Document:

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                           INDEMNIFICATION AGREEMENT

      INDEMNIFICATION AGREEMENT, made and executed effective as of the 10th day
of December, 2004, by and between CARMIKE CINEMAS, INC., a Delaware corporation
(the "Company"), and FRED W. VAN NOY, an individual resident of the State of
Georgia (the "Indemnitee").

      WHEREAS, the Company is aware that, in order to induce highly competent
persons to serve the Company as directors or officers or in other capacities,
the Company must provide such persons with adequate protection through insurance
and indemnification against inordinate risks of claims and actions against them
arising out of their service to and activities on behalf of the Company;

      WHEREAS, the Company recognizes that the increasing difficulty in
obtaining directors' and officers' liability insurance, the increases in the
cost of such insurance and the general reductions in the coverage of such
insurance have increased the difficulty of attracting and retaining such
persons;

      WHEREAS, the Board of Directors of the Company has determined that it is
essential to the best interests of the Company's stockholders that the Company
act to assure such persons that there will be increased certainty of such
protection in the future;

      WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will continue to serve the Company free
from undue concern that they will not be so indemnified; and

      WHEREAS, the Indemnitee is willing to serve, continue to serve, and take
on additional service for or on behalf of the Company on the condition that
he/she be so indemnified.

      NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
Indemnitee do hereby agree as follows:

      1. SERVICE BY THE INDEMNITEE. The Indemnitee agrees to serve and/or
continue to serve as a director or officer of the Company faithfully and will
discharge his/her duties and responsibilities to the best of his/her ability so
long as the Indemnitee is duly elected or qualified in accordance with the
provisions of the Amended and Restated Certificate of Incorporation, as amended
(the "Certificate"), and Amended and Restated By-laws, as amended (the
"By-laws") of the Company and the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), or until his/her earlier death, resignation
or removal. The Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or other obligation
imposed by operation by law), in which event the Company shall have no
obligation under this Agreement to continue the Indemnitee in any such position.
Nothing in this Agreement shall confer upon the Indemnitee the right to continue
in the employ of the Company or as a director of the Company or affect the right
of the Company to terminate the Indemnitee's

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employment at any time in the sole discretion of the Company, with or without
cause, subject to any contract rights of the Indemnitee created or existing
otherwise than under this Agreement.

      2. INDEMNIFICATION. The Company shall indemnify the Indemnitee against all
Expenses (as defined below), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee as provided in this Agreement
to the fullest extent permitted by the Certificate, By-laws and DGCL or other
applicable law in effect on the date of this Agreement and to any greater extent
that applicable law may in the future from time to time permit. Without
diminishing the scope of the indemnification provided by this Section 2, the
rights of indemnification of the Indemnitee provided hereunder shall include,
but shall not be limited to, those rights hereinafter set forth, except that no
indemnification shall be paid to the Indemnitee:

            (a) on account of any suit in which judgment is rendered against the
      Indemnitee for disgorgement of profits made from the purchase or sale by
      the Indemnitee of securities of the Company pursuant to the provisions of
      Section 16(b) of the Securities Exchange Act of 1934, as amended (the
      "Act"), or similar provisions of any federal, state or local statutory
      law;

            (b) on account of conduct of the Indemnitee which is finally
      adjudged by a court of competent jurisdiction to have been knowingly
      fraudulent or to constitute willful misconduct;

            (c) in any circumstance where such indemnification is expressly
      prohibited by applicable law;

            (d) with respect to liability for which payment is actually made to
      the Indemnitee under a valid and collectible insurance policy or under a
      valid and enforceable indemnity clause, By-law or agreement (other than
      this Agreement), except in respect of any liability in excess of payment
      under such insurance, clause, By-law or agreement;

            (e) if a final decision by a court having jurisdiction in the matter
      shall determine that such indemnification is not lawful (and, in this
      respect, both the Company and the Indemnitee have been advised that it is
      the position of the Securities and Exchange Commission that
      indemnification for liabilities arising under the federal securities laws
      is against public policy and is, therefore, unenforceable, and that claims
      for indemnification should be submitted to the appropriate court for
      adjudication); or

            (f) in connection with any proceeding by the Indemnitee against the
      Company or its directors, officers, employees or other Indemnitees, (i)
      unless such indemnification is expressly required to be made by law, (ii)
      unless the proceeding was authorized by the Board of Directors of the
      Company, (iii) unless such indemnification is provided by the Company, in
      its sole discretion, pursuant to the powers vested in the Company under
      applicable law, or (iv) except as provided in Sections 11 and 13 hereof.

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      3. ACTIONS OR PROCEEDINGS OTHER THAN AN ACTION BY OR IN THE RIGHT OF THE
COMPANY. The Indemnitee shall be entitled to the indemnification rights provided
in this Section 3 if the Indemnitee was or is a party or is threatened to be a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative in nature, other than
an action by or in the right of the Company, by reason of the fact that the
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent or fiduciary of any other entity, including, but not
limited to, another corporation, partnership, limited liability company,
employee benefit plan, joint venture, trust or other enterprise, or by reason of
any act or omission by him/her in such capacity. Pursuant to this Section 3, the
Indemnitee shall be indemnified against all Expenses, judgments, penalties
(including excise and similar taxes), fines and amounts paid in settlement which
were actually and reasonably incurred by the Indemnitee in connection with such
action, suit or proceeding (including, but not limited to, the investigation,
defense or appeal thereof), if the Indemnitee acted in good faith and in a
manner the Indemnitee reasonably believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his/her conduct was unlawful.

      4. ACTIONS BY OR IN THE RIGHT OF THE COMPANY. The Indemnitee shall be
entitled to the indemnification rights provided in this Section 4 if the
Indemnitee was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding brought by or in the
right of the Company to procure a judgment in its favor by reason of the fact
that the Indemnitee is or was a director, officer, employee, agent or fiduciary
of the Company, or is or was serving at the request of the Company as a
director, officer, employee, agent or fiduciary of another entity, including,
but not limited to, another corporation, partnership, limited liability company,
employee benefit plan, joint venture, trust or other enterprise, or by reason of
any act or omission by him/her in any such capacity. Pursuant to this Section 4,
the Indemnitee shall be indemnified against all Expenses actually and reasonably
incurred by him/her in connection with the defense or settlement of such action,
suit or proceeding (including, but not limited to the investigation, defense or
appeal thereof), if the Indemnitee acted in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Company; provided however, that no such indemnification shall be made in
respect of any claim, issue, or matter as to which the Indemnitee shall have
been adjudged to be liable to the Company, unless and only to the extent that
the Court of Chancery of the State of Delaware or the court in which such
action, suit or proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, the Indemnitee is fairly and reasonably entitled to be indemnified
against such Expenses actually and reasonably incurred by him/her which such
court shall deem proper.

      5. GOOD FAITH DEFINITION. For purposes of this Agreement, the Indemnitee
shall be deemed to have acted in good faith and in a manner the Indemnitee
reasonably believed to be in or not opposed to the best interests of the
Company, or, with respect to any criminal action or proceeding to have had no
reasonable cause to believe the Indemnitee's conduct was unlawful, if such
action was based on (i) the records or books of the accounts of the Company or
other enterprise, including financial statements; (ii) information supplied to
the Indemnitee by the officers of the Company or other enterprise in the course
of their duties; (iii) the advice of legal counsel for the Company or other
enterprise; or (iv) information or records given in reports made

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to the Company or other enterprise by an independent certified public accountant
or by an appraiser or other expert selected with reasonable care by the Company
or other enterprise.

