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EXHIBIT 10.1
INDEMNIFICATION AGREEMENT
INDEMNIFICATION
AGREEMENT, made and executed effective as of the 11th day
of November, 2005, by and between CARMIKE
CINEMAS, INC., a Delaware corporation
(the "Company"), and JAMES J. GAFFNEY, an
individual resident of the State of
California (the "Indemnitee").
WHEREAS, the
Company is aware that, in order to induce highly competent
persons to serve the Company as directors
or officers or in other capacities,
the Company must provide such persons with
adequate protection through insurance
and indemnification against inordinate
risks of claims and actions against them
arising out of their service to and
activities on behalf of the Company;
WHEREAS, the
Company recognizes that the increasing difficulty in obtaining
directors' and officers' liability
insurance, the increases in the cost of such
insurance and the general reductions in the
coverage of such insurance have
increased the difficulty of attracting and
retaining such persons;
WHEREAS, the
Board of Directors of the Company has determined that it is
essential to the best interests of the
Company's stockholders that the Company
act to assure such persons that there will
be increased certainty of such
protection in the future;
WHEREAS, it is
reasonable, prudent and necessary for the Company
contractually to obligate itself to
indemnify such persons to the fullest extent
permitted by applicable law so that they
will continue to serve the Company free
from undue concern that they will not be so
indemnified; and
WHEREAS, the
Indemnitee is willing to serve, continue to serve, and take on
additional service for or on behalf of the
Company on the condition that he/she
be so indemnified.
NOW, THEREFORE,
in consideration of the premises and the mutual promises
and covenants contained herein, and for
other good and valuable consideration,
the receipt and sufficiency of which are
hereby acknowledged, the Company and
Indemnitee do hereby agree as follows:
1. SERVICE BY
THE INDEMNITEE. The Indemnitee agrees to serve and/or
continue to serve as a director or officer
of the Company faithfully and will
discharge his/her duties and
responsibilities to the best of his/her ability so
long as the Indemnitee is duly elected or
qualified in accordance with the
provisions of the Amended and Restated
Certificate of Incorporation, as amended
(the "Certificate"), and Amended and
Restated By-laws, as amended (the
"By-laws") of the Company and the General
Corporation Law of the State of
Delaware, as amended (the "DGCL"), or until
his/her earlier death, resignation
or removal. The Indemnitee may at any time
and for any reason resign from such
position (subject to any other contractual
obligation or other obligation
imposed by operation by law), in which
event the Company shall have no
obligation under this Agreement to continue
the Indemnitee in any such position.
Nothing in this Agreement shall confer upon
the Indemnitee the right to continue
in the employ of the Company
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or as a director of the Company or affect
the right of the Company to terminate
the Indemnitee's employment at any time in
the sole discretion of the Company,
with or without cause, subject to any
contract rights of the Indemnitee created
or existing otherwise than under this
Agreement.
2.
INDEMNIFICATION. The Company shall indemnify the Indemnitee against
all
Expenses (as defined below), judgments,
fines and amounts paid in settlement
actually and reasonably incurred by the
Indemnitee as provided in this Agreement
to the fullest extent permitted by the
Certificate, By-laws and DGCL or other
applicable law in effect on the date of
this Agreement and to any greater extent
that applicable law may in the future from
time to time permit. Without
diminishing the scope of the
indemnification provided by this Section 2, the
rights of indemnification of the Indemnitee
provided hereunder shall include,
but shall not be limited to, those rights
hereinafter set forth, except that no
indemnification shall be paid to the
Indemnitee:
(a) on account of any suit in which judgment is rendered against
the
Indemnitee for
disgorgement of profits made from the purchase or sale by
the Indemnitee of
securities of the Company pursuant to the provisions of
Section 16(b) of
the Securities Exchange Act of 1934, as amended (the
"Act"), or
similar provisions of any federal, state or local statutory
law;
(b) on account of conduct of the Indemnitee which is finally
adjudged
by a court of
competent jurisdiction to have been knowingly fraudulent or
to constitute
willful misconduct;
(c) in any circumstance where such indemnification is expressly
prohibited by applicable law;
(d) with respect to liability for which payment is actually made
to
the Indemnitee
under a valid and collectible insurance policy or under a
valid and
enforceable indemnity clause, By-law or agreement (other than
this Agreement),
except in respect of any liability in excess of payment
under such
insurance, clause, By-law or agreement;
(e) if a final decision by a court having jurisdiction in the
matter
shall determine
that such indemnification is not lawful (and, in this
respect, both
the Company and the Indemnitee have been advised that it is
the position of
the Securities and Exchange Commission that indemnification
for liabilities
arising under the federal securities laws is against public
policy and is,
therefore, unenforceable, and that claims for
indemnification
should be submitted to the appropriate court for
adjudication);
or
(f) in connection with any proceeding by the Indemnitee against
the
Company or its
directors, officers, employees or other Indemnitees, (i)
unless such
indemnification is expressly required to be made by law, (ii)
unless the
proceeding was authorized by the Board of Directors of the
Company, (iii)
unless such indemnification is provided by the Company, in
its sole
discretion, pursuant
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to the powers
vested in the Company under applicable law, or (iv) except as
provided in
Sections 11 and 13 hereof.
