<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM 10/A-3
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
NEW GAYLORD ENTERTAINMENT COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 73-0664379
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
One Gaylord Drive
Nashville, Tennessee 37214
(Address of principal executive offices) (ZIP code)
</TABLE>
(615) 316-6000
(Registrant's telephone number, including area code)
Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
- --------------------------------------------- ---------------------------------------------
<C> <C>
Common Stock, $.01 par value New York Stock Exchange, Inc.
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of class)
================================================================================
<PAGE> 2
EXPLANATORY NOTE:
This Form 10/A-3 is being filed to include financial information for New Gaylord
Entertainment Company for the six months ended June 30, 1997 and to update
certain other information included in the Information Statement dated July 16,
1997 previously furnished to stockholders of Gaylord Entertainment Company in
connection with the proposed pro rata distribution by Gaylord Entertainment
Company to its stockholders of all of the outstanding capital stock of New
Gaylord Entertainment Company.
[GAYLORD ENTERTAINMENT]
INFORMATION STATEMENT
NEW GAYLORD ENTERTAINMENT COMPANY
COMMON STOCK, $.01 PAR VALUE
This Information Statement ("Information Statement") has been prepared by
Gaylord Entertainment Company, a Delaware corporation ("Old Gaylord"), in
connection with the proposed pro rata distribution (the "Distribution") by Old
Gaylord to its stockholders of all of the outstanding Common Stock, $.01 par
value ("New Gaylord Common Stock"), of New Gaylord Entertainment Company
(formerly known as Gaylord Broadcasting Company), a Delaware corporation and a
wholly owned subsidiary of Old Gaylord ("New Gaylord"). It is currently
anticipated that the Distribution will be effected on the day prior to the
effective time of the proposed merger (the "Merger") of G Acquisition Corp.
("Sub"), a Delaware corporation and a wholly owned subsidiary of Westinghouse
Electric Corporation, a Pennsylvania corporation ("Westinghouse"), with and into
Old Gaylord, as such Merger is described in the Proxy Statement/Prospectus dated
July 16, 1997 (the "Proxy Statement/Prospectus"), relating to the Special
Meeting of Stockholders of Old Gaylord held on August 15, 1997 (the "Special
Meeting"). At the Special Meeting, the Old Gaylord stockholders approved the
Merger.
As a result of the Distribution, each holder of record as of the record
date for the Distribution (as established below, the "Record Date") of (a)
shares of Class A Common Stock, $.01 par value, of Old Gaylord ("Old Gaylord
Class A Common Stock"), and (b) shares of Class B Common Stock, $.01 par value,
of Old Gaylord ("Old Gaylord Class B Common Stock" and, together with the Old
Gaylord Class A Common Stock, the "Old Gaylord Common Stock"), will receive that
number of shares of New Gaylord Common Stock equal to one-third the number of
shares of Old Gaylord Common Stock held of record by such holder. Cash will be
distributed in lieu of any fractional shares of New Gaylord Common Stock. The
Record Date for the Distribution has been established by Old Gaylord's Board of
Directors as the fifth calendar day following the receipt of certain Tax Rulings
(as defined herein) (or legal opinions in lieu of certain of such rulings). Old
Gaylord will issue a press release announcing the expected date of the
Distribution promptly after the Tax Rulings are received.
The obligation of Old Gaylord to consummate the Distribution is subject to
the satisfaction or waiver of a number of conditions, including, among other
things, the satisfaction or waiver of all conditions to the obligations of
Westinghouse and Old Gaylord to effect the Merger (other than the consummation
of the Recapitalization (as defined herein), the Restructuring (as defined
herein), and the Distribution) as set forth in the Agreement and Plan of Merger,
dated as of February 9, 1997, among Westinghouse, Sub, and Old Gaylord (the
"Merger Agreement"). The consummation of the Distribution is a condition to the
obligations of Westinghouse and Old Gaylord to effect the Merger but will occur
only if all other conditions to the Merger are satisfied or waived and the
Merger is about to occur. See "THE RESTRUCTURING, THE DISTRIBUTION, AND THE
MERGER."
(continued on next page)
---------------------
THE SECURITIES TO BE ISSUED IN THE DISTRIBUTION HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS INFORMATION
STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Information Statement is August 29, 1997.
<PAGE> 3
Prior to the Distribution and the Merger, Old Gaylord will be restructured
(the "Restructuring") so that the assets and liabilities that are part of Old
Gaylord's hospitality, attractions, music, television, and radio businesses,
including all of Old Gaylord's long-term debt, as well as Old Gaylord's interest
in the Country Music Television cable networks outside of the United States and
Canada ("CMT International") and the option to acquire 95% of and the assets
used in the management of Z Music, Inc. ("Z Music"), a cable network currently
featuring primarily contemporary Christian music videos, will be transferred to
or retained by New Gaylord or one of its subsidiaries. Following the
Restructuring, the businesses of New Gaylord will include the Grand Ole Opry;
the Opryland Hotel; the Opryland theme park; the Wildhorse Saloon; the Ryman
Auditorium; the broadcasting operations comprised of the CBS-affiliate
television station KTVT in Dallas-Fort Worth and three Nashville-based radio
stations; interests in country and Christian music publishing and recording with
the Opryland Music Group and Word Entertainment ("Word"), and the operations of
CMT International and the management of Z Music. As a result of the
Restructuring, certain of the assets of Old Gaylord's cable networks business,
consisting primarily of The Nashville Network ("TNN") and the domestic and
Canadian operations of Country Music Television ("CMT"), and certain other
related businesses, and certain liabilities related thereto, will be held by Old
Gaylord or one of its subsidiaries (other than New Gaylord or its subsidiaries
after giving effect to the Restructuring) and will be acquired by Westinghouse
in the Merger.
No consideration will be paid by Old Gaylord stockholders for the shares of
New Gaylord Common Stock to be received by them in the Distribution. There is
currently no public trading market for the New Gaylord Common Stock. The shares
of New Gaylord Common Stock to be distributed in the Distribution have been
approved for listing, subject to official notice of issuance, on the New York
Stock Exchange (the "NYSE") under the symbol "GET," which is currently the
symbol for the Old Gaylord Class A Common Stock. No fractional shares of New
Gaylord Common Stock will be distributed in the Distribution. Old Gaylord
stockholders who otherwise would be entitled to receive a fractional share of
New Gaylord Common Stock will receive cash in lieu thereof. See "THE
RESTRUCTURING, THE DISTRIBUTION, AND THE MERGER -- Manner of Effecting the
Distribution."
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION....................................... 1
SUMMARY OF INFORMATION STATEMENT............................ 2
CAPITALIZATION.............................................. 8
LISTING AND TRADING OF NEW GAYLORD COMMON STOCK............. 9
DIVIDEND POLICY............................................. 9
THE RESTRUCTURING, THE DISTRIBUTION, AND THE MERGER......... 10
BUSINESS OF NEW GAYLORD..................................... 15
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES................ 26
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL
DATA OF NEW GAYLORD....................................... 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................. 31
MANAGEMENT.................................................. 41
EXECUTIVE COMPENSATION...................................... 44
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 53
DESCRIPTION OF CAPITAL STOCK................................ 57
INDEX TO FINANCIAL STATEMENTS............................... F-1
</TABLE>
AVAILABLE INFORMATION
New Gaylord has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form 10 (such registration statement, as it
may be amended or supplemented, the "Registration Statement") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect
to the New Gaylord Common Stock. This Information Statement does not contain all
of the information that is set forth in the Registration Statement and the
exhibits and schedules thereto. Additional information concerning the Merger and
related transactions may be found in the Proxy Statement/Prospectus included in
the registration statement on Form S-4 (the "Form S-4") filed by Westinghouse
under the Securities Act of 1933, as amended (the "Securities Act"). The
Registration Statement and the Form S-4, as well as the respective annexes,
exhibits, and schedules thereto, are available for inspection and copying at the
public reference facilities maintained by the SEC at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the Regional Offices of the SEC
at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; Seven World Trade Center, Suite 1300, New York, New York 10048; and at
5670 Wilshire Boulevard, Suite 1100, Los Angeles, California 90036. Copies of
such information are obtainable by mail from the Public Reference Section of the
SEC at 450 Fifth Street N.W., Washington, D.C. 20549 at prescribed rates. Copies
of such material may also be obtained from the SEC's web site
(http://www.sec.gov).
Following the Distribution, New Gaylord will be subject to the
informational requirements of the Exchange Act and, in accordance therewith,
will file reports, proxy statements, and other information with the SEC. The
reports, proxy statements, and other information that will be filed by New
Gaylord with the SEC will be available for inspection and copying at the SEC's
public reference facilities referred to above. Copies of such material will be
obtainable by mail from the Public Reference Section of the SEC at the address
referred to above at prescribed rates and from the SEC's web site referred to
above. In addition, it is expected that reports, proxy statements, and other
information concerning New Gaylord will be available for inspection at the
offices of the NYSE at 20 Broad Street, New York, New York 10005.
NO PERSON IS AUTHORIZED BY OLD GAYLORD OR NEW GAYLORD TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS WITH RESPECT TO THE MATTERS DESCRIBED
IN THIS INFORMATION STATEMENT OTHER THAN THOSE CONTAINED IN THIS INFORMATION
STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER OLD GAYLORD OR NEW GAYLORD.
NEITHER THE DELIVERY OF THIS INFORMATION STATEMENT NOR CONSUMMATION OF THE
DISTRIBUTION CONTEMPLATED HEREBY SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF NEW GAYLORD SINCE
THE DATE HEREOF, OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
1
<PAGE> 5
SUMMARY OF INFORMATION STATEMENT
The following summary is not intended to be complete and is qualified in
its entirety by reference to the more detailed information and financial
statements, including the notes thereto, included in this Information Statement
and the Annexes to the Proxy Statement/Prospectus, including (i) the Merger
Agreement attached as Annex I to the Proxy Statement/Prospectus, and (ii) the
form of Agreement and Plan of Distribution attached as Annex II to the Proxy
Statement/Prospectus (the "Distribution Agreement"). Stockholders are urged to
read this Information Statement, the Proxy Statement/Prospectus, and the Annexes
thereto in their entirety. The Recapitalization, the Restructuring, the
Distribution, the Merger, and the other transactions contemplated thereby are
sometimes collectively referred to herein as the "Transactions." TNN, CMT, and
the other related businesses that will be acquired by Westinghouse in the Merger
are collectively referred to herein as the "Cable Networks Business." All
businesses of Old Gaylord and its subsidiaries that are not part of the Cable
Networks Business, including CMT International and the management of and option
to acquire 95% of Z Music, are collectively referred to herein as the "New
Gaylord Business."
NEW GAYLORD
Following the Restructuring, the Distribution, and the Merger, New Gaylord
will be a diversified entertainment company emphasizing family values and its
country music roots, operating principally in three industry segments: (i)
hospitality and attractions; (ii) broadcasting and music; and (iii) cable
networks. New Gaylord's predecessor traces its origins to a newspaper publishing
business founded in 1903 in the Oklahoma Territory by a group including the
Gaylord and Dickinson families. In 1928, New Gaylord's predecessor entered the
radio broadcasting business and, in 1949, expanded its broadcasting interests to
include television stations. In 1983, New Gaylord's predecessor acquired an
interrelated group of businesses ("Opryland USA") tracing their origins to the
Grand Ole Opry music radio show created in 1925. Opryland USA has become the
cornerstone of the company's hospitality and attractions businesses. Also in
1983, Opryland USA entered the cable networks business by launching TNN, a cable
network with a national audience featuring country lifestyles, entertainment,
and sports, and, in 1991, acquired a 67% interest in CMT, a cable network with a
24-hour country music video format. The first of the CMT International cable
networks was launched in Europe in 1992 and CMT International has since expanded
into Asia, the South Pacific, and Latin America. In 1994, New Gaylord's
predecessor acquired an option to purchase 95% of Z Music, a cable network
currently featuring primarily contemporary Christian music videos, which it
currently manages. In 1997, New Gaylord's predecessor acquired the assets of
Word, a contemporary Christian music company.
As a result of the Restructuring, the Distribution, and the Merger, the
Cable Networks Business will be acquired by Westinghouse. Following the
Restructuring, the Distribution, and the Merger, the New Gaylord Business will
consist of Old Gaylord's hospitality, attractions, music, television, and radio
businesses, as well as CMT International and the management of and option to
acquire 95% of Z Music, and will include the Grand Ole Opry, the Opryland Hotel,
the Opryland theme park, the Wildhorse Saloon, the Ryman Auditorium,
CBS-affiliate television station KTVT (Dallas-Fort Worth), three Nashville-based
radio stations, Opryland Music Group's interests in music publishing, and Word's
music publishing and recording operations. See "BUSINESS OF NEW GAYLORD."
As a result of the Distribution, New Gaylord will be an independent,
publicly held company. The current executive officers and directors of Old
Gaylord are expected to be directors and executive officers of New Gaylord, with
the exception of David Hall, currently a Vice President of Old Gaylord, who will
remain with the Cable Networks Business following the Merger and will be
employed by an affiliate of Westinghouse. See "MANAGEMENT."
New Gaylord was incorporated under the laws of the State of Delaware in
1956 and, since that time, has been a wholly owned subsidiary of Old Gaylord.
Prior to the Restructuring, substantially all of Old Gaylord's assets and
liabilities have been held by, and substantially all of Old Gaylord's operations
have been conducted through, New Gaylord and direct and indirect subsidiaries of
New Gaylord, and such assets, liabilities, and results of operations are
reflected in the historical Consolidated Financial Statements of New Gaylord
included herein.
2
<PAGE> 6
New Gaylord's principal executive offices are located at One Gaylord Drive,
Nashville, Tennessee 37214, and its telephone number is (615) 316-6000.
Immediately after the Merger, New Gaylord will change its name to "Gaylord
Entertainment Company."
THE TRANSACTIONS
The Recapitalization. Prior to the Distribution, New Gaylord will effect a
recapitalization (the "Recapitalization") pursuant to which New Gaylord will
amend and restate its Certificate of Incorporation to, among other things, (i)
authorize one class of common stock of New Gaylord, (ii) increase the currently
authorized number of shares of New Gaylord Common Stock to 150,000,000 shares,
(iii) convert the 1,000 shares of New Gaylord common stock, $100.00 par value,
currently outstanding into a number of shares of New Gaylord Common Stock equal
to one-third the total number of shares of Old Gaylord Common Stock outstanding
immediately prior to the Record Date, and (iv) authorize 100,000,000 shares of
preferred stock, $.01 par value, of New Gaylord ("Preferred Stock"). See
"DESCRIPTION OF CAPITAL STOCK." Based on the number of shares of Old Gaylord
Common Stock outstanding on July 15, 1997, the 1,000 shares of New Gaylord
common stock currently outstanding would be converted into 32,425,230 shares of
New Gaylord Common Stock, all of which will be distributed to Old Gaylord's
stockholders in the Distribution.
The Restructuring. Prior to the Distribution, Old Gaylord will effect a
series of mergers, asset and stock transfers, and liability assumptions among
itself and its subsidiaries. The purpose and effect of the Restructuring is to
separate the New Gaylord Business, which is not being acquired by Westinghouse
in the Merger, from the Cable Networks Business. In connection with the
Restructuring, New Gaylord will, or will cause one of its subsidiaries to,
assume all liabilities of Old Gaylord and its subsidiaries other than certain
liabilities to the extent that they arise out of the Cable Networks Business,
which Old Gaylord will, or will cause one of its subsidiaries to, retain or
assume. See "THE RESTRUCTURING, THE DISTRIBUTION, AND THE MERGER -- The
Restructuring."
The Distribution. Upon completion of the Restructuring and on the day
prior to the effective time of the Merger, Old Gaylord will effect the
Distribution by distributing to each holder of record of Old Gaylord Common
Stock as of the Record Date certificates representing that number of shares of
New Gaylord Common Stock equal to one-third the number of shares of Old Gaylord
Common Stock held by such holder. Cash will be distributed in lieu of any
fractional shares of New Gaylord Common Stock. See "THE RESTRUCTURING, THE
DISTRIBUTION, AND THE MERGER."
The Merger. At the effective time of the Merger, Sub will be merged with
and into Old Gaylord, with Old Gaylord continuing as the surviving corporation
and a wholly owned subsidiary of Westinghouse. The number of shares of
Westinghouse Common Stock to be received by Old Gaylord's stockholders in
connection with the Merger for each outstanding share of Old Gaylord Common
Stock (subject to the proviso to this sentence, the "Per Share Merger
Consideration") will be equal to (i) the quotient of (x) $1.55 billion divided
by (y) the number of shares of Old Gaylord Common Stock issued and outstanding
immediately prior to the effective time of the Merger, divided by (ii) the
average of the daily closing prices per share of Common Stock, par value $1.00
per share, of Westinghouse ("Westinghouse Common Stock") as reported on the NYSE
Composite Transactions List for the 15 consecutive full NYSE trading days
immediately preceding the third full NYSE trading day prior to the effective
time of the Merger; provided, that Westinghouse will not be required to issue
more than 110 million shares of Westinghouse Common Stock in the Merger (or 88
million shares in the unlikely event that Westinghouse consummates the
anticipated separation of its power-related and non-power-related businesses
into two companies (the "Westinghouse Distribution") prior to the effective time
of the Merger). If the issuance of 110 million shares (or 88 million shares, as
the case may be) of Westinghouse Common Stock would result in Old Gaylord's
stockholders receiving shares with an aggregate value of less than $1.55 billion
(calculated in accordance with the Merger Agreement as described above), then
Old Gaylord would have the right to terminate the Merger Agreement, subject to
Westinghouse's right to issue additional shares. Based on the average of the
daily closing prices per share of Westinghouse Common Stock as reported on the
NYSE Composite Transactions List for the 15 day trading period ended July 15,
1997, and on the number of shares of Old Gaylord Common Stock outstanding on
that date, the Per Share Merger Consideration would have been 0.673 shares of
3
<PAGE> 7
Westinghouse Common Stock. The actual Per Share Merger Consideration at the
effective time of the Merger, however, may be greater or less than the above
number.
Old Gaylord and Westinghouse currently anticipate that the Merger will be
consummated prior to the Westinghouse Distribution. In such event, stockholders
of Old Gaylord who become shareholders of Westinghouse in connection with the
Merger and who continue to hold their shares of Westinghouse Common Stock on the
record date for the Westinghouse Distribution will be entitled to participate in
the Westinghouse Distribution on the same basis as all other shareholders of
Westinghouse. The foregoing is a brief summary of certain terms of the Merger
Agreement. A more complete description of the Merger and the Merger Agreement
may be found in the Proxy Statement/Prospectus.
THE DISTRIBUTION
Set forth below is a brief summary of certain terms of the Distribution and
related transactions. The Distribution Agreement is more fully described herein
under "THE RESTRUCTURING, THE DISTRIBUTION, AND THE MERGER," and is attached as
Annex II to the Proxy Statement/Prospectus.
Distributing Company....... Old Gaylord
Securities to be
Distributed................ All the outstanding shares of New Gaylord Common
Stock on the basis of one share of New Gaylord
Common Stock for each three shares of Old Gaylord
Common Stock, and cash in lieu of any fractional
shares of New Gaylord Common Stock. Based on the
number of shares of Old Gaylord Common Stock
outstanding as of July 15, 1997, it is estimated
that 32,425,230 shares of New Gaylord Common Stock
will be distributed to Old Gaylord stockholders in
the Distribution.
Time of Distribution....... The time at which the Distribution is effective
(the "Time of Distribution") is expected to be on
the day prior to the effective time of the Merger.
Stock certificates for shares of New Gaylord Common
Stock will be mailed as soon as practicable after
the Time of Distribution. See "THE RESTRUCTURING,
THE DISTRIBUTION, AND THE MERGER -- Manner of
Effecting the Distribution."
Record Date................ The Record Date for the Distribution has been
established by Old Gaylord's Board of Directors as
the fifth calendar day following the receipt of the
Tax Rulings (or legal opinions in lieu of certain
of such rulings). Old Gaylord will issue a press
release announcing the expected Time of
Distribution promptly after the Tax Rulings are
received.
Trading Market............. The shares of New Gaylord Common Stock to be
distributed in the Distribution have been approved
for listing, subject to official notice of
issuance, on the NYSE under the symbol "GET." See
"LISTING AND TRADING OF NEW GAYLORD COMMON STOCK."
Conditions to
Distribution............... The obligation of Old Gaylord to consummate the
Distribution is subject to the satisfaction or
waiver of a number of conditions, including, among
other things, the satisfaction or waiver of all
conditions to the obligations of Westinghouse and
Old Gaylord to effect the Merger (other than the
consummation of the Recapitalization, the
Restructuring, and the Distribution). See "THE
RESTRUCTURING, THE DISTRIBUTION, AND THE
MERGER -- Conditions."
Distribution Agent,
Transfer Agent, and
Registrar................ SunTrust Bank, Atlanta, the transfer agent for the
Old Gaylord Common Stock, is expected to serve as
the distribution agent and as the transfer agent
and registrar for the New Gaylord Common Stock.
4
<PAGE> 8
Tax Consequences........... Consummation of the Distribution and the Merger is
conditioned upon the receipt of private letter
rulings (the "Tax Rulings") issued by the Internal
Revenue Service (the "IRS") to the effect that (i)
the Distribution will qualify as a transaction
described in Section 355(a) of the United States
Internal Revenue Code of 1986, as amended (the
"Code"), and the transfer of assets and liabilities
to New Gaylord immediately preceding the
Distribution will qualify as a transaction
described in Section 351 of the Code and/or a
"reorganization" under Section 368(a)(1)(D) of the
Code, and (ii) the Merger will qualify as a
"reorganization" under Section 368(a)(1)(B) of the
Code. In addition, Old Gaylord and Westinghouse
have requested rulings from the IRS to the effect
that certain aspects of the Restructuring will not
be taxable to New Gaylord or any of its
subsidiaries, and consummation of the Distribution
and the Merger is conditioned upon either (i) the
receipt of such rulings or (ii) the receipt by Old
Gaylord and Westinghouse of opinions of their
respective counsel to the same effect. See "CERTAIN
U.S. FEDERAL INCOME TAX CONSEQUENCES."
