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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 7, 1997 (September
30, 1997)
GAYLORD ENTERTAINMENT COMPANY
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(Exact name of registrant as specified in its charter)
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Delaware 1-13079 73-0664379
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(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
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One Gaylord Drive
Nashville, TN 37214
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (615) 316-6000
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New Gaylord Entertainment Company
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On October 1, 1997, the Registrant issued a press release announcing
that the distribution of its Common Stock and a related merger of the
Registrant's parent with a subsidiary of Westinghouse Electric Corporation had
been completed. A copy of the press release is attached hereto as Exhibit 99 and
is incorporated herein in its entirety.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits.
3 Restated Certificate of Incorporation of the Registrant, as
amended by Certificate of Ownership and Merger, effective as
of October 1, 1997.
10.1 Agreement and Plan of Distribution, dated as of September 30,
1997, between Gaylord Entertainment Company, a Delaware
corporation now known as CBS Cable Networks, Inc. ("Old
Gaylord"), and the Registrant.
10.2 Post-Closing Covenants Agreement, dated as of September 30,
1997, by and among Westinghouse Electric Corporation
("Westinghouse"), Old Gaylord, the Registrant, and certain
subsidiaries of the Registrant.
10.3 Tax Disaffiliation Agreement, dated as of September 30, 1997,
by and among Old Gaylord, the Registrant, and Westinghouse.
99 Press Release issued by the Registrant on October 1, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 7, 1997
GAYLORD ENTERTAINMENT COMPANY
By: /s/ Terry E. London
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Terry E. London
President and Chief Executive Officer
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EXHIBIT 3
RESTATED
CERTIFICATE OF INCORPORATION
OF
NEW GAYLORD ENTERTAINMENT COMPANY
The undersigned, Terry E. London, certifies that he is the President
and Chief Executive Officer of New Gaylord Entertainment Company, a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), and does hereby further certify as follows:
1. The name of the Corporation is New Gaylord Entertainment Company.
2. The name under which the Corporation was originally incorporated was
"WKY Television System, Inc." and the original Certificate of Incorporation of
the Corporation was filed with the Secretary of State of the State of Delaware
on August 21, 1956.
3. This Restated Certificate of Incorporation was duly adopted by the
Board of Directors of the Corporation and by the sole stockholder of the
Corporation all in accordance with the provisions of Sections 228, 242 and 245
of the General Corporation Law of the State of Delaware as set forth in Title 8
of the Delaware Code (the "GCL").
4. The text of the Restated Certificate of Incorporation of the
Corporation is hereby amended and restated to read in its entirety, as follows:
I.
The name of this corporation is New Gaylord Entertainment Company (the
"Corporation").
II.
The Corporation's registered office in the State of Delaware is 1013
Centre Road, Wilmington, Delaware 19805, and the name of its registered agent at
such address is Corporation Service Company.
III.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the GCL.
IV.
(A) Classes and Numbers of Shares
The total number of shares of all classes authorized is 250,000,000
having a par value of $.01 per share. The classes and the aggregate number of
shares of stock of each class that the Corporation shall have the authority to
issue is as follows:
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(1) 100,000,000 shares of Preferred Stock, $.01 par value
("Preferred Stock").
(2) 150,000,000 shares of Common Stock, $.01 par value ("Common
Stock").
Such stock may be issued by the Corporation from time to time for such
consideration as may be fixed from time to time by the Board of Directors of the
Corporation (the "Board of Directors").
(B) Common Stock
(1) General. The rights, powers, and privileges of the holders of the
Common Stock are subject to and qualified by the rights of holders, if any, of
the Preferred Stock.
(2) Voting Rights. Except as otherwise required by applicable law or
this Restated Certificate of Incorporation, the holder of each outstanding share
of Common Stock shall have one vote on each matter submitted to a vote of the
stockholders of the Corporation.
(3) Dividends and Distributions. Subject to the preferences applicable
to Preferred Stock outstanding at any time, the holders of shares of Common
Stock shall be entitled to receive, from time to time, when, as, and if declared
by the Board of Directors, out of assets or funds of the Corporation legally
available therefor, dividends and other distributions in cash, property, or
securities of the Corporation.
(4) Liquidation Rights. In the event of any dissolution, liquidation or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
after payment or provision for the payment of the debts and other liabilities of
the Corporation and after making provision for the holders of each series of
Preferred Stock, if any, the remaining assets and funds of the Corporation, if
any, shall be divided among and paid ratably to the holders of the Common Stock.
(5) No holder of shares of Common Stock shall be entitled to preemptive
or subscription rights.
(C) Preferred Stock
Shares of the Preferred Stock may be issued from time to time in one or
more classes or series, each of which class or series shall have such
distinctive designation or title as shall be fixed by the Board of Directors
prior to the issuance of any shares thereof. Each such class or series of
Preferred Stock shall have such voting powers, full or limited, or no voting
powers, and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions thereof, as
shall be stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issuance of such class or series,
including, without limitation, the authority to provide that any such class or
series may be (i) subject to redemption at such time or times and at such price
or prices; (ii) entitled to receive dividends (which may be cumulative or
non-cumulative) at such rates, on such conditions, and at such times, and
payable in preference to, or in such relation to, the dividends payable on any
other class or classes
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or any other series; (iii) entitled to such rights upon the dissolution of, or
upon any distribution of the assets of, the Corporation; or (iv) convertible
into, or exchangeable for, shares of any other class or classes of stock, or of
any other series of the same or any other class or classes of stock, of the
Corporation at such price or prices or at such rates of exchange and with such
adjustments; all as may be stated in such resolution or resolutions.
(D) Compliance with the Communications Act of 1934 and the Regulations
thereunder
(1) Proof of Ownership. If the Corporation has reason to believe that
the ownership, or proposed ownership, of shares of capital stock of the
Corporation by any holder or any person presenting any shares of capital stock
of the Corporation for transfer into his name (a "Proposed Transferee") may be
inconsistent with, or in violation of, any provision of the Federal
Communications Laws (as hereinafter defined), such holder or Proposed
Transferee, upon request of the Corporation, shall furnish promptly to the
Corporation such information with respect to citizenship and other ownership
interests and affiliations, as the Corporation shall reasonably request to
determine whether the ownership of, or the exercise of any rights with respect
to, shares of capital stock of the Corporation by such stockholder or Proposed
Transferee is inconsistent with, or in violation of, the Federal Communications
Laws.
(2) Rights of Corporation upon Inconsistency or Violation. If any
holder or Proposed Transferee from whom information is requested should fail to
respond to such request pursuant to Section (1) of this Division (D), or if the
Corporation shall conclude that the ownership of, or the exercise of any rights
of ownership with respect to, shares of capital stock of the Corporation by such
stockholder or Proposed Transferee could result in any inconsistency with, or
violation of, the Federal Communications Laws, the Corporation may (i) refuse to
permit the transfer of shares of capital stock of the Corporation to such
Proposed Transferee, (ii) suspend those rights of stock ownership the exercise
of which would result in any inconsistency with, or violation of, the Federal
Communications Laws, or (iii) redeem such shares of capital stock of the
Corporation in accordance with Division (D)(3) hereof. In the case of clause (i)
or (ii) of the preceding sentence, such refusal of transfer or suspension shall
remain in effect until the requested information has been received or until the
Corporation has determined that such transfer, or the exercise of such suspended
rights, as the case may be, is permissible under the Federal Communications
Laws. The Corporation may exercise any and all appropriate remedies, at law or
in equity in any court of competent jurisdiction, against any such holder or
Proposed Transferee, with a view towards obtaining such information or
preventing or curing any situation which would cause any inconsistency with, or
violation of, any provision of the Federal Communications Laws.
(3) Redemption. Notwithstanding any other provision of this Restated
Certificate of Incorporation to the contrary, outstanding shares of capital
stock of the Corporation shall always be subject to redemption by the
Corporation, by action of the Board of Directors, if in the judgment of the
Board of Directors such action should be taken, pursuant to Section 151(b)(2) of
the GCL or any other applicable provision of law, to the extent necessary to
prevent the loss or secure the reinstatement of any license or franchise from
any governmental agency held by the Corporation or any of its subsidiaries to
conduct any portion of the business of the Corporation or any of its
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subsidiaries, which license or franchise is conditioned upon some or all of the
holders of the Corporation's stock possessing prescribed qualifications. The
terms and conditions of such redemption shall be as follows:
(i) The redemption price of the shares to be redeemed
pursuant to this Division (D) shall be equal to the lesser of (a) the
Fair Market Value (as hereinafter defined), or (b) if such stock was
purchased by a Disqualified Holder (as hereinafter defined) within one
year of the Redemption Date, such Disqualified Holder's purchase price
for such shares.
(ii) The redemption price of such shares may be paid in cash,
Redemption Securities (as hereinafter defined) or any combination
thereof.
(iii) If less than all the shares held by Disqualified Holders
are to be redeemed, the shares to be redeemed shall be selected in such
manner as shall be determined by the Board of Directors, which may
include selection first of the most recently purchased shares thereof,
selection by lot, or selection in any other manner determined by the
Board of Directors.
(iv) At least 30 days' written notice of the Redemption Date
(as hereinafter defined) shall be given to the record holders of the
shares selected to be redeemed (unless waived in writing by any such
holder), provided that the Redemption Date may be the date on which
written notice shall be given to record holders provided that the cash
or Redemption Securities necessary to effect the redemption shall have
been deposited in trust for the benefit of such record holders and such
cash or Redemption Securities are subject to immediate withdrawal by
them upon surrender of the stock certificates for their shares to be
redeemed.
(v) From and after the Redemption Date, any and all rights
of whatever nature, which may be held by the owners of shares selected
for redemption (including without limitation any rights to vote or
participate in dividends declared on stock of the same class or series
as such shares), shall cease and terminate and they shall thenceforth
be entitled only to receive the cash or Redemption Securities payable
upon redemption.
(vi) Such other terms and conditions as the Board of
Directors shall determine.
(vii) For purposes of this Division (D):
(a) "Disqualified Holder" shall mean any holder of
shares of stock of the Corporation whose holding of such
stock, either individually or when taken together with the
holding of shares of stock of the Corporation by any other
holders, may result, in the judgment of the Board of
Directors, in the loss of, or the failure to secure the
reinstatement of, any license or franchise from any
governmental agency held by the Corporation or any of its
subsidiaries to conduct any portion of the business of the
Corporation or any of its subsidiaries.
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(b) "Fair Market Value" of a share of the
Corporation's stock of any class or series shall mean the
average Closing Price (as hereinafter defined) for such a
share for each of the 45 most recent days on which shares of
stock of such class or series shall have been traded preceding
the day on which notice of redemption shall be given pursuant
to paragraph (iv) of this Division (D)(3); provided, however,
that if shares of stock or such class or series are not traded
on any securities exchange or in the over-the-counter market,
"Fair Market Value" shall be determined by the Board of
Directors in good faith. "Closing Price" on any day means the
reported closing sales price or, in case no such sale takes
place, the average of the reported closing bid and asked
prices on the principal United States securities exchange
registered under the Securities Exchange Act of 1934 on which
such stock is listed, or, if such stock is not listed on any
such exchange, the highest closing sales price or bid
quotation for such stock on The Nasdaq Stock Market or any
other market or system then in use, or if no such prices or
quotations are available, the fair market value on the day in
question as determined by the Board of Directors in good
faith.
(c) "Federal Communications Laws" shall mean any law
of the United States now or hereafter in effect (and any
regulation thereunder) pertaining to the ownership of, or the
exercise of rights of ownership with respect to capital stock
of corporate entities holding, directly or indirectly,
television or radio station, cable television, or other radio
authorizations, including, without limitation, the
Communications Act of 1934, as amended (the "Communications
Act"), and regulations thereunder pertaining to the ownership,
or the exercise of the rights of ownership, of capital stock
of corporate entities holding, directly or indirectly,
television or radio broadcast station, cable television, or
other radio authorizations, by (1) aliens, as defined in or
under the Communications Act, as it may be amended from time
to time, (2) persons having interests in television or radio
broadcast stations, newspapers, or cable television systems,
or (3) persons unilaterally or otherwise, seeking direct or
indirect control of the corporation as construed under the
Communications Act, without having obtained any requisite
prior Federal regulatory approval to such control. The word
"regulation" shall include not only regulations but rules,
published policies and published controlling interpretations
by an administrative agency or body empowered to administer a
statutory provision of the Federal Communications Laws.
(d) "Person" shall include not only natural persons
but partnerships, associations, corporate entities, joint
ventures, and other entities.
(e) "Redemption Date" shall mean the date fixed by
the Board of Directors for the redemption of any shares of
stock of the Corporation pursuant to this Division (D)(3).
(f) "Redemption Securities" shall mean any debt or
equity securities of the Corporation, any of its subsidiaries
or any other corporation, or any combination
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thereof, having such terms and conditions as shall be approved
by the Board of Directors and which, together with any cash to
be paid as part of the redemption price, in the opinion of any
nationally recognized investment banking firm selected by the
Board of Directors (which may be a firm which provides other
investment banking, brokerage or other services to the
corporation) has a value, at the time notice of redemption is
given pursuant to paragraph (iv) of this Division (D)(3), at
least equal to the price required to be paid pursuant to
paragraph (i) of this Division (D)(3) (assuming, in the case
of Redemption Securities to be publicly traded, such
Redemption Securities were fully distributed and subject only
to normal trading activity).
(4) The Corporation shall note on the certificates of its capital
stock that the shares represented by such certificates are subject to the
restrictions set forth in this Division (D).
V.
The Corporation is to have perpetual existence.
VI.
The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatsoever.
VII.
(A) Management by Board of Directors
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(B) Number and Classes of Directors; Election by Stockholders; Vacancies
and Removal
(1) Classified Board of Directors. The number of directors of the
Corporation shall be not less than one nor more than fifteen, with the exact
number of directors to be determined from time to time by resolution adopted by
the affirmative vote of a majority of the entire Board of Directors. The
directors shall be divided into three classes, designated Class I, Class II and
Class III. Each class shall consist, as nearly as may be possible, of one-third
of the total number of directors constituting the entire Board of Directors. The
term of the initial Class I directors shall terminate on the date of the 1998
annual meeting of stockholders, the term of the initial Class II directors shall
terminate on the date of the 1999 annual meeting of stockholders and the term of
the initial Class III directors shall terminate on the date of the 2000 annual
meeting of stockholders. At each annual meeting of stockholders beginning in
1998, successors to the class of directors whose term expires at that annual
meeting shall be elected for a three-year term. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the
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number of directors in each class as nearly equal as possible, and any
additional directors of any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term that shall coincide with the
remaining term of that class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Any
vacancy on the Board of Directors, howsoever resulting, may be filled by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy shall hold
office for a term that shall coincide with the term of the class to which such
director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filing of
vacancies and other features of such directorships shall be governed by the
terms of this Restated Certificate of Incorporation or the resolution or
resolutions adopted by the Board of Directors pursuant to Article IV applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to this Article VII unless expressly provided by such terms.
(2) Removal of Directors. Subject to the rights, if any, of the holders
of shares of Preferred Stock then outstanding, any or all of the directors of
the Corporation may be removed from office at any time, but only for cause and
only by the affirmative vote of the holders of a majority of votes represented
by the outstanding shares of the Corporation then entitled to vote generally in
the election of directors.
VIII.
Any action required or permitted to be taken at any annual or special
meeting of stockholders may be taken only upon the vote of the stockholders at
an annual or special meeting duly noticed and called, as provided in the By-laws
of the Corporation, and may not be taken by a written consent of the
stockholders.
Special meetings of the stockholders of the Corporation for any purpose
or purposes may be called at any time by the Chairman of the Board of Directors
or by a majority of the members of the Board of Directors. Special meetings of
the stockholders of the Corporation may not be called by any other person or
persons.
IX.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to exercise all such
powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of the GCL, this Restated
Certificate of Incorporation, and any By-Laws adopted by the stockholders;
provided,
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however, that no By-Laws hereafter adopted by the stockholders shall invalidate
any prior act of the directors which would have been valid if such By-Laws had
not been adopted.
Pursuant to the affirmative vote of the holders of at least a majority
of the stock issued and outstanding having voting power given at a stockholders'
meeting duly called for that purpose, the Board of Directors shall have power
and authority at any meeting to sell, lease or exchange all of the property and
assets of the Corporation, including its good will and its corporate franchises,
upon such terms and conditions as the Board of Directors deem expedient and in
the best interests of this Corporation.
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the By-laws of the Corporation. In addition, the By-laws of the
Corporation may be adopted, repealed, altered, amended, or rescinded by the
affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the
outstanding stock of the Corporation entitled to vote thereon.
Notwithstanding anything contained in this Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the issued and outstanding stock
having voting power cast at a stockholders meeting duly called for that purpose,
voting together as a single class, shall be required to amend, repeal or adopt
any provision inconsistent with Articles VII, VIII, IX, X and XI of this
Restated Certificate of Incorporation.
The Corporation may in its By-laws, and by amendment thereto from time
to time, make any lawful restriction upon the sale or transfer of stock of the
Corporation held by its stockholders; and all persons subscribing for stock of
the Corporation or purchasing stock, whether from the Corporation itself or from
any stockholder, shall take notice of and be bound by such lawful restrictions,
and shall be deemed to agree thereto.
Both stockholders and the Board of Directors shall have the power, if
the By-laws so provide, to hold their meetings and to have one or more offices
within or without the State of Delaware and to keep the books of the Corporation
(subject to the provisions of the statutes,) outside the State of Delaware at
such place or places as from time to time may be designated by the Board of
Directors.
X.
No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for any
breach of the director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
GCL or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of this provision shall apply to or
have any effect on the liability or alleged liability of any director of the
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Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
The Corporation shall indemnify to the fullest extent authorized or
permitted by the GCL (as now or hereafter in effect) any person made, or
threatened to be made, a defendant or witness to any action, suit or proceeding
(whether civil or criminal or otherwise) by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Corporation or by
reason of the fact that such director or officer, at the request of the
Corporation is or was serving any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, in any capacity; provided,
however, that, except for proceedings to enforce rights to indemnification, the
Corporation shall not be obligated to indemnify any director or officer (or his
or her heirs, executors or personal or legal representatives) in connection with
a proceeding (or part thereof) initiated by such persons unless such proceeding
(or part thereof) was authorized or consented to by the Board of Directors of
the Corporation. The right to indemnification conferred by this Article X shall
include the right to be paid by the Corporation the expenses incurred in
defending or otherwise participating in any proceeding in advance of its final
disposition.
The Corporation may, to the extent authorized from time to time by
resolution of the Board of Directors, provide rights to indemnification and to
the advancement of expenses to employees and agents of the Corporation similar
to those conferred in this Article X to directors and officers of the
Corporation.
The rights to indemnification and to the advancement of expenses
conferred in this Article X shall not be exclusive of any other right which any
person may have or hereafter acquire under this Restated Certificate of
Incorporation, the By-laws of the Corporation, any statute, agreement, vote of
stockholders or disinterested directors or otherwise.
XI.
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of the GCL or on the application of trustees in
dissolution or of any receiver or receivers appointed for the Corporation under
the provisions of Section 279 of the GCL order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or
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on all the stockholders or class of stockholders, of the Corporation, as the
case may be, and also on the Corporation.
XII.
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by this Restated Certificate of
Incorporation, the Corporation's By-laws or the GCL and all rights conferred
upon stockholders herein are granted subject to this reservation.
5. Upon the filing (the "Effective Time") of this Restated Certificate
of Incorporation pursuant to the GCL, the 1000 shares of the Corporation's
common stock, $100.00 par value, issued and outstanding immediately prior to the
Effective Time (the "Old Common Stock") shall, without any action by the holder
thereof, be reclassified as and changed into an aggregate number of validly
issued, fully paid, and nonassessable shares of Common Stock authorized by
subparagraph (A) of Article IV of this Restated Certificate of Incorporation
equal to one third of the total number of shares of Class A Common Stock and
Class B Common Stock of Gaylord Entertainment Company issued and outstanding as
of the close of business on September 30, 1997. Until such time as a new
certificate representing a share or shares of Common Stock is issued, each
certificate that theretofore represented a share or shares of Old Common Stock
shall thereafter represent that number of shares of Common Stock into which the
share or shares of Old Common Stock represented by such certificate shall have
been reclassified.
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IN WITNESS WHEREOF, New Gaylord Entertainment Company has caused this
Restated Certificate of Incorporation to be signed by its duly authorized
officer, this 30th day of September, 1997.
NEW GAYLORD ENTERTAINMENT COMPANY
By: /s/ Terry E. London
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Name: Terry E. London
-----------------------------------------
Title: President and Chief Executive Officer
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CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
NCMS, INC.
INTO
NEW GAYLORD ENTERTAINMENT COMPANY
(PURSUANT TO SECTION 253 OF THE GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE)
New Gaylord Entertainment Company, a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the General
Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding shares of each
class of the capital stock of NCMS, Inc., a Delaware corporation ("NCMS").
THIRD: That the Corporation, by the following resolutions of its Board
of Directors, duly adopted on the 26th day of September, 1997, determined to
merge NCMS into itself on the conditions set forth in such resolutions:
RESOLVED: that the Board of Directors of the Corporation has determined
that it is in the best interest of the Corporation to merge NCMS, Inc.,
a Delaware corporation and wholly owned subsidiary of the Corporation
("NCMS"), with and into the Corporation (the "Merger").