      6. INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY. Notwithstanding the
other provisions of this Agreement, to the extent that the Indemnitee has served
on behalf of the Company as a witness or other participant in any class action
or proceeding, or has been successful, on the merits or otherwise, in defense of
any action, suit or proceeding referred to in Section 3 and 4 hereof, or in
defense of any claim, issue or matter therein, including, but not limited to,
the dismissal of any action without prejudice, the Indemnitee shall be
indemnified against all Expenses actually and reasonably incurred by the
Indemnitee in connection therewith, regardless of whether or not the Indemnitee
has met the applicable standards of Section 3 or 4 and without any determination
pursuant to Section 8.

      7. PARTIAL INDEMNIFICATION. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the Expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee in connection with the
investigation, defense, appeal or settlement of such suit, action, investigation
or proceeding described in Section 3 or 4 hereof, but is not entitled to
indemnification for the total amount thereof, the Company shall nevertheless
indemnify the Indemnitee for the portion of such Expenses, judgments, penalties,
fines and amounts paid in settlement actually and reasonably incurred by the
Indemnitee to which the Indemnitee is entitled.

      8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. (a) To
obtain indemnification under this Agreement, Indemnitee shall submit to the
Company a written request, including documentation and information which is
reasonably available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to indemnification. The
Secretary of the Company shall, promptly upon receipt of a request for
indemnification, advise the Board of Directors in writing that Indemnitee has
requested indemnification. Any Expenses incurred by the Indemnitee in connection
with the Indemnitee's request for indemnification hereunder shall be borne by
the Company. The Company hereby indemnifies and agrees to hold the Indemnitee
harmless for any Expenses incurred by Indemnitee under the immediately preceding
sentence irrespective of the outcome of the determination of the Indemnitee's
entitlement to indemnification.

      (b) Upon written request by the Indemnitee for indemnification pursuant to
Section 3 or 4 hereof, the entitlement of the Indemnitee to indemnification
pursuant to the terms of this Agreement shall be determined by the following
person or persons, who shall be empowered to make such determination: (i) if a
Change in Control (as hereinafter defined) shall have occurred, by Independent
Counsel (as hereinafter defined) (unless the Indemnitee shall request in writing
that such determination be made by the Board of Directors (or a committee
thereof) in the manner provided for in clause (ii) of this Section 8(b)) in a
written opinion to the Board of Directors, a copy of which shall be delivered to
the Indemnitee; or (ii) if a Change in Control shall not have occurred, (A)(1)
by the Board of Directors of the Company, by a majority vote of Disinterested
Directors (as hereinafter defined) even though less than a quorum, or (2) by a
committee of Disinterested Directors designated by majority vote of
Disinterested Directors, even though less than a quorum, or (B) if there are no
such Disinterested Directors or, even if

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there are such Disinterested Directors, if the Board of Directors, by the
majority vote of Disinterested Directors, so directs, by Independent Counsel in
a written opinion to the Board of Directors, a copy of which shall be delivered
to the Indemnitee. Such Independent Counsel shall be selected by the Board of
Directors and approved by the Indemnitee. Upon failure of the Board of Directors
to so select, or upon failure of the Indemnitee to so approve, such Independent
Counsel shall be selected by the Chancellor of the State of Delaware or such
other person as the Chancellor shall designate to make such selection. Such
determination of entitlement to indemnification shall be made not later than 45
days after receipt by the Company of a written request for indemnification. If
the person making such determination shall determine that the Indemnitee is
entitled to indemnification as to part (but not all) of the application for
indemnification, such person shall reasonably prorate such part of
indemnification among such claims, issues or matters. If it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be
made within ten days after such determination.

      9. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS. (a) In making a
determination with respect to entitlement to indemnification, the Indemnitee
shall be presumed to be entitled to indemnification hereunder and the Company
shall have the burden of proof in the making of any determination contrary to
such presumption.

      (b) If the Board of Directors, or such other person or persons empowered
pursuant to Section 8 to make the determination of whether Indemnitee is
entitled to indemnification, shall have failed to make a determination as to
entitlement to indemnification within 45 days after receipt by the Company of
such request, the requisite determination of entitlement to indemnification
shall be deemed to have been made and the Indemnitee shall be absolutely
entitled to such indemnification, absent actual and material fraud in the
request for indemnification or a prohibition of indemnification under applicable
law. The termination of any action, suit, investigation or proceeding described
in Section 3 or 4 hereof by judgment, order, settlement or conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself: (a) create a
presumption that the Indemnitee did not act in good faith and in a manner which
he/she reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, that the
Indemnitee has reasonable cause to believe that the Indemnitee's conduct was
unlawful; or (b) otherwise adversely affect the rights of the Indemnitee to
indemnification, except as may be provided herein.

      10. ADVANCEMENT OF EXPENSES. All reasonable Expenses actually incurred by
the Indemnitee in connection with any threatened or pending action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding, if so requested by the Indemnitee, within 20
days after the receipt by the Company of a statement or statements from the
Indemnitee requesting such advance or advances. The Indemnitee may submit such
statements from time to time. The Indemnitee's entitlement to such Expenses
shall include those incurred in connection with any proceeding by the Indemnitee
seeking an adjudication or award in arbitration pursuant to this Agreement. Such
statement or statements shall reasonably evidence the Expenses incurred by the
Indemnitee in connection therewith and shall include or be accompanied by a
written affirmation by Indemnitee of Indemnitee's good faith belief that
Indemnitee has met the standard of conduct necessary for indemnification under
this Agreement and an undertaking by or on behalf of the Indemnitee to repay
such amount if it

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is ultimately determined that the Indemnitee is not entitled to be indemnified
against such Expenses by the Company pursuant to this Agreement or otherwise.
Each written undertaking to pay amounts advanced must be an unlimited general
obligation but need not be secured, and shall be accepted without reference to
financial ability to make repayment.

      11. REMEDIES OF THE INDEMNITEE IN CASES OF DETERMINATION NOT TO INDEMNIFY
OR TO ADVANCE EXPENSES. In the event that a determination is made that the
Indemnitee is not entitled to indemnification hereunder or if the payment has
not been timely made following a determination of entitlement to indemnification
pursuant to Sections 8 and 9, or if Expenses are not advanced pursuant to
Section 10, the Indemnitee shall be entitled to a final adjudication in an
appropriate court of the State of Delaware or any other court of competent
jurisdiction of the Indemnitee's entitlement to such indemnification or advance.
Alternatively, the Indemnitee may, at the Indemnitee's option, seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association, such award to be made within 60 days following
the filing of the demand for arbitration. The Company shall not oppose the
Indemnitee's right to seek any such adjudication or award in arbitration or any
other claim. Such judicial proceeding or arbitration shall be made de novo, and
the Indemnitee shall not be prejudiced by reason of a determination (if so made)
that the Indemnitee is not entitled to indemnification. If a determination is
made or deemed to have been made pursuant to the terms of Section 8 or Section 9
hereof that the Indemnitee is entitled to indemnification, the Company shall be
bound by such determination and shall be precluded from asserting that such
determination has not been made or that the procedure by which such
determination was made is not valid, binding and enforceable. The Company
further agrees to stipulate in any such court or before any such arbitrator that
the Company is bound by all the provisions of this Agreement and is precluded
from making any assertions to the contrary. If the court or arbitrator shall
determine that the Indemnitee is entitled to any indemnification hereunder, the
Company shall pay all reasonable Expenses actually incurred by the Indemnitee in
connection with such adjudication or award in arbitration (including, but not
limited to, any appellate proceedings).

      12. NOTIFICATION AND DEFENSE OF CLAIM. Promptly after receipt by the
Indemnitee of notice of the commencement of any action, suit or proceeding, the
Indemnitee will, if a claim in respect thereof is to be made against the Company
under this Agreement, notify the Company in writing of the commencement thereof;
but the omission to so notify the Company will not relieve the Company from any
liability that it may have to the Indemnitee under this Agreement or otherwise,
except to the extent that the Company may suffer material prejudice by reason of
such failure. Notwithstanding any other provision of this Agreement, with
respect to any such action, suit or proceeding as to which the Indemnitee gives
notice to the Company of the commencement thereof:

            (a) The Company will be entitled to participate therein at its own
      expense.

