal Revenue Code. There can be no assurance that the Internal Revenue Service will not take a contrary view, and no ruling from the IRS has been or will be sought. Legislative, judicial or administrative changes or interpretations may be forthcoming that could alter or modify the statements and conditions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences to holders. Certain holders, including insurance companies, tax-exempt organizations, financial institutions, broker-dealers, foreign corporations and persons who are not citizens or residents of the United States, may be subject to special rules not discussed below. For U.S. federal income tax purposes, the exchange of original notes for exchange notes pursuant to the exchange offer should not be treated as a taxable transaction for federal income tax purposes. As a result, there should be no federal income tax consequences to holders exchanging original notes for exchange notes pursuant to the exchange offer. A holder should have the same adjusted basis and holding period in an exchange note as it had in an original note immediately before the exchange. The foregoing discussion is based on the provisions of the code, regulations, treasury regulations, rulings and judicial decisions now in effect, all of which are subject to change. Any such changes may be applied retroactively in a manner that could adversely affect holders exchanging notes. Each holder of notes should consult its own tax advisor with respect to the tax consequences to it, including the tax consequences under state, local, foreign and other tax laws, of exchanging original notes for exchange notes pursuant to the exchange offer. EXCHANGE AGENT The Bank of New York has been appointed as exchange agent for the exchange offer. Delivery of the letters of transmittal and any other required documents, questions, requests for assistance, and requests for additional copies of this prospectus or of the letter of transmittal should be directed to the exchange agent as follows: 38 43 By Registered or Certified Mail: The Bank of New York 101 Barclay Street, (7 East) New York, New York 10286 Attention: Odell Romeo Reorganization Section By Hand or Overnight Delivery Service: The Bank of New York 101 Barclay Street Corporate Trust Services Window Ground Level New York, New York 10286 Attention: Odell Romeo Reorganization Section By Facsimile Transmission (for Eligible Institutions only): (212) 815-6339 Confirm by Telephone: (212) 815-6337 Delivery to other than the above addresses or facsimile number will not constitute a valid delivery. FEES AND EXPENSES Carmike has agreed to pay the exchange agent reasonable and customary fees for its services and will reimburse it for its reasonable out-of-pocket expenses. Carmike will also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this prospectus and related documents to the beneficial owners of original notes, and in handling or tendering for their customers. Holders who tender their original notes for exchange will not be obligated to pay any transfer taxes in connection with the transfer. If, however, exchange notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the original notes tendered, or if a transfer tax is imposed for any reason other than the exchange of original notes in connection with the exchange offer, then the amount of any such transfer taxes, whether imposed on the registered holder or any other persons, will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. Carmike will not make any payment to brokers, dealers or other nominees soliciting acceptances of the exchange offer. 39 44 USE OF PROCEEDS The exchange offer is intended to satisfy some of our obligations under the exchange and registration rights agreement. We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. In exchange for issuing the exchange notes as described in this prospectus, we will receive an equal principal amount of original notes, which will be canceled. We used the proceeds from the sale of the original notes, together with funds provided by our term loan, as follows:
SOURCES OF FUNDS USES OF FUNDS -------------------------------------------------- -------------------------------------------------- (IN MILLIONS) (IN MILLIONS) 9 3/8% Senior Subordinated Repay revolving credit Notes due 2009.................... $ 200.0 facility (1)...................... $ 177.0 Term loan........................... 75.0 Redemption of senior notes (2)......................... 79.9 Expenses and redemption premiums (3)...................... 18.1 --------- --------- Total............................... $ 275.0 Total............................... $ 275.0 ========= =========
- ------------ (1) Represents the repayment of amounts outstanding under our revolving credit facility at the closing of the sale of the original notes. Actual borrowings under our revolving credit facility as of the closing of the exchange offer will likely be greater than the amount reflected here because of additional borrowings to fund our ongoing construction, expansion and renovation program. (2) Represents the following indebtedness: $47.7 million principal amount of our 10.53% Senior Notes due 2005; $14.3 million principal amount of our 7.90% Senior Notes due 2002; and $17.9 million principal amount of our 7.52% Senior Notes due 2003. (3) Includes $9.2 million of prepayment premiums paid in connection with the redemption of our senior notes and $8.9 million of expenses incurred in the sale of the original notes and the issuance of our term loan. 40 45 CAPITALIZATION The following table sets forth the consolidated historical capitalization of Carmike (1) as of December 31, 1998 and (2) as adjusted as of December 31, 1998 to give effect to the offering of the original notes, borrowings under the term loan, the use of the proceeds of each of the foregoing, and the revolving credit facility as though such transactions had been completed on December 31, 1998. The information contained in this table should be read in conjunction with the historical and unaudited pro forma financial information of Carmike, together with the related notes thereto, included elsewhere herein.
AS OF DECEMBER 31, 1998 ------------------------- AS ACTUAL ADJUSTED --------- --------- (IN THOUSANDS) Cash.................................................................... $ 17,771 $ 17,771 ========= ========= Total debt (including current portion): Revolving credit facility.......................................... $ 230,000 $ 52,982 (1) Term loan.......................................................... -- 75,000 Senior notes....................................................... 79,870 -- Industrial revenue bond............................................ 2,285 2,285 Capital lease obligations.......................................... 39,605 39,605 9 3/8% Senior Subordinated Notes due 2009.......................... -- 200,000 --------- --------- Total debt............................................................ 351,760 369,872 --------- --------- Shareholders' equity: 5.5% Series A Senior Cumulative Convertible Exchangeable Preferred Stock, par value $1.00 per share, four votes per share (subject to adjustment), authorized 1,000,000 shares; issued 550,000 shares as of November 22, 1998.................. 550 550 Class A Common Stock, par value $.03 per share, one vote per share, authorized 22,500,000 shares; issued 9,942,487 shares................................ 298 298 Class B Common Stock, par value $.03 per share, ten votes per share, 5,000,000 shares authorized; issued 1,420,700 shares............................ 43 43 Additional paid-in capital............................................ 158,543 158,543 Retained earnings..................................................... 66,875 60,584 (2) --------- --------- Total shareholders' equity............................................ 226,309 220,018 --------- --------- Total capitalization.................................................... $ 578,069 $ 589,890 ========= =========
- ------------ (1) Actual borrowings under our revolving credit facility as of the closing of the exchange offer will likely be greater than the amount reflected here because of additional borrowings to fund our ongoing construction, expansion and renovation program. 41 46 (2) Reflects reductions attributable to our extraordinary charge of $10.1 million ($6.3 million after income taxes) recognized in February 1999 for (a) the prepayment premium paid in connection with redemption of our senior notes, and (b) the elimination of deferred debt costs on our senior notes and our revolving credit facility. 42 47 SELECTED FINANCIAL AND OPERATING DATA The selected consolidated Statement of Income and Balance Sheet data set forth below were derived from the consolidated financial statements of Carmike. This information should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" and Carmike's Consolidated Financial Statements and related Notes thereto included in documents incorporated herein by reference.
FOR THE YEAR ENDED DECEMBER 31, ----------------------------------------------------------- 1994 1995 (1) 1996 (1) 1997 (1) 1998 (2) ---------- ---------- ---------- ---------- ---------- (IN MILLIONS EXCEPT PERCENTAGES, RATIOS AND OPERATING DATA) STATEMENT OF INCOME DATA: Revenues: Admissions................................ $ 232.1 $ 253.7 $ 296.6 $ 319.2 $ 330.5 Concessions and other..................... 95.5 111.0 130.1 139.4 151.1 ---------- ---------- ---------- ---------- ---------- Total revenues....................... 327.6 364.7 426.7 458.6 481.6 Costs and expenses: Film exhibition costs..................... 123.6 135.6 157.0 169.7 177.8 Concession costs.......................... 12.2 15.0 17.3 18.3 19.9 Other theatre operating costs............. 119.0 143.7 164.1 175.1 187.9 General and administrative................ 5.1 5.5 6.0 6.4 7.1 Depreciation and amortization............. 22.5 27.2 28.4 33.4 37.5 Impairment of long-lived assets........... -- -- 45.4 -- 38.3 Restructuring charge...................... -- -- -- -- 34.7 ---------- ---------- ---------- ---------- ---------- 282.4 327.0 418.2 402.9 503.2 ---------- ---------- ---------- ---------- ---------- Operating income (loss).............. 45.2 37.7 8.5 55.7 (21.6) Interest expense.............................. 17.0 16.0 20.3 23.1 27.2 ---------- ---------- ---------- ---------- ---------- Income (loss) before income taxes............. 28.2 21.7 (11.8) 32.6 (48.8) Income tax expense (benefit).................. 11.2 8.7 (4.5) 12.4 (18.2) ---------- ---------- ---------- ---------- ---------- Net income (loss)............................. $ 17.0 $ 13.0 $ (7.3) $ 20.2 $ (30.6) ========== ========== ========== ========== ========== Weighted average common shares outstanding: Basic......................................... 8,312 11,161 11,174 11,277 11,356 ========== ========== ========== ========== ========== Diluted....................................... 8,477 11,260 11,174 11,366 11,356 ========== ========== ========== ========== ========== Earnings (loss) per common share: Basic......................................... $ 2.04 $ 1.17 $ (0.65) $ 1.79 $ (2.73) ========== ========== ========== ========== ========== Diluted....................................... $ 2.00 $ 1.16 $ (0.65) $ 1.78 $ (2.73) ========== ========== ========== ========== ==========
43 48
AS OF DECEMBER 31, ------------------------------------------------ 1994 1995 1996 1997 1998 ------------------------------------------------ (in millions, except operating data) BALANCE SHEET DATA: Cash and cash equivalents..................... $ 17.9 $ 11.3 $ 5.6 $ 16.5 $ 17.8 Property and equipment, net................... 294.0 371.9 388.0 497.1 573.6 Total assets.................................. 377.6 478.0 489.4 620.0 697.5 Total long-term obligations, including current maturities.............. 153.3 230.5 268.3 360.7 351.8 Total shareholders' equity.................... 172.0 185.1 178.0 202.9 226.3 OPERATING DATA: Theatre locations............................. 445 519 519 520 468 Screens....................................... 1,942 2,383 2,518 2,720 2,658 Average screens per location.................. 4.4 4.6 4.9 5.2 5.7 Total attendance (in thousands)............... 59,660 64,496 74,213 75,336 77,763 Total average screens in operation............ 1,852 2,151 2,476 2,644 2,733 Average ticket price.......................... $ 3.89 $ 3.93 $ 4.00 $ 4.24 $ 4.25 Average concession per patron................. $ 1.46 $ 1.59 $ 1.62 $ 1.68 $ 1.79
- -------------------- (1) Our results reflect the following acquisitions: 1997--19 theatres with 104 screens; 1996--14 theatres with 79 screens; and 1995--83 theatres with 377 screens. (2) Preferred stock dividends on the Series A Preferred Stock totaled $332,000 for the period of November 22, 1998 through December 31, 1998. 44 49 DESCRIPTION OF OTHER INDEBTEDNESS As of March 31, 1999, Carmike had outstanding indebtedness aggregating $407.7 million, of which $84.3 million was outstanding under its revolving credit facility, $75.0 million was outstanding under its term loan credit agreement, $46.2 million was outstanding under its capitalized lease obligations, $2.2 million was outstanding under its industrial revenue bonds and $200.0 million was outstanding under the notes. On January 29, 1999, Carmike amended and restated its revolving credit facility, and on February 25, 1999, Carmike entered into the $75.0 million term loan with a syndicate of financial institutions. Goldman Sachs Credit Partners, L.P. acted as lead arranger and syndication agent, and Wachovia Bank, N.A. acted as lead arranger, as well as administrative agent, with respect to the term loan and acts as agent for the revolving credit facility. First Union National Bank is documentation agent with respect to the term loan and is a participant in the revolving credit facility. In connection with the amendment and restatement of the revolving credit facility, Carmike also amended and restated on January 29, 1999 its master lease with Movieplex Realty Leasing, L.L.C. to provide for security interests and guarantees and to amend some covenants contained therein. The obligations under Carmike's revolving credit facility, term loan and master lease and the related documents are secured by: - a first priority lien upon all of the personal property of Carmike and its subsidiaries, including without limitation, a first priority lien on all equipment, inventory, intellectual property, accounts receivable and other intangibles, - a negative pledge on all other assets, including all real estate of Carmike and its subsidiaries, and - a pledge of all of the capital stock Carmike owns in its subsidiaries. The parties to each agreement have entered into an intercreditor agreement under which Wachovia Bank, N.A. acts as collateral agent. BANK FINANCINGS Carmike entered into a revolving credit facility on October 17, 1997, and amended and restated this facility on January 29, 1999. The revolving credit facility matures November 10, 2002. Carmike is obligated to pay a commitment fee of .5% on the unused portion of the facility. In addition, on February 25, 1999, Carmike entered into the $75.0 million term loan, the proceeds of which were applied to repay revolving credit borrowings. The term loan matures March 30, 2005. Following application of the proceeds of the term loan, the maximum available borrowings under the revolving credit facility was reduced from $275.0 million to $200.0 million. At March 31, 1999, Carmike had $115.7 million available for borrowings under the revolving credit facility. 45 50 The following is a summary of the material terms and conditions of the revolving credit facility and the term loan and is subject to the detailed provisions of the revolving credit facility and the term loan and the various related documents entered into in connection with the amendment and restatement of the revolving credit facility and the term loan. Capitalized terms used in this section not otherwise defined will have the meanings defined in the revolving credit facility or the term loan. REVOLVING CREDIT FACILITY The initial interest rate on the revolving credit facility was LIBOR plus 2.25%. The interest rate and commitment fees of the revolving credit facility are adjusted based on Carmike's Debt to Cash Flow Ratio as follows: - if Carmike's Debt to Cash Flow Ratio is equal to or greater than 5.5 to 1.0, then the applicable LIBOR margin is 2.75% and the commitment fees are 0.5%, - if Carmike's Debt to Cash Flow Ratio is equal to or greater than 5.0 to 1.0 but less than 5.5 to 1.0, then the applicable LIBOR margin is 2.5% and the commitment fees are 0.5%, - if Carmike's Debt to Cash Flow Ratio is equal to or greater than 4.5 to 1.0 but less than 5.0 to 1.0, then the applicable LIBOR margin is 2.25% and the commitment fees are 0.5%, - if Carmike's Debt to Cash Flow Ratio is equal to or greater than 4.0 to 1.0 but less than 4.5 to 1.0, then the applicable LIBOR margin is 2.0% and the commitment fees are 0.375%, or - if Carmike's Debt to Cash Flow Ratio is less than 4.0 to 1.0 then the applicable LIBOR margin is 1.75% and the commitment fees are 0.375%. The aggregate interest rate on the revolving credit facility was 8.2% through March 31, 1999. The obligations of Carmike under the revolving credit facility are guaranteed by all of Carmike's current subsidiaries and any future subsidiaries of Carmike. The revolving credit facility allowed Carmike to issue the notes and prohibits any change in the terms of or prepayment provisions with respect to the notes. In addition, the revolving credit facility has a minimum ratio of Consolidated Total Debt to Consolidated Cash Flow and Fixed Charge Coverage Ratio and a new minimum ratio of Consolidated Senior Funded Debt to Consolidated Cash Flow as well as a new minimum Adjusted Fixed Charge Coverage. In addition, the revolving credit facility contains negative and affirmative covenants, and events of default substantially similar to those of the term loan as described below. Carmike is required to make prepayments of the revolving credit facility and of loans under the term loan, on a pro rata basis, with the net cash proceeds of asset sales, excess cash flows, the sale of any new equity securities and insurance/condemnation proceedings. The 46 51 maximum available borrowings under the revolving credit facility will be reduced by the amount of any such prepayments, but in no event below $150.0 million. Once the commitments of the revolving credit facility reach $150.0 million, any prepayments will be applied solely to loans under the term loan until it is repaid in full as described below. The revolving credit facility also requires certain mandatory repayments if the lenders of the term loan waive prepayments thereunder. The revolving credit facility and the term loan rank pari passu. TERM LOAN General. The term loan provides up to a maximum aggregate principal amount of $75.0 million and has a maturity of six years. The proceeds of the term loan were used to refinance outstanding borrowings under, and reduce commitments with respect to, the revolving credit facility. Interest Rates; Fees. Interest accrues on the term loan at a floating rate per annum initially equal to, at Carmike's option, either: (1) the Base Rate plus 1.75%, or (2) the Adjusted LIBOR Rate plus 2.75%. The applicable margins over the index used to determine the interest rate are adjustable from time to time following the fiscal quarter ending March 31, 1999 based upon Carmike's Total Leverage Ratio as follows: - if Carmike's Total Leverage Ratio is equal to or greater than 5.0 to 1.0, the applicable margin for the Base Rate is 2.0% and for the Adjusted LIBOR Rate is 3.0%, - if Carmike's Total Leverage Ratio is equal to or greater than 4.0 but less than 5.0 to 1.0, the applicable margin for the Base Rate is 1.75% and for the Adjusted LIBOR Rate is 2.75%, or - if Carmike's Total Leverage Ratio is less than 4.0 to 1.0, the applicable margin for the Base Rate is 1.50% and for the Adjusted LIBOR Rate is 2.50%. The Base Rate is defined as, on any date, the greatest of (1) the prime commercial lending rate of Wachovia Bank, N.A., (2) the prime commercial lending rate of Goldman Sachs Credit Partners, L.P. and (3) the overnight Federal Funds Rate plus 0.50%. The aggregate interest rate on the term loan was 8.1% through March 31, 1999. Guarantees. The obligations of Carmike under the term loan are guaranteed by all of Carmike's current wholly-owned subsidiaries and any future subsidiaries of Carmike. Prepayments. As discussed above, Carmike is required to apply pro rata the net proceeds of certain transactions to make prepayments on the revolving credit facility and on the term loan. If the holders of the term loan waive the right to receive any such mandatory prepayments, the prepayment is expected to be applied to the prepayment of the revolving credit facility. Any mandatory prepayments made before the twelfth month anniversary of the funding of the term loan are expected to be subject to a prepayment premium equal to 1.0% of the principal prepaid. 47 52 Conditions and Covenants. Carmike and each of its wholly-owned subsidiaries are subject to certain negative covenants customary for credit agreements, including, without limitation, covenants that restrict, subject to specified exceptions: (1) investments, loans and advances; (2) the incurrence of additional indebtedness and other obligations; and (3) mergers, acquisitions, investments and acquisitions and dispositions of assets. The term loan also contains customary affirmative covenants, including compliance with environmental and other laws, maintenance of corporate existence and rights, and the payment of taxes. In addition, the term loan requires Carmike to maintain compliance with certain specified financial covenants, including a minimum adjusted fixed charge coverage ratio, a maximum total leverage ratio, a maximum senior leverage ratio and a minimum fixed charge coverage ratio. Some of these financial, negative and affirmative covenants are more restrictive than those contained in the indenture. Events of Default. The term loan also includes events of default, including, without limitation, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties in any material respect, cross defaults to certain other indebtedness and agreements, bankruptcy and insolvency events, material judgments and liabilities, defaults or judgments under ERISA and change of control. The occurrence of any of such events of default could result in acceleration of Carmike's obligations under the term loan and foreclosure on the collateral securing such obligations, which could have material adverse results to holders of the notes. LEASING ARRANGEMENTS As of December 31, 1998, Carmike owned 88 of its theatres, had 322 ground and improvement leases and 49 ground leases. Minimum annual rent payments on these leased theatres totaled $53.1 million in 1998 and are expected to increase in 1999. Carmike is a party to the master lease with Movieplex Realty Leasing, L.L.C., which provides up to $75.0 million for financing the development of multiplex theatres, of which approximately $43.8 million was available as of March 31, 1999. Theatres leased pursuant to the master lease have lease terms of 16 years, and Carmike assumes responsibility for all operating expenses of the properties. 48 53 DESCRIPTION OF THE EXCHANGE NOTES You can find the definitions of some terms used in this description under the subheading "Certain Definitions." In this description, the word "Carmike" refers only to Carmike Cinemas, Inc. and not to any of its subsidiaries. The exchange notes will be issued, and the original notes were issued, under an Indenture dated as of February 3, 1999 (the "Indenture"), among Carmike, the Guarantors and The Bank of New York, as trustee (the "Trustee"). The exchange notes will evidence the same debt as the original notes, and both series of notes will be entitled to the benefits of the Indenture and will be treated as a single class of debt securities. Upon effectiveness of the registration statement of which this prospectus is a part, the Indenture will be subject to and governed by the Trust Indenture Act of 1939. The following description is a summary of the material provisions of the notes, the Indenture and the Exchange and Registration Rights Agreement relating to the notes (the "Registration Rights Agreement"). It does not restate those documents in their entirety. We urge you to read the notes, the Indenture and the Registration Rights Agreement because they, and not this description, define your rights as holders of the notes. Copies of the Indenture, including a form of the notes, and the Registration Rights Agreement are available as set forth below under "-- Additional Information." BRIEF DESCRIPTION OF THE NOTES AND THE SUBSIDIARY GUARANTEES The Notes The notes: - are general unsecured obligations of Carmike; - are subordinated in right of payment to all existing and future Senior Debt of Carmike; - are pari passu in right of payment with any future senior subordinated Indebtedness of Carmike; and - are unconditionally guaranteed by the Guarantors. The Subsidiary Guarantees The notes are guaranteed by all of the Domestic Subsidiaries of Carmike that are Restricted Subsidiaries. 49 54 The Subsidiary Guarantees of the notes: - are general unsecured obligations of each Guarantor; - are subordinated in right of payment to all existing and future Senior Debt of each Guarantor; and - are pari passu in right of payment with any future senior subordinated Indebtedness of each Guarantor. As of the date of this prospectus, all of our Subsidiaries are "Restricted Subsidiaries," except for Military Services, Inc. which has been designated as an Unrestricted Subsidiary. Under the circumstances described below under the subheading "Certain Covenants -- Designation of Restricted and Unrestricted Subsidiaries," we will be permitted to designate certain of our other subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be subject to most of the restrictive covenants in the Indenture. Our Unrestricted Subsidiaries will not guarantee the notes. PRINCIPAL, MATURITY AND INTEREST Carmike has issued notes with an aggregate principal amount of $200.0 million, in denominations of $1,000 and integral multiples of $1,000. The notes will mature on February 1, 2009. The Indenture provides for the issuance by Carmike of notes with a maximum aggregate principal amount of $350.0 million. Carmike may issue additional notes (the "Additional Notes") from time to time, subject to the covenant described below under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." The notes and any Additional Notes subsequently issued under the Indenture would be treated as a single class for all purposes under the Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. Interest on the notes accrues at the rate of 9 3/8% per annum and will be payable semi-annually in arrears on February 1 and August 1, beginning on August 1, 1999. Carmike will make each interest payment to the noteholders of record on the immediately preceding January 15 and July 15. Interest on the notes accrues from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. METHODS OF RECEIVING PAYMENTS ON THE NOTES If a holder has given wire transfer instructions to Carmike, Carmike will pay all principal, interest (including Special Interest) and premium, if any, on that Holder's notes in accordance with those instructions. All other payments on the notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless Carmike elects to 50 55 make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders. PAYING AGENT AND REGISTRAR FOR THE NOTES The Trustee will initially act as Paying Agent and Registrar. Carmike may change the Paying Agent or Registrar without prior notice to the Holders, and Carmike or any of its Subsidiaries may act as Paying Agent or Registrar. TRANSFER AND EXCHANGE A Holder may transfer or exchange notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and Carmike may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. Carmike is not required to transfer or exchange any note selected for redemption. Also, Carmike is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed. The registered Holder of a note will be treated as the owner of it for all purposes. SUBSIDIARY GUARANTEES The Guarantors jointly and severally guarantee Carmike's obligations under the notes. Each Subsidiary Guarantee is subordinated to the prior payment in full of all Senior Debt of that Guarantor. The obligations of each Guarantor under its Subsidiary Guarantee are limited as necessary to prevent that Subsidiary Guarantee from constituting a fraudulent conveyance under applicable law. See "Risk Factors -- Fraudulent Conveyance Matters." A Guarantor may not sell or otherwise dispose of all or substantially all of its assets, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person (other than Carmike or another Guarantor) unless: (1) immediately after giving effect to that transaction, no Default or Event of Default exists; and (2) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger assumes all the obligations of that Guarantor under the Indenture, its Subsidiary Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee. The Subsidiary Guarantee of a Guarantor will be released: (1) in connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of Carmike; or 51 56 (2) in connection with any sale of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of Carmike; or (3) if Carmike properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary. SUBORDINATION The payment of principal, interest (including Special Interest) and premium, if any, on the notes will be subordinated to the prior payment in full of all Senior Debt of Carmike, including Senior Debt incurred after the date of the Indenture. The holders of Senior Debt will be entitled to receive payment in full of all Obligations due in respect of Senior Debt (including interest after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt) before the Holders of notes will be entitled to receive any payment with respect to the notes (except that Holders of notes may receive and retain Permitted Junior Securities and payments made from the trust described under the subheading "-- Legal Defeasance and Covenant Defeasance"), in the event of any distribution to creditors of Carmike: (1) in a liquidation or dissolution of Carmike; (2) in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to Carmike or its property; (3) in an assignment for the benefit of creditors; or (4) in any marshaling of Carmike's assets and liabilities. Carmike also may not make any payment in respect of the notes (except in Permitted Junior Securities or from the trust described under "-- Legal Defeasance and Covenant Defeasance") if: (1) a payment default on Designated Senior Debt occurs and is continuing beyond any applicable grace period; or (2) any other default occurs and is continuing on any series of Designated Senior Debt that permits holders of that series of Designated Senior Debt to accelerate its maturity and the Trustee receives a notice of such default (a "Payment Blockage Notice") from Carmike or the holders of any Designated Senior Debt. Payments on the notes may and shall be resumed: (1) in the case of a payment default, upon the date on which such default is cured or waived; and 52 57 (2) in case of a nonpayment default, the earlier of the date on which such nonpayment default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of any Designated Senior Debt has been accelerated. No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 180 days. If the Trustee or any Holder of the notes receives a payment in respect of the notes (except in Permitted Junior Securities or from the trust described under "-- Legal Defeasance and Covenant Defeasance") when: (1) the payment is prohibited by these subordination provisions; and (2) the Trustee or the Holder has been notified (as a result of the receipt of a Payment Blockage Notice or otherwise) that the payment is prohibited; the Trustee or the Holder, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt. Upon the proper written request of the holders of Senior Debt, the Trustee or the Holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt or their proper representative. Carmike must promptly notify holders of Senior Debt if payment of the notes is accelerated because of an Event of Default. As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of Carmike, Holders of notes may recover less ratably than creditors of Carmike who are holders of Senior Debt. See "Risk Factors -- Subordination." OPTIONAL REDEMPTION At any time before February 1, 2002, Carmike may on any one or more occasions redeem up to 35% of the aggregate principal amount of notes issued under the Indenture at a redemption price of 109.375% of the principal amount of the notes, plus accrued and unpaid interest (including Special Interest) to the redemption date, with the net cash proceeds of one or more Equity Offerings; provided that: (1) at least 65% of the aggregate principal amount of notes issued under the Indenture remain outstanding immediately after the occurrence of such redemption (excluding notes held by Carmike and its Subsidiaries); and 53 58 (2) the redemption must occur within 60 days of the date of the closing of such Equity Offering. Except pursuant to the preceding paragraph, the notes will not be redeemable at Carmike's option before February 1, 2004. After February 1, 2004, Carmike may redeem all or a part of the notes upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest (including Special Interest) to the applicable redemption date, if redeemed during the twelve-month period beginning on February 1 of the years indicated below:
YEAR PERCENTAGE ---- ---------- 2004......................... 104.688% 2005......................... 103.125% 2006......................... 101.563% 2007 and thereafter.......... 100.000%
MANDATORY REDEMPTION Carmike is not required to make mandatory redemption or sinking fund payments with respect to the notes. REPURCHASE AT THE OPTION OF HOLDERS Change of Control If a Change of Control occurs, each Holder of notes will have the right to require Carmike to repurchase all or any part (equal to $1,000 or an integral multiple of $1,000) of that Holder's notes pursuant to a Change of Control Offer. In the Change of Control Offer, Carmike will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest (including Special Interest) to the date of purchase. Within ten days following any Change of Control, Carmike will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase notes on the Change of Control Payment Date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed pursuant to the procedures required by the Indenture and described in such notice. Carmike will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, Carmike will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such conflict. 54 59 On the Change of Control Payment Date, Carmike will, to the extent lawful: (1) accept for payment all notes or portions of the notes properly tendered pursuant to the Change of Control Offer; (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all notes or portions of the notes so tendered; and (3) deliver or cause to be delivered to the Trustee the notes so accepted together with an Officers' Certificate stating the aggregate principal amount of notes or portions of the notes being purchased by Carmike. The Paying Agent will promptly mail to each Holder of notes so tendered the Change of Control Payment for such notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new note equal in principal amount to any unpurchased portion of the notes surrendered, if any; provided that each such new note will be in a principal amount of $1,000 or an integral multiple of $1,000. Prior to complying with any of the provisions of this "Change of Control" covenant, but in any event within 90 days following a Change of Control, Carmike will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of notes required by this covenant. Carmike will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The provisions described above that require Carmike to make a Change of Control Offer following a Change of Control will be applicable regardless of whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the notes to require that Carmike repurchase or redeem the notes in the event of a takeover, recapitalization or similar transaction. The agreements governing Carmike's outstanding Senior Debt prohibit Carmike from purchasing any notes, and provide that certain change of control events with respect to Carmike would constitute a default under the agreements governing the Senior Debt. Any future credit agreements or other agreements relating to Senior Debt to which Carmike becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when Carmike is prohibited from purchasing notes, Carmike could seek the consent of its senior lenders to the purchase of notes or could attempt to refinance the borrowings that contain such prohibition. If Carmike does not obtain such a consent or repay such borrowings, Carmike will remain prohibited from purchasing notes. In such case, Carmike's failure to purchase tendered notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of notes. 55 60 Carmike will not be required to make a Change of Control Offer upon a Change of Control if: (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by Carmike and (2) the third party purchases all notes validly tendered and not withdrawn under such Change of Control Offer. The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the properties or assets of Carmike and its Restricted Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase "substantially all," there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of notes to require Carmike to repurchase such notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of Carmike and its Restricted Subsidiaries taken as a whole to another Person or group may be uncertain. SELECTION AND NOTICE If less than all of the notes are to be redeemed at any time, the Trustee will select notes for redemption as follows: (1) if the notes are listed, in compliance with the requirements of the principal national securities exchange on which the notes are listed; or (2) if the notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. No notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any note is to be redeemed in part only, the notice of redemption that relates to that note shall state the portion of the principal amount of the notes to be redeemed. A new note in principal amount equal to the unredeemed portion of the original note will be issued in the name of the Holder of the note upon cancellation of the original note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on notes or portions of them called for redemption. 56 61 CERTAIN COVENANTS Fall-Away Event Carmike's and its Restricted Subsidiaries' obligations to comply with the provisions of the Indenture described below under the subheadings "-- Restricted Payments," "-- Incurrence of Indebtedness and Issuance of Preferred Stock," "-- No Senior Subordinated Debt," "-- Merger, Consolidation or Sale of Assets" and "-- Transactions with Affiliates" will terminate if and when the notes achieve Investment Grade Status (a "Fall-Away Event"); provided, however, that Carmike's and its Restricted Subsidiaries' obligations to comply with such provisions shall be reinstated as to events occurring after the date of reinstatement if the notes cease to be of Investment Grade Status, subject to the terms, conditions and obligations set forth in the Indenture. As a result, upon the occurrence of a Fall-Away Event, the Holders of notes will be entitled to substantially reduced covenant protection. Restricted Payments Carmike will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other payment or distribution on account of Carmike's Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving Carmike) or to the direct or indirect holders of Carmike's Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of Carmike or to Carmike); (2) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving Carmike) any Equity Interests of Carmike or any direct or indirect parent of Carmike; (3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the notes or the Subsidiary Guarantees, except a payment of interest or principal at the Stated Maturity of the notes; or (4) make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (2) Carmike would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness (other 57 62 than Permitted Debt) pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described below under the subheading "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments declared or made after the date of the Indenture shall not exceed, at the date of determination, the sum of: (a) an amount equal to 100% of Carmike's Consolidated EBITDA since the date of the Indenture to the end of Carmike's most recently ended full fiscal quarter for which internal financial statements are available, taken as a single accounting period, less the product of 2.0 times Carmike's Consolidated Interest Expense since the date of the Indenture to the end of Carmike's most recently ended full fiscal quarter for which internal financial statements are available, taken as a single accounting period, plus (b) an amount equal to 100% of the aggregate net proceeds, including the fair market value of property other than cash, received by Carmike from the sale of Equity Interests since the date of the Indenture (other than (i) sales of Disqualified Stock, and (ii) Equity Interests sold to any of Carmike's Subsidiaries), plus (c) without duplication of any amount included in clause 3(b) above, 100% of the aggregate net proceeds, including the fair market value of property other than cash, received by Carmike as a capital contribution since the date of the Indenture, plus (d) $60.0 million or 10% of Total Tangible Assets of Carmike and its consolidated Subsidiaries, whichever is greater, as determined in accordance with GAAP as of the date of the most recently prepared internal balance sheet of Carmike, plus (e) to the extent that any Unrestricted Subsidiary is redesignated as a Restricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by Carmike and its Restricted Subsidiaries in the Subsidiary so redesignated. So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit: (1) the payment of any dividend within 60 days after the date of declaration of the dividend, if at said date of declaration such payment would have complied with the provisions of the Indenture; (2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of Carmike or any Guarantor or of any Equity Interests of Carmike in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of Carmike) of, Equity Interests of Carmike (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause 3(b) of the preceding paragraph; 58 63 (3) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of Carmike or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (4) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of Carmike or any Subsidiary of Carmike held by any employee, director or consultant of Carmike (or any of its Subsidiaries) pursuant to any equity subscription agreement or stock option or similar agreement; provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $2.5 million in any twelve-month period; (5) repurchases of Equity Interests deemed to occur upon exercise of Equity Interests if such Equity Interests represent a portion of the exercise price of such warrants, options or rights; (6) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of Carmike or any of its Restricted Subsidiaries or any class or series of Preferred Stock of Restricted Subsidiaries of Carmike, in each case, issued in accordance with the covenant described below under the subheading "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" and (7) the declaration and payment of dividends to holders of the Existing Preferred Stock. The amount of all Restricted Payments, other than cash, shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by Carmike or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Board of Directors in good faith whose resolution with respect thereto shall be delivered to the Trustee. To the extent the issuance of Capital Stock and the receipt of capital contributions are applied to permit the issuance of Indebtedness pursuant to clause (12) of the definition of Permitted Debt, the issuance of such Capital Stock and the receipt of such capital contributions shall not be applied to Restricted Payments under this covenant. Incurrence of Indebtedness and Issuance of Preferred Stock Carmike will not, and will not permit any of its Restricted Subsidiaries to, directly, or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt) and Carmike will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; provided, however, that Carmike may incur Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock, and Carmike's Restricted Subsidiaries may incur Indebtedness or issue shares of Preferred 59 64 Stock, if Carmike's Leverage Ratio at the time of incurrence of such Indebtedness or the issuance of such Disqualified Stock or Preferred Stock, after giving pro forma effect to such incurrence or issuance as set forth in the definition of "Leverage Ratio," would have been no greater than 7.0 to 1. The first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness, issuances of Preferred Stock, or acquisitions of Indebtedness, Disqualified Stock or Preferred Stock (collectively, "Permitted Debt"): (1) the incurrence by Carmike and any of its Restricted Subsidiaries of additional Indebtedness and letters of credit pursuant to Credit Facilities (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of Carmike and its Restricted Subsidiaries thereunder) in an aggregate principal amount at any one time outstanding under this clause (1) not to exceed $275.0 million; (2) the incurrence by Carmike and its Restricted Subsidiaries of the Existing Indebtedness; (3) the incurrence by Carmike and the Guarantors of Indebtedness represented by the notes issued on the date of the Indenture and the exchange notes to be issued pursuant to the Registration Rights Agreement (including, in each case, the Subsidiary Guarantees); (4) the incurrence by Carmike or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2), (3), (4), (12) or (13) of this paragraph; (5) the incurrence by Carmike or any of its Restricted Subsidiaries of intercompany Indebtedness between or among Carmike and any of its Restricted Subsidiaries; provided, however, that: (a) if Carmike or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the notes, in the case of Carmike, or the Subsidiary Guarantee, in the case of a Guarantor; and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than Carmike or a Restricted Subsidiary of Carmike and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either Carmike or a Restricted Subsidiary of Carmike; shall be deemed, in each case, to constitute an incurrence of such Indebtedness by Carmike or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5); (6) the issuance by Carmike or any of its Restricted Subsidiaries of Preferred Stock that is held solely by Carmike and/or any of its Restricted Subsidiaries; provided, however, that: 60 65 (a) if Carmike or any Guarantor is the issuer of such Preferred Stock, such Preferred Stock (a) must not be mandatorily redeemable or redeemable at the option of the issuer or the holder of the Preferred Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature; (b) if such Preferred Stock is exchangeable into Indebtedness, such Indebtedness shall not be Permitted Debt unless it meets the criteria of one or more of the categories of Permitted Debt described in clauses (1) through (13); and (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Preferred Stock being held by a Person other than Carmike or a Restricted Subsidiary of Carmike and (ii) any sale or other transfer of any such Preferred Stock to a Person that is not either Carmike or a Restricted Subsidiary of Carmike; shall be deemed, in each case, to constitute an issuance of such Preferred Stock by Carmike or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); (7) the incurrence by Carmike or any of its Restricted Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness that is permitted by the terms of this Indenture to be outstanding or currency exchange risk other than solely for speculative purposes; (8) the guarantee by Carmike or any of the Guarantors of Indebtedness of Carmike or a Restricted Subsidiary of Carmike that was permitted to be incurred by another provision of this covenant; (9) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this covenant; (10) Indebtedness in respect of performance bonds, reimbursement obligations with respect to letters of credit, bankers' acceptances, completion guarantees and surety or appeal bonds provided by Carmike or any of its Restricted Subsidiaries in the ordinary course of their business or Indebtedness with respect to reimbursement type obligations regarding workers' compensation claims; (11) Indebtedness arising from agreements providing for indemnification, adjustment of purchase price or similar obligations, or from guarantees or letters of credit, surety bonds or performance bonds securing any obligations of Carmike or any of its Restricted Subsidiaries pursuant to such agreements, in each case incurred in connection with the disposition of any business assets or Subsidiaries of Carmike (other than guarantees of Indebtedness or other obligations incurred by any Person acquiring all or any portion of such business assets or Restricted Subsidiaries of Carmike for the purpose of financing such acquisition) in a principal amount not to exceed the gross proceeds, including non-cash proceeds, actually received by Carmike or any of its Restricted Subsidiaries in connection with such disposition; provided, however, that such Indebtedness is not reflected on the balance sheet of Carmike or any 61 66 Restricted Subsidiary (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (11)); (12) Indebtedness, Disqualified Stock or Preferred Stock of Persons that are acquired by Carmike or any of its Restricted Subsidiaries or merged into a Restricted Subsidiary in accordance with the terms of the Indenture; provided, however, that such Indebtedness, Disqualified Stock or Preferred Stock is not incurred in contemplation of such acquisition or merger; and provided further that after giving effect to such acquisition or merger, either (i) Carmike would be permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Debt) pursuant to the Leverage Ratio set forth in the first paragraph of this covenant or (ii) Carmike's Leverage Ratio immediately after giving effect to such acquisition or merger would be lower than Carmike's Leverage Ratio immediately prior to such acquisition or merger; and (13) additional Indebtedness of Carmike or any of its Restricted Subsidiaries in an aggregate principal amount which, when aggregated with the aggregate principal amount of all other Indebtedness then outstanding and incurred pursuant to this clause (13), does not at any one time outstanding exceed the sum of (x) $100.0 million and (y) 100% of the net cash proceeds received by Carmike from the sale of its Equity Interests (other than Disqualified Stock) after the date of the Indenture to the extent such net cash proceeds have not been applied to make Restricted Payments or to effect other transactions pursuant to the covenant described above under the subheading "-- Restricted Payments." For purposes of determining compliance with this "Incurrence of Indebtedness and Issuance of Preferred Stock" covenant, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (13) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, Carmike will be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of the Indebtedness, in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which notes are first issued and authenticated under the Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. Notwithstanding the foregoing, Carmike will not incur or suffer to exist, or permit any of its Restricted Subsidiaries or its Unrestricted Subsidiaries to incur or suffer to exist, any Obligations with respect to an Unrestricted Subsidiary that would violate the provisions set forth in the definition of Unrestricted Subsidiary. Specifically, without limiting the generality of the foregoing, if an Unrestricted Subsidiary incurs Indebtedness that is not Non-Recourse Debt or any Indebtedness of an Unrestricted Subsidiary ceases to be Non-Recourse Debt, such Unrestricted Subsidiary shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of Carmike as of such date. Notwithstanding any other provision of this covenant, Carmike will not issue any Indebtedness in exchange for the Existing Preferred Stock unless the Weighted Average Life to 62 67 Maturity of such Indebtedness is at least one year longer than the remaining Weighted Average Life to Maturity of the notes. No Senior Subordinated Debt Carmike will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of Carmike and senior in any respect in right of payment to the notes. No Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Guarantor and senior in any respect in right of payment to such Guarantor's Subsidiary Guarantee. Merger, Consolidation or Sale of Assets Carmike may not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not Carmike is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of Carmike and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; unless: (1) either: (a) Carmike is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than Carmike) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state or the District of Columbia; (2) the Person formed by or surviving any such consolidation or merger (if other than Carmike) or the Person to which such sale, assignment, transfer, conveyance or other disposition shall have been made assumes all the obligations of Carmike under the notes, the Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; (3) immediately after such transaction no Default or Event of Default exists; and (4) Carmike or the Person formed by or surviving any such consolidation or merger (if other than Carmike), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made will either: (a) on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness (other than Permitted Debt) pursuant to the Leverage Ratio test set forth in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" or (b) have a Leverage Ratio less than the Leverage Ratio of Carmike immediately prior to such transaction. 63 68 Notwithstanding the foregoing clauses (2) and (4), (A) any Restricted Subsidiary of Carmike may consolidate with, merge into or transfer all or part of its properties and assets to Carmike or to another Restricted Subsidiary and (B) Carmike may merge with an Affiliate of Carmike organized solely for the purpose of reorganizing Carmike in another jurisdiction in the United States to realize tax or other benefits. In addition, Carmike may not, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. This "Merger, Consolidation or Sale of Assets" covenant will not apply to a sale, assignment, transfer, conveyance or other disposition of assets between or among Carmike and any of its Wholly Owned Restricted Subsidiaries. Transactions with Affiliates Carmike will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate in any single transaction or series of related transactions involving aggregate payments or consideration in excess of $5.0 million (each, an "Affiliate Transaction"), unless: (1) such Affiliate Transaction is on terms that are no less favorable to Carmike or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Carmike or such Restricted Subsidiary with an unrelated Person; and (2) Carmike delivers to the Trustee with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors. The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph: (1) reasonable and customary directors' fees, indemnification and similar arrangements and payments thereunder; (2) any obligations of Carmike under any employment agreement, noncompetition or confidentiality agreement with any officer of Carmike, as in effect on the date of the Indenture (provided that each amendment of any of the foregoing agreements shall be subject to the limitations of this covenant); (3) Restricted Payments that are permitted by the provisions of the Indenture described above under the subheading "-- Restricted Payments;" 64 69 (4) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors; (5) loans or advances to employees in the ordinary course of business of Carmike or any of its Restricted Subsidiaries consistent with the past practices; (6) payments by Carmike or any of its Restricted Subsidiaries to PIA or its Affiliates made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking or similar services, including, without limitation, in connection with acquisitions or divestitures, which payments are approved by a majority of the Board of Directors in good faith; (7) transactions in which Carmike or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to Carmike or such Restricted Subsidiary from a financial point of view or that it is on terms that are no less favorable than those that might reasonably have been obtained in a comparable transaction on an arms-length basis from a person that is not an Affiliate; (8) the existence of, or the performance by Carmike or any of its Restricted Subsidiaries of its obligations under the terms of, the Stock Purchase Agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the date of the Indenture and any similar agreements that it may enter into thereafter; provided, however, that the existence of, or the performance by Carmike or any of its Restricted Subsidiaries of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the date of the Indenture shall only be permitted by this clause (8) to the extent that the terms, taken as a whole, of any such amendment or new agreement are not otherwise disadvantageous to the Holders in any material respect; (9) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the Indenture which are fair to Carmike or its Restricted Subsidiaries, in the reasonable determination of their Board of Directors or management, or are on terms, taken as a whole, at least as favorable as might reasonably have been obtained at such time from a person that is not an Affiliate; (10) any agreement as in effect since the date of the Indenture or any amendment thereto (so long as any such amendment, taken as a whole, is not disadvantageous to the Holders in any material respect) or any transaction contemplated thereby; and (11) any purchase of Capital Stock (other than Disqualified Stock) of Carmike by our Affiliates. 65 70 Additional Subsidiary Guarantees If Carmike or any of its Subsidiaries acquires or creates another Domestic Subsidiary after the date of the Indenture, then that newly acquired or created Domestic Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee within 10 Business Days of the date on which it was acquired or created; provided, however, this covenant shall not apply to any Subsidiary that has been properly designated as an Unrestricted Subsidiary in accordance with the covenant described under the subheading "-- Designation of Restricted and Unrestricted Subsidiaries" for so long as it continues to constitute an Unrestricted Subsidiary. Designation of Restricted and Unrestricted Subsidiaries The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by Carmike and its Restricted Subsidiaries in the Subsidiary so designated will be deemed to be a Restricted Investment made as of the time of such designation and will either reduce the amount available for Restricted Payments under the first paragraph of the covenant described above under the caption "-- Restricted Payments" or reduce the amount available for future Permitted Investments, as Carmike shall determine. That designation will only be permitted if such Restricted Investment would be permitted at that time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (1) Carmike could incur at least $1.00 of additional Indebtedness (other than Permitted Debt) pursuant to the Leverage Ratio set forth in the first paragraph of the covenant described above under the subheading "-- Incurrence of Indebtedness and Issuance of Preferred Stock" and (2) no Default or Event of Default shall have occurred or be continuing. Any designation pursuant to this covenant by the Board of Directors shall be evidenced to the Trustee by the filing with the Trustee of a certified copy of the resolution of the Board of Directors giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. Payments for Consent Carmike will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the notes unless such consideration is offered to be paid and is paid to all Holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. 