Post-Closing Covenants
Agreement................ Westinghouse, Old Gaylord, New Gaylord, and certain
of New Gaylord's subsidiaries will enter into a
Post-Closing Covenants Agreement, the form of which
is attached as Annex IV to the Proxy
Statement/Prospectus (the "Post-Closing Covenants
Agreement"), which will provide, among other
things, (i) that New Gaylord and certain of its
subsidiaries will indemnify Westinghouse and its
affiliates (including, after the Merger, Old
Gaylord) against certain losses and liabilities and
Westinghouse will indemnify New Gaylord and its
affiliates against certain losses and liabilities;
(ii) that New Gaylord and its subsidiaries will not
engage in certain specified activities that would
constitute competition with the Cable Networks
Business, and Westinghouse will not engage in
certain activities that would constitute
competition with CMT International; and (iii) for a
post-closing adjustment based on the level of
working capital of the Cable Networks Business. See
"THE RESTRUCTURING, THE DISTRIBUTION, AND THE
MERGER -- Post-Closing Covenants Agreement."
Tax Disaffiliation
Agreement................ New Gaylord, Old Gaylord, and Westinghouse will
also enter into a Tax Disaffiliation Agreement, the
form of which is attached as Annex V to the Proxy
Statement/Prospectus (the "Tax Disaffiliation
Agreement"), which will set forth each party's
rights and obligations with respect to U.S.
Federal, state, local, and foreign taxes for
periods before and after the Merger and related
matters. See "THE RESTRUCTURING, THE DISTRIBUTION,
AND THE MERGER -- Tax Disaffiliation Agreement."
Relationship with Old
Gaylord After the
Distribution and Merger.. New Gaylord and Old Gaylord (or one of their
respective subsidiaries after giving effect to the
Restructuring) will enter into a number of other
agreements relating to, among other things, the
leasing by New Gaylord of certain real property to
Old Gaylord, the provision of services between New
Gaylord and Old Gaylord, and the licensing of
certain intellectual property. See "THE
RESTRUCTURING, THE DISTRIBUTION, AND THE
MERGER -- Relationships with Old Gaylord and
Westinghouse Following the Distribution and the
Merger."
5
<PAGE> 9
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Information Statement, including those
under the captions "BUSINESS OF NEW GAYLORD" and "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause the actual
results, performance, or achievements of New Gaylord to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. When used in this Information Statement, the
words "estimate," "project," "intend," "expect," "anticipate," and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are based on various factors, many of which are
beyond New Gaylord's control, and were derived utilizing numerous assumptions
and other important factors that could cause actual results to differ materially
from those in the forward-looking statements. Important factors that could cause
actual results to differ materially from those in the forward-looking statements
include, but are not limited to, the following: uncertainty as to New Gaylord's
future profitability without the Cable Networks Business; the growth in the
popularity of Christian music and family values lifestyles; the advertising
market in the United States in general and in New Gaylord's local television and
radio markets; the perceived attractiveness of Nashville, Tennessee as a
convention and tourist destination; competition in New Gaylord's existing and
potential future lines of business; New Gaylord's ability to integrate and
successfully operate any acquired businesses and the risks associated with such
businesses; and uncertainty as to the future profitability of any acquired
businesses. Other factors and assumptions not identified above were also
involved in the derivation of these forward-looking statements, and the failure
of such other assumptions to be realized as well as other factors may also cause
actual results to differ materially from those projected. New Gaylord assumes no
obligation to update these forward-looking statements to reflect actual results,
changes in assumptions, or changes in other factors affecting such
forward-looking statements.
SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA
FINANCIAL DATA OF NEW GAYLORD
The following table sets forth (i) unaudited summary consolidated
historical financial data as of June 30, 1997 and for the six months ended June
30, 1997 and 1996, before giving effect to the Transactions, which has been
derived from New Gaylord's unaudited Condensed Consolidated Financial Statements
as of June 30, 1997 and for the six months ended June 30, 1997 and 1996,
included elsewhere herein, (ii) summary consolidated historical financial data
as of December 31, 1996 and 1995 and for each year in the three-year period
ended December 31, 1996, before giving effect to the Transactions, which has
been derived from New Gaylord's Consolidated Financial Statements as of December
31, 1996 and 1995, and for each year in the three-year period ended December 31,
1996, included elsewhere herein; (iii) summary consolidated balance sheet data
as of December 31, 1994, which has been derived from the audited consolidated
balance sheet of New Gaylord as of December 31, 1994, not included elsewhere
herein; and (iv) unaudited summary consolidated pro forma financial data as of
and for the six months ended June 30, 1997 and for the year ended December 31,
1996, which gives effect to the Transactions, and which has been derived from
New Gaylord's Unaudited Pro Forma Consolidated Financial Statements included
elsewhere herein. Such data should be read in conjunction with the consolidated
financial statements (including the notes thereto) and "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" included
elsewhere herein. The unaudited summary consolidated pro forma balance sheet
data as of June 30, 1997 is presented as if the Transactions had occurred on
June 30, 1997, and the unaudited summary consolidated pro forma income statement
data for the six months ended June 30, 1997 and for the year ended December 31,
1996 is presented as if the Transactions had occurred on January 1, 1997 and
January 1, 1996, respectively. The unaudited summary consolidated pro forma
financial data incorporates certain assumptions set forth in the footnotes to
New Gaylord's Unaudited Pro Forma Consolidated Financial Statements included
elsewhere herein. The summary consolidated pro forma information does not
purport to represent what New Gaylord's financial position or results of
operations actually would have been had the Transactions, in fact, occurred on
such date or at the beginning of the period indicated, or to project New
Gaylord's financial position or results of operations at any future date or for
any future period.
6
<PAGE> 10
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------------- ------------------------------------------
ACTUAL ACTUAL
PRO FORMA ------------------- PRO FORMA ------------------------------
1997(1) 1997 1996 1996(1) 1996 1995 1994
--------- -------- -------- --------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Hospitality and attractions...... $154,656 $154,656 $131,953 $313,023 $313,023 $276,638 $274,494
Broadcasting and music........... 96,462 49,498 49,211 102,368 102,368 148,175 169,538
Cable networks................... 5,639 183,686 166,973 11,155 331,767 282,647 243,899
-------- -------- -------- -------- -------- -------- --------
Total revenues................. 256,757 387,840 348,137 426,546 747,158 707,460 687,931
Operating expenses:
Operating costs.................. 160,437 230,916 207,459 261,175 443,236 442,177(4) 427,853
Selling, general and
administrative................. 67,765 70,614 62,739 95,586 125,456 115,355 108,624
Depreciation and amortization:
Hospitality and attractions.... 15,795 15,795 11,880 28,861 28,861 21,782 19,040
Broadcasting and music......... 3,693 2,228 2,142 4,421 4,421 3,954 3,854
Cable networks................. 1,055 7,072 5,741 1,991 12,406 9,522 7,758
Corporate...................... 1,686 1,686 1,523 3,168 3,168 2,828 2,293
-------- -------- -------- -------- -------- -------- --------
Total depreciation and
amortization................. 22,229 26,781 21,286 38,441 48,856 38,086 32,945
-------- -------- -------- -------- -------- -------- --------
Total operating expenses....... 250,431 328,311 291,484 395,202 617,548 595,618 569,422
Operating income (loss):
Hospitality and attractions...... 16,319 16,319 15,694 45,938 45,941 40,215 38,305
Broadcasting and music........... 10,583 10,651 9,931 23,846 23,846 19,578(4) 37,837
Cable networks................... (7,858) 45,277 43,415 (13,379) 84,884 74,459 63,343
Corporate........................ (12,718) (12,718) (12,387) (25,061) (25,061) (22,410) (20,976)
-------- -------- -------- -------- -------- -------- --------
Total operating income......... 6,326 59,529 56,653 31,344 129,610 111,842 118,509
Interest expense................... (14,832) (22,132) (20,241) (18,976) (49,880) (40,856) (27,578)
Interest income.................... 11,525 11,674 10,451 22,904 21,580 5,968 738
Other gains (losses)............... 144,231(2) 142,828(2) 73,077(3) 74,281(3) 72,220(3) (8,088)(5) (15,172)(5)(7)
-------- -------- -------- -------- -------- -------- --------
Income from continuing operations
before provision for income
taxes.......................... 147,250 191,899 119,940 109,553 173,530 68,866 76,497
Provision for income taxes......... 47,646 65,903 45,282 35,770 62,947 27,500 29,451
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations..................... 99,604 125,996 74,658 73,783 110,583 41,366 47,046
Discontinued operations, net of
taxes............................ -- -- -- -- -- 42,998(6) --
-------- -------- -------- -------- -------- -------- --------
Net income....................... $ 99,604 $125,996 $ 74,658 $ 73,783 $110,583 $ 84,364 $ 47,046
======== ======== ======== ======== ======== ======== ========
Net income per share............... $ 3.07 $ 2.26
======== ========
Weighted average shares
outstanding...................... 32,471 32,585
======== ========
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
----------------------- AS OF DECEMBER 31,
PRO FORMA ACTUAL ------------------------------------
1997(1) 1997 1996 1995 1994
---------- ---------- ---------- ---------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................................ $1,160,299 $1,189,858 $1,152,626 $1,071,842 $988,476
Net assets of discontinued operations............... -- -- -- -- 214,649(6)
Payable to Old Gaylord.............................. -- 324,264 476,316 554,488 560,422
Long-term debt, including current portion........... 349,128 -- -- -- --
Total stockholders' equity.......................... 461,628 527,207 401,211 203,628 114,264
</TABLE>
- ---------------
(1) See Unaudited Pro Forma Consolidated Financial Statements and the notes
thereto included elsewhere herein.
(2) Includes a pretax gain of $144,259 on sale of Seattle-Tacoma television
station KSTW.
(3) Includes a pretax gain of $73,850 on sale of Houston television station
KHTV.
(4) Includes non-recurring pretax charge of $13,302 for write-down to net
realizable value of certain television program rights.
(5) Includes pretax losses of $5,529 and $26,000 for 1995 and 1994,
respectively, to reflect the loss on the January 1996 disposal of New
Gaylord's 14% limited partnership interest in the Fiesta Texas theme park.
(6) In November 1993, New Gaylord formalized plans to sell its cable television
systems segment (the "Systems") and began accounting for the Systems as
discontinued operations. The Systems were sold in September 1995 which
resulted in a gain of $42,998, net of income taxes of $30,824.
(7) Includes a pretax gain of $10,689 on sale of Milwaukee television station
WVTV.
7
<PAGE> 11
CAPITALIZATION
The following table sets forth the actual capitalization of New Gaylord as
of June 30, 1997 before giving effect to the Transactions and the pro forma
capitalization of New Gaylord as of such date after giving effect to the
Transactions (amounts in thousands, except share data). This table should be
read in conjunction with New Gaylord's Consolidated Financial Statements and the
notes thereto, New Gaylord's Unaudited Pro Forma Consolidated Financial
Statements and the footnotes thereto, and "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," all of which are included
elsewhere herein.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
---------------------
ACTUAL PRO FORMA
-------- ---------
<S> <C> <C>
Long-term debt:
Payable to Old Gaylord.................................... $324,264 $ --
Other long-term debt...................................... -- 349,128
-------- --------
Total............................................. 324,264 349,128
-------- --------
Stockholders' equity:
Common Stock, $100.00 par value, 10,000 shares authorized,
1,000 shares issued and outstanding.................... 100 --
Class B Common Stock, $.01 par value, 10,000 shares
authorized, no shares issued or outstanding............ -- --
New Gaylord Preferred Stock, $.01 par value, 100,000,000
shares authorized, no shares issued or outstanding..... -- --
New Gaylord Common Stock, $.01 par value, 150,000,000
shares authorized, 32,130,780 shares issued and
outstanding............................................ -- 321
Additional paid-in capital................................ 92,400 329,001
Retained earnings......................................... 434,707 132,306
-------- --------
Total stockholders' equity........................ 527,207 461,628
-------- --------
Total capitalization......................... $851,471 $810,756
======== ========
</TABLE>
8
<PAGE> 12
LISTING AND TRADING OF NEW GAYLORD COMMON STOCK
The shares of New Gaylord Common Stock to be distributed in the
Distribution have been approved for listing, subject to official notice of
issuance, on the NYSE under the symbol "GET," which is currently the symbol for
the Old Gaylord Class A Common Stock. There is currently no public trading
market for the New Gaylord Common Stock and there can be no assurance as to the
establishment or consistency of any such market. Of the 32.4 million shares of
New Gaylord Common Stock that are expected to be outstanding following the
Distribution, 19.2 million shares will become eligible for sale in the public
market immediately following the Distribution, and the remaining 13.2 million
shares held by affiliates will become eligible for resale, either immediately
following the Distribution or 90 days thereafter depending on the SEC's response
to Old Gaylord's request for interpretive guidance on this point, subject to
volume, manner of sale, and other limitations of Rule 144 under the Securities
Act. Persons who may be deemed to be affiliates of New Gaylord after the
Distribution generally include individuals or entities that control, are
controlled by, or are under common control with New Gaylord, and may include the
directors and executive officers of New Gaylord as well as any principal
stockholder of New Gaylord. See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT."
DIVIDEND POLICY
After the Distribution, the Board of Directors of New Gaylord intends to
establish a policy of declaring and paying regular quarterly cash dividends on
the New Gaylord Common Stock, although the amount of such dividends has not yet
been determined. The payment and amount of future dividends will be within the
discretion of the Board of Directors and will depend upon New Gaylord's future
earnings, financial condition, capital requirements, and other factors,
including any limitations under then-existing credit facilities. Pursuant to the
Restructuring, all of Old Gaylord's long-term debt, including bank indebtedness,
will be assumed by New Gaylord. See "THE RESTRUCTURING, THE DISTRIBUTION, AND
THE MERGER -- New Gaylord Credit Facility." New Gaylord believes that any
contractual restrictions on the payment of dividends required by its lenders
will not materially limit New Gaylord's ability to pay currently anticipated
cash dividends.
Old Gaylord has historically paid regular quarterly cash dividends. In the
first and second quarters of 1995, Old Gaylord paid a dividend of $.073 per
share with respect to the outstanding Old Gaylord Common Stock. For the third
and fourth quarters of 1995, Old Gaylord paid a $.076 per share dividend with
respect to its outstanding Old Gaylord Common Stock. Old Gaylord paid a dividend
of $.086 per share of outstanding Old Gaylord Common Stock for the first and
second quarters of 1996, $.09 per share for the third quarter of 1996, and $.10
per share for the fourth quarter of 1996 and the first and second quarters of
1997. The foregoing cash dividend amounts for 1995 and for the first two
quarters of 1996 have been adjusted to reflect 5% stock dividends paid in June
1995 and June 1996.
9
<PAGE> 13
THE RESTRUCTURING, THE DISTRIBUTION, AND THE MERGER
This section of the Information Statement describes certain aspects of the
Recapitalization, the Restructuring, the Distribution, and the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the agreements (including the Merger Agreement and the form of
Distribution Agreement) which are attached as Annexes to the Proxy
Statement/Prospectus.
REASONS FOR THE TRANSACTIONS
For information concerning the background and reasons for the Transactions,
see "THE MERGER -- Background of the Merger," "-- The Company's Reasons for the
Merger; Recommendation of its Board of Directors," and "THE COMPANY DISTRIBUTION
AND RELATED TRANSACTIONS -- General" in the Proxy Statement/Prospectus. As
stated therein, the Old Gaylord Board of Directors believes that the
Transactions, taken together, will permit the Old Gaylord stockholders to
continue to be involved in the New Gaylord Business while also providing them
with the opportunity to participate in the growth of the Cable Networks Business
as shareholders of Westinghouse. The structure of the Transactions was designed
to enable (i) Old Gaylord to transfer the Cable Networks Business to
Westinghouse on a tax-free basis, and (ii) Old Gaylord's stockholders to receive
the proceeds of such transfer on a tax-free basis while addressing
Westinghouse's objective of effecting a transaction that would result in stock
being issued directly to Old Gaylord's stockholders.
THE RECAPITALIZATION
Prior to the Distribution, New Gaylord will effect the Recapitalization
pursuant to which New Gaylord will amend and restate its Certificate of
Incorporation to, among other things, (i) authorize one class of common stock of
New Gaylord, (ii) increase the currently authorized number of shares of common
stock of New Gaylord to 150,000,000 shares of New Gaylord Common Stock, (iii)
convert the 1,000 shares of New Gaylord common stock, $100.00 par value,
currently outstanding into that number of shares of New Gaylord Common Stock
equal to one-third the total number of shares of Old Gaylord Common Stock
outstanding immediately prior to the Record Date, and (iv) authorize 100,000,000
shares of the Preferred Stock. See "DESCRIPTION OF CAPITAL STOCK." Based on the
number of shares of Old Gaylord Common Stock outstanding on July 15, 1997 the
1,000 shares of New Gaylord common stock currently outstanding would be
converted into 32,425,230 shares of New Gaylord Common Stock, all of which will
be distributed to Old Gaylord's stockholders in the Distribution.
THE RESTRUCTURING
Prior to the Distribution, Old Gaylord will effect a series of mergers,
asset and stock transfers, and liability assumptions among itself and its
subsidiaries. The purpose and effect of the Restructuring is to separate the New
Gaylord Business, which is not being acquired by Westinghouse in the Merger,
from the Cable Networks Business. In connection with the Restructuring, New
Gaylord will, or will cause one of its subsidiaries to, assume all liabilities
of Old Gaylord and its subsidiaries, including all of Old Gaylord's long-term
debt, other than certain liabilities to the extent that they arise out of the
Cable Networks Business, which Old Gaylord will, or will cause one of its
subsidiaries to, retain or assume.
Following the Restructuring, the assets transferred to or retained by Old
Gaylord or one of its subsidiaries and to be acquired by Westinghouse in the
Merger will consist principally of all of the assets that are used, or are being
held for use, in the Cable Networks Business (excluding certain specified
assets), including, but not limited to: (i) TNN and CMT; (ii) all of Old
Gaylord's contractual rights and obligations under the programming contracts for
programs (a) produced for and originally aired on TNN and/or CMT, or (b)
licensed from a third party for exhibition on TNN or CMT; (iii) all of Old
Gaylord's right, title, and interest in and to the program inventory in its
inventory tape library that was produced for and originally aired on TNN and/or
CMT; and (iv) all of Old Gaylord's right, title, and interest in and to certain
trademarks and other registered intellectual property relating primarily to the
Cable Networks Business. The Distribution Agreement provides that certain assets
that are or may be used or held for use in the Cable Networks Business prior to
the closing date of the Merger (the "Merger Closing Date") will be transferred
to or retained by New Gaylord, including, but not limited to: (i) all prepaid
insurance amounts; (ii) Old Gaylord's indirect ownership interest in the
Wildhorse Saloon and related entities; (iii) certain specified assets related to
CMT International and Z Music; (iv) the cash surrender value of all
10
<PAGE> 14
life insurance policies owned by Old Gaylord or any of its subsidiaries; (v) the
Opryland Productions Duplicating Services service mark; (vi) all real property
and related improvements (excluding certain properties listed in the
Distribution Agreement) owned by, used by, or in any way related to the Cable
Networks Business; (vii) certain shared computer software; and (viii) one Astra
jet aircraft.
THE DISTRIBUTION
Upon completion of the Restructuring and on the day prior to the effective
time of the Merger, Old Gaylord will effect the Distribution by distributing pro
rata to each holder of record of Old Gaylord Common Stock as of the Record Date
certificates representing that number of shares of New Gaylord Common Stock
equal to one-third the number of shares of Old Gaylord Common Stock held by such
holder. Cash will be distributed in lieu of any fractional shares of New Gaylord
Common Stock. See "-- Manner of Effecting the Distribution."
The Board of Directors of Old Gaylord has formally declared the
Distribution and authorized Old Gaylord to effect the Distribution on the day
prior to the effective time of the Merger subject to the satisfaction or waiver
of all the conditions to the consummation of the Merger, other than the
consummation of the Distribution. The Distribution will occur only if, and at
such time as, such conditions are satisfied and the Merger is about to occur.
See " -- Conditions."
MANNER OF EFFECTING THE DISTRIBUTION
Old Gaylord will effect the Distribution by delivering share certificates
for New Gaylord Common Stock to SunTrust Bank, Atlanta as the distribution agent
(the "Distribution Agent"), for delivery on a pro rata basis to the holders of
Old Gaylord Common Stock as of the close of business on the Record Date without
further action by such holders. It is expected that the Distribution Agent will
begin mailing share certificates representing the New Gaylord Common Stock as
soon as practicable after the Distribution. The Distribution will be deemed
effective upon notification by Old Gaylord to the Distribution Agent that the
Distribution has been declared and that the Distribution Agent is authorized to
proceed with the distribution of New Gaylord Common Stock. All shares of New
Gaylord Common Stock to be distributed in the Distribution will be fully paid,
nonassessable, and free of preemptive rights. See "DESCRIPTION OF CAPITAL
STOCK."
No fractional shares of New Gaylord Common Stock will be distributed in the
Distribution. Old Gaylord stockholders who otherwise would be entitled to
receive fractional shares of New Gaylord Common Stock in the Distribution will
receive a number of shares of New Gaylord Common Stock equal to the next lower
number of shares of Old Gaylord Common Stock from the number of shares actually
held by such holder which is evenly divisible by three. All fractional shares of
New Gaylord Common Stock that otherwise would have been distributed to such
holders of Old Gaylord Common Stock will be aggregated and sold in the open
market as soon as practicable after the Time of Distribution and the holders
otherwise entitled to such fractional shares will receive their pro rata share
of the proceeds of such sale in lieu of such fractional shares.
No holder of Old Gaylord Common Stock will be required to pay any cash or
any other consideration for the shares of New Gaylord Common Stock to be
received in the Distribution or to surrender or exchange shares of Old Gaylord
Common Stock in order to receive shares of New Gaylord Common Stock.
THE DISTRIBUTION AGENT WILL SEND YOU YOUR NEW GAYLORD STOCK CERTIFICATES
FOLLOWING CONSUMMATION OF THE DISTRIBUTION.