RESOLVED FURTHER: that the Corporation merge its subsidiary NCMS into
itself, and thereby assume all of NCMS' liabilities and obligations.
RESOLVED FURTHER: that an authorized officer or officers of this
Corporation are hereby directed to make, execute, and acknowledge a
Certificate of Ownership and Merger setting forth (i) a copy of these
resolutions to merge NCMS into this Corporation and to thereby assume
NCMS' liabilities and obligations and (ii) the date of adoption thereof
and to file the same in the Office of the Secretary of State of
Delaware and a certified copy thereof in the appropriate office of the
recorder of deeds, if applicable.
RESOLVED FURTHER: that the Corporation shall be the surviving
corporation of the Merger (the "Surviving Corporation") and shall
change its name to "Gaylord Entertainment Company" in the Merger.
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RESOLVED FURTHER: that, as of the effective time of the Merger, the
Restated Certificate of Incorporation of the Corporation as in effect
immediately prior to the effective time of the Merger shall be amended
so that Article I thereof shall read in its entirety as follows:
The name of this corporation is Gaylord Entertainment Company
(the "Corporation").
As so amended, such Restated Certificate of Incorporation shall be the
certificate of incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
RESOLVED FURTHER: that this Certificate of Ownership and Merger, and
the Merger contemplated hereby, shall not become effective until 12:02
a.m., local time, on the day immediately following the date on which
this Certificate of Ownership and Merger is filed.
RESOLVED FURTHER: that the authorized officers of the Corporation are,
and any one of them is, hereby authorized to pay all fees and expenses
and to take all other actions as in their judgment shall be necessary,
proper, or advisable to fully carry out the intent and accomplish the
purpose of the foregoing resolutions.
FOURTH: This Certificate of Ownership and Merger, and the Merger
contemplated hereby, shall not become effective until 12:02 a.m., local time, on
the day immediately following the date on which this Certificate of Ownership
and Merger is filed.
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<PAGE> 14
IN WITNESS WHEREOF, the undersigned, an authorized officer of the
Corporation, has executed this Certificate as of this 30th day of September,
1997.
NEW GAYLORD ENTERTAINMENT COMPANY
By: /s/ Terry E. London
--------------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
<PAGE> 1
Exhibit 10.1
AGREEMENT AND PLAN OF DISTRIBUTION, dated as of
September 30, 1997 (this "Distribution Agreement"),
between GAYLORD ENTERTAINMENT COMPANY, a Delaware
corporation (the "Company"), and NEW GAYLORD
ENTERTAINMENT COMPANY, a Delaware corporation and a
direct wholly owned subsidiary of the Company ("New
Gaylord").
WHEREAS the Company, Westinghouse Electric Corporation, a
Pennsylvania corporation ("Parent"), and G Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), have entered into
an Agreement and Plan of Merger, dated as of February 9, 1997 (the "Merger
Agreement"), providing for the Merger (as defined in the Merger Agreement) of
Sub with and into the Company, with the Company as the surviving corporation;
WHEREAS the Board of Directors of the Company has approved
this Distribution Agreement, which is being entered into prior to the Effective
Time (as defined in Section 1.03 of the Merger Agreement), subject to the
issuance of the Tax Rulings (as defined in Section 10.03 of the Merger
Agreement), pursuant to and subject to the terms of which the Restructuring and
the Company Distribution (as such terms are hereinafter defined) will be
consummated;
WHEREAS after the Restructuring and the New Gaylord
Recapitalization (as hereinafter defined) and on the day immediately prior to
the Effective Time, subject to the satisfaction or waiver of the conditions set
forth in Article VIII of this Distribution Agreement, the Company will
distribute (the "Company Distribution") to each holder of record of shares of
Class A Common Stock, $.01 par value, of the Company ("Company Class A Common
Stock") and Class B Common Stock, $.01 par value, of the Company ("Company Class
B Common Stock" and, together with the Company Class A Common Stock, "Company
Common Stock") a number of shares of Common Stock, $.01 par value, of New
Gaylord ("New Gaylord Common Stock") equal to one-third of the number of shares
of Company Common Stock held by such holder;
WHEREAS the purpose of the Restructuring and the Company
Distribution is to make possible the Merger by divesting the Company of all
businesses and operations (other than the Retained Business (as hereinafter
defined)) conducted by the Company and its Subsidiaries which Parent is
unwilling to acquire. This Dis-
<PAGE> 2
tribution Agreement sets forth or provides for certain agreements among the
Company and New Gaylord in consideration of the separation of their ownership;
and
WHEREAS it is the intention of the parties to this
Distribution Agreement that (a) the Company Distribution shall qualify as a
transaction described in Section 355 of the Internal Revenue Code of 1986, as
amended (the "Code"), and shall be immediately preceded by a transfer of assets
and related liabilities that qualifies as a transaction described in Section 351
or 368(a)(1)(D) of the Code, (b) the New Gaylord Recapitalization and certain
other transactions that are part of the Restructuring shall be tax-free
transactions under the Code and (c) the Merger shall qualify as a
"reorganization" within the meaning of Section 368(a)(1)(B) of the Code.
NOW, THEREFORE in consideration of the premises, and of the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Distribution Agreement, the
following terms shall have the following respective meanings (capitalized terms
used but not defined herein shall have the respective meanings ascribed to them
in the Merger Agreement):
"Affiliate" of any Person means another Person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first Person; provided, however, that for
the purposes of this Distribution Agreement and the Post-Closing Covenants
Agreement, from and after the Time of Distribution, none of the Retained
Companies or the New Gaylord Companies shall be deemed to be an Affiliate of any
New Gaylord Company or Retained Company, respectively.
"Ancillary Agreements" shall mean the documents listed in
clauses (a)-(i) of Section 5.1 hereof.
"Affiliate Contracts" shall have the meaning set forth in
Section 4.1(c)(iii) hereof.
"Assumed Liabilities" shall have the meaning set forth in
Section 4.2 hereof.
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<PAGE> 3
"Business Stationery" shall have the meaning set forth in
Section 5.2 hereof.
"Change in Control" shall have the meaning set forth in the
Listed Agreements.
"Closing Balance Sheet" shall have the meaning set forth in
Section 3.05 of the Post-Closing Covenants Agreement.
"Closing Date" shall have the meaning set forth in Section
1.02 of the Merger Agreement.
"CMT" shall have the meaning set forth in Section 4.1(c)(i)
hereof.
"CMT Asset Transfer" shall have the meaning set forth in
Section 4.1(c)(iii) hereof.
"CMT International Assets" shall have the meaning set forth in
Section 4.1(c)(iii) hereof.
"CMTV" shall mean the Country Music Television cable
television network.
"Code" shall have the meaning set forth in the Recitals.
"Company" shall have the meaning set forth in the Preamble.
"Company Class A Common Stock" shall have the meaning set
forth in the Recitals.
"Company Class B Common Stock" shall have the meaning set
forth in the Recitals.
"Company Common Stock" shall have the meaning set forth in the
Recitals.
"Company Disclosure Schedule" shall have the meaning set forth
in Section 4.01 of the Merger Agreement.
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<PAGE> 4
"Company Distribution" shall have the meaning set forth in the
Recitals.
"Company Stock Plans" shall mean the GEC Amended and Restated
1993 Stock Option and Incentive Plan and the GEC Amended and Restated 1991 Stock
Option and Incentive Plan.
"Company VEBA" shall mean the Gaylord Entertainment Company
VEBA.
"Contracts" shall have the meaning set forth in Section 4.01
(d) of the Merger Agreement.
"DGCL" shall mean the General Corporation Law of the State of
Delaware.
"Distribution Agreement" shall have the meaning set forth in
the Preamble.
"Effective Time" shall have the meaning set forth in Section
1.03 of the Merger Agreement.
"Entertainment Business" shall mean all of the businesses
conducted at or at any time prior to the Effective Time by the Company or any of
its Subsidiaries, excluding the Retained Business.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Idea" shall have the meaning set forth in Section 4.1(a)(i)
hereof.
"Information" of a party shall mean any and all information
that such party or any of its Representatives furnish or have furnished to the
receiving party or any of its Representatives whether furnished orally or in
writing or by any other means or gathered by inspection and regardless of
whether the same is specifically marked or designated as "confidential" or
"proprietary", together with any and all notes, memoranda, analyses,
compilations, studies or other documents (whether in hard copy or electronic
media) prepared by the receiving party or any of its Representatives which
contain or otherwise reflect such Information, together with any and all copies,
extracts or other reproductions of any of the same; provided,
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<PAGE> 5
however, that for the purposes hereof all information relating to the Retained
Companies and the Retained Business in the possession of any New Gaylord Company
at the Time of Distribution shall be deemed to have been furnished by the
Retained Companies and all information relating to the New Gaylord Companies and
the Entertainment Business in the possession of any Retained Company at the Time
of Distribution shall be deemed to have been furnished by the New Gaylord
Companies; provided, further, however, that the term "Information" does not
include information that:
(a) is or becomes generally available to the public
through no wrongful act of the receiving party or its Representatives;
(b) is or becomes available to the receiving party on a
nonconfidential basis from a source other than the providing party or its
Representatives, provided that such source is not known by the receiving party
to be subject to a confidentiality agreement with the providing party; or
(c) has been independently acquired or developed by the
receiving party without violation of any of the obligations of the receiving
party or its Representatives under this Distribution Agreement.
"IRS" shall mean the United States Internal Revenue Service.
"Liabilities" shall mean any and all debts, liabilities,
commitments and obligations, whether fixed, contingent or absolute, matured or
unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown,
whenever or however arising and whether or not the same would be required by
generally accepted accounting principles to be reflected in financial statements
or disclosed in the notes thereto.
"Listed Agreements" shall have the meaning set forth in
Section 7.6 hereof.
"Merger" shall have the meaning set forth in the Recitals to
the Merger Agreement.
"Merger Agreement" shall have the meaning set forth in the
Recitals.
"NEI" shall have the meaning set forth in Section 4.1(e)(i)
hereof.
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<PAGE> 6
"New CMT" shall have the meaning set forth in Section 4.1(c)
(iii) hereof.
"New Gaylord" shall have the meaning set forth in the
Preamble.
"New Gaylord Companies" shall mean New Gaylord and its
Subsidiaries (determined after giving effect to the transactions contemplated by
Article IV of this Distribution Agreement).
"New Gaylord Employees" shall mean all current and former
employees of the Company and its Subsidiaries other than the Retained Employees.
"New Gaylord Old Class B Common Stock" shall have the meaning
set forth in Section 2.1 hereof.
"New Gaylord Common Stock" shall have the meaning set forth in
the Recitals.
"New Gaylord Old Common Stock" shall have the meaning set
forth in Section 2.1 hereof.
"New Gaylord Pension Plan" shall have the meaning set forth in
Section 7.3(a) hereof.
"New Gaylord Recapitalization" shall have the meaning set
forth in Section 2.2 hereof.
"New Gaylord Savings Plan" shall have the meaning set forth in
Section 7.3(b) hereof.
"New Gaylord Welfare Plans" shall have the meaning set forth
in Section 7.3(c) hereof.
"Nonqualified Plans" shall have the meaning set forth in
Section 7.3(e) hereof.
"NV" shall have the meaning set forth in Section 4.1(e)(i)(C)
hereof.
"NYSE" shall mean The New York Stock Exchange, Inc.
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<PAGE> 7
"OKC" shall have the meaning set forth in Section 4.1(f)(i)(A)
hereof.
"Opryland USA" shall have the meaning set forth in Section
4.1(b) hereof.
"O&W" shall have the meaning set forth in Section 4.1(c)(i)
hereof.
"Parent" shall have the meaning set forth in the Recitals.
"Person" shall have the meaning set forth in Section 10.03 of
the Merger Agreement.
"Post-Closing Covenants Agreement" shall have the meaning set
forth in Section 3.01 of the Merger Agreement.
"Record Date" shall mean the date designated by or pursuant to
the authorization of the Board of Directors of the Company for closing of the
stock transfer books of the Company for the purpose of determining the
stockholders of the Company entitled to participate in the Company Distribution.
"Replacement Welfare Plans" shall have the meaning set forth
in Section 7.2(c) hereof.
"Representatives" of a party shall mean such party's
affiliates, directors, officers, stockholders, partners, employees, agents or
other representatives (including attorneys, accountants and financial advisors).
"Restructuring" shall have the meaning set forth in Section
4.1 hereof.
"Retained Business" shall mean the Company's businesses
included in its cable networks segment excluding certain businesses as described
in Annex D to the Merger Agreement.
"Retained Business Balance Sheet" shall have the meaning set
forth in Section 4.01(g) of the Merger Agreement.
"Retained Companies" shall have the meaning set forth in
Section 4.01 of the Merger Agreement.
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<PAGE> 8
"Retained Employees" shall mean those Persons who are
employees of the Retained Companies or the New Gaylord Companies whose names are
listed on SCHEDULE 1.1 attached hereto other than those who continue to be
employed after the Effective Time by one of the New Gaylord Companies as
contemplated by Section 6.15(d) of the Merger Agreement.
"Retained Liabilities" shall have the meaning set forth in
Section 4.2 hereof.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Sub" shall have the meaning set forth in the Recitals.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such Person or any other Subsidiary of such Person is a general
partner or (ii) at least 50% of the securities or other interests having by
their terms ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such corporation or other
organization or at least 50% of the value of the outstanding equity is directly
or indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
"SUDCOMP Plan" shall have the meaning set forth in Section
7.2(e) hereof.
"Tax Disaffiliation Agreement" shall have the meaning set
forth in Section 3.1 hereof.
"Taxes" shall have the meaning set forth in Section 1.35 of
the Tax Disaffiliation Agreement.
"Time of Distribution" shall mean the time as of which the
Company Distribution is effective.
"TNN" shall mean the TNN cable television network.
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<PAGE> 9
"Transfer Agent" shall mean SunTrust Bank, Atlanta, the
transfer agent for the Company Common Stock.
"Word Agreement" shall have the meaning set forth in Section
4.1(a)(i) hereof.
"Word Assets" shall have the meaning set forth in Section 4.1
(a)(i) hereof.
"Word Music" shall have the meaning set forth in Section 4.1
(a)(ii) hereof.
"Nonqualified Plans" shall have the meaning set forth in
Section 7.3(e) hereof.
"WSM" shall have the meaning set forth in Section 4.1(d)(i)
hereof.
ARTICLE II
RECAPITALIZATION OF NEW GAYLORD;
MECHANICS OF COMPANY DISTRIBUTION
2.1 Capitalization of New Gaylord. The authorized capital
stock of New Gaylord currently consists of (a) 10,000 shares of common stock,
$100.00 par value ("New Gaylord Old Common Stock"), of which 1,000 shares are
issued and outstanding and owned beneficially and of record by the Company, and
(b) 10,000 shares of class B common stock, $.01 par value ("New Gaylord Old
Class B Common Stock"), of which no shares are issued and outstanding.
2.2 Recapitalization of New Gaylord. Immediately prior to the
Time of Distribution, the Company shall cause New Gaylord to amend its
Certificate of Incorporation to (a) create the New Gaylord Common Stock, (b)
increase the authorized number of shares of common stock of New Gaylord and
convert the shares of New Gaylord Old Common Stock into that number of shares of
New Gaylord Common Stock equal to one-third the number of shares of Company
Common Stock outstanding immediately prior to the Record Date for the Company
Distribution (the "New Gaylord Recapitalization"), and (c) authorize 100 million
shares of preferred stock, par value $.01 per share.
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<PAGE> 10
2.3 Mechanics of Company Distribution. The Company
Distribution shall be effected by the distribution to each holder of record of
shares of Company Common Stock, as of the Record Date, of certificates
representing the number of shares of New Gaylord Common Stock equal to one-third
the number of shares of Company Common Stock held by such holder; provided,
however, that no fractional shares of New Gaylord Common Stock shall be issued
or delivered. In the event there are holders of Company Common Stock holding of
record on the Record Date a number of shares of Company Common Stock not evenly
divisible by three, the Transfer Agent shall distribute certificates
representing shares of New Gaylord Common Stock to such holders on the basis of
the next number of shares of Company Common Stock held below the actual number
of shares held which is evenly divisible by three. The Transfer Agent shall
aggregate all shares of New Gaylord Common Stock that would be distributable but
for the proviso to the first sentence of this Section 2.3, shall sell such
shares in the public market as soon as practicable after the Time of
Distribution and shall distribute the proceeds of the sale of such shares pro
rata among the holders of record of Company Common Stock holding such numbers of
shares of Company Common Stock not evenly divisible by three.
2.4 Timing of the Company Distribution. The Board of Directors
of the Company (i) shall formally declare the Company Distribution and (ii)
shall authorize the Company to effect the Company Distribution at the close of
business on the Closing Date, which shall be the day immediately prior to the
Effective Time, subject to the satisfaction or waiver of the conditions set
forth in Article VIII of this Distribution Agreement, by delivery of
certificates representing shares of New Gaylord Common Stock to the Transfer
Agent for delivery to the holders entitled thereto. The Company Distribution
shall be deemed to be effective upon notification by the Company to the Transfer
Agent that the Company Distribution has been declared and that the Transfer
Agent is authorized to proceed with the distribution of shares of New Gaylord
Common Stock.
ARTICLE III
TAX MATTERS
3.1 Tax Disaffiliation Agreement. Prior to the Time of
Distribution, New Gaylord, the Company and Parent shall enter into an agreement
relating to past and future tax sharing and certain issues associated therewith
in the form attached to the Merger Agreement as Annex B (the "Tax Disaffiliation
Agreement").
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<PAGE> 11
3.2 Tax Matters. Notwithstanding anything to the contrary in
this Distribution Agreement, Liabilities of the parties for Taxes are subject to
the terms of the Tax Disaffiliation Agreement. All obligations of New Gaylord
under the Tax Disaffiliation Agreement shall be treated as Assumed Liabilities
and not as Retained Liabilities under this Distribution Agreement and all
obligations of the Company under the Tax Disaffiliation Agreement shall be
treated as Retained Liabilities and not as Assumed Liabilities under this
Distribution Agreement.
ARTICLE IV
RESTRUCTURING AND ASSUMED LIABILITIES
4.1 Restructuring. Prior to the Time of Distribution, the
Company and New Gaylord shall cause the following transactions to occur in the
order set forth below (the "Restructuring"), which transactions are intended to
separate the Entertainment Business from the Retained Business:
(a) The Company shall, effective as of January 6,
1997:
(i) contribute, as a capital contribution to
Idea Enter- tainment, Inc., a Delaware corporation and a wholly owned
subsidiary of the Company formerly known as Word Entertainment Group,
Inc. ("Idea"), (A) all of the Company's right, title and interest in
and to the assets (the "Word Assets") purchased pursuant to the Asset
Purchase Agreement, dated as of November 21, 1996, by and among Thomas
Nelson, Inc., Word, Incorporated, Word Direct Partners, L.P. and the
Company (the "Word Agreement") and (B) all of the Company's rights and
obligations under the Word Agreement; and
(ii) cause Idea to contribute, as capital
contributions to Word Music Group, Inc., a Tennessee corporation and a
wholly owned subsidiary of Idea ("Word Music"), and to Word
Entertainment Direct LLC, a limited liability company that is 99%-owned
by Idea, all or a portion of the Word Assets. Thereafter, Word Music
may contribute all or a portion of such Word Assets to one or more of
its Subsidiaries, which may, in turn, contribute all or a portion of
such assets to one or more of Word Music's indirect Subsidiaries.
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<PAGE> 12
(b) New Gaylord shall cause its wholly owned
Subsidiary, Opryland USA Inc, a Delaware corporation ("Opryland USA"), to be
merged upstream with and into New Gaylord;
(c) New Gaylord shall:
(i) pay the then outstanding balance of
any intercompany notes payable and accounts payable owed by New
Gaylord, as successor to Opryland USA, to Country Music Television
Inc., a Tennessee corporation ("CMT") by transferring to CMT an equal
amount of intercompany notes payable and accounts payable owed by O&W
Corporation ("O&W"), a Tennessee corporation, to New Gaylord, as
successor to Opryland USA;
(ii) contribute to the capital of O&W the
then outstanding balance of intercompany notes payable and accounts
payable owed to New Gaylord, as successor to Opryland USA, by each of
O&W and Outdoor Entertainment, Inc., a Tennessee corporation;
(iii) cause CMT to transfer (A) all
assets listed on SCHEDULE 4.1(C)(III) attached hereto which
comprise the assets used in the business of CMT outside of the United
States and Canada (other than the trademarks and other intellectual
property used by CMT outside of the United States and Canada) (the
"CMT International Assets"), together with all Liabilities associated
therewith (other than the loans payable to Parent or any of its
Subsidiaries) which are currently held in the European, Latin American
and Asian divisions of CMT, (B) the excluded real and personal
property reflected on CMT's balance sheet which is included in Exhibit
1 to Section 4.01(g) of the Company Disclosure Schedule and (C) all
Contracts listed on SCHEDULE 4.1(C)(III-1) attached hereto as well as
any Contracts between CMT and its network affiliates ("Affiliate
Contracts") relating to the distribution of CMTV in Europe, Asia and
Latin America, except those Affiliate Contracts pursuant to which
CMT's network affiliates receive CMTV via the satellite that is used
to distribute CMTV inside the United States and Canada, to a newly
formed wholly owned direct Subsidiary corporation of CMT ("New CMT")
in exchange for all of the issued and outstanding capital stock of New
CMT (the "CMT Asset Transfer");
(iv) cause CMT to distribute, immediately
after the CMT Asset Transfer, all of the issued and outstanding capital
stock of New
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<PAGE> 13
CMT to O&W, the holder of all of the issued and outstanding capital
stock of CMT; and
(v) cause O&W to distribute all of the
issued and outstanding capital stock of New CMT to New Gaylord,
as successor to Opryland USA, the holder of 67% of the capital stock
of O&W, in redemption of a portion of the O&W capital stock held by
New Gaylord equal to the fair market value of the then outstanding
capital stock of New CMT.