            (b) Except as otherwise provided in this Section 12(b), to the
      extent that it may wish, the Company, jointly with any other indemnifying
      party similarly notified, shall be entitled to assume the defense thereof
      with counsel reasonably satisfactory to the Indemnitee. After notice from
      the Company to the Indemnitee of its election to so assume the defense
      thereof, the Company shall not

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      be liable to the Indemnitee under this Agreement for any legal or other
      Expenses subsequently incurred by the Indemnitee in connection with the
      defense thereof other than reasonable costs of investigation or as
      otherwise provided below. The Indemnitee shall have the right to employ
      the Indemnitee's own counsel in such action or lawsuit, but the fees and
      Expenses of such counsel incurred after notice from the Company of its
      assumption of the defense thereof shall be at the expense of the
      Indemnitee unless (i) the employment of counsel by the Indemnitee has been
      authorized by the Company, (ii) the Indemnitee shall have reasonably
      concluded that there may be a conflict of interest between the Company and
      the Indemnitee in the conduct of the defense of such action and such
      determination by the Indemnitee shall be supported by an opinion of
      counsel, which opinion shall be reasonably acceptable to the Company, or
      (iii) the Company shall not in fact have employed counsel to assume the
      defense of the action, in each of which cases the fees and Expenses of
      counsel shall be at the expense of the Company. The Company shall not be
      entitled to assume the defense of any action, suit or proceeding brought
      by or on behalf of the Company or as to which the Indemnitee shall have
      reached the conclusion provided for in clause (ii) above.

            (c) The Company shall not be liable to indemnify the Indemnitee
      under this Agreement for any amounts paid in settlement of any action or
      claim effected without its written consent, which consent shall not be
      unreasonably withheld. The Company shall not be required to obtain the
      consent of Indemnitee to settle any action or claim which the Company has
      undertaken to defend if the Company assumes full and sole responsibility
      for such settlement and such settlement grants Indemnitee a complete and
      unqualified release in respect of potential liability.

            (d) If, at the time of the receipt of a notice of a claim pursuant
      to this Section 12, the Company has director and officer liability
      insurance in effect, the Company shall give prompt notice of the
      commencement of such proceeding to the insurers in accordance with the
      procedures set forth in the respective policies. The Company shall
      thereafter take all necessary or desirable action to cause such insurers
      to pay, on behalf of the Indemnitee, all amounts payable as a result of
      such proceeding in accordance with the terms of the policies.

      13. OTHER RIGHT TO INDEMNIFICATION. The indemnification and advancement of
Expenses provided by this Agreement are cumulative, and not exclusive, and are
in addition to any other rights to which the Indemnitee may now or in the future
be entitled under any provision of the By-laws or Certificate of the Company,
any vote of stockholders or Disinterested Directors, any provision of law or
otherwise. Except as required by applicable law, the Company shall not adopt any
amendment to its By-laws or Certificate the effect of which would be to deny,
diminish or encumber the Indemnitee's right to indemnification under this
Agreement.

      14. DIRECTOR AND OFFICER LIABILITY INSURANCE. The Company shall, from time
to time, make the good faith determination whether or not it is practicable for
the Company to obtain and maintain a policy or policies of insurance with
reputable insurance companies

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providing the officers and directors of the Company with coverage for losses
from wrongful acts, or to ensure the Company's performance of its
indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. In the event the Company maintains
directors' and officers' liability insurance, the Indemnitee shall be named as
an insured in such manner as to provide the Indemnitee the same rights and
benefits as are accorded to the most favorably insured of the Company's officers
or directors. However, the Company agrees that the provisions hereof shall
remain in effect regardless of whether liability or other insurance coverage is
at any time obtained or retained by the Company; except that any payments made
to, or on behalf of, the Indemnitee under an insurance policy shall reduce the
obligations of the Company hereunder. Notwithstanding the foregoing, the Company
shall have no obligation to obtain or maintain such insurance if the Company
determines in good faith that such insurance is not reasonably available, if the
premium costs for such insurance are disproportionate to the amount of coverage
provided or if the coverage provided by such insurance is limited by exclusions
so as to provide an insufficient benefit.

      15. SPOUSAL INDEMNIFICATION. The Company will indemnify the Indemnitee's
spouse to whom the Indemnitee is legally married at any time the Indemnitee is
covered under the indemnification provided in this Agreement (even if Indemnitee
did not remain married to him or her during the entire period of coverage)
against any pending or threatened action, suit, proceeding or investigation for
the same period, to the same extent and subject to the same standards,
limitations, obligations and conditions under which the Indemnitee is provided
indemnification herein, if the Indemnitee's spouse (or former spouse) becomes
involved in a pending or threatened action, suit, proceeding or investigation
solely by reason of his or her status as Indemnitee's spouse, including, without
limitation, any pending or threatened action, suit, proceeding or investigation
that seeks damages recoverable from marital community property, jointly-owned
property or property purported to have been transferred from the Indemnitee to
his/her spouse (or former spouse). The Indemnitee's spouse or former spouse also
may be entitled to advancement of Expenses to the same extent that Indemnitee is
entitled to advancement of Expenses herein. The Company may maintain insurance
to cover its obligation hereunder with respect to Indemnitee's spouse (or former
spouse) or set aside assets in a trust or escrow fund for that purpose.

      16. INTENT. This Agreement is intended to be broader than any statutory
indemnification rights applicable in the State of Delaware and shall be in
addition to any other rights Indemnitee may have under the Company's
Certificate, By-laws, applicable law or otherwise. To the extent that a change
in applicable law (whether by statute or judicial decision) permits greater
indemnification by agreement than would be afforded currently under the
Company's Certificate, By-laws, applicable law or this Agreement, it is the
intent of the parties that Indemnitee enjoy by this Agreement the greater
benefits so afforded by such change.

      17. ATTORNEY'S FEES AND OTHER EXPENSES TO ENFORCE AGREEMENT. In the event
that the Indemnitee is subject to or intervenes in any proceeding in which the
validity or enforceability of this Agreement is at issue or seeks an
adjudication or award in arbitration to enforce the Indemnitee's rights under,
or to recover damages for breach of, this Agreement the Indemnitee, if he/she
prevails in whole or in part in such action, shall be entitled to recover from

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the Company and shall be indemnified by the Company against any actual expenses
for attorneys' fees and disbursements reasonably incurred by the Indemnitee.

      18. EFFECTIVE DATE. The provisions of this Agreement shall cover claims,
actions, suits or proceedings whether now pending or hereafter commenced and
shall be retroactive to cover acts or omissions or alleged acts or omissions
which heretofore have taken place. The Company shall be liable under this
Agreement, pursuant to Sections 3 and 4 hereof, for all acts of the Indemnitee
while serving as a director and/or officer, notwithstanding the termination of
the Indemnitee's service, if such act was performed or omitted to be performed
during the term of the Indemnitee's service to the Company.

      19. DURATION OF AGREEMENT. This Agreement shall survive and continue even
though the Indemnitee may have terminated his/her service as a director,
officer, employee, agent or fiduciary of the Company or as a director, officer,
employee, agent or fiduciary of any other entity, including, but not limited to
another corporation, partnership, limited liability company, employee benefit
plan, joint venture, trust or other enterprise or by reason of any act or
omission by the Indemnitee in any such capacity. This Agreement shall be binding
upon the Company and its successors and assigns, including, without limitation,
any corporation or other entity which may have acquired all or substantially all
of the Company's assets or business or into which the Company may be
consolidated or merged, and shall inure to the benefit of the Indemnitee and
his/her spouse, successors, assigns, heirs, devisees, executors, administrators
or other legal representations. The Company shall require any successor or
assignee (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by written agreement in form and substance reasonably satisfactory to
the Company and the Indemnitee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession or assignment had taken place.