CONDITIONS
The obligation of Old Gaylord to consummate the Distribution is subject to
the fulfillment or waiver of each of the following conditions: (i) the
Recapitalization shall have been consummated in accordance with the terms of the
Distribution Agreement in all material respects; (ii) the Tax Disaffiliation
Agreement shall have been executed and delivered by each of Old Gaylord, New
Gaylord, and Westinghouse; (iii) the Restructuring shall have been consummated
in accordance with the terms of the Distribution Agreement in all material
respects; (iv) each condition to the closing of the Merger set forth in the
Merger Agreement, including, but not limited to, the receipt of the Tax Rulings
and the execution and delivery of the Post-Closing Covenants Agreement by each
of Westinghouse, Old Gaylord, New Gaylord, and certain of New Gaylord's
subsidiaries other than (a) the condition to each party's obligations set forth
therein as to the consummation of the transactions contemplated by the
Distribution Agreement and (b) the condition to Westinghouse's obligation set
forth therein as to the satisfaction
11
<PAGE> 15
of conditions contained in the Distribution Agreement, shall have been satisfied
or waived by the party for whose benefit such provision exists; and (v) the
Board of Directors of Old Gaylord shall be reasonably satisfied that, after
giving effect to the Restructuring, (a) Old Gaylord will not be insolvent and
will not have unreasonably small capital with which to engage in its businesses
and (b) Old Gaylord's surplus will be sufficient to permit the Distribution,
without violation of Section 170 of the General Corporation Law of the State of
Delaware. See "CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES." See also "THE
COMPANY DISTRIBUTION AND RELATED TRANSACTIONS -- Conditions to Consummation of
the Distribution," "THE MERGER AGREEMENT -- Conditions to Each Party's
Obligation to Effect the Merger," "-- Conditions to Obligations of Westinghouse
and Sub," "-- Conditions to Obligations of the Company" in the Proxy
Statement/Prospectus.
THE MERGER
At the effective time of the Merger, Sub will be merged with and into Old
Gaylord, with Old Gaylord continuing as the surviving corporation and a wholly
owned subsidiary of Westinghouse. The Per Share Merger Consideration to be
received by Old Gaylord's stockholders in the Merger will be equal to (i) the
quotient of (x) $1.55 billion divided by (y) the number of shares of Old Gaylord
Common Stock issued and outstanding immediately prior to the effective time of
the Merger, divided by (ii) the average of the daily closing prices per share of
Westinghouse Common Stock as reported on the NYSE Composite Transactions List
for the 15 consecutive full NYSE trading days immediately preceding the third
full NYSE trading day prior to the effective time of the Merger; provided, that
Westinghouse will not be required to issue more than 110 million shares of
Westinghouse Common Stock in the Merger (or 88 million shares in the unlikely
event that Westinghouse consummates the Westinghouse Distribution prior to the
effective time of the Merger). If the issuance of 110 million shares (or 88
million shares, as the case may be) of Westinghouse Common Stock would result in
Old Gaylord's stockholders receiving shares with an aggregate value of less than
$1.55 billion (calculated in accordance with the Merger Agreement as described
above), then Old Gaylord would have the right to terminate the Merger Agreement,
subject to Westinghouse's right to issue additional shares. Based on the average
of the daily closing prices per share of Westinghouse Common Stock as reported
on the NYSE Composite Transactions List for the 15-day trading period ended July
15, 1997, and on the number of shares of Old Gaylord Common Stock outstanding on
that date, the Per Share Merger Consideration would have been 0.673 shares of
Westinghouse Common Stock. The actual Per Share Merger Consideration at the
effective time of the Merger may be greater or less than the above number.
Old Gaylord and Westinghouse currently anticipate that the Merger will be
consummated prior to the Westinghouse Distribution. In such event, stockholders
of Old Gaylord who become shareholders of Westinghouse in connection with the
Merger and who continue to hold their shares of Westinghouse Common Stock on the
record date for the Westinghouse Distribution will be entitled to participate in
the Westinghouse Distribution on the same basis as all other shareholders of
Westinghouse.
The foregoing is a brief summary of certain terms of the Merger. A more
complete description of the Merger and the Merger Agreement may be found in the
Proxy Statement/Prospectus.
POST-CLOSING COVENANTS AGREEMENT
Pursuant to the Merger Agreement and prior to the Distribution, Old
Gaylord, New Gaylord, certain of New Gaylord's subsidiaries, and Westinghouse
will enter into the Post-Closing Covenants Agreement, which will provide, among
other things, (i) that New Gaylord and certain of its subsidiaries will
indemnify Westinghouse and its affiliates against certain losses and liabilities
and Westinghouse will indemnify New Gaylord and its affiliates against certain
losses and liabilities; (ii) that New Gaylord and its subsidiaries will not
engage in certain specified activities that would constitute competition with
the Cable Networks Business (see "THE BUSINESS OF NEW
GAYLORD -- Competition -- Cable Networks"), and Westinghouse will not engage in
certain activities that would constitute competition with CMT International; and
(iii) for a post-closing adjustment based on the level of working capital of the
Cable Networks Business. See "THE POST-CLOSING COVENANTS AGREEMENT" in the Proxy
Statement/Prospectus for a more complete description of the Post-Closing
Covenants Agreement.
12
<PAGE> 16
TAX DISAFFILIATION AGREEMENT
Pursuant to the Merger Agreement and prior to the Distribution, New
Gaylord, Old Gaylord, and Westinghouse will enter into the Tax Disaffiliation
Agreement, which will set forth each party's rights and obligations with respect
to U.S. Federal, state, local, and foreign taxes for periods before and after
the Merger, and related matters such as the filing of tax returns and the
conduct of audits and other tax proceedings. In general, under the Tax
Disaffiliation Agreement, New Gaylord will be responsible for any tax liability
of Old Gaylord and its subsidiaries for any taxable period (or portion thereof)
ending on or prior to the date of the Merger; any tax liability of New Gaylord
and its subsidiaries for any taxable period (or portion thereof) beginning after
the Merger; and certain other tax liabilities imposed on Westinghouse or any of
its subsidiaries after the Merger that are related to the tax position of Old
Gaylord or its subsidiaries at the time of the Merger. In addition, Westinghouse
will generally be responsible for all tax liabilities of Westinghouse and its
subsidiaries for any taxable period (or portion thereof) beginning after the
Merger. See "THE TAX DISAFFILIATION AGREEMENT" in the Proxy Statement/Prospectus
for a more complete description of the Tax Disaffiliation Agreement.
RELATIONSHIPS WITH OLD GAYLORD AND WESTINGHOUSE FOLLOWING THE DISTRIBUTION AND
THE MERGER
Prior to the Distribution, New Gaylord will enter into various agreements
described below with Old Gaylord relating to the future relationship between New
Gaylord and Old Gaylord after the Transactions. The net cost of these
arrangements, if any, is not expected to be material to New Gaylord. For the
purposes of this section, New Gaylord includes one or more of its subsidiaries
and Old Gaylord includes one or more of its subsidiaries, in each case after
giving effect to the Restructuring.
Leases. New Gaylord and Old Gaylord will enter into various five-year
leases of certain properties which are currently used by the Cable Networks
Business but which will be transferred to or retained by New Gaylord in the
Restructuring. Each of the leases will be on the terms set forth in the Annexes
to the Distribution Agreement.
Production and Promotional Services. New Gaylord and Old Gaylord will
enter into an agreement whereby Old Gaylord will provide to New Gaylord certain
production, exhibition, and promotional services, on the terms set forth in the
Annexes to the Distribution Agreement, including but not limited to: (i)
producing and exhibiting, at Old Gaylord's expense, the program "Grand Ole Opry
Live," which will consist of (a) airing Grand Ole Opry Live, on a weekly basis
for a period of five years from the Merger Closing Date, and (b) promoting the
program on TNN and otherwise; and (ii) for so long as New Gaylord retains a
33 1/3% or greater ownership interest in the Wildhorse Saloon, (a) producing and
exhibiting in prime-time at least four one-hour television specials originating
from the Wildhorse Saloon in each year for a period of five years from the
Merger Closing Date, (b) promoting such specials on TNN and otherwise, and (c)
providing additional ongoing promotion of the Wildhorse Saloon on TNN and CMT.
Promotional Advertising Services. New Gaylord and Old Gaylord will enter
into an agreement whereby Old Gaylord will provide to New Gaylord, for a period
of five years from the Merger Closing Date, certain promotional advertising
services for the New Gaylord Business, on terms set forth in the Annexes to the
Distribution Agreement, including, but not limited to: (i) exhibiting eight
30-second commercial announcements per day on TNN, inserted in local breaks
throughout the day, and (ii) exhibiting five 30-second commercial announcements
on CMT, inserted in local breaks throughout the day.
Intercompany Services to CMT International. New Gaylord and Old Gaylord
will enter into an agreement whereby Old Gaylord will provide, at New Gaylord's
request, for a period of five years from the Merger Closing Date, certain
programming, operating, and management services to CMT International on the
terms set forth in the Annexes to the Distribution Agreement.
Transponder Use. Westinghouse, as successor in interest to Group W
Television, Inc., will provide to Z Music, for a period of five years from the
Merger Closing Date, the use of the GI-R transponder number 6 (the
"Transponder") for distribution of Z Music. Furthermore, Old Gaylord will
provide uplink services to Z Music from Nashville, Tennessee, for such five-year
period, regardless of whether the use of the Transponder is terminated earlier.
13
<PAGE> 17
Trademark License Agreements. New Gaylord and Old Gaylord will enter into
various license agreements whereby: (i) Old Gaylord will grant to New Gaylord
the exclusive, irrevocable, perpetual, royalty-free right to use all CMT
trademarks and service marks in jurisdictions other than the United States and
Canada, and (ii) New Gaylord will grant to Old Gaylord the exclusive, worldwide,
royalty-free right to use, for a period of one year from the Merger Closing
Date, the Opryland Productions Duplicating Services service mark (with mandolin
design), in each case on the terms set forth in the Annexes to the Distribution
Agreement.
Software License Agreement. New Gaylord and Old Gaylord will enter into an
agreement whereby New Gaylord will grant to Old Gaylord the non-exclusive,
worldwide, perpetual, irrevocable, royalty-free license to use certain software
packages, in each case on the terms set forth in the Annexes to the Distribution
Agreement.
Transition Services Agreements. New Gaylord and Old Gaylord will enter
into an agreement whereby New Gaylord, at the request and expense of Old
Gaylord, will provide, for a period of five years from the Merger Closing Date
(unless otherwise stated in the Annexes to the Distribution Agreement), certain
goods and services on terms set forth in the Annexes to the Distribution
Agreement, including, but not limited to, access to and use of the Opryland
Hotel, the Opry House, the Wildhorse Saloon, the Opryland theme park, and the
Ryman Auditorium.
Furthermore, New Gaylord and Old Gaylord will also enter into an agreement
whereby Old Gaylord, at the request and expense of New Gaylord, will provide,
for a period of five years from the Merger Closing Date (unless otherwise stated
in the Annexes to the Distribution Agreement), certain goods and services on
terms set forth in the Annexes to the Distribution Agreement, including, but not
limited to, access to and use of its production facilities, studio, edit,
post-production, remote units, and staff.
NEW GAYLORD CREDIT FACILITY
Pursuant to the Restructuring, New Gaylord will assume all of Old Gaylord's
long-term indebtedness, which, as of June 30, 1997, aggregated approximately
$354 million. In that regard, New Gaylord will assume all of Old Gaylord's
obligations under a revolving credit facility entered into by Old Gaylord in
August 1997 (the "1997 Credit Facility").
The lenders under the 1997 Credit Facility are a syndicate of banks with
NationsBank of Texas, N.A., acting as agent (the "Agent"). The maximum amount
that can be borrowed under the 1997 Credit Facility is $600 million. The final
maturity of the 1997 Credit Facility is August 2002. The 1997 Credit Facility is
unsecured and guaranteed by certain New Gaylord subsidiaries.
Amounts outstanding under the 1997 Credit Facility bear interest at a rate,
at Old Gaylord's (and after the Restructuring and the Distribution, New
Gaylord's) option, equal to either (i) the higher of the Agent's prime rate or
the federal funds rate plus 1/2%, or (ii) LIBOR plus a margin ranging from .40%
to 1% depending on New Gaylord's ratio of debt to capitalization or debt
ratings. In addition, New Gaylord will be required to pay a commitment fee
ranging between .125% and .25% per year, also depending on the ratio of debt to
capitalization or debt ratings, on the average unused portion of the 1997 Credit
Facility and an annual administrative fee to the Agent.
The 1997 Credit Facility will require New Gaylord to maintain certain
financial ratios and minimum stockholders' equity levels and will be subject to
limitations on, among other things, mergers and sales of assets, additional
indebtedness, dividends and stock repurchases, liens, and transactions with
affiliates.
EXPENSES
Regardless of whether the Distribution and the Merger are consummated, all
fees, costs, and expenses incurred in connection with the Transactions will be
paid by the party incurring such fees, costs, and expenses, except that each of
Westinghouse and Old Gaylord will bear and pay one-half of (i) the fees, costs,
and expenses incurred in connection with filing, printing, and mailing of the
Form S-4, the Registration Statement, and the Proxy Statement/Prospectus, and
(ii) all filing fees incurred under the Hart Scott Rodino Antitrust Improvements
Act of 1976, as amended, in connection with the Merger.
If the Merger is consummated, New Gaylord will be responsible for and will
pay all expenses of Old Gaylord directly related to the Transactions.
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BUSINESS OF NEW GAYLORD
The following description of the business of New Gaylord gives effect to
the Transactions.
INTRODUCTION AND HISTORY
New Gaylord is a diversified entertainment company emphasizing family
values and its country music roots, operating principally in three industry
segments: (i) hospitality and attractions; (ii) broadcasting and music; and
(iii) cable networks. New Gaylord's predecessor traces its origins to a
newspaper publishing business founded in 1903 in the Oklahoma Territory by a
group including the Gaylord and Dickinson families. In 1928, New Gaylord's
predecessor entered the radio broadcasting business and, in 1949, expanded its
broadcasting interests to include television stations. New Gaylord currently
owns a television station that is affiliated with the CBS television network and
three radio stations. See "-- Broadcasting and Music."
In 1983, New Gaylord's predecessor acquired Opryland USA, an interrelated
group of businesses tracing their origins to the Grand Ole Opry music radio show
created in 1925, which has become the cornerstone of the company's hospitality
and attractions businesses. Opryland USA has developed an entertainment and
convention/resort complex in Nashville, Tennessee, that is anchored by the Opry
House (the current home of the Grand Ole Opry), the Opryland Hotel, which is one
of the nation's largest convention/resort hotels, and the Opryland theme park.
Also in 1983, Opryland USA entered the cable networks business by launching
TNN, a cable network with a national audience featuring country lifestyles,
entertainment, and sports, and, in 1991, acquired a 67% interest in CMT, a cable
network with a 24-hour country music video format. Since TNN's formation and
CMT's acquisition, TNN and CMT have been marketed by Westinghouse through
certain of Westinghouse's divisions and subsidiaries. An affiliate of
Westinghouse also owns the remaining 33% interest in CMT. Both TNN and the U.S.
and Canadian operations of CMT will be acquired by Westinghouse in the Merger.
The first of the CMT International cable networks was launched in Europe in
1992. CMT International, which programs primarily country music videos, was
later expanded into Asia, the South Pacific, and Latin America. In 1994, New
Gaylord's predecessor acquired an option to purchase 95% of the outstanding
common stock of Z Music, a cable network currently featuring primarily
contemporary Christian music videos. New Gaylord currently manages the
operations of Z Music. In January 1997, New Gaylord's predecessor acquired the
assets of Word, a record and music publishing company featuring primarily
contemporary Christian music.
HOSPITALITY AND ATTRACTIONS
New Gaylord's hospitality and attractions operations consist primarily of
an interrelated group of businesses including the Grand Ole Opry, the Opryland
Hotel, the Opryland theme park, the Wildhorse Saloon, the Ryman Auditorium, the
General Jackson (an entertainment showboat), and other related businesses.
Convention/Resort Hotel Operations
The Opryland Hotel. The Opryland Hotel, situated on approximately 120
acres in the Opryland complex, is the seventh largest hotel in the United States
in terms of number of guest rooms and has more exhibit space per room than any
other convention hotel in the world. The Opryland Hotel attracts convention
business, which accounted for approximately 78% of the hotel's revenues in each
of 1996, 1995, and 1994, from major trade associations and corporations. It also
serves as a destination resort for vacationers seeking accommodations in close
proximity to the Opryland theme park and the Grand Ole Opry as well as to other
attractions in the Nashville area. New Gaylord believes that the ambience
created at the Opryland Hotel by combining a state of the art convention
facility, live musical entertainment, and old-fashioned Southern hospitality and
charm are factors that differentiate it from other convention/resort hotels.
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The following table sets forth information concerning the Opryland Hotel
for each of the five years in the period ended December 31, 1996.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average number of guest rooms............... 2,613 1,907 1,878 1,891 1,891
Occupancy Rate.............................. 84.7% 87.5% 87.9% 85.5% 85.5%
Average Room Rate........................... $ 131.21 $ 132.99 $ 130.15 $ 126.27 $ 121.09
Food and beverage revenues (in thousands)... $ 59,904 $ 50,418 $ 48,694 $ 46,870 $ 45,702
Total revenues (in thousands)............... $196,226 $153,062 $147,049 $140,573 $133,288
</TABLE>
To serve conventions, the Opryland Hotel has 2,883 guest rooms, four
ballrooms with approximately 123,900 square feet, 85 banquet/meeting rooms, and
total dedicated exhibition space of approximately 289,000 square feet. In
addition to extensive convention facilities, the Opryland Hotel features the
Delta, a 4.5 acre atrium containing a New Orleans street scene with shops; a 1.5
acre garden conservatory; a 1.5 acre water-oriented interior space called the
Cascades; six restaurants; a food court featuring a variety of cuisines; three
swimming pools; and twenty-nine retail shops. In the Delta, hotel guests and
visitors can take boat rides on the Delta's indoor river. Live entertainment is
featured in the Cascades and in the hotel's restaurants and lounges, and special
productions for conventions are often staged in the hotel or on the General
Jackson showboat. Springhouse Golf Club, New Gaylord's 18-hole championship golf
course, attracts conventions requiring the availability of golf and makes the
hotel more attractive to vacationers. The Springhouse Golf Club also hosts an
annual Senior PGA Tour event, the BellSouth Senior Classic at Opryland, which is
televised on NBC.
The Opryland Hotel directs its convention marketing efforts primarily to
major trade, industry, and professional associations and corporations. New
Gaylord believes that the primary factors in successfully marketing the Opryland
Hotel to meeting planners have been the reputation of the Opryland Hotel's
services and facilities; the Opryland Hotel's ability to offer comprehensive
convention services at a single facility; the quality and variety of
entertainment and activities available at the hotel and in the Opryland complex
generally; and the central location of Nashville within the United States. The
Opryland Hotel typically enters into contracts for conventions several years in
advance. To date, Opryland Hotel has experienced a minimal number of
cancellations. Conventions that cancel are contractually required to pay certain
penalties and face the possible loss of future convention space at the hotel. As
of April 30, 1997, convention bookings for the balance of 1997 and for 1998 were
for approximately 578,000 and 676,000 guest room nights, respectively,
representing 82% and 64%, respectively, of the available guest room nights for
such periods.
New Gaylord also markets the Opryland Hotel as a destination resort through
national and local advertising and a variety of promotional activities. As part
of its marketing activities, New Gaylord advertises promotional "packages" on
TNN and CMT and through other media. Such promotions include a "Country Winter
Celebration," "Spring into Summer," the International Country Music Fan Fair
Celebration in June of each year, and "A Country Christmas," which runs each
year from early November through Christmas Day. The Country Christmas program
has contributed to the hotel's high occupancy rate during the month of December
(approximately 84%, 90%, and 91% of available guest room nights during December
1996, 1995, and 1994, respectively), traditionally a slow period for the hotel
industry. Following the Merger, New Gaylord will continue to have access to
promotional spots on TNN and CMT, consistent with past practices, allowing New
Gaylord to promote the Opryland Hotel and other properties on these cable
networks for a period of five years. See "THE RESTRUCTURING, THE DISTRIBUTION,
AND THE MERGER -- Relationships with Old Gaylord and Westinghouse Following the
Distribution and Merger."
The General Jackson. The General Jackson, a 300-foot, four-deck paddle
wheel showboat, operates on the Cumberland River, which flows past the Opryland
complex. Its Victorian Theatre can seat 620 people for banquets and 1,000 people
for theater-style presentations. The showboat stages Broadway-style shows and
other theatrical productions. It is one of many sources of entertainment that
New Gaylord makes available to conventions held at the Opryland Hotel and
contributes to New Gaylord's revenues from convention participants. During the
day it serves primarily tourists visiting the Opryland complex and the Nashville
area.
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Opryland Theme Park
The Opryland theme park is a musical show park that emphasizes live
productions of country, rock 'n' roll, gospel, bluegrass, and Broadway show
tunes. The 218-acre park consists of approximately 80 acres of developed in-park
entertainment area, 30 acres of support facilities, 70 acres of parking lot, and
38 acres of contiguous undeveloped land. The park has 11 theaters, bandstands,
and other facilities where it can stage musical productions. These facilities,
including a 4,000-seat amphitheater and an additional 2,200-seat theater, have a
total seating capacity of approximately 12,000. The park can simultaneously
stage up to 11 musical shows and, during the summer months, presents up to 50
shows each day. The amphitheater is also used regularly for television
productions and other events. "Nashville On Stage," a series of live concerts,
is slated for its fourth year of operation during the 1997 season. From May to
August 1997, top-name music stars, including The Oak Ridge Boys, Billy Ray
Cyrus, The Temptations, and Sandi Patty are scheduled to perform at the park.
New Gaylord believes that its attention to, and emphasis on, live
entertainment productions are the principal factors that differentiate the
Opryland theme park from other amusement and theme parks. In addition to
offering shows and other live entertainment, the park operates 21 rides as well
as shops, restaurants, children's play areas, and other facilities. New Gaylord
makes regular capital improvements in the form of new rides and attractions. The
park also features the Grand Ole Opry Museum and other museums containing
memorabilia collections of country music legends Roy Acuff and Minnie Pearl.