(d) New Gaylord shall:
(i) cause its wholly owned direct
Subsidiary, WSM, Incorporated, a Tennessee corporation ("WSM"), to be
merged upstream with and into New Gaylord; and
(ii) cause Hospitality & Leisure Management
Company, Inc., a Delaware corporation and, after the merger of WSM with
and into New Gaylord described in (i) above, a wholly owned direct
Subsidiary of New Gaylord, to be merged upstream with and into New
Gaylord.
(e) (i) New Gaylord, as successor to
Opryland USA, shall contribute, or shall cause to be contributed, as a capital
contribution to Network Enterprises, Inc., a Tennessee corporation and a
wholly owned direct Subsidiary of New Gaylord ("NEI"), the following assets:
(A) all of the issued and
outstanding shares of capital stock of O&W held by New Gaylord, as
successor to Opryland USA;
(B) all of the issued and
outstanding capital stock of Peppercorn Productions, Inc., a Tennessee
corporation and a wholly owned, direct Subsidiary of New Gaylord, as
successor to Opryland USA;
(C) all of the issued and
outstanding shares of capital stock of NV International, Inc., a
Georgia corporation ("NV"), held by New Gaylord, as successor to
Opryland USA;
(D) all of New Gaylord's
contractual rights and obligations under the Distribution Agreement,
dated as of January 1, 1989, as amended, among New Gaylord, as
successor to Opryland USA, and
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<PAGE> 14
Parent, as successor to Westinghouse Broadcasting Company, Inc., Group
W Television, Inc. and Group W Satellite Communications;
(E) all of New Gaylord's
contractual rights and obligations under the programming contracts for
programs (x) produced for and originally aired on or to be produced for
and originally aired on TNN and/or CMTV or (y) licensed from a third
party for exhibition on TNN and/or CMTV;
(F) all of New Gaylord's right,
title, interest and obligations in and to the program inventory in its
inventory tape library that was produced for and originally aired on
TNN and/or CMTV;
(G) all of New Gaylord's custodial
rights and obligations with respect to the program inventory in its
inventory tape library that was originally aired on TNN and is held by
New Gaylord as custodian;
(H) all of New Gaylord's right,
title and interest in and to the assets (and related Liabilities)
reflected on the Retained Business Balance Sheet under the column
"GBCI" excluding those assets (and related Liabilities) disposed of in
the ordinary course of business since the date of the Retained Business
Balance Sheet and including all assets (and related Liabilities)
acquired since the date of the Retained Business Balance Sheet which
would have been reflected under the column "GBCI" if the Retained
Business Balance Sheet were prepared on the date that such assets were
contributed to NEI; and
(I) all of New Gaylord's and its
Subsidiaries' (other than NEI's and its Subsidiaries') right, title and
interest in and to (a) the trademarks and other owned and registered
intellectual property relating primarily to the Retained Business, as
set forth on SCHEDULE 4.1(E)(I)(I) attached hereto, (b) all
unregistered intellectual property used solely by the Retained
Business,except that listed on SCHEDULE 4.1(E)(I)(I-1) attached hereto,
and (c) all FCC licenses used solely in connection with the Retained
Business and FCC license number E-950243 (which is used in connection
with both the Entertainment Business and the Retained Business).
(J) all of New Gaylord's rights and
obligations under the Contracts set forth on SCHEDULE 4.1(E)(I)(J)
attached hereto, which
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<PAGE> 15
Contracts have been entered into by New Gaylord or Opryland USA for the
benefit of one or more of the Retained Companies.
(ii) New Gaylord shall cause NEI to
assume all intercompany notes payable and accounts payable owed by New Gaylord
to NV and its Subsidiaries.
(iii) New Gaylord, as successor to Opryland
USA, shall assign to a newly formed wholly owned direct Subsidiary of NEI that
is a limited liability company all rights and obligations under or in connection
with the Program Agreement between Opryland USA d/b/a/ The Grand Ole Opry and
the American Federation of Television and Radio Artists, dated January 1, 1996.
(f) The Company shall pay the then outstanding
balance of the intercompany note payable and accounts payable owed by the
Company to New Gaylord in the following manner:
(i) the Company shall transfer to New
Gaylord the Company's aggregate interest in a minor league baseball
franchise, including, without limitation, the assets set forth below,
as payment of an amount of such balance equal to the agreed upon fair
market value of such assets:
(A) all of the capital stock of
Oklahoma City Athletic Club, Inc., an Oklahoma corporation ("OKC"),
held by the Company (50%);
(B) all of the Company's limited
partner interest (24.5%) in OKC Athletic Club, LP, an Oklahoma limited
partnership; and
(C) all of the Company's limited
partner interest (24.5%) in OKC Concession Services Limited
Partnership, an Oklahoma limited partnership; and
(ii) to the extent of any remaining balance,
the Company shall transfer to New Gaylord an equal amount of
intercompany notes receivable and accounts receivable owed by New
Gaylord or one or more of its Subsidiaries to the Company, which shall
consist of (A) all or a portion of such receivables owed by NEI and
NEI's Subsidiaries to the Company (to the extent such receivables are
to be paid by NEI pursuant to
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<PAGE> 16
Section 4.1(g)), (B) all or a portion of such receivables owed by New
Gaylord to the Company, and (C) a portion of such receivables owed by
the Company's Subsidiaries (other than New Gaylord, NEI and NEI's
Subsidiaries) to the Company which relate to the Entertainment
Business.
(g) New Gaylord shall cause NEI to pay the
outstanding balance of intercompany notes receivable and accounts receivable
then owed by NEI and NEI's Subsidiaries to New Gaylord (which were transferred
to New Gaylord pursuant to Section 4.1(f)(ii)(A)) with the following assets that
have an aggregate agreed upon fair market value equal to such balance:
(i) all of NEI's general partner interest
(51%) in WHS Entertainment Ventures, a Tennessee general partnership;
(ii) all of NEI's right, title and
interest in and to the Wildhorse Saloon in Nashville, Tennessee,
including all intellectual property related thereto (other than
intellectual property (A) relating primarily to the Retained Business,
as set forth on SCHEDULE 4.1(E)(I)(I) attached hereto, or (B) used
solely by the Retained Business and not listed on SCHEDULE
4.1(E)(I)(I-1) attached hereto);
(iii) all of NEI's right, title and
interest in and to all real property and improvements thereto owned by
NEI, including, without limitation, the TNN headquarters building, the
Greenland building, the Gaslight building, improvements to the Grand
Ole Opry House, the Scenic Shop, the antenna farm and the broadcast
service facilities field shop;
(iv) all of the capital stock of WHS
Licensing GP Corporation, a Tennessee corporation held by NEI (51%);
(v) all of NEI's limited partner interest
(50.49%) in WHS Licensing Limited Partnership, a Tennessee limited
partnership;
(vi) all of NEI's or NEI's Subsidiaries'
right, title and interest in and to Z Music, Inc. and the assets
thereof;
(vii) all of NEI's right, title and
interest in and to the assets set forth on SCHEDULE 4.1(G)(VII)
attached hereto; and
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(viii) all of NEI's and NEI's Subsidiaries'
right, title and interest in and to (A) all trademarks and other owned
and registered intellectual property relating primarily to the
Entertainment Business and (B) all unregistered intellectual property
other than such intellectual property used solely by the Retained
Business and not listed on SCHEDULE 4.1(E)(I)(I-1) attached hereto.
(h) The Company shall contribute, as a capital
contribution to New Gaylord, all of the outstanding capital stock of Idea.
(i) New Gaylord may transfer to one or more of New
Gaylord's Subsidiaries (other than NEI or NEI's Subsidiaries) all or a portion
of (i) the assets received from NEI pursuant to Section 4.1(g) and (ii) the
assets received from the Company pursuant to Section 4.1(f).
(j) The Company shall contribute, as a capital
contribution to New Gaylord, the then outstanding balance of the intercompany
notes receivable and accounts receivable owed by the Company's Subsidiaries
(other than NEI and NEI's Subsidiaries) to the Company which relate to the
Entertainment Business.
(k) The Company shall contribute, as a capital
contribution to New Gaylord, the following assets:
(i) all of the Company's right, title and
interest (other than NEI's and NEI's Subsidiaries' right, title and
interest which is the subject of Section 4.1(g)(vi)) in and to Z Music,
Inc. and the assets thereof, the option to acquire 95% of the
outstanding stock of Z Music, Inc., the outstanding balance of any note
receivable and any accounts receivable owed by Z Music, Inc. to the
Company, and all other related rights;
(ii) all of the Company's right, title and
interest in and to all of the assets and Liabilities and rights and
obligations under any Contracts of the Company except those assets,
Liabilities and contractual rights and obligations set forth on
SCHEDULE 4.1(K)(II) attached hereto; and
(iii) all of the Company's right, title and
interest in and to (i) all trademarks and other owned and registered
intellectual property relating primarily to the Entertainment Business
and (ii) all unregistered intellectual property other than such
intellectual property used solely by the Retained Business and not
listed on SCHEDULE 4.1(E)(I)(I-1) attached hereto.
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(l) New Gaylord shall assume all then outstanding
third-party bank debt of the Company and any intercompany notes and accounts
payable then owed by the Company to New Gaylord's Subsidiaries (other than those
owed to NEI on NEI's Subsidiaries).
(m) New Gaylord shall distribute all of the issued
and outstanding capital stock of NEI to the Company.
4.2 Other Assumed Liabilities. The parties further agree that,
except as otherwise specifically set forth in this Distribution Agreement, the
Merger Agreement, the Post-Closing Covenants Agreement or the Tax Disaffiliation
Agreement, at or prior to the Time of Distribution, New Gaylord shall, or shall
cause the appropriate New Gaylord Subsidiary to, unconditionally assume and
undertake to pay, satisfy and discharge when due in accordance with their terms
all Liabilities (whether arising before or after the Time of Distribution) of
the Company and its Subsidiaries other than the Retained Liabilities
(collectively, the "Assumed Liabilities"), and the Company shall retain, or
shall, or shall cause the appropriate Retained Company to assume, and undertake
to pay, satisfy and discharge when due in accordance with their terms all
Liabilities (whether arising before or after the Time of Distribution
(including, without limitation, all Liabilities to be reflected on the Closing
Balance Sheet)) of the Company and its Subsidiaries to the extent arising out of
the Retained Business (the "Retained Liabilities").
4.3 OPUBCO Liabilities. The Company shall have a right of
subrogation to New Gaylord's right (as successor to the Company upon
consummation of the Restructuring) to indemnification pursuant to the
Distribution Agreement dated as of October 30, 1991 between the Company and The
Oklahoma Publishing Company and relating, inter alia, to Liabilities arising out
of or related to sites listed on the National Priorities List under the
Comprehensive Environment Response, Compensation, and Liability Act, including
the Hardage/Criner site, the Mosley Road site and the Double Eagle Refining
site.
4.4 Intercompany Balances. The parties agree that following
the Restructuring there shall not be outstanding any indebtedness or accounts
payable or receivable between any of the Retained Companies, on the one hand,
and any of the New Gaylord Companies, on the other hand.
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ARTICLE V
OTHER AGREEMENTS
5.1 Ancillary Agreements. Prior to the Time of Distribution,
the Company, or another of the Retained Companies, and New Gaylord, or another
of the New Gaylord Companies, shall enter into (a) one or more mutually
satisfactory five-year agreements relating to the lease by the New Gaylord
Companies to the Retained Companies subsequent to the Time of Distribution of
certain real property described on ANNEX A attached hereto, with substantially
the terms set forth thereon, (b) a mutually satisfactory five-year agreement
relating to certain productions and promotional activities of the Grand Ole Opry
Live and the Wildhorse Saloon subsequent to the Time of Distribution, with
substantially the terms set forth on ANNEX B attached hereto, (c) a mutually
satisfactory five-year agreement relating to certain promotional advertising
services consisting of the exhibition of the New Gaylord Companies' promotional
advertising on TNN and CMTV subsequent to the Time of Distribution, with
substantially the terms set forth on ANNEX C attached hereto, (d) a mutually
satisfactory five-year agreement relating to certain operational, distribution,
marketing, sales, programming and administrative services to be provided to New
CMT by the Company subsequent to the Time of Distribution, with substantially
the terms set forth on ANNEX D attached hereto, (e) a mutually satisfactory
five-year agreement relating to the use by the New Gaylord Companies subsequent
to the Time of Distribution of the GI-R transponder number 6 for Z Music
distribution, with substantially the terms set forth on ANNEX E attached hereto,
(f) a mutually satisfactory perpetual, exclusive (including with respect to the
Company), royalty-free license agreement relating to the use by New Gaylord of
the CMT name outside of the United States and Canada and all related trademarks
owned by the Company with substantially the terms set forth on ANNEX F attached
hereto, (g) a mutually satisfactory one-year license agreement relating to the
use by the Company of the Opryland Duplicating Services with mandolin design
mark and other license agreements as deemed necessary after the Time of
Distribution, with substantially the terms set forth on ANNEX G attached hereto,
(h) a mutually satisfactory perpetual license agreement relating to the use by
the Company of certain software owned by New Gaylord, with substantially the
terms set forth on ANNEX H attached hereto and (i) one or more mutually
satisfactory five-year transition services agreements relating to the services
set forth on ANNEXES I AND J with substantially the terms set forth thereon.
Each of the Company and New Gaylord agree that the annual fair market values of
the rights and benefits to be received pursuant to the Annexes and provisions
referred to in this Section 5.1 by the Retained Companies, on the one hand, and
the New Gaylord Companies, on the other hand, are intended to be equal.
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5.2 Use of "Gaylord" and "Opryland" Names. From and after the
Effective Time, New Gaylord shall have all rights in and use of the name
"Gaylord" and all derivatives thereof and, except as contemplated by Annex G to
this Distribution Agreement, the name "Opryland" and all derivatives thereof. As
a result, after completion of the Restructuring, the Company shall take or cause
to be taken all action necessary to (a) change, immediately prior to the Time of
Distribution, the name of any of the Retained Companies (other than the Company)
to eliminate therefrom the names "Gaylord" and "Opryland" and all respective
derivatives thereof and (b) promptly deliver to New Gaylord all stationery,
business cards, brochures and other documents (collectively, "Business
Stationery"), including, without limitation, invoices and purchase orders,
bearing the name "Gaylord" and all derivatives thereof and, except as
contemplated by Annex G to this Distribution Agreement, the name "Opryland" and
all derivatives thereof; provided, however, that the Company shall not be
required to deliver to New Gaylord any Business Stationery that also contains
the name of any of the Retained Businesses or any derivative thereof, until
three (3) months following the Effective Time. Within three (3) months following
the Effective Time, the Company shall cause to be removed from display from all
of its facilities all demountable displays which contain the names "Gaylord" or
"Opryland" and all respective derivatives thereof or any corporate symbol
related thereto and shall cause the removal of all signs displaying such name
and all derivatives thereof.
5.3 Books and Records. Prior to or as promptly as practicable
after completion of the Restructuring, the Company shall deliver to New Gaylord
all corporate books and records of the New Gaylord Companies in the possession
of the Retained Companies and the relevant portions (or copies thereof) of all
corporate books and records of the Retained Companies relating directly and
primarily to the New Gaylord Companies, the Entertainment Business or the
Assumed Liabilities, including, in each case, all active agreements, active
litigation files and government filings. From and after the completion of the
Restructuring, all such books, records and copies shall be the property of New
Gaylord. The Company may retain copies of all such corporate books and records.
Prior to or as promptly as practicable after the completion of the
Restructuring, New Gaylord shall deliver to the Company all corporate books and
records of the Retained Companies in the possession of any of the New Gaylord
Companies and relevant portions (or copies thereof) of all corporate books and
records of the New Gaylord Companies relating directly and primarily to the
Retained Companies, the Retained Business or the Retained Liabilities,
including, in each case, all active agreements, active litigation files and
government filings. From and after the completion of the Restructuring, all such
books, records and copies shall be the property of the Company. New Gaylord may
retain copies of all such corporate books and records.
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5.4 Access. From and after the Time of Distribution, each of
the Company and New Gaylord shall afford to the other and to the other's
Representatives reasonable access and duplicating rights (at the requesting
party's expense), during normal business hours and upon reasonable advance
notice, to all information within the possession or control of any of the
Retained Companies or any of the New Gaylord Companies, as the case may be, to
the extent relating to the business, assets or Liabilities of the other as they
existed prior to the completion of the Restructuring or to the extent relating
to or arising in connection with the relationship between any of the Retained
Companies or the New Gaylord Companies, as the case may be, prior to the
Restructuring insofar as such access is reasonably required for a reasonable
purpose. Without limiting the foregoing, information may be requested under this
Section 5.4 for audit, accounting, claims, litigation and tax purposes, as well
as for purposes of fulfilling disclosure and reporting obligations.
5.5 Retention of Records. Except as provided in any of the
Transaction Agreements, if any information relating to the businesses, assets or
Liabilities of a Retained Company or a New Gaylord Company is retained by a New
Gaylord Company or Retained Company, respectively, each of the Company and New
Gaylord shall, and shall cause the other Retained Companies and New Gaylord
Companies, respectively, to, retain all such information in the Retained
Companies' or New Gaylord Companies' possession or under its control until such
information is at least ten years old except that if, prior to the expiration of
such period, any Retained Company or New Gaylord Company wishes to destroy or
dispose of any such information that is at least three years old, prior to
destroying or disposing of any of such information, (a) the Company or New
Gaylord, on behalf of the Retained Company or the New Gaylord Company that is
proposing to dispose of or destroy any such information, shall provide no less
than 45 days' prior written notice to the other party, specifying the
information proposed to be destroyed or disposed of, and (b) if, prior to the
scheduled date of such destruction or disposal, the other party requests in
writing that any of the information proposed to be destroyed or disposed of be
delivered to such other party, the Company or New Gaylord, as applicable,
promptly shall arrange for the delivery of the requested information to a
location specified by, and at the expense of, the requesting party.
5.6 Confidentiality.
(a) Each party hereto shall keep, and shall
cause its Representatives to keep, the other party's Information strictly
confidential and will disclose such Information only to such of its
Representatives who need to know such Information and who agree to be bound by
this Section 5.6 and not to disclose such
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Information to any other Person. Without the prior written consent of the other
party, each party and its Representatives shall not disclose the other party's
Information to any Person or entity except as may be required by law or judicial
process and in accordance with this Section 5.6.
(b) In the event that either party or any of its
Representatives receives a request or is required by law or judicial process to
disclose to a court or other tribunal all or any part of the other party's
Information, the receiving party or its Representatives shall promptly notify
the other party of the request in writing, and consult with and assist the other
party in seeking a protective order or request for other appropriate remedy. In
the event that such protective order or other remedy is not obtained or the
other party waives compliance with the terms hereof, such receiving party or its
Representatives, as the case may be, shall disclose only that portion of the
Information or facts which, in the written opinion of the receiving party's
outside counsel, is legally required to be disclosed, and will exercise its
respective reasonable best efforts to assure that confidential treatment will be
accorded such Information or facts by the Persons or entities receiving the
same. The providing party will be given an opportunity to review the Information
or facts prior to disclosure.
5.7 Listing on NYSE. New Gaylord shall use its reasonable best
efforts to list the shares of New Gaylord Common Stock to be issued pursuant to
the Company Distribution on the NYSE, subject to official notice of issuance, or
to have such shares designated as a national market system security on the
interdealer quotation system by the National Association of Securities Dealers,
Inc.
5.8 Further Assurances. The parties agree that if, after the
Time of Distribution, either party holds assets which by the terms hereof or of
the Merger Agreement were intended to be assigned and transferred to, or
retained by, the other party, such party shall, at its expense, promptly assign
and transfer or cause to be assigned and transferred such assets to the other
party, and the parties agree that the transferring party will hold such assets
as trustee of the transferee party and all income and risk of loss of the
transferred assets to the Time of Distribution shall be for the account of the
intended owner. Each of the parties hereto, at its own cost and expense,
promptly shall execute such documents and other instruments and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and to consummate the transactions contemplated hereby.