      20. DISCLOSURE OF PAYMENTS. Except as expressly required by any Federal or
state securities laws or other Federal or state law, neither party shall
disclose any payments under this Agreement unless prior approval of the other
party is obtained.

      21. SEVERABILITY. If any provision or provisions of this Agreement shall
be held invalid, illegal or unenforceable for any reason whatsoever, (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including, but not limited to, all portions of any Sections of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby and (b) to
the fullest extent possible, the provisions of this Agreement (including, but
not limited to, all portions of any paragraph of this Agreement containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall be construed so as to give
effect to the intent manifest by the provision held invalid, illegal or
unenforceable.

      22. COUNTERPARTS. This Agreement may be executed by one or more
counterparts, each of which shall for all purposes be deemed to be an original
but all of which together shall constitute one and the same Agreement. Only one
such counterpart signed by the party against

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whom enforceability is sought shall be required to be produced to evidence the
existence of this Agreement.

      23. CAPTIONS. The captions and headings used in this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.

      24. DEFINITIONS. For purposes of this Agreement:

            (a) "Change in Control" shall mean:

                  (i)   a "change in control" of the Company of a nature that
                        would be required to be reported in response to Item
                        6(e) of Schedule 14A for a proxy statement filed under
                        Section 14(a) of the Act as in effect on the date of
                        this Agreement;

                  (ii)  a "person" (as that term is used in Section 14(d)(2) of
                        the Act) who becomes the beneficial owner (as defined in
                        Rule 13d-3 under the Act) directly or indirectly of
                        securities representing 45% or more of the combined
                        voting power for election of directors of the then
                        outstanding securities of the Company;

                  (iii) the individuals who at the beginning of any period of
                        two consecutive years or less (starting on or after the
                        date of this Agreement) constitute the Company's Board
                        of Directors cease for any reason during such period to
                        constitute at least a majority of the Company's Board of
                        Directors, unless the election or nomination for
                        election of each new member of the Board of Directors
                        was approved in advance by vote of at least two-thirds
                        of the members of such Board of Directors then still in
                        office who were members of such Board of Directors at
                        the beginning of such period;

                  (iv)  the stockholders of the Company approve any
                        reorganization, merger, consolidation or share exchange
                        as a result of which the common stock of the Company
                        shall be changed, converted or exchanged into or for
                        securities of another organization or any dissolution or
                        liquidation of the Company or any sale or the
                        disposition of 50% or more of the assets or business of
                        the Company; or

                  (v)   the stockholders of the Company approve any
                        reorganization, merger, consolidation or share exchange
                        with another corporation unless (1) the persons who were
                        the beneficial owners of the outstanding shares of the
                        common stock of the Company immediately before the
                        consummation of such transaction beneficially own more
                        than 60% of the outstanding shares of the

                                      -10-
<PAGE>

                        common stock of the successor or survivor corporation in
                        such transaction immediately following the consummation
                        of such transaction and (2) the number of shares of the
                        common stock of such successor or survivor corporation
                        beneficially owned by the persons described in Section
                        24(a)(v)(1) immediately following the consummation of
                        such transaction is beneficially owned by each such
                        person in substantially the same proportion that each
                        such person had beneficially owned shares of the Company
                        common stock immediately before the consummation of such
                        transaction, provided (3) the percentage described in
                        Section 24(a)(v)(1) of the beneficially owned shares of
                        the successor or survivor corporation and the number
                        described in Section 24(a)(v)(2) of the beneficially
                        owned shares of the successor or survivor corporation
                        shall be determined exclusively by reference to the
                        shares of the successor or survivor corporation which
                        result from the beneficial ownership of shares of common
                        stock of the Company by the persons described in Section
                        24(a)(v)(1) immediately before the consummation of such
                        transaction.

            (b) "Disinterested Director" shall mean a director of the Company
      who is not or was not a party to the action, suit, investigation or
      proceeding in respect of which indemnification is being sought by the
      Indemnitee.

            (c) "Expenses" shall include all attorneys' fees, retainers, court
      costs, transcript costs, fees of experts, witness fees, travel expenses,
      duplicating costs, printing and binding costs, telephone charges, postage,
      delivery service fees, and all other disbursements or expenses incurred in
      connection with prosecuting, defending, preparing to prosecute or defend,
      investigating or being or preparing to be a witness in any threatened,
      pending or completed action, suit or proceeding, whether civil, criminal,
      administrative or investigative in nature.

            (d) "Independent Counsel" shall mean a law firm or a member of a law
      firm that neither is presently nor in the past five years has been
      retained to represent (i) the Company or the Indemnitee in any matter
      material to either such party or (ii) any other party to the action, suit,
      investigation or proceeding giving rise to a claim for indemnification
      hereunder. Notwithstanding the foregoing, the term "Independent Counsel"
      shall not include any person who, under the applicable standards of
      professional conduct then prevailing, would have a conflict of interest in
      representing either the Company or the Indemnitee in an action to
      determine the Indemnitee's right to indemnification under this Agreement.

      25. ENTIRE AGREEMENT, MODIFICATION AND WAIVER. This Agreement constitutes
the entire agreement and understanding of the parties hereto regarding the
subject matter hereof, and no supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by both parties hereto. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provisions hereof (whether or not similar) nor

                                      -11-
<PAGE>

shall such waiver constitute a continuing waiver. No supplement, modification or
amendment of this Agreement shall limit or restrict any right of the Indemnitee
under this Agreement in respect of any act or omission of the Indemnitee prior
to the effective date of such supplement, modification or amendment unless
expressly provided therein.

      26. NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given if (i)
delivered by hand with receipt acknowledged by the party to whom said notice or
other communication shall have been directed or if (ii) mailed by certified or
registered mail, return receipt requested with postage prepaid, on the date
shown on the return receipt:

            (a)   If to the Indemnitee to:

                  Fred W. Van Noy
                  c/o Carmike Cinemas, Inc.
                  1301 First Avenue
                  Columbus, Georgia 31901

            (b)   If to the Company, to:

                  Carmike Cinemas, Inc.
                  1301 First Avenue
                  Columbus, Georgia  31901
                  Attention:  Anthony J. Rhead

                  with a copy to:

                  King & Spalding LLP
                  Attn:  Alan J. Prince
                  191 Peachtree Street
                  Atlanta, Georgia 30303

or to such other address as may be furnished to the Indemnitee by the Company or
to the Company by the Indemnitee, as the case may be.

      27. GOVERNING LAW. The parties hereto agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, applied without giving effect to any conflicts-of-law
principles.

                                      -12-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

                                           CARMIKE CINEMAS, INC.

                                           By /s/ Martin A. Durant
                                              ----------------------------------
                                           Name: Martin A. Durant
                                           Title: Senior Vice President

                                           INDEMNITEE:

                                           By /s/ Fred W. Van Noy
                                              ----------------------------------
                                           Name: Fred W. Van NoyForm of Subscription Agreement

 

EXHIBIT 4.1

LADENBURG THALMANN FINANCIAL SERVICES INC.

SUBSCRIPTION AGREEMENT

AND

INVESTOR INFORMATION STATEMENT

INSTRUCTIONS

IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.

SIGNIFICANT REPRESENTATIONS ARE CONTAINED IN THIS DOCUMENT.

	1.  	Fill in the missing information on Page 1.
	 
	2.  	Individual Investors must complete the requested information on pages 9
and 10 and sign the signature page on page 10.
	 
	3.  	Entity Investors must complete the requested information on pages 11
and 12 and if applicable, page 13 and sign the signature page on page 12 and if
applicable, page 13.

DELIVER THE EXECUTED AGREEMENTS TO:

LADENBURG THALMANN FINANCIAL SERVICES INC.

