<PAGE> 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)
<TABLE>
<S> <C> <C>
DELAWARE 7830 58-1469127
(State or other jurisdiction (Primary Standard Industrial I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
(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
<TABLE>
<CAPTION>
=================================================================================================================================
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
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
=================================================================================================================================
</TABLE>
<PAGE> 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
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C>
Eastwynn Theatres, Inc. Alabama 7830 58-2184195
Wooden Nickel Pub, Inc. Delaware 5800 58-1364384
</TABLE>
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
<PAGE> 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.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 7
Recent Results of Operations
Recent results of operations for the quarter ended March 31, 1999 are
as follows:
<TABLE>
<CAPTION>
THREE MONTH PERIOD
ENDED MARCH 31,
----------------------------------
1999 1998
------------- --------------
(in thousands)
<S> <C> <C>
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
</TABLE>
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
<PAGE> 8
THE EXCHANGE OFFER
<TABLE>
<S> <C>
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
</TABLE>
4
<PAGE> 9
<TABLE>
<S> <C>
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.
</TABLE>
5
<PAGE> 10
<TABLE>
<S> <C>
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.
</TABLE>
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.
<TABLE>
<S> <C>
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
</TABLE>
6
<PAGE> 11
<TABLE>
<S> <C>
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.
</TABLE>
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
<PAGE> 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
<PAGE> 13
periods. The pro forma adjustments are based upon currently available
information and upon certain assumptions that management believes are reasonable
under the circumstances.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1994 1995 (1) 1996 (1) 1997 (1) 1998 (2)
---------- ---------- ---------- ---------- ----------
(IN MILLIONS EXCEPT PERCENTAGES, RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
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)............................... --
</TABLE>
9
<PAGE> 14
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------------
1994 1995 1996 1997 1998
----------------------------------------------------------
(in millions, except operating data)
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- ------------------
(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):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
INTEREST RATE 1998
----------------- -----------------------
<S> <C> <C>
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
=====
</TABLE>
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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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%.
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<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
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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.
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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
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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
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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.
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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.
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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
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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.
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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
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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.
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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.
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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
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<PAGE> 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
<PAGE> 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
<PAGE> 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.
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<PAGE> 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
<PAGE> 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:
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<PAGE> 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.
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<PAGE> 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:
<TABLE>
<CAPTION>
SOURCES OF FUNDS USES OF FUNDS
-------------------------------------------------- --------------------------------------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C>
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
========= =========
</TABLE>
- ------------
(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
<PAGE> 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.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
-------------------------
AS
ACTUAL ADJUSTED
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
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
========= =========
</TABLE>
- ------------
(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.
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<PAGE> 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.
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<PAGE> 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.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1994 1995 (1) 1996 (1) 1997 (1) 1998 (2)
---------- ---------- ---------- ---------- ----------
(IN MILLIONS EXCEPT PERCENTAGES, RATIOS AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
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)
========== ========== ========== ========== ==========
</TABLE>
43
<PAGE> 48
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------------------------------
1994 1995 1996 1997 1998
------------------------------------------------
(in millions, except operating data)
<S> <C> <C> <C> <C> <C>
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
</TABLE>
- --------------------
(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
<PAGE> 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
<PAGE> 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
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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.
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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.
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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.
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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
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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
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(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
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(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
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(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:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2004......................... 104.688%
2005......................... 103.125%
2006......................... 101.563%
2007 and thereafter.......... 100.000%
</TABLE>
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.
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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.
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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.
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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
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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;
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(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
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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:
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(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
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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
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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.
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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;"
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(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.
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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.
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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;
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(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.
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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:
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(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
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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):
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(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;
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(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.
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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
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"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
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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.
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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.
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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
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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.
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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.
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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.
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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.
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"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;
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(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
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(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
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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).
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"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;
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(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
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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
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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.
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"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
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(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:
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(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.
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"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.
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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.
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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:
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- 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;
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- 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;
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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
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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.
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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.
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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.
<PAGE> 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
<TABLE>
<S> <C>
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.
</TABLE>
<TABLE>
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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.
</TABLE>
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.
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[ALTERNATE INSIDE FRONT COVER PAGE
FOR MARKET-MAKING PROSPECTUS]
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
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..............................................................................................
</TABLE>
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.
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[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.
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[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.
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[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.
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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:
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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.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
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.
</TABLE>
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<TABLE>
<S> <C>
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.
</TABLE>
- ------------
* 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.
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(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
<PAGE> 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
<PAGE> 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.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ C.L. Patrick Chairman of the Board
- ----------------------------------
C. L. Patrick
/s/ Michael W. Patrick President, Chief Executive Officer and
- ---------------------------------- Director
Michael W. Patrick
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/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
</TABLE>
<PAGE> 119
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
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.
</TABLE>
- ------------
* To be filed by amendment.
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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,
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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
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<PAGE> 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;
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<PAGE> 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
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<PAGE> 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;
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(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,
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<PAGE> 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
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<PAGE> 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;
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(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
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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
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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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<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
<PAGE> 23
SCHEDULE I
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
SECURITIES
TO BE
PURCHASER PURCHASED
--------- ----------
<S> <C>
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
============
</TABLE>
Schedule I Page 1
<PAGE> 24
SCHEDULE II
GUARANTORS
1. Eastwynn Theatres, Inc.
2. Wooden Nickel Pub, Inc.
Schedule II Page 1
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 1
EXHIBIT 12
CARMIKE CINEMAS, INC.
STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
------------------------------------------------------------------------ --------------
YEAR ENDED
YEAR ENDED DECEMBER 31, DECEMBER 31,
------------------------------------------------------------------------ --------------
1994 1995 1996 1997 1998 1998
------------- ------------ --------------- -------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
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 -- --
</TABLE>
- ----------------------------
(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.
<PAGE> 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
<PAGE> 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)
================================================================================
<PAGE> 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name Address
- ------------------------------------------------------------------------------------------------
<S> <C>
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
</TABLE>
(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-
<PAGE> 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-
<PAGE> 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.
<TABLE>
<CAPTION>
ASSETS Dollar Amounts
in Thousands
<S> <C>
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
===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
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
===========
</TABLE>
<PAGE> 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 }
<PAGE> 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
<TABLE>
<S> <C> <C>
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
</TABLE>
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.
<PAGE> 2
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX: DESCRIPTION OF ORIGINAL NOTES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
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
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 8
<TABLE>
<S> <C>
- --------------------------------------------------------- ------------------------------------------------
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
- ---------------------------------------------------------
- --------------------------------------------------------- ------------------------------------------------
</TABLE>
-8-
<PAGE> 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-
<PAGE> 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
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<PAGE> 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-
<PAGE> 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-
<PAGE> 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.
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<PAGE> 14
(TO BE COMPLETED BY ALL TENDERING SECURITY HOLDERS)
(SEE INSTRUCTION 9)
PAYER'S NAME: THE BANK OF NEW YORK
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE> 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-
<PAGE> 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
<TABLE>
<S> <C> <C>
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
</TABLE>
(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.
<PAGE> 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-
<PAGE> 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-