5.9 Cooperation. The parties shall cooperate with each other
in all reasonable respects to ensure (a) that the Restructuring and the
assumption of the
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Retained Liabilities ( to the extent necessary) and the Assumed Liabilities are
consummated in accordance with the terms hereof, (b) the retention by the
Company of the Retained Business, including, without limitation, allocating
rights and obligations under Contracts, if any, of the Retained Companies or the
New Gaylord Companies that relate to the Retained Business, and (c) the
retention by New Gaylord of the Entertainment Business, including, without
limitation, allocating rights and obligations under Contracts, if any, of the
New Gaylord Companies or the Retained Companies that relate to the Entertainment
Business.
ARTICLE VI
RELEASES
6.1 Mutual Release. Effective as of the Time of Distribution
and except as otherwise specifically set forth in the Transaction Agreements,
each of the Company, on the one hand, and New Gaylord, on the other hand,
releases and forever discharges the other and its affiliates, and its and their
directors, officers, employees and agents of and from all debts, demands,
actions, causes of action, suits, accounts, covenants, contracts, agreements,
damages, and any and all claims, demands and Liabilities whatsoever of every
name and nature, both in law and in equity, against such other party or any of
its assigns, which the releasing party has or ever had, which arise out of or
relate to events, circumstances or actions taken by such other party prior to
the Time of Distribution; provided, however, that the foregoing general release
shall not apply to this Distribution Agreement, the Merger Agreement, the
Post-Closing Covenants Agreement or the Tax Disaffiliation Agreement or the
transactions contemplated hereby or thereby and shall not affect either party's
right to enforce this Distribution Agreement or any other agreement contemplated
hereby or thereby in accordance with its terms. Each party understands and
agrees that, except as otherwise specifically provided herein or in the Merger
Agreement, the Post- Closing Covenants Agreement or the Tax Disaffiliation
Agreement, neither the other party nor any of its Subsidiaries is, in this
Distribution Agreement or any other agreement or document, representing or
warranting to such party in any way as to the assets, business or Liabilities
transferred or assumed as contemplated hereby or thereby or as to any consents
or approvals required in connection with the consummation of the transactions
contemplated by this Distribution Agreement, the Merger Agreement, the
Post-Closing Covenants Agreement or the Tax Disaffiliation Agreement.
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ARTICLE VII
EMPLOYEE MATTERS
7.1 Employees. Effective as of the Time of Distribution, (a)
Retained Employees shall remain or become employees of the Retained Companies in
the same capacities as then held by such employees (or in such other capacities
and upon such terms and conditions as the Company shall determine in its sole
discretion) and (b) New Gaylord Employees shall remain or become employees of
the New Gaylord Companies in the same capacities as then held by such employees
(or in such other capacities and upon such terms and conditions as New Gaylord
shall determine in its sole discretion). Nothing contained in this Section 7.1
shall confer on any Retained Employee or any New Gaylord Employee any right to
continued employment after the Time of Distribution, and such employees shall
continue to be employed "at-will".
7.2 Other Liabilities and Obligations. Effective as of the
Time of Distribution, New Gaylord shall assume and be solely responsible for (i)
all liabilities and obligations related to the New Gaylord Employees and (ii)
except as specifically provided in this Article VII and except to the extent
otherwise provided in this Distribution Agreement, the Merger Agreement or the
Post-Closing Covenants Agreement, all liabilities and obligations related to the
Retained Employees that were incurred on or before the Time of Distribution.
Effective as of the Time of Distribution, the Company shall assume and be solely
responsible for (i) all liabilities and obligations related to the Retained
Employees incurred after the Time of Distribution, (ii) all holiday, vacation
and sick day benefits of the Retained Employees accrued as of the Time of
Distribution to the extent reflected on the Closing Balance Sheet and (iii) all
other liabilities, including without limitation for worker's compensation and
medical benefits, to the extent reflected as a Current Liability on the Closing
Balance Sheet (as those terms are defined in the Post-Closing Covenants
Agreement). For purposes of this Section 7.2, a liability is "incurred" on
either the date the event giving rise to the liability occurs or, if the
liability is related to more than one event, the date the first event to which
the liability relates occurs. Notwithstanding the foregoing, (i) New Gaylord
shall assume all liabilities and obligations related to Retained Employees who
also perform services for the New Gaylord Companies with respect to whom New
Gaylord continues to employ in accordance with Section 6.15(d) of the Merger
Agreement and (ii) the Company shall have no obligation or liability (including
severance liability) thereto. Notwithstanding the foregoing, deferred directors'
fees shall be the sole responsibility of New Gaylord.
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7.3 Employee Benefits. Without limiting the generality of
Section 7.2 above:
(a) Effective as of the Time of Distribution,
New Gaylord shall assume sponsorship of the Retirement Plan for Employees of New
Gaylord and Affiliated and Adopting Corporations (the "New Gaylord Pension
Plan") and the trust related thereto. As of the Time of Distribution, Retained
Employees shall cease to participate in the New Gaylord Pension Plan and shall
be fully vested in their benefits accrued thereunder as of the Time of
Distribution, and the accrued benefits of Retained Employees shall be maintained
under the New Gaylord Pension Plan until distributed in accordance with the
terms of the New Gaylord Pension Plan.
(b) Effective as of the Time of Distribution,
New Gaylord shall assume sponsorship of the GEC 401(k) Savings Plan (the "New
Gaylord Savings Plan") and the trust related thereto. As of the Time of
Distribution, Retained Employees shall cease to participate in the New Gaylord
Saving Plan, and shall be fully vested in their account balances thereunder as
of the Time of Distribution, and the account balances of Retained Employees
shall be maintained under the New Gaylord Savings Plan until distributed in
accordance with the terms of the New Gaylord Savings Plan.
(c) Effective as of the Time of Distribution,
New Gaylord shall assume sponsorship of the employee welfare benefit plans (as
such term is defined in ERISA) maintained or sponsored by the Company
immediately prior to the Time of Distribution ("New Gaylord Welfare Plans"). As
of the Time of Distribution, Retained Employees shall cease to participate in
the New Gaylord Welfare Plans and, unless allowed to participate in Parent (or
any of its Subsidiaries) welfare plans, shall commence to participate in welfare
benefit plans of the Company (the "Replacement Welfare Plans"). The Company
will, or shall use its best efforts to cause Parent (or any of its Subsidiaries)
to, (i) waive all limitations as to pre-existing condition exclusions and
waiting periods with respect to participation and coverage requirements
applicable to Retained Employees under the Replacement Welfare Plans, other than
limitations or waiting periods that were in effect with respect to such
employees under the New Gaylord Welfare Plans and that have not been satisfied
as of the Time of Distribution, and (ii) provide each Retained Employee with
credit for any co-payments and deductibles paid prior to the Time of
Distribution in satisfying any deductible or out-of-pocket requirements under
the Replacement Welfare Plans. Effective as of the Time of Distribution, New
Gaylord shall assume sponsorship of the Company VEBA.
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(d) Effective as of the Time of Distribution, with
respect to those collective bargaining agreements to which any of the Retained
Companies or the New Gaylord Companies is a party and which cover New Gaylord
Employees, New Gaylord shall assume liabilities and obligations of the Retained
Companies and the New Gaylord Companies thereunder, to the extent that such
liabilities and obligations relate to New Gaylord Employees and the
Entertainment Business.
(e) Effective as of the Time of Distribution, New
Gaylord will assume sponsorship of the Company's Opryland USA, Inc. Supplemental
Deferred Compensation Plan ("SUDCOMP Plan"), NLT Supplemental Executive
Retirement Plan, GEC Benefit Restoration Plan and the GEC Supplemental Executive
Retirement Plan (collectively, the "Nonqualified Plans"). As of the time of
Distribution, Retained Employees shall cease to participate in the Nonqualified
Plans and shall be fully vested in their benefits accrued thereunder or account
balances thereunder, as applicable, as of the Time of Distribution.
7.4 Preservation of Rights to Amend or Terminate Plans. Except
as otherwise provided in the Merger Agreement or this Distribution Agreement, no
provision of this Distribution Agreement shall be construed as a limitation on
the right of the Company or New Gaylord to amend or terminate any employee
benefit plan, policy, or other perquisite of employment (hereinafter, "Employee
Benefit") which right the Company or New Gaylord would otherwise have under the
terms of such Employee Benefit, and no provision of this Distribution Agreement
shall be construed to create a right in any employee or beneficiary of such
Employee Benefit that such employee or beneficiary would not otherwise have
under the terms of the plan or policy governing the Employee Benefit itself.
7.5 Reimbursement; Indemnification. New Gaylord and the
Company acknowledge that the Company, on the one hand, and New Gaylord, on the
other hand, may incur costs and expenses (including, without limitation,
contributions to plans and the payment of insurance, or other similar premiums)
pursuant to any of the employee benefit or compensation plans, programs or
arrangements which are, as set forth in this Distribution Agreement, the
responsibility of the other party. Accordingly, the Company and New Gaylord
agree to reimburse each other, as soon as practicable but in any event within 30
days of receipt from the other party of appropriate verification, for all such
costs and expenses. All liabilities retained, assumed or indemnified by New
Gaylord pursuant to this Article VII shall in each case be deemed to be Assumed
Liabilities, and all liabilities retained, assumed or indemnified by the Company
pursuant to this Article VII shall in each case be deemed to be Retained
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Liabilities and, in each case, shall be subject to the indemnification
provisions set forth in Article II of the Post-Closing Covenants Agreement.
7.6 Employment, Consulting and Severance Agreements. Effective
as of the Time of Distribution, New Gaylord shall assume all liabilities and
obligations attributable to New Gaylord Employees under their respective
employment, consulting and severance agreements with the Retained Companies or
the New Gaylord Companies, as the same are in effect immediately prior to the
Time of Distribution subject to the rights of New Gaylord to alter such
agreements including, without limitation, the rights described in Sections 7.1
and 7.4 hereof except as otherwise provided in the Merger Agreement or this
Distribution Agreement. Effective as of the Time of Distribution, the Company
shall retain all liabilities and obligations attributable to Retained Employees
under their respective employment, consulting and severance agreements with the
Retained Companies or the New Gaylord Companies to the extent disclosed in Annex
L attached hereto ("Listed Agreements"), as the same are in effect immediately
prior to the Time of Distribution subject to the rights of the Company to alter
such agreements including, without limitation, the rights described in Sections
7.1 and 7.4 hereof except as otherwise provided in the Merger Agreement or this
Distribution Agreement. The Company and New Gaylord agree that the transactions
contemplated by this Distribution Agreement shall not constitute severance of
employment of any Retained Employee or any New Gaylord Employee.
7.7 Equity Awards. Prior to the Time of Distribution, the
Company shall amend the Company Stock Plans, make adjustments and take actions
(and New Gaylord shall take such actions as are reasonably required to implement
the same) with respect to the options, restricted stock and performance shares
which are outstanding immediately prior to the Time of Distribution to provide
that (i) effective immediately prior to the Time of Distribution all
restrictions with respect to restricted stock shall lapse and all performance
criteria with respect to performance shares shall be deemed satisfied as though
the "Company Performance Target" achieved was 150% pursuant to Exhibit A of the
restricted stock agreement evidencing the award of such performance shares, (ii)
any such options to acquire Company Common Stock which are held by New Gaylord
Employees shall become fully vested and exercisable and will be converted into
and represent options to acquire shares of New Gaylord Common Stock, under an
equity incentive plan to be established by New Gaylord, with such other
amendments and adjustments as are reasonable and appropriate, and (iii) the
terms and/or number of such options to acquire Company Common Stock which are
held by Retained Employees will be adjusted in accordance with the Merger
Agreement.
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7.8 Certain Amendments. Prior to the Time of Distribution, the
Company shall amend the Listed Agreements and take actions (and New Gaylord
shall take such actions as are reasonably required to implement the same) to
provide that "Change in Control" (as such term is used in such Listed
Agreements) shall include the Company Distribution.
7.9 Actions By New Gaylord. Any action required to be taken
under this Article VII may be taken by any member of the New Gaylord Companies.
ARTICLE VIII
CONDITIONS
The obligations of the Company and New Gaylord to consummate
the Company Distribution shall be subject to the fulfillment of each of the
following conditions:
8.1 New Gaylord Recapitalization. The New Gaylord
Recapitalization shall have been consummated in accordance with Section 2.2
hereof in all material respects.
8.2 Tax Disaffiliation Agreement. The Tax Disaffiliation
Agreement, in the form attached to the Merger Agreement as Annex B, shall have
been executed and delivered by each of the Company, New Gaylord and Parent.
8.3 Certain Transactions. The Restructuring shall have been
consummated in accordance with Article IV in all material respects.
8.4 Conditions to Merger Satisfied. Each condition to the
closing of the Merger set forth in Article VII of the Merger Agreement, other
than (i) the condition to each party's obligations set forth in Section 7.01(f)
thereof as to the consummation of the transactions contemplated by this
Distribution Agreement and (ii) the condition to Parent's obligation set forth
in Section 7.02(e) thereof as to the satisfaction of conditions contained in the
Distribution Agreement shall have been satisfied or waived by the party for
whose benefit such provision exists.
8.5 Adequate Surplus. The Board of Directors of the Company
shall be reasonably satisfied that, after giving effect to the Restructuring,
(i) the Company will not be insolvent and will not have unreasonably small
capital with which to
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engage in its businesses and (ii) the Company's surplus will be sufficient to
permit, without violation of Section 170 of the DGCL, the Company Distribution.
ARTICLE IX
MISCELLANEOUS AND GENERAL
9.1 Modification or Amendment. The parties hereto may modify
or amend this Distribution Agreement by written agreement executed and delivered
by authorized officers of the respective parties.
9.2 Waiver; Remedies. The conditions to the Company's
obligation to consummate the Company Distribution are for the sole benefit of
the Company and may be waived in writing by the Company in whole or in part to
the extent permitted by applicable law. No delay on the part of any party hereto
in exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor will any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. Unless otherwise
provided, the rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies which the parties may otherwise have at law
or in equity.
9.3 Counterparts. For the convenience of the parties hereto,
this Distribution Agreement may be executed in separate counterparts, each such
counterpart being deemed to be an original instrument, and which counterparts
shall together constitute the same agreement.
9.4 Governing Law. This Distribution Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to its conflicts of law principles.
9.5 Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the other shall be in writing and
shall be deemed to have been duly given (i) on the date of delivery if delivered
by facsimile (upon confirmation of receipt) or personally, (ii) on the first
business day following the date of dispatch if delivered by Federal Express or
other next-day courier service, or (iii) on the third business day following the
date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall
29
<PAGE> 30
be delivered as set forth below, or pursuant to such other instructions as may
be designated in writing by the party to receive such notice:
If to the Company:
Gaylord Entertainment Company
Westinghouse Building
11 Stanwix Street
Pittsburgh, PA 15222-1384
Attn: Louis J. Briskman, Esq.
Facsimile: (412) 642-5224
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attn: Peter S. Wilson
Facsimile: (212) 474-3700
If to New Gaylord:
New Gaylord Entertainment Company
One Gaylord Drive
Nashville, Tennessee 37214
Attn: Frank M. Wentworth, Jr., Esq.
Facsimile: (615) 316-6060
with a copy to:
Skadden, Arps, Slate, Meagher & Flom (Delaware)
One Rodney Square
Wilmington, Delaware 19801
Attn: Richard L. Easton, Esq.
Facsimile: (302) 651-3001
9.6 Captions. All Article, Section and paragraph captions
herein are for convenience of reference only, do not constitute part of this
Distribution Agreement and shall not be deemed to limit or otherwise affect any
of the provisions hereof.
30
<PAGE> 31
9.7 Assignment. No party to this Distribution Agreement shall
convey, assign or otherwise transfer any of its rights or obligations under this
Distribution Agreement without the express written consent of the other party
hereto in its sole and absolute discretion, except that either party hereto may
assign any of its rights hereunder to a successor to all or any part of its
business or to any of its wholly owned Subsidiaries. Except as aforesaid, any
such conveyance, assignment or transfer without the express written consent of
the other party shall be void ab initio. No assignment of this Distribution
Agreement or any rights hereunder shall relieve the assigning party of its
obligations hereunder.
9.8 Third-Party Beneficiaries. Parent shall be a third-party
beneficiary of this Distribution Agreement. Nothing contained in this
Distribution Agreement is intended to confer upon any Person or entity other
than the parties hereto and their respective successors and permitted assigns
(other than Parent), any benefit, right or remedy under or by reason of this
Distribution Agreement, except that the provisions of Section 6.1 hereof shall
inure to the benefit of the Persons referred to therein.
9.9 Certain Obligations. Whenever this Distribution Agreement
requires any of the Subsidiaries of any party to take any action, this
Distribution Agreement will be deemed to include an undertaking on the part of
such party to cause such Subsidiary to take such action.
9.10 Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and provisions
of this Distribution Agreement, the party or parties who are or are to be
thereby aggrieved shall have the right of specific performance and injunctive
relief giving effect to its or their rights under this Distribution Agreement,
in addition to any and all other rights and remedies at law or in equity, and
all such rights and remedies shall be cumulative. The parties agree that the
remedies at law for any breach or threatened breach, including monetary damages,
are inadequate compensation for any loss and that any defense in any action for
specific performance that a remedy at law would be adequate is waived.
9.11 Severability. If any provision of this Distribution
Agreement or the application thereof to any Person or circumstance is determined
by a court of competent jurisdiction to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof or the application of such provision to any other Persons or
circumstances. In the event that the terms and conditions of this Distribution
Agreement are materially altered as a result of this
31
<PAGE> 32
Section, the parties shall negotiate in good faith to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.
9.12 Entire Agreement. The Transaction Agreements (including
the documents and the instruments referred to herein and in the Merger
Agreement, the Annexes hereto and to the Merger Agreement, the Parent Disclosure
Schedule and the Company Disclosure Schedule), and the Confidentiality Agreement
(as defined in the Merger Agreement) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
9.13 Jurisdiction. Each of the Company and New Gaylord hereby
(i) consents to be subject to the jurisdiction of the United States District
Court for the District of Delaware and the jurisdiction of the courts of the
State of Delaware in any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Distribution Agreement or the transactions contemplated hereby, (ii) agrees that
it will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that it will not bring
any action relating to this Distribution Agreement or the transactions
contemplated hereby in any court other than the United States District Court for
the District of Delaware or the courts of the State of Delaware, (iv)
irrevocably waives (x) any objection that it may have or hereafter have to the
changing of venue of any such suit, action or proceeding in such court and (y)
any claim that any such suit, action or proceeding in any such court has been
brought in an inconvenient forum and (v) irrevocably consents to the service of
any and all process in any such suit, action or proceeding by the delivery of
such process to such party at the address and in the manner provided in Section
9.5 hereof.
[SIGNATURE PAGE FOLLOWS]
32
<PAGE> 33
IN WITNESS WHEREOF, this Distribution Agreement has been duly
executed and delivered by the duly authorized officers of the parties hereto as
of the date first hereinabove written.
GAYLORD ENTERTAINMENT COMPANY
By: /s/ Terry E. London
---------------------------------
Terry E. London
President and Chief Executive Officer
NEW GAYLORD ENTERTAINMENT COMPANY
By: /s/ Carl Kornmeyer
---------------------------------
Carl Kornmeyer
Vice President and President-
Communications Group
33
<PAGE> 1
EXHIBIT 10.2
================================================================================
POST-CLOSING COVENANTS AGREEMENT
dated as of September 30, 1997,
among
WESTINGHOUSE ELECTRIC CORPORATION,
GAYLORD ENTERTAINMENT COMPANY,
NEW GAYLORD ENTERTAINMENT COMPANY
and
THE SUBSIDIARIES OF NEW GAYLORD ENTERTAINMENT COMPANY
LISTED ON SCHEDULE A ATTACHED HERETO
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions
<S> <C> <C>
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Indemnification
SECTION 2.01. Indemnification by New Gaylord
Indemnitors . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02. Indemnification by Parent . . . . . . . . . . . . . 4
SECTION 2.03. Procedures Relating to
Indemnification . . . . . . . . . . . . . . . . . 5
SECTION 2.04. Certain Limitations . . . . . . . . . . . . . . . . 7
SECTION 2.05. Limitation on the New Gaylord
Indemnitors' Indemnification
Obligation under Section 2.01(iv) . . . . . . . . 8
SECTION 2.06. Exclusivity of Tax Disaffiliation
Agreement . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III
Other Agreements
SECTION 3.01. Insurance . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02. Expenses . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03. Characterization of Payments . . . . . . . . . . . 10
SECTION 3.04. Agreement Not to Compete . . . . . . . . . . . . . 10
SECTION 3.05. Working Capital Adjustment . . . . . . . . . . . . 11
SECTION 3.06. Successors . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.07. Third Party Rights . . . . . . . . . . . . . . . . 15
SECTION 3.08. Joint Defense and Confidentiality
Agreement . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
Miscellaneous and General
SECTION 4.01 Effectiveness; Modification or
Amendment . . . . . . . . . . . . . . . . . . . 16
</TABLE>
i
<PAGE> 3
ii
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 4.02. Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.03. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 4.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.06. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.07. Certain Obligations. . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.09. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.10. Severability . . . . . . , . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.11. No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . 19
SECTION 4.12. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Schedule A -- Subsidiaries of New Gaylord
Annex A -- Joint Defense and Confidentiality Agreement
</TABLE>
ii
<PAGE> 4
POST-CLOSING COVENANTS AGREEMENT dated as of September
30, 1997, among WESTINGHOUSE ELECTRIC CORPORATION, a
Pennsylvania corporation ("Parent"), GAYLORD ENTERTAINMENT
COMPANY, a Delaware corporation (the "Company"), NEW GAYLORD
ENTERTAINMENT COMPANY, a Delaware corporation and a wholly
owned subsidiary of the Company ("New Gaylord"), and THE
SUBSIDIARIES OF NEW GAYLORD LISTED ON SCHEDULE A ATTACHED
HERETO (together with New Gaylord, collectively the "New
Gaylord Indemnitors").