These museums are located in the Opry Plaza area of the park, which remains open
year round. The park has a broadcast studio from which New Gaylord's radio
station WSM-FM is broadcast. With certain exceptions, such as "Nashville on
Stage" concerts, visitors to the park purchase a single ticket for a full day's
admission to all of the park's entertainment and attractions.
The park operates on weekends in the spring and the autumn and seven days a
week in the summer. In recent years, the "Christmas in the Park" program during
November and December has provided an additional attraction for the Country
Christmas program at the Opryland Hotel, extending the park's operating season.
The following table sets forth certain information concerning the park.
"Revenues per visitor" include revenues from tickets, food and beverage sales,
and sales of retail merchandise. "Total attendance" and "Revenues per visitor"
include paying and non-paying visitors. "Average ticket price" includes paying
visitors only. The data set forth for 1993 through 1996 below includes results
of the "Christmas in the Park" program during which the revenues per visitor and
ticket prices were significantly less than during the park's other operating
periods.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total attendance (in thousands)....................... 1,980 2,100 2,266 2,247 2,023
Revenues per visitor.................................. $26.73 $27.66 $26.52 $24.11 $25.49
Average ticket price.................................. $15.60 $16.34 $15.15 $14.01 $15.05
Number of operating days.............................. 190 197 218 190 147
</TABLE>
Country Music Entertainment
The Grand Ole Opry. The Grand Ole Opry, the most widely known platform for
country music in the world, is a live country music show with performances every
Friday and Saturday night and frequent summer matinees. The Opry House, home of
the Grand Ole Opry, is located in the Opryland complex. The show is radio
broadcast by WSM-AM every Friday and Saturday night from the Opry House, and TNN
telecasts a 30-minute live segment every Saturday night together with a
30-minute live segment of the warm-up preceding the show. Following the Merger,
the 30-minute live segment of the Grand Ole Opry will continue to be shown on
TNN for five years. See "THE RESTRUCTURING, THE DISTRIBUTION, AND THE
MERGER -- Relationships with Old Gaylord and Westinghouse Following the
Distribution and Merger." The show has been radio broadcast since 1925 on
WSM-AM, making it the longest running live radio program in the world. During
the summer months, the Grand Ole Opry, which requires the purchase of a separate
admission ticket, is a complementary attraction to the live shows in the
Opryland theme park.
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The Grand Ole Opry currently has 72 performing members who are stars or
other notables in the country music field. Members perform at the Grand Ole Opry
and there are no financial inducements attached to membership in the Grand Ole
Opry other than the prestige associated with membership. In addition, the Grand
Ole Opry presents performances by many other country music artists. The
following is a list of the current members of the Grand Ole Opry (including year
of membership).
MEMBERS OF THE GRAND OLE OPRY
<TABLE>
<S> <C> <C>
Bill Anderson -- 1961 Jan Howard -- 1972 Charley Pride -- 1993
Ernie Ashworth -- 1964 Alan Jackson -- 1991 Jeanne Pruett -- 1973
Clint Black -- 1991 Stonewall Jackson -- 1956 Del Reeves -- 1966
Garth Brooks -- 1990 Jim & Jesse -- 1964 Riders In The Sky -- 1982
Jim Ed Brown -- 1963 George Jones* -- 1969 Johnny Russell -- 1985
The Carlisles -- 1953 Grandpa Jones* -- 1947 Jeannie Seely -- 1967
Roy Clark -- 1987 Hal Ketchum -- 1994 Ricky Van Shelton -- 1988
Jerry Clower -- 1973 Pete Kirby ("Bashful Jean Shepard -- 1955
John Conlee -- 1981 Brother Oswald") -- 1995 Ricky Skaggs -- 1982
Wilma Lee Cooper -- 1957 Alison Krauss -- 1993 Melvin Sloan Dancers -- 1957
Skeeter Davis -- 1959 Hank Locklin -- 1960 Connie Smith -- 1971
Little Jimmy Dickens* -- 1948 Charlie Louvin -- 1955 Mike Snider -- 1990
Joe Diffie -- 1993 Patty Loveless -- 1988 Hank Snow* -- 1950
Roy Drusky -- 1958 Loretta Lynn* -- 1962 Marty Stuart -- 1992
Holly Dunn -- 1989 Martina McBride -- 1995 Randy Travis -- 1986
The 4 Guys -- 1967 Mel McDaniel -- 1986 Travis Tritt -- 1992
Larry Gatlin & The Gatlin Reba McEntire -- 1985 Justin Tubb -- 1955
Brothers Band -- 1976 Barbara Mandrell -- 1972 Porter Wagoner -- 1957
Don Gibson -- 1958 Ronnie Milsap -- 1976 Billy Walker -- 1960
Vince Gill -- 1991 Lorrie Morgan -- 1984 Charlie Walker -- 1967
Billy Grammar -- 1959 Jimmy C. Newman -- 1956 Steve Wariner -- 1996
Jack Greene -- 1967 Osborne Brothers -- 1964 The Whites -- 1984
Tom T. Hall -- 1980 Dolly Parton -- 1969 Teddy Wilburn -- 1953
George Hamilton IV -- 1960 Stu Phillips -- 1967 Boxcar Willie -- 1981
Emmylou Harris -- 1992 Ray Pillow -- 1966
</TABLE>
- ---------------
* Members of the Country Music Hall of Fame.
The Opry House, which was built in 1974 to replace the Ryman Auditorium as
the home of the Grand Ole Opry, contains a 45,000 square foot auditorium with
4,400 seats, a television production center that includes a 300-seat studio as
well as lighting, audio, and video control rooms, and set design and scenery
shops. The Opry House is used by New Gaylord for the production of television
and other programming and for third parties such as national television networks
and the Public Broadcasting System. The Opry House is also rented for concerts,
theatrical productions, and special events and is used by the Opryland Hotel for
convention entertainment and events. Following the Merger, the Cable Networks
Business will have continued access to and use of the Opry House and certain
other properties owned by New Gaylord. See "THE RESTRUCTURING, THE DISTRIBUTION,
AND THE MERGER -- Relationships with Old Gaylord and Westinghouse Following the
Distribution and the Merger."
The Wildhorse Saloon. Since 1994, New Gaylord has operated the Wildhorse
Saloon, a country music dance club on historic Second Avenue in downtown
Nashville. The three-story, 56,000 square-foot facility includes a 3,000 square
foot dance floor, a 190-seat restaurant and banquet facility, and a 15 x 22 foot
television screen featuring, among other things, country music videos. The club
also has a broadcast-ready stage and facilities to house mobile production units
from which broadcasts of live concerts may be distributed nationwide. New
Gaylord owns 51% of a joint venture with Levy Restaurants Group ("Levy"), which
was established to expand the Wildhorse Saloon concept to major, high-profile
tourism cities around the country. Levy will provide
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<PAGE> 22
restaurant management expertise and oversee day-to-day operations, site
selections, and lease negotiations for the restaurants. Cities currently under
consideration for expansion of the Wildhorse Saloon concept include Atlanta,
Dallas, Las Vegas, Los Angeles, Orlando, and Washington, D.C. Following the
Merger, the Wildhorse Saloon will receive continued exposure and promotion on
TNN for a period of five years, including the airing of four shows annually on
TNN to originate from the Wildhorse Saloon. See "THE RESTRUCTURING, THE
DISTRIBUTION, AND THE MERGER -- Relationships with Old Gaylord and Westinghouse
Following the Distribution and the Merger."
Ryman Auditorium. In 1994, New Gaylord re-opened the renovated Ryman
Auditorium, the former home of the Grand Ole Opry, for concerts and musical
productions, including musicals produced by New Gaylord such as "Always Patsy
Cline" and the currently-running "Lost Highway," a tribute to the life and music
of Hank Williams. The Ryman Auditorium, built in 1892, is listed on the National
Register of Historic Places and seats approximately 2,100. Recent performers at
the Ryman Auditorium include James Brown, Bob Dylan, Amy Grant, Lyle Lovett,
Ricky Skaggs, and Bruce Springsteen.
BROADCASTING AND MUSIC
Television Stations
New Gaylord and its predecessor have been engaged in television
broadcasting since 1949, at one time owning as many as seven television
stations. As of December 31, 1996, New Gaylord owned and operated two television
stations: KTVT (Dallas-Fort Worth, Texas), and KSTW (Tacoma-Seattle,
Washington), which have been affiliated with the CBS television network since
1995. In June 1997, New Gaylord consummated the sale of KSTW for $160 million in
cash.
As of November 1996, based on the Nielsen Station Index produced by the
A.C. Nielsen Company ("Nielsen"), KTVT, broadcasting on channel 11, was the
fourth ranked station, out of 13 commercial stations, in the Dallas-Fort Worth
Designated Market Area ("DMA"), which is an exclusive geographic area consisting
of all counties in which the local stations receive a preponderance of total
viewing hours. The Dallas-Fort Worth DMA, consisting of 1.85 million television
households, is the eighth largest DMA in the United States. KTVT's broadcast
license issued by the Federal Communications Commission (the "FCC") expires in
August 1998, but is expected to be renewed. See "-- Regulation and Legislation."
KTVT has historically generated revenues from local, regional, and national
spot advertising. The majority of local, regional, and national spot advertising
contracts are short-term, generally running for only a few weeks. Advertising
rates charged by a television station are based primarily upon the demographics
and number of television households in the area served by the station, as well
as the station's ability to attract audiences as reflected in surveys made by
Nielsen. DMA data, which is published by Nielsen, is a significant factor in
determining television advertising rates. Rates are highest during the most
desirable viewing hours (generally between 5:00 p.m. and midnight). The rates
for local and national advertising are determined by KTVT. Local advertising
spots are sold by KTVT's sales personnel and national advertising spots are sold
by HRP, Inc., the national advertising sales agent for KTVT. Pursuant to an
affiliation agreement with CBS, KTVT receives cash compensation and network
programming from CBS (which represents the majority of the programming for
KTVT). In turn, the affiliation agreement entitles CBS to a portion of the
advertising spots on KTVT. Accordingly, KTVT now has fewer advertising spots to
sell than it did prior to July 1995, when it was an independent television
station.
Radio Stations
WSM-AM and WSM-FM. New Gaylord's radio stations WSM-AM and WSM-FM
commenced broadcasting in 1925 and 1967, respectively. New Gaylord's involvement
with country music dates back to the creation of the Grand Ole Opry, which has
been broadcast live on WSM-AM since 1925.
WSM-AM and WSM-FM are each broadcast from the Opryland complex and have
country music formats. WSM-AM went on the air in 1925 and is one of the nation's
25 "clear channel" stations, meaning that no other station in a 750-mile radius
uses the same frequency for nighttime broadcasts. As a result, the station's
signal,
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transmitted by a 50,000 watt transmitter, can be heard at night in much of the
United States and parts of Canada. New Gaylord has radio broadcast studios in
the Opryland Hotel, at the Opryland theme park, and at the Wildhorse Saloon.
WWTN-FM. In 1995, New Gaylord acquired the assets of radio station
WWTN-FM, operated out of Nashville, Tennessee, which has a news/talk/sports
format.
Music
Word Entertainment. In January 1997, New Gaylord's predecessor acquired
the assets of Word for $120 million, which included approximately $40 million of
working capital. Word is one of the largest contemporary Christian music
companies in the world, with nine recording labels featuring artists such as Amy
Grant, Shirley Caesar, Sandi Patty, and Point of Grace. Other significant Word
operations include print and hymnal music sales, distribution of music and video
products owned by third parties, and music publishing, including a 40,000 song
catalog. Word produces a wide variety of traditional and contemporary Christian
inspirational music, including adult contemporary, pop, country, rock, gospel,
praise and worship, rap, metal, and rhythm and blues, with an emphasis on
positive, inspirational, and family values themes. In addition, Word produces
master recordings of classical music and is a leading supplier of value-priced
Christmas music to mass market, convenience, and specialty stores.
In April 1997, New Gaylord announced the acquisition of Blanton/Harrell
Entertainment, an international management company which, together with Word and
Z Music, will anchor New Gaylord's family values entertainment offerings.
Blanton/Harrell Entertainment manages primarily Christian music artists,
including Word artist Amy Grant, the top-selling contemporary Christian music
artist of all time, Michael W. Smith, and Gary Chapman.
Opryland Music Group. Opryland Music Group ("OMG") is primarily engaged in
the music publishing business and owns one of the world's largest catalogs of
copyrighted country music songs. The OMG catalog also includes popular music,
with songs of legendary writers such as Hank Williams, Pee Wee King, Roy
Orbison, and Don and Phil Everly. Songs in the OMG catalog have accumulated more
country "Song of the Year" awards from the major performing rights organizations
than the songs of any other publisher, and the OMG catalog contains more than 40
songs that have been publicly performed over a million times. Standards such as
"Oh, Pretty Woman," "Blue Eyes Cryin' in the Rain," and "When Will I Be Loved"
are included in the roster of OMG songs. In addition to commercially recorded
music, OMG issues licenses for the use of its songs in films, plays, print,
commercials, videos, cable, and television. Through various subsidiaries and
sub-publishers, OMG collects royalties on licenses granted in a number of
foreign countries in addition to its U.S.-based business.
CABLE NETWORKS
CMT International. In October 1992, CMT launched CMT International through
a new cable network, CMT Europe. CMT International expanded its reach to include
portions of Asia and the South Pacific, including Australia and New Zealand,
with the launch of a second cable network in 1994. In 1995, CMT International
launched its third cable network in Latin America, allowing CMT's satellite
signals to potentially reach an estimated 90% of the world's homes with
televisions. The programming for CMT International currently consists primarily
of country music videos. At December 31, 1996, CMT International had 6.8 million
subscribers.
Z Music. In 1994, New Gaylord's predecessor entered into an agreement to
manage Z Music in exchange for an option to purchase 95% of Z Music's
outstanding capital stock. Z Music, a cable network currently featuring
primarily contemporary Christian music videos, is currently available in
approximately 19 million U.S. broadcast and cable homes. Z Music's contemporary
Christian programming covers a spectrum of musical styles, ranging from
inspirational, country and rock videos to spiritual music videos with more overt
Christian messages. The Z Music network also programs music news and artists'
interviews, featuring artists with strong convictions and a passion for their
message. Z Music has recently expanded its programming to include positive,
uplifting music by artists that are not necessarily categorized as Christian. Z
Music also produces and syndicates radio news features, "Radio Z Buzz," that
reach audiences in more than 100 markets across the U.S. New Gaylord anticipates
that it will exercise its option to purchase Z Music in 1997.
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ADDITIONAL INTERESTS
Bass Pro Shops. In 1993, New Gaylord's predecessor purchased a minority
interest in a partnership that owns and operates Bass Pro Shops, a leading
retailer of premium outdoor sporting goods and fishing tackle. Bass Pro Shops
serves its customers through an extensive mail order catalog operation, a
185,000-square-foot retail center in Springfield, Missouri, and an additional
retail store in Atlanta, Georgia. Bass Pro Shops currently has four new stores
under construction, including one in Nashville adjacent to the Opryland Hotel.
The partnership also owns a two-thirds interest in Tracker Marine, a
manufacturer of fiberglass and aluminum fishing boats, which are sold through
the Bass Pro Shops catalogs and by means of wholesale distribution to authorized
dealers. New Gaylord's properties are featured in the approximately 40 million
Bass Pro Shops catalogs published annually. New Gaylord also provides hotel
consulting services to Bass Pro Shops' Big Cedar Lodge, a 1,250 acre resort
development on Table Rock Lake located in the Ozark Mountains in southern
Missouri.
Texas Rangers Baseball Club. New Gaylord owns a 10% interest in B/R
Rangers Associates, Ltd., a limited partnership that owns the Texas Rangers
major league baseball club, the American League West Division Champions in 1996.
COMPETITION
Hospitality and Attractions
New Gaylord's hospitality and attractions operations compete with all other
forms of entertainment, lodging, and recreational activities. In addition to the
competitive factors outlined below for each of New Gaylord's businesses within
the hospitality and attractions segment, the success of the hospitality and
attractions segment is dependent upon certain factors beyond New Gaylord's
control including economic conditions, amount of available leisure time,
transportation costs, public taste, and weather conditions.
The Opryland Hotel competes with other hotels throughout the United States
and abroad, including many hotels operated by companies with greater financial,
marketing, and human resources than New Gaylord. Principal factors affecting
competition within the convention/resort hotel industry include the hotel's
reputation, quality of facilities, location and convenience of access, price,
and entertainment. The hotel business is management and marketing intensive, and
the Opryland Hotel competes with other hotels throughout the United States for
high quality management and marketing personnel. Although the Opryland Hotel has
historically enjoyed a relatively low rate of turnover among its managerial and
marketing personnel, there can be no assurance that it will continue to be able
to attract and retain high quality employees with managerial and marketing
skills. The hotel also competes with other employers for nonmanagerial employees
in the Middle Tennessee labor market, which recently has had a low level of
unemployment. The low unemployment rate makes it difficult to attract qualified
nonmanagerial employees and has been a substantial factor in the high turnover
rate among those employees.
The principal competitive factors in the amusement park industry generally
include the uniqueness and perceived quality of the rides and attractions in a
particular park; its proximity to densely populated areas; the atmosphere,
cleanliness, and safety of a park; the quality of food and beverages; and
available entertainment. New Gaylord believes that its attention to, and
emphasis on, live musical productions is one of the factors that differentiates
the Opryland theme park from other amusement and theme parks. Opryland's
emphasis on live musical entertainment requires that it compete with other show
parks, concert halls, and other forums for live entertainment for musical talent
as well as creative and production personnel, who are essential to New Gaylord's
operations. In addition, the same factors affecting the hotel's ability to
recruit and retain qualified nonmanagerial employees also affect the park.
Broadcasting and Music
KTVT competes for advertising revenues primarily with television stations
serving the same markets, including both independent stations and
network-affiliated stations. Advertising rates of KTVT are based principally on
the size, market share, and demographic profile of its viewing audience. WSM-AM,
WSM-FM,
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<PAGE> 25
and WWTN-FM similarly compete for advertising revenues with other radio stations
in the same market area on the basis of formats, ratings, market share, and the
demographic make-up of their audiences. New Gaylord's television and radio
stations also compete with cable networks and local cable channels for both
audience share and advertising revenues and with radio, newspapers, billboards,
and magazines for advertising revenues. Other sources of present and potential
competition are prerecorded video cassettes, direct broadcast satellite
services, and multi-channel, multi-point distribution services ("MMDS" also
known as "wireless cable"). Management competence and experience, station
frequency signal coverage, network affiliation, format effectiveness of
programming, sales effort, and level of customer service are all important
factors in determining competitive position.
Word competes with numerous other companies that publish and distribute
Christian inspirational music, many of which have longer operating histories and
certain of which are tax-exempt organizations. Word competes with other record
and music publishing companies, both Christian and secular, to sign top artists
and songwriters, and new talent. New Gaylord's ability to sign and re-sign
popular recording artists and successful songwriters depends on a number of
factors, including distribution and marketing capabilities, Word's management
team, and the royalty and advance arrangements offered.
Cable Networks
CMT International and Z Music compete for viewer acceptance with all forms
of video entertainment, including other basic cable services, premium cable
services, commercial television networks, independent television stations, and
products distributed for the home video markets, in addition to the motion
picture industry and other communications, media, and entertainment services. Z
Music is delivered to subscribers primarily by cable television systems. CMT
International is carried in many different ways depending on the technology
available in the country where it is carried. CMT International and Z Music
compete with other nationally and internationally distributed cable networks and
local broadcast television stations for available channel space on cable
television systems, with other cable networks for subscriber fees from cable
systems operators, and with all forms of advertiser-supported media for
advertising revenues. New Gaylord also competes to obtain creative talents,
properties, and market share, which are essential to the success of its cable
networks business.
The principal competitive factors in obtaining viewer acceptance, on which
cable subscriber fees and advertiser support ultimately depend, are the appeal
of the networks' programming focus and the quality of their programming. Music
videos constitute substantially all of CMT International's and Z Music's
programming. These videos are currently provided to New Gaylord for promotional
purposes by record companies and may also be distributed to other programming
services as well as to other media.
For a period of five years following the Merger, New Gaylord is prohibited
by the Post-Closing Covenants Agreement from owning or operating a cable network
featuring country music videos or a significant amount of musical, sports,
variety, or other entertainment features or series, the theme of which is
perceived by the viewing public as "country entertainment." New Gaylord is also
prohibited, during such five-year period, from providing, or making available
for viewing, "country entertainment" programming on a cable network or an
over-the-air broadcast television station. Notwithstanding the foregoing, New
Gaylord can own and operate CMT International in any area outside of the United
States and Canada, provided that CMT International's programming, other than
country music videos, will not primarily consist of programming featuring or
related to "country entertainment." In addition, New Gaylord is prohibited by
the Post-Closing Covenants Agreement from hiring any Cable Networks Business
employee (unless such person is no longer a Cable Networks Business employee)
for a period of one year following the Merger. For additional information, see
"THE POST-CLOSING COVENANTS AGREEMENT -- Agreement Not to Compete" in the Proxy
Statement/Prospectus.
REGULATION AND LEGISLATION
Hospitality and Attractions
The Opryland Hotel is subject to certain federal, state, and local
governmental regulations including, without limitation, health, safety, and
environmental regulations applicable to hotel and restaurant operations. New
Gaylord believes that it is in substantial compliance with such regulations. In
addition, the sale of alcoholic
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<PAGE> 26
beverages by the Opryland Hotel requires a license and is subject to regulation
by the applicable state and local authorities. The agencies involved have full
power to limit, condition, suspend, or revoke any such license, and any
disciplinary action or revocation could have an adverse effect upon the results
of the operations of New Gaylord's hospitality and attractions segment.
The Opryland theme park is subject to certain federal, state, and local
governmental regulations including, without limitation, health, safety, and
environmental regulations applicable to amusement park operations, and state and
local regulations applicable to restaurant operations at the park. New Gaylord
believes that it is in substantial compliance with such regulations. The park's
rides are not subject to federal regulations although bills have been introduced
in Congress at various times proposing such regulation. The park's rides are
inspected frequently by New Gaylord's own maintenance personnel. These
inspections include safety checks as well as regular maintenance.
