CKEC » Topics » 5. BUSINESS PROTECTION COVENANTS.

This excerpt taken from the CKEC 10-Q filed Aug 7, 2007.

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 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 Rhead .

(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) Rhead ‘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) Rhead 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 Rhead and any Competing Business whereby Rhead is required to perform services for the Competing Business which are substantially similar to those that Rhead 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 Rhead performed services for Carmike as an employee and for which he will provide services to Carmike as a consultant under this Agreement.

Rhead 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.

Rhead 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.

Rhead hereby agrees that he shall not, without the prior written 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.

Rhead 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.

Rhead 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, Rhead 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 Rhead is receiving hereunder. Rhead 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.

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