Document:

EX-10.1 RELEASE AND CONSULTING SERVICES AGREEMENT

 

Exhibit
10.1

RELEASE AND CONSULTING SERVICES AGREEMENT

     This Release and Consulting Services Agreement (hereinafter “Agreement”) is entered into
as of the 31ST day of March, 2006, by and between MARTIN A. DURANT (hereinafter
referred to as “Durant”) and CARMIKE CINEMAS, INC. (hereinafter referred to as “Carmike”), and
arises out of the resignation of Durant as Senior Vice President-Finance, Treasurer and Chief
Financial Officer of Carmike. In consideration of the material promises contained herein, the
parties agree as follows:

     1. RESIGNATION OF EMPLOYMENT. Durant hereby voluntarily resigns as an employee and
officer of Carmike, as well as in each other capacity in which he served Carmike and the entitles
listed on Exhibit A attached hereto, effective as of the later
of the
31st day
of March, 2006 or the date immediately following the filing of
Carmike’s Form 10-K for the year ended December 31, 2005 with the Securities and Exchange Commission (the
“Resignation Date”). Contemporaneously with the signing of this Agreement, Durant is signing and
delivering to the Board of Directors of Carmike (and each of the entities listed on Exhibit A) a
notice of resignation in the form attached hereto as Exhibit B indicating his resignation as an
officer and/or a member of the Board of Directors of the entitles listed on Exhibit A hereto
effective as of the Resignation Date. It is agreed that as of the Resignation Date, Durant has no
further privileges, duties, or obligations to Carmike, except as described in this Agreement.

     2. SEVERANCE PACKAGE. In consideration of the promises and releases made by Durant
contained herein, Carmike agrees to provide Durant with a Severance Package consisting of the
following:

          (a) In exchange for Consulting Services as hereinafter set forth, Carmike will pay Durant his
regular base salary at his current rate of pay for a period of six (6) months from the Resignation
Date, less any amounts required to be withheld under applicable laws and regulations, which will be
paid in twelve (12) equal installments according to Carmike’s regular payday schedule over a six
(6) month period beginning the next payday following the Resignation Date. Durant will remain on
the Carmike major medical plan at Carmike’s current contribution rate for this six-month period.

          (b) Durant shall be paid his 2005 earned bonus on the same date said bonus is paid to
Carmike’s other executives pursuant to Carmike’s 2005 bonus plan.

          (c) On the Resignation Date, Durant shall be paid the cash equivalent payout for the 25,000
vested stock options granted to him under Carmike’s 2002 Stock Plan based on the difference between
the strike price of $21.74 and the market price of Carmike stock of $25.36 on December 31, 2005 the
date the options vested. All remaining options shall be forfeited without regard to vesting.

          (d) On the January 31, 2007, Carmike shall deliver to Durant the final 10,000 shares of
restricted stock granted to him in October 2004 in recognition of his performance in 2004.
 

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          (e) Carmike agrees to transfer to Durant the 2003 Mercedes Benz CLK55 that he was permitted to
use during his employment with Carmike.

          (f) Carmike agrees that Durant shall participate in the Carmike
Deferred Compensation Plan as to all amounts paid or transferred hereunder
including amounts due related to the shares delivered under Item 2 (d) above.

          (g) The payments and benefits provided to Durant in this Section 2 shall be subject to
all applicable income tax or other withholding required by applicable federal, state or
local law.

          (h) Notwithstanding the release contained in Section 3 of this Agreement, it is understood by
all parties that Durant does not release any claims that may arise under the terms of this
Agreement or after the effective date of this Agreement. It is also agreed and understood that
Durant does not forfeit or release his claims to any funds held in his account in Carmike’s
Deferred Compensation Plan. Durant also does not release any claim he may have to indemnification
pursuant to the terms of Carmike’s bylaws.