WHEREAS, Parent, G Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Parent ("Sub"), and the COMPANY have entered into an
Agreement and Plan of Merger dated as of February 9, 1997 (the "Merger
Agreement"), providing for the Merger (as defined in the Merger Agreement) of
Sub with and into the Company;
WHEREAS, the Board of Directors of the Company has approved an Agreement
and Plan of Distribution in the form of Annex A attached to the Merger Agreement
with such changes as may be made in accordance with Section 6.14 of the Merger
Agreement (the "Distribution Agreement"), which will be entered into prior to
the Effective Time (as defined in the Merger Agreement), pursuant to and subject
to the terms of which (a) the assets and businesses of the Company and its
subsidiaries (as defined in the Merger Agreement) will be restructured as a
result of which (i) all the assets of the Company and its subsidiaries, other
than the Retained Assets (as defined in the Merger Agreement), will be held by
New Gaylord or one or more of New Gaylord's subsidiaries and (ii) all the
liabilities of the Company and its subsidiaries, other than the Retained
Liabilities (as defined in the Merger Agreement), will be assumed by New Gaylord
or one or more of New Gaylord's subsidiaries, (b) New Gaylord will be
recapitalized in accordance with Article II of the Distribution Agreement and
(c) following such restructuring and recapitalization, the Company will
distribute (the "Company Distribution") to each holder of record of shares of
Class A Common Stock, $.01 par value, of the Company ("Company Class A Common
Stock") and Class Common Stock, $.01 par value, of the Company ("Company Class B
Common Stock" and, together with the Company Class A Common Stock, "Company
Common Stock") a number of shares of Common Stock, $.01 par value, of New
Gaylord equal to one-third of the number of shares of Company Common Stock held
by such holder;
<PAGE> 5
2
WHEREAS, the execution and delivery of this Agreement by the parties hereto
is a condition to the obligations of the parties to the Merger Agreement to
consummate the Merger;
WHEREAS, the execution and delivery of this Agreement by the parties hereto
is a condition to the obligations of the parties to the Distribution Agreement
to consummate the Company Distribution; and
WHEREAS, the parties to this Agreement have determined that it is necessary
and desirable to set forth certain agreements that will govern certain matters
that may arise following the Restructuring (as defined in the Merger Agreement),
the Company Distribution and the Merger.
NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned to such terms in the
Merger Agreement or, if not defined in the Merger Agreement, the Distribution
Agreement. As used in this Agreement, the following terms shall have the
following respective meanings:
"Filings" shall mean the Registration Statements, the Proxy
Statement-Prospectus and any other document filed or required to be filed with
the SEC in connection with the transactions contemplated by the Transaction
Agreements, or any preliminary or final form thereof or any amendment or
supplement thereto.
"New Gaylord Indemnities" shall mean New Gaylord, each Affiliate (as
defined in the Distribution Agreement) of New Gaylord, including any of its
direct or indirect subsidiaries, and each of their respective Representatives
and each of the heirs, executors, successors and assigns of any of the
foregoing.
"Indemnifiable Losses" shall mean, subject to Section 2.04, all losses,
liabilities, damages,
<PAGE> 6
3
deficiencies, obligations, fines, expenses, claims, demands, actions, suits,
proceedings, judgments or settlements, whether or not resulting from Third Party
Claims (as defined in Section 2.03(a)), including interest and penalties
recovered by a third party with respect thereto and out-of-pocket expenses and
reasonable attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of the Indemnitee's rights hereunder, suffered or incurred by an
Indemnitee.
"Indemnitee" shall mean any of the Parent Indemnities or the New Gaylord
Indemnities who or which may seek indemnification under this Agreement.
"Parent Indemnities" shall mean Parent, each Affiliate of Parent, including
any of its direct or indirect subsidiaries (including, after the Effective Time,
the Retained Companies), and each of their respective Representatives and each
of the heirs, executors, successors and assigns of any of the foregoing.
ARTICLE II
INDEMNIFICATION
SECTION 2.01. Indemnification by New Gaylord Indemnitors. Subject to the
provisions of this Article II, the New Gaylord Indemnitors shall jointly and
severally indemnify, defend and hold harmless the Parent Indemnities from and
against, and pay or reimburse the Parent Indemnities for, all Indemnifiable
Losses, as incurred:
(i) relating to or arising from the Entertainment Business, the
assets of the Entertainment Business or the Assumed Liabilities
(including the failure by New Gaylord or any New Gaylord Company to
pay, perform or otherwise discharge any of the Assumed Liabilities in
accordance with their terms), whether such Indemnifiable Losses relate
to or arise from events, occurrences, actions, omissions, facts or
circumstances occurring, existing or asserted before, at or after the
Effective Time;
(ii) relating to or arising from any untrue statement or alleged
untrue statement of a material fact contained in any of the Filings,
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
<PAGE> 7
4
statements therein, in light of the circumstances under which they
were made, not misleading; but only in each case with respect to
information provided by the Company relating to the Company or any of
its subsidiaries (including the Retained Subsidiaries) contained in or
omitted from the Filings;
(iii) relating to or arising from the breach by any New Gaylord
Company of any agreement or covenant contained in any Transaction
Agreement (other than the Tax Disaffiliation Agreement, the Ancillary
Agreements and the Stockholder Agreement) which by its express terms
is to be performed or complied with after the Effective Time; or
(iv) relating to or arising from any breach or inaccuracy of any
representation or warranty of the Company contained in the Merger
Agreement
SECTION 2.02. Indemnification on by Parent. Subject to the provisions of
this Article II, Parent shall indemnify, defend and hold harmless the New
Gaylord Indemnities from and against, and pay or reimburse the New Gaylord
Indemnities for, all Indemnifiable Losses, as incurred:
(i) subject to the provisions of Sections 2.01(iv), relating to
or arising from the Retained Business, the Retained Assets or the
Retained Liabilities (including the failure by any Retained Company to
pay, perform or otherwise discharge any of the Retained Liabilities in
accordance with their terms), whether such Indemnifiable Losses
relate to or arise from events, occurrences, actions, omissions,
facts of circumstances occurring, existing or asserted before, at or
after the Effective Time;
(ii) relating to or arising from any untrue statement or alleged
untrue statement of a material fact contained in any of the Filings,
or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statemetns
therein, in light of the circumstances under which they were made, not
misleading; but only in each case with respect to information provided
by Parent relating to Parent or any of its subsidiaries other than the
Retained Companies contained in or omitted from the Filings; or
<PAGE> 8
5
(iii) relating to or arising from the breach by Parent or any
Retained Company of any agreement or covenant contained in any
Transaction Agreement (other than the Tax Disaffiliation Agreement,
the Ancillary Agreements and the Stockholder Agreement) which by its
express terms is to be performed or complied with after the Effective
Time.
SECTION 2.03. Procedures Relating to Indemnification. (a) In order for an
Indemnitee to be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim made by any Person
who is not an Indemnitee against the Indemnitee (a "Third Party Claim"), such
Indemnitee must notify the party who may become obligated to provide
indemnification hereunder (the "indemnifying party") in writing, and in
reasonable detail, of the Third Party Claim reasonably promptly, and in any
event within 20 business days after receipt by such Indemnitee of written notice
of the Third Party Claim; provided, however, that failure to give such
notification shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure; provided further, however, that with respect to any
matter for which any New Gaylord Indemnitor is the indemnifying party, such New
Gaylord Indemnitor shall be deemed to have received notice with respect to all
matters by or against any Retained Company that arose prior to, or were
otherwise pending at, the Effective Time. After any required notification (if
applicable), the Indemnitee shall deliver to the indemnifying party, promptly
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an Indemnitee, the indemnifying
party will be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof (at the expense of the indemnifying
party) with counsel selected by the indemnifiying party and reasonably
satisfactory to the Indemnitee. Should the indemnifying party so elect to assume
the defense of a Third Party Claim, the indemnifying party will not be liable to
the Indemnitee for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. If the indemnifying party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the indemnifying party, it being understood that
<PAGE> 9
the indemnifying party shall control such defense. The indemnifying party
shall be liable for the fees and expenses of counsel employed by the Indemnitee
for any period during which the indemnifying party has not assumed the defense
thereof (other than during any period in which the Indemnitee shall have failed
to give notice of the Third Party Claim as provided above). Notwithstanding the
foregoing, the indemnifying party shall not be entitled to assume the defense of
any Third Party Claim (and shall be liable for the fees and expenses of counsel
incurred by the Indemnitee in defending such Third Party Claim) if the Third
Party Claim seeks an order, injunction or other equitable relief or relief for
other than money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its outside counsel, cannot be separated from
any related claim for money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from that for money
damages, the indemnifying party shall be entitled to assume the defense of the
portion relating to money damages. The indemnification required by Section 2.01
or 2.02, as the case may be, shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills
are received or the indemnifiable Loss is incurred. If the indemnifying party
chooses to defend or prosecute a Third Party Claim, all the parties hereto shall
cooperate in the defense or prosecution thereof, which cooperation shall include
the retention in accordance with the Distribution Agreement and (upon the
indemnifying party's request) the provision to the indemnifying party of records
and information which are reasonably relevant to such Third Party Claim, and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. It the
indemnifying party chooses to defend or prosecute any Third Party Claim, the
Indemnitee will agree to any settlement, compromise or discharge of such Third
Party Claim which the indemnifying party may recommend and which by its terms
obligates the indemnifying party to pay the full amount of liability in
connection with such Third Party Claim; provided, however, that, without the
Indemnitee's consent, the indemnifying party shall not consent to entry of any
judgment or enter into any settlement (x) that provides for injunctive or other
nonmonetary relief affecting the Indemnitee or (y) that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to such
Indemnitee of a release from all liability with respect to such claim. If the
indemnifying party shall have assumed the defense of a Third Party Claim, the
Indemnitee shall not admit any
<PAGE> 10
7
liability with respect to, or settle, compromise or discharge, such Third Party
Claim without the indemnifying party's prior written consent (which consent
shall not be unreasonably withheld).
(c) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of a claim that does not involve a
Third Party Claim, the Indemnitee shall deliver notice of such claim (in
reasonably sufficient detail to enable the indemnifying party to evaluate such
claim) with reasonable promptness to the indemnifying party. The failure by any
Indemnitee so to notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may have to such Indemnitee under
this Agreement, except to the extent that the indemnifying party shall have been
actually prejudiced by such failure. If the indemnifying party does not notify
the Indemnitee within 20 calendar days following its receipt of such notice that
the indemnifying party disputes its liability with respect to such claim under
Section 2.01 or 2.02, as the case may be, the claim shall be conclusively deemed
a liability of the indemnifying party under Section 2.01 or 2.02, as the case
may be, and the indemnifying party shall pay the amount of such liability to the
Indemnitee on demand or, in the case of any notice in which the amount of the
claim (or any portion thereof) is estimated, on such later date when the amount
of such claim (or such portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect to such claim,
as provided above, the indemnifying party and the Indemnitee shall proceed in
good faith to negotiate a resolution of such dispute and, if not resolved
through negotiations, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
(d) The parties hereto agree that New Gaylord shall be the representative
of the other New Gaylord Indemnitors for all purposes of this Section 2.03, and
as such all deliveries, notices and other communications made or delivered to
New Gaylord shall also be deemed to have been made or delivered to the other New
Gaylord Indemnitors, and all elections, selections of counsel, choices,
agreements and consents made or delivered by New Gaylord shall be deemed to have
also been made or delivered by the other applicable New Gaylord Indemnitors, and
shall be binding thereon. Notwithstanding the foregoing, the parties hereto
agree that nothing contained in this Section 2.03(d) shall in any manner affect,
limit or impair the rights of
<PAGE> 11
8
the Parent Indemnitees to indemnification from any New Gaylord Indemnitor
pursuant to Section 2.01.
SECTION 2.04. Certain Limitations. (a) The amount of any Indemnifiable
Losses or other liability for which indemnification is provided under this
Agreement or any other amounts payable or reimbursable by one party to another
under this Agreement shall be net of any amounts actually recovered by the
Indemnitee from third parties (including, without limitation, amounts actually
recovered under insurance policies) with respect to such Indemnifiable Losses or
other liability or amounts.
(b) All indemnification payments under this Agreement shall be determined
on a pre-tax basis, i.e., without regard to the tax consequences to the
Indemnitee of making a payment that is indemnified by another party under this
Agreement or of receiving a payment under this Agreement as indemnification
therefor.
SECTION 2.05. Limitation on the New Gaylord Indemnitors' Indemnification
Obligation Section 2.01(iv) (a) The New Gaylord Indemnitors shall not have any
liability under Section 2.01(iv) unless the aggregate of all Indemnifiable
Losses for which the New Gaylord Indemnitors would, but for this Section 2.05,
be liable under Section 2.0l(iv) exceed on a cumulative pre-tax basis an amount
equal to $8,250,000.
(b) The parties hereto agree that the more failure to list a Contract on
the Company Disclosure Schedule shall not in and of itself constitute an
Indemnifiable Loss. The parties hereto further agree that the foregoing shall in
no way limit or impair any right of any Parent Indemnitee to indemnification
under Section 2.01 or to recover any Indemnifiable Loss arising out of or
otherwise related to any such Contract or the terms thereof, when considered
individually or together with the terms of any other Contract, including with
respect to any revenues that may be lower than otherwise reasonably anticipated
by Parent, any expenses that may be higher than otherwise reasonably anticipated
by Parent or any other Indemnifiable Loss whatsoever resulting from such
Contract or its terms. The parties hereto further agree that this paragraph is
not in any way intended to impose any different or more stringent burden of
proof on any Parent Indemnitee in asserting or enforcing any right than that
which may have existed in the absence of the foregoing.
<PAGE> 12
9
SECTION 2.06. Exclusivity of Tax Disaffiliation Agreement. Notwithstanding
anything in this Agreement to the contrary, the Tax Disaffiliation Agreement
shall be the exclusive agreement among the parties with respect to all Tax
matters, including indemnification in respect of Tax matters.
ARTICLE III
OTHER AGREEMENTS
SECTION 3.01. Insurance. In the event that prior to the Effective Time any
Retained Asset suffers any damage, destruction or other casualty loss, New
Gaylord shall, or shall cause a New Gaylord Subsidiary to, surrender to Parent
(i) all insurance proceeds received with respect to such damage, destruction or
loss and (ii) all rights of the New Gaylord Companies with respect to any causes
of action, whether or not litigation has commenced as of the Effective Time, in
connection with such damage, destruction or loss. New Gaylord shall, and shall
cause each New Gaylord Subsidiary to, make available to the Retained Companies
the benefit of any workers' compensation, general liability, product liability'
automobile liability, umbrella (excess) liability or crime or other insurance
policy covering the Company or any of its subsidiaries (including the Retained
Subsidiaries) and relating to the Retained Business with respect to insured
events or occurrences prior to the Effective Time (whether or not claims
relating to such events or occurrences are made prior to or after the Effective
Time); provided, however, that (i) all of New Gaylord's costs and expenses
incurred in connection with the foregoing are promptly paid by Parent and (ii)
such benefit shall be subject to (and recovery thereon shall be reduced by the
amount of) any applicable deductibles and co-payments provisions or any payment
or reimbursement obligations of New Gaylord or any of its subsidiaries or
Affiliates in respect thereof. The New Gaylord Companies shall promptly pay to
Parent all insurance proceeds relating to the Retained Business received by any
Hew Gaylord Company under any insurance policy.
SECTION 3.02. Expenses. Except as otherwise expressly provided in the
Transaction Agreements, New Gaylord (and not the Company) shall be responsible
for and agrees to pay all expenses of the Company and its subsidiaries directly
related to the Restructuring, the Company Distribution and the Merger.
<PAGE> 13
10
SECTION 3.03. Characterization of Payments. The payments made pursuant to
this Agreement shall be treated as occurring immediately before the Company
Distribution, and none of the New Gaylord Companies, the Retained Companies and
Parent and its subsidiaries shall take any position inconsistent with such
treatment before any Taxing Authority, except to the extent that a Final
Determination (as defined in the Tax Disaffiliation Agreement) with respect to
the recipient party causes any such payment to not be so treated.
SECTION 3.04. Agreement Not to Compete. (a) New Gaylord understands that
Parent shall be entitled to protect and preserve the going concern value of the
Retained Business to the extent permitted by law and that Parent would not have
entered into the Merger Agreement absent the provisions of this Section 3.04.
Therefore, New Gaylord agrees that, commencing at the Effective Time and
continuing for a period of 5 years thereafter, it shall not, and shall not
permit any of its subsidiaries to, engage in, directly or indirectly, alone or
in association with any other person, the business of (i) owning or operating
retail stores with a motor sports theme other than those located in the Opryland
complex, (ii) owning or operating a Cable Network (as defined below) featuring
country music videos and/or a significant amount of musical, sports (including,
but not limited to, motor sports and outdoor sports), variety or other
entertainment features or series the theme of which is perceived by the viewing
public as being, or related to, that which is commonly known as "country
entertainment" programming (the "Theme"), or owning, sharing in the earnings of,
financing or investing in the capital stock of any person engaged in such
business or (iii) providing or otherwise making available for viewing on a Cable
Network or an over-the-air broadcast television station or network programming
featuring or related to the Theme (other than occasional (not regularly
scheduled) country music related specials for viewing on an over-the-air
broadcast television station or network), or owning, sharing in the earnings of,
financing or investing in the capital stock of any person engaged in such
business; provided, however, that nothing contained herein shall prohibit New
Gaylord or its subsidiaries from owning or operating the CMT International
network in any area outside of the United States and Canada; provided further,
however, that other than country music videos, the CMT International network's
programming will not primarily consist of programming featuring or related to
the Theme; provided further, however, that ownership for investment purposes
only of less than 5% of any class of voting stock of any
<PAGE> 14
11
publicly held corporation shall not constitute a violation hereof. In addition,
New Gaylord agrees that for a period of one year from the Effective Time it
shall not, and shall cause its subsidiaries not to, directly or indirectly, (i)
induce any Retained Employee to leave the employ of the Retained Companies, or
recommend to any other person that they employ or solicit for employment any
such employee, or (ii) knowingly hire any such employee, unless such employee is
no longer employed by the Retained Companies. As used herein, "Cable Network"
shall mean a television network making programming available for viewing by any
technology other than over-the-air broadcast (whether or not retransmitted via
cable), including, without limitation, cable television, MMDS, SMATV, DES, TVRO
and so-called "superstations".
(b) Parent understands that New Gaylord shall be entitled to protect and
preserve the going concern value of the CMT International network to the extent
permitted by law Therefore, Parent agrees that, commencing at the Effective Time
and continuing for a period of 5 years thereafter, it shall not, and shall not
permit any of its subsidiaries to, engage in, directly or indirectly, alone or
in association with any other person, the business of owning or operating a
Cable Network that is telecast outside of the United States and Canada and that
primarily features country music videos and occasional country music-related
specials; provided, however, that nothing contained herein shall prohibit Parent
or its subsidiaries from owning or operating for viewing outside of the United
States and Canada a Cable Network featuring the Theme or programming that is
otherwise of a type that is currently featured on the TNN network. Parent shall
not be deemed in breach of this Section 3.04(b) or of the license described in
Section 5.1(f) of the Distribution Agreement by virtue of Parent or any of its
subsidiaries having licensed or renewing the licenses of any current
distributors of CMTV in markets that ate outside the United States and Canada:
provided, however, that neither Parent nor any of its subsidiaries shall license
any additional distributors of CMTV in such markets.
SECTION 3.05. Working Capital Adjustment. (a) Within 90 days after the
Closing Date, Parent shall prepare and deliver to New Gaylord (i) an audited
combined balance sheet of the Retained Companies (the "Closing Balance Sheet"),
prepared from the books and records of the Retained Companies, certified by
Parent's independent auditors, and (ii) a statement (the "Closing Statement")
setting forth Working Capital (as defined below) as of the Effective Time
("Closing Working Capital"), together with a
<PAGE> 15
12
certificate of Parent's independent auditors that the Closing Statement has been
prepared in accordance with this Section 3.05.