Broadcasting and Music
Radio and television broadcasting is subject to regulation under the
Communications Act of 1934, as amended (the "Communications Act"). Under the
Communications Act, the FCC, among other things, assigns frequency bands for
broadcasting; determines the frequencies, location, and signal strength of
stations; issues, renews, revokes, and modifies station licenses; regulates
equipment used by stations; and adopts and implements regulations and policies
that directly or indirectly affect the ownership, operation, and employment
practices of broadcasting stations.
The FCC has adopted new rules to implement a provision of the 1996
Communications Act Amendments (the "1996 Amendments") pursuant to which licenses
issued for radio renewal applications filed on or after June 1, 1995 and for
television renewal applications filed on or after June 3, 1996, will have terms
of eight years. (The maximum periods were formerly five years and seven years,
respectively.) Television and radio broadcast licenses are renewable upon
application to the FCC and in the past usually have been renewed except in rare
cases. In a departure from past practice, the 1996 Amendments provide that
competing applications will not be accepted at the time of license renewal, and
will not be entertained at all unless the FCC first concludes that renewal of
the license would not serve the public interest. A station will be entitled to
renewal in the absence of serious violations of the Communications Act or the
FCC regulations or other violations which constitute a pattern of abuse. New
Gaylord is aware of no reason why its radio and television station licenses
should not be renewed.
FCC regulations also prohibit concentrations of media ownership on both the
local and national levels. FCC regulations prohibit the common ownership or
control of most communications media serving the same market areas (i.e., (i)
television and radio ownership; (ii) television and daily newspapers; (iii)
radio and daily newspapers; and (iv) television and cable television). Pursuant
to the 1996 Amendments, however, the FCC's liberal waiver policy for joint
television and radio ownership in the top 25 markets will be expanded to include
the top 50 markets. The 1996 Amendments also increase the number of radio
stations a single entity may own in the same market area (depending on the
number of stations operating in the local radio market), and the FCC is
conducting a rulemaking to consider whether owning more than one television
station in the same market area may be permitted. The FCC has also issued a
notice of inquiry for the purpose of reevaluating the restriction on
radio/newspaper cross ownership. Pursuant to the 1996 Amendments, FCC
regulations no longer will limit the total number of television broadcast
stations held by any single entity so long as all of the stations under common
control do not attain an aggregate national audience reach exceeding 35%, up
from the prior cap of 25%, and no more than 12 stations. The 1996 Amendments
also eliminated previous limits on the total number of radio stations commonly
owned on a national basis. The FCC is in the process of amending certain of its
regulations to implement the 1996 Amendments.
The Communications Act also places certain limitations on alien ownership
or control of entities holding broadcast licenses. The Restated Certificate of
Incorporation of New Gaylord (the "Restated Certificate") will contain a
provision permitting New Gaylord to redeem common stock from certain holders if
the Board of Directors deems such redemption necessary to prevent the loss or
secure the reinstatement of any of its licenses or
23
<PAGE> 27
franchises. See "DESCRIPTION OF CAPITAL STOCK." The 1996 Amendments have deleted
existing restrictions on communications companies having non-citizen officers
and directors.
The foregoing is only a brief summary of certain provisions of the
Communications Act and FCC regulations. The Communications Act and FCC
regulations may be amended from time to time, and New Gaylord cannot predict
whether any such legislation will be enacted or whether new or amended FCC
regulations will be adopted, or the effect on New Gaylord of any such changes,
including those made by the 1996 Amendments.
Cable Networks
Although the operations of New Gaylord's cable networks are not directly
subject to regulation, the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Act") and the regulations thereunder have required cable
networks to, in certain instances, lower charges for their programming for
certain distributors. Although the recently enacted 1996 Amendments did not have
such an effect, any future legislation or regulatory actions that increase rate
regulation or effect structural changes in New Gaylord's cable networks could
have such an effect. For example, increased rate regulation could, among other
things, affect the ability or willingness of cable system operators to establish
or retain Z Music as a basic tier cable service.
CMT International's programming and uplink services are handled in the
United States. The network has no employees abroad and any contracts between the
network and cable systems are executed in the United States. The network
generally does not require a license or authorization from the British
government to conduct its business. New Gaylord's management is currently
studying the regulatory frameworks of certain other European countries and at
this time is not aware of any material regulation that would prevent it from
delivering the network into such countries. There currently exists a European
Community Directive requiring that a majority of programming delivered to
European countries be locally originated, where practicable. Representatives of
the British government have informed New Gaylord that this would not impact the
network with respect to the United Kingdom as there currently is no
locally-originated country music programming available. New Gaylord does not
expect the European Community Directive will be a material obstacle to entering
other European countries for the foreseeable future.
EMPLOYEES
As of December 31, 1996, New Gaylord (excluding the Cable Networks
Business) had approximately 5,600 full-time and 3,050 part-time and seasonal
employees. The Opryland theme park employs approximately 1,700 additional
seasonal employees during the summer months. New Gaylord believes that its
relationship with its employees is good.
PROPERTIES
New Gaylord owns its executive offices and corporate headquarters located
at One Gaylord Drive, Nashville, Tennessee, which consists of a four-story
office building comprising approximately 80,000 square feet. New Gaylord
believes that its present facilities for each of its business segments as
described below are generally well maintained and currently sufficient to serve
each segment's particular needs.
Hospitality and Attractions
New Gaylord owns approximately 800 acres of land in Nashville, Tennessee
and the improvements thereon that comprise the Opryland complex including in
excess of 100 acres of undeveloped land. The Opryland complex is comprised of
the Opryland Hotel, the Opryland theme park, the General Jackson showboat's
docking facility, the TNN/CMT production and administration facilities, the Opry
House, and WSM Radio's offices and studios. New Gaylord also owns the
Springhouse Golf Club, an 18-hole golf course situated on approximately 240
acres, and a 26-acre KOA campground, both of which are located near the Opryland
complex. In addition, New Gaylord owns the Ryman Auditorium in downtown
Nashville; the Wildhorse Saloon, a dance hall/production facility, on Company
property in downtown Nashville; and a 100,000 square foot warehouse in Old
Hickory, Tennessee.
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<PAGE> 28
Broadcasting and Music
New Gaylord owns all of KTVT's business facilities which are comprised of
an office and two studios containing an aggregate of approximately 48,000 square
feet. KTVT owns its transmitter facilities and tower. KTVT leases additional
space for sales and news offices in Dallas, Texas. In addition, New Gaylord owns
the Opryland Music Group building located on Nashville's "Music Row" and
adjacent real estate. New Gaylord leases approximately 34,000 square feet on
various floors in a Nashville office building, which space is primarily used for
Word's executive and administrative offices. These leases expire on various
dates ranging from October 1998 to June 2001. Word also leases sales office and
warehouse space in Waco, Texas; Richmond, Canada; and Milton Keynes, United
Kingdom.
Cable Networks
New Gaylord owns the offices and three television studios of TNN, all of
which are located within the Opryland complex and contain approximately 84,000
square feet of space. The transmitter used for satellite uplink is owned by New
Gaylord and is located at the Opryland complex. New Gaylord owns the offices of
CMT and CMT International which were added to the offices of TNN and contain
approximately 2,700 square feet of space. CMT began using a Company-owned
transmitter located on the Opryland complex during 1992. CMT International
currently leases its transmitters. Following the Merger, certain equipment and
facilities used by TNN and CMT will be leased to Westinghouse. See "THE
RESTRUCTURING, THE DISTRIBUTION, AND THE MERGER -- Relationships with Old
Gaylord and Westinghouse Following the Distribution and Merger."
INSURANCE AND LEGAL PROCEEDINGS
New Gaylord maintains various insurance policies, including general
liability and property damage insurance, as well as product liability, workers'
compensation, business interruption, and other policies, which it believes
provide adequate coverage for its operations. Various subsidiaries of New
Gaylord are involved in lawsuits incidental to the ordinary course of their
businesses, such as personal injury actions by guests and employees and
complaints alleging employee discrimination. New Gaylord believes that it is
adequately insured against these claims by its existing insurance policies and
that the outcome of any pending claims or proceedings will not have a material
adverse effect upon its results of operations or financial condition.
New Gaylord may have potential liability under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
("CERCLA" or "Superfund"), for response costs at two Superfund sites. The
liability relates to properties formerly owned by Old Gaylord. In 1991, Old
Gaylord and The Oklahoma Publishing Company ("OPUBCO"), a former subsidiary of
Old Gaylord, entered into a distribution agreement (the "OPUBCO Distribution
Agreement"), pursuant to which OPUBCO assumed such liabilities and agreed to
indemnify Old Gaylord for any losses, damages, or other liabilities incurred by
Old Gaylord in connection with such matters. Under the OPUBCO Distribution
Agreement, OPUBCO is required to maintain adequate reserves to cover potential
Superfund liabilities. In connection with the Restructuring, Old Gaylord will
assign its rights under the OPUBCO Distribution Agreement to New Gaylord, and
Old Gaylord will have a right of subrogation to New Gaylord's right to
indemnification from OPUBCO. To date, no litigation has been commenced against
New Gaylord, Old Gaylord or OPUBCO with respect to these two Superfund sites.
Although statutorily liable private parties cannot contractually transfer
liability so as to render themselves no longer liable, CERCLA permits private
parties to indemnify one another against CERCLA liability pursuant to a
contract, and to enforce such a contract in an appropriate court. New Gaylord
believes that OPUBCO's indemnification will fully cover New Gaylord's Superfund
liabilities, if any, and that, based on New Gaylord's current estimates of these
liabilities, OPUBCO has sufficient financial resources to fulfill its
indemnification obligations under the OPUBCO Distribution Agreement.
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<PAGE> 29
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of certain U.S. Federal income tax
consequences of the Distribution and the Restructuring. The discussion which
follows is based upon the Code, Treasury regulations promulgated thereunder, and
judicial and administrative interpretations thereof, all as in effect on the
date hereof, and is subject to any changes in these or other laws occurring
after such date, possibly with retroactive effect. The discussion below is for
general information only and does not address the effects of any state, local,
or foreign tax laws on the Distribution. The tax treatment of an Old Gaylord
stockholder may vary depending on his or her particular situation, and certain
stockholders (including insurance companies, tax-exempt organizations, financial
institutions or broker-dealers, persons who do not hold Old Gaylord Common Stock
as capital assets, individuals who received Old Gaylord Common Stock pursuant to
the exercise of employee stock options or otherwise as compensation, and
non-U.S. persons) may be subject to special rules not discussed below.
EACH STOCKHOLDER OF OLD GAYLORD IS URGED TO CONSULT SUCH STOCKHOLDER'S OWN
TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE DISTRIBUTION, INCLUDING
THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR FOREIGN LAWS AND OF CHANGES
IN APPLICABLE TAX LAWS.
Consummation of the Distribution and the Merger is conditioned upon the
receipt of the Tax Rulings issued by the IRS to the effect that (i) the
Distribution will qualify as a transaction described in Section 355(a) of the
Code and the transfer of assets and liabilities to New Gaylord immediately
preceding the Distribution will qualify as a transaction described in Section
351 of the Code and/or a "reorganization" under Section 368(a)(1)(D) of the Code
and (ii) the Merger will qualify as a "reorganization" under Section
368(a)(1)(B) of the Code. In addition, Old Gaylord and Westinghouse have
requested rulings from the IRS to the effect that certain aspects of the
Restructuring will not be taxable to New Gaylord or any of its subsidiaries, and
consummation of the Distribution and the Merger is conditioned upon either (i)
the receipt of such rulings or (ii) the receipt by Old Gaylord and Westinghouse
of opinions of their respective counsel to the same effect.
The Tax Rulings and the opinions of counsel (if any) will be based on
current law, and will be based on certain representations as to factual matters
made by, among others, Old Gaylord, New Gaylord and Westinghouse. Such
representations, if incorrect in certain material respects, could jeopardize the
conclusions reached in the Tax Rulings or the opinions. None of New Gaylord, Old
Gaylord, or Westinghouse is currently aware of any facts or circumstances which
would cause any such representations required to be made to the IRS or to
counsel to be untrue or incorrect in any material respect. Further, an opinion
of counsel is not binding on the IRS or the courts.
Based on the rulings and opinions (if any) discussed above, the material
federal income tax consequences that will result from the Restructuring and the
Distribution are as follows:
(a) No income, gain or loss will be recognized by New Gaylord or Old
Gaylord in the Distribution or as a result of certain aspects of the
Restructuring. As a result of certain other aspects of the Restructuring,
however, New Gaylord or Old Gaylord will recognize income, gain, or loss.
(b) An Old Gaylord stockholder will not recognize any income, gain or
loss as a result of the receipt of New Gaylord Common Stock in the
Distribution, except with respect to any cash received in lieu of
fractional shares of New Gaylord Common Stock.
(c) An Old Gaylord stockholder's tax basis for the New Gaylord Common
Stock and Old Gaylord Common Stock immediately after the Distribution,
including any fractional share interest of New Gaylord Common Stock for
which cash is received, will equal such stockholder's tax basis in the Old
Gaylord Common Stock immediately before the Distribution, allocated in
proportion to the relative fair market values of New Gaylord Common Stock
and Old Gaylord Common Stock at the time of the Distribution.
(d) An Old Gaylord stockholder's holding period for the shares of New
Gaylord Common Stock received in the Distribution, including any fractional
share interest of New Gaylord Common Stock for which cash is received, will
include the period during which the stockholder held Old Gaylord Common
Stock, provided that the Old Gaylord Common Stock was held as a capital
asset.
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<PAGE> 30
(e) An Old Gaylord stockholder that receives cash in lieu of a
fractional share interest of New Gaylord Common Stock pursuant to the
Distribution will be treated as having received such cash in exchange for
such fractional share interest and generally will recognize capital gain or
loss on such deemed exchange in an amount equal to the difference between
the amount of cash received and the Old Gaylord stockholder's adjusted tax
basis in such fractional share. Such capital gain or loss generally will be
long-term capital gain or loss if the holding period for the New Gaylord
Common Stock or the Old Gaylord Common Stock with respect to which such
fractional share is deemed issued exceeds one year.
BECAUSE OF THE INDIVIDUAL NATURE OF TAX CONSEQUENCES, EACH OLD GAYLORD
STOCKHOLDER IS URGED TO CONSULT ITS TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO IT OF THE DISTRIBUTION, INCLUDING THE EFFECT OF U.S. FEDERAL,
STATE AND LOCAL, AND FOREIGN AND OTHER TAX RULES, AND THE EFFECT OF POSSIBLE
CHANGES IN TAX LAWS.
Unless the Merger is effected after the Westinghouse Distribution, Old
Gaylord stockholders who continue to hold Westinghouse Common Stock on the
record date for the Westinghouse Distribution will be entitled to participate in
the Westinghouse Distribution on the same basis as all other Westinghouse
shareholders. Westinghouse has applied to the IRS for rulings substantially to
the effect that no income, gain, or loss will be recognized by Westinghouse
shareholders (including former stockholders of Old Gaylord) as a result of
participating in the Westinghouse Distribution.
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<PAGE> 31
SELECTED CONSOLIDATED HISTORICAL AND
PRO FORMA FINANCIAL DATA OF NEW GAYLORD
The following table sets forth (i) unaudited selected consolidated
historical financial data as of June 30, 1997 and for the six months ended June
30, 1997 and 1996, before giving effect to the Transactions, which has been
derived from New Gaylord's unaudited Condensed Consolidated Financial Statements
as of June 30, 1997 and for the six months ended June 30, 1997 and 1996,
included elsewhere herein, (ii) selected consolidated historical financial data
as of December 31, 1996 and 1995 and for each year in the three-year period
ended December 31, 1996, before giving effect to the Transactions, which has
been derived from New Gaylord's Consolidated Financial Statements as of December
31, 1996 and 1995, and for each year in the three-year period ended December 31,
1996, included elsewhere herein; (iii) selected consolidated historical
financial data as of December 31, 1994, 1993, and 1992, and for each year in the
two-year period ended December 31, 1993, before giving effect to the
Transactions, which has been derived from the audited consolidated financial
statements of New Gaylord, not included elsewhere herein; and (iv) unaudited
selected consolidated pro forma financial data as of and for the six months
ended June 30, 1997 and for the year ended December 31, 1996 which gives effect
to the Transactions and which has been derived from New Gaylord's Unaudited Pro
Forma Consolidated Financial Statements included elsewhere herein. The unaudited
selected consolidated pro forma balance sheet data as of June 30, 1997 is
presented as if the Transactions had occurred on June 30, 1997, and the
unaudited selected consolidated pro forma income statement data for the six
months ended June 30, 1997 and for the year ended December 31, 1996 is presented
as if the Transactions had occurred on January 1, 1997 and January 1, 1996,
respectively. The unaudited selected consolidated pro forma financial data
incorporates certain assumptions which are set forth in the footnotes to New
Gaylord's Unaudited Pro Forma Consolidated Financial Statements included
elsewhere herein. The selected consolidated pro forma information does not
purport to represent what New Gaylord's financial position or results of
operations actually would have been had the Transactions, in fact, occurred on
such date or at the beginning of the period indicated, or to project New
Gaylord's financial position or results of operations at any future date or for
any future period.
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NEW GAYLORD ENTERTAINMENT COMPANY
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------------- ---------------------------------
ACTUAL ACTUAL
PRO FORMA ------------------- PRO FORMA --------------------
1997(1) 1997 1996 1996(1) 1996 1995
--------- -------- -------- --------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Hospitality and
attractions........... $154,656 $154,656 $131,953 $313,023 $313,023 $276,638
Broadcasting and
music................. 96,462 49,498 49,211 102,368 102,368 148,175
Cable networks.......... 5,639 183,686 166,973 11,155 331,767 282,647
-------- -------- -------- -------- -------- --------
Total revenues........ 256,757 387,840 348,137 426,546 747,158 707,460
Operating expenses:
Operating costs......... 160,437 230,916 207,459 261,175 443,236 442,177(4)
Selling, general and
administrative........ 67,765 70,614 62,739 95,586 125,456 115,355
Depreciation and
amortization:
Hospitality and
attractions......... 15,795 15,795 11,880 28,861 28,861 21,782
Broadcasting and
music............... 3,693 2,228 2,142 4,421 4,421 3,954
Cable networks........ 1,055 7,072 5,741 1,991 12,406 9,522
Corporate............. 1,686 1,686 1,523 3,168 3,168 2,828
-------- -------- -------- -------- -------- --------
Total depreciation and
amortization........ 22,229 26,781 21,286 38,441 48,856 38,086
-------- -------- -------- -------- -------- --------
Total operating
expenses............ 250,431 328,311 291,484 395,202 617,548 595,618
Operating income (loss):
Hospitality and
attractions........... 16,319 16,319 15,694 45,938 45,941 40,215
Broadcasting and
music................. 10,583 10,651 9,931 23,846 23,846 19,578(4)
Cable networks.......... (7,858) 45,277 43,415 (13,379) 84,884 74,459
Corporate............... (12,718) (12,718) (12,387) (25,061) (25,061) (22,410)
-------- -------- -------- -------- -------- --------
Total operating
income.............. 6,326 59,529 56,653 31,344 129,610 111,842
Interest expense.......... (14,832) (22,132) (20,241) (18,976) (49,880) (40,856)
Interest income........... 11,525 11,674 10,451 22,904 21,580 5,968
Other gains (losses)...... 144,231(2) 142,828(2) 73,077(3) 74,281(3) 72,220(3) (8,088)(5)
-------- -------- -------- -------- -------- --------
Income from continuing
operations before
provision for income
taxes................. 147,250 191,899 119,940 109,553 173,530 68,866
Provision for income
taxes................... 47,646 65,903 45,282 35,770 62,947 27,500
-------- -------- -------- -------- -------- --------
Income from continuing
operations............ 99,604 125,996 74,658 73,783 110,583 41,366
Discontinued operations,
net of taxes(6)......... -- -- -- -- -- 42,998
Cumulative effect of
accounting change, net
of taxes................ -- -- -- -- -- --
-------- -------- -------- -------- -------- --------
Net income.............. $ 99,604 $125,996 $ 74,658 $ 73,783 $110,583 $ 84,364
======== ======== ======== ======== ======== ========
Net income per share...... $ 3.07 $ 2.26
======== ========
Weighted average shares
outstanding............. 32,471 32,585
======== ========
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
ACTUAL
----------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Hospitality and
attractions........... $274,494 $243,460 $232,614
Broadcasting and
music................. 169,538 170,255 156,255
Cable networks.......... 243,899 208,869 176,035
-------- -------- --------
Total revenues........ 687,931 622,584 564,904
Operating expenses:
Operating costs......... 427,853 392,124 358,828
Selling, general and
administrative........ 108,624 92,849 87,255
Depreciation and
amortization:
Hospitality and
attractions......... 19,040 16,959 17,872
Broadcasting and
music............... 3,854 3,936 3,974
Cable networks........ 7,758 6,608 4,995
Corporate............. 2,293 1,420 948
-------- -------- --------
Total depreciation and
amortization........ 32,945 28,923 27,789
-------- -------- --------
Total operating
expenses............ 569,422 513,896 473,872
Operating income (loss):
Hospitality and
attractions........... 38,305 41,222 44,115
Broadcasting and
music................. 37,837 34,107 18,200
Cable networks.......... 63,343 50,869 45,884
Corporate............... (20,976) (17,510) (17,167)
-------- -------- --------
Total operating
income.............. 118,509 108,688 91,032
Interest expense.......... (27,578) (14,526) (7,402)
Interest income........... 738 214 102
Other gains (losses)...... (15,172)(5)(7) 1,131 (162)
-------- -------- --------
Income from continuing
operations before
provision for income
taxes................. 76,497 95,507 83,570
Provision for income
taxes................... 29,451 40,113 28,950
-------- -------- --------
Income from continuing
operations............ 47,046 55,394 54,620
Discontinued operations,
net of taxes(6)......... -- (26,905) (29,045)
Cumulative effect of
accounting change, net
of taxes................ -- (8,152)(8) --
-------- -------- --------
Net income.............. $ 47,046 $ 20,337 $ 25,575
======== ======== ========
Net income per share......
Weighted average shares
outstanding.............