     3. GENERAL RELEASE BY DURANT. In exchange for the payments and benefits described in
Section 2 of this Agreement, Durant hereby voluntarily, irrevocably, fully, and completely
RELEASES, ACQUITS, AND FOREVER DISCHARGES Carmike (including its current and former owners,
shareholders, predecessors, successors, assigns, agents, directors, officers, employees,
representatives, attorneys, insurers, subsidiaries, divisions, affiliates, and related business
entities) from any and all claims, complaints, liabilities, obligations, promises, agreements,
controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts,
and expenses of any nature whatsoever (whether known or unknown) which Durant ever had, may have,
or now has arising from or related to, directly or indirectly, Durant’s employment with Carmike or
the termination of Durant’s employment with Carmike, or other events accrued as of the date of
execution of this Agreement, including, but not limited to:

          (a) Violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With
Disabilities Act, the Equal Pay Act, the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Family and
Medical Leave Act, the Consolidated Omnibus Budget Reconciliation Act of 1985, or the Employee
Retirement Income Security Act; and

          (b) Violations of any other federal or state statute or regulation or local ordinance; and

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          (c) Claims for lost or unpaid wages, compensation, or other benefits claims under state law,
defamation, intentional infliction of emotional distress, negligent infliction of emotional
distress, bad faith action, slander, assault, battery, wrongful or constructive discharge,
negligent hiring, retention and/or supervision, fraud, misrepresentation, conversion, tortious
interference with property, negligent investigation; and

          (d) Any claims to benefits under any and all bonus, severance, workforce reduction, early
retirement, outplacement, or any other similar plan sponsored by Carmike which Durant ever had or
now has or may in the future have; and

          (e) Any other claims arising in tort or contract under state law.

          In addition, Durant acknowledges that this Agreement constitutes a full SETTLEMENT, ACCORD AND
SATISFACTION of all claims covered by the release provisions of this paragraph. Notwithstanding
the foregoing, it is understood by all parties that Durant does not release any claims that may
arise under the terms of this Agreement or after the effective date of this Agreement.

     4. CONSULTING SERVICES. During the period commencing on the Resignation Date and
ending six (6) months therefrom (the “Consulting Period), Durant agrees to be available to serve,
and to serve, in the capacity of an independent consultant to Carmike. As a consultant to Carmike,
Durant agrees to be available to assist Carmike with such matters related to the business of
Carmike as shall be mutually agreed to from time to time by Durant and the CEO of Carmike,
including but not limited to the annual audit of Carmike’s financial records. During the
Consulting Period, Durant shall perform the consulting services as an independent contractor and
not as an employee of Carmike. Carmike will not exercise direction or control over Durant in the
performance of the consulting services. Durant shall act solely in an advisory capacity, and in
consequence shall not hold himself out as an officer or an employee of Carmike, and (unless
otherwise instructed or authorized in writing) Durant shall not have an authority to act for
Carmike or make any decisions or commitments for or on behalf of Carmike.

          Carmike agrees to reimburse Durant for any reasonable and necessary expenses Durant incurs in
performing services for Carmike during the Consulting Period so long as such expenses are
documented in writing and are submitted to Carmike for reimbursement within thirty (30) days of the
date the expense is incurred.

     5. BUSINESS PROTECTION COVENANTS.

          Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:

          (a) “Confidential Information” shall mean valuable, non-public, competitively

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sensitive data and information relating to the Carmike’s business that is not generally known by or readily
available to Carmike’s competitors. Confidential Information does not include any information that
comes into the public domain without any action by Durant.

          (b) “Trade Secret” shall mean information, including a formula, pattern, compilation, program,
device, method, technique, or process that: (a) derives independent economic value, actual or
potential, from not being generally known to, and not being readily ascertainable by proper means
by, other persons who can obtain economic value from its disclosure or use; and (b) is the subject
of efforts that are reasonable under the circumstances to maintain its secrecy.

          (c)
“Competing Business” shall mean any business (other than Carmike) that, directly
or indirectly, engages in the distribution and the exhibition of motion pictures.

          (d) “Competitive Position” shall mean (A) Durant’s direct or indirect equity ownership
(excluding ownership of less than one percent (1%) of the outstanding common stock of any publicly
held corporation) or control of any portion of any Competing Business; (B) Durant serving as a
director; officer; consultant, lender, joint venturer, partner, agent, or advisor of or to any
Competing Business; or (C) any employment arrangement or independent contractor agreement between
Durant and any Competing Business whereby Durant is required to perform services for the Competing
Business which are substantially similar to those that Durant performed for Carmike.