During the 30 day period following New Gaylord's receipt of the Closing
Statement, New Gaylord and its independent auditors will be permitted to review
the working papers of Parent's independent auditors relating to the Closing
Balance Sheet and the Closing Statement. The Closing Statement shall become
final and binding upon the parties on the thirtieth day following receipt
thereof, unless New Gaylord gives written notice of its disagreement with the
Closing Statement ("Notice of Disagreement") to Parent prior to such date. Any
Notice of Disagreement shall (i) specify in reasonable detail the nature of any
disagreement so asserted, (ii) only include disagreements based on Closing
Working Capital not being calculated in accordance with this Section 3.05 and
(iii) be accompanied by a certificate of new Gaylord 's independent auditors
that they concur with each of the positions taken by New Gaylord in the Notice
of Disagreement. If a Notice of Disagreement is received by Parent in a timely
manner, then the Closing Statement (as revised in accordance with clauses (A) or
(B) below) shall become final on the earlier of (A) the date Parent and New
Gaylord resolve in writing any differences they have with respect to the matters
specified in the Notice of Disagreement or (B) the date any disputed matters are
finally resolved in writing by the Accounting Firm (as defined below).
During the 30 day period following delivery of a Notice of Disagreement,
Parent and New Gaylord shall seek in good faith to resolve in writing any
differences which they may have with respect to the matters specified in the
Notice of Disagreement. During such period Parent and its independent auditors
shall have access to the working papers relating to the Notice of Disagreement
At the end of such 30 day period (or such longer period as the parties may
agree), Parent and New Gaylord shall submit to an independent accounting firm
(the "Accounting Firm") for review and resolution any and all matters which
remain in dispute and which were properly included in the Notice of
Disagreement. The Accounting Firm shall be a nationally recognized independent
public accounting firm agreed upon by Parent and New Gaylord in writing. Parent
and New Gaylord shall jointly use all reasonable efforts to cause the Accounting
Firm to render a decision within 30 days following submission. Parent and New
Gaylord agree that judgment may be entered upon the determination of the
Accounting Firm in any court having jurisdiction over the
<PAGE> 16
13
party against which such determination is to be enforced. The cost of any
dispute resolution (including the fees and expenses of the Accounting Firm and
reasonable attorney fees and expenses of the parties) pursuant to this Section
3.05 shall be borne by Parent and New Gaylord in inverse proportion as they may
prevail on matters resolved by the Accounting Firm, which proportionate
allocations shall also be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered on the merits of the matters
submitted. The fees and disbursements of Parent's independent auditors in
connection with their review of any Notice of Disagreement shall be borne by
Parent, and the fees and disbursements of New Gaylord's independent auditors
incurred in connection with their review of the Closing Statement shall be borne
by New Gaylord.
(b) If, the Closing Working Capital is less than $53,798,000 (the "WC
Amount"), New Gaylord shall, and if the Closing Working Capital is greater than
the WC Amount, Parent shall, within 10 business days after the Closing Statement
becomes final and binding on the parties, make payment by wire transfer of
immediately available funds of the amount of such difference together with
interest thereon at the prime rate as reported in the Wall Street Journal on the
date the Closing Statement becomes final and binding on the parties, calculated
on the basis of the actual number of days elapsed divided by 365, from the date
of the Effective Time to the date of actual payment. Notwithstanding the
foregoing, in the event that New Gaylord gives a Notice of Disagreement to
Parent in accordance with this Section 3.05 and either Parent or New Gaylord
shall be required to make a payment to the other regardless of the resolution of
the items contained in the Notice of Disagreement, then Parent or New Gaylord,
as applicable, shall, within 10 business days of the receipt of the Notice of
Disagreement, make payment to the other by wire transfer of immediately
available funds of the lesser of the two amounts that may be owed by Parent or
New Gaylord, as applicable, pending resolution of the items contained in the
Notice of Disagreement together with interest thereon on at the prime rate as
reported in the Wall street Journal on the date of the Notice of Disagreement,
calculated as described above, and such payment shall be credited against the
payment required pursuant to the first sentence of this paragraph.
(c) The term "Working Capital" shall mean Current Assets minus Current
Liabilities (in each case as defined below). The WC Amount equals Working
Capital as set forth on the Retained Business Balance Sheet (as defined in the
<PAGE> 17
14
Merger Agreement) for December 31, 1996, provided to Parent by New Gaylord prior
to the execution of the Merger Agreement. The terms "Current Assets" and
"Current Liabilities" shall mean the current assets and current liabilities of
the Retained Business calculated in accordance with GAAP except that (i)
accruals for taxes shall be excluded, (ii) all programming assets shall be
treated as Current Assets and all programming liabilities shall be treated as
Current Liabilities (it being understood that programming assets shall be
amortized on a basis consistent with the method of amortization followed in the
Retained Business Financial Statements), (iii) one-third of any cash held by O&W
Corporation, Country Music Television Inc. and Outdoor Entertainment, Inc.
immediately prior to the Time of Distribution shall not be treated as a Current
Asset (it being understood that 100% of such cash will be a Retained Asset),
(iv) any Unspent Amount (as defined in Section 5.01(vii) of the Merger
Agreement) shall be treated as Current Liabilities, (v) any NASCAR Expenditures
(as defined in Section 5.01(vii)(B) of the Merger Agreement) shall be treated as
Current Assets, and (vi) purchase accounting adjustments shall not be made.
Notwithstanding the foregoing it is understood that cash was not included in the
calculation of the WC Amount. It is understood and agreed to by the parties
hereto that in the event that after the Effective Time any New Gaylord Company
receives checks, cash or other proceeds related to any assets on the Closing
Balance Sheet, then such New Gaylord Company shall promptly pay or deliver such
checks, cash or proceeds to the Company. It is further understood and agreed to
by the parties hereto that in the event that after the Effective Time any
Retained Company receives checks, cash or other proceeds related to any assets
of the Entertainment Business, then such Retained Company shall promptly pay or
deliver such checks, cash or other proceeds to New Gaylord. It is further
understood and agreed to by the parties hereto that in the event that prior to
the Effective Time checks were written by any of the Retained Companies that
were not presented for payment prior to the Effective Time, then either such
checks will be honored by the New Gaylord Companies or at the Effective Time the
Retained Companies will have sufficient cash to cover such checks. The scope of
the disputes to be resolved by the Accounting Firm is limited to whether the
Closing Statement was prepared in compliance with the requirements of this
Section 3.05, and the Accounting Firm is not to make any other determination.
(d) During the period of time from and after the delivery of the Closing
Statement to New Gaylord through the date the Closing Statement becomes final
and binding on the
<PAGE> 18
15
parties, Parent shall cause the Retained Companies to afford to New Gaylord and
any accountants, counsel or financial advisors retained by New Gaylord in
connection with the adjustment contemplated by this Section 3.05 reasonable
access during normal business hours to the Retained Companies' books and records
to the extent relevant to the adjustment contemplated by this Section 3.05.
SECTION 3.06. Successors. None of the New Gaylord Indemnitors shall
consolidate with or merge with or into, or sell, convey, transfer or lease, in
one transaction or a series of transactions, all or substantially all of its
assets to, any person, unless the resulting, surviving or transferee person (the
"Successor Company") shall expressly assume, by an instrument in form and
substance reasonably satisfactory to Parent, all the obligations of such New
Gaylord Indemnitor under this Agreement. The Successor Company shall be the
successor to such New Gaylord Indemnitor and shall succeed to, and be
substituted for, such New Gaylord Indemnitor under this Agreement, but, in the
:case of a sale, conveyance, transfer or lease, such New Gaylord Indemnitor
shall not be released from its obligations hereunder.
SECTION 3.07. Third Party Rights. In the event that after the Effective
Time any of the New Gaylord Companies holds any right to indemnification or any
other contractual or other right (collectively, a "Recourse Right") with respect
to any Retained Liability or any Assumed Liability for which any of the Retained
Companies are held responsible (including, without limitation, rights under the
Distribution Agreement dated as of October 30, l991 between the Company and The
Oklahoma Publishing Company relating to liabilities arising out of or related to
sites listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation, and Liability Act, including the
Hardage/Criner site, the Mosley Road Site and the Double Eagle Refining site),
then (i) to the extent possible such Recourse Right shall be deemed to be held
as a shared right of the applicable New Gaylord Companies and the applicable
Retained Companies to the extent necessary to protect the Retained Companies
against such Retained Liability, and (ii) to the extent not so possible, New
Gaylord shall, or shall cause a New Gaylord Company to, assert or otherwise make
available to the Retained Companies the full benefit of such Recourse Right by
making a claim on behalf of the Retained Companies or taking other steps
reasonably requested by the Retained Companies.
<PAGE> 19
16
SECTION 3.08. Joint Defense and Confidentiality Agreement. Prior to the
Effective Time, Parent and New Gaylord shall enter into the Joint Defense and
Confidentiality Agreement substantially in the form attached hereto as Annex A.
ARTICLE IV
MISCELLANEOUS AND GENERAL
SECTION 4.01. Effectiveness; Modification or Amendment. The parties
hereto agree that this Agreement will become effective at the Effective Time.
The parties hereto may modify or amend this Agreement only by written
agreement executed and delivered by duly authorized officers of the respective
parties.
SECTION 4.02. Waiver; Remedies. No delay on the part of any party hereto
in exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor will any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. No waiver will be
effective hereunder unless it is in writing. Unless otherwise provided, the
rights and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties may otherwise have at law or in equity.
SECTION 4.03. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 4.04. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts-of
laws thereof.
<PAGE> 20
17
SECTION 4.05. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent, to
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222-1384
Telecopy No.: (412) 642-5224
Attention: Louis J. Briskman, Esq.
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: Peter S. Wilson, Esq.;
(b) if to the Company, to
G Corp.
11 Stanwix Street
Pittsburgh, PA 15222
Telecopy No.: (412) 642-5224
Attention: Louis J. Briskman, Esq.
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Telecopy No.: (212) 474-3700
Attention: Peter S. Wilson, Esq.;
<PAGE> 21
18
c) if to New Gaylord, to
New Gaylord Entertainment Company
One Gaylord Drive
Nashville, TN 37214
Telecopy No.: (615) 316-6060
Attention: Frank M. Wentworth, Esq.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
(Delaware)
One Rodney Square
Wilmington, DE 19801
Telecopy No.: (302) 651-3001
Attention: Richard L. Easton, Esq.
SECTION 4.06. Entire Agreement. The Transaction Agreements (including the
documents and instruments referred to therein, the Annexes thereto, the Parent
Disclosure Schedule and the Company Disclosure Schedule) and the Confidentiality
Agreement constitute the entire agreement, and supersede all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof and thereof.
SECTION 4.07. Certain Obligations. Whenever this Agreement requires any of
the subsidiaries of any party to take any action, this Agreement will be deemed
to include an undertaking on the part of such party to cause such subsidiary to
take such action; provided, however, that for this purpose New Gaylord Companies
shall not be considered to be subsidiaries of the Company.
SECTION 4.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 4.09. Captions. The Article, Section and paragraph captions herein
are for convenience of reference
<PAGE> 22
19
only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof.
SECTION 4.10. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision hereof or
the application of such provision to any other persons or circumstances. In the
event that the terms and conditions of this Agreement are materially altered as
a result of this Section the parties shall negotiate in good faith to agree upon
a suitable and equitable substitute provision to effect the original intent of
the parties.
SECTION 4.11. No Third Party Beneficiaries. Nothing contained in this
Agreement is intended to confer upon any person or entity other than the parties
hereto and their respective successors and permitted assigns, any benefit, right
or remedies under or by reason of this Agreement, except that the provisions of
Article II hereof shall inure to the benefit of Indemnitees.
SECTION 4.12 Enforcement. Notwithstanding any other provision of this
Agreement to the contrary, the parties agree that irreparable damage would occur
and the remedy of indemnification pursuant to Section 2.01 or 2.02, as the case
may be, and other remedies at law will by inadequate in the event that any of
the provisions of this Agreement, including but not limited to Section 3.04,
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of the Agreement.
<PAGE> 23
20
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto on the date first hereinabove
written.
WESTINGHOUSE ELECTRIC CORPORATION,
BY: /s/ Frederic G. Reynolds
---------------------------------
Name: Frederic G. Reynolds
Title: Executive Vice
President and Chief
Financial Officer
GAYLORD ENTERTAINMENT COMPANY,
By: /s/ Terry E. London
---------------------------------
Name: Terry E. London
Title: President and Chief
Executive Officer
NEW GAYLORD ENTERTAINMENT COMPANY,
By: /s/ Carl Kornmeyer
---------------------------------
Name: Carl Kornmeyer
Tltle: Vice President and
President - Communications
Group
IDEA ENTERTAINMENT INC.
By: /s/ F.M. Wentworth, Jr.
---------------------------------
Name: F.M. Wentworth, Jr.
Title: Secretary
CNR, INC.
By: /s/ E.K. Gaylord
---------------------------------
Name: E.K. Gaylord
Title: President
<PAGE> 24
21
GAYLORD BROADCASTING COMPANY, L.P.
by Gaylord Communications,
Inc., its general partner,
By: /s/ Carl Kornmeyer
---------------------------------
Name: Carl Kornmeyer
Title: Vice President
OPRYLAND ATTRACTIONS, INC.
By: /s/ Terry E. London
---------------------------------
Name: Terry E. London
Title: Chief Financial Officer
and Treasurer
OLH, L.P.
by Opryland Hospitality, Inc.,
its general partner,
By: /s/ Terry E. London
---------------------------------
Name: Terry E. London
Title: Chief Financial Officer
and Treasurer
COUNTRY MUSIC TELEVISION
INTERNATIONAL INC.
By: /s/ Carl Kornmeyer
---------------------------------
Name: Carl Kornmeyer
Title: President and Chief
Executive Officer
REAL ENTERTAINMENT VENTURES, INC.
By: /s/ Carl Kornmeyer
---------------------------------
Name: Carl Kornmeyer
Title: President
<PAGE> 25
SCHEDULE A TO THE
POST-CLOSING COVENANTS AGREEMENT
IDEA ENTERTAINMENT, INC.
CNR, INC.
GAYLORD BROADCASTING COMPANY, L. P.
OPRYLAND ATTRACTIONS, INC.
OLH, L. P.
COUNTRY MUSIC TELEVISION INTERNATIONAL, INC.
REAL ENTERTAINMENT VENTURES, INC.
<PAGE> 26
ANNEX A
JOINT DEFENSE AND CONFIDENTIALITY AGREEMENT ("JD
Agreement") dated as of September 30, 1997, between
WESTINGHOUSE ELECTRIC CORPORATION, a Pennsylvania
corporation ("Parent"), and NEW GAYLORD ENTERTAINMENT
COMPANY, a Delaware Corporation ("New Gaylord").
1. In view of the execution of the Agreement and Plan of Merger dated as of
February 9, 1997 (the "Merger Agreement"), among Parent, G Acquisition Corp., a
Delaware corporation and wholly owned subsidiary of Parent ("Sub"), and Gaylord
Entertainment Company, a Delaware corporation ("the Company"), and the
Post-Closing Covenants Agreement dated as of September 30, 1997 (the
"Post-Closing Covenants Agreement") among Parent, the Company, New Gaylord and
the other New Gaylord Indemnitors (as defined therein), Parent and New Gaylord
have concluded that they have a common interest in preparing for joint defense
against claims that may be asserted at or after the date of the Merger Agreement
against the Retained Companies or the New Gaylord Companies, or their respective
affiliates, particularly with respect to the matters which are the subject of
indemnification pursuant to the Post-Closing Covenants Agreement. Capitalized
terms used in this Agreement and not otherwise defined herein shall have the
meanings assigned thereto in the Merger Agreement.
2. Accordingly, Parent and New Gaylord have further concluded that it is in
their common and individual interests to cooperate with each other by sharing
information in anticipation of joint defense against the aforementioned claims.
Parent and New Gaylord intend this JD Agreement to enable them, to the fullest
extent permitted by law, to share confidential or privileged information without
waiving any privileges, doctrines or rules of protection against disclosure that
might attach thereto, including but not limited to the attorney-client
privilege, the self-evaluating privilege, the joint defense privilege, the party
communication privilege and the attorney work product doctrine. This document
contains all terms and conditions of Parent's and New Gaylord's understanding
concerning the sharing of confidential or privileged information as contemplated
by this JD Agreement.
3. Although neither Parent or New Gaylord shall be under an obligation to
share any confidential or privileged information pursuant to paragraph 2 above,
from time to time either parent or New Gaylord in its sole discretion may choose
<PAGE> 27
2
to share with the other materials concerning certain issues about which they
have common interests in preparing for defense, and to exchange factual and/or
legal information and/or theories, mental impressions, memoranda, witness
statements, interview reports and other documents, information and/or materials,
including the information and the confidences of Parent and New Gaylord
contained therein, relevant to those common interests (collectively, "Joint
Privilege Materials"). Such exchange or disclosure shall be conducted in
reliance upon the following concepts:
(a) Joint Privilege Materials transmitted among Parent, New Gaylord or
their counsel may contain confidential and privileged communications,
whether or not subject to the attorney-client privilege, the self-
evaluating privilege, the joint defense privilege or the party
communication privilege;
(b) Joint Privilege Materials transmitted among Parent, New Gaylord or
their counsel may contain attorney work product;
(c) Joint Privilege Materials transmitted among Parent, New Gaylord or
their counsel may contain materials protected by other applicable
privileges and rules of confidentiality; and
(d) In accordance with applicable legal standards, any exchanges
made will be of information related only to issues as to which Parent and
New Gaylord believe they share common interests in preparing for defense.
4. It is the intention and understanding of Parent and New Gaylord that
exchanges of Joint Privilege Materials otherwise protected against disclosure by
privilege, doctrine or rule of confidentiality (i) will not waive any applicable
privilege, doctrine or rule of confidentiality from disclosure, (ii) will not
diminish the confidentiality of such materials and (iii) will not be asserted as
a waiver of any such privilege, doctrine or rule by either party receiving Joint
Privilege Materials.
5. Disclosure of Joint Privilege Materials to any person or entity, other
than attorneys representing Parent and New Gaylord, and consultants acting as
agents of such attorneys for purposes of reviewing any Joint Privilege Materials
(it being understood that such agents are subject to the confidentiality
provisions of this JD Agreement), or without the prior written consent of the
nondisclosing party through its respective counsel, is expressly prohibited.
<PAGE> 28
3
6. Each of Parent and New Gaylord shall give prompt notice to the other of
any attempt, by letter, notice, subpoena or other document or direction, to
compel disclosure of Joint Privilege Materials. In addition, each of Parent and
New Gaylord shall afford the other reasonable opportunity to assert any right or
privilege it may have to protect against disclosure of Joint Privilege Materials
sought by any entity.
7. Each of Parent and New Gaylord may withdraw from this JD Agreement upon
thirty (30) days written notice to the other's counsel. Any such withdrawal from
this JD Agreement shall be prospective in effect, and any Joint Privilege
Materials made available by either Parent or New Gaylord prior to such
withdrawal shall continue to be governed by the terms of this JD Agreement. Upon
withdrawal from this JD Agreement, each of Parent and New Gaylord shall return
all copies of all written and recorded Joint Privilege Materials to the other
within thirty (30) days of the date of its written notice of withdrawal, or
shall destroy all Joint Privilege Materials and certify to the other that such
destruction has taken place in accordance with applicable security requirements.
8. By entering into this JD Agreement, each of Parent and New Gaylord (i)
affirms its commitment to treat all information acquired in connection with this
JD Agreement as confidential and intended solely for purposes of advancing the
common interests in preparing the defense; and (ii) acknowledges the broadest
application allowed by law in the jurisdiction in which such privileges are
asserted of the attorney-client privilege, the self-evaluating privilege, the
joint defense privilege, the party communication privilege and the attorney work
product doctrine to such information.
9. The execution of this JD Agreement is not, nor shall it be construed as,
an admission of any fact or liability by either Parent or New Gaylord.
10. The execution of this JD Agreement shall not preclude the execution of
further agreements concerning joint defense against, and the sharing of
confidential information relating to, particular claims or the threat of
particular claims against either Parent or New Gaylord.
11. Notwithstanding anything contained in this JD Agreement to the
contrary, Parent and New Gaylord may use and disclose Joint Privilege Materials
to the extent such use or disclosure is necessary to assert its right to
indemnification by, or to contest its obligation to indemnify, the other
pursuant to the Post-Closing Covenants Agreement, or as
<PAGE> 29
4
required by law, rule, regulation or final order of a court of competent
jurisdiction.
12. This JD Agreement shall not limit Parent's or New Gaylord's right to
use and/or disclose its own privileged or protected information and materials as
it sees fit, including but not limited to intentionally waiving any applicable
privileges or protections it has in such materials, regardless of whether Parent
or New Gaylord, as applicable, shall have previously shared such information or
materials with the other as Joint Privileged Materials under this JD Agreement.
<PAGE> 30
5
13. All notices hereunder shall be given in the manner set forth in the
Merger Agreement. Notices to a party's counsel hereunder shall be to the counsel
set forth in Section 10.02 of the Merger Agreement.
Executed this 30th day of September, 1997 by the following:
WESTINGHOUSE ELECTRIC
CORPORATION,
by /s/ Frederic G. Reynolds
--------------------------------
Name: Frederic G. Reynolds
Title: Executive Vice
President and Chief
Financial Officer
NEW GAYLORD ENTERTAINMENT
COMPANY,
by /s/ Carl Kornmeyer
--------------------------------
Name: Carl Kornmeyer
Title: Vice President and President -
Communications Group
<PAGE> 1
Exhibit 10.3
TAX DISAFFILIATION AGREEMENT dated as of
September 30, 1997 by and among GAYLORD ENTERTAINMENT
COMPANY, a Delaware corporation ("GEC"), GAYLORD
ENTERTAINMENT COMPANY, a Delaware corporation and a
direct, wholly owned subsidiary of GEC ("New
Gaylord"), and WESTINGHOUSE ELECTRIC CORPORATION, a
Pennsylvania corporation ("Parent").