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30,
----------------------- AS OF DECEMBER 31,
PRO FORMA ACTUAL --------------------------------------------------------
1997(1) 1997 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets................................. $1,160,299 $1,189,858 $1,152,626 $1,071,842 $988,476 $902,019 $802,632
Net assets of discontinued operations(6)..... -- -- -- -- 214,649 222,830 258,474
Payable to Old Gaylord....................... -- 324,264 476,316 554,488 560,422 525,546 450,715
Long-term debt, including current portion.... 349,128 -- -- -- -- -- --
Total stockholders' equity................... 461,628 527,207 401,211 203,628 114,264 67,218 46,336
</TABLE>
- ---------------
(1) See Unaudited Pro Forma Consolidated Financial Statements and the notes
thereto included elsewhere herein.
(2) Includes a pretax gain of $144,259 on sale of Seattle-Tacoma television
station KSTW.
(3) Includes a pretax gain of $73,850 on sale of Houston television station
KHTV.
(4) Includes non-recurring pretax charge of $13,302 for write-down to net
realizable value of certain television program rights.
29
<PAGE> 33
(5) Includes pretax losses of $5,529 and $26,000 for 1995 and 1994,
respectively, to reflect the loss on the January 1996 disposal of New
Gaylord's 14% limited partnership interest in the Fiesta Texas theme park.
(6) In November 1993, New Gaylord formalized plans to sell its cable television
systems segment (the "Systems") and began accounting for the Systems as
discontinued operations. The Systems were sold in September 1995 which
resulted in a gain of $42,998, net of income taxes of $30,824.
(7) Includes a pretax gain of $10,689 on sale of Milwaukee television station
WVTV.
(8) Reflects the adoption of Statement of Financial Accounting Standards No.
106, "Employers' Accounting of Postretirement Benefits Other Than Pensions."
30
<PAGE> 34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
New Gaylord is currently a wholly owned subsidiary of Old Gaylord. New
Gaylord operates principally in three industry segments: hospitality and
attractions; broadcasting and music; and cable networks. New Gaylord sold its
cable television systems segment (the "Systems") on September 29, 1995. Prior to
the sale, the Systems were accounted for as discontinued operations. The
accompanying financial statements and the following financial analysis represent
the consolidated financial position and results of operations of New Gaylord,
both before and after giving effect to the Transactions.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
RESULTS OF OPERATIONS
The following table contains unaudited selected income statement data for
the six month periods ended June 30, 1997 and 1996 (amounts in thousands). The
pro forma data for the six month period ended June 30, 1997 is presented as if
the Transactions had occurred on January 1, 1997. The table also shows the
percentage relationships to total revenues and, in the case of segment operating
income, its relationship to segment revenues. Old Gaylord purchased all of the
assets of Word on January 7, 1997 for approximately $120 million in cash. The
assets and liabilities of Word will be transferred to New Gaylord as part of the
Restructuring. In addition to the Transactions, the pro forma data for the six
months ended June 30, 1997 reflects the impact of the results of operations of
Word subsequent to the acquisition date as detailed in New Gaylord's Unaudited
Pro Forma Consolidated Financial Statements and the footnotes thereto for the
six month period ended June 30, 1997.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------------------------------------
PRO FORMA ACTUAL
----------------- --------------------------------------
1997 % 1997 % 1996 %
-------- ------ -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Hospitality and attractions............... $154,656 60.2% $154,656 39.9% $131,953 37.9%
Broadcasting and music.................... 96,462 37.6 49,498 12.7 49,211 14.1
Cable networks............................ 5,639 2.2 183,686 47.4 166,973 48.0
-------- ------ -------- ------ -------- -----
Total revenues..................... 256,757 100.0 387,840 100.0 348,137 100.0
-------- ------ -------- ------ -------- -----
Operating expenses:
Operating costs........................... 160,437 62.4 230,916 59.6 207,459 59.6
Selling, general and administrative....... 67,765 26.4 70,614 18.2 62,739 18.0
Depreciation and amortization:
Hospitality and attractions............. 15,795 15,795 11,880
Broadcasting and music.................. 3,693 2,228 2,142
Cable networks.......................... 1,055 7,072 5,741
Corporate............................... 1,686 1,686 1,523
-------- ------ -------- ------ -------- -----
Total depreciation and
amortization..................... 22,229 8.7 26,781 6.9 21,286 6.1
-------- ------ -------- ------ -------- -----
Total operating expenses........... 250,431 97.5 328,311 84.7 291,484 83.7
-------- ------ -------- ------ -------- -----
Operating income (loss):
Hospitality and attractions............... 16,319 10.6 16,319 10.6 15,694 11.9
Broadcasting and music.................... 10,583 11.0 10,651 21.5 9,931 20.2
Cable networks............................ (7,858) (139.4) 45,277 24.6 43,415 26.0
Corporate................................. (12,718) -- (12,718) -- (12,387) --
-------- ------ -------- ------ -------- -----
Total operating income............. $ 6,326 2.5% $ 59,529 15.3% $ 56,653 16.3%
======== ====== ======== ====== ======== =====
</TABLE>
Revenues
Total Revenues -- Total revenues increased $39.7 million, or 11.4%, to
$387.8 million in the first six months of 1997. The increase was primarily
attributable to the expansion of the Opryland Hotel in the hospitality and
31
<PAGE> 35
attractions segment and continued growth in the cable networks segment. On a pro
forma basis assuming the Transactions had occurred on January 1, 1997, total
revenues for the six months ended June 30, 1997 would have been $256.8 million,
and would have been $209.9 million excluding the revenues of Word subsequent to
the date of the Word acquisition.
Hospitality and Attractions -- Revenues in the hospitality and attractions
segment increased $22.7 million, or 17.2%, to $154.7 million in the first six
months of 1997. Opryland Hotel revenues increased $24.8 million, or 29.8%, to
$108.1 million in the first six months of 1997 principally because of the hotel
expansion. The hotel's occupancy rate increased to 82.2% in the first six months
of 1997 compared to 81.2% in the first six months of 1996. The hotel sold
408,900 rooms in the first six months of 1997 compared to 339,500 rooms sold in
the same period of 1996 reflecting a 20.4% increase over 1996. The hotel's
average guest room rate increased to $131.36 in the first six months of 1997
from $127.27 in the first six months of 1996. At June 30, 1997, the hotel's
advanced bookings were approximately $1 billion of future revenues at current
rates with a significant portion of these advanced bookings relating to the next
three years.
Broadcasting and Music -- Revenues increased $0.3 million, or 0.6%, to
$49.5 million for the first six months of 1997. On a pro forma basis, revenues
for the broadcasting and music segment for the six month period ended June 30,
1997 would have been $96.5 million, $46.8 million of which would have been
attributable to Word subsequent to the date of the Word acquisition.
Cable Networks -- Revenues increased $16.7 million, or 10.0%, to $183.7
million for the first six months of 1997. Advertising revenues increased 9.5%
for the first six months of 1997 at TNN. Subscriber revenues at TNN increased
6.5% for the first six months of 1997 as the number of U.S. subscribers
increased to 69.4 million in June 1997 from 65.3 million in June 1996. Revenues
related to CMT increased 22.9% for the first six months of 1997 due to growth in
both advertising and subscriber revenues. CMT subscribers increased to 39.4
million in June 1997 from 33.5 million in June 1996. CMT International revenues
increased to $5.6 million in the first six months of 1997 from $4.6 million in
the first six months of 1996. On a pro forma basis, revenues for the cable
networks segment for the first six months of 1997 would have been $5.6 million.
Operating Expenses
Total Operating Expenses -- Total operating expenses increased $36.8
million, or 12.6%, to $328.3 million for the first six months of 1997. Operating
costs, as a percentage of revenues, remained unchanged at 59.6% during the first
six months of 1997 and 1996. Selling, general and administrative expenses, as a
percentage of revenues, increased to 18.2% in the first six months of 1997 from
18.0% in the first six months of 1996, for the reasons explained below. On a pro
forma basis, total operating expenses for the first six months of 1997 would
have been $250.4 million, and would have been $203.9 million excluding the total
operating expenses of Word subsequent to the date of the Word acquisition.
Operating Costs -- Operating costs increased $23.5 million, or 11.3%, to
$230.9 million in the first six months of 1997. The increase was attributable to
increased operating costs at the Opryland Hotel of $16.5 million for the first
six months of 1997 primarily related to the hotel expansion. In addition,
operating costs increased during the first six months of 1997 due to the
continued growth in the cable networks segment, including a $3.4 million
increase in Westinghouse commissions at TNN, a $2.8 million increase in
programming costs at TNN, and a $2.8 million increase in operating costs related
to the expansion of CMT International including increased costs for a 24-hour
transponder for CMT International's European operations. These increases were
partially offset by decreases in operating costs for the first six months of
1997 of $1.1 million at the Opryland theme park due to cost-cutting measures and
$1.3 million at KSTW. On a pro forma basis, operating costs for the first six
months of 1997 would have been $160.4 million, and would have been $131.8
million excluding the operating costs of Word subsequent to the date of the Word
acquisition.
Selling, General and Administrative -- Selling, general and administrative
expenses increased $7.9 million, or 12.6%, to $70.6 million for the first six
months of 1997. The increase was primarily attributable to higher promotional
expenses related to CMT and CMT International of $1.5 million and $2.0 million,
respectively, for the first six months of 1997. Administrative costs increased
$2.2 million at the Opryland Hotel during the first six months of 1997 primarily
because of the hotel expansion. In addition, selling, general and administrative
32
<PAGE> 36
expenses increased $1.6 million in the first six months of 1997 as a result of
the expansion of the NASCAR Thunder Stores, a chain of auto racing-themed retail
stores, which will be acquired by Westinghouse in the Merger. Selling, general
and administrative expenses for the first six months of 1997 would have been
$67.8 million on a pro forma basis, and would have been $51.2 million excluding
the selling, general and administrative expenses of Word subsequent to the date
of the Word acquisition.
Depreciation and Amortization -- Depreciation and amortization increased
$5.5 million, or 25.8%, to $26.8 million for the first six months of 1997. The
increase was primarily attributable to increased depreciation and amortization
expense of $3.9 million for the six months ended June 30, 1997 related to the
expansion of the Opryland Hotel. On a pro forma basis, depreciation and
amortization would have been $22.2 million for the first six months of 1997, and
would have been $20.8 million excluding the depreciation and amortization
expense of Word subsequent to the date of the Word acquisition.
Operating Income
Total operating income increased $2.9 million, or 5.1%, to $59.5 million
for the first six months of 1997. The increase in operating income in the
hospitality and attractions segment for the first six months of 1997 was
primarily related to greater operating income generated by the Opryland Hotel
and the reduction in operating expenses at the Opryland theme park. The
broadcasting and music segment operating income improved slightly for the first
six months of 1997. The cable networks segment increase reflected continued
growth of TNN and CMT, which was offset, in part, by increased operating losses
associated with CMT International's expansion. The operating losses of CMT
International increased to $7.6 million in the first six months of 1997 from
$3.7 million in the first six months of 1996. On a pro forma basis, operating
income for the first six months of 1997 would have been $6.3 million, including
operating income of $0.3 million attributable to Word subsequent to the date of
the Word acquisition.
Although CMT International has yet to operate profitably, New Gaylord
believes that its operating results can be improved. If CMT International's
results of operations do not improve, however, New Gaylord will consider various
possible courses of action, including seeking a joint venture partner, pursuing
a sale of CMT International, or ceasing its operations. New Gaylord's ability to
improve CMT International's operating results may be negatively impacted by the
restrictions on its ability to change CMT International's programming content
for the five-year period immediately following the Merger under the
non-competition provisions of the Post-Closing Covenants Agreement. See "THE
POST-CLOSING COVENANTS AGREEMENT -- Agreement Not to Compete" in the Proxy
Statement/Prospectus.
Interest Expense
Interest expense increased $1.9 million to $22.1 million for the first six
months of 1997. The majority of New Gaylord's interest expense is derived from
interest charged on outstanding amounts payable to Old Gaylord. On a pro forma
basis, interest expense would have been $14.8 million in the first six months of
1997.
Interest Income
Interest income increased $1.2 million to $11.7 million in the first six
months of 1997. Interest income primarily results from noncash interest income
earned on a long-term note receivable.
Other Gains (Losses)
In June 1997, New Gaylord sold KSTW, its Tacoma-Seattle, Washington
television station, for $160.0 million in cash. The sale resulted in a pretax
gain of $144.3 million, which is included in other gains (losses) in the
condensed consolidated statements of income.
In January 1996, New Gaylord sold KHTV, its Houston, Texas television
station, for $97.8 million, including certain working capital and other
adjustments of approximately $4.3 million. The sale resulted in a pretax gain of
$73.9 million which is included in other gains (losses) in the condensed
consolidated statements of income.
33
<PAGE> 37
Income Taxes
New Gaylord's provision for income taxes was $65.9 million for the first
six months of 1997, which included a tax provision of $50.3 million on the gain
from the sale of KSTW, compared to $45.3 million for the first six months of
1996, which included a tax provision of $30.4 million on the gain from the sale
of KHTV. New Gaylord's effective tax rate on its income before provision for
income taxes was 34.3% for the first six months of 1997 compared to 37.8% for
the first six months of 1996. On a pro forma basis, the provision for income
taxes for the first six months of 1997 would have been $47.6 million.
YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995
RESULTS OF OPERATIONS
The following table contains selected income statement data for each of the
three years ended December 31, 1996, 1995, and 1994 (amounts in thousands). The
pro forma data for the year ended December 31, 1996 is presented as if the
Transactions had occurred on January 1, 1996. The table also shows the
percentage relationships to total revenues and, in the case of segment operating
income, its relationship to segment revenues.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------
ACTUAL
PRO FORMA --------------------------------------------------------
1996 % 1996 % 1995 % 1994 %
--------- ------ -------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Hospitality and
attractions............... $313,023 73.4% $313,023 41.9% $276,638 39.1% $274,494 39.9%
Broadcasting and music...... 102,368 24.0 102,368 13.7 148,175 20.9 169,538 24.6
Cable networks.............. 11,155 2.6 331,767 44.4 282,647 40.0 243,899 35.5
-------- ------ -------- ----- -------- ----- -------- -----
Total revenues....... 426,546 100.0 747,158 100.0 707,460 100.0 687,931 100.0
-------- ------ -------- ----- -------- ----- -------- -----
Operating expenses:
Operating costs............. 261,175 61.2 443,236 59.3 442,177 62.5 427,853 62.2
Selling, general and
administrative............ 95,586 22.4 125,456 16.8 115,355 16.3 108,624 15.8
Depreciation and
amortization:
Hospitality and
attractions............. 28,861 28,861 21,782 19,040
Broadcasting and music.... 4,421 4,421 3,954 3,854
Cable networks............ 1,991 12,406 9,522 7,758
Corporate................. 3,168 3,168 2,828 2,293
-------- ------ -------- ----- -------- ----- -------- -----
Total depreciation
and amortization... 38,441 9.0 48,856 6.5 38,086 5.4 32,945 4.8
-------- ------ -------- ----- -------- ----- -------- -----
Total operating
expenses................ 395,202 92.6 617,548 82.6 595,618 84.2 569,422 82.8
-------- ------ -------- ----- -------- ----- -------- -----
Operating income:
Hospitality and
attractions............... 45,938 14.7 45,941 14.7 40,215 14.5 38,305 14.0
Broadcasting and music...... 23,846 23.3 23,846 23.3 19,578 13.2 37,837 22.3
Cable networks.............. (13,379) (119.9) 84,884 25.6 74,459 26.3 63,343 26.0
Corporate................... (25,061) -- (25,061) -- (22,410) -- (20,976) --
-------- ------ -------- ----- -------- ----- -------- -----
Total operating income.... $ 31,344 7.4% $129,610 17.3% $111,842 15.8% $118,509 17.2%
======== ====== ======== ===== ======== ===== ======== =====
</TABLE>
34
<PAGE> 38
Revenues
Total Revenues -- Total revenues increased $39.7 million, or 5.6%, to
$747.2 million in 1996. The increases were primarily attributable to continued
growth in the cable networks segment and increased revenues in the hospitality
and attractions segment resulting from the expansion of the Opryland Hotel. The
average number of guest rooms at the hotel increased from 1,907 in 1995 to 2,613
in 1996. These increases were partially offset by a decrease in revenues from
the broadcasting and music segment due to the sale of a television station in
January 1996 and a decline in revenues at New Gaylord's two other television
stations. On a pro forma basis assuming the Transactions had occurred on January
1, 1996, total revenues in 1996 would have been $426.5 million.
Hospitality and attractions -- Revenues in the hospitality and attractions
segment increased $36.4 million, or 13.2%, to $313.0 million in 1996. Opryland
Hotel revenues increased $43.2 million, or 28.2%, to $196.2 million in 1996,
principally because of the hotel expansion. The hotel's occupancy rate decreased
to 84.7% in 1996 compared to 87.5% in 1995 because of the additional rooms which
became available in 1996. The hotel sold 780,300 rooms in 1996 compared to
587,200 rooms sold in 1995 reflecting a 32.9% increase. The hotel's average
guest room rate declined to $131.21 in 1996 from $132.99 in 1995. At December
31, 1996, the hotel's advanced bookings were approximately $1 billion of future
revenues at current rates with a significant portion of these advanced bookings
relating to the next three years. Opryland theme park revenues decreased $5.4
million in 1996 due primarily to a 5.7% decrease in theme park attendance and a
3.4% decrease in per guest spending as compared with 1995.
Broadcasting and music -- Revenues decreased $45.8 million, or 30.9%, to
$102.4 million in 1996. Broadcasting and music revenues were impacted by New
Gaylord's sale of KHTV, a Houston, Texas, television station in January 1996.
Excluding the operations of KHTV from the 1995 results, broadcasting and music
revenues decreased 10.8% in 1996. The decline in broadcasting and music revenues
reflects a decrease in advertising inventory available for sale at New Gaylord's
Dallas and Seattle-area television stations resulting from their affiliation
with the CBS television network. The affiliation with CBS was effective on March
13, 1995 in Tacoma-Seattle and on July 2, 1995 in Dallas-Ft. Worth. Advertising
revenues at KSTW, New Gaylord's Tacoma-Seattle television station, also
decreased in 1996 due to a decline in ratings. In June 1997, New Gaylord
consummated the sale of KSTW for $160.0 million in cash, which will result in
the recognition of a gain.
Cable networks -- Revenues increased $49.1 million, or 17.4%, to $331.8
million in 1996. Advertising revenues increased 19.6% during 1996 at TNN.
Subscriber revenues at TNN increased 12.2% in 1996 due to an increase in the
number of U.S. subscribers to 68.3 million in December 1996 from 64.4 million in
December 1995 and increased revenues from satellite customers. Revenues related
to the United States operations of CMT increased 19.3% in 1996 due to growth in
both advertising and subscriber revenues. CMT subscribers increased to 37.3
million in December 1996 from 31.7 million in December 1995. CMT International
revenues increased to $10.1 million in 1996 from $8.9 million in 1995. On a pro
forma basis, revenues for the cable networks segment in 1996 would have been
$11.2 million.
Operating Expenses
Total Operating Expenses -- Total operating expenses increased $21.9
million, or 3.7%, to $617.5 million in 1996. Operating costs, as a percentage of
revenues, decreased to 59.3% during 1996 as compared to 62.5% during 1995.
Selling, general and administrative expenses, as a percentage of revenues,
increased to 16.8% in 1996 from 16.3% in 1995. Total operating expenses for 1995
include operating expenses of KHTV of $30.1 million. Corporate expenses
increased in 1996 by $2.7 million, or 11.8%, to $25.1 million as a result of
increased administrative expenses at the corporate headquarters. On a pro forma
basis, total operating expenses for 1996 would have been $395.2 million.
Operating Costs -- Operating costs increased $1.1 million, or 0.2%, to
$443.2 million in 1996. During 1995, New Gaylord recorded a nonrecurring pretax
charge of $13.3 million for the write-down of certain program rights at New
Gaylord's Dallas and Seattle-area television stations. This write-down was
primarily related to excess program rights resulting from the affiliations of
these stations with CBS. Excluding the effect of the 1995 program rights
write-down and the operating costs of KHTV, operating costs increased by $37.8
million, or
35
<PAGE> 39
9.3%, in 1996. The increase was attributable to operating costs increases of
$23.6 million during 1996 at the Opryland Hotel, primarily as a result of the
hotel expansion. In addition, increased operating costs are attributable to the
continued growth in the cable networks segment, including an $11.6 million
increase in TNN's commissions payable to an affiliate of Westinghouse; a $9.3
million increase in programming costs at TNN; a $4.5 million increase in
operating costs related to the expansion of CMT International; and a $1.1
million operating cost increase relating to the opening of a chain of racing
themed retail stores. These increases were partially offset by a $10.4 million
decrease in operating costs during 1996 at New Gaylord's two remaining
television stations due to lower programming costs resulting from their
affiliation with CBS; a $3.5 million decrease in operating costs at the Opryland
theme park; and a $2.4 million decrease in operating costs of the Nashville On
Stage concert series. Because of New Gaylord's agreements with an affiliate of
Westinghouse, certain operating costs in the cable networks segment increase or
decrease proportionately with revenues. On a pro forma basis, operating costs
for 1996 would have been $261.2 million.
Selling, General and Administrative -- Selling, general and administrative
expenses increased $10.1 million, or 8.8%, to $125.5 million in 1996. Excluding
the selling, general and administrative expenses of KHTV from the 1995 results,
selling, general and administrative expenses increased $16.0 million, or 14.7%,
in 1996. The increases for the year are primarily attributable to administrative
cost increases of $4.8 million at the Opryland Hotel, $3.7 million at TNN and
$1.2 million at the Opryland theme park. Selling and promotion costs at CMT's
domestic and international operations increased $1.5 million and $1.8 million,
respectively. New Gaylord's two remaining television stations also reflected
increased selling and promotion costs, which were $1.1 million greater than the
corresponding 1995 amounts. In addition, New Gaylord had nonrecurring expenses
of $1.1 million during 1996 related to its obligations under an employment
agreement with its departing chief operating officer which is included in the
increases discussed above. On a pro forma basis, selling, general, and
administrative expenses for 1996 would have been $95.6 million.