          (e) “Restricted Territory” shall mean the thirty-seven (37) states of the United States in
which Carmike is operating as of the Effective Date. A list of these states is attached hereto as
Exhibit C. This Restricted Territory is intended to be co-extensive with the actual geographic
areas for which Durant performed services for Carmike as an employee and for which he will provide
services to Carmike as a consultant under this Agreement.

          Durant hereby agrees that he will not (without the prior written consent of Carmike) for any
reason in any fashion, either directly or indirectly use, sell, lend, lease, distribute, license,
transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate in any way
for himself or for any other person or entity (i) any Confidential Information for a period of
three (3) years after the Resignation Date; or (ii) any Trade Secret at any time during which such
information shall constitute a trade secret under Georgia law.

          Durant
hereby covenants and agrees that he shall not, without the prior written consent of Carmike in each instance, directly or indirectly, alone or in conjunction with
any other person or entity, accept, enter into or attempt to enter into a Competitive Position in
the Restricted Territory during the Consulting Period and for one year after the termination of the
Consulting Period.

          Durant hereby agrees that he shall not, without the prior written

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consent of Carmike in each
instance, directly or indirectly, during the Consulting Period and for one year after the
termination of the Consulting Period: (i) hire any “key” employee of Carmike; or (ii) solicit or
attempt to solicit any “key” employee, consultant, contractor or other personnel of Carmike to
terminate, alter or lessen such party’s affiliation or relationship with Carmike or to violate the
terms of any agreement or understanding between such party and Carmike. For purposes of the
preceding sentence, “key” employees, consultants, contractors and other personnel of Carmike are
those who have access to Confidential Information or Trade Secrets.

          Durant hereby agrees that he shall not, without the prior written consent of Carmike in each
instance, directly or indirectly, during the Consulting Period, solicit or attempt to solicit for
or on behalf of any person or entity engaged in a Competing Business any dealer, customer or
actively sought prospective dealer; distributor, or customer of Carmike with whom he had
significant contact while an employee of Carmike through the end of the Consulting Period.

          Durant hereby acknowledges and agrees that he has sufficient skills to find alternative
commensurate work in his field of expertise that would not involve a violation of this Section 5.
Additionally, Durant hereby acknowledges and agrees that the covenants set forth in this Section 5
are reasonable as to time, scope, territory and otherwise given Carmike’s need to protect its
legitimate business interests and given the substantial benefits Durant is receiving hereunder.
Durant further acknowledges and agrees that monetary damages may not be an adequate remedy for any
breach of the provisions of Section 5 of this Agreement and that Carmike may (in its sole
discretion) apply to any court of law or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any violation (or threatened violation) of
Section 5 of this Agreement. Any equitable or monetary relief provided pursuant to this Section 5
will be in addition to other damages to which Carmike is entitled under Section 9 of this Agreement
or the law. In the event any covenant or agreement contained in this Section 5 shall be determined
by a court of competent, jurisdiction to be unenforceable by reason of its extending for
too great a period of time or over too great a geographical area or by reason of its being too
extensive in any other respect, it is the intention of the parties hereto that this Section 5 be
interpreted to extend only over the maximum period of time for which it may be enforceable and/or
over the maximum geographical area as to which it may be enforceable and/or to the maximum extent
in all other respects as to which it may be enforceable, all as determined by such court in such
action.

     6. CONFIDENTIALITY.

          Durant agrees that he will keep the terms and provisions of this Agreement strictly and
absolutely confidential. Durant agrees not to disclose any information whatsoever regarding this
Agreement, except Durant may divulge the terms and provisions of this Agreement to his spouse,
financial advisor, and/or legal counsel or as may be required by law or by order of a court of
competent jurisdiction. Notwithstanding the provisions of this Section 6, Durant shall not be
precluded from

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disclosing to a prospective employer (i) that he worked for Carmike as its chief
financial officer, and (ii) thereafter, he worked for Carmike as a consultant. In addition, Durant
may disclose to the prospective employer the general nature of his work for Carmike and his
compensation.