WHEREAS, GEC is the common parent of an affiliated group of
corporations (the "GEC Group") within the meaning of Section 1504(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the members of the
GEC Group have heretofore joined in filing consolidated federal income Tax
Returns;
WHEREAS, GEC expects, pursuant to the Agreement and Plan of
Distribution dated as of September 30, 1997 (the "Distribution Agreement") by
and between GEC and New Gaylord, to spin off to GEC's stockholders GEC's
interest in certain assets. In furtherance of this plan, among other things, and
as more fully set forth in the Distribution Agreement, GEC will (i) effect the
recapitalization described in Article II of the Distribution Agreement and the
restructuring transactions described in Article IV of the Distribution Agreement
(together, the "Restructuring") and (ii) distribute (the "Distribution") on the
Distribution Date (as defined below) to the holders of GEC Common Stock all of
the outstanding shares of New Gaylord Common Stock (as defined below);
WHEREAS, on the day after the Distribution Date, G Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary ("Sub") of Parent,
will merge with and into GEC with GEC surviving (the "Merger"), as contemplated
by the Agreement and Plan of Merger dated as of February 9, 1997 (the "Merger
Agreement") by and among GEC, Sub and Parent, pursuant to which the holders of
GEC Common Stock (as defined below) will receive solely common stock of Parent
in exchange for their GEC Common Stock;
WHEREAS, GEC and New Gaylord intend the Distribution to be a
tax-free transaction under Section 355 of the Code, after which neither New
Gaylord nor any of its Subsidiaries (as defined below) will be a member of the
GEC Group for federal income tax purposes;
WHEREAS, GEC, Sub and Parent intend the Merger to be a
reorganization within the meaning of Section 368(a)(1)(B) of the Code; and
WHEREAS, GEC and New Gaylord desire on behalf of themselves,
their Subsidiaries and their successors to set forth their rights and
obligations with respect to Taxes relating to taxable periods before and after
the Distribution.
<PAGE> 2
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement,
1.1 "Acquired Business" shall mean the Retained Business, as defined
in the Merger Agreement.
1.2 "Acquired Group" shall mean, for any Post-Distribution Period, GEC
and its Subsidiaries.
1.3 "Ancillary Agreements" shall have the meaning set forth in the
Distribution Agreement.
1.4 "Code" shall have the meaning set forth in the Recitals.
1.5 "Dispose" (and, with correlative meaning, "Disposition") shall
mean pay, discharge, settle or otherwise dispose.
1.6 "Distributed Business" shall mean the Entertainment Business, as
defined in the Distribution Agreement.
1.7 "Distribution" shall have the meaning set forth in the Recitals.
1.8 "Distribution Agreement" shall have the meaning set forth in the
Recitals.
1.9 "Distribution Date" shall mean the last day on which, due to the
Distribution, New Gaylord could be considered a member of the GEC Group for
federal income Tax purposes.
1.10 "Due Date" shall mean, with respect to any Tax Return or payment,
the date on which such Tax Return is due to be filed with or such payment is due
to be made to the appropriate Tax Authority pursuant to applicable law, giving
effect to any applicable extensions of the time for such filing or payment.
1.11 "Effective Time" shall have the meaning set forth in the Merger
Agreement.
1.12 "Final Determination" shall mean (1) the entry of a decision of a
court of competent jurisdiction at such time as an appeal may no longer be taken
from such decision or (2) the execution of a closing agreement or its equivalent
between the particular taxpayer and the relevant Tax Authority.
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1.13 "GEC" shall have the meaning set forth in the Preamble.
1.14 "GEC Common Stock" shall have the same meaning as "Company Common
Stock" set forth in the Distribution Agreement.
1.15 "GEC Group" shall have the meaning set forth in the Recitals.
1.16 "Merger" shall have the meaning set forth in the Recitals.
1.17 "Merger Agreement" shall have the meaning set forth in the
Recitals.
1.18 "New Gaylord" shall have the meaning set forth in the Preamble.
1.19 "New Gaylord Common Stock" shall have the meaning set forth in the
Distribution Agreement.
1.20 "New Gaylord Group" shall mean, for any Post-Distribution Period,
the affiliated group of corporations (within the meaning of Section 1504(a) of
the Code) of which New Gaylord is the common parent and which join in filing
consolidated federal income Tax Returns.
1.21 "NV" shall mean NV International, Inc., a Georgia corporation.
1.22 "O&W" shall mean O&W Corporation, a Tennessee corporation.
1.23 "Parent" shall have the meaning set forth in the Recitals.
1.24 "Payee" shall have the meaning set forth in Section 4.7 hereof.
1.25 "Payor" shall have the meaning set forth in Section 4.7 hereof.
1.26 "Post-Distribution Period" shall mean any taxable period beginning
after the Distribution Date (or, if the Effective Time occurs later than the day
immediately following the Distribution Date, the last day that GEC is the common
parent of the GEC Group) and, in the case of any Straddle Period, that portion
of such Straddle Period that begins on the day immediately following the
Distribution Date (or, if the Effective Time occurs later than the day
immediately following the Distribution Date, the day immediately following the
last day that GEC is the common parent of the GEC Group).
1.27 "Pre-Distribution Period" shall mean any taxable period that ends
on or prior to the Distribution Date (or, if the Effective Time occurs later
than the day immediately following the Distribution Date, the last day that GEC
is the common parent of the GEC Group) and, in the case of any Straddle Period,
that portion of such Straddle Period ending on and including the Distribution
Date (or, if the Effective Time occurs later than the day
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immediately following the Distribution Date, the last day that GEC is the common
parent of the GEC Group).
1.28 "Restructuring" shall have the meaning set forth in the Recitals.
1.29 "Straddle Period" shall mean any taxable period that begins before
or on and ends after the Distribution Date (or, if the Effective Time occurs
later than the day immediately following the Distribution Date, any taxable
period that begins before or on and ends after the last day that GEC is the
common parent of the GEC Group).
1.30 "Sub" shall have the meaning set forth in the Recitals.
1.31 "Subsidiary" shall mean a subsidiary, as defined in the Merger
Agreement.
1.32 "Tax Attribute" shall mean any net operating loss, investment tax
credit, foreign tax credit, or other credit, deduction or tax attribute
(including basis).
1.33 "Tax Authority" shall mean the Internal Revenue Service and any
other state, local or foreign governmental authority responsible for the
administration of Taxes.
1.34 "Tax Claim" shall mean a notice of deficiency, proposed
adjustment, assessment, audit, examination, suit, dispute or other claim with
respect to Taxes or a Tax Return.
1.35 "Taxes" (and, with correlative meaning, "Tax") means all taxes,
charges, fees, levies, imposts, duties and other assessments, including, without
limitation, income, gross receipts, excise, personal property, real property,
sales, ad valorem, value-added, withholding, social security, occupation, use,
service, service use, leasing, leasing use, license, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by any Tax Authority,
whether computed on a separate, consolidated, unitary, combined or any other
basis, together with any interest, fines, penalties and additional amounts
attributable to, imposed on, or with respect to, any such taxes, charges, fees,
levies, imposts, duties or other assessments, and interest thereon.
1.36 "Tax Returns" (and, with correlative meaning, "Tax Return") shall
mean all returns, reports, declarations, information, estimates, schedules,
filings or documents (including any related or supporting information) filed or
required by any Tax Authority to be filed with respect to Taxes, including,
without limitation, all information returns, claims for refund, amended returns,
declarations of estimated Tax, and requests for extensions of time to file any
item described in this paragraph.
1.37 "Transaction Agreements" shall have the meaning set forth in the
Merger Agreement.
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1.38 "Transfer Tax" shall mean any real property transfer Tax, sales
Tax, use Tax, stamp Tax, stock transfer Tax, or other similar Tax.
1.39 "Underpayment Rate" shall mean the interest rate specified under
Section 6621(a)(2) of the Code.
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
2.1 Preparation of Pre-Distribution Period Tax Returns and Certain
Straddle Period Tax Returns. New Gaylord, with the cooperation of Parent, GEC
and any member of the Acquired Group (as provided for in Article VII hereof),
shall prepare (or cause to be prepared) all Tax Returns with respect to any
Pre-Distribution Period or Straddle Period that include GEC or any of its
Subsidiaries (including all Tax Returns filed on a consolidated, combined or
unitary basis). New Gaylord shall have sole discretion as to the positions in
and with respect to any Tax Returns described in this Section 2.1 to the extent
that such positions relate to a Pre-Distribution Period or the Restructuring.
2.2 Filing of Certain Pre-Distribution Period Tax Returns. At least 20
days before the Due Date of any Tax Return which New Gaylord is required to
prepare (or cause to be prepared) pursuant to Section 2.1 hereof and Parent, GEC
or a member of the Acquired Group is required to file, New Gaylord shall deliver
to GEC such Tax Return. Parent or GEC shall timely file (or cause to be filed)
any such Tax Return as prepared by New Gaylord with the appropriate Tax
Authority.
2.3 Preparation and Filing of Certain Straddle Period Tax Returns. With
respect to any Straddle Period Tax Return required to be filed by New Gaylord or
any of New Gaylord's Subsidiaries with respect to which Parent or GEC is liable
for any Tax shown to be due thereon pursuant to this Agreement, New Gaylord
shall prepare (or cause to be prepared) such Tax Return and, at least 20 days
prior to the Due Date thereof, shall deliver such Tax Return (or cause such Tax
Return to be delivered) to GEC for its review, together with a statement showing
in reasonable detail New Gaylord's calculation of any Taxes attributable to a
Pre-Distribution Period. New Gaylord shall file such Tax Return, with GEC's
prior written consent, which shall not be unreasonably withheld or delayed.
2.4 Preparation and Filing of Post-Distribution Period Tax Returns.
Except as set forth in this Article II, with respect to Post-Distribution
Periods, New Gaylord shall not have any responsibility for preparing (or causing
to be prepared) and timely filing (or causing to be timely filed) any Tax Return
with respect to any member of the Acquired Group, and Parent shall not have any
responsibility for preparing (or causing to be prepared) and timely filing (or
causing to be filed) any Tax Return with respect to New Gaylord or any of its
Subsidiaries.
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2.5 Consistent Treatment. (a) Each Tax Return described in this Article
II shall be consistent with the rulings obtained from the Internal Revenue
Service in connection with the Restructuring, the Distribution and the Merger
(including any opinions of counsel of GEC or Parent in lieu of any rulings
pursuant to the provisions of the Merger Agreement), and, to the extent not
inconsistent with such rulings and any such opinions, with the Transaction
Agreements.
(b) In the absence of a controlling change in law and except as
otherwise expressly required by this Agreement, each Tax Return described in
Section 2.1, 2.2 or 2.3 hereof shall be prepared on a basis that is consistent
with the elections, accounting methods, conventions, practices and principles of
taxation used for the most recent taxable periods for which Tax Returns for GEC
or any of its Subsidiaries have been filed.
2.6 Amended Returns and Claims for Refund. No member of the Acquired
Group (or any entity that directly or indirectly controls GEC) shall amend a Tax
Return or file a claim for Tax refund with respect to any Pre-Distribution
Period of GEC or any of its Subsidiaries without the prior written consent of
New Gaylord, which shall not be unreasonably withheld or delayed.
ARTICLE III
PAYMENTS WITH RESPECT TO TAXES
3.1 Payment of Taxes. (a) Except as set forth in Section 3.1(c) hereof,
for all Taxes with respect to which Parent, GEC or a member of the Acquired
Group is required to file Tax Returns pursuant to Section 2.2 hereof, New
Gaylord shall pay GEC the amount of such Taxes relating to any Pre-Distribution
Period at least 5 business days prior to the Due Date of the Tax Return
reporting such Taxes.
(b) Except as set forth in Section 3.1(c) hereof, for all Taxes with
respect to which New Gaylord or any of its Subsidiaries is required to file Tax
Returns pursuant to Section 2.3 hereof, Parent or GEC shall pay New Gaylord the
amount of such Taxes relating to the Acquired Business for any Post-Distribution
Period at least 5 business days prior to the Due Date of the Tax Return
reporting such Taxes.
(c) For all Taxes with respect to which Parent or GEC is required to
file Tax Returns for O&W, NV or any of their Subsidiaries pursuant to Section
2.2 hereof, New Gaylord shall pay GEC New Gaylord's share of the amount, if any,
of such Taxes, as determined pursuant to Article IV hereof, at least 5 business
days prior to the Due Date of the Tax Return reporting such Taxes and include a
statement showing in reasonable detail New Gaylord's calculation of such Taxes.
3.2 Remittance of Taxes to a Tax Authority. Parent and New Gaylord,
as the case may be, shall each remit or cause to be remitted in a timely manner
to the appropriate Tax
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Authority all Taxes due in respect of any Tax for which it is required to file a
Tax Return pursuant to Article II hereof.
ARTICLE IV
INDEMNIFICATION
4.1 Obligations of GEC. Parent, GEC and GEC's Subsidiaries shall
indemnify and hold New Gaylord and New Gaylord's Subsidiaries harmless from and
against the following:
(a) except to the extent otherwise expressly provided in Sections
4.2(c), (d) and (e) hereof, any liability for Taxes attributable to the Acquired
Business, any current member of the Acquired Group or any Subsidiary of any such
member for any Post-Distribution Period, and any liability of any current member
of the Acquired Group arising under the provisions of Treasury regulation
section 1.1502-6(a) or comparable provisions of foreign, state or local law for
any Post-Distribution Period;
(b) any liability for Taxes relating to the Distribution, to the
extent set forth in Section 4.3(a) hereof;
(c) any liability for Taxes relating to GEC or any of its Subsidiaries
or the Restructuring to the extent that New Gaylord has made a payment to Parent
or GEC with respect thereto pursuant to Section 3.1 hereof; and
(d) 33 percent of any liability for Taxes attributable to O&W, NV or
any of their Subsidiaries for any Pre-Distribution Period other than Taxes
incurred in the Restructuring, including any liability of any member of an
"affiliated group" (within the meaning of Section 1504(a) of the Code) of which
O&W or NV is the common parent arising under the provisions of Treasury
regulation section 1.1502-6(a) or comparable provisions of foreign, state or
local law for any Pre-Distribution Period.
4.2 Obligations of New Gaylord. New Gaylord and New Gaylord's
Subsidiaries shall indemnify and hold Parent, GEC and their respective
Subsidiaries harmless from and against the following:
(a) except to the extent otherwise expressly provided in Section 4.1(d)
hereof and subject to the remaining provisions of Section 4.2 hereof, any
liability for Taxes attributable to the Distributed Business, any current or
former member of the GEC Group or any Subsidiary of any such member for any
Pre-Distribution Period, including any liability of any member of the GEC Group
or any of its Subsidiaries arising under the provisions of Treasury regulation
section 1.1502-6(a) or comparable provisions of foreign, state or local law for
any Pre-Distribution Period or any liability under a Pre-Distribution Period Tax
sharing agreement;
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(b) 67 percent of any liability for Taxes attributable to O&W, NV or
any of their Subsidiaries for any Pre-Distribution Period other than Taxes
incurred in the Restructuring, including any liability of any member of an
"affiliated group" (within the meaning of Section 1504(a) of the Code) of which
O&W or NV is the common parent arising under the provisions of Treasury
regulation section 1.1502-6(a) or comparable provisions of foreign, state or
local law for any Pre-Distribution Period or any liability under a
Pre-Distribution Period Tax sharing agreement;
(c) any liability for Taxes relating to the Distribution, to the extent
set forth in Section 4.3(a) hereof;
(d) any liability for Taxes incurred as a result of the Restructuring
for any taxable period, provided, however, that if Parent, GEC or any of their
respective Subsidiaries takes any action after the Closing Date (as defined in
the Merger Agreement) which results in the incurrence of any such Taxes, Parent
and GEC shall pay, and shall fully indemnify and hold harmless New Gaylord and
its Subsidiaries from and against, such Taxes to the extent that they result
from such action unless such action (i) is contemplated by the Transaction
Agreements or (ii) is taken by Parent, GEC or any of GEC's Subsidiaries with the
participation at that time of New Gaylord, any of its Subsidiaries or Edward L.
Gaylord (in his capacity as a shareholder or a trustee); and
(e) any liability for Taxes incurred solely as a result of a breach of
the representations set forth in Section 4.01(m)(ix) of the Merger Agreement
(determined by taking into account exceptions to such representations set forth
in Section 4.01(m) of the Company Disclosure Schedule to the Merger Agreement),
or in Sections 4.01(m)(x), (xi) or (xiii) of the Merger Agreement (in each case
determined without regard to materiality, knowledge by New Gaylord, and any
exceptions to such representations set forth in Section 4.01(m) of the Company
Disclosure Schedule to the Merger Agreement), calculated as the amount of the
excess of (x) the actual liability for Taxes of Parent and its Subsidiaries for
the relevant taxable period over (y) the liability for Taxes of the Parent and
its Subsidiaries for such period assuming such breach of representation had not
occurred but with all other facts unchanged.
4.3 Taxes Relating to the Distribution. Notwithstanding any other
provision of this Agreement to the contrary,
(a) New Gaylord and New Gaylord's Subsidiaries shall pay or cause to be
paid, and shall fully indemnify and hold harmless Parent, GEC or any of their
respective Subsidiaries from and against, all Taxes attributable to any member
of the GEC Group or any Subsidiary of any such member resulting from the
Distribution, including, without limitation, any Tax imposed pursuant to or as a
result of Section 311 of the Code; provided, however, that if Parent, GEC or any
of their respective Subsidiaries takes any action after the Closing Date (as
defined in the Merger Agreement) which results in the incurrence of any such
Taxes, Parent and GEC shall pay, and shall fully indemnify and hold harmless
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New Gaylord and its Subsidiaries from and against, such Taxes to the extent that
they result from such action unless such action (i) is contemplated by the
Transaction Agreements or (ii) is taken by Parent, GEC or any of GEC's
Subsidiaries with the participation at that time of New Gaylord, any of its
Subsidiaries or Edward L. Gaylord (in his capacity as a shareholder or a
trustee).
(b) If GEC or any of its Subsidiaries is required to recognize gain
pursuant to Section 311 of the Code with respect to the Restructuring or the
Distribution, then, to the extent permitted by law or regulation, Parent, GEC or
the appropriate member of the Acquired Group or the appropriate Subsidiary of
Parent, if so requested by New Gaylord, shall elect pursuant to Section 336(e)
of the Code to treat the Distribution as a disposition of all the assets of New
Gaylord, provided, however, that Parent, GEC or the appropriate member of the
Acquired Group or the appropriate Subsidiary of Parent, as the case may be,
shall not be required to file such election if such election would result in an
actual increase in Tax liability to Parent and its Subsidiaries and New Gaylord
does not fully indemnify Parent and its Subsidiaries from and against such Tax
liability.
4.4 Straddle Periods.
(a) To the extent permitted by law or administrative practice, the
taxable year of any member of the GEC Group or any of its Subsidiaries which
includes the Distribution Date shall be treated as closing on (and including)
the Distribution Date, provided, however, that if the Effective Time occurs
later than the day immediately following the Distribution Date, the taxable year
of any member of the Acquired Group or any of its Subsidiaries which includes
the Distribution Date shall be treated as closing on (and including) the last
day that GEC is the common parent of the GEC Group.
(b) Where it is necessary pursuant to this Agreement to apportion
between New Gaylord, on the one hand, and GEC and Parent, on the other hand, the
Tax liability of an entity for a Straddle Period which is not treated under
Section 4.4(a) hereof as closing on the Distribution Date (or, if applicable
pursuant to the principles set forth in Section 4.4(a) hereof, the last day that
GEC is the common parent of the GEC Group), such liability shall be apportioned
between the Pre-Distribution Period and the Post-Distribution Period on the
basis of an interim closing of the books, except that Taxes (such as real
property Taxes) imposed on a periodic basis shall be allocated on a daily basis.
4.5 Tax Obligations Arising Under a Pre-Distribution Period Tax Sharing
Agreement. Except as set forth in this Agreement, any and all existing Tax
sharing agreements and practices regarding Taxes and their payment, allocation,
or sharing between any member of the Acquired Group and any member of the New
Gaylord Group or its Subsidiaries shall be terminated with respect to the New
Gaylord Group as of the Distribution Date and no remaining liabilities
thereunder shall exist thereafter.
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4.6 Refunds and Tax Attributes. (a) New Gaylord shall be entitled to
any refund of Taxes or the benefit of the utilization of any Tax Attribute of
any member of the GEC Group attributable to any Pre-Distribution Period or the
Distributed Business, and GEC shall be entitled to a refund for Taxes or the
benefit of the utilization of any Tax Attribute attributable to the Acquired
Business for any Post-Distribution Period. If the Acquired Group receives any
refund of Tax to which New Gaylord is entitled pursuant to this Section 4.6 or
utilizes any Tax Attribute of the GEC Group attributable to any Pre-Distribution
Period, GEC shall promptly notify New Gaylord and shall pay the amount of any
such refund or the benefit realized from such utilization within 5 days of the
receipt of such refund or the realization of such benefit.