590 MADISON AVENUE, 34TH FLOOR

NEW YORK, NEW YORK 10022

ATTENTION: SALVATORE GIARDINA

 

 

Print Name of Subscriber __________________

Amount of Investment __________________

SUBSCRIPTION AGREEMENT AND INVESTOR INFORMATION STATEMENT

Ladenburg Thalmann Financial Services Inc. (the “Company”) and the Investor hereby agree as
follows:

     1. Subscription for Securities. I (sometimes referred to herein as the “Investor”)
hereby subscribe for and agree to purchase the number of shares of Common Stock (“Share(s)”) set
forth on the signature page hereto at $0.45 per share and upon the other terms and conditions
described in this Agreement. The Shares are being offered in a private placement in accordance
with the terms set forth in the Confidential Term Sheet dated December 28, 2004 (“Term Sheet”).
Capitalized terms not defined herein will have the same meaning as set forth in the Term Sheet.

     2. Offering Period. The Shares will be offered for sale until the day following the
Company’s 2004 Annual Meeting of Shareholders or such earlier date as determined by the Company
(such date is referred to as the “Commitment Date”).

     3. Investor Delivery of Subscription Agreement. I hereby tender to the Company one
manually executed copy of this Subscription Agreement. My delivery of the Subscription Agreement
represents my binding commitment to pay for the Shares subscribed for on the Closing (defined below
in Section 5).

     4. Acceptance or Rejection of Subscription. The Company has the right to reject this
subscription for the Shares, in whole or in part for any reason and at any time prior to the
Commitment Date, notwithstanding prior receipt by me of notice of acceptance of my subscription.
In the event my subscription is rejected, my payment will be returned promptly to me without
interest or deduction and this Subscription Agreement will have no force or effect. The Shares
subscribed for herein will not be deemed issued to or owned by me until one copy of this
Subscription Agreement has been executed by me and countersigned by the Company and the Closing
with respect to my subscription has occurred.

     5. Closing, Payment and Delivery of Securities. The offering is being made on a “best
efforts, no minimum, $20,000,000 maximum” basis. Accordingly, there is no minimum amount of Shares
that must be subscribed for in order for the Company to hold a closing with respect to those Shares
that are subscribed and paid for. The Company anticipates it will hold a closing (“Closing”)
subsequent to the Company’s 2004 Annual Meeting of Shareholders (“2004 Annual Meeting”) and prior
to May 13, 2005 (such date is referred to as the “Termination Date”) provided the following closing
conditions have been met:

          (i) The Company has obtained the approval of the terms of the Amended and Restated Debt
Conversion Agreement, Standby Commitment and the offering at the 2004 Annual Meeting;

          (ii) The Company has caused the Registration Statement (defined below) to be declared
effective by the SEC;

          (iii) The Company has not suffered any material adverse change in its assets, liabilities,
financial condition, results of operations or business from the Commitment Date until the Closing;
and

          (iv) The Company shall have caused the shares of Common Stock issuable pursuant to the Amended
and Restated Debt Conversion Agreement (as defined in the Term Sheet) and this offering (including
the Standby Commitment) to be approved for listing on the American Stock Exchange or any national
securities

1

 

exchange
on which the Common Stock is then listed.

The Closing of the offering shall also be conditioned on and subject to the simultaneous
consummation of debt conversion transaction described in the Amended and Restated Debt Conversion
Agreement. In the event my subscription is accepted and there is a Closing, I agree to pay the
full purchase price of the Shares I am purchasing by check or wire transfer at the Closing.
Alternatively, if I hold outstanding promissory notes issued by the Company that are, by their
terms, convertible into the Shares, I may exchange such notes for Shares being offered hereby
(based upon the aggregate principal and accrued interest on such debt divided by $0.45 per Share).
Upon payment for the Shares, the certificates representing such Shares will be delivered promptly
to me along with a fully executed version of this Agreement. The Company agrees to notify me at
least five business days prior to the date on which the Closing is scheduled and provide me with
instructions on paying for the Shares subscribed for prior to the Closing. If a Closing does not
occur by the Termination Date, then this Subscription Agreement will be null and void.

     6. Offering to Accredited Investors. This offering is limited to accredited investors
as defined in Section 2(15) of the Securities Act of 1933, as amended (“Securities Act”), and Rule
501 promulgated thereunder, and is being made without registration under the Securities Act in
reliance upon the exemptions contained in Sections 3(b), 4(2) and/or 4(6) of the Securities Act and
applicable state securities laws. As indicated by the responses on the signature page hereof, the
Investor is an accredited investor within the meaning of Section 2(15) of the Securities Act and
Rule 501 promulgated thereunder.

     7. Investor Representations and Warranties. I acknowledge, represent and warrant to
the Company as follows:

          7.1 Obligations of the Company and the Investor. The Company has no
obligation to me other than as set forth in this Agreement. I am aware that I am not entitled to
cancel, terminate or revoke this subscription, and any agreements made in connection herewith will
survive my death or disability. In order to induce the Company to issue and sell the Shares to
me, I represent and warrant that the information relating to me stated herein is true and complete
as of the date hereof and will be true and complete as of the date on which my purchase of Shares
becomes effective. If, prior to the Closing, there should be any change in such information or any
of such information becomes incorrect or incomplete, I agree to notify the Company and supply the
Company promptly with corrective information.

          7.2 Information About the Company.

               (1) I have read the Term Sheet relating to this offering and all exhibits listed therein and
fully understand the Term Sheet, including the “Risk Factors” contained therein. I have been given
access to full and complete information regarding the Company and have utilized such access to my
satisfaction for the purpose of verifying the information included in the Term Sheet and exhibits
thereto, and I have either met with or been given reasonable opportunity to meet with officers of
the Company for the purpose of asking reasonable questions of such officers concerning the terms
and conditions of the offering of the Shares and the business and operations of the Company and all
such questions have been answered to my full satisfaction. I also have been given an opportunity to
obtain any additional relevant information to the extent reasonably available to the Company. I
have received all information and materials regarding the Company that I have reasonably requested.
After my reading of the materials about the Company, I understand that there is no assurance as to
the future performance of the Company.

               (2) I have received no representation or warranty from the Company or any of its respective
officers, directors, employees or agents in respect of my investment in the Company. I am not
participating in the Offering as a result of or subsequent to: (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar media or broadcast
over television, radio or the

2

 

Internet or (ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.

          7.3 Speculative Investment. I am aware that the Shares are a speculative investment
that involve a high degree of risk including, but not limited to, the risk of losses from
operations of the Company and the total loss of my investment. I acknowledge and am aware that
there is no assurance as to the future performance of the Company and recognize that the Shares, as
an investment, involve a high degree of risk including, but not limited to, the risk of losses from
operations of the Company and the total loss of my investment. I have such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and risks of an
investment in the Shares and have obtained, in my judgment, sufficient information from the Company
to evaluate the merits and risks of an investment in the Company. I have not utilized any person
as my purchaser representative (as defined in Regulation D) in connection with evaluating such
merits and risks and have relied solely upon my own investigation in making a decision to invest in
the Company. I have been urged to seek independent advice from my professional advisors relating
to the suitability of an investment in the Company in view of my overall financial needs and with
respect to the legal and tax implications of such investment. I believe that the investment in the
Shares is suitable for me based upon my investment objectives and financial needs, and I have
adequate means for providing for my current financial needs and contingencies and have no need for
liquidity with respect to my investment in the Company. The investment in the Company does not
constitute all or substantially all of my investment portfolio.

          7.4 Restrictions on Transfer. I understand that (i) the Shares have not been
registered under the Securities Act or the securities laws of certain states in reliance on
specific exemptions from registration, (ii) no securities administrator of any state or the federal
government has recommended or endorsed this Offering or made any finding or determination relating
to the fairness of an investment in the Company, and (iii) the Company is relying on my
representations and agreements for the purpose of determining whether this transaction meets the
requirements of the exemptions afforded by the Securities Act and certain state securities laws. I
understand and agree that the Shares cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Securities Act and under applicable securities
laws of certain states, or an exemption from such registration is available. I acknowledge that,
notwithstanding the Company’s commitment described below in Section 8, there can be no assurance
that the Company will be able to keep the Registration Statement (defined below) effective until I
sell the Shares registered thereon.