     7. COOPERATION IN LITIGATION.

     Durant agrees to cooperate fully with Carmike in the preparation and assertion of any claim or
defense in connection with any action, suit or proceeding brought by or against Carmike; provided
however, that Durant’s obligation under this Section 7 shall apply only to matters in which Durant
was involved, or in respect of which Durant acquired information as a result of his services as an
employee, officer or director of Carmike. Carmike shall reimburse Durant for all reasonable
expenses incurred by Durant (including reasonable attorney’s fees and expenses) as a result of any
request by Carmike under this Section 7.

     8. RETURN OF CARMIKE’S PROPERTY. Durant agrees to return to Carmike all data, lists,
information, memoranda, documents, identification cards, credit cards, keys, computers, fax
machines, beepers, phones, files (including copies thereof) and all other property of Carmike
within five (5) business days after the Resignation Date.

     9. VIOLATIONS OF AGREEMENT.

          Any material breach by Durant of the agreements contained in Sections 3 through 8 of this
Agreement shall constitute a material breach of this Agreement and shall result in the following:

          (a) Durant will automatically forfeit all unpaid benefits he is scheduled to receive under
this Agreement; and

          (b) Carmike shall be entitled to such other monetary and equitable relief as allowed by law,
including reimbursement of payments hereunder.

     10. SUCCESSORS. The parties agree that this Agreement and the releases contained
herein shall be binding upon and inure to the benefit of the parties hereto and their respective
successors, heirs, executors, administrators, assigns, and representatives.

     11. ENTIRE AGREEMENT. The parties affirm that this Agreement sets forth the entire
agreement between the parties, and shall fully replace and supersede any and all prior agreements,
understandings, or representations between the parties hereto pertaining to the subject matter
hereof. The parties further affirm that the only consideration of their agreement to execute, and
their execution of this Agreement is described herein and that there are no other promises or
agreements of any kind which have caused them to execute this Agreement.

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     12. SEVERABILITY. The parties agree that the provisions of this Agreement are
contractual and not merely a recital. Should any portion of this Agreement be found by any court
of competent jurisdiction to be invalid, void, illegal, contrary to law or public policy, or
otherwise unenforceable, it is expressly agreed by the parties that the validity of the remaining
parts, terms, or provisions will remain intact and stand in full force and effect as if said
unenforceable provision had never been contained herein.

     13. APPLICABLE LAW. This Agreement shall be governed by the law of the State of
Georgia.

     14. EFFECTIVE DATE OF AGREEMENT AND OPTION TO REVOKE. The parties agree and
understand that Durant may revoke this Agreement within seven (7) days after signing it. The last
day upon which this Agreement can be revoked is referred to herein as the “Last Revocation Day.”
Revocation shall be made by delivering a written notice of revocation to Lee Champion, General
Counsel for Carmike, no later than 5:00 p.m. Eastern Time, on the Last Revocation Day at the
following address:

F. Lee Champion, III

Attorney for Carmike Cinemas, Inc.

P. O. Box 391

Columbus, Georgia 31902-0391

          The parties agree and understand that if Durant does not revoke this Agreement prior to the
Last Revocation Day, this Agreement shall become effective on the day following the Last Revocation
Day and Durant shall receive the Severance Package described in Section 2 of this Agreement. If
Durant does revoke this Agreement prior to the Last Revocation Day, this Agreement shall not become
effective and Durant will not receive the Severance Package described in Section 2 of this
Agreement.

15. PERIOD OF CONSIDERATION AND CONSULTATION WITH COUNSEL.

          Durant hereby represents and warrants that:

          (a) Durant has CAREFULLY READ THIS AGREEMENT AND FULLY UNDERSTANDS ALL OF THE PROVISIONS OF
THIS AGREEMENT;

          (b) Durant has had an OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF HIS CHOICE AS TO THE TERMS OF
THIS AGREEMENT to the full extent that he desired before signing this Agreement;

          (c) Durant understands that this Agreement FOREVER RELEASES Carmike from any legal action
arising prior to the date of execution of this Agreement;

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          (d) Durant has had the opportunity to REVIEW AND CONSIDER THIS AGREEMENT FOR A PERIOD OF AT
LEAST TWENTY ONE (21) DAYS before signing it;

          (e) Durant understands that HE SHALL HAVE SEVEN (7) DAYS FOLLOWING THE EXECUTION OF THIS
AGREEMENT TO REVOKE SAID AGREEMENT;