Depreciation and Amortization -- Depreciation and amortization increased
$10.8 million, or 28.3%, to $48.9 million in 1996. The increase was primarily
attributable to the expansion of the Opryland Hotel and continued growth in the
cable networks segment. On a pro forma basis, depreciation and amortization
would have been $38.4 million in 1996.
Operating Income
Total operating income increased $17.8 million, or 15.9%, to $129.6 million
during 1996. This increase reflects higher operating income in all operating
segments. The hospitality and attractions segment increase is primarily related
to greater operating income generated by the Opryland Hotel expansion. The
broadcasting and music segment increase resulted from the 1995 write-down of
television program rights. Excluding the impact of this write-down, broadcasting
and music segment operating income decreased primarily due to the sale of KHTV
and the decline in revenues at New Gaylord's Tacoma-Seattle television station
as discussed above. The cable networks increase is a result of the continued
growth of TNN and CMT offset, in part, by increased operating losses associated
with CMT International's expansion. Operating losses of CMT International
increased to $13.0 million in 1996 from $7.1 million in 1995. On a pro forma
basis, total operating income would have been $31.3 million in 1996.
Interest Expense
Interest expense increased $9.0 million to $49.9 million in 1996. The
majority of New Gaylord's interest expense is derived from interest charged on
outstanding amounts due to Old Gaylord. A significant portion of New Gaylord's
interest expense for 1995 was attributable to the Systems prior to their sale in
September 1995. In accordance with generally accepted accounting principles,
such interest was allocated to the Systems and was therefore not included in
income from continuing operations. On a pro forma basis, interest expense would
have been $19.0 million in 1996.
36
<PAGE> 40
Interest Income
Interest income increased $15.6 million to $21.6 million in 1996. This
increase primarily results from an additional $15.5 million of noncash interest
income in 1996 recorded on the long-term note receivable from the sale of the
Systems.
Other Gains (Losses)
In January 1996, New Gaylord sold its Houston, Texas, television station,
KHTV, for $97.8 million, including certain working capital and other adjustments
of approximately $4.3 million. The sale resulted in a pretax gain of $73.9
million which is included in other gains (losses) in 1996.
In 1995, New Gaylord recorded a pretax charge of $5.5 million to reflect
losses related to the January 1996 disposal of its 14% limited partnership
interest in the Fiesta Texas theme park. The charge was based on the permanent
impairment in the value of the investment and New Gaylord's guarantee of certain
indebtedness related to the original construction of Fiesta Texas. New Gaylord
paid $13.0 million to transfer its partnership interest and related obligations
to a subsidiary of USAA, the majority investor, in January 1996. In connection
with New Gaylord's termination of its interest in Fiesta Texas, New Gaylord was
released from the loan guarantee.
Income Taxes
New Gaylord's provision for income taxes on income from continuing
operations was $62.9 million for 1996 compared to $27.5 million for 1995. New
Gaylord's effective tax rate on its income from continuing operations before
provision for income taxes was 36.3% for 1996 compared to 39.9% for 1995. Income
taxes for 1996 on a pro forma basis would have been $35.8 million.
YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues
Total Revenues -- Total revenues increased $19.5 million, or 2.8%, to
$707.5 million in 1995. The increase was primarily attributable to growth in the
cable networks segment offset in part by a decrease in broadcasting and music
segment revenues.
Hospitality and attractions -- Revenues in the hospitality and attractions
segment increased $2.1 million, or 0.8%, to $276.6 million in 1995. Opryland
Hotel revenues increased $6.0 million, or 4.1%, to $153.1 million in 1995 due
primarily to an additional 385 guest rooms completed in the fourth quarter of
1995 and an increase in the average guest room rate to $132.99 in 1995 from
$130.15 in 1994. The hotel's occupancy rate was 87.5% in 1995 and 87.9% in 1994.
Hospitality and attractions segment revenues also increased during 1995 due to a
full year of operations of the Wildhorse Saloon and the renovated Ryman
Auditorium, each of which opened in June 1994. These increases were offset by
lower revenues from the Nashville On Stage concert series, which had fewer
concerts in 1995 than in 1994; lower revenues related to the nonrecurring 1994
production of the World Cup opening ceremonies; and a decrease in Opryland theme
park attendance to 2.1 million visitors in 1995 from 2.3 million visitors in
1994.
Broadcasting and music -- Revenues decreased $21.4 million, or 12.6%, to
$148.2 million in 1995. Broadcasting and music revenues were impacted by New
Gaylord's sale of substantially all of the assets of WVTV, a Milwaukee,
Wisconsin, television station, in May 1994. Excluding the revenues related to
WVTV's operations, broadcasting and music revenues decreased 8.7% in 1995 as
compared to 1994. Revenues from New Gaylord's remaining television stations
reflected decreased advertising demand at those stations, partially due to
decreased fan and advertiser support for major league baseball. The decline in
revenues also reflected a decrease in advertising inventory available for sale
at New Gaylord's Dallas and Seattle-area television stations due to their
affiliation with CBS.
Cable networks -- Revenues increased $38.7 million, or 15.9%, to $282.6
million in 1995. Advertising revenues increased 12.5% at TNN in 1995 due to
higher advertising rates. TNN subscriber revenues increased
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<PAGE> 41
8.5% due to an increase in the number of subscribers to 64.4 million at the end
of 1995 from 58.7 million at the end of 1994, an increase in subscriber rates,
and an increase in revenue from satellite customers. Revenues at CMT increased
25.1% in 1995 due to increased advertising and subscriber revenues. The number
of CMT subscribers increased by 27.4% to 31.7 million at the end of 1995 from
24.9 million at the end of 1994.
Operating Expenses
Total Operating Expenses -- Total operating expenses increased $26.2
million, or 4.6%, to $595.6 million in 1995. As a percentage of revenues,
operating costs increased slightly to 62.5% in 1995 compared to 62.2% in 1994.
As a percentage of revenues, selling, general and administrative expenses
increased to 16.3% in 1995 from 15.8% in 1994. Corporate expenses increased $1.4
million, or 6.8%, to $22.4 million because of increased administrative expenses
at the corporate headquarters.
Operating Costs -- Operating costs increased $14.3 million, or 3.4%, to
$442.2 million in 1995. During 1995, New Gaylord recorded a nonrecurring pretax
charge of $13.3 million for the write-down of certain program rights at New
Gaylord's Dallas and Seattle-area television stations. Excluding the impact of
the television program write-down, operating costs increased $1.0 million, or
0.2%, to $428.9 million in 1995. Additional increases in operating costs during
1995 were attributable to the Wildhorse Saloon and the Ryman Auditorium being
operational for all of 1995, compared with seven months of operations in 1994,
representing an increase of $4.5 million; growth in the cable networks,
including increased Group W commissions and higher programming costs at TNN
which resulted in an increase of $12.9 million; and increased labor costs at the
Opryland Hotel. These increases were partially offset by lower operating costs
of $9.4 million resulting from fewer Nashville On Stage concerts; the
nonrecurring 1994 production of the World Cup opening ceremonies which reduced
operating costs by $3.1 million; and the 1994 inclusion of WVTV's operating
costs of $6.0 million prior to its sale.
Selling, General and Administrative -- Selling, general and administrative
expenses increased $6.7 million, or 6.2%, to $115.4 million in 1995. The
increase was primarily due to increased selling and promotional costs of $3.8
million associated with CMT's international expansion; higher administrative
costs at the Opryland Hotel and Opryland theme park of $3.2 million; and the
continued growth of TNN and CMT which resulted in an increase of $2.4 million.
These increases were partially offset by decreases at New Gaylord's television
stations of $2.3 million, primarily attributable to the impact of the sale of
WVTV in 1994, and reduced promotional costs associated with the Nashville On
Stage concert series.
Depreciation and Amortization -- Depreciation and amortization increased
15.6% to $38.1 million in 1995 due to the capital improvements at the Opryland
Hotel, growth in the cable networks segment, and a full year of operations for
the Wildhorse Saloon and the Ryman Auditorium.
Operating Income
Total operating income decreased $6.7 million, or 5.6%, to $111.8 million
in 1995. Excluding the nonrecurring charge for the write-down of television
program rights, total operating income increased $6.6 million, or 5.6%, to
$125.1 million in 1995. The hospitality and attractions segment had a $1.9
million increase in operating income during 1995, due primarily to the reduction
of operating losses of the Nashville On Stage concert series by $6.3 million.
The broadcasting and music segment had a $5.0 million decrease in operating
income during 1995, excluding the effect of the write-down of television program
rights, due primarily to the decline in revenues at New Gaylord's television
stations as discussed above and increased news costs resulting from the
affiliations with CBS. The cable networks segment had an $11.1 million increase
in operating income in 1995, reflecting improvements at both TNN and CMT, which
were offset by a $1.6 million increase in losses from CMT's international
operations.
Interest Expense
Interest expense increased $13.3 million to $40.9 million in 1995. The
majority of New Gaylord's interest expense is derived from interest charged on
outstanding amounts due to Old Gaylord. Additional interest expense for 1995 and
1994, $17.1 million and $19.7 million, respectively, was attributable to the
Systems prior to their
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<PAGE> 42
sale. In accordance with generally accepted accounting principles, such interest
has been allocated to the Systems and is therefore not included in income from
continuing operations.
Interest Income
Interest income increased $5.2 million to $6.0 million in 1995. This
increase primarily resulted from $5.0 million of noncash interest income
recorded on the long-term note receivable from the sale of the Systems.
Other Gains (Losses)
In 1995, New Gaylord recorded a pretax charge of $5.5 million (in addition
to the pretax charge of $26.0 million recorded in December 1994) to reflect
losses related to the January 1996 disposal of its 14% limited partnership
interest in the Fiesta Texas theme park. The charges were based on the permanent
impairment in the value of the investment and New Gaylord's guarantee on certain
indebtedness related to the original construction of Fiesta Texas.
Sinclair Broadcast Group, Inc. purchased the non-license assets of WVTV
from New Gaylord in May 1994 for $18.2 million, resulting in a pretax gain of
$10.7 million, and assigned its purchase option for the license assets of WVTV
to Glencairn, Ltd., which exercised the option and purchased the license assets
in July 1995.
Income Taxes
New Gaylord's provision for income taxes was $27.5 million for 1995
compared to $29.5 million for 1994. New Gaylord's effective tax rate on its
income from continuing operations before provision for income taxes was 39.9%
for 1995 compared to 38.5% for 1994.
Discontinued Operations
On September 29, 1995, New Gaylord sold the Systems to CCT Holdings Corp.
("CCTH"), an entity jointly owned by investment partnerships affiliated with
Kelso & Company, Inc. and by Charter Communications, Inc. ("Charter"), an owner
and manager of cable systems. Proceeds from the sale, after a working capital
adjustment, consisted of $198.8 million in cash and a 10-year, $165.7 million
note (the "Note") with an interest rate of 12% per year which increases to 15%
in year six and increases 2% per year thereafter, with principal and interest
payable at maturity. The Note was recorded at $150.7 million, net of a $15.0
million discount, to reflect the Note at fair value at the date of the sale
based upon financial instruments of comparable credit risk and interest rates.
In addition, New Gaylord received the contractual right to 15% of the net
distributable proceeds, as defined, from certain future sales by Charter
Communications Entertainment, L.P., a newly formed joint venture created to
operate cable television systems, to which CCTH contributed certain of the
Systems' assets which were purchased from New Gaylord. Immediately prior to the
closing of the sale, New Gaylord paid Charter $10.6 million to acquire the
remaining 2.9% interest in the Systems.
New Gaylord recorded a gain of $43.0 million, net of tax of $30.8 million,
on the sale of the Systems during 1995. The Systems have been accounted for as
discontinued operations and, accordingly, the Systems' losses including interest
expense (based upon debt that can be specifically attributed to the Systems)
subsequent to the November 1993 measurement date were deferred and reflected as
a reduction in the gain on the sale of the Systems. The 1995 net loss from
discontinued operations prior to the sale of the Systems was $19.5 million,
including interest expense of $17.1 million, which was deferred and reflected as
a reduction in the gain on the sale of the Systems.
LIQUIDITY AND CAPITAL RESOURCES
The cable networks segment of New Gaylord's operations has historically
contributed a significant portion of New Gaylord's total revenues and operating
income. Although the net cash flow generated by the Cable Networks Business will
no longer be available to New Gaylord, the sale of the Cable Networks Business
to Westinghouse pursuant to the Merger is not expected to adversely affect New
Gaylord's ability to conduct and expand its operations. In addition, the net
cash flow generated by New Gaylord's operations has historically
39
<PAGE> 43
exceeded its net investing and financing requirements and New Gaylord's
management believes that the net cash flow from New Gaylord's operations will
continue to do so. New Gaylord currently projects capital expenditures of
approximately $52.0 million for 1997, of which approximately $23.4 million had
been spent as of June 30, 1997.
Old Gaylord currently has, and, following the Merger, New Gaylord expects
to implement, a centralized cash management system whereby cash is or will be
made available to New Gaylord's various business operations on an as needed
basis for normal operating activities. In connection with the Transactions, New
Gaylord will assume all of Old Gaylord's long-term debt, which, at June 30,
1997, aggregated approximately $354 million, by assuming Old Gaylord's
obligations under the 1997 Credit Facility. See "THE RESTRUCTURING, THE
DISTRIBUTION, AND THE MERGER -- New Gaylord Credit Facility."
New Gaylord's management believes that the net cash flow from New Gaylord's
operations, together with the amount available for borrowing under the 1997
Credit Facility will be sufficient to satisfy New Gaylord's anticipated future
cash requirements on both a short-term and long-term basis.
SEASONALITY
Certain of New Gaylord's operations are subject to seasonal fluctuation.
Many of the operations in the hospitality and attractions segment are either
closed or operate on a limited basis during the first quarter of the year and
conduct most of their business during the summer tourism season. The first
calendar quarter is also the weakest quarter for most television and radio
broadcasters, including New Gaylord, as advertising revenues are lower in the
post-Christmas period. Revenues in the music business are typically weakest in
the first calendar quarter following the Christmas buying season.
RECENT DEVELOPMENTS
New Gaylord was notified recently by Nashville governmental authorities of
an increase in appraised value and property tax rates on the Opryland Hotel and
Opryland theme park resulting in a potential tax assessment of approximately
$4.1 million more than was originally anticipated. New Gaylord is in the process
of appealing the appraised values. New Gaylord intends to vigorously contest the
increased tax assessment, but believes that, even if the appeal is determined
unfavorably, the increased tax will not have a material adverse effect on New
Gaylord's results of operations or financial position.
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<PAGE> 44
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
As the sole stockholder of New Gaylord prior to the Distribution, Old
Gaylord has designated the persons who will serve as the directors and executive
officers of New Gaylord following the Distribution, most of whom have served in
similar capacities for Old Gaylord immediately prior to the Distribution. David
Hall, currently a Vice President of Old Gaylord, will remain with the Cable
Networks Business following the Merger and be employed by an affiliate of
Westinghouse. The following table sets forth certain information concerning
persons who are currently expected to serve as directors and executive officers
of New Gaylord.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH NEW GAYLORD
- ---- --- -------------------------
<S> <C> <C>
Edward L. Gaylord....................... 78 Chairman of the Board
E. K. Gaylord II........................ 40 Vice-Chairman of the Board
Terry E. London......................... 48 President, Chief Executive Officer, and Director
Jerry O. Bradley........................ 57 President -- Opryland Music Group
Dan E. Harrell.......................... 48 President -- Idea Entertainment
Carl Kornmeyer.......................... 45 President -- Communications Group
Jack J. Vaughn.......................... 59 President -- Hospitality and Attractions Group
F. M. Wentworth, Jr..................... 53 Senior Vice President, Secretary, and General Counsel
Robert F. Whittaker..................... 56 President -- Grand Ole Opry
Martin C. Dickinson..................... 62 Director
Christine Gaylord Everest............... 46 Director
Joe M. Rodgers.......................... 63 Director
</TABLE>
New Gaylord's Board of Directors will be comprised of six members, divided
into three classes of two members each. At each annual meeting of stockholders,
directors constituting one class will be elected for a three-year term. The
terms of Edward L. Gaylord and Joe M. Rodgers will expire at the 1998 Annual
Meeting of Stockholders, the terms of Martin C. Dickinson and Christine Gaylord
Everest will expire at the 1999 Annual Meeting of Stockholders, and the terms of
E. K. Gaylord II and Terry E. London will expire at the 2000 Annual Meeting of
Stockholders. See "DESCRIPTION OF CAPITAL STOCK -- Certain Restated Certificate
and By-law Provisions." It is currently contemplated that, following the
Distribution, New Gaylord will add two more nonemployee directors whose terms
will expire at the 1998 and 1999 Annual Meetings of Stockholders. In addition,
New Gaylord is currently searching for a person to serve as Chief Financial
Officer. All officers of New Gaylord serve at the discretion of the Board of
Directors.
The following is additional information with respect to the above-named
executive officers and directors.
Mr. Edward L. Gaylord, the son of one of the founders of Old Gaylord,
served as President and Chief Executive Officer of Old Gaylord from 1974 until
October 1991, and has served as Chairman of the Board of Old Gaylord since
October 1991. Mr. Gaylord has been a director of Old Gaylord since 1946. Mr.
Gaylord is currently the chairman, chief executive officer, and a director of
OPUBCO, a newspaper publishing company. Mr. Gaylord is active in numerous civic
and charitable organizations, and is (among others) chairman of the Oklahoma
Industries Authority, director and past president (ten years) of the State Fair
of Oklahoma, chairman and director of The Oklahoma Medical Research Foundation,
and chairman and director of the National Cowboy Hall of Fame & Western Heritage
Center. Mr. Gaylord is the father of Mr. E. K. Gaylord II, Vice Chairman of the
Board of New Gaylord, and Mrs. Christine Gaylord Everest, a director of New
Gaylord.
Mr. E. K. Gaylord II has served as Vice-Chairman of the Board of Old
Gaylord since May 1996 and as a director since 1977. From 1989 until October
1991, Mr. Gaylord served as Vice President of Old Gaylord. Mr. Gaylord has been
the president of OPUBCO since June 1994 and is a director of OPUBCO. He served
as executive vice president and assistant secretary of OPUBCO from June 1993
until June 1994 and as vice president and assistant secretary from 1991 until
1993. He also owns and operates the Lazy E Ranch in Guthrie, Oklahoma. Mr.
Gaylord is a director of the National Cowboy Hall of Fame and Western Heritage
Center and is a
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<PAGE> 45
director of Bass GEC Management Company. Mr. Gaylord is the son of Mr. Edward L.
Gaylord and the brother of Mrs. Christine Gaylord Everest, both of whom are
directors of New Gaylord.
Mr. London was elected President and Chief Executive Officer of Old Gaylord
effective May 1, 1997. Prior to May 1997, Mr. London had served, since March
1997, as Executive Vice President and Chief Operating Officer and, since
September 1993, as Senior Vice President and Chief Financial and Administrative
Officer of Old Gaylord. He served as Vice President and Chief Financial Officer
of Old Gaylord from October 1991 until September 1993, and has been employed by
Old Gaylord since 1978. Mr. London is a certified public accountant.
Mr. Bradley has served as President of Opryland Music Group since September
1993 and as General Manager of Opryland Music Group since July 1986. Prior to
joining Opryland Music Group, Mr. Bradley operated Bradley Productions, an
independent production company for three years and worked for RCA Records for 16
years.
Mr. Harrell has been President of Idea Entertainment, Old Gaylord's family
entertainment subsidiary, since Old Gaylord's March 1997 acquisition of
Blanton/Harrell Entertainment, an artist management company that manages the
careers of several prominent contemporary Christian music artists. For over 17
years prior to such acquisition, Mr. Harrell was co-owner of Blanton/Harrell
Entertainment.
Mr. Kornmeyer has been Senior Vice President of Broadcast and Business
Affairs of Old Gaylord's broadcasting and cable networks operations since March
1996. He served as Vice President of Business Affairs of Old Gaylord's
broadcasting and cable networks operations from March 1994 until February 1996,
and, from August 1989 through February 1994, he was Executive Director of
Business and Financial Affairs of Old Gaylord's broadcasting and cable networks
operations.
Mr. Vaughn is Old Gaylord's executive officer in charge of the Opryland
Hotel, the Opryland theme park, and certain other hospitality and attractions
properties. He has served as Vice President of Old Gaylord since October 1991
and was the General Manager of the Opryland Hotel from 1975 to 1993. He has been
a member and served on committees of the American Hotel and Motel Association
since 1972.
Mr. Wentworth has served as Senior Vice President, Secretary, and General
Counsel of Old Gaylord since September 1993. He served as Secretary and General
Counsel of Old Gaylord from October 1991 until September 1993, as General
Counsel and Secretary of Opryland USA Inc since 1983, and has been employed by
the Opryland USA businesses since 1966.
Mr. Whittaker has been the President and General Manager of the Grand Ole
Opry since November 1996. From September 1993 until November 1996, Mr. Whittaker
served as Vice President of the Grand Ole Opry and Opryland Productions, and
from August 1990 until September 1993, he was the General Manager of Opryland
theme park. Mr. Whittaker has worked for the Opryland USA businesses since 1971.
Mr. Dickinson has been a director of Old Gaylord since 1974. He is a
retired officer of Scripps Bank in La Jolla, California and has been a director
of the bank since 1990. Mr. Dickinson is also a director of OPUBCO. Following
the Merger, Mr. Dickinson is expected to be recommended to the Nominating and
Governance Committee of the Westinghouse Board and to the Westinghouse Board for
appointment as a director of Westinghouse.
Mrs. Everest has been a director of Old Gaylord since 1976. She has served
as vice president of OPUBCO since June 1996, as secretary of OPUBCO since June
1994, and as senior assistant secretary of OPUBCO from October 1991 until June
1994. Mrs. Everest is also a director of OPUBCO. From 1989 to October 1991, Mrs.
Everest was Senior Assistant Secretary of Old Gaylord. Mrs. Everest is the
daughter of Mr. Edward L. Gaylord and the sister of Mr. E. K. Gaylord II, both
of whom are directors of Old Gaylord.