          7.5 No Market for Shares. I am purchasing the Shares for my own account for
investment and not with a view to, or for sale in connection with, any subsequent distribution of
the Shares, nor with any present intention of selling or otherwise disposing of all or any part of
the Shares. I understand that, although there is a public market for the Shares, there is no
assurance that such market will continue.

          7.6 Entity Authority. If the Investor is a corporation, partnership, company, trust,
employee benefit plan, individual retirement account, Keogh Plan or other tax-exempt entity, it is
authorized and qualified to become an investor in the Company and the person signing this
Subscription Agreement and Investor Information Statement on behalf of such entity has been duly
authorized by such entity to do so.

          7.7 No Offer Until Determination of Suitability. I acknowledge that any delivery to
me of the documents relating to the offering of the Shares prior to the determination by the
Company of my suitability will not constitute an offer of the Shares until such determination of
suitability is made.

     8. Registration Rights.

          (a)(i) The Company shall file a registration statement (the “Registration Statement”) to
register the Shares received by the investors in the offering (collectively the “Registrable
Securities”) for resale pursuant to the Securities Act no later than ten business days after the
Commitment Date. The

3

 

Company shall use commercially reasonable efforts to cause the Registration Statement to be
declared effective by the SEC as promptly as practicable.

               (ii) In connection the foregoing, the Company will, as expeditiously as possible, use its best
efforts to: (A) furnish to investors copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits), and each of the investors shall have the opportunity to
object to any information pertaining solely to it that is contained therein and the Company will
make the corrections reasonably requested by either of them with respect to such information prior
to filing any such registration statement or amendment; (B) prepare and file with the SEC such
amendments and supplements to such Registration Statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such Registration Statement and to
comply with the provisions of the Securities Act with respect to the disposition of all Registrable
Securities covered by such Registration Statement; (C) promptly notify investors: (1) when such
Registration Statement or any prospectus used in connection therewith, or any amendment or
supplement thereto, has been filed and, with respect to such Registration Statement or any
post-effective amendment thereto, when the same has become effective; (2) of any written comments
from the SEC with respect to any filing referred to in clause (A) and of any written request by the
SEC for amendments or supplements to such Registration Statement or prospectus; and (3) of the
notification to the Company by the SEC of its initiation of any proceeding with respect to the
issuance by the SEC of, or of the issuance by the SEC of, any stop order suspending the
effectiveness of such Registration Statement; (D) furnish investors such number of copies of the
prospectus contained in such Registration Statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 promulgated under the Securities
Act relating to the Registrable Securities, and such other documents, as investors may reasonably
request to facilitate the disposition of its Registrable Securities; (E) notify investors at any
time when a prospectus relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which any prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and at the request of
investors promptly prepare and furnish investors a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
and (F) make available for inspection by the investors and any attorney, accountant or other agent
retained by any such seller or underwriter (collectively, the “Inspectors”), all financial and
other records, pertinent corporate documents and properties of the Company as shall be reasonably
necessary to enable them to exercise their due diligence responsibility, and cause the Company’s
officers, directors and employees to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement, and permit the inspectors to participate
in the preparation of such Registration Statement and any prospectus contained therein and any
amendment or supplement thereto.

          (b) The Company shall bear all fees and expenses attendant to registering the Registrable
Securities, but the investors shall pay any and all sales commissions and the expenses of any legal
counsel selected by them to represent them in connection with the sale of the Registrable
Securities. The Company shall use its best efforts to cause any registration statement filed
pursuant to this section to remain effective until all the Registrable Securities registered
thereunder are sold or until the delivery to the Holders of an opinion of counsel to the Company to
the effect set forth in Section 8(h).

          (c)(i) The Company will indemnify the investors, their directors and officers and each
underwriter, if any, and each person who controls any of them within the meaning of the Securities
Act or the Exchange Act against all claims, losses, damages and liabilities (or actions or
proceedings, commenced or threatened, in respect thereof), joint or several, arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document

4

 

(including any related registration statement, notification or the like) incident to any
registration, qualification or compliance pursuant to this Section 8 or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation by the Company of the Securities Act
or any rule or regulation thereunder applicable to the Company in connection with any such
registration, qualification or compliance, and will reimburse the investors, their directors and
officers, each such underwriter and each person who controls any such underwriter within the
meaning of the Securities Act or the Exchange Act for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss, damage, liability or
action or proceeding; provided that the Company will not be liable to an investor in any such case
to the extent that any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the Company by or on
behalf of such investor specifically stating that it is intended for inclusion in any registration
statement under which Registrable Securities are registered. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an investor or any such
director, officer or controlling person, and shall survive the transfer of such securities by any
investor.

               (ii) Each of the investors, severally and not jointly, shall indemnify the Company, each of
its directors and officers and each underwriter, if any, of the Company’s securities covered by
such registration statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act and the Exchange Act and the rules and regulations thereunder, each
other securityholder participating in such distribution and each of their officers and directors
and each person controlling such other securityholder, against all claims, losses, damages and
liabilities (or actions or proceedings, commenced or threatened, in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material fact contained in any
such registration statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse the Company and such other security
holders, directors, officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any such claim, loss,
damage, liability or action or proceeding, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in
such document in reliance upon and in conformity with written information furnished to the Company
by or on behalf of such investor specifically stating that it is intended for inclusion in such
document; provided, however, that the obligations of each investor hereunder shall be limited to an
amount equal to the proceeds received by such investor of securities sold as contemplated herein.
Such indemnity shall remain in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person, and shall survive the
transfer of such securities by any investor.

               (iii) Each party desiring indemnification or contribution under this Section 8(c) hereof (the
“Securities Indemnified Party”) shall give notice to the party required to provide indemnification
or contribution (the “Securities Indemnifying Party”) promptly after such Securities Indemnified
Party has actual knowledge of any claim as to which indemnity or contribution may be sought, and
shall permit the Securities Indemnifying Party to assume, at its sole cost and expense, the defense
of any such claim or any litigation resulting therefrom, provided that counsel for the Securities
Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Securities Indemnified Party (whose approval shall not be
unreasonably withheld). The Securities Indemnified Party may participate in such defense at the
Securities Indemnified Party’s expense unless (A) the employment of counsel by the Securities
Indemnified Party has been authorized in writing by the Securities Indemnifying Party, (B) the
Securities Indemnified Party has been advised by such counsel employed by it that there are legal
defenses available to it involving potential conflict with those of the Securities Indemnifying
Party (in which case the Securities Indemnifying Party will not have the right to direct the
defense of such action on behalf of the Securities Indemnified Party), or (C) the Securities
Indemnifying Party has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the

5

 

commencement of the action, in each of which cases the reasonable fees and expenses of counsel for
the Securities Indemnified Party shall be at the expense of the Securities Indemnifying Party. The
failure of any Securities Indemnified Party to give notice as provided herein shall not relieve the
Securities Indemnifying Party of its obligations under this Section 8. No Securities
Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent
of each Securities Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the claimant or plaintiff to
such Securities Indemnified Party of a release from all liability in respect to such claim or
litigation. No Securities Indemnified Party shall settle any claim or demand without the prior
written consent of the Securities Indemnifying Party (which consent will not be unreasonably
withheld). Each Securities Indemnified Party shall furnish such information regarding itself or
the claim in question as the Securities Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and litigation resulting
therefrom.

               (iv) The provisions of this Section 8(c) shall be in addition to any other rights to
indemnification or contribution which an Indemnified Party may have pursuant to law, equity,
contract or otherwise.