          (f) In signing this Agreement, Durant DOES NOT RELY ON NOR HAS HE RELIED ON ANY REPRESENTATION
OR STATEMENT (WRITTEN OR ORAL) NOT SPECIFICALLY SET FORTH IN THIS AGREEMENT by Carmike or by any of
Carmike’s agents, representatives, or attorneys with regard to the subject matter, basis, or effect
of this Agreement or otherwise; and

          (g) Durant was not coerced, threatened, or otherwise forced to sign this Agreement, and Durant
is VOLUNTARILY SIGNING AND DELIVERING THIS AGREEMENT of his own free will.

     IN WITNESS WHEREOF, the undersigned have signed and executed this Agreement on the dates set
forth below as an expression of their intent to be bound by the foregoing terms of this Agreement.

	 	 	 	 	 
	 

	 	/s/ Martin A. Durant
 

MARTIN A. DURANT
	 	 
	 
	 	 	 	 
	 

	 	Date: March 9, 2006	 	 

Sworn to and subscribed before me,

this the 9th day of March, 2006

/s/ Tina Mitchell

Notary Public

[Seal]

	 	 	 	 	 
	 	CARMIKE CINEMAS, INC.

 	 
	 	BY:	 /s/ Lee Champion
 	 
	 	Title:
Senior Vice President 
	 
	 	1301 First Avenue
Columbus, GA  31901 
	 
	 

	 	 	 
	 

	 	Date: March 9, 2006

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EXHIBIT A

MARTIN A. DURANT

DIRECTOR:

Eastwynn Theatres, Inc.

George G. Kerasotes Corporation

GKC Indiana Theatres, Inc.

GKC Michigan Theatres, Inc.

GKC Theatres, Inc.

OFFICER: 

	 	 	 
	Carmike Cinemas, Inc.

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer
	 
	 	 
	Eastwynn Theatres, Inc.

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer
	 
	 	 
	Military Services, Inc.

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer
	 
	 	 
	George G. Kerasotes Corporation

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer
	 
	 	 
	GKC Indiana Theatres, Inc.

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer
	 
	 	 
	GKC Michigan Theatres, Inc.

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer
	 
	 	 
	GKC Theaters, Inc.

	 	Senior Vice President-Finance,
Treasurer and Chief Financial Officer

 

EXHIBIT B

Board of Directors

(Name and Address of Entity)

     I hereby resign as an officer and/or a member of the Board of Directors of
___________________________ effective ____________, 2006.

     This the ______ day of ____________, 2006.

	 	 	 
	 

	 	 
	 

	 	 
	 

	 	MARTIN A. DURANT

 

EXHIBIT C

States in which Carmike is presently operating:

	 	 	 
	1.

	 	Alabama
	2.

	 	Arkansas
	3.

	 	Colorado
	4.

	 	Delaware
	5.

	 	Florida
	6.

	 	Georgia
	7.

	 	Idaho
	8.

	 	Illinois
	9.

	 	Indiana
	10.

	 	Iowa
	11.

	 	Kansas
	12.

	 	Kentucky
	13.

	 	Louisiana
	14.

	 	Maryland
	15.

	 	Michigan
	16.

	 	Minnesota
	17.

	 	Missouri
	18.

	 	Montana
	19.

	 	Nebraska
	20.

	 	New Mexico
	21.

	 	New York
	22.

	 	North Carolina
	23.

	 	North Dakota
	24.

	 	Ohio
	25.

	 	Oklahoma
	26.

	 	Oregon
	27.

	 	Pennsylvania
	28.

	 	South Carolina
	29.

	 	South Dakota
	30.

	 	Tennessee
	31.

	 	Texas
	32.

	 	Utah
	33.

	 	Virginia
	34.

	 	Washington
	35.

	 	Wisconsin
	36.

	 	West Virginia
	37.