Mr. Rodgers has been a director of Old Gaylord since 1991. He is chairman
of The JMR Group, a private investment company specializing in merchant and
investment banking. Mr. Rodgers served as chairman of the board and chief
executive officer of Berlitz International, Inc., a foreign language services
company, from December 1991 to February 1993. From 1985 to 1989, Mr. Rodgers
served as United States Ambassador to France. Mr. Rodgers is also a director of
AMR Corporation/American Airlines, Inc.; American Constructors, Inc.; Gryphon
Holdings, Inc.; Lafarge Corporation; SunTrust Bank, Nashville, N.A.; Thomas
Nelson, Inc.; Tractor Supply Company; and Willis Corroon Group, PLC.
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<PAGE> 46
COMMITTEES OF THE BOARD OF DIRECTORS
In order to facilitate the activities of the New Gaylord Board of Directors
following the Distribution, the Board of Directors intends to create several
standing committees, including an Audit Committee and a Compensation Committee.
The Board of Directors will not have a standing nominating committee. The
functions normally performed by a nominating committee will be performed by the
Board of Directors as a whole. The anticipated committees, their primary
functions, and their memberships are as follows:
Audit Committee -- This Committee will make recommendations to the New
Gaylord Board of Directors with respect to the appointment of independent
public accountants, review significant audit and accounting policies and
practices, meet with New Gaylord's independent public accountants
concerning, among other things, the scope of audits and reports, and review
the performance of the overall accounting and financial controls of New
Gaylord. Initial members of the Audit Committee are expected to be Martin
C. Dickinson (Chairman) and Joe M. Rodgers, each of whom currently serves
on the Audit Committee of Old Gaylord.
Compensation Committee -- This Committee will have the responsibility
for reviewing and approving the compensation and benefits of executive
officers, advising management regarding benefits, including bonuses, and
other terms and conditions of compensation of other employees,
administering New Gaylord's stock plan, and reviewing and recommending
compensation of directors. Initial members of the Compensation Committee
are expected to be Martin C. Dickinson and Joe M. Rodgers (Chairman), each
of whom currently serves on the Compensation Committee of Old Gaylord.
Nominations for election to the Board of Directors may be made by the Board
of Directors, by a nominating committee appointed by the Board of Directors, or
by any stockholder entitled to vote for the election of directors as described
below. The By-laws establish an advance notice procedure for the nomination,
other than by or at the direction of the Board of Directors or a committee
thereof, of candidates for election as directors. Notice of director nominations
must be timely given in writing to the Secretary of New Gaylord prior to the
meeting at which the directors are to be elected. To be timely, notice must be
delivered to or mailed and received at the principal executive offices of New
Gaylord (a) in the case of an annual meeting, not less than 60 nor more than 90
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders; provided, however, that in the event that the annual meeting is
called for a date that is not within 30 days before or after such anniversary
date, notice must be so received not later than the close of business on the
tenth day following the day on which such notice of the date of the annual
meeting was mailed or public disclosure of the date of the annual meeting was
made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth day following the day on which notice of the date
of the special meeting was mailed or public disclosure of the date of the
special meeting was made, whichever first occurs. Notice to New Gaylord from a
stockholder who proposes to nominate a person at a meeting for election as a
director must contain all information about such person that would be required
to be included in a proxy statement soliciting proxies for the election of the
proposed nominee (including such person's written consent to serve as a director
if so elected) and certain information about the stockholder proposing to
nominate that person. If the chairman of the meeting of stockholders determines
that a person was not nominated in accordance with the nomination procedure,
such nomination will be disregarded.
DIRECTORS' COMPENSATION
Arrangements regarding directors' compensation for services as directors
will be determined by the New Gaylord Compensation Committee. It is currently
anticipated that employee directors will not be compensated for service as
directors in addition to their salaries and that all directors will be
reimbursed for their expenses incurred in attending meetings. Directors will
also be entitled to receive awards under the New Gaylord Entertainment Company
1997 Stock Option and Incentive Plan (the "1997 Stock Plan"). See "EXECUTIVE
COMPENSATION -- Compensation Pursuant to Plans -- 1997 Stock Plan."
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<PAGE> 47
EXECUTIVE COMPENSATION
Prior to the Distribution, New Gaylord has been a wholly owned subsidiary
of Old Gaylord and New Gaylord's officers and directors have not been separately
compensated for acting in such capacities. The following Summary Compensation
Table sets forth the cash compensation and certain other components of the
compensation of Earl W. Wendell, the President and Chief Executive Officer of
Old Gaylord at December 31, 1996, and the other four most highly compensated
executive officers of Old Gaylord who were serving as executive officers at
December 31, 1996 (including Mr. Wendell, the "Named Executive Officers"). Mr.
Wendell retired in May 1997 and was replaced as President and Chief Executive
Officer by Terry E. London. Following the Merger, David Hall will remain with
the Cable Networks Business and will be employed by an affiliate of
Westinghouse. Compensation and benefits to be provided by New Gaylord to its
executive officers will be governed, in part, by the severance agreements
between such officers and Old Gaylord. See "-- Employment, Severance, and Change
in Control Arrangements."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
------------------------
ANNUAL COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL POSITION --------------------- STOCK UNDERLYING ALL OTHER
AS OF DECEMBER 31, 1996 YEAR SALARY BONUS AWARDS(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- -------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Earl W. Wendell(3) 1996 $654,000 $292,730 $338,625 $52,500 $38,103
President and CEO 1995 654,000 286,256 306,000 55,125 33,032
1994 627,123(4) 260,400 -0- -0- 25,752
Edward L. Gaylord 1996 510,000 -0- -0- -0- -0-
Chairman of the Board 1995 510,000 -0- -0- -0- -0-
1994 510,000(4) -0- -0- -0- -0-
Jack J. Vaughn 1996 364,000 195,723 148,120 21,000 24,280
Vice President (Hospitality
and Attractions) 1995 364,000 203,767 133,863 22,050 19,973
1994 336,939 105,000 -0- -0- 11,942
Terry E. London 1996 312,000 194,683 84,643 14,175 15,892
Senior Vice President, Chief 1995 312,000 117,312 76,488 14,883 14,058
Financial and Administrative 1994 295,810 83,610 -0- -0- 8,800
Officer
David Hall(5) 1996 305,000 182,040 105,785 18,375 22,601
Vice President (Cable 1995 300,000 218,610 95,593 19,293 21,215
Networks and Broadcasting) 1994 242,729 238,430 -0- -0- 9,804
</TABLE>
- ---------------
(1) Awards of shares of restricted Old Gaylord Class A Common Stock (the
"Performance Shares") were made in 1996 and 1995 to the Named Executive
Officers other than Mr. Gaylord, the restrictions with respect to which were
designed to lapse on the third anniversary of the date of grant based on the
extent to which Old Gaylord attained certain predetermined cumulative
earnings per share targets. Persons holding Performance Shares are entitled
to dividends and voting rights from the date of grant. The numbers of
Performance Shares awarded to Messrs. Wendell, Vaughn, London, and Hall in
each of 1996 and 1995 were 13,230, 5,787, 3,307, and 4,133, respectively.
The values of these awards as shown in the table are based on per share
prices of $25.60 and $23.13, the closing market prices of the Class A Common
Stock as reported on the NYSE on the respective dates of the awards. Based
on the closing market price of the Old Gaylord Class A Common Stock of
$22.875 as reported on the NYSE on December 31, 1996, the aggregate values
of the 1996 and 1995 awards to Messrs. Wendell, Vaughn, London, and Hall
were $605,273 (see Note 3), $264,755, $151,295, and $189,085. In connection
with the Merger, Performance Shares will vest as though Old Gaylord had
achieved 100% of the applicable performance targets with respect to such
Performance Shares (as contemplated by the Distribution Agreement).
Accordingly, restrictions on two-thirds of the outstanding Performance
Shares will lapse. The remaining one-third of those Performance Shares will
be forfeited.
(2) Includes contributions by Old Gaylord to the supplemental deferred
compensation plan (the "SUDCOMP Plan") and to Old Gaylord's 401(k) Savings
Plan (the "Savings Plan"), and premiums paid by Old Gaylord for term life
insurance provided for the benefit of the Named Executive Officers. Mr.
Gaylord is not a
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<PAGE> 48
participant in the SUDCOMP Plan or Savings Plan nor does he receive life
insurance benefits from Old Gaylord. Old Gaylord's contributions to the
SUDCOMP Plan, the Savings Plan, and payments on behalf of the Named
Executive Officers for group term life insurance are reflected below. In
connection with the Restructuring and the Merger, New Gaylord will assume
the SUDCOMP Plan and the Savings Plan and Mr. Hall will become fully vested
under each of such plans and will no longer be eligible to participate
therein.
<TABLE>
<CAPTION>
GROUP TERM
LIFE INSURANCE TOTAL ALL OTHER
NAME YEAR SUDCOMP 401(K) PREMIUMS COMPENSATION
- ---- ---- ------- ------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
Earl W. Wendell 1996 $24,748 $4,455 $8,900 $38,103
1995 21,701 4,304 7,027 33,032
1994 21,026 4,620 106 25,752
Jack J. Vaughn 1996 11,721 4,500 8,059 24,280
1995 9,443 4,152 6,378 19,973
1994 7,166 4,620 156 11,942
Terry E. London 1996 4,484 4,500 6,908 15,892
1995 4,086 4,500 5,472 14,058
1994 4,042 4,620 138 8,800
David Hall 1996 11,459 4,500 6,642 22,601
1995 11,451 4,500 5,264 21,215
1994 5,028 4,620 156 9,804
</TABLE>
(3) Mr. Wendell retired from his positions as an officer and director of Old
Gaylord and various of its subsidiaries effective as of May 1, 1997. In
connection with his retirement, Mr. Wendell agreed to (i) exercise all of
his options for Old Gaylord Class A Common Stock that were in-the-money
(covering 882,000 shares), (ii) forfeit all out-of-the-money options for Old
Gaylord Class A Common Stock (covering 107,625 shares), and (iii) sell, on
or before August 31, 1997, all shares of Old Gaylord Class A Common Stock
issued upon the exercise of such options. In consideration therefor, and in
recognition of his past contributions to Old Gaylord, Old Gaylord agreed to
pay Mr. Wendell a cash bonus of $1,900,000 and accelerated the vesting of
17,640 Performance Shares as though Old Gaylord had achieved 100% of the
applicable performance targets with respect to such Performance Shares (as
contemplated by the Distribution Agreement, except that Mr. Wendell's
Performance Shares vested as of his retirement date rather than as of the
Time of Distribution). In addition to benefits he is otherwise entitled to
receive under Old Gaylord's existing benefit plans, in connection with his
retirement Mr. Wendell will receive (i) the pro rata portion of his target
bonus for 1997, which will be payable by New Gaylord in 1998; (ii) up to
$10,000 for personal financial counseling services; and (iii) title to his
company car. In addition, Old Gaylord, New Gaylord, and Mr. Wendell have
entered into a Consulting Agreement pursuant to which Mr. Wendell has agreed
to provide consulting services to Old Gaylord and, after the Distribution
and the Merger, to New Gaylord, for a period of three years for which he
will receive payments totaling $800,000. Mr. Wendell has also executed a
Noncompetition Agreement pursuant to which Mr. Wendell has agreed not to
compete with Old Gaylord and, after the Distribution and the Merger, with
New Gaylord for a period of three years for which he will receive payments
totaling $800,000. In connection with the Restructuring and the
Distribution, Old Gaylord's rights and obligations under the Consulting
Agreement and the Noncompetition Agreement will be assigned to and assumed
by New Gaylord.
(4) Includes fees for services as a director of $30,000.
(5) Mr. Hall became a Vice President of Old Gaylord on December 1, 1996.
45
<PAGE> 49
OLD GAYLORD OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes the terms of stock options granted by Old
Gaylord to each of the Named Executive Officers during 1996. All of the options
referred to in the table below are nonqualified stock options granted pursuant
to Old Gaylord's 1993 Stock Option and Incentive Plan (the "1993 Stock Plan") at
the fair market value on the date of grant (determined as the closing sale price
on the NYSE of Old Gaylord Class A Common Stock on the trading day preceding the
grant) and are for the purchase of Old Gaylord Class A Common Stock. In
connection with the Merger, all then outstanding options, including those that
are held by the Named Executive Officers other than Mr. Hall, will be converted
into options to purchase New Gaylord Common Stock. Mr. Hall's options will be
converted into options to purchase Westinghouse Common Stock. See "-- Issuance
of New Gaylord Options and Conversion of Old Gaylord Options." No stock
appreciation rights have ever been granted by Old Gaylord.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ----------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR(%) PRICE DATE 5% 10%
---- ---------- -------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Earl W. Wendell............... 52,500 20.53 $25.00 2/23/06(1) $825,424 $2,091,787
Edward L. Gaylord............. -0- -- -- -- -- --
Jack J. Vaughn................ 21,000(2) 8.21 25.00 2/23/06 330,170 836,715
Terry E. London............... 14,175(2) 5.54 25.00 2/23/06 222,865 564,782
David Hall.................... 18,375(2) 7.18 25.00 2/23/06 288,898 732,125
</TABLE>
- ---------------
(1) In connection with Mr. Wendell's retirement, these options have been
cancelled. See Note (3) to the Summary Compensation Table.
(2) Pursuant to the terms of the 1993 Stock Plan, all outstanding options will
vest and become exercisable upon the approval of the Merger Agreement by the
Old Gaylord stockholders.
AGGREGATED OLD GAYLORD OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION VALUES
The following table summarizes, for each of the Named Executive Officers,
the total number of unexercised stock options and the aggregate dollar value of
in-the-money unexercised stock options held at December 31, 1996. No shares were
acquired by the Named Executive Officers upon the exercise of stock options
during 1996. All of the stock options referenced below are for Old Gaylord Class
A Common Stock and were awarded pursuant to either the 1993 Stock Plan or Old
Gaylord's 1991 Stock Option and Incentive Plan (collectively, the "Stock
Plans"). In connection with the Merger, all then outstanding options, including
those that are held by the Named Executive Officers other than Mr. Hall, will be
converted into options to purchase New Gaylord Common Stock. Mr. Hall's options
will be converted into options to purchase Westinghouse Common Stock. See " --
Issuance of New Gaylord Options and Conversion of Old Gaylord Options."
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END(#) OPTIONS AT FY-END($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Earl W. Wendell(2)............................. 882,000 107,625 $11,975,750 $ -0-
Edward L. Gaylord.............................. 132,300 -0- 1,796,363 -0-
Jack J. Vaughn................................. 132,300 43,050 1,796,363 -0-
Terry E. London................................ 132,300 29,058 1,796,363 -0-
David Hall..................................... 55,125 37,668 748,484 -0-
</TABLE>
- ---------------
(1) The aggregate dollar value of the options held at fiscal year-end are
calculated as the difference between the fair market value of Old Gaylord
Class A Common Stock ($22.875 as reported on the NYSE on December 31, 1996)
and the exercise price of the stock options.
(2) See Note (3) to the Summary Compensation Table.
46
<PAGE> 50
ISSUANCE OF NEW GAYLORD OPTIONS AND CONVERSION OF OLD GAYLORD OPTIONS
Pursuant to the Distribution Agreement, all options to acquire Old Gaylord
Class A Common Stock that are held by persons who, following the Distribution,
will be New Gaylord employees will be converted into fully vested and
exercisable options to acquire shares of New Gaylord Common Stock under the 1997
Stock Plan, with such amendments and adjustments as the New Gaylord Board of
Directors determines are reasonable and appropriate based, in part, on the Per
Share Merger Consideration and the fair market value of the New Gaylord Common
Stock immediately following the Distribution. As a result, the number of options
to acquire shares of New Gaylord Common Stock to be granted upon the conversion
of options to acquire shares of Company Class A Common Stock is not presently
determinable. Pursuant to the Merger Agreement, all options to acquire shares of
Old Gaylord Class A Common Stock that are held by persons who, following the
Distribution, will remain with the Cable Networks Business and become employees
of an affiliate of Westinghouse following the Merger will be converted into
options to acquire shares of Westinghouse Common Stock. See "THE MERGER
AGREEMENT -- Employee Matters and Stock Options" in the Proxy
Statement/Prospectus.
COMPENSATION PURSUANT TO PLANS
1997 Stock Plan
New Gaylord's Board of Directors and Old Gaylord's stockholders have
approved the 1997 Stock Plan, pursuant to which directors, officers, and other
key employees of New Gaylord will be eligible to receive awards of stock
options, stock appreciation rights and restricted stock. Options granted under
the 1997 Stock Plan may be "incentive stock options" ("ISOs"), within the
meaning of Section 422 of the Code, or nonqualified stock options ("NQSOs").
Stock Appreciation Rights ("SARs") may be granted simultaneously with the grant
of an option or (in the case of NQSOs) at any time during its term. Restricted
stock may be granted in addition to or in lieu of any other award granted under
the 1997 Stock Plan.
The 1997 Stock Plan provides that awards may be granted covering up to
3,000,000 shares of New Gaylord Common Stock (subject to antidilution and
similar adjustments in the event of a stock split, combination of shares,
recapitalization, or similar changes). The 1997 Stock Plan limits the number of
shares with respect to which awards (including options, SARs, and restricted
stock) may be granted to any individual to no more than 500,000 shares, in any
three-year period. Unless the 1997 Stock Plan is terminated earlier by New
Gaylord's Board of Directors, awards may be granted for a period of ten years
from the date of the Distribution.
Unless otherwise determined by New Gaylord's Board of Directors, the 1997
Stock Plan will be administered by the Compensation Committee, which will be
comprised solely of "nonemployee directors" within the meaning of Rule 16b-3
under the Exchange Act, or by New Gaylord's Board of Directors if the
Compensation Committee is not so comprised (any entity administering the 1997
Stock Plan is hereinafter referred to as the "Committee"). It is currently
anticipated that the members of the Committee will also be "outside directors"
within the meaning of Section 162(m) of the Code. Subject to the provisions of
the 1997 Stock Plan, the Committee will determine the type of award, when and to
whom awards will be granted, and the number of shares covered by each award. The
Committee will have sole discretionary authority to interpret the 1997 Stock
Plan and to adopt rules and regulations related thereto. In determining the
persons to whom awards shall be granted and the number of shares covered by each
award, the Committee will take into account the contribution to the management,
growth, and profitability of the business of New Gaylord by the respective
persons and such other factors as the Committee deems relevant.
The Committee will determine, in its sole discretion, the purchase price of
the shares of stock covered by an option and the kind of consideration payable
with respect to any awards; provided, however, that in the case of the ISOs, the
price must not be less than the "Fair Market Value" (as defined in the 1997
Stock Plan) on the date of grant, and provided further that the option price
must be 110% of the Fair Market Value in the case of ISOs granted to "Ten
Percent Stockholders" (as defined in the 1997 Stock Plan). The Committee may
provide for the payment of the option price in cash, by delivery of shares of
New Gaylord Common Stock having a Fair Market Value equal to such option price,
by a combination thereof, or by any other method in accordance with the terms of
the option agreements. The 1997 Stock Plan contains special rules governing the
time of exercise in the case of
47
<PAGE> 51
death, disability, or other termination of employment and also provides for
acceleration of the exercisability of options in the event of a "Change in
Control" (as defined in the 1997 Stock Plan.)
The 1997 Stock Plan also permits the Committee to grant SARs with respect
to all or any portion of the shares of New Gaylord Common Stock covered by
options. Each SAR will confer a right to receive an amount with respect to each
share subject thereto, upon exercise thereof, equal to the excess of (i) the
Fair Market Value of one share of New Gaylord Common Stock on the date of
exercise over (ii) the grant price of the SAR. The grant price of any SAR
granted in tandem with an option will be equal to the exercise price of the
underlying option, and the grant price of any other SAR will be such price as
the Committee determines. The Committee may, in its sole discretion, condition
the exercise of any SAR upon the attainment of specified Performance Goals (as
defined below).
The 1997 Stock Plan also provides for the grant of restricted stock awards,
which are awards of New Gaylord Common Stock that may not be transferred or
otherwise disposed of, except by will or the laws of descent and distribution,
for such period as the Committee determines (the "Restricted Period"). The
Committee may also impose such other conditions and restrictions on the shares
as it deems appropriate, including the satisfaction of one or more of the
following performance criteria: (i) pre-tax income or after-tax income; (ii)
operating cash flow; (iii) operating profit; (iv) return on equity, assets,
capital, or investment; (v) earnings or book value per share; (vi) sales or
revenues; (vii) operating expenses; (viii) New Gaylord Common Stock price
appreciation; and (ix) implementation or completion of critical projects or
processes (the "Performance Goals"). The Performance Goals may include a
threshold level of performance below which no payment will be made (or no
vesting will occur), levels of performance at which specified payments will be
made (or specified vesting will occur), and a maximum level of performance above
which no additional payment will be made (or at which full vesting will occur).
Each of the Performance Goals will be determined, to the extent applicable, in
accordance with generally accepted accounting principles and will be subject to
certification by the Committee; provided, that the Committee will have the
authority to make equitable adjustments to the Performance Goals in recognition
of unusual or non-recurring events affecting New Gaylord. The Committee may
provide that such restrictions will lapse with respect to specified percentages
of the awarded shares on successive future dates.
During the Restricted Period, the grantee will be entitled to receive
dividends with respect to, and to vote the shares awarded to him or her. If,
during the Restricted Period, the grantee's continuous employment with New
Gaylord terminates for any reason, any shares remaining subject to restrictions
will be forfeited, unless otherwise determined by the Committee. The Committee
has the authority to cancel any or all outstanding restrictions prior to the end
of the Restricted Period, including cancellation of restrictions in connection
with certain types of termination of employment.
New Gaylord's Board of Directors may at any time and from time to time
suspend, amend, modify, or terminate the 1997 Stock Plan; provided, however,
that, no amendment that requires stockholder approval in order for the 1997
Stock Plan to continue to comply with Section 162(m) of the Code or any other
applicable law will be effective unless and until such amendment has received
the requisite approval by New Gaylord's stockholders.
Retirement Plans
Employees of New Gaylord and certain of its subsidiaries who have attained
age 21 and completed at least one year of service with more than 1,000 hours of
service will be eligible to participate in Old Gaylord's defined benefit pension
plan (the "Retirement Plan") and will receive full credit for service with Old
Gaylord for vesting purposes. The normal retirement benefit payable to a vested