          (d) In order to provide for just and equitable contribution under the Securities Act in any
case in which (A) any person entitled to indemnification under Section (c) makes a claim for
indemnification pursuant hereto but such indemnification is not enforced in such case
notwithstanding the fact that this section provides for indemnification in such case, or (B)
contribution under the Securities Act, the Exchange Act or otherwise is required on the part of any
such person in circumstances for which indemnification is provided under this section, then, and in
each such case, the Company and each of the Holders shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement
(including legal and other expenses reasonably incurred in connection with investigation or
defense) incurred by the Company and the Holders, as incurred, in proportion to their relative
fault and the relative knowledge and access to information of the Securities Indemnifying Party, on
the one hand, and the Securities Indemnified Party, on the other hand, concerning the matters
resulting in such losses, liabilities, claims, damages and expenses, the opportunity to correct and
prevent any untrue statement or omission, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission of a material fact relates to information
supplied by the Securities Indemnifying Party, on the one hand, or the Securities Indemnified
Party, on the other hand, and any other equitable considerations appropriate under the
circumstances; provided that no person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this section, each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act shall have the same
rights to contribution as the Company.

          (e) Each of the investors shall furnish to the Company such information regarding itself and
the distribution proposed by it as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or compliance referred to in
this Section 8.

          (f) The Company shall comply with all of the reporting requirements of the Exchange Act and
with all other public information reporting requirements of the Commission, which are conditions to
the availability of Rule 144 for the sale of the Shares. The Company shall cooperate with each
investor in supplying such information as may be necessary for such investor to complete and file
any information reporting forms presently or hereafter required by the Commission as a condition to
the availability of Rule 144.

          (g) The Company represents and warrants to the holders of Registrable Securities that the
granting of the registration rights to the investors hereby does not and will not violate any
agreement

6

 

between the Company and any other security holders with respect to registration rights granted
by the Company.

          (h) The rights granted under this Section 8 shall terminate upon delivery to the investors of
an opinion of counsel to the Company reasonably satisfactory to the investors to the effect that
such rights are no longer necessary for the public sale of the Registrable Securities without
restriction as to the number of securities that may be sold at any one time or the manner of sale.

          (i) The rights granted under this Section 8 shall not be transferable.

     9. For Florida Residents. None of the Shares have been registered under the
Securities Act of 1933, as amended, or the Florida Securities Act, by reason of specific exemptions
thereunder relating to the limited availability of the offering. The Shares cannot be sold,
transferred or otherwise disposed of to any person or entity unless subsequently registered under
the Securities Act of 1933, as amended, or the Securities Act of Florida, if such registration is
required. Pursuant to Section 517.061(11) of the Florida Securities Act, when sales are made to
five (5) or more persons in Florida, any sale made pursuant to Subsection 517.061(11) of the
Florida Securities Act will be voidable by such Florida purchaser either within three days after
the first tender of consideration is made by the purchaser to the issuer, an agent of the issuer,
or an escrow agent, or within three days after the availability of the privilege is communicated to
such purchaser, whichever occurs later. In addition, as required by Section 517.061(11)(a)(3),
Florida Statutes and by Rule 3-500.05(a) thereunder, if I am a Florida resident I may have, at the
offices of the Company, at any reasonable hour, after reasonable notice, access to the materials
set forth in the Rule that the Company can obtain without unreasonable effort or expense.

     10. Indemnification. I hereby agree to indemnify and hold harmless the Company, its
respective officers, directors, stockholders, employees, agents and attorneys against any and all
losses, claims, demands, liabilities, and expenses (including reasonable legal or other expenses
incurred by each such person in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such person or whether incurred by the
indemnified party in any action or proceeding between the indemnitor and indemnified party or
between the indemnified party and any third party) to which any such indemnified party may become
subject, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact made by me and
contained herein or (b) arise out of or are based upon any breach by me of any representation,
warranty or agreement made by me contained herein.

     11. Governing Law and Jurisdiction. This Subscription Agreement will be deemed to
have been made and delivered in New York City and will be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State of New York. Each
of the Company and the Investor hereby (i) agrees that any legal suit, action or proceeding arising
out of or relating to this Subscription Agreement will be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for the Southern District
of New York, (ii) waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum for such suit, action or proceeding,
(iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York in any such suit,
action or proceeding, (iv) agrees to accept and acknowledge service of any and all process that may
be served in any such suit, action or proceeding in New York State Supreme Court, County of New
York or in the United States District Court for the Southern District of New York and (v) agrees
that service of process upon it mailed by certified mail to its address set forth on my signature
page will be deemed in every respect effective service of process upon it in any suit, action or
proceeding.

     12. Counterparts. This Subscription Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together will constitute
one and the same

7

 

instrument. The execution of this Subscription Agreement may be by actual or facsimile
signature.

     13. Benefit. Except as otherwise set forth herein, this Subscription Agreement is
binding upon and inures to the benefit of the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns.

     14. Notices. All notices, offers, acceptance and any other acts under this
Subscription Agreement (except payment) must be in writing, and is sufficiently given if delivered
to the addressees in person, by overnight courier service, or, if mailed, postage prepaid, by
certified mail (return receipt requested), and will be effective three days after being placed in
the mail if mailed, or upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. All communications to me should be sent to
my preferred address on the signature page hereto. All communications to the Company should be
sent to:

Ladenburg Thalmann Financial Services Inc.

590 Madison Avenue, 34th Floor

New York, New York 10022

Attn: Charles I. Johnston, Chief Executive Officer

Tel: (212) 409-2500

     15. Entire Agreement. This Subscription Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all prior oral and
written agreements between the parties hereto with respect to the subject matter hereof; provided,
however, that if the undersigned is a party to the Amended and Restated Debt Conversion Agreement,
the Amended and Restated Debt Conversion Agreement controls in the event there is any inconsistency
or ambiguity set forth in this Subscription Agreement. In the event any parts of this Subscription
Agreement are found to be void, the remaining provisions of this Subscription Agreement are
nevertheless binding with the same effect as though the void parts were deleted. This Subscription
Agreement may not be changed, waived, discharged, or terminated orally, but rather, only by a
statement in writing signed by the party or parties against which enforcement or the change,
waiver, discharge or termination is sought.

     16. Section Headings. Section headings herein have been inserted for reference only
and will not be deemed to limit or otherwise affect, in any matter, or be deemed to interpret in
whole or in part, any of the terms or provisions of this Subscription Agreement.

     17. Survival of Representations, Warranties and Agreements. The representations,
warranties and agreements contained herein will survive the delivery of, and the payment for, the
Shares.

     18. Acceptance of Subscription. The Company may accept this Subscription Agreement at
any time for all or any portion of the Shares subscribed for by executing a copy hereof as provided
and notifying me within a reasonable time thereafter.

[SIGNATURE PAGES FOLLOW]

8

 

SIGNATURE PAGE FOR INDIVIDUAL INVESTORS - COMPLETE ALL INFORMATION

	 	 	 	 	 
	Name:
	 

	 	Name of Joint Investor (if any):	 

		
	Residence Address: 	 

	 	 	 	 	 	 	 
	Telephone:

	 	(H) ____________________________	 	(W) ____________________________	 	Fax ____________________________

	 	 	 	 	 	 	 
	Occupation:
	 	 

	 	Employer:	 	 

			
	Business Address: 	 	

	 	 	 	 	 	 	 	 	 
	Send communications to:

	 	o Home
	 	o Office
	 	o E-Mail:	 	 

		
	Age: 	
 _______________

		
	Social Security Number: 	
 ____________________

Check manner in which securities are to be held:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o
	 	Individual Ownership	 	o	 	Tenants in Common	 	 	o	 	 	Joint Tenants with Right of Survivorship (both parties must sign)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o
	 	Community Property	 	 	 	 	 	 	 	 	o	 	 	Other (please indicate)
 

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	

	 

Amount of Investment:

		
	Number of Shares: 	
 ______________

Corresponding dollar amount ($0.45 multiplied by number of Shares): $_______________

Accredited Investor Status For Individuals. (INVESTORS THAT ARE CORPORATIONS, LIMITED
LIABILITY COMPANIES, PARTNERSHIPS, REVOCABLE TRUSTS, IRREVOCABLE TRUSTS, EMPLOYEE BENEFIT PLAN
TRUSTS AND INDIVIDUAL RETIREMENT ACCOUNTS SHOULD IGNORE THE FOLLOWING QUESTIONS AND PROCEED TO THE
ENTITY SIGNATURE PAGE).