66 71 REPORTS Whether or not required by the SEC, so long as any notes are outstanding, Carmike will furnish to the Holders of notes, within the time periods specified in the SEC's rules and regulations: (1) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if Carmike were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by Carmike's certified independent accountants; and (2) all current reports that would be required to be filed with the SEC on Form 8-K if Carmike were required to file such reports. If Carmike has designated any of its Subsidiaries as Unrestricted Subsidiaries and if any of its Unrestricted Subsidiaries would constitute a Significant Subsidiary or any group of Unrestricted Subsidiaries, taken as a whole, would constitute a Significant Subsidiary, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in Management's Discussion and Analysis of Financial Condition and Results of Operations, of the financial condition and results of operations of Carmike and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of Carmike. In addition, following the completion of the exchange offer contemplated by the Registration Rights Agreement, whether or not required by the SEC, Carmike will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, Carmike and the Guarantors have agreed that, for so long as any notes remain outstanding, they will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT AND REMEDIES Each of the following is an Event of Default: (1) default for 30 days in the payment when due of interest (including Special Interest) on the notes whether or not prohibited by the subordination provisions of the Indenture; (2) default in payment when due of the principal of, or premium, if any, on the notes, whether or not prohibited by the subordination provisions of the Indenture; 67 72 (3) failure by Carmike or any of its Restricted Subsidiaries to comply with the provisions described under the captions "Repurchase at the Option of Holders -- Change of Control," "Certain Covenants -- Restricted Payments," "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock" or "Certain Covenants -- Merger, Consolidation or Sale of Assets;" (4) failure by Carmike or any of its Restricted Subsidiaries for 60 days after notice to comply with any of the other agreements in the Indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by Carmike or any of its Restricted Subsidiaries (or the payment of which is guaranteed by Carmike or any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists, or is created after the date of the Indenture, if that default: (a) is caused by a failure to pay principal of, or interest or premium, if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default"); or (b) results in the acceleration of such Indebtedness prior to its express maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more; (6) failure by Carmike or any of its Significant Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 consecutive days; and (7) except as permitted by the Indenture, the Subsidiary Guarantee of any Significant Restricted Subsidiary shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any such Guarantor, or any Person acting on behalf of any Guarantor that is a Significant Restricted Subsidiary, shall deny or disaffirm its obligations under its Subsidiary Guarantee; and (8) certain events of bankruptcy or insolvency with respect to Carmike or any of its Significant Restricted Subsidiaries. In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to Carmike or any Significant Restricted Subsidiary, all outstanding notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding notes may declare all the notes to be due and payable immediately. 68 73 Holders of the notes may not enforce the Indenture or the notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest, including Special Interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest (including Special Interest) on, or the principal of, the notes. In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of Carmike with the intention of avoiding payment of the premium that Carmike would have had to pay if Carmike then had elected to redeem the notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the notes. If an Event of Default occurs prior to February 1, 2004, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of Carmike with the intention of avoiding the prohibition on redemption of the notes prior to February 1, 2004, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the notes. Carmike is required to deliver to the Trustee annually a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, Carmike is required to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No past, present or future director, officer, employee, incorporator or stockholder of Carmike or any Guarantor, as such, shall have any liability for any obligations of Carmike or the Guarantors under the notes, the Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws. LEGAL DEFEASANCE AND COVENANT DEFEASANCE Carmike may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding notes and all obligations of the Guarantors discharged with respect to their Subsidiary Guarantees ("Legal Defeasance") except for: 69 74 (1) the rights of Holders of outstanding notes to receive payments in respect of the principal of, or interest (including Special Interest) on, or premium, if any, on such notes when such payments are due from the trust referred to below; (2) Carmike's obligations with respect to the notes concerning issuing temporary notes, registration of notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust; (3) the rights, powers, trusts, duties and immunities of the Trustee, and Carmike's obligations in connection therewith; and (4) the Legal Defeasance provisions of the Indenture. In addition, Carmike may, at its option and at any time, elect to have the obligations of Carmike and the Guarantors released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (1) Carmike must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the notes, cash in U.S. dollars, non-callable Government Securities or a combination of cash and Government Securities, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest (including Special Interest) and premium, if any, on the outstanding notes on the stated maturity or on the applicable redemption date, as the case may be, and Carmike must specify whether the notes are being defeased to maturity or to a particular redemption date; (2) in the case of Legal Defeasance, Carmike shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) Carmike has received from, or there has been published by, the IRS a ruling or (b) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (3) in the case of Covenant Defeasance, Carmike shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same 70 75 amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (4) no Default or Event of Default shall have occurred and be continuing either: (a) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); or (b) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which Carmike or any of its Subsidiaries is a party or by which Carmike or any of its Subsidiaries is bound; (6) Carmike must have delivered to the Trustee an Opinion of Counsel to the effect that, assuming no intervening bankruptcy of Carmike or any Guarantor between the date of deposit and the 91st day following the deposit and assuming that no Holder is an "insider" of Carmike under applicable bankruptcy law, after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (7) Carmike must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by Carmike with the intent of preferring the Holders of notes over the other creditors of Carmike with the intent of defeating, hindering, delaying or defrauding creditors of Carmike or others; (8) Carmike must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with; and (9) Carmike must deliver to the Trustee the written consent of the holders of each series of Senior Debt or their designated representative. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture or the notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes), and any existing default or compliance with any provision of the Indenture or the notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any notes held by a non-consenting Holder): 71 76 (1) reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any note or alter the provisions with respect to the redemption of the notes (other than provisions relating to the covenant described above under the caption "-- Repurchase at the Option of Holders"); (3) reduce the rate of or change the time for payment of interest on any note; (4) waive a Default or Event of Default in the payment of principal of, or interest (including Special Interest) or premium, if any, on the notes (except a rescission of acceleration of the notes by the Holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration); (5) make any note payable in money other than that stated in the notes; (6) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of notes to receive payments of principal of, or interest (including Special Interest) or premium, if any, on the notes; (7) waive a redemption payment with respect to any note (other than a payment required by the covenant described above under the caption "-- Repurchase at the Option of Holders"); (8) make any change in the preceding amendment and waiver provisions; or (9) release any Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of the Indenture. In addition, any amendment to, or waiver of, the provisions of the Indenture relating to subordination that adversely affects the rights of the Holders of the notes will require the consent of the Holders of at least 75% in aggregate principal amount of notes then outstanding. Notwithstanding the preceding, without the consent of any Holder of notes, Carmike, the Guarantors and the Trustee may amend or supplement the Indenture or the notes: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated notes in addition to or in place of certificated notes; (3) to provide for the assumption of Carmike's obligations to Holders of notes in the case of a merger or consolidation or sale of all or substantially all of Carmike's assets; 72 77 (4) to make any change that would provide any additional rights or benefits to the Holders of notes or that does not adversely affect the legal rights under the Indenture of any such Holder; (5) to provide for the issuance of Additional Notes in accordance with the provisions set forth in the Indenture; or (6) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE If the Trustee becomes a creditor of Carmike or any Guarantor, the Indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. ADDITIONAL INFORMATION Anyone who receives this prospectus may obtain a copy of the Indenture and Registration Rights Agreement without charge by writing to Carmike Cinemas, Inc., 1301 First Avenue, Columbus, Georgia 31901, Attention: General Counsel. BOOK-ENTRY, DELIVERY AND FORM The certificates representing the exchange notes will be issued in fully registered form and will be deposited with the Trustee as custodian for the Depository Trust Company, New York, New York ("DTC") and registered in the name of a nominee of DTC. 73 78 Initially, the Trustee will act as Paying Agent and Registrar. The notes may be presented for registration of transfer and exchange at the offices of the Registrar. DEPOSITORY PROCEDURES DTC has advised Carmike that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers of the notes), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the 74 79 "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests and transfer of ownership interests of each actual purchaser of each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised Carmike that, pursuant to procedures established by it, (1) upon deposit of the global exchange notes, DTC will credit the accounts of Participants designated by the initial purchasers of the notes with portions of the principal amount of the global exchange notes and (2) ownership of such interests in the global exchange notes will be shown on, and the transfer of ownership of the global exchange notes will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the global exchange notes). Investors in the global notes may hold their interests therein directly through DTC, if they are Participants in such system, or indirectly through organizations (including Euroclear and Cedel) which are Participants in such system. Investors in the Regulation S global notes must initially hold their interests therein through Euroclear or Cedel, if they are participants in such systems, or indirectly through organizations that are participants in such systems. After the expiration of the Restricted Period (but not earlier), investors may also hold interests in the Regulation S global notes through organizations other than Euroclear and Cedel that are participants in DTC. Euroclear and Cedel will hold interests in the Regulation S global notes on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositories, which are Morgan Guaranty Trust Company of New York, Brussels office, as operator of Euroclear, and Citibank, N.A., as operator of Cedel. All interests in a global note, including those held through Euroclear or Cedel, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Cedel may also be subject to the procedures and requirements of such systems. The laws of some states require that certain persons take physical delivery in definitive, certificated form of securities that they own. Consequently, the ability to transfer beneficial interests in a global note to such persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants and certain banks, the ability of a person having a beneficial interest in a global note to pledge such interest to persons or entities that do not participate in the DTC system, or otherwise take actions in respect of such interest, may be affected by the lack of a physical certificate evidencing such interest. EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL EXCHANGE NOTES WILL NOT HAVE EXCHANGE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF EXCHANGE NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR "HOLDERS" OF THE EXCHANGE NOTES UNDER THE INDENTURE FOR ANY PURPOSE. Payments in respect of the principal of, premium, if any, and interest (including Special Interest) on a global note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered Holder under the Indenture. Under the terms of the Indenture, Carmike and the Trustee will treat the persons in whose names the exchange notes, including the global 75 80 exchange notes, are registered as the owners of the exchange notes for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, neither Carmike, the Trustee nor any agent of Carmike or the Trustee has or will have any responsibility or liability for (1) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interest in the global exchange notes, or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the global exchange notes or (2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advised Carmike that its current practice, upon receipt of any payment in respect of securities such as the exchange notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date, in amounts proportionate to their respective holdings in the principal amount of beneficial interest in the relevant security such as the global exchange note as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of exchange notes will be governed by standing instructions and customary practices and will not be the responsibility of DTC, the Trustee or Carmike. Neither Carmike nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the exchange notes, and Carmike and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee as the registered owner of the exchange note for all purposes. Except for trades involving only Euroclear and Cedel participants, interests in the global exchange notes will trade in DTC's Same-Day Funds Settlement System and secondary market trading activity in such interests will, therefore, settle in immediately available funds, subject in all cases to the rules and procedures of DTC and its Participants. Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same day funds. Transfers between participants in Euroclear and Cedel will be effected in the ordinary way in accordance with their respective rules and operating procedures. Subject to compliance with the transfer restrictions applicable to the exchange notes described herein, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Cedel participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Cedel, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Cedel, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant global exchange note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Cedel participants may not deliver instructions directly to the depositories for Euroclear or Cedel. 76 81 DTC has advised Carmike that it will take any action permitted to be taken by a Holder of exchange notes only at the direction of one or more Participants to whose account DTC has credited the interests in the global exchange notes and only in respect of such portion of the aggregate principal amount of the exchange notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the exchange notes, DTC reserves the right to exchange the global exchange notes for legended notes in certificated form, and to distribute such notes to its Participants. The information in this section concerning DTC, Euroclear and Cedel and their book-entry systems has been obtained from sources that Carmike believes to be reliable, but Carmike takes no responsibility for the accuracy thereof. Although DTC, Euroclear and Cedel have agreed to the foregoing procedures to facilitate transfers of interests in the global notes among Participants in DTC, Euroclear and Cedel, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither Carmike nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Cedel or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES A global note is exchangeable for definitive exchange notes in registered certificated form if (1) DTC (A) notifies Carmike that it is unwilling or unable to continue as depositary for the global notes and Carmike thereupon fails to appoint a successor depositary or (B) has ceased to be a clearing agency registered under the Exchange Act, (2) Carmike, at its option, notifies the Trustee in writing that it elects to cause the issuance of the certificated notes or (3) there shall have occurred and be continuing a Default or Event of Default with respect to the exchange notes. In addition, beneficial interests in a global note may be exchanged for certificated exchange notes upon request but only upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, certificated exchange notes delivered in exchange for any global note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures). EXCHANGE OF CERTIFICATED NOTES FOR BOOK-ENTRY NOTES Certificated notes may only be exchanged for beneficial interests in global notes if the transferor first delivers to the Trustee a written certificate in the form provided in the Indenture to the effect that the transfer will comply with the appropriate transfer restrictions described in the Indenture. 77 82 SAME DAY SETTLEMENT AND PAYMENT The Indenture requires that payments in respect of the notes represented by the global notes (including principal, premium, if any, and interest (including Special Interest)) be made by wire transfer of immediately available funds to the accounts specified by the global note holder. With respect to notes in certificated form, Carmike will make all payments of principal, premium, if any, and interest (including Special Interest), by wire transfer of immediately available funds to the accounts specified by the Holders of the notes or, if no such account is specified, by mailing a check to each such Holder's registered address. Carmike expects that secondary trading in any certificated notes will also be settled in immediately available funds. Because of time zone differences, the securities account of a Euroclear or Cedel participant purchasing an interest in a global note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Cedel participant, during the securities settlement processing day (which must be a business day for Euroclear and Cedel) immediately following the settlement date of DTC. DTC has advised Carmike that cash received in Euroclear or Cedel as a result of sales of interests in a global note by or through a Euroclear or Cedel participant to a Participant in DTC will be received with value on the settlement date of 78 83 DTC but will be available in the relevant Euroclear or Cedel cash account only as of the business day for Euroclear or Cedel following DTC's settlement date. REGISTRATION RIGHTS; SPECIAL INTEREST In connection with the issuance of the original notes, Carmike entered into the exchange and registration rights agreement with the initial purchasers (the "Registration Rights Agreement"). The following description is a summary of the material provisions of the Registration Rights Agreement. This summary does not purport to be complete and is qualified in its entirety by reference to all the provisions of the Registration Rights Agreement, a copy of which is filed as an exhibit hereto. Pursuant to the Registration Rights Agreement, Carmike has agreed to file with the SEC the registration statement of which this prospectus is a part with respect to the exchange notes. Upon the effectiveness of the registration statement, Carmike will offer to the Holders of Transfer Restricted Securities pursuant to the exchange offer who are able to make certain representations the opportunity to exchange their Transfer Restricted Securities for exchange notes. If: (1) Carmike is not (a) required to file the Exchange Offer Registration Statement; or (b) permitted to consummate the exchange offer because the exchange offer is not permitted by applicable law or SEC policy; or (2) any Holder of Transfer Restricted Securities notifies Carmike prior to the 20th day following completion of the exchange offer that: (a) it is prohibited by law or SEC policy from participating in the exchange offer; or (b) that it may not resell the exchange notes acquired by it in the exchange offer to the public without delivering a prospectus and the prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales; or (c) that it is a broker-dealer and owns notes acquired directly from Carmike or an affiliate of Carmike, Carmike will file with the SEC a Shelf Registration Statement to cover resales of the notes by the Holders of the notes who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. 79 84 Carmike will use its reasonable best efforts to cause the applicable registration statement to be declared effective as promptly as possible by the SEC. For purposes of the preceding, "Transfer Restricted Securities" means each note until: (1) the date on which such note has been exchanged by a person other than a broker-dealer for an exchange note in the exchange offer; (2) following the exchange by a broker-dealer in the exchange offer of a note for an exchange note, the date on which such exchange note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement; (3) the date on which such note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement; or (4) the date on which such note is distributed to the public pursuant to Rule 144 under the Securities Act. The Registration Rights Agreement provides: (1) Carmike will file an Exchange Offer Registration Statement with the SEC on or prior to 90 days after the Closing Date; (2) Carmike will use its reasonable best efforts to have the Exchange Offer Registration Statement declared effective by the SEC on or prior to 180 days after the Closing Date; (3) unless the exchange offer would not be permitted by applicable law or SEC policy, Carmike will (a) commence the exchange offer; and (b) use its reasonable best efforts to issue on or prior to 30 business days, or longer, if required by the federal securities laws, after the date on which the Exchange Offer Registration Statement was declared effective by the SEC, exchange notes in exchange for all notes tendered prior thereto in the exchange offer; and (4) if obligated to file the Shelf Registration Statement, Carmike will use its reasonable best efforts to file the Shelf Registration Statement with the SEC on or prior to 45 days after such filing obligation arises and to cause the Shelf Registration to be declared effective by the SEC on or prior to 120 days after such obligation arises. 80 85 If: (1) Carmike fails to file any of the Registration Statements required by the Registration Rights Agreement on or before the date specified for such filing; or (2) any of such Registration Statements is not declared effective by the SEC on or prior to the date specified for such effectiveness (the "Effectiveness Target Date"); or (3) Carmike fails to consummate the exchange offer within 45 business days after the initial effective date of the Exchange Registration Statement; or (4) any of the registration statements required by the Registration Rights Agreement is declared effective but thereafter shall either be withdrawn by Carmike or become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Act suspending the effectiveness of such registration statement during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (1) through (4) above a "Registration Default" and, each period during which a Registration Default has occurred and is continuing, a "Registration Default Period"), then, as liquidated damages for such Registration Default, Special Interest, in addition to the Base Interest (as defined in the Registration Rights Agreement), shall accrue at a per annum rate of 0.25% for the first 90 days of the Registration Default Period, at a per annum rate of 0.50% for the second 90 days of the Registration Default Period, at a per annum rate of 0.75% for the third 90 days of the Registration Default Period and at a per annum rate of 1.0% thereafter for the remaining portion of the Registration Default Period. All accrued Special Interest will be paid by Carmike on each Interest Payment Date to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Securities by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of Special Interest will cease. Holders of notes will be required to make certain representations to Carmike (as described in the Registration Rights Agreement) in order to participate in the exchange offer and will be required to deliver certain information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their notes included in the Shelf Registration Statement and benefit from the provisions regarding Special Interest set forth above. 81 86 CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings. "Asset Acquisition" means: (1) any transaction pursuant to which any Person shall become a Restricted Subsidiary of Carmike or shall be consolidated or merged with Carmike or any Restricted Subsidiary of Carmike; or (2) the acquisition by Carmike or any Restricted Subsidiary of Carmike of assets of any Person comprising a division, line of business or theatre site of such Person. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning. "Capital Lease Obligation" means, at the time any determination of Capital Lease Obligation is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. 82 87 "Capital Stock" means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. "Change of Control" means the occurrence of any of the following: (1) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of Carmike and its Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Principal, a Related Party of the Principal, PIA, any of PIA's officers or directors or any Affiliate of PIA or any of PIA's officers or directors (collectively, the "Permitted Holders"); or (2) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than the Permitted Holders or any direct or indirect Subsidiary of any Permitted Holder or any Permitted Group, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of Carmike, measured by voting power rather than number of shares. "Consolidated EBITDA" means, for any period, the net income of Carmike and its Restricted Subsidiaries for such period plus, to the extent such amount was deducted in calculating such net income: (1) Consolidated Interest Expense; (2) income taxes; (3) depreciation expense; (4) amortization expense; (5) all other non-cash items, extraordinary items, nonrecurring and unusual items and the cumulative effects of changes in accounting principles reducing such net income, less all non-cash items, extraordinary items, nonrecurring and unusual items and cumulative effects of changes in accounting principles increasing such net income, all as determined on a consolidated basis for Carmike and its Restricted Subsidiaries in conformity with GAAP; 83 88 (6) upfront expenses resulting from equity offerings, investments, mergers, recapitalizations, option buyouts, Dispositions, Asset Acquisitions and similar transactions to the extent such expenses reduce net income; (7) restructuring charges reducing net income; and (8) gains or losses on Dispositions; provided that, Consolidated EBITDA shall not include: (x) the net income (or net loss) of any Person that is not a Restricted Subsidiary, except (I) with respect to net income, to the extent of the amount of dividends or other distributions actually paid to Carmike or any of its Restricted Subsidiaries by such Person during such period and (II) with respect to net losses, to the extent of the amount of investments made by Carmike or any Restricted Subsidiary in such Person during such period; (y) solely for the purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (3) of the covenant described under the subheading "Certain Covenants -- Restricted Payments" (and in such case, except to the extent includable pursuant to clause (x) above), the net income (or net loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with Carmike or any of its Restricted Subsidiaries or all or substantially all of the property and assets of such Person are acquired by Carmike or any of its Restricted Subsidiaries; and (z) the net income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary (other than any agreement or instrument evidencing Indebtedness or Preferred Stock outstanding on the date of the Indenture or incurred or issued thereafter in compliance with the covenant described under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock;" provided that the terms of any such agreement restricting the declaration and payment of dividends or similar distributions apply only in the event of a default with respect to a financial covenant or a covenant relating to payment (beyond any applicable period of grace) contained in such agreement or instrument and provided such terms are determined by Carmike to be customary in comparable financings and such restrictions are determined by Carmike not to materially affect Carmike's ability to make principal or interest payments on the notes when due). "Consolidated Indebtedness" means, with respect to any Person as of any date of determination, the sum, without duplication, of: (1) the total amount of Indebtedness of such Person and its Restricted Subsidiaries, plus 84 89 (2) the total amount of Indebtedness of any other Person, to the extent that such Indebtedness has been Guaranteed by the referent Person or one or more of its Restricted Subsidiaries, plus (3) the aggregate liquidation value of all Disqualified Stock of such Person and all Preferred Stock of Restricted Subsidiaries of such Person, in each case, determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any Person for any period, without duplication, the sum of: (1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, amortization or original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations); and (2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (3) any interest expense on Indebtedness of another Person that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon); excluding, however, any amount of such interest of any Restricted Subsidiary if the net income of such Restricted Subsidiary is excluded in the calculation of Consolidated EBITDA pursuant to clause (z) of the definition thereof (but only in the same proportion as the net income of such Restricted Subsidiary is excluded from the calculation of Consolidated EBITDA pursuant to clause (z) of the definition thereof), in each case, on a consolidated basis and in accordance with GAAP. "Construction Indebtedness Amount" shall mean, as of any date, an amount equal to the lesser of: (1) $100.0 million; and (2) the total Indebtedness of any Person and its Restricted Subsidiaries outstanding on the last day of the most recently ended period of Carmike for which internal financial statements are available incurred in connection with the construction or enhancement of motion picture theatres or screens that, on such date, are not yet open for business. "Credit Facilities" means one or more debt facilities or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters 85 90 of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time. "Debt Rating" shall mean the rating assigned to the notes by Moody's or S&P, as the case may be. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Designated Senior Debt" means: (1) any Indebtedness outstanding under Credit Facilities; and (2) after payment in full of all Obligations under Credit Facilities, any other Senior Debt permitted under the Indenture the principal amount of which is $25.0 million or more and that has been designated by Carmike as "Designated Senior Debt." "Disposition" means, with respect to any Person, any merger, consolidation or other business combination involving such Person (whether or not such Person is the Surviving Person) or the sale, assignment, or transfer, lease, conveyance or other disposition of all or substantially all of such Person's assets or Capital Stock. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require Carmike to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that Carmike may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption "Certain Covenants -- Restricted Payments." "Domestic Subsidiary" means, with respect to Carmike, any Subsidiary of Carmike that: (1) was formed under the laws of the United States of America, any state thereof or the District of Columbia; or (2) guarantees or otherwise becomes obligated with respect to any Indebtedness of Carmike. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). 86 91 "Equity Offering" means any underwritten offering of Qualified Capital Stock of Carmike. "Existing Indebtedness" means up to $41.9 million in aggregate principal amount of Indebtedness of Carmike and its Restricted Subsidiaries (other than Indebtedness under any Credit Facility) in existence on the date of the Indenture, until such amounts are repaid. "Existing Preferred Stock" means the convertible preferred stock of Carmike issued to GS Capital Partners III, L.P. and its affiliates pursuant to a Stock Purchase Agreement, dated November 22, 1998. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the date of the Indenture. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Guarantors" means each of: (1) Carmike's current Domestic Restricted Subsidiaries; and (2) any other subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of the Indenture; and their respective successors and assigns. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (1) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements; and (2) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of: (1) borrowed money; 87 92 (2) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (3) banker's acceptances; (4) representing Capital Lease Obligations; (5) the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (6) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date shall be: (1) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and (2) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness. For purposes of calculating the amount of any Indebtedness hereunder, (a) there shall be no double-counting of direct obligations, Guarantees and reimbursement obligations for letters of credit; (b) the principal amount of any Indebtedness of any Person arising by reason of such Person having granted or assumed a Lien on its property to secure Indebtedness of others shall be the lower of the fair market value of such property and the principal amount of such Indebtedness outstanding (or committed to be advanced) at the time of determination; (c) the principal amount of any Indebtedness of any Person arising by reason of such Person having Guaranteed Indebtedness of others where the amount of such Guarantee is limited to an amount less than the principal amount of the Indebtedness Guaranteed, shall be such amount as so limited; (d) the payment obligation for non-interest rate Hedging Obligations shall be equal to (i) zero, to the extent the notional amount of the Hedging Obligation is not greater than the reasonably anticipated requirements of Carmike and its Subsidiaries for the asset that is the subject of the Hedging Obligation, as such needs are projected by management of Carmike at the time the Hedging Obligation is entered into or (ii) the notional amount of such Hedging Obligation, to the extent such notional amount exceeds such reasonably anticipated requirements. "Independent Financial Advisor" means an accounting, appraisal, investment banking firm or consultant to Persons engaged in the motion picture exhibition and distribution business 88 93 of nationally recognized standing that is, in the judgment of the Board of Directors, qualified to perform the task for which it has been engaged. "Investment Grade Status" exists as of a date and thereafter if at such date either (i) the Debt Rating of Moody's is at least Baa3 (or the equivalent) or higher or (ii) the Debt Rating of S&P is at least BBB- (or the equivalent) or higher. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. "Leverage Ratio" means, as of any date, the ratio of: (1) Consolidated Indebtedness (excluding any Construction Indebtedness Amount and net of any cash and cash equivalents) of Carmike on such date to (2) the aggregate amount of Consolidated EBITDA of Carmike for the most recently ended four full fiscal quarter period of Carmike for which internal financial statements are available (the "Reference Period"). In addition to the foregoing, for purposes of this definition, "Consolidated EBITDA" shall be calculated on a pro forma basis after giving effect to (1) the issuance of the Existing Preferred Stock and the offering of the notes; (2) the incurrence of the Indebtedness or the issuance of the Disqualified Stock or other Preferred Stock (and the application of the proceeds therefrom) giving rise to the need to make such calculation and any incurrence or issuance (and the application of the proceeds therefrom) or repayment of other Indebtedness or Preferred Stock, other than the incurrence or repayment of Indebtedness for ordinary working capital purposes, at any time subsequent to the beginning of the Reference Period and on or prior to the date of determination, as if such incurrence (and the application of the proceeds thereof), or the repayment, as the case may be, occurred on the first day of the Reference Period; (3) any Dispositions, Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Subsidiaries (including any Person that becomes a Restricted Subsidiary as a result of such Asset Acquisition) incurring, assuming or otherwise becoming liable for or issuing Indebtedness or Preferred Stock) or Theatre Completions at any time on or subsequent to the first day of the Reference Period and on or prior to the date of determination, as if such Disposition, Asset Acquisition (including the incurrence, assumption or liability for any such Indebtedness or 89 94 Preferred Stock and also including any Consolidated EBITDA associated with such Asset Acquisition) or Theatre Completion had occurred on the first day of the Reference Period; (4) the effects of incremental contributions to Consolidated EBITDA that Carmike reasonably believes in good faith could have been achieved during the Reference Period as a result of such Asset Acquisition or Theatre Completion (regardless whether such incremental contributions could then be reflected in pro forma financial statements under GAAP, Regulation S-X promulgated by the SEC or any other regulation or policy of the SEC); provided, however, that such incremental contributions were identified and quantified in good faith in an Officers' Certificate delivered to the Trustee at the time of any calculation of the Leverage Ratio; and (5) any motion picture theatre that was permanently closed for business at any time on or subsequent to the first day of the Reference Period and on or prior to the date of determination as if such theatre was closed on the first day of the Reference Period. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset securing Indebtedness, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Moody's" means Moody's Investors Service, Inc. or any successor to the rating agency business thereof. "Non-Recourse Debt" means Indebtedness: (1) as to which neither Carmike nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) constitutes the lender; (2) no default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the notes) of Carmike or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of Carmike or any of its Restricted Subsidiaries. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. 90 95 "Permitted Group" means any group of investors that is deemed to be a "person" (as that term is used in Section 13(d)(3) of the Exchange Act) by virtue of the Stock Purchase Agreement, as the same may be amended, modified or supplemented from time to time, provided that no single Person (other than the Principal and the Principal's Related Parties) Beneficially Owns (together with its Affiliates) more of the Voting Stock of Carmike that is Beneficially Owned by such group of investors than is then collectively Beneficially Owned by the Principal and the Principal's Related Parties in the aggregate. "Permitted Investments" means any one or more Investments in any one or more Unrestricted Subsidiaries of Carmike made since the date of the Indenture having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this definition not to exceed $10.0 million at any time outstanding. "Permitted Junior Securities" means: (1) Equity Interests in Carmike or any Guarantor; or (2) debt securities that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the notes and the Subsidiary Guarantees are subordinated to Senior Debt under the Indenture. "Permitted Refinancing Indebtedness" means any Indebtedness of Carmike or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of Carmike or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of all customary expenses and premiums incurred in connection therewith); (2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (3) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the notes on terms at least as favorable to the Holders of notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and 91 96 (4) such Indebtedness is incurred either by Carmike or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "PIA" means Goldman, Sachs & Co. and its Affiliates. "Preferred Stock" of any Person means any Capital Stock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemptions or upon liquidation. "Principal" means Michael W. Patrick. "Qualified Capital Stock" means any Capital Stock that is not Disqualified Stock. "Related Party" means: (1) any controlling stockholder, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of the Principal; or (2) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of the Principal and/or such other Persons referred to in the immediately preceding clause (1). "Restricted Investments" means any Investment in an Unrestricted Subsidiary other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc., or any successor to the rating agency business thereof. "Senior Debt" means: (1) all Indebtedness of Carmike or any Guarantor outstanding under Credit Facilities and all Hedging Obligations with respect thereto; (2) any other Indebtedness of Carmike or any Guarantor permitted to be incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the notes or any Subsidiary Guarantee; and (3) all Obligations with respect to the items listed in the preceding clauses (1) and (2). Notwithstanding anything to the contrary in the preceding, Senior Debt will not include: 92 97 (1) any liability for federal, state, local or other taxes owed or owing by Carmike; (2) any Indebtedness of Carmike to any of its Subsidiaries or other Affiliates; (3) any trade payables; or (4) the portion of any Indebtedness that is incurred in violation of the Indenture. "Significant Restricted Subsidiary" means any Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the Indenture. "Significant Subsidiary" means any Subsidiary that would be a "Significant Subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date of the Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stock Purchase Agreement" means that certain Stock Purchase Agreement, dated as of November 22, 1998, by and between Carmike and GS Capital Partners III, L.P. and certain related parties, as in effect on the date of the Indenture. "Subsidiary" means, with respect to any specified Person: (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "Surviving Person" means, with respect to any Person involved in or that makes any Disposition, the Person formed by or surviving such Disposition or the Person to which such Disposition is made. "Theatre Completion" means any motion picture theatre or screen or enhancement which was first opened for business during any applicable period. 93 98 "Total Tangible Assets" means the total consolidated assets of Carmike and its Restricted Subsidiaries, less total consolidated intangible assets of Carmike and its Restricted Subsidiaries, in each case, as shown on the most recent balance sheet of Carmike. "Unrestricted Subsidiary" means Military Services, Inc. and each Subsidiary of Carmike created after the date of the Indenture and so designated by a resolution adopted by the Board of Directors; provided, however, that, in each case: (1) such Subsidiary had no Indebtedness other than Non-Recourse Debt; and (2) at the time of designation of such Subsidiary, such Subsidiary has no property or assets (other than de minimis assets resulting from the initial capitalization of such Subsidiary). "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any specified Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries of such Person. 94 99 PLAN OF DISTRIBUTION Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of exchange notes received in exchange for original notes where such original notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period not to exceed 180 days after the exchange offer has been completed, we will make this prospectus, as amended or supplemented, available to any broker-dealer that reasonably requests such documents for use in connection with any such resale. We will not receive any proceeds from any sale of exchange notes by broker-dealers. Exchange notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of such exchange notes may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit of any such resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 180 days after the exchange offer has been completed, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents in the letter of transmittal. We have agreed to pay certain expenses incident to the exchange offer, other than commission or concessions of any brokers or dealers, and will indemnify the holders of the exchange notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. By acceptance of this exchange offer, each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer agrees that, upon receipt of notice from Carmike of the happening of any event which makes any statement in the prospectus untrue in any material respect or requires the making of any changes in the prospectus in order to make the statements therein not misleading (which notice we agree to deliver promptly to such broker-dealer), such broker-dealer will suspend use of the prospectus until we have amended or supplemented the prospectus to correct such misstatement or omission and have furnished copies of the amended or supplemental prospectus to such broker-dealer. 95 100 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS SCOPE OF DISCUSSION This general discussion of certain United States federal income and estate tax consequences applies to you if you acquire the notes at original issue for cash and hold the notes as a "capital asset," generally, for investment, under Section 1221 of the Internal Revenue Code. This summary, however, does not consider state, local or foreign tax laws. In addition, it does not include all of the rules which may affect the United States tax treatment of your investment in the notes. For example, special rules not discussed here may apply to you if you are: - a broker-dealer, a dealer in securities or a financial institution; - an S corporation; - an insurance company; - a tax-exempt organization; - subject to the alternative minimum tax provisions of the Internal Revenue Code; - holding the notes as part of a hedge, straddle or other risk reduction or constructive sale transaction; or - a nonresident alien or foreign corporation subject to net-basis United States federal income tax on income or gain derived from a note because such income or gain is effectively connected with the conduct of a United States trade or business. This discussion only represents our best attempt to describe certain federal income tax consequences that may apply to you based on current United States federal tax laws. This discussion may in the end inaccurately describe the federal income tax consequences which are applicable to you because the law may change, possibly retroactively, and because the IRS or any court may disagree with this discussion. THIS SUMMARY MAY NOT COVER YOUR PARTICULAR CIRCUMSTANCES BECAUSE IT DOES NOT CONSIDER FOREIGN, STATE OR LOCAL TAX RULES, DISREGARDS CERTAIN FEDERAL TAX RULES, AND DOES NOT DESCRIBE FUTURE CHANGES IN FEDERAL TAX RULES. PLEASE CONSULT YOUR TAX ADVISOR RATHER THAN RELYING ON THIS GENERAL DESCRIPTION. UNITED STATES HOLDERS If you are a "United States Holder," as defined below, this section applies to you. Otherwise, the next section, "Non-United States Holders," applies to you. Definition of United States Holder. You are a "United States Holder" if you hold the notes and you are: 96 101 - a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the "substantial presence" test under Section 7701(b) of the Internal Revenue Code; - a corporation or partnership created or organized in the United States or under the laws of the United States or of any political subdivision of the United States; - an estate, the income of which is subject to United States federal income tax regardless of its source; or - a trust, if a United States court can exercise primary supervision over the administration of the trust and one or more United States persons can control all substantial decisions of the trust, or if the trust was in existence on August 20, 1996 and has elected to continue to be treated as a United States person. Taxation of Stated Interest. You must generally pay federal income tax on the interest on the notes: - a when it accrues, if you use the accrual method of accounting for United States federal income tax purposes; or - a when you receive it, if you use the cash method of accounting for United States federal income tax purposes. Sale or Other Taxable Disposition of the Notes. You must recognize taxable gain or loss on the sale, exchange, redemption, retirement or other taxable disposition of a note. The amount of your gain or loss equals the difference between the amount you receive for the note (in cash or other property, valued at fair market value), minus the amount attributable to accrued interest on the note, minus your adjusted tax basis in the note. Your initial tax basis in a note equals the price you paid for the note. Your gain or loss will generally be a long-term capital gain or loss if you have held the note for more than one year. Otherwise, it will be a short-term capital gain or loss. Payments attributable to accrued interest which you have not yet included in income will be taxed as ordinary interest income. Backup Withholding. You may be subject to a 31% backup withholding tax when you receive interest payments on the note or proceeds upon the sale or other disposition of a note. Certain holders (including, among others, corporations and certain tax-exempt organizations) are generally not subject to backup withholding. In addition, the 31% backup withholding tax will not apply to you if you provide your taxpayer identification number ("TIN") in the prescribed manner unless: - the IRS notifies us or our agent that the TIN you provided is incorrect; 97 102 - you fail to report interest and dividend payments that you receive on your tax return and the IRS notifies us or our agent that withholding is required; or - you fail to certify under penalties of perjury that you are not subject to backup withholding. If the 31% backup withholding tax does apply to you, you may use the amounts withheld as a refund or credit against your United States federal income tax liability as long as you provide certain information to the IRS. NON-UNITED STATES HOLDERS Definition of Non-United States Holder. A "Non-United States Holder" is any person other than a United States Holder. Please note that if you are subject to United States federal income tax on a net basis on income or gain with respect to a note because such income or gain is effectively connected with the conduct of a United States trade or business, this disclosure does not cover the United States federal tax rules that apply to you. Interest. Portfolio Interest Exemption. You will generally not have to pay United States federal income tax on interest paid on the notes because of the "portfolio interest exemption" if either: - you represent that you are not a United States person for United States federal income tax purposes and you provide your name and address to us or our paying agent on a properly executed IRS Form W-8 (or a suitable substitute form) signed under penalties of perjury; or - a securities clearing organization, bank, or other financial institution that holds customers' securities in the ordinary course of its business holds the note on your behalf, certifies to us or our agent under penalties of perjury that it has received IRS Form W-8 (or a suitable substitute) from you or from another qualifying financial institution intermediary, and provides a copy to us or our agent. You will not, however, qualify for the portfolio interest exemption described above if: - you own, actually or constructively, 10% or more of the total combined voting power of all classes of our capital stock; - you are a controlled foreign corporation with respect to which we are "related person" within the meaning of Section 864(d)(4) of the Internal Revenue Code; - you are a bank receiving interest described in Section 881(c) (3)(A) of the Internal Revenue Code; 98 103 Withholding Tax if the Interest Is Not Portfolio Interest. If you do not claim, or do not qualify for, the benefit of the portfolio interest exemption, you may be subject to a 30% withholding tax on interest payments made on the notes. However, you may be able to claim the benefit of a reduced withholding tax rate under an applicable income tax treaty. The required information for claiming treaty benefits is generally submitted, under current regulations, on Form 1001. Successor forms will require additional information, as discussed below under the heading "Non-United States Holders -- New Withholding Regulations." Reporting. We may report annually to the IRS and to you the amount of interest paid to, and the tax withheld, if any, with respect to you. Sale or Other Disposition of the Notes. You will generally not be subject to United States federal income tax or withholding tax on gain recognized on a sale, exchange, redemption, retirement, or other disposition of a note. You may, however, be subject to tax on such gain if: you are an individual who was present in the United States for 183 days or more in the taxable year of the disposition, in which case you may have to pay a United States federal income tax of 30% (or a reduced treaty rate) on such gain, and you may also be subject to withholding tax; or - you are an individual who is a former citizen or resident of the United States, your loss of citizenship or residency occurred within the last ten years (and, if you are a former resident, on or after February 6, 1995), and it had as one of its principal purposes the avoidance of United States tax, in which case you may be taxed on the net gain derived from the sale under the graduated United States federal income tax rates that are applicable to United States citizens and resident aliens, and you may be subject to withholding under certain circumstances. United States Federal Estate Taxes. If you qualify for the portfolio interest exemption under the rules described above when you die, the notes will not be included in your estate for United States federal estate tax purposes. Backup Withholding and Information Reporting. Payments From United States Office. If you receive payments of interest or principal directly from us or through the United States office of a custodian, nominee, agent or broker, there is a possibility that you will be subject to both backup withholding at a rate of 31% and information reporting. With respect to interest payments made on the note, however, backup withholding and information reporting will not apply if you certify, generally on a Form W-8 or substitute form, that you are not a United States person in the manner described above under the heading "Non-United States Holders -- Interest." Moreover, with respect to proceeds received on the sale, exchange, redemption, or other disposition of a note, backup withholding or information reporting generally will not apply if you properly provide, generally on Form W-8 or a substitute form, a statement that you are an "exempt foreign person" for purposes of the broker reporting rules, and other required information. If you are not subject to United States federal income or withholding tax on the sale 99 104 or other disposition of a note, as described above under the heading "Non-United States--Sale or Other Disposition of Notes," you will generally qualify as an "exempt foreign person" for purposes of the broker reporting rules. Payments From Foreign Office. If payments of principal and interest are made to you outside the United States by or through the foreign office of your foreign custodian, nominee or other agent, or if you receive the proceeds of the sale of a note through a foreign office of a "broker," as defined in the pertinent United States Treasury Regulations, you will generally not be subject to backup withholding or information reporting. You will, however, be subject to backup withholding and information reporting if the foreign custodian, nominee, agent or broker has actual knowledge or reason to know that the payee is a United States person. You will also be subject to information reporting, but not backup withholding, if the payment is made by a foreign office of a custodian, nominee, agent or broker that is a United States person or a controlled foreign corporation for United States federal income tax purposes, or that derives 50% or more of its gross income from the conduct of a United States trade or business for a specified three year period, unless the broker has in its records documentary evidence that you are a Non-United States Holder and certain other conditions are met. Refunds. Any amounts withheld under the backup withholding rules may be refunded or credited against the Non-United States Holder's United States federal income tax liability, provided that the required information is furnished to the IRS. New Withholding Regulations. New regulations relating to withholding tax on income paid to foreign persons (the "New Withholding Regulations") will generally be effective for payments made after December 31, 1999, subject to certain transition rules. The New Withholding Regulations modify and, in general, unify the way in which you establish your status as a non-United States "beneficial owner" eligible for withholding exemptions including the portfolio interest exemption, a reduced treaty rate or an exemption from backup withholding. For example, the new regulations will require new forms, which you will generally have to provide earlier than you would have had to provide replacements for expiring existing forms. The New Withholding Regulations clarify withholding agents' reliance standards. They also require additional certifications for claiming treaty benefits. The New Withholding Regulations also provide somewhat different procedures for foreign intermediaries and flow-through entities (such as foreign partnerships) to claim the benefit of applicable exemptions on behalf of non-United States beneficial owners for which or for whom they receive payments. The Net Withholding Regulations also amend the foreign broker office definition as it applies to partnerships. THE NEW WITHHOLDING REGULATIONS ARE COMPLEX AND THIS SUMMARY DOES NOT COMPLETELY DESCRIBE THEM. PLEASE CONSULT YOUR TAX ADVISOR TO DETERMINE HOW THE NEW WITHHOLDING REGULATIONS WILL AFFECT YOUR PARTICULAR CIRCUMSTANCES. 100 105 LEGAL MATTERS The validity of the notes offered hereby will be passed upon for Carmike by Troutman Sanders LLP, Atlanta, Georgia, and as to matters governed by New York law only, by Latham & Watkins, New York, New York. Carl E. Sanders, a partner of Troutman Sanders LLP, is a director of Carmike and at March 31, 1999, was the beneficial owner of 44,228 shares of Carmike's Class A Common Stock. EXPERTS Ernst & Young LLP, independent auditors, have audited our consolidated financial statements and schedule included in our Annual Report on Form 10-K for the year ended December 31, 1998, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements and schedule are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing. 101 106 WE HAVE NOT AUTHORIZED ANYONE TO GIVE ANY INFORMATION ABOUT THE EXCHANGE OFFER THAT IS NOT INCLUDED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE REGISTERED NOTES IN ANY PLACE WHERE, OR TO ANY PERSON WHOM, IT IS ILLEGAL TO DO SO. USE OF THIS PROSPECTUS DOES NOT IMPLY IN ANY WAY THAT THE INFORMATION IN THIS PROSPECTUS, AND OUR BUSINESS AFFAIRS GENERALLY, HAVE NOT CHANGED SINCE THE DATE OF THIS PROSPECTUS. 107 [ALTERNATE FRONT COVER PAGE FOR MARKET-MAKING PROSPECTUS] PROSPECTUS CARMIKE CINEMAS, INC. TERMS OF THE 9 3/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2009 GUARANTEES INTEREST - ---------- -------- The notes are guaranteed by our current and future The notes bear interest at a fixed annual rate of 9 wholly-owned United States subsidiaries. 3/8%. Interest will be paid on each February 1 and August 1 commencing August 1, 1999. RANKING MATURITY - ------- -------- The notes are unsecured obligations of Carmike Cinemas, The notes will mature on February 1, 2009. Inc. and are subordinated to all of our existing and future senior indebtedness. The guarantee of each guarantor is the unsecured obligation of that guarantor and is subordinated to all existing and future senior indebtedness of that guarantor.
OPTIONAL REDEMPTION MANDATORY OFFER TO REPURCHASE - ------------------- ----------------------------- At any time on or after February 1, 2004, we may redeem If we undergo a specific kind of change of control, we some or all of the notes at the prices specified herein. must offer to repurchase the notes at the prices specified herein. In addition, on or prior to February 1, 2002, we may redeem up to 35% of the notes at the prices specified herein, but only with the net cash proceeds from certain equity offerings.
INVESTING IN THE NOTES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE _____ FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE NOTES. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THIS PROSPECTUS HAS BEEN PREPARED FOR AND WILL BE USED BY GOLDMAN, SACHS & CO. IN CONNECTION WITH OFFERS AND SALES OF THE NOTES IN MARKET-MAKING TRANSACTIONS. THESE TRANSACTIONS MAY OCCUR IN THE OPEN MARKET OR MAY BE PRIVATELY NEGOTIATED, AT PRICES RELATED TO PREVAILING MARKET PRICES AT THE TIME OF SALE OR AT NEGOTIATED PRICES. GOLDMAN, SACHS & CO. MAY ACT AS PRINCIPAL OR AGENT IN THESE TRANSACTIONS. CARMIKE WILL NOT RECEIVE ANY OF THE PROCEEDS OF SUCH SALES OF THE NOTES BUT WILL BEAR THE EXPENSES OF REGISTRATION. THE DATE OF THIS PROSPECTUS IS ________________________, 1999. A-1 108 [ALTERNATE INSIDE FRONT COVER PAGE FOR MARKET-MAKING PROSPECTUS] TABLE OF CONTENTS
PAGE ---- Where You Can Find More Information.................................................................. Prospectus Summary................................................................................... Risk Factors......................................................................................... Incorporation by Reference........................................................................... Information About Carmike............................................................................ Use of Proceeds...................................................................................... Capitalization....................................................................................... Selected Financial and Operating Data................................................................ Description of Other Indebtedness.................................................................... Description of the Notes............................................................................. Plan of Distribution................................................................................. Legal Matters........................................................................................ Experts..............................................................................................
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION ABOUT CARMIKE THAT IS NOT INCLUDED IN OR DELIVERED WITH THE PROSPECTUS. THIS INFORMATION IS AVAILABLE WITHOUT CHARGE TO HOLDERS OF THE NOTES UPON WRITTEN OR ORAL REQUEST. REQUESTS SHOULD BE DIRECTED TO: CARMIKE CINEMAS, INC., ATTENTION: CORPORATE SECRETARY, 1301 FIRST AVENUE, COLUMBUS, GEORGIA 31901, TELEPHONE NUMBER (706) 576-3400. TO OBTAIN TIMELY DELIVERY, NOTEHOLDERS MUST REQUEST THE INFORMATION NO LATER THAN [___________]. WHERE YOU CAN FIND MORE INFORMATION We file reports, proxy statements and other information electronically with the Securities and Exchange Commission. The public may read and copy any materials Carmike files with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We are required by the indenture that governs the notes to furnish the trustee for the notes with annual reports containing consolidated financial statements audited by our independent public accountants and with quarterly reports containing unaudited condensed consolidated financial statements for each of the first three quarters of each fiscal year. The trustee for the notes is The Bank of New York. A-2 109 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] TRADING MARKET FOR THE EXCHANGE NOTES There is no existing trading market for the exchange notes, and we cannot assure you about the future development of a market for the exchange notes or the ability of the holders of the exchange notes to sell their exchange notes or the price at which such holders may be able to sell their exchange notes. If such market were to develop, the exchange notes could trade at prices that may be higher or lower than their initial offering price depending on many factors, including prevailing interest rates, Carmike's operating results and the market for similar securities. Although it is not obligated to do so, Goldman, Sachs & Co. intends to make a market in the exchange notes. Any such market-making activity may be discontinued at any time, for any reason, without notice at the sole discretion of Goldman, Sachs & Co. No assurance can be given as to the liquidity of or the trading market for the exchange notes. Goldman, Sachs & Co. may be deemed to be an affiliate of Carmike and, as such, may be required to deliver a prospectus in connection with its market-making activities in the exchange notes. Pursuant to the registration rights agreement, we have agreed to file and maintain a registration statement that would allow Goldman, Sachs & Co. to engage in market-making transactions in the exchange notes. Subject to certain exceptions, the registration statement will remain effective for as long as Goldman, Sachs & Co. may be required to deliver a prospectus in connection with market-making transactions in the exchange notes. We have agreed to bear substantially all the costs and expenses related to such registration statement. A-3 110 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] USE OF PROCEEDS This prospectus is delivered in connection with the sale of the exchange notes by Goldman, Sachs & Co. in market-making transactions. Carmike will not receive any of the proceeds from such transactions. A-4 111 [ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS] PLAN OF DISTRIBUTION This prospectus is to be used by Goldman, Sachs & Co. in connection with offers and sales of the exchange notes in market-making transactions effected from time to time. Goldman, Sachs & Co. may act as a principal or agent in such transactions, including as agent for the counterparty when acting as principal or as agent for both counterparties, and may receive compensation in the form of discounts and commissions, including from both counterparties when it acts as agent for both. Such sales will be made at prevailing market prices at the time of sale, at prices related thereto or at negotiated prices. Investment partnerships affiliated with Goldman, Sachs & Co. own 408,000 shares of Carmike's Class A Common Stock and 550,000 shares of Carmike's 5.5% Series A Senior Cumulative Convertible Exchangeable Preferred Stock. The Series A Preferred Stock is convertible at any time after November 30, 1999 into 2,200,000 shares of Carmike's Class A Common Stock (subject to certain adjustments). As of January 31, 1999, the shares of Class A Common Stock and Series A Preferred Stock held by affiliates of Goldman, Sachs & Co. represented 9.9% of the total voting interest of Carmike's outstanding voting securities. Goldman, Sachs & Co. has informed Carmike that it does not intend to confirm sales of the exchange notes to any accounts over which it exercises discretionary authority without the prior specific written approval of such transactions by the customer. Carmike has been advised by Goldman, Sachs & Co. that, subject to applicable laws and regulations, Goldman, Sachs & Co. currently intends to make a market in the exchange notes following completion of the Exchange Offer. However, Goldman, Sachs & Co. is not obligated to do so and any such market-making may be interrupted or discontinued at any time without notice. In addition, such market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act. There can be no assurance that an active trading market will develop or be sustained. See "Risk Factors - Trading Market for the Exchange Notes." Goldman, Sachs & Co. has provided investment banking services to Carmike in the past and may provide such services and financial advisory services to Carmike in the future. Goldman, Sachs & Co. acted as purchasers in connection with the initial sale of the original notes. Goldman, Sachs & Co. and Carmike have entered into a registration rights agreement with respect to the use by Goldman, Sachs & Co. of this prospectus. Pursuant to such agreement, Carmike agreed to bear substantially all registration expenses incurred under such agreement, and Carmike agreed to indemnify Goldman, Sachs & Co. against certain liabilities, including liabilities under the Securities Act. A-5 112 PART II. INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of Title 8 of the Delaware General Corporation Law gives a corporation power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The same Section also gives a corporation power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Also, the Section states that, to the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any such action, suit or proceeding, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Article VI of Carmike's By-Laws provides that Carmike shall indemnify the directors and officers of Carmike to the fullest extent authorized by the Delaware General Corporation Law. Article Ninth of Carmike's Certificate of Incorporation provides in regard to the limitation of liability of directors and officers as follows: II-1 113 No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction for which the director derived an improper personal benefit. This Article NINTH shall not eliminate or limit the liability of a director for any act or omission occurring prior to the time this Article NINTH became effective. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits.
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1 Purchase Agreement dated January 27, 1999 between Carmike, Eastwynn Theatres, Inc., Wooden Nickel Pub, Inc., Goldman Sachs & Co. and the purchasers named in Schedule I of the purchase agreement. 4.1 Indenture dated February 3, 1999 between Carmike and The Bank of New York (filed as Exhibit 4.1 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 4.2 Exchange and Registration Rights Agreement dated February 3, 1999 between Carmike, Eastwynn Theatres, Inc., Wooden Nickel Pub, Inc. and the purchasers named in Schedule I of the purchase agreement (filed as Exhibit 4.2 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 4.3 Form of Note (filed as Exhibit A to Exhibit 4.1 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 4.4 Form of Notation of Guarantee (filed as Exhibit E to Exhibit 4.1 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 5.1* Opinion of Troutman Sanders LLP. 5.2* Opinion of Latham & Watkins. 8* Opinion of Troutman Sanders LLP regarding tax matters. 12 Statement regarding computation of ratios of earnings.
II-2 114 23.1* Consent of Troutman Sanders LLP (contained in Exhibits 5.1 and 8). 23.2* Consent of Latham & Watkins (contained in Exhibit 5.2). 23.3 Consent of Ernst & Young LLP. 24 Power of attorney (included in the signature page to the registration statement). 25 Statement on Form T-1 of eligibility of trustee. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery.
- ------------ * To be filed by amendment. (b) Financial Statement Schedules. The following financial statement schedule was filed with Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No 1-11604), filed with the SEC on March 30, 1999, and is incorporated herein by reference: Schedule II -- Valuation and Qualifying Accounts Schedules not listed above have been omitted because they are inapplicable or the information required to be set forth therein is contained, or incorporated by reference, in Carmike's Consolidated Financial Statements or notes thereto. ITEM 22. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change in such information in the registration statement; provided, however, that the registrant need not file a post-effective amendment to include the information required to be included by subsection (i) or (ii) if such information is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act that are incorporated by reference in the registration statement. II-3 115 (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (d) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (e) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by II-4 116 first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (f) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-5 117 SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Georgia, on April 29, 1999. CARMIKE CINEMAS, INC. By: /s/ Michael W. Patrick ------------------------------------- Michael W. Patrick President and Chief Executive Officer POWER OF ATTORNEY We, the undersigned officers and directors of Carmike Cinemas, Inc., hereby severally constitute and appoint Michael W. Patrick and F. Lee Champion, III, and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, the registration statement on Form S-4 filed herewith and any and all pre-effective and post-effective amendments to said registration statement, and generally to do all such things in our names and on our behalf in our capacities as officers and directors to enable Carmike Cinemas, Inc. to comply with the provisions of the Securities Act, and all requirements of the SEC, hereby ratifying and confirming our signatures as they may be signed by our said attorneys or any of them, to said registration statement and any and all amendments thereto. Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities indicated below and as of the date above indicated.
Signature Title --------- ----- /s/ C.L. Patrick Chairman of the Board - ---------------------------------- C. L. Patrick /s/ Michael W. Patrick President, Chief Executive Officer and - ---------------------------------- Director Michael W. Patrick
118
Signature Title --------- ----- /s/ Larry M. Adams Senior Vice President -- Information - ------------------------------------ Systems (Chief Accounting Officer) Larry M. Adams /s/ Philip A. Smitley Assistant Vice President and - ------------------------------------ Controller (Chief Financial Officer) Philip A. Smitley /s/ F. Lee Champion, III Director - ------------------------------------ F. Lee Champion, III /s/ Elizabeth Cogan Fascitelli Director - ------------------------------------ Elizabeth Cogan Fascitelli /s/ Richard A. Friedman Director - ------------------------------------ Richard A. Friedman /s/ John W. Jordan, II Director - ------------------------------------ John W. Jordan, II /s/ Carl L. Patrick, Jr. Director - ------------------------------------ Carl L. Patrick, Jr. /s/ Carl E. Sanders Director - ------------------------------------ Carl E. Sanders /s/ David W. Zalaznick Director - ------------------------------------ David W. Zalaznick
119 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 1 Purchase Agreement dated January 27, 1999 between Carmike, Eastwynn Theatres, Inc., Wooden Nickel Pub, Inc., Goldman Sachs & Co. and the purchasers named in Schedule I of the purchase agreement. 4.1 Indenture dated February 3, 1999 between Carmike and The Bank of New York (filed as Exhibit 4.1 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 4.2 Exchange and Registration Rights Agreement dated February 3, 1999 between Carmike, Eastwynn Theatres, Inc., Wooden Nickel Pub, Inc. and the purchasers named in Schedule I of the purchase agreement (filed as Exhibit 4.2 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 4.3 Form of Note (filed as Exhibit A to Exhibit 4.1 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 4.4 Form of Notation of Guarantee (filed as Exhibit E to Exhibit 4.1 to Carmike's Annual Report on Form 10-K for the year ended December 31, 1998 (SEC File No. 1-11604) and incorporated in this registration statement by reference). 5.1* Opinion of Troutman Sanders LLP. 5.2* Opinion of Latham & Watkins. 8* Opinion of Troutman Sanders LLP regarding tax matters. 12 Statement regarding computation of ratios of earnings. 23.1* Consent of Troutman Sanders LLP (contained in Exhibits 5.1 and 8). 23.2* Consent of Latham & Watkins (contained in Exhibit 5.2). 23.3 Consent of Ernst & Young LLP. 24 Power of attorney (included in the signature page to the registration statement). 25 Statement on Form T-1 of eligibility of trustee. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery.
- ------------ * To be filed by amendment. EX-1 2 PURCHASE AGREEMENT DATED JANUARY 27,1999 1 EXHIBIT 1 CARMIKE CINEMAS, INC. 9 3/8% SENIOR SUBORDINATED NOTES DUE 2009 UNCONDITIONALLY GUARANTEED AS TO THE PAYMENT OF PRINCIPAL, PREMIUM, IF ANY AND INTEREST BY EASTWYNN THEATRES, INC. WOODEN NICKEL PUB, INC. PURCHASE AGREEMENT JANUARY 27, 1999 Goldman, Sachs & Co., As representatives of the several Purchasers named in Schedule I hereto, c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 Ladies and Gentlemen: Carmike Cinemas, Inc., a Delaware corporation (the "COMPANY"), proposes, subject to the terms and conditions stated herein, to issue and sell to the Purchasers named in Schedule I hereto (each, a "PURCHASER" and, collectively, the "PURCHASERS") an aggregate of $200,000,000 principal amount of the 9 3/8% Senior Subordinated Notes due 2009 (the "SECURITIES") of the Company. The Securities will be unconditionally guaranteed as to the payment of principal, premium, if any and interest (the "GUARANTEES") by each of the entities named in Schedule II hereto (each, a "GUARANTOR" and, collectively, the "GUARANTORS"). Prior to or upon consummation of the Offering, the Company will issue irrevocable redemption notices to the holders of the Existing Notes referred to below (the "REDEMPTION NOTICES") to redeem all of its outstanding (i) 7.90% Senior Notes due 2002, (ii) 7.52% Senior Notes due 2003, and (iii) 10.53% Senior Notes due 2005 (collectively, the "EXISTING NOTES") at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest and any applicable premium on a date that is not more than 45 days after the Time of Delivery (as defined in Section 4(a)). Such redemption is herein called the "EXISTING NOTE REDEMPTION". 1. Each of the Company and the Guarantors, jointly and severally, represents and warrants to, and agrees with, each of the Purchasers that: (a) A preliminary offering circular, dated January 12, 1999 (the "PRELIMINARY OFFERING CIRCULAR"), and an offering circular, dated January 27, 1999 (the "OFFERING CIRCULAR"), in each case including the international supplement thereto, have been prepared in connection with the offering of the Securities and the Guarantees. Any reference to the 2 Preliminary Offering Circular or the Offering Circular shall be deemed to refer to and include any Additional Issuer Information (as defined in Section 5(f)) furnished by the Company prior to the completion of the distribution of the Securities. The Preliminary Offering Circular or the Offering Circular and any amendments or supplements thereto did not and will not, as of their respective dates, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by a Purchaser through Goldman, Sachs & Co. expressly for use therein; (b) Neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included in the Offering Circular any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular; and, since the respective dates as of which information is given in the Offering Circular, there has not been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries (a "Material Adverse Effect"), otherwise than as set forth or contemplated in the Offering Circular; (c) The Company and each of its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Offering Circular or such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries; (d) The Company and each of its subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular, and has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction; (e) The Company has an authorized capitalization as set forth in the Offering Circular, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and 2 3 issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims except that the Company owns only 80% of the outstanding issued shares of capital stock of Military Services, Inc.; (f) This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors; (g) The Securities have been duly authorized and, when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the indenture, to be dated as of February 3, 1999 (the "INDENTURE"), between the Company and The Bank of New York, as Trustee (the "TRUSTEE") under which they are to be issued; the Indenture has been duly authorized and, when executed and delivered by the Company and the Trustee, the Indenture will constitute a valid and legally binding instrument of the Company, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and the Securities and the Indenture will conform in all material respects to the descriptions thereof in the Offering Circular and will be in substantially the form previously delivered to you; (h) The Guarantees have been duly authorized and, upon the due authorization, issuance and delivery of the related Securities and the due endorsement of the Guarantees thereon, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of such Guarantor entitled to the benefits provided by the Indenture under which they are to be issued, and the Guarantees will conform in all material respects to the description thereof in the Offering Circular and will be in substantially the form previously delivered to you; (i) The exchange and registration rights agreement, to be dated as of February 3, 1999 (the "REGISTRATION RIGHTS AGREEMENT"), between the Company, the Guarantors and the Purchasers has been duly authorized by the Company and each of the Guarantors and, when executed and delivered by the Company and each Guarantor, the Registration Rights Agreement will constitute a valid and legally binding instrument of the Company and each Guarantor, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree to file with the Commission, under the circumstances set forth therein, (i) a registration statement under the United States Securities Act of 1933, as amended (the "ACT"), relating to another series of debt securities of the Company with terms substantially identical to the Securities (the "EXCHANGE SECURITIES") to be offered in exchange for the Securities (the "EXCHANGE OFFER"), (ii) to the extent required by the Registration Rights Agreement, a shelf registration statement pursuant to Rule 415 of the Act relating to the resale by certain holders of the Securities and (iii) to the extent required by the Registration Rights Agreement, a market making registration statement, and in each case, to use its reasonable best efforts to cause such registration statements to be declared effective. The Exchange Securities have been duly authorized for issuance by the Company, and when issued and authenticated in 3 4 accordance with the terms of the Indenture will be the valid and legally binding obligations of the Company, entitled to the benefits provided by the Indenture, enforceable in accordance with their terms. The Guarantees with respect to the Exchange Securities have been duly authorized for issuance by each Guarantor, and when issued in accordance with the terms of the Indenture will be the valid and legally binding obligations of such Guarantor, entitled to the benefits provided by the Indenture, enforceable in accordance with their terms. The Registration Rights Agreement, the Exchange Securities and the Guarantees with respect to the Exchange Securities will conform, in all material respects, to the descriptions thereof in the Offering Circular and will be in substantially the form previously delivered to you; (j) None of the transactions contemplated by this Agreement (including, without limitation, the use of the proceeds from the sale of the Securities) will violate or result in a violation of Section 7 of the Exchange Act, or any regulation promulgated thereunder, including, without limitation, Regulations G, T, U, and X of the Board of Governors of the Federal Reserve System; (k) Prior to the date hereof, none of the Company, the Guarantors or any of their respective affiliates has taken any action which is designed to or which has constituted or which might reasonably have been expected to cause or result in stabilization or manipulation of the price of any security of the Company or any Guarantor in connection with the offering of the Securities and the Guarantees; (l) The issue and sale of the Securities and the Guarantees and the compliance by the Company and the Guarantors with all of the provisions of the Securities, the Guarantees, the Indenture, the Registration Rights Agreement and this Agreement and the consummation of the transactions herein and therein contemplated (i) will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) will not result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any Guarantor or (iii) will not result in any violation of any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties, except in the cases of clauses (i) and (iii) as would not, singly or in the aggregate, have a Material Adverse Effect; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities and the Guarantees or the consummation by the Company and the Guarantors of the transactions contemplated by this Agreement, the Registration Rights Agreement or the Indenture, except for the filing of a registration statement by the Company with the United States Securities and Exchange Commission (the "COMMISSION") pursuant to the Act pursuant to Section 5(k) of this Agreement and the related qualification of the Indenture under the United States Trust Indenture Act of 1939, as amended (the "TIA") and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities and the Guarantees by the Purchasers; 4 5 (m) Neither the Company nor any of its subsidiaries is (i) in violation of its Certificate of Incorporation or By-laws or (ii) in default in the performance or observance of any material obligation, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, except in the case of clause (ii) as would not, singly or in the aggregate, have a Material Adverse Effect; (n) The statements set forth in the Offering Circular under the caption "Description of Notes" insofar as they purport to constitute a summary of certain of the terms of the Securities, and under the captions "Description of Other Indebtedness", "The Preferred Stock Placement", "Certain Relationships and Related Transactions", "Certain United States Federal Income Tax Considerations" and "Underwriting" insofar as they purport to describe the provisions of the laws and documents referred to therein, are accurate, complete and fair in all material respects; (o) Other than as set forth in the Offering Circular, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future financial position, stockholders' equity or results of operations of the Company and its subsidiaries; and, to the best of the Company's and the Guarantor's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (p) When the Securities and the Guarantees are issued and delivered pursuant to this Agreement, neither the Securities nor the Guarantees will be of the same class (within the meaning of Rule 144A under the Act) as any security of the Company or the Guarantors that is listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system; (q) The Company is subject to Section 13 or 15(d) of the Exchange Act; (r) Each of the Company and the Guarantors is not, and after giving effect to the offering and sale of the Securities, will not be an "investment company", as such term is defined in the United States Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"); (s) None of the Company, the Guarantors or any person acting on its or their behalf (other than the Initial Purchasers or affiliates of the Initial Purchasers, as to whom the Company and the Guarantors make no representation) has offered or sold the Securities and Guarantees by means of any general solicitation or general advertising within the meaning of Rule 502(c) under the Act or, with respect to Securities and Guarantees sold outside the United States to non-U.S. persons (as defined in Rule 902 under the Act), by means of any directed selling efforts within the meaning of Rule 902 under the Act, and the Company, the Guarantors, any affiliate of the Company or the Guarantors and any person acting on its or their behalf (other than the Initial Purchasers or affiliates of the Initial Purchasers, as to whom the Company and the Guarantors 5 6 make no representation) has complied with and will implement the "offering restriction" within the meaning of such Rule 902; (t) Within the preceding six months, none of the Company, the Guarantors or any other person acting on behalf of the Company or any Guarantor (other than the Initial Purchasers or affiliates of the Initial Purchasers, as to whom the Company and the Guarantors make no representation) has offered or sold to any person any Securities or Guarantees, or any securities of the same or a similar class as the Securities or the Guarantees, other than the Securities and Guarantees offered or sold to the Purchasers hereunder. The Company and the Guarantors will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any U.S. person (as defined in Rule 902 under the Act) of any Securities, the Guarantees or any substantially similar security issued by the Company or any Guarantor, within six months subsequent to the date on which the distribution of the Securities and Guarantees has been completed (as notified to the Company by Goldman, Sachs & Co.), is made under restrictions and other circumstances reasonably designed not to affect the status of the offer and sale of the Securities and the Guarantees in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of the Securities Act; (u) Ernst & Young LLP who has certified certain financial statements of the Company and its subsidiaries, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (v) The Company has reviewed its operations and that of its subsidiaries and any third parties with which the Company or any of its subsidiaries has a material relationship to evaluate the extent to which the business or operations of the Company or any of its subsidiaries will be affected by the Year 2000 Problem. As a result of such review, the Company has no reason to believe, and does not believe, that the Year 2000 Problem will have a material adverse effect on the general affairs, management, the current or future consolidated financial position, business prospects, stockholders' equity or results of operations of the Company and its subsidiaries or result in any material loss or interference with the Company's business or operations. The "Year 2000 Problem" as used herein means any significant risk that computer hardware or software used in the receipt, transmission, processing, manipulation, storage, retrieval, retransmission or other utilization of data or in the operation of mechanical or electrical systems of any kind will not, in the case of dates or time periods occurring after December 31, 1999, function at least as effectively as in the case of dates or time periods occurring prior to January 1, 2000; (w) The Company and its subsidiaries have complied in all material respects with all laws, regulations and orders applicable to it or its businesses the violation of which would have a material adverse effect on the general affairs, management, the current or future consolidated financial position, business prospects, stockholders' equity or results of operations of the Company and its subsidiaries; and (x) The Company and its subsidiaries own or possess or have the right to use the patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names (collectively, the "INTELLECTUAL 6 7 PROPERTY") presently employed by them in connection with, and material to, collectively or in the aggregate, the operation of the businesses now operated by them, and neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to the foregoing which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a material adverse effect on the general affairs, management, the current or future consolidated financial position, business prospects, stockholders' equity or results of operations of the Company and its subsidiaries. 2. Subject to the terms and conditions herein set forth, the Company and the Guarantors agree to issue and sell to each of the Purchasers, and each of the Purchasers agrees, severally and not jointly, to purchase from the Company and the Guarantors, at a purchase price of 97.25% of the principal amount thereof, plus accrued interest, if any, from February 3, 1999 to the Time of Delivery hereunder, the principal amount of Securities (including the Guarantees thereof) set forth opposite the name of such Purchaser in Schedule I hereto. 3. Upon the authorization by you of the release of the Securities and Guarantees, the several Purchasers propose to offer the Securities for sale upon the terms and conditions set forth in this Agreement and the Offering Circular and each Purchaser hereby represents and warrants to, and agrees with the Company and the Guarantors that: (a) It will offer and sell the Securities only to (i) persons whom it reasonably believes are "qualified institutional buyers" ("QIBS") within the meaning of Rule 144A under the Act in transactions meeting the requirements of Rule 144A or (ii) upon the terms and conditions set forth in Annex I to this Agreement; (b) It is an Institutional Accredited Investor; and (c) Neither it nor any person acting on its behalf will offer or sell the Securities and Guarantees by any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Act. 4. (a) The Securities to be purchased by each Purchaser hereunder will be represented by one or more definitive global Securities in book-entry form which will be deposited by or on behalf of the Company with The Depository Trust Company ("DTC") or its designated custodian. The Company and the Guarantors will deliver the Securities and the Guarantees to Goldman, Sachs & Co., for the account of each Purchaser, against payment by or on behalf of such Purchaser of the purchase price therefor by wire transfer of Federal (same day) funds to an account designated by the Company, by causing DTC to credit the Securities to the account of Goldman, Sachs & Co. at DTC. The Company and the Guarantors will cause the certificates representing the Securities to be made available to Goldman, Sachs & Co. for checking at least twenty-four hours prior to the Time of Delivery (as defined below) at the office of DTC or its designated custodian (the "DESIGNATED OFFICE"). The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on February 3, 1999 or such other time and date as Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and date are herein called the "Time of Delivery". 7 8 (b) The documents to be delivered at the Time of Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof, including the cross-receipt for the Securities and any additional documents requested by the Purchasers pursuant to Section 7 hereof, will be delivered at such time and date at the offices of Latham & Watkins, 885 Third Avenue, New York, New York 10022 (the "CLOSING LOCATION"), and the Securities and Guarantees will be delivered at the Designated Office, all at the Time of Delivery. A meeting will be held at the Closing Location at 1:30 p.m., New York City time, on the New York Business Day next preceding the Time of Delivery, at which meeting the final drafts of the documents to be delivered pursuant to the preceding sentence will be available for review by the parties hereto. For the purposes of this Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close. 5. Each of the Company and the Guarantors, jointly and severally, agrees with each of the Purchasers: (a) To prepare the Offering Circular in a form approved by you; to make no amendment or any supplement to the Offering Circular which shall be disapproved by you promptly after reasonable notice thereof; and to furnish you with copies thereof; (b) Promptly from time to time to take such action as you may reasonably request to qualify the Securities for offering and sale under the securities laws of such jurisdictions as you may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Securities, provided that in connection therewith neither the Company nor any Guarantor shall be required to qualify as a foreign corporation or to file a general consent to service of process; (c) To furnish the Purchasers with copies of the Offering Circular and two copies of each amendment or supplement thereto signed by an authorized officer of the Company with the independent accountants' report(s) in the Offering Circular, and any amendment or supplement containing amendments to the financial statements covered by such report(s), signed by the accountants, and additional conformed copies thereof in such quantities as you may from time to time reasonably request, and if, at any time prior to the expiration of nine months after the date of the Offering Circular, any event shall have occurred as a result of which the Offering Circular as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Offering Circular is delivered, not misleading, or, if for any other reason it shall be necessary or desirable during such same period to amend or supplement the Offering Circular, to notify you and upon your request to prepare and furnish without charge to each Purchaser and to any dealer in securities as many copies as you may from time to time reasonably request of an amended Offering Circular or a supplement to the Offering Circular which will correct such statement or omission or effect such compliance; (d) During the period beginning from the date hereof and continuing until the date six months after the Time of Delivery, not to offer, sell, contract to sell or otherwise dispose of, 8 9 except as provided hereunder any securities of the Company or any Guarantor that are substantially similar to the Securities or the Guarantees; (e) Not to be or become, at any time prior to the expiration of two years after the Time of Delivery, an open-end investment company, unit investment trust, closed-end investment company or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act; (f) At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, for the benefit of holders from time to time of Securities, to furnish at its expense, upon request, to holders of Securities and prospective purchasers of Securities information (the "ADDITIONAL ISSUER INFORMATION") satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the Act; (g) If requested by you, to use its reasonable best efforts to cause such Securities to be eligible for the PORTAL trading system of the National Association of Securities Dealers, Inc.; (h) To furnish to the holders of the Securities within the time periods specified in the Commission's rules and regulations after the end of each fiscal year an annual report (including a balance sheet and statements of income, stockholders' equity and cash flows of the Company and its consolidated subsidiaries certified by independent public accountants) and, within the time periods specified in the Commission's rules and regulations after the end of each of the first three quarters of each fiscal year (beginning with the fiscal quarter ending after the date of the Offering Circular), to make available to its stockholders consolidated summary financial information of the Company and its subsidiaries for such quarter in reasonable detail; (i) During a period of five years from the date of the Offering Circular, to furnish to you copies of all reports or other communications (financial or other) furnished to stockholders of the Company or any of the Guarantors, and to deliver to you (i) as soon as they are available, copies of any reports and financial statements furnished to or filed with the Commission or any securities exchange on which the Securities or any class of securities of the Company or the Guarantors is listed; and (ii) such additional information concerning the business and financial condition of the Company or the Guarantors as you may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to its stockholders generally or to the Commission); (j) During the period of two years after the Time of Delivery, the Company will not, and will not permit any of its "affiliates" (as defined in Rule 144 under the Securities Act) to, resell any of the Securities which constitute "restricted securities" under Rule 144 that have been reacquired by any of them; (k) The Company and the Guarantors shall file and use its reasonable best efforts to cause to be declared or become effective under the Act, on or prior to 180 days after the Time of Delivery, a registration statement on Form S-4 providing for the registration of the Exchange Securities and the Guarantees thereon, and the exchange of the Securities for the Exchange 9 10 Securities, all in a manner which will permit persons who acquire the Exchange Securities to resell the Exchange Securities pursuant to Section 4(1) of the Act; and (l) To use the net proceeds received by it from the sale of the Securities pursuant to this Agreement in the manner specified in the Offering Circular under the caption "Use of Proceeds". 6. Each of the Company and the Guarantors, jointly and severally, covenants and agrees with the several Purchasers that the Company and the Guarantors will, jointly and severally, pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's and the Guarantors' counsel and accountants in connection with the issuance of the Securities and Guarantees and all other expenses in connection with the preparation, printing and filing of the Preliminary Offering Circular and the Offering Circular and any amendments and supplements thereto and the mailing and delivering of copies thereof to the Purchasers and dealers; (ii) the cost of printing or producing any Agreement among Purchasers, this Agreement, the Indenture, the Registration Rights Agreement, the Blue Sky and Legal Investment Memoranda, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Securities and Guarantees; (iii) all expenses in connection with the qualification of the Securities and the Exchange Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Purchasers in connection with such qualification and in connection with the Blue Sky and legal investment surveys which will be $7,500; (iv) any fees charged by securities rating services for rating the Securities and the Exchange Securities; (v) the cost of preparing the Securities, the Exchange Securities and the Guarantees with respect thereto; (vi) the fees and expenses of the TRUSTEE and any agent of the Trustee and the reasonable fees and disbursements of counsel for the Trustee in connection with the Indenture, the Securities and the Exchange Securities; (viii) any cost incurred in connection with the designation of the Securities for trading in PORTAL and (ix) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 6. It is understood, however, that, except as provided in this Section 6, and Sections 8 and 11 hereof, the Purchasers will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Purchasers hereunder shall be subject, in their discretion, to the condition that all representations and warranties of the Company and the Guarantors herein are, at and as of the Time of Delivery, true and correct, the condition that the Company and the Guarantors shall have performed all of its obligations hereunder theretofore to be performed unless otherwise waived by the Initial Purchasers, and the following additional conditions: (a) Latham & Watkins, counsel for the Purchasers, shall have furnished to you such opinion or opinions, dated the Time of Delivery, with respect to the matters covered in paragraphs (i), (iii), (iv), (v), (vi), (vii), (viii), (ix), (xiii) and (xiv) of subsection (b) below as well as such other related matters as you may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; 10 11 (b) Troutman Sanders LLP, counsel for the Company and the Guarantors, shall have furnished to you their written opinion, dated the Time of Delivery, in form and substance satisfactory to you and your counsel, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular; (ii) The Company has an authorized capitalization as set forth in the Offering Circular, and all of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable; (iii) This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors; (iv) The Securities have been duly authorized, executed, authenticated, issued and delivered and constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture; and the Securities and the Indenture conform in all material respects to the descriptions thereof in the Offering Circular; (v) The Guarantees have been duly authorized, executed, issued and delivered and constitute valid and legally binding obligations of the Guarantors entitled to the benefits provided by the Indenture; and the Guarantees conform in all material respects to the descriptions thereof in the Offering Circular; (vi) The Exchange Securities have been duly authorized; (vii) The Guarantees with respect to the Exchange Securities have been duly authorized; (viii) The Indenture has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding instrument of the Company and each Guarantor, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (ix) The Registration Rights Agreement has been duly authorized, executed and delivered by the parties thereto and constitutes a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; (x) The issue and sale of the Securities and the Guarantees and the compliance by the Company and the Guarantors with all of the provisions of the Securities, the Guarantees, the Indenture, the Registration Rights Agreement and this Agreement and the consummation of the transactions herein and therein contemplated will not conflict with 11 12 or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject and that has been identified to such counsel as being material to the Company and its subsidiaries and except for such breaches, violations or defaults that have been waived or consented to by the parties thereto, nor will such actions result in any violation of the provisions of the Certificate of Incorporation or By-laws of the Company or any Guarantor or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties; (xi) No consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities and the Guarantees or the consummation by the Company and the Guarantors of the transactions contemplated by this Agreement, the Registration Rights Agreement or the Indenture, except for the filing of a registration statement by the Company with the Commission pursuant to the Act pursuant to Section 5(k) of this Agreement and the related qualification of the Indenture under the TIA and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Securities by the Purchasers; (xii) The statements set forth in the Offering Circular under the caption "Description of Notes" insofar as they purport to constitute a summary of certain of the terms of the Securities, and under the captions "Description of Other Indebtedness", "The Preferred Stock Placement", "Certain Relationships and Related Transactions", "Certain United States Federal Income Tax Considerations" and "Underwriting" insofar as they purport to describe the provisions of the laws and documents referred to therein are accurate and complete summaries of such terms and such provisions, respectively, in all material respects; (xiii) No registration of the Securities under the Act, and no qualification of an indenture under the TIA with respect thereto, is required for the offer, sale and initial resale of the Securities by the Purchasers in the manner contemplated by this Agreement; (xiv) Such counsel has no reason to believe that the Offering Circular and any further amendments or supplements thereto made by the Company prior to the Time of Delivery (other than the financial statements therein, as to which such counsel need express no opinion) contained as of its date or contains as of the Time of Delivery an untrue statement of a material fact or omitted or omits, as the case may be, to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xv) Each of the Company and the Guarantors is not an "investment company", as such term is defined in the Investment Company Act; 12 13 (xvi) Neither the issuance or sale of the Securities nor the application of the proceeds thereof by the Company as set forth in the Offering Circular will violate Regulations T, U or X of the Board of Governors of the Federal Reserve System; and (xvii) The Offering Circular, as of its date, and each amendment or supplement thereto, as of its date, contains the information specified in Rule 144A(d)(4) under the Act. (c) Forrest Lee Champion, III, general counsel for the Company and the Guarantors, shall have furnished to you his written opinion, dated the Time of Delivery, in form and substance satisfactory to you and your counsel, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Circular; (ii) Each subsidiary of the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation; and all of the issued shares of capital stock of each subsidiary have been duly and validly authorized and issued are fully paid and non-assessable, and are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company or its subsidiaries; provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates); (iii) The Company and each of its Subsidiaries has been duly qualified as a foreign corporation for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business so as to require such qualification, or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction (such counsel being entitled to rely in respect of the opinion in this clause upon opinions of local counsel and in respect of matters of fact upon certificates of officers of the Company; provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions and certificates); (iv) The Company and its subsidiaries have good and marketable title in fee simple to all real property owned by them, in each case free and clear of all liens, encumbrances and defects except such as are described in the Offering Circular or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries (in giving the opinion in this clause, 13 14 such counsel may state that no examination of record titles for the purpose of such opinion has been made, and that they are relying upon a general review of the titles of the Company and its subsidiaries, upon opinions of local counsel and abstracts, reports and policies of title companies rendered or issued at or subsequent to the time of acquisition of such property by the Company or its subsidiaries, upon opinions of counsel to the lessors of such property and, in respect of matters of fact, upon certificates of officers of the Company or its subsidiaries; provided that such counsel shall state that they believe that both you and they are justified in relying upon such opinions, abstracts, reports, policies and certificates); (v) To the best of such counsel's knowledge and other than as set forth in the Offering Circular, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, stockholders' equity or results of operations of the Company and its subsidiaries; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; and (vi) Neither the Company nor any of its subsidiaries is in violation of its Certificate of Incorporation or By-laws or in default in the performance or observance of any material obligation, covenant or condition contained in any material indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; (d) On the date of the Offering Circular prior to the execution of this Agreement and also at the Time of Delivery, Ernst & Young LLP shall have furnished to you a letter or letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you and your counsel. The letter dated the Time of Delivery will address the financial data included in the Offering Circular under the caption "Offering Circular Summary -- Recent Developments" in the manner previously agreed to by Latham & Watkins and Ernst & Young LLP. (e) (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Offering Circular any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Offering Circular, and (ii) since the respective dates as of which information is given in the Offering Circular there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any change, or any development involving a prospective change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Offering Circular, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Purchasers so material and adverse as to make it impracticable or inadvisable to proceed with the 14 15 public offering or the delivery of the Securities on the terms and in the manner contemplated in this Agreement and in the Offering Circular; (f) On or after the date hereof (i) no downgrading shall have occurred in the rating accorded the Company's and any Guarantor's debt securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of the Company's and any Guarantor's debt securities; (g) On or after the date hereof there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange; (ii) a suspension or material limitation in trading in the Company's securities on the New York Stock Exchange; (iii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities; (iv) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this clause (iv) in the judgment of the Purchasers makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the terms and in the manner contemplated in the Offering Circular; or (v) the occurrence of any material adverse change in the existing, financial, political or economic conditions in the United States or elsewhere which, in the judgment of the Purchasers, would materially and adversely affect the financial markets or the markets for the Securities and other debt securities; (h) The Securities have been designated for trading on PORTAL; (i) The Company shall have furnished or caused to be furnished to you at the Time of Delivery certificates of officers of the Company and the Guarantors satisfactory to you as to the accuracy of the representations and warranties of the Company and the Guarantors herein at and as of such Time of Delivery, as to the performance by the Company and the Guarantors of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in the first paragraph of this Section 7 and subsections (e) and (f) of this Section 7 and as to such other matters as you may reasonably request. (j) The Company shall have issued the Redemption Notices and evidence as to such, reasonably satisfactory to you and your counsel, shall have been delivered to you; (k) The issuance by the Company of the Securities shall not constitute a default or an event of default under the Existing Notes; (l) The Company shall use the remaining proceeds of the sale of Securities to repay a portion of the borrowings under the Company's Credit Agreement, dated as of October 17, 1997, by and among the Company and various banks and Wachovia Bank, N.A., as agent (the "EXISTING CREDIT AGREEMENT") and evidence as to such, reasonably satisfactory to you and your counsel, shall have been delivered to you; 15 16 (m) The Company shall have amended the Existing Credit Agreement as described in the Offering Circular and have obtained a waiver under the Existing Credit Agreement to allow the issuance of the Securities and evidence as to such, reasonably satisfactory to you and your counsel, shall have been delivered to you; (n) The Company shall have received any consents necessary for the issuance of the Securities under its master lease facility with Movieplex Realty Leasing, L.L.C. (the "MASTER LEASE") and evidence as to such, reasonably satisfactory to you and your counsel, shall have been delivered to you; and (o) The Company shall have agreed pursuant to the terms of the Registration Rights Agreement to prepare, file and cause to become effective a Market Making Shelf Registration Statement (as defined therein) with respect to the Securities and Exchange Securities, and to take all other action set forth in the Registration Rights Agreement with respect thereto, and evidence as to such, reasonably satisfactory to you and your counsel, shall have been delivered to you. 8. (a) The Company and each Guarantor will, jointly and severally, indemnify and hold harmless each Purchaser against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, and will reimburse each Purchaser for any legal or other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that neither the Company nor any Guarantor shall be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by any Purchaser through Goldman, Sachs & Co. expressly for use therein. (b) Each Purchaser will indemnify and hold harmless the Company and the Guarantors against any losses, claims, damages or liabilities to which the Company and any Guarantor may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Circular or the Offering Circular, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Offering Circular or the Offering Circular or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Purchaser through Goldman, Sachs & Co. expressly for use therein; and will reimburse the 16 17 Company and the Guarantors for any legal or other expenses reasonably incurred by the Company and the Guarantors in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any indemnified party. The indemnifying party shall not be required to indemnify the indemnified party for any amount paid or payable by the indemnified party in the settlement of any proceeding effected without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Purchasers on the other from the offering of the Securities. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantors on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one 17 18 hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Guarantors bear to the total underwriting discounts and commissions received by the Purchasers, in each case as set forth in the Offering Circular. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors on the one hand or the Purchasers on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Guarantors and the Purchasers agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to investors were offered to investors exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. (e) The obligations of the Company and the Guarantors under this Section 8 shall be in addition to any liability which the Company and the Guarantors may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Act; and the obligations of the Purchasers under this Section 8 shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or any Guarantor and to each person, if any, who controls the Company or any Guarantor within the meaning of the Act. 9. (a) If any Purchaser shall default in its obligation to purchase the Securities which it has agreed to purchase hereunder, you may in your discretion arrange for you or another party or other parties to purchase such Securities on the terms contained herein. If within thirty-six hours after such default by any Purchaser you do not arrange for the purchase of such Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to you to purchase such Securities on such terms. In the event that, within the respective prescribed periods, you notify the Company that you have so arranged for the purchase of such Securities, or the Company notifies you that it has so arranged for the purchase of such Securities, you or the Company shall have the right to postpone the Time of Delivery for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Offering Circular, or in any other documents or arrangements, and the Company agrees to prepare promptly any amendments to the Offering Circular which in your reasonable opinion may thereby be made necessary. The 18 19 term "Purchaser" as used in this Agreement shall include any person substituted under this Section 9 with like effect as if such person had originally been a party to this Agreement with respect to such Securities. (b) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or Purchasers by you and the Company as provided in subsection (a) above, the aggregate principal amount of such Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities, then the Company shall have the right to require each non-defaulting Purchaser to purchase the principal amount of Securities which such Purchaser agreed to purchase hereunder and, in addition, to require each non-defaulting Purchaser to purchase its pro rata share (based on the principal amount of Securities which such Purchaser agreed to purchase hereunder) of the Securities of such defaulting Purchaser or Purchasers for which such arrangements have not been made; but nothing herein shall relieve a defaulting Purchaser from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Securities of a defaulting Purchaser or Purchasers by you and the Company as provided in subsection (a) above, the aggregate principal amount of Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of all the Securities, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Purchasers to purchase Securities of a defaulting Purchaser or Purchasers, then this Agreement shall thereupon terminate, without liability on the part of any non-defaulting Purchaser or the Company and the Guarantors, except for the expenses to be borne by the Company, the Guarantors and the Purchasers as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Purchaser from liability for its default. 10. The respective indemnities, agreements, representations, warranties and other statements of the Company, the Guarantors and the several Purchasers, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Purchaser or any controlling person of any Purchaser, or the Company, the Guarantors or any officer or director or controlling person of the Company or a Guarantor, and shall survive delivery of and payment for the Securities. 11. If this Agreement shall be terminated pursuant to Section 9 hereof, the Company and the Guarantors shall not then be under any liability to any Purchaser except as provided in Sections 6 and 8 hereof; but, if for any other reason, the Securities (including the Guarantees with respect thereto) are not delivered by or on behalf of the Company and the Guarantors as provided herein, the Company and the Guarantors will reimburse the Purchasers through you for all out-of-pocket expenses approved in writing by you, including reasonable fees and disbursements of one counsel and any local counsel, reasonably incurred by the Purchasers in making preparations for the purchase, sale and delivery of the Securities, but the Company shall then be under no further liability to any Purchaser except as provided in Sections 6 and 8 hereof. 12. In all dealings hereunder, you shall act on behalf of each of the Purchasers, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or 19 20 agreement on behalf of any Purchaser made or given by you jointly or by Goldman, Sachs & Co. on behalf of you as the representatives. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Purchasers shall be delivered or sent by mail, telex or facsimile transmission to you as the representatives in care of Goldman, Sachs & Co., 32 Old Slip, 9th Floor, New York, New York 10005, Attention: Registration Department; and if to the Company and the Guarantors shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Offering Circular, Attention: Secretary; provided, however, that any notice to a Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Purchaser at its address set forth in its Purchasers' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company by you upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement shall be binding upon, and inure solely to the benefit of, the Purchasers, the Company, the Guarantors and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and the Guarantors and each person who controls the Company, a Guarantor or any Purchaser, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. No purchaser of any of the Securities from any Purchaser shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of this Agreement. 15. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 16. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 20 21 If the foregoing is in accordance with your understanding, please sign and return to us one for the Company and the Guarantors and each of the Purchasers plus one for each counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of each of the Purchasers, this letter and such acceptance hereof shall constitute a binding agreement between each of the Purchasers, the Company and the Guarantors. It is understood that your acceptance of this letter on behalf of each of the Purchasers is pursuant to the authority set forth in a form of Agreement among Purchasers, the form of which shall be submitted to the Company for examination upon request, but without warranty on your part as to the authority of the signers thereof. Very truly yours, CARMIKE CINEMAS, INC. By: /s/ F. Lee Champion, III -------------------------------------- EASTWYNN THEATRES, INC. By: /s/ F. Lee Champion, III -------------------------------------- Name: F. Lee Champion, III Title: Senior Vice President/Secretary WOODEN NICKEL PUB, INC. By: /s/ F. Lee Champion, III -------------------------------------- Name: F. Lee Champion, III Title: Secretary Purchase Agreement Signature Page 22 Accepted as of the date hereof: Goldman, Sachs & Co. First Union Capital Markets, a division of Wheat First Securities, Inc. ING Baring Furman Selz LLC By: /s/ Goldman, Sachs & Co. ------------------------ (Goldman, Sachs & Co.) Purchase Agreement Signature Page 23 SCHEDULE I
PRINCIPAL AMOUNT OF SECURITIES TO BE PURCHASER PURCHASED --------- ---------- Goldman, Sachs & Co. ................................................................ $140,000,000 First Union Capital Markets, a division of Wheat First Securities, Inc............... 30,000,000 ING Baring Furman Selz LLC .......................................................... 30,000,000 ------------ Total ...................................................................... $200,000,000 ============
Schedule I Page 1 24 SCHEDULE II GUARANTORS 1. Eastwynn Theatres, Inc. 2. Wooden Nickel Pub, Inc. Schedule II Page 1 25 ANNEX I (1) The Securities have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S under the Act or pursuant to an exemption from the registration requirements of the Act. Each Purchaser represents that it has offered and sold the Securities, and will offer and sell the Securities (i) as part of their distribution at any time and (ii) otherwise until 40 days after the later of the commencement of the offering and the Time of Delivery, only in accordance with Rule 903 of Regulation S, Rule 144A under the Act. Accordingly, each Purchaser agrees that neither it, its affiliates nor any persons acting on its or their behalf has engaged or will engage in any directed selling efforts with respect to the Securities, and it and they have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser agrees that, at or prior to confirmation of sale of Securities (other than a sale pursuant to Rule 144A), it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "SECURITIES ACT") and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S." Terms used in this paragraph have the meanings given to them by Regulation S. Each Purchaser further agrees that it has not entered and will not enter into any contractual arrangement with respect to the distribution or delivery of the Securities, except with its affiliates or with the prior written consent of the Company. In addition, (A) except to the extent permitted under U.S. Treas. Reg. ss.1.163-5(c)(2)(i)(D) (the "D RULES"), (i) each Purchaser agrees that it has not offered or sold, and during the restricted period will not offer or sell, Securities in bearer form to a person who is within the United States or its possessions or to a U.S. person, and (ii) it has not delivered and will not deliver within the United States or its possessions definitive Securities in bearer form that are sold during the restricted period; (B) each Purchaser represents and agrees that it has, and throughout the restricted period will have, in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Securities in bearer form are aware that such Securities may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules; Annex I Page 1 26 (C) if it is a United States person, each such Purchaser represents that it is acquiring the Securities in bearer form for purposes of resale in connection with their original issuance and if it retains Securities in bearer form for its own account, it will only do so in accordance with the requirements of U.S. Treas. Reg. ss.1.163-5(c)(2)(i)(D)(6); and (D) with respect to each affiliate that acquires from it Securities in bearer form for the purpose of offering or selling such Securities during the restricted period, such Purchaser either (i) repeats and confirms the representations and agreements contained in clauses (A), (B) and (C) on its behalf or (ii) agrees that it will obtain from such affiliate for the Company's benefit the representations and agreements contained in clauses (A), (B) and (C). Terms used in this paragraph have the meanings given to them by the United States Internal Revenue Code and regulations thereunder, including the D Rules. (2) Notwithstanding the foregoing, Securities in registered form may be offered, sold and delivered by the Purchasers in the United States and to U.S. persons pursuant to Section 3 of this Agreement without delivery of the written statement required by paragraph (1) above. (3) Each Purchaser further represents and agrees that (i) it has not offered or sold and will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (b) it has complied, and will comply, with all applicable provisions of the Financial Services Act of 1986 of Great Britain with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 of Great Britain or is a person to whom the document may otherwise lawfully be issued or passed on. (4) Each Purchaser agrees that it will not offer, sell or deliver any of the Securities in any jurisdiction outside the United States except under circumstances that will result in compliance with the applicable laws thereof, and that it will take at its own expense whatever action is required to permit its purchase and resale of the Securities in such jurisdictions. Each Purchaser understands that no action has been taken to permit a public offering in any jurisdiction outside the United States where action would be required for such purpose. Each Purchaser agrees not to cause any advertisement of the Securities to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Securities, except in any such case with Goldman, Sachs & Co.'s express written consent and then only at its own risk and expense. Annex I Page 2 27 ANNEX II Pursuant to Section 7(d) of the Purchase Agreement, the accountants shall furnish letters to the Purchasers to the effect that: (i) They are independent certified public accountants with respect to the Company and its subsidiaries under rule 101 of the American Institute of Certified Public Accountants' Code of Professional Conduct, and its interpretations and rulings; (ii) In our opinion, the consolidated financial statements audited by us and included in the Offering Circular comply as to form in all material respects with the applicable requirements of the Exchange Act and the related published rules and regulations; (iii) The unaudited selected financial information with respect to the consolidated results of operations and financial position of the Company for the five most recent fiscal years included in the Offering Circular agrees with the corresponding amounts (after restatements where applicable) in the audited consolidated financial statements for such five fiscal years; (iv) On the basis of limited procedures not constituting an audit in accordance with generally accepted auditing standards, consisting of a reading of the unaudited financial statements and other information referred to below, a reading of the latest available interim financial statements of the Company and its subsidiaries, inspection of the minute books of the Company and its subsidiaries since the date of the latest audited financial statements included in the Offering Circular, inquiries of officials of the Company and its subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that: (A) the unaudited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Offering Circular are not in conformity with generally accepted accounting principles applied on the basis substantially consistent with the basis for the audited consolidated statements of income, consolidated balance sheets and consolidated statements of cash flows included in the Offering Circular; (B) any other unaudited income statement data and balance sheet items included in the Offering Circular do not agree with the corresponding items in the unaudited consolidated financial statements from which such data and items were derived, and any such unaudited data and items were not determined on a basis substantially consistent with the basis for the corresponding amounts in the audited consolidated financial statements included in the Offering Circular; (C) the unaudited financial statements which were not included in the Offering Circular but from which were derived any unaudited condensed financial statements referred to in Clause (A) and any unaudited income statement data and Annex II Page 1 28 balance sheet items included in the Offering Circular and referred to in Clause (B) were not determined on a basis substantially consistent with the basis for the audited consolidated financial statements included in the Offering Circular; (D) any unaudited pro forma consolidated condensed financial statements included in the Offering Circular do not comply as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X or the pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements; (E) as of a specified date not more than five days prior to the date of such letter, there have been any changes in the consolidated capital stock (other than issuances of capital stock upon exercise of options and stock appreciation rights, upon earn-outs of performance shares and upon conversions of convertible securities, in each case which were outstanding on the date of the latest financial statements included in the Offering Circular) or any increase in the consolidated long-term debt of the Company and its subsidiaries, or any decreases in consolidated net current assets or stockholders' equity or other items specified by the Purchasers, or any increases in any items specified by the Purchasers, in each case as compared with amounts shown in the latest balance sheet included in the Offering Circular except in each case for changes, increases or decreases which the Offering Circular discloses have occurred or may occur or which are described in such letter; and (F) for the period from the date of the latest financial statements included in the Offering Circular to the specified date referred to in Clause (E) there were any decreases in consolidated net revenues or operating profit or the total or per share amounts of consolidated net income or other items specified by the Purchasers, or any increases in any items specified by the Purchasers, in each case as compared with the comparable period of the preceding year and with any other period of corresponding length specified by the Purchasers, except in each case for decreases or increases which the Offering Circular discloses have occurred or may occur or which are described in such letter; and (v) In addition to the examination referred to in their report(s) included in the Offering Circular and the limited procedures, inspection of minute books, inquiries and other procedures referred to in paragraphs (iii) and (iv) above, they have carried out certain specified procedures, not constituting an audit in accordance with generally accepted auditing standards, with respect to certain amounts, percentages and financial information specified by the Purchasers, which are derived from the general accounting records of the Company and its subsidiaries, which appear in the Offering Circular, and have compared certain of such amounts, percentages and financial information with the accounting records of the Company and its subsidiaries that are subject to the internal control structure policies and procedures of the Company's accounting system and have found them to be in agreement. Annex II Page 2 EX-12 3 STATEMENT RE: COMPUTATION OF RATIOS & EARNINGS 1 EXHIBIT 12 CARMIKE CINEMAS, INC. STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
HISTORICAL PRO FORMA ------------------------------------------------------------------------ -------------- YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------------------------------------ -------------- 1994 1995 1996 1997 1998 1998 ------------- ------------ --------------- -------------- -------------- -------------- (IN THOUSANDS) Earnings: Income (loss) before income taxes $ 28,199 $ 21,725 $ (11,746) $ 32,552 $ (48,813) $ (53,194) Interest expense (1) 17,028 16,031 20,289 23,142 27,230 31,611 Interest portion of rent expense 10,147 12,410 14,942 15,560 16,061 16,061 Earnings as adjusted 55,374 50,166 23,485 71,254 (5,522) (5,522) Fixed charges: Interest expense (2) 17,436 16,819 21,404 26,056 31,767 36,148 Interest portion of rent expense 10,147 12,410 14,942 15,560 16,061 16,061 Fixed charges 27,583 29,229 36,346 41,616 47,828 52,209 Ratio of earnings to fixed charges (3) 2.0 1.7 -- 1.8 -- --
- ---------------------------- (1) Includes amortization of deferred debt costs. (2) Includes capitalized interest. (3) The ratio of earnings to fixed charges is computed by dividing earnings by fixed charges. For this purpose, "earnings" include net income (loss) before income taxes and fixed charges (adjusted for interest capitalized during the period). For the years ended December 31,1996 and 1998, earnings before fixed charges were insufficient to cover fixed charges by approximately $12.8 million and $53.4 million, respectively. For the year ended December 31, 1998, pro forma earnings before fixed charges would have been insufficient to cover fixed charges by approximately $57.7 million. "Fixed charges" include interest, whether expensed or capitalized, amortization of debt expenses and the portion of rental expense that is representative of the interest factor in these rentals. EX-23.3 4 CONSENT OF ERNST AND YOUNG LLP 1 EXHIBIT 23.3 We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-4) and related Prospectus of Carmike Cinemas, Inc. for the registration of $200 million of its 9 3/8% Series B Senior Subordinated Notes due 2009 and to the incorporation by reference therein of our report dated February 25, 1999, with respect to the consolidated financial statements and schedule of Carmike Cinemas, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP Columbus, GA April 27, 1999 EX-25 5 STATEMENT ON FORM T-1 OF ELIGIBILITY OF TRUSTEE 1 Exhibit 25 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |__| --------------------------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) --------------------------- CARMIKE CINEMAS, INC. (Exact name of obligor as specified in its charter) Delaware 58-1469127 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 1301 First Avenue 31901 Columbus, Georgia (Zip code) (Address of principal executive offices) --------------------------- 9-3/8% Series B Senior Subordinated Notes due 2009 (Title of the indenture securities) ================================================================================ 2 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
- ------------------------------------------------------------------------------------------------ Name Address - ------------------------------------------------------------------------------------------------ Superintendent of Banks of the State of 2 Rector Street, New York, N.Y. New York 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(d). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- 3 SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 22nd day of April, 1999. THE BANK OF NEW YORK By: /s/CHERYL L. LASER ---------------------------- Name: CHERYL L. LASER Title: ASSISTANT VICE PRESIDENT -3- 4 EXHIBIT 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
ASSETS Dollar Amounts in Thousands Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin.. $ 3,951,273 Interest-bearing balances .......................... 4,134,162 Securities: Held-to-maturity securities ........................ 932,468 Available-for-sale securities ...................... 4,279,246 Federal funds sold and Securities purchased under agreements to resell ............................... 3,161,626 Loans and lease financing receivables: Loans and leases, net of unearned income..................................37,861,802 LESS: Allowance for loan and lease losses...............................619,791 LESS: Allocated transfer risk reserve......................................3,572 Loans and leases, net of unearned income, allowance, and reserve ........................... 37,238,439 Trading Assets ........................................ 1,551,556 Premises and fixed assets (including capitalized leases)............................................. 684,181 Other real estate owned ............................... 10,404 Investments in unconsolidated subsidiaries and associated companies................................ 196,032 Customers' liability to this bank on acceptances outstanding......................................... 895,160 Intangible assets ..................................... 1,127,375 Other assets .......................................... 1,915,742 ----------- Total assets .......................................... $60,077,664 ===========
5
Dollar Amounts in Thousands LIABILITIES Deposits: In domestic offices ................................ $27,020,578 Noninterest-bearing.......................11,271,304 Interest-bearing..........................15,749,274 In foreign offices, Edge and Agreement subsidiaries, and IBFs ........................... 17,197,743 Noninterest-bearing..........................103,007 Interest-bearing..........................17,094,736 Federal funds purchased and Securities sold under agreements to repurchase............................ 1,761,170 Demand notes issued to the U.S.Treasury ............... 125,423 Trading liabilities ................................... 1,625,632 Other borrowed money: With remaining maturity of one year or less ........ 1,903,700 With remaining maturity of more than one year through three years............................... 0 With remaining maturity of more than three years ... 31,639 Bank's liability on acceptances executed and outstanding ........................................ 900,390 Subordinated notes and debentures ..................... 1,308,000 Other liabilities ..................................... 2,708,852 ----------- Total liabilities ..................................... 54,583,127 =========== EQUITY CAPITAL Common stock .......................................... 1,135,284 Surplus ............................................... 764,443 Undivided profits and capital reserves ................ 3,542,168 Net unrealized holding gains (losses) on available-for-sale securities....................... 82,367 Cumulative foreign currency translation adjustments ........................................ (29,725) ----------- Total equity capital .................................. 5,494,537 ----------- Total liabilities and equity capital .................. $60,077,664 ===========
6 I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Reyni } Directors Gerald L. Hassell } Alan R. Griffith } EX-99.1 6 FORM OF LETTER OF TRANSMITTAL 1 EXHIBIT 99.1 LETTER OF TRANSMITTAL CARMIKE CINEMAS, INC. OFFER TO EXCHANGE 9 3/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2009 WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 FOR ANY AND ALL OUTSTANDING 9 3/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 PURSUANT TO THE PROSPECTUS DATED ________________, 1999 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ____________________, 1999, UNLESS THE OFFER IS EXTENDED. To: THE BANK OF NEW YORK, Exchange Agent By Hand Or Overnight Delivery: Facsimile Transmissions: By Registered Or Certified Mail: (Eligible Institutions Only) The Bank of New York (212) 815-6339 The Bank of New York 101 Barclay Street 101 Barclay Street, (7 East) Corporate Trust Services Window To Confirm by Telephone New York, New York 10286 Ground Level or for Information Call: Attention: Odell Romeo New York, New York 10286 Reorganization Section Attention: Odell Romeo Reorganization Section (212) 815-6337
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. Capitalized terms used but not defined herein shall have the same meaning given them in the Prospectus (as defined below). This Letter of Transmittal is to be completed by holders of Original Notes (as defined below) either if Original Notes are to be forwarded herewith or if tenders of Original Notes are to be made by book-entry transfer to an account maintained by The Bank of New York (the "Exchange Agent") at The Depository Trust Company ("DTC") pursuant to the procedures set forth in "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus. Holders of Original Notes whose certificates (the "Certificates") for such Original Notes are not immediately available or who cannot deliver their Certificates and all other required documents to the Exchange Agent on or prior to the Expiration Date (as defined in the Prospectus) or who cannot complete the procedures for book-entry transfer on a timely basis must tender their Original Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT. 2 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY ALL TENDERING HOLDERS COMPLETE THIS BOX: DESCRIPTION OF ORIGINAL NOTES
- --------------------------------------------------------------------------------------------------------------------------------- Please print Name and Address Please Show Original Notes Principal Amount of Beneficial of Registered Holder Certificate Number(s) Tendered Original Notes Tendered Holders and Names (Need not be (Attach (if Principal Amount of in which such Completed by additional list Original Notes is Less Securities are Book-Entry Holders) if needed) than All)* held --------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- TOTAL - ---------------------------------------------------------------------------------------------------------------------------------
* All Original Notes held shall be deemed tendered unless a lesser number is specified in this column. (BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY) [ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING: Name of Tendering Institution: -------------------------------------------- DTC Account Number: ------------------------------------------------------- Transaction Code Number: -------------------------------------------------- [ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING: Name of Registered Holders(s): -------------------------------------------- Window Ticket Number (if any): -------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ----------------------- Name of Institution which Guaranteed Delivery: ---------------------------- If Guaranteed Delivery is to be made By Book-Entry Transfer: Name of Tendering Institution: -------------------------------------------- DTC Account Number: ------------------------------------------------------- Transaction Code Number: -------------------------------------------------- [ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED ORIGINAL NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH ABOVE. [ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: --------------------------------------------------------------------- Address: ------------------------------------------------------------------ -2- 3 Ladies and Gentlemen: The undersigned hereby tenders to Carmike Cinemas, Inc., a corporation formed under the laws of the State of Delaware (the "Company"), the above described aggregate principal amount of the Company's 9 3/8% Series A Senior Subordinated Notes due 2009 (the "Original Notes") in exchange for a like aggregate principal amount of the Company's 9 3/8% Series B Senior Subordinated Notes due 2009 (the "Exchange Notes") which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and the obligations thereunder guaranteed (the "Guarantees") by Eastwynn Theatres, Inc. and Wooden Nickel Pub, Inc. (the "Guarantors"), upon the terms and subject to the conditions set forth in the Prospectus dated ______________, 1999 (as the same may be amended or supplemented from time to time, the "Prospectus"), receipt of which is acknowledged, and in this Letter of Transmittal (which, together with the Prospectus, constitute the "Exchange Offer"). Subject to and effective upon the acceptance for exchange of all or any portion of the Original Notes tendered herewith in accordance with the terms and conditions of the Exchange Offer (including, if the Exchange Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to such Original Notes as are being tendered herewith. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent as its agent and attorney-in-fact (with full knowledge that the Exchange Agent is also acting as agent of the Company in connection with the Exchange Offer) with respect to the tendered Original Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), subject only to the right of withdrawal described in the Prospectus, to (i) deliver Certificates for Original Notes to the Company together with all accompanying evidences of transfer and authenticity to, or upon the order of, the Company, upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to be issued in exchange for such Original Notes, (ii) present Certificates for such Original Notes for transfer, and to transfer the Original Notes on the books of the Company, and (iii) receive for the account of the Company all benefits and otherwise exercise all rights of beneficial ownership of such Original Notes, all in accordance with the terms and conditions of the Exchange Offer. THE UNDERSIGNED HEREBY REPRESENT(S) AND WARRANT(S) THAT THE UNDERSIGNED HAS FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE ORIGINAL NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE ORIGINAL NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE GUARANTORS OR THE EXCHANGE AGENT TO BE NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE ORIGINAL NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS UNDER THE EXCHANGE AND REGISTRATION RIGHTS AGREEMENT DATED FEBRUARY 3, 1999 (THE "REGISTRATION RIGHTS AGREEMENT"). THE UNDERSIGNED HAS READ AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER. The name(s) and address(es) of the registered holder(s) of the Original Notes tendered hereby should be printed above, if they are not already set forth above, as they appear on the Certificates representing such -3- 4 Original Notes. The Certificate number(s) and the Original Notes that the undersigned wishes to tender should be indicated in the appropriate boxes above. If any tendered Original Notes are not exchanged pursuant to the Exchange Offer for any reason, or if Certificates are submitted for more Original Notes than are tendered or accepted for exchange, Certificates for such nonexchanged or nontendered Original Notes will be returned (or, in the case of Original Notes tendered by book-entry transfer, such Original Notes will be credited to an account maintained at DTC), without expense to the tendering holder, promptly following the expiration or termination of the Exchange Offer. The undersigned understands that tenders of Original Notes pursuant to any one of the procedures described in "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus and in the instructions hereto will, upon the Company's acceptance for exchange of such tendered Original Notes, constitute a binding agreement among the undersigned, the Company and the Guarantors upon the terms and subject to the conditions of the Exchange Offer. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company and the Guarantors may not be required to accept for exchange any of the Original Notes tendered hereby. Unless otherwise indicated herein in the box entitled "Special Issuance Instructions," below, the undersigned hereby directs that the Exchange Notes be issued in the name(s) of the undersigned or, in the case of a book-entry transfer of Original Notes, that such Exchange Notes be credited to the account indicated above maintained at DTC. If applicable, substitute Certificates representing Original Notes not exchanged or not accepted for exchange will be issued to the undersigned or, in the case of a book-entry transfer of Original Notes, will be credited to the account indicated above maintained at DTC. Similarly, unless otherwise indicated under "Special Delivery Instructions," please deliver Exchange Notes to the undersigned at the address shown below the undersigned's signature. BY TENDERING ORIGINAL NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL OR BY DELIVERING AN AGENT'S MESSAGE IN LIEU THEREOF, THE UNDERSIGNED HEREBY REPRESENTS AND AGREES THAT (I) THE UNDERSIGNED IS NOT AN "AFFILIATE" OF THE COMPANY OR THE GUARANTORS WITHIN THE MEANING OF RULE 405 UNDER THE SECURITIES ACT, (II) ANY EXCHANGE NOTES TO BE RECEIVED BY THE UNDERSIGNED ARE BEING ACQUIRED IN THE ORDINARY COURSE OF ITS BUSINESS, (III) THE UNDERSIGNED HAS NO ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES, AND (IV) IF THE UNDERSIGNED IS NOT A BROKER-DEALER, THE UNDERSIGNED IS NOT ENGAGED IN, AND DOES NOT INTEND TO ENGAGE IN, A DISTRIBUTION (WITHIN THE MEANING OF THE SECURITIES ACT) OF SUCH EXCHANGE NOTES. BY TENDERING ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER AND EXECUTING THIS LETTER OF TRANSMITTAL, A HOLDER OF ORIGINAL NOTES WHICH IS A BROKER-DEALER REPRESENTS AND AGREES, CONSISTENT WITH CERTAIN INTERPRETIVE LETTERS ISSUED BY THE STAFF OF THE DIVISION OF CORPORATION FINANCE OF THE SECURITIES AND EXCHANGE COMMISSION TO THIRD PARTIES, THAT (A) SUCH ORIGINAL NOTES HELD BY THE BROKER-DEALER ARE HELD ONLY AS A NOMINEE, OR (B) SUCH ORIGINAL NOTES WERE ACQUIRED BY SUCH BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND IT WILL DELIVER THE PROSPECTUS (AS AMENDED OR SUPPLEMENTED FROM TIME TO TIME) MEETING THE REQUIREMENTS OF THE SECURITIES ACT IN CONNECTION WITH ANY RESALE OF SUCH EXCHANGE NOTES (PROVIDED THAT, BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, SUCH BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT). -4- 5 THE COMPANY AND THE GUARANTORS HAVE AGREED THAT, SUBJECT TO THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A PARTICIPATING BROKER-DEALER (AS DEFINED BELOW) IN CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR ORIGINAL NOTES, WHERE SUCH ORIGINAL NOTES WERE ACQUIRED BY SUCH PARTICIPATING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. IN THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED ORIGINAL NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (A "PARTICIPATING BROKER-DEALER"), BY TENDERING SUCH ORIGINAL NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL OR BY DELIVERING AN AGENT'S MESSAGE IN LIEU THEREOF, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OR THE GUARANTORS OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF (I) ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR (II) ANY FACT WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR (III) OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH PARTICIPATING BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY OR THE GUARANTORS HAVE AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAVE FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE PARTICIPATING BROKER-DEALER OR THE COMPANY OR THE GUARANTORS HAVE GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY BE RESUMED, AS THE CASE MAY BE. Holders of Original Notes whose Original Notes are accepted for exchange will not receive accrued interest on such Original Notes for any period from and after the last Interest Payment Date to which interest has been paid or duly provided for on such Original Notes prior to the original issue date of the Exchange Notes or, if no such interest has been paid or duly provided for, will not receive any accrued interest on such Original Notes, and the undersigned waives the right to receive any interest on such Original Notes accrued from and after such Interest Payment Date or, if no such interest has been paid or duly provided for, from and after _______________, 1999. All authority herein conferred or agreed to be conferred in this Letter of Transmittal shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, administrators, personal representatives, trustees in bankruptcy, legal representatives, successors and assigns of the undersigned. Except as stated in the Prospectus, this tender is irrevocable. Please be advised that the Company and the Guarantors are making the Exchange Offer in reliance on the position of the staff of the Division of Corporation Finance of the Securities and Exchange Commission set forth in certain interpretive letters addressed to third parties in other transactions. In addition, each of the Company and the Guarantors have authorized us to inform you as follows: Neither the Company nor the Guarantors have entered into any arrangement or understanding with any person to distribute the Exchange Notes to be received in the Exchange Offer and, to the best of its information and belief, each person participating in the Exchange Offer is acquiring the Exchange Notes in its ordinary course of business and has no arrangement or understanding with any person to participate in the distribution of the Exchange Notes to be received in the Exchange Offer. In this regard, the Company and the Guarantors will make each person participating in the Exchange Offer aware that if such person is participating in the Exchange Offer for the purpose of distributing the Exchange Notes to be acquired in the Exchange Offer, such person (a) could not rely -5- 6 on the Staff position enunciated in the interpretative letters referred to above and (b) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. The Company and the Guarantors acknowledge that such a secondary resale transaction by such person participating in the Exchange Offer for the purpose of distributing the Exchange Notes should be covered by an effective registration statement containing the selling securityholder information required by Item 507 or 508, as applicable, of Regulation S-K. Furthermore, the Company and the Guarantors will include in the transmittal letter to be executed by an exchange offeree in order to participate in the Exchange Offer (x) an acknowledgment that if such exchange offeree is a broker-dealer that will receive Exchange Notes for its own account in exchange for Original Notes that were acquired as a result of market-making activities or other trading activities, it will deliver a prospectus in connection with any resale of such Exchange Notes and (y) a statement that by so acknowledging and by delivering a prospectus, such exchange offeree will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AS SET FORTH IN SUCH BOX. -6- 7 HOLDER(S) SIGN HERE (SEE INSTRUCTIONS 2, 5 AND 6) (NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (SIGNATURE(S) OF HOLDER(S) Dated: __________________________________________________________________, 1999 Must be signed by registered holder(s) exactly as name(s) appear(s) on Certificate(s) for the Original Notes hereby tendered or on a security position listing, or by any person(s) authorized to become the registered holder(s) by endorsements and documents transmitted herewith (including such opinions of counsel, certifications and other information as may be required by the Company for the Original Notes to comply with the restrictions on transfer applicable to the Original Notes). If signature is by an attorney-in-fact, executor, administrator, trustee, guardian, officer of a corporation or another acting in a fiduciary capacity or representative capacity, please set forth the signer's full title. See Instruction 5. Name(s): - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): - ------------------------------------------------------------------------------- Address: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number: - ------------------------------------------------------------------------------- Tax ID Number: - ------------------------------------------------------------------------------- GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 2 AND 5) - ------------------------------------------------------------------------------- AUTHORIZED SIGNATURE Date: ___________________________________________________________________, 1999 Name of Firm: - ------------------------------------------------------------------------------- Capacity (full title): - ------------------------------------------------------------------------------- (PLEASE PRINT) Address: - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (INCLUDE ZIP CODE) Area Code and Telephone Number: - ------------------------------------------------------------------------------- -7- 8 - --------------------------------------------------------- ------------------------------------------------ SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, AND 6) (SEE INSTRUCTIONS 1, 5, AND 6) To be completed ONLY if the Exchange Notes or To be completed ONLY if Exchange Notes or Original Notes not tendered are to be issued in the Original Notes not tendered are to be sent to name of someone other not than the registered someone other than the registered holder of the holder of the Original Notes whose registered holder of Original Notes whose name(s) appear(s) above, the Original Notes whose name(s) name(s) appear(s) above. or such registered holder(s) at an address other than that shown above. Issue Mail [ ] Original Notes not tendered to: [ ] Original Notes not tendered to: [ ] Exchange Notes to: [ ] Exchange Notes to: Name(s) Name(s) - --------------------------------------------------------- ------------------------------------------------ Address Address - --------------------------------------------------------- ------------------------------------------------ - --------------------------------------------------------- ------------------------------------------------ - --------------------------------------------------------- ------------------------------------------------ (INCLUDE ZIP CODE) (INCLUDE ZIP CODE) Area Code and Telephone Number Area Code and Telephone Number - --------------------------------------------------------- ------------------------------------------------ Tax ID Number - --------------------------------------------------------- - --------------------------------------------------------- ------------------------------------------------
-8- 9 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. This Letter of Transmittal is to be completed either if (a) Certificates are to be forwarded herewith or (b) tenders are to be made pursuant to the procedures for tender by book-entry transfer set forth in "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus and an Agent's Message is not delivered. Certificates, or timely confirmation of a book-entry transfer of such Original Notes into the Exchange Agent's account at DTC, as well as this Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at any of its addresses set forth herein on or prior to the Expiration Date. Tenders by book-entry transfer may also be made by delivering an Agent's Message in lieu of this Letter of Transmittal. The term "Agent's Message" means a message, transmitted by DTC to and received by the Exchange Agent and forming a part of a book-entry confirmation, which states that DTC has received an express acknowledgment from the DTC participant, which acknowledgment states that such participant has received and agrees to be bound by the Letter of Transmittal (including the representations contained herein) and that the Company and the Guarantors may enforce the Letter of Transmittal against such participant. Original Notes may be tendered in whole or in part in integral multiples of $1,000. Holders who wish to tender their Original Notes and (i) whose Original Notes are not immediately available or (ii) who cannot deliver their Original Notes, this Letter of Transmittal and all other required documents to the Exchange Agent on or prior to the Expiration Date or (iii) who cannot complete the procedures for delivery by book-entry transfer on a timely basis, may tender their Original Notes by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth in "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus. Pursuant to such procedures: (A) such tender must be made by or through an Eligible Institution (as defined below); (B) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Company, must be received by the Exchange Agent on or prior to the Expiration Date; and (C) the Certificates (or a book-entry confirmation (as defined in the Prospectus)) representing all tendered Original Notes, in proper form for transfer, together with a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in "The Exchange Offer -- Procedures for Tendering Original Notes" in the Prospectus. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile or mail to the Exchange Agent, and must include a guarantee by an Eligible Institution in the form set forth in such Notice. For Original Notes to be properly tendered pursuant to the guaranteed delivery procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the Expiration Date. As used herein and in the Prospectus, "Eligible Institution" means a firm or other entity identified in Rule 17Ad-15 under the Exchange Act as "an eligible Guarantors institution," including (as such terms are defined therein) (i) a bank; (ii) a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; (iii) a credit union; (iv) a national securities exchange, registered securities association or clearing agency; or (v) a savings association that is a participant in a Securities Transfer Association. THE METHOD OF DELIVERY OF CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING HOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY -9- 10 THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, OR OVERNIGHT DELIVERY SERVICE IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Neither the Company nor the Guarantors will accept any alternative, conditional or contingent tenders. Each tendering holder, by execution of a Letter of Transmittal (or facsimile thereof), waives any right to receive any notice of the acceptance of such tender. 2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of Transmittal is required if: (i) this Letter of Transmittal is signed by the registered holder (which term, for purposes of this document, shall include any participant in DTC whose name appears on a security position listing as the owner of the Original Notes) of Original Notes tendered herewith, unless such holder(s) has completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" above, or (ii) such Original Notes are tendered for the account of a firm that is an Eligible Institution. In all other cases, an Eligible Institution must guarantee the signature(s) on this Letter of Transmittal. See Instruction 5. 3. INADEQUATE SPACE. If the space provided in the box captioned "Description of Original Notes" is inadequate, the Certificate number(s) and/or the principal amount of Original Notes and any other required information should be listed on a separate signed schedule which is attached to this Letter of Transmittal. 4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. If less than all the Original Notes evidenced by any Certificate submitted are to be tendered, fill in the principal amount of Original Notes which are to be tendered in the box entitled "Principal Amount of Original Notes Tendered (if Principal Amount of Original Notes is Less than All)." In such case, new Certificate(s) for the remainder of the Original Notes that were evidenced by your old Certificate(s) will only be sent to the holder of the Original Notes, promptly after the Expiration Date. All Original Notes represented by Certificates delivered to the Exchange Agent will be deemed to have been tendered unless otherwise indicated. Except as otherwise provided herein, tenders of Original Notes may be withdrawn at any time on or prior to the Expiration Date. In order for a withdrawal to be effective on or prior to that time, a written, telegraphic, telex or facsimile transmission of such notice of withdrawal must be timely received by the Exchange Agent at any of its addresses set forth above or in the Prospectus on or prior to the Expiration Date. Any such notice of withdrawal must specify the name of the person who tendered the Original Notes to be withdrawn, the aggregate principal amount of Original Notes to be withdrawn, and (if Certificates for Original Notes have been tendered) the name of the registered holder of the Original Notes as set forth on the Certificate for the Original Notes, if different from that of the person who tendered such Original Notes. If Certificates for the Original Notes have been delivered or otherwise identified to the Exchange Agent, then prior to the physical release of such Certificates for the Original Notes, the tendering holder must submit the serial numbers shown on the particular Certificates for the Original Notes to be withdrawn and the signature on the notice of withdrawal must be guaranteed by an Eligible Institution, except in the case of Original Notes tendered for the account of an Eligible Institution. If Original Notes have been tendered pursuant to the procedures for book-entry transfer set forth in the Prospectus under "The Exchange Offer -- Procedures for Tendering Original Notes," the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of Original Notes, in which case a notice of withdrawal will be effective if delivered to the Exchange Agent by -10- 11 written, telegraphic, telex or facsimile transmission. Withdrawals of tenders of Original Notes may not be rescinded. Original Notes properly withdrawn will not be deemed validly tendered for purposes of the Exchange Offer, but may be retendered at any subsequent time on or prior to the Expiration Date by following any of the procedures described in the Prospectus under "The Exchange Offer -- Procedures for Tendering Original Notes." All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Company and the Guarantors, in their sole discretion, whose determination shall be final and binding on all parties. The Company and the Guarantors, any affiliates or assigns of the Company and the Guarantors, the Exchange Agent or any other person shall not be under any duty to give any notification of any irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Original Notes which have been tendered but which are withdrawn will be returned to the holder thereof without cost to such holder promptly after withdrawal. 5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Original Notes tendered hereby, the signature(s) must correspond exactly with the name(s) as written on the face of the Certificate(s) without alteration, enlargement or any change whatsoever. If any of the Original Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any tendered Original Notes are registered in different name(s) on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal (or facsimiles thereof) as there are different registrations of Certificates. If this Letter of Transmittal or any Certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing and must submit proper evidence satisfactory to the Company and the Guarantors, in their sole discretion, of such persons' authority to so act. When this Letter of Transmittal is signed by the registered owner(s) of the Original Notes listed and transmitted hereby, no endorsement(s) of Certificate(s) or separate bond power(s) are required unless Exchange Notes are to be issued in the name of a person other than the registered holder(s). Signature(s) on such Certificate(s) or bond power(s) must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered owner(s) of the Original Notes listed, the Certificates must be endorsed or accompanied by appropriate bond powers, signed exactly as the name or names of the registered owner(s) appear(s) on the Certificates, and also must be accompanied by such opinions of counsel, certifications and other information as the Company or the Guarantors for the Original Notes may require in accordance with the restrictions on transfer applicable to the Original Notes. Signatures on such Certificates or bond powers must be guaranteed by an Eligible Institution. 6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to be issued in the name of a person other than the signer of this Letter of Transmittal, or if Exchange Notes are to be sent to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Certificates for Original Notes not exchanged will be returned by mail or, if tendered by book-entry transfer, by crediting the account indicated above maintained at DTC. See Instruction 4. -11- 12 7. IRREGULARITIES. The Company and the Guarantors will determine, in their sole discretion, all questions as to the form of documents, validity, eligibility (including time of receipt) and acceptance for exchange of any tender of Original Notes, which determination shall be final and binding on all parties. The Company and the Guarantors reserve the absolute right to reject any and all tenders determined by either of them not to be in proper form or the acceptance of which, or exchange for, may, in the view of counsel to the Company and the Guarantors, be unlawful, and the Company and the Guarantors also reserve the right to waive any conditions or irregularities in any tender of Original Notes of any particular holder whether or not similar conditions or irregularities are waived in the case of other holders. The Company's and the Guarantors' interpretation of the terms and conditions of the Exchange Offer (including this Letter of Transmittal and the instructions hereto) will be final and binding. No tender of Original Notes will be deemed to have been validly made until all irregularities with respect to such tender have been cured or waived. The Company and the Guarantors, any affiliates or assigns of the Company and the Guarantors, the Exchange Agent, or any other person shall not be under any duty to give notification of any irregularities in tenders or incur any liability for failure to give such notification. 8. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Exchange Agent at any of its addresses and telephone number set forth on the front of this Letter of Transmittal. Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may be obtained from the Exchange Agent or from your broker, dealer, commercial bank, trust company or other nominee. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a holder whose tendered Original Notes are accepted for exchange is required to provide the Exchange Agent with such holder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Exchange Agent is not provided with the correct TIN, the Internal Revenue Service (the "IRS") may subject the holder or other payee to a $50 penalty. In addition, payments to such holders or other payees with respect to Original Notes exchanged pursuant to the Exchange Offer may be subject to 31% backup withholding. The box in Part 2 of the Substitute Form W-9 may be checked if the tendering holder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 2 is checked, the holder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 2 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Exchange Agent will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Exchange Agent. The Exchange Agent will retain such amounts withheld during the 60 day period following the date of the Substitute Form W-9. If the holder furnishes the Exchange Agent with its TIN within 60 days after the date of the Substitute Form W-9, the amounts retained during the 60 day period will be remitted to the holder and no further amounts shall be retained or withheld from payments made to the holder thereafter. If, however, the holder has not provided the Exchange Agent with its TIN within such 60 day period, amounts withheld will be remitted to the IRS as backup withholding. In addition, 31% of all payments made thereafter will be withheld and remitted to the IRS until a correct TIN is provided. The holder is required to give the Exchange Agent the TIN (e.g., social security number or employer identification number) of the registered owner of the Original Notes or of the last transferee appearing on the transfers attached to, or endorsed on, the Original Notes. If the Original Notes are registered in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. -12- 13 Certain holders (including, among others, corporations, financial institutions and certain foreign persons) may not be subject to these backup withholding and reporting requirements. Such holders should nevertheless complete the attached Substitute Form W-9 below, and write "exempt" on the face thereof, to avoid possible erroneous backup withholding. A foreign person may qualify as an exempt recipient by submitting a properly completed IRS Form W-8, signed under penalties of perjury, attesting to that holder's exempt status. Please consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which holders are exempt from backup withholding. Backup withholding is not an additional U.S. Federal income tax. Rather, the U.S. Federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. 10. NO CONDITIONAL TENDERS. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering holders of Original Notes, by execution of this Letter of Transmittal, shall waive any right to receive notice of the acceptance of Original Notes for exchange. Neither the Company, the Guarantors, the Exchange Agent nor any other person is obligated to give notice of any defect or irregularity with respect to any tender of Original Notes nor shall any of them incur any liability for failure to give any such notice. 11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any Certificate(s) representing Original Notes have been lost, destroyed or stolen, the holder should promptly notify the Exchange Agent. The holder will then be instructed as to the steps that must be taken in order to replace the Certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost, destroyed or stolen Certificate(s) have been followed. 12. SECURITY TRANSFER TAXES. Holders who tender their Original Notes for exchange will not be obligated to pay any transfer taxes in connection therewith. If, however, Exchange Notes are to be delivered to, or are to be issued in the name of, any person other than the registered holder of the Original Notes tendered, or if a transfer tax is imposed for any reason other than the exchange of Original Notes in connection with the Exchange Offer, then the amount of any such transfer tax (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF) AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. -13- 14 (TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS) (SEE INSTRUCTION 9) PAYER'S NAME: THE BANK OF NEW YORK - ---------------------------------------------------------------------------------------------------------------------------- SUBSTITUTE FORM W-9 PART 1-- PLEASE PROVIDE TIN: YOUR TIN ON THE LINE AT ------------------------------ Department of the Treasury Internal RIGHT AND CERTIFY BY Revenue Service SIGNING AND DATING BELOW ------------------------------ Payor's Request for Taxpayer ------------------------ Social Security Number Identification Number (TIN) NAME and Certification OR ------------------------ ADDRESS ------------------------------ Employer Identification Number ------------------------ CITY, STATE & ZIP CODE ---------------------------------------------------------------------- PART 2 Awaiting TIN [ ] ---------------------------------------------------------------------- PART 3 - CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME), (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE (I) I AM EXEMPT FROM BACKUP WITHHOLDING, (II) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE ("IRS") THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR DIVIDENDS, OR (III) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING, AND (3) ANY OTHER INFORMATION PROVIDED ON THIS FORM IS TRUE AND CORRECT. SIGNATURE ------------------------------------------------------------ DATE ----------------------------------------------------------------- You must cross out item (iii) in Part (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return and you have not been notified by the IRS that you are no longer subject to backup withholding. - ---------------------------------------------------------------------------------------------------------------------------- NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY IN CERTAIN CIRCUMSTANCES RESULT IN BACKUP WITHHOLDING OF 31% OF ANY AMOUNTS PAID TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. - ----------------------------------------------------------------------------------------------------------------------------
-14- 15 YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all payments made to me on account of the Exchange Notes shall be retained until I provide a taxpayer identification number to the Exchange Agent and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the Internal Revenue Service as backup withholding and 31% of all reportable payments made to me thereafter will be withheld and remitted to the Internal Revenue Service until I provide a taxpayer identification number. Signature ---------------------------------------------------------------------- Date:____________________________________________________________________, 1999 -15- EX-99.2 7 FORM OF NOTICE OF GUARANTEED DELIVERY 1 EXHIBIT 99.2 NOTICE OF GUARANTEED DELIVERY TO TENDER UNREGISTERED 9 3/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2009 (INCLUDING THOSE IN BOOK-ENTRY FORM) OF CARMIKE CINEMAS, INC. PURSUANT TO THE EXCHANGE OFFER AND PROSPECTUS DATED ________________, 1999 As set forth in the Exchange Offer (as described in the Prospectus (as defined below)), this form or one substantially equivalent hereto must be used to accept the Exchange Offer if certificates for unregistered 9 3/8% Series A Senior Subordinated Notes due 2009 (the "Original Notes"), of Carmike Cinemas, Inc., are not immediately available or time will not permit a holder's Original Notes or other required documents to reach the Exchange Agent on or prior to the Expiration Date, or the procedure for book-entry transfer cannot be completed on a timely basis. This form may be delivered by facsimile transmission, by registered or certified mail, by hand, or by overnight delivery service to the Exchange Agent. See "The Exchange Offer - Procedures for Tendering Original Notes" in the Prospectus. =============================================================================== THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [_______________], 1999 (THE "EXPIRATION DATE"), UNLESS THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY. =============================================================================== THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS: THE BANK OF NEW YORK Facsimile Transmissions: By Registered or Certified Mail: (Eligible Institutions Only) By Hand or Overnight Delivery: The Bank of New York (212) 815-6339 The Bank of New York 101 Barclay Street (7 East) 101 Barclay Street New York, New York 10286 Confirm by Telephone: Corporate Trust Services Window Attention: Odell Romeo (212) 815-6337 Ground Level Reorganization Section New York, New York 10286 For Information Call: Attention: Odell Romeo (212) 815-6337 Reorganization Section
(Originals of all documents sent by facsimile should be sent promptly by registered or certified mail, by hand, or by overnight delivery service.) DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 2 Ladies and Gentlemen: The undersigned hereby tenders to Carmike Cinemas, Inc., a Delaware corporation (the "Company"), in accordance with the Company's offer, upon the terms and subject to the conditions set forth in the prospectus dated _______________, 1999 (the "Prospectus"), and in the accompanying Letter of Transmittal, receipt of which is hereby acknowledged, $____________ in the aggregate principal amount of Original Notes pursuant to the guaranteed delivery procedures described in the Prospectus. =============================================================================== Name(s) of Registered Holder(s):_______________________________________________ (Please Type or Print) Address:_______________________________________________________________________ _______________________________________________________________________________ Area Code and Telephone Number:________________________________________________ Certificate Number(s) for Original Notes (if available):_______________________ Total Principal Amount Tendered and Represented by Certificate(s): $_________________________ Signature of Registered Holder(s):_____________________________________________ Date:____________________________ [ ] The Depository Trust Company (check if Original Notes will be tendered by book-entry transfer) Account Number___________________________________________ =============================================================================== -2- 3 THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE [Not to be used for signature guarantee] The undersigned, being a member firm of a registered national securities exchange, a member of the National Association of Securities Dealers, Inc., or a commercial bank or trust company having an office in the United States, hereby guarantees (a) that the above-named person(s) "own(s)" the Original Notes tendered hereby within the meaning of Rule 14e-4 ("Rule 14e-4") under the Securities Exchange Act of 1934, as amended, (b) that such Original Notes complies with Rule 14e-4, and (c) to deliver to the Exchange Agent the certificates representing the Original Notes tendered hereby or confirmation of book-entry transfer of such Original Notes into the Exchange Agent's account at The Depository Trust Company, in proper form for transfer, together with the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees and any other required documents, within three New York Stock Exchange trading days after the Expiration Date. =============================================================================== Name of Firm: _________________________________________________________________ Address:_______________________________________________________________________ _______________________________________________________________________________ Area Code and Telephone Number:________________________________________________ Authorized Signature:__________________________________________________________ Name:__________________________________________________________________________ Title:_________________________________________ Date:__________________________________________ =============================================================================== NOTE: DO NOT SEND CERTIFICATES OF ORIGINAL NOTES WITH THIS FORM. CERTIFICATES FOR ORIGINAL NOTES SHOULD BE SENT ONLY WITH YOUR LETTER OF TRANSMITTAL. -3- -----END PRIVACY-ENHANCED MESSAGE-----