(b) If Parent, any of its Subsidiaries or any member of the Acquired
Group actually realizes a reduction of Taxes for any taxable period because it
utilizes or claims a Tax Attribute as a result of an adjustment to the taxable
income of a member of the GEC Group for a Pre-Distribution Period (including a
Tax Attribute attributable to a Section 336(e) election pursuant to Section
4.3(c) hereof), Parent or GEC shall pay New Gaylord the amount of such reduction
of Taxes within 5 days of the filing of the Tax Return in which such reduction
of Taxes is actually realized. If, after Parent or GEC pays New Gaylord the
amount of any reduction of Taxes pursuant to the immediately preceding sentence,
there is (i) a Final Determination that results in the reduction or elimination
in whole or in part of the reduction of Taxes that gave rise to such payment on
the grounds that under applicable law the Tax Attribute that produced such
reduction of Taxes did not in fact occur or arise (in whole or in part) or (ii)
a subsequent event results in the reduction or elimination in whole or in part
of the reduction of Taxes that gave rise to such payment, New Gaylord shall
repay to GEC within 5 days of the payment of Tax in connection with the Final
Determination or subsequent event that so reduced or eliminated the reduction of
Taxes the amount of such Tax (excluding interest and penalties thereon) incurred
by a member of the Acquired Group as a result of such Final Determination or
subsequent event; provided, however, that the amount of any such repayment shall
not exceed the amount of the reduction of Taxes relating to the same Tax
Attribute which Parent or GEC first paid to New Gaylord pursuant to this Section
4.6(b) and provided, further that the provisions set forth above in this Section
4.6(b) shall continue to apply thereafter to the extent of any subsequent
reduction or elimination of such Taxes or such payments.
(c) If GEC or any of its Subsidiaries actually realizes a reduction of
Taxes for a Pre-Distribution Period because it utilizes or claims a Tax
Attribute as a result of an adjustment to the taxable income of a member of the
Acquired Group for a Post-Distribution Period, New Gaylord shall pay GEC the
amount of such reduction of Taxes within 5 days of the filing of the Tax Return
in which such reduction of Taxes is actually realized. If, after New Gaylord
pays GEC the amount of any reduction of Taxes pursuant to the immediately
preceding sentence, there is (i) a Final Determination that results in the
reduction or elimination in whole or in part of the reduction of Taxes that gave
rise to such payment on the grounds that under applicable law the Tax Attribute
that produced such reduction of Taxes did not in fact occur or arise (in whole
or in part) or (ii) a subsequent event that
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results in the reduction or elimination in whole or in part of the reduction of
Taxes that gave rise to such payment, Parent or GEC shall repay to New Gaylord
within 5 days of the payment of Tax in connection with the Final Determination
or subsequent event that so reduced or eliminated the reduction of Taxes the
amount of such Tax (excluding interest and penalties thereon) incurred by a
member of the GEC Group as a result of such Final Determination or subsequent
event; provided, however, that the amount of any such repayment shall not exceed
the amount of the reduction of Taxes relating to the same Tax Attribute which
New Gaylord first paid to GEC pursuant to this Section 4.6(c) and provided,
further that the provisions set forth above in this Section 4.6(c) shall
continue to apply thereafter to the extent of any subsequent reduction or
elimination of such Taxes or such payments.
(d) For purposes of this Agreement, when as a result of an action or
event, a Tax benefit, a reduction of Taxes, or a Tax refund arises, the amount
of such benefit, reduction or refund shall equal the amount of the excess of (x)
the actual liability for Taxes of the person for the relevant taxable period
over (y) the liability for Taxes of such person for such period assuming the
action or event from which such benefit, reduction or refund arose had not
occurred but with all other facts unchanged.
4.7 Indemnification Payments. To the extent that a party (the "Payor")
is required to make an indemnification payment to another party (the "Payee")
pursuant to Section 4.1, 4.2 or 4.3 hereof, the Payor shall pay the Payee no
later than 5 business days prior to the Due Date of the relevant Tax Return or 5
business days after the Payor receives the Payee's calculations of Payor's
indemnification obligation hereunder, whichever occurs last, the amount of such
indemnification obligation.
ARTICLE V
CARRYBACKS
No member of the Acquired Group shall carry back any Tax Attribute
arising in any Post-Distribution Period to any Pre-Distribution Period without
the prior written consent of New Gaylord, which shall not be unreasonably
withheld or delayed. GEC shall be entitled to retain any Tax benefits with
respect to any permitted carryback of a Tax Attribute relating to the Acquired
Business from a Post-Distribution Period to a Pre-Distribution Period. No member
of the New Gaylord Group shall carry back any Tax Attribute arising in any
Post-Distribution Period to any Pre-Distribution Period without the prior
written consent of GEC, which shall not be unreasonably withheld or delayed. GEC
shall forward to New Gaylord with respect to any permitted carryback of a Tax
Attribute relating to the Distributed Business from a Post-Distribution Period
to a Pre-Distribution Period (a) any refunds of Taxes received from a Tax
Authority within 5 days of the receipt thereof or (b) the amount of any
reduction in Taxes of the Acquired Group attributable to any Tax Attribute
within 5 days of the utilization of such Tax Attribute.
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To the extent that this Article V conflicts with Section 4.6
hereof, this Article V shall apply.
ARTICLE VI
TAX CLAIMS
6.1 General. New Gaylord shall have sole control over all Tax Claims
with respect to any Tax Return which New Gaylord is responsible for preparing
(or causing to be prepared) pursuant to this Agreement, and GEC shall have sole
control over all Tax Claims with respect to any Tax Return which GEC is
responsible for preparing (or causing to be prepared) pursuant to this
Agreement. The party controlling a Tax Claim pursuant to this Section 6.1 shall
have the sole right to contest, litigate and Dispose of such Tax Claim and to
employ counsel of its choice at its sole expense; provided, however, that the
other party may participate in (but not control) the defense of any such Tax
Claim at its own expense. If, pursuant to this Section 6.1, a Tax Claim presents
issues for which both parties may be liable pursuant to this Agreement or an
issue which affects both the Distributed Business and the Acquired Business, the
party controlling such Tax Claim shall not litigate or Dispose of such Tax Claim
without the prior written consent of the other party, which shall not be
unreasonably withheld or delayed.
6.2 Tax Claim Management. (a) GEC or New Gaylord, as the case may be,
shall promptly notify the other party in writing of any Tax Claim that may
reasonably be likely to result in liability of the other party under this
Agreement. With respect to any such Tax Claim, the party not controlling such
Tax Claim shall (i) not make any submission to any Tax Authority without
offering the other party the opportunity to review it, (ii) not take any action
or make (or purport to make) any representations in connection with such Tax
Claim with respect to issues affecting the other party's indemnity hereunder,
(iii) keep the other party informed as to any information that it receives
regarding the progress of such Tax Claim, (iv) provide the other party with any
information that it receives regarding the nature and amounts of any proposed
Disposition of the Tax Claim, (v) permit the other party to participate in all
conferences, meetings or proceedings with any Tax Authority in which the
indemnified Tax Claim is or may be a subject, and (vi) permit the other party to
participate in all court appearances in which the indemnified Tax Claim is or
may be a subject. With respect to any Tax Claim relating to a Pre-Distribution
Period for which New Gaylord is or may be liable pursuant to this Agreement, GEC
shall either file (or cause to be filed) submissions at New Gaylord's direction
which appoint (or cause to be appointed) New Gaylord or its authorized
representatives as additional authorized representatives entitled to communicate
fully with the Internal Revenue Service with respect to such Tax Claim.
(b) Unless New Gaylord and GEC agree otherwise in writing, GEC shall
use its best efforts to keep all Tax Claims arising under federal Tax Returns
which GEC is responsible for filing pursuant to Section 2.2 hereof under the
jurisdiction of the Nashville, Tennessee district of the Internal Revenue
Service. GEC shall promptly notify New
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Gaylord if any Tax Authority proposes to transfer or contest such a Tax Claim in
a district other than the district that includes Nashville, Tennessee and shall
cooperate with New Gaylord in taking all reasonable actions to prevent such
transfer or contest.
ARTICLE VII
COOPERATION
Parent, GEC and New Gaylord shall (and shall cause Parent's
Subsidiaries, the members of the GEC Group and the New Gaylord Group,
respectively, to) cooperate with each other in the preparation and filing of any
Tax Returns and the conduct of any audit or other proceeding and each shall
execute and deliver such powers of attorney and make available such other
documents as are necessary to carry out the intent of this Agreement. Such
cooperation shall include, without limitation, (a) making employees available on
a mutually convenient basis to provide such assistance as might reasonably be
required and (b) providing such information as might reasonably be required in
connection with any such Tax Return or proceeding, including, without
limitation, records, returns, schedules, documents, work papers or other
relevant materials.
The parties hereto shall use reasonable best efforts to reduce any
transfer, sales or other similar Taxes that may be incurred with respect to the
transactions contemplated by the Distribution Agreement, the Merger Agreement
and the Ancillary Agreements.
ARTICLE VIII
RETENTION OF RECORDS; ACCESS
Parent, each Subsidiary of Parent, the Acquired Group and the New
Gaylord Group shall (a) until the expiration of the relevant statutes of
limitations (giving effect to any applicable extensions or waivers), retain
records, documents, accounting data and other information (including computer
data) necessary for the preparation and filing of all Tax Returns in respect of
Taxes of the Acquired Group or the New Gaylord Group or for a Tax Claim by a Tax
Authority relating to such Tax Returns; and (b) give to the other group
reasonable access to such records, documents, accounting data and other
information (including computer data) and to its personnel (ensuring their
cooperation) and premises, with reimbursement by the requesting group of
reasonable out-of-pocket costs incurred therewith, for the purpose of the review
or audit of such Tax Returns to the extent relevant to an obligation or
liability of any party under this Agreement. Prior to destroying any records,
documents, data or other information described in this Article VIII, the group
wishing to destroy such items shall give the other group a reasonable
opportunity to obtain such items (at such other group's expense).
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ARTICLE IX
DISPUTES
If the parties disagree as to the calculation of any Tax or the amount
of (but not liability for) any payment to be made under this Agreement, the
parties shall cooperate in good faith to resolve any such dispute, and any
agreed-upon amount shall be paid to the appropriate party. If the parties are
unable to resolve any such dispute within 15 days thereafter, such dispute shall
be resolved by a "Big Six" accounting firm acceptable to both GEC and New
Gaylord. The decision of such firm shall be final and binding. The fees and
expenses incurred in connection with such decision shall be shared by GEC and
New Gaylord in accordance with the final allocation of the Tax liability in
dispute. Following the decision of such accounting firm, the parties shall each
take (or cause to be taken) any action that is necessary or appropriate to
implement such decision, including, without limitation, the filing of amended
Tax Returns and the prompt payment of underpayments or overpayment, with
interest calculated on such underpayments or overpayment at the Underpayment
Rate from the date such payment was due.
ARTICLE X
SURVIVAL
Notwithstanding any other provision in this Agreement to the contrary,
the rights and obligations provided for in this Agreement shall not terminate
any earlier than the expiration of the applicable statute of limitation for the
relevant taxable periods in question (giving effect to any applicable waivers or
extensions). All other covenants under this Agreement shall survive
indefinitely.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Transfer Taxes. New Gaylord shall prepare (or cause to be
prepared) and timely file (or cause to be timely filed) with the appropriate Tax
Authority all Tax Returns with respect to Transfer Taxes imposed with respect to
the Restructuring, the Distribution and the Merger. New Gaylord shall pay (or
cause to be paid) all Transfer Taxes attributable to the Restructuring and the
Distribution. New Gaylord, on the one hand, and GEC and Parent, on the other
hand, shall share equally the liability for all Transfer Taxes attributable to
the Merger. Notwithstanding anything in this Section 11.1 to the contrary, if
any member of the Acquired Group is required to file a Tax Return in respect of
Transfer Taxes, then New Gaylord shall deliver to GEC the prepared Tax Return
together with the amount of Taxes shown to be due on such Tax Return and for
which New Gaylord is liable at least 5 days prior to the Due Date thereof and
Parent or GEC shall timely file (or cause to be timely filed) with the
appropriate Tax Authority such Tax Return as prepared by New
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Gaylord and remit to such Tax Authority the amount of Transfer Taxes shown to be
due on such Tax Return.
11.2 Interest on Late Payments. Any payment required by this Agreement
which is not made on or before the date required to be made hereunder shall bear
interest after such date at the Underpayment Rate.
11.3 Determination and Characterization of Payments. (a) All
indemnification payments under this Agreement shall be determined on a pre-Tax
basis, i.e., without regard to the Tax consequences to the indemnified party of
making a payment that is indemnified by another party under this Agreement or of
receiving a payment under this Agreement as indemnification therefor.
(b) The payments made pursuant to this Agreement shall be treated as
occurring immediately before the Distribution, and no member of the New Gaylord
Group and the Acquired Group and none of the Subsidiaries of any such member and
none of Parent and its Subsidiaries shall take any position inconsistent with
such treatment before any Tax Authority, except to the extent that a Final
Determination with respect to the recipient party causes any such payment to not
be so treated.
11.4 Notices and Governing Law. All notices required or permitted to be
given pursuant to this Agreement shall be given, and the applicable law
governing the interpretation of this Agreement shall be determined, in
accordance with the applicable provisions of the Distribution Agreement.
11.5 Amendments. This Agreement may not be amended except by an
agreement in writing, signed by the parties.
11.6 Binding Effect; No Assignment; Third Party Beneficiaries. This
Agreement shall be binding on, and shall inure to the benefit of, the parties
and the respective successors, assigns, and persons controlling any of the
corporations bound hereby. Parent and GEC, on the one hand, and New Gaylord, on
the other hand, hereby guarantee the performance of all actions, agreements and
obligations provided for under this Agreement of GEC's Subsidiaries and New
Gaylord's Subsidiaries, respectively. Parent and GEC, on the one hand, and New
Gaylord, on the other hand, shall, upon the written request of any other party,
cause any of their respective Subsidiaries (but in the case of Parent, only GEC
and its Subsidiaries and their respective successors) to execute this Agreement.
No party to this Agreement shall assign any of its rights or delegate any of its
duties under this Agreement without the prior written consent of New Gaylord, in
the case of Parent or GEC, and GEC, in the case of New Gaylord. No person
(including, without limitation, any employee of a party or any stockholder of a
party) shall be, or shall be deemed to be, a third party beneficiary of this
Agreement.
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11.7 Entire Agreement. This Agreement constitutes the entire agreement
of the parties concerning the subject matter hereof and supersedes all prior
agreements, whether or not written, concerning such subject matter. To the
extent that the provisions of this Agreement are inconsistent with the
provisions of the Distribution Agreement, the provisions of this Agreement shall
prevail.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute together the same document.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
GAYLORD ENTERTAINMENT COMPANY
By /s/ Terry E. London
----------------------------------
Terry E. London
President and Chief Executive Officer
NEW GAYLORD ENTERTAINMENT COMPANY
By /s/ Carl Kornmeyer
----------------------------------
Carl Kornmeyer
Vice President and President-
Communications
WESTINGHOUSE ELECTRIC CORPORATION
By /s/ Frederic G. Reynolds
----------------------------------
Frederic G. Reynolds
Executive Vice President, Chief
Financial Officer
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EXHIBIT 99
INFORMATION FOR RELEASE
GAYLORD ENTERTAINMENT
MEDIA CONTACT: ALAN HALL INVESTOR CONTACT: RUSS WORSHAM
TELEPHONE: (615) 316-6551 TELEPHONE: (615) 316-6564
FOR IMMEDIATE RELEASE
GAYLORD ENTERTAINMENT COMPANY COMPLETES CABLE NETWORKS
MERGER WITH WESTINGHOUSE; 'NEW' GAYLORD ENTERTAINMENT
COMPANY LAUNCHED TODAY
NASHVILLE, TN, October 1, 1997 -- Gaylord Entertainment Company (NYSE:GET) today
announced that it had completed the merger of TNN: The Nashville Network and the
U.S. and Canadian operations of CMT: Country Music Television into the CBS Cable
operations of Westinghouse Electric Corporation (NYSE:WX) for $1.55 billion in
Westinghouse stock and the spin-off of its remaining operations to its
stockholders.
Under the terms of the Westinghouse merger, Gaylord Entertainment shareholders
are entitled to receive .606 shares of Westinghouse common stock for each of
their shares of "old" Gaylord Entertainment common stock. In addition, Gaylord
Entertainment shareholders will receive one newly issued share of common stock
of the "new" Gaylord Entertainment Company for every three "old" Gaylord
Entertainment shares. Both the Westinghouse merger and the related spin-off
transaction are tax free to Gaylord Entertainment shareholders.
"With the successful completion of the Westinghouse transaction, Gaylord
Entertainment now begins its quest of creating new entertainment traditions,"
said Terry E. London, President and Chief Executive Officer of Gaylord
Entertainment. "We intend to build upon our 72-year heritage of providing
quality, family-oriented entertainment through properties such as the Grand Ole
Opry and the Opryland Hotel to create new products and activities that are fun
and exciting, while reflecting the values of the traditional American family.
With the quality and creativity of the management team we have in place today, I
fully expect Gaylord Entertainment to become known as a top-notch entertainment
company in the years to come."
In addition to the Grand Ole Opry and the Opryland Hotel, the major assets of
the "new" Gaylord Entertainment Company will include the Company's
Nashville-based attractions anchored by the Opryland theme park, broadcasting
operations comprised of Dallas CBS-affiliate station KTVT and three
Nashville-based radio stations, as well as ongoing interests in country and
contemporary Christian music with Opryland Music Group, Word Entertainment and
Blanton/Harrell Entertainment.
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New Gaylord Entertainment
Page Two
CMT International -- which is comprised of CMT Europe, CMT Asia and CMT Latin
American -- and Z Music Television, will be the Company's remaining cable
networks. London noted that the Company will initially rely on the Opryland
Hotel, the largest hotel and convention center under one roof in the world, for
the majority of the Company's profitability.
"The Opryland Hotel, with its almost nine acres of trees, gardens, waterfalls
and rivers under glass, is one of the most entertaining and enjoyable hotels in
the world," said London. "We intend to explore opportunities to build upon our
reputation and expand our talent and expertise in the convention hotel industry
into other convention destinations in this country."
The Company's CBS-affiliated television station, KTVT-TV in Dallas-Ft. Worth, is
a significant contributor to the Company's financial performance. "Dallas is the
number eight television market in the country, and it is one of the largest
markets for both country music and contemporary Christian music, both of which
are key elements of our Company," said London. "We will be looking for
opportunities to leverage off of our strength in the Dallas-Ft. Worth market to
enhance the long-term growth prospects for our music business."
The Company's country music roots go back to the founding of the home of country
music, and Grand Ole Opry, in 1925. "The Opry is the longest-running live radio
program in history, and membership is still coveted by many country music
performers, whether they be rising stars, superstars, or legends," said London.
"Our task is to keep the Opry strong and exciting, while adapting it to the
interests of the old and the new."
"Adapting our entertainment to fit the tastes of today's audience is something
we already do well. For example, we use songs from our Opryland Music Group, the
oldest country music song- publishing catalog in the country, in two musicals
produced by our own Opryland Productions group. One of these productions is
'Always, Patsy Cline,' which is having a successful run off-Broadway in New
York. The other, 'Los Highway,' the story of the short, tragic life of Hank
Williams, just completed a successful two-year run at our Ryman Auditorium in
downtown Nashville."
The Company retains full ownership of CMT International, which broadcasts
country music videos throughout much of the world. "CMT International, which is
actually three networks -- CMT Europe, CMT Asia-Pacific and CMT Latin America --
is providing valuable exposure to country music artists around the world today,
much like the Grand Ole Opry created awareness of country music and artists
across much of the U.S. years ago," said London.
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New Gaylord Entertainment
Page Three
The Company's tourism and other hospitality assets in Nashville will remain
valuable pieces of the entertainment mix. For example, the Wildhorse Saloon, a
dynamic restaurant and country music dance and performance hall in downtown
Nashville, is reviewing expansion opportunities in other major tourism cities.
The second Wildhorse Saloon is scheduled to open at Disney World in Orlando in
1998.
The Company has also formed a "family values"-oriented entertainment group which
is known as Idea Entertainment. Properties in this group include Word
Entertainment, the Company's contemporary Christian music record label with an
approximate 40% share of the U.S. market; Z Music Television, a U.S.-based cable
network currently featuring contemporary Christian music videos which the
Company manages and intends to acquire soon; and artist-management firm
Blanton/Harrell Entertainment.
"We believe that music, film, concerts, television shows and children's programs
with the right values will be heartily endorsed by great numbers of American
people," said London. "As the baby-boomers think about raising their children
and as we move toward the millennium, people are searching for entertainment
with values exemplified by the success of such programming as CBS' Touched by an
Angel. We plan to be a big part of that form of entertainment in the future."
The "new" Gaylord Entertainment Company will have a strong balance sheet, with
over $1 billion in assets, and will be traded on the New York Stock Exchange,
retaining the symbol "GET."