9

 

     (a) I am an accredited investor within the meaning of Section 2(15) of the Securities Act and
Rule 501 promulgated thereunder because (check any boxes that apply):

	 	 	 
	o

	 	My individual annual income during each of the two most recent years exceeded
$200,000 and I expect my annual income during the current year will exceed
$200,000.
	 
	 	 
	o

	 	If I am married, my joint annual income with my spouse during each of the two
most recent years exceeded $300,000 and I expect my joint annual income with my
spouse during the current year will exceed $300,000.
	 
	 	 
	o

	 	My individual or joint (together with my spouse) net worth (including my home,
home furnishings and automobiles) exceeds $1,000,000.

                         (b) The aggregate value of my assets is approximately $___.

                         (c) My aggregate liabilities are approximately $___.

                         (d) My current and expected income is:

	 	 	 	 	 	 
	 	YEAR
	 	 	INCOME	 
	 	2004 (Estimated)
	 	 	$	 
	 	2003 (Actual)
	 	 	$	 
	 	2002 (Actual)
	 	 	$	 
	 

     I hereby confirm the information set forth above is true and correct in all respects as of the
date hereof and will be on the date of the purchase of Shares.

	 	 	 	 	 	 
	 	 
	 	ALL INVESTORS MUST SIGN AND PRINT
	 	 	The foregoing subscription is	 
	 	NAME BELOW
	 	 	accepted and the Company hereby	 
	 	 
	 	 	agrees to be bound by its terms.	 
	 	 
	 	 	 	 
	 	Signature: _____________________________
	 	 	LADENBURG THALMANN FINANCIAL	 
	 	 
	 	 	SERVICES INC.	 
	 	 
	 	 	 	 
	 	Print Name: _____________________________
	 	 	By:	 
	 	 
	 	 	 	 
	 	Date: _________________________________
	 	 	 	 
	 	 
	 	 	 	 
	 	Signature: ______________________________
	 	 	Name: ____________________________	 
	 	 
	 	 	 	 
	 	Print Name: _____________________________
	 	 	Title: _____________________________	 
	 	 
	 	 	 	 
	 	Date: _________________________________
	 	 	Date: ______________________________	 
	 	 
	 	 	 	 
	 

10

 

SIGNATURE PAGE FOR ENTITY INVESTORS - COMPLETE ALL INFORMATION

		
	Name of Entity: 	

		
	Address of Principal Office: 	

	 	 	 
	Telephone:

	 	Fax:

		
	Taxpayer Identification Number: 	

Check type of Entity:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o

	 	Employee Benefit
Plan Trust
	 	o
	 	Limited Partnership
	 	o
	 	General Partnership
	 	o
	 	Individual Retirement Account
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	o

	 	Limited Liability Company
	 	o
	 	Revocable Trust
	 	o
	 	Corporation
	 	o
	 	Other

(please indicate)

	 	 	 
	o

	 	Irrevocable Trust (If the Investor is an Irrevocable Trust, a supplemental questionnaire
must be completed by the person directing the decision for the trust to determine by
accredited investor status. Please contact Graubard Miller for a copy of such supplemental
questionnaire.)

     Amount of Investment:

		
	Number of Shares: 	

		
	Corresponding dollar amount ($0.45 multiplied by number of Shares): $ 	

	 	 	 	 	 	 	 
	Date of Formation or incorporation:

	 	 

	 	State of Formation:	 	 

Describe the business of the Entity:

List the names and positions of the executive officers, managing members, partners or
trustees authorized to act with respect to investments by the Entity generally and specify who has
the authority to act with respect to this investment.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name
	 	 	Position	 	 	Authority for this investment (yes or no)	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

11

 

Accredited Investor Status for Entities.

	(a)  	Check all boxes which apply (IRA Entities can skip this question and go to (b)):

The Entity was not formed for the specific purpose of investing in the
Company

The Entity has total assets in excess of $5 million dollars

For Employee Benefit Plan Trusts Only: The decision to invest in the
Company was made by a plan fiduciary, as defined in Section 3(21) of ERISA, who
is either a bank, insurance company or registered investment advisor.

	(b)  	If you did not check the first two of the three boxes in Question (a) or if the Entity is an
Individual Retirement Account, a Self-directed Employee Benefit Plan Trust or an Irrevocable Trust,
list the name of each person who:

          (i) owns an equity interest in the Entity (i.e., each shareholder if the Entity is a
corporation, each member if the Entity is a limited liability company and each partner if the
Entity is a partnership); or

          (ii) is a grantor for the revocable trust or Individual Retirement Account; or

          (iii) is the person making the investment decision for a self-directed Employee Benefit Plan
Trust; or

          (iv)is the person making the investment decisions for an Irrevocable Trust.

	 	 	 
	

	 	

	 
	

	 	

EACH PERSON LISTED ABOVE MUST SEPARATELY COMPLETE AND SUBMIT TO THE COMPANY THE ANSWERS TO THE
QUESTIONS FOLLOWING THE SIGNATURE BOX BELOW AND SIGN THE WRITTEN CONFIRMATION IMMEDIATELY
FOLLOWING.

	 	 	 	 	 	 
	 	INVESTOR:

	 	 	The foregoing subscription is accepted
and the Company hereby agrees to be
bound by its terms.	 
	 	 
	 	 	 	 
	 	

Signature of Authorized Signatory

	 	 	LADENBURG THALMANN FINANCIAL SERVICES
INC.	 
	 	 
	 	 	 	 
	 	

	 	 	By:	 
	 	 
	 	 	 	 
	 	Name: ______________________

	 	 	Name: ______________________	 
	 	 
	 	 	 	 
	 	Title: ______________________

	 	 	Title: ______________________	 
	 	 
	 	 	 	 
	 	Date: ______________________

	 	 	Date: ______________________	 
	 	 
	 	 	 	 
	 

12

 

Accredited Investor Questions for Entity equity owners and investment decision makers

	(a)  	I am an accredited investor within the meaning of Section 2(15) of the Securities Act and Rule
501 promulgated thereunder because (check any boxes that apply):

	 	 	 
	o

	 	My individual annual income during each of the two most recent years exceeded
$200,000 and I expect my annual income during the current year will exceed
$200,000.
	 
	 	 
	o

	 	If I am married, my joint annual income with my spouse during each of the two
most recent years exceeded $300,000 and I expect my joint annual income with my
spouse during the current year will exceed $300,000.
	 
	 	 
	o

	 	My individual or joint (together with my spouse) net worth (including my home,
home furnishings and automobiles) exceeds $1,000,000.

	(b)  	The aggregate value of my assets is approximately $____________.
	 
	(c)  	My aggregate liabilities are approximately $____________.
	 
	(d)  	My current and expected income is:

	 	 	 	 	 	 
	 	YEAR
	 	 	INCOME	 
	 	2004 (Estimated)
	 	 	$	 
	 	2003 (Actual)
	 	 	$	 
	 	2002 (Actual)
	 	 	$	 
	 

I hereby confirm the information set forth above is true and correct in all respects as of the date
hereof and will be on the date of the purchase of Shares.

	 	 	 
	Date: ______________________

	 	_______________________________
Name: 

13

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