	 	Wyoming<PAGE>

                                                                   EXHIBIT 10.19
NON-EMPLOYEE DIRECTOR COMPENSATION

      Each non-employee director receives an annual retainer of $10,000 for his
or her services as a director, $3,500 for each Board meeting that he or she
attends in person and $1,500 for each Board meeting that he or she attends via
telephone. Each non-employee director also receives $1,000 for each meeting of
the Compensation Committee or the Nominating and Corporate Governance Committee
that he or she attends and $2,500 for each meeting of the Audit Committee that
he or she attends, whether in person or via telephone, except that the Chair of
the Audit Committee receives $3,500 for each Audit Committee meeting that he
attends, the Chair of the Compensation Committee receives $2,000 for each
Compensation Committee meeting that he attends and the Chair of the Nominating
and Corporate Governance Committee receives $2,000 for each Nominating and
Corporate Governance Committee meeting that he attends. The Chairman of the
Board of Directors receives an additional $25,000 for his services as Chairman.
The Company also pays each non-employee director $2,500 for each director
education session conducted by the Company that the director attends in person.
The Company reimburses each non-employee director for his or her out-of-pocket
expenses incurred in attending Board of Directors' meetings and committee
meetings.

      On the date of each annual meeting of shareholders, each non-employee
director who is elected or reelected to the Board of Directors, or who otherwise
continues as a director, automatically receives on the date of the annual
meeting of shareholders a grant of that number of shares of restricted common
stock having an aggregate fair market value on such date equal to an amount that
is adjusted annually for changes in the Consumer Price Index, or CPI. In 2005,
each non-employee director received shares of common stock having an aggregate
value of $11,910.

      Each grant of restricted stock vests in equal one-third increments on the
date of grant and, if the grantee is still a director, the first and second
anniversaries of the date of grant. Until the earlier of (i) five years from the
date of grant and (ii) the date on which the non-employee director ceases to
serve as a director, no restricted stock may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Upon termination of a non-employee director's
service as a director for any reason other than death, disability or retirement,
all shares of his or her unvested restricted stock will be forfeited. Upon
termination of a non-employee director's service as a director due to death,
disability or retirement, all shares of his or her restricted stock will vest
immediately.

<PAGE>

NAMED EXECUTIVE OFFICER COMPENSATION

The 2006 base salary of each of the Company's named executive officers, as
determined by the Compensation Committee of the Company's Board of Directors in
accordance with the terms and conditions of their respective employment
agreements, the forms of which have previously been filed by the Company, are
set forth below. The 2006 base salaries were effective as of January 1, 2006.

<TABLE>
<CAPTION>
                                                          2006
                                                         Salary
                                                       ---------
<S>                                                    <C>
Ken P. McDonald................................        $ 485,100
Claire M. Gulmi................................          325,000
David L. Manning...............................          325,000
Frank J. Coll..................................          260,000
Royce D. Harrell...............................          218,500
</TABLE>

The named executive officers also participate in the Company's Cash Bonus Plan,
as approved by the Compensation Committee. Pursuant to the 2006 Cash Bonus Plan,
employees of the Company, including the executive officers, are eligible to
receive cash bonuses based upon the Company's attainment of certain earnings
targets and other specific targets related to an employee's specific area of
responsibility, including surgery center profits and new acquisition and
development transactions, in each case as determined by the Committee. For 2006,
bonuses for Mr. McDonald and Ms. Gulmi will be based 50% upon the attainment of
Company earnings targets, 33% upon targets related to surgery center profits,
and 17% upon targets related to new acquisition and development transactions;
Mr. Harrell's bonus will be based 33% upon the attainment of Company earnings
targets, 50% upon targets related to surgery center profits, and 17% upon
targets related to new acquisition and development transactions; and Mr. Coll's
bonus will be based 33% upon the attainment of Company earnings targets, 50%
upon targets related to surgery center profits, and 17% upon targets related to
new acquisition and development transactions. Mr. Manning is eligible to receive
a cash bonus of up to 30% of his base salary based upon the attainment of
Company earnings targets and up to 10% of his base salary based upon targets
related to profits for newly acquired surgery centers. Mr. Manning is eligible
to receive an additional cash bonus based upon the number of new acquisition and
development transactions completed during 2006. The maximum total bonus award
that executive officers can receive ranges from 60% to 100% of base salary for
2006.

In addition, the named executive officers are eligible to receive awards
pursuant to the Company's equity incentive plans and participate in the
Company's non-qualified deferred compensation plan.

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