3. ACTIONS OR
PROCEEDINGS OTHER THAN AN ACTION BY OR IN THE RIGHT OF THE
COMPANY. The Indemnitee shall be entitled
to the indemnification rights provided
in this Section 3 if the Indemnitee was or
is a party or is threatened to be a
party to any threatened, pending or
completed action, suit or proceeding,
whether civil, criminal, administrative or
investigative in nature, other than
an action by or in the right of the
Company, by reason of the fact that the
Indemnitee is or was a director, officer,
employee, agent or fiduciary of the
Company, or is or was serving at the
request of the Company as a director,
officer, employee, agent or fiduciary of
any other entity, including, but not
limited to, another corporation,
partnership, limited liability company,
employee benefit plan, joint venture, trust
or other enterprise, or by reason of
any act or omission by him/her in such
capacity. Pursuant to this Section 3, the
Indemnitee shall be indemnified against all
Expenses, judgments, penalties
(including excise and similar taxes), fines
and amounts paid in settlement which
were actually and reasonably incurred by
the Indemnitee in connection with such
action, suit or proceeding (including, but
not limited to, the investigation,
defense or appeal thereof), if the
Indemnitee acted in good faith and in a
manner the Indemnitee reasonably believed
to be in or not opposed to the best
interests of the Company, and, with respect
to any criminal action or
proceeding, had no reasonable cause to
believe his/her conduct was unlawful.
4. ACTIONS BY OR
IN THE RIGHT OF THE COMPANY. The Indemnitee shall be
entitled to the indemnification rights
provided in this Section 4 if the
Indemnitee was or is a party or is
threatened to be made a party to any
threatened, pending or completed action,
suit or proceeding brought by or in the
right of the Company to procure a judgment
in its favor by reason of the fact
that the Indemnitee is or was a director,
officer, employee, agent or fiduciary
of the Company, or is or was serving at the
request of the Company as a
director, officer, employee, agent or
fiduciary of another entity, including,
but not limited to, another corporation,
partnership, limited liability company,
employee benefit plan, joint venture, trust
or other enterprise, or by reason of
any act or omission by him/her in any such
capacity. Pursuant to this Section 4,
the Indemnitee shall be indemnified against
all Expenses actually and reasonably
incurred by him/her in connection with the
defense or settlement of such action,
suit or proceeding (including, but not
limited to the investigation, defense or
appeal thereof), if the Indemnitee acted in
good faith and in a manner the
Indemnitee reasonably believed to be in or
not opposed to the best interests of
the Company; provided however, that no such
indemnification shall be made in
respect of any claim, issue, or matter as
to which the Indemnitee shall have
been adjudged to be liable to the Company,
unless and only to the extent that
the Court of Chancery of the State of
Delaware or the court in which such
action, suit or proceeding was brought
shall determine upon application that,
despite the adjudication of liability but
in view of all the circumstances of
the case, the Indemnitee is fairly and
reasonably entitled to be indemnified
against such Expenses actually and
reasonably incurred by him/her which such
court shall deem proper.
5. GOOD FAITH
DEFINITION. For purposes of this Agreement, the Indemnitee
shall be deemed to have acted in good faith
and in a manner the Indemnitee
reasonably believed to be in or not opposed
to the best interests of the
Company, or, with respect to any criminal
action or proceeding to have had no
reasonable cause to believe the
Indemnitee's conduct was unlawful, if such
action was based on (i) the records or
books of the accounts of the Company or
other
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enterprise, including financial statements;
(ii) information supplied to the
Indemnitee by the officers of the Company
or other enterprise in the course of
their duties; (iii) the advice of legal
counsel for the Company or other
enterprise; or (iv) information or records
given in reports made to the Company
or other enterprise by an independent
certified public accountant or by an
appraiser or other expert selected with
reasonable care by the Company or other
enterprise.
6.
INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding
the
other provisions of this Agreement, to the
extent that the Indemnitee has served
on behalf of the Company as a witness or
other participant in any class action
or proceeding, or has been successful, on
the merits or otherwise, in defense of
any action, suit or proceeding referred to
in Section 3 and 4 hereof, or in
defense of any claim, issue or matter
therein, including, but not limited to,
the dismissal of any action without
prejudice, the Indemnitee shall be
indemnified against all Expenses actually
and reasonably incurred by the
Indemnitee in connection therewith,
regardless of whether or not the Indemnitee
has met the applicable standards of Section
3 or 4 and without any determination
pursuant to Section 8.
7. PARTIAL
INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to
indemnification by the Company for some or a
portion of the Expenses, judgments, fines
and amounts paid in settlement
actually and reasonably incurred by the
Indemnitee in connection with the
investigation, defense, appeal or
settlement of such suit, action, investigation
or proceeding described in Section 3 or 4
hereof, but is not entitled to
indemnification for the total amount
thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of
such Expenses, judgments, penalties,
fines and amounts paid in settlement
actually and reasonably incurred by the
Indemnitee to which the Indemnitee is
entitled.
8. PROCEDURE FOR
DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (a) To
obtain indemnification under this
Agreement, Indemnitee shall submit to the
Company a written request, including
documentation and information which is
reasonably available to Indemnitee and is
reasonably necessary to determine
whether and to what extent Indemnitee is
entitled to indemnification. The
Secretary of the Company shall, promptly
upon receipt of a request for
indemnification, advise the Board of
Directors in writing that Indemnitee has
requested indemnification. Any Expenses
incurred by the Indemnitee in connection
with the Indemnitee's request for
indemnification hereunder shall be borne by
the Company. The Company hereby indemnifies
and agrees to hold the Indemnitee
harmless for any Expenses incurred by
Indemnitee under the immediately preceding
sentence irrespective of the outcome of the
determination of the Indemnitee's
entitlement to indemnification.
(b) Upon written
request by the Indemnitee for indemnification pursuant to
Section 3 or 4 hereof, the entitlement of
the Indemnitee to indemnification
pursuant to the terms of this Agreement
shall be determined by the following
person or persons, who shall be empowered
to make such determination: (i) if a
Change in Control (as hereinafter defined)
shall have occurred, by Independent
Counsel (as hereinafter defined) (unless
the Indemnitee shall request in writing
that such determination be made by the
Board of Directors (or a committee
thereof) in the manner provided for in
clause (ii) of this Section 8(b)) in a
written opinion to the Board of Directors,
a copy of which shall be delivered to
the Indemnitee; or (ii) if a Change in
Control shall not have occurred, (A)(1)
by the Board of Directors of the Company,
by a majority vote of
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Disinterested Directors (as hereinafter
defined) even though less than a quorum,
or (2) by a committee of Disinterested
Directors designated by majority vote of
Disinterested Directors, even though less
than a quorum, or (B) if there are no
such Disinterested Directors or, even if
there are such Disinterested Directors,
if the Board of Directors, by the majority
vote of Disinterested Directors, so
directs, by Independent Counsel in a
written opinion to the Board of Directors,
a copy of which shall be delivered to the
Indemnitee. Such Independent Counsel
shall be selected by the Board of Directors
and approved by the Indemnitee. Upon
failure of the Board of Directors to so
select, or upon failure of the
Indemnitee to so approve, such Independent
Counsel shall be selected by the
Chancellor of the State of Delaware or such
other person as the Chancellor shall
designate to make such selection. Such
determination of entitlement to
indemnification shall be made not later
than 45 days after receipt by the
Company of a written request for
indemnification. If the person making such
determination shall determine that the
Indemnitee is entitled to indemnification
as to part (but not all) of the application
for indemnification, such person
shall reasonably prorate such part of
indemnification among such claims, issues
or matters. If it is so determined that
Indemnitee is entitled to
indemnification, payment to Indemnitee
shall be made within ten days after such
determination.
9. PRESUMPTIONS
AND EFFECT OF CERTAIN PROCEEDINGS. (a) In making a
determination with respect to entitlement
to indemnification, the Indemnitee
shall be presumed to be entitled to
indemnification hereunder and the Company
shall have the burden of proof in the
making of any determination contrary to
such presumption.
(b) If the Board
of Directors, or such other person or persons empowered
pursuant to Section 8 to make the
determination of whether Indemnitee is
entitled to indemnification, shall have
failed to make a determination as to
entitlement to indemnification within 45
days after receipt by the Company of
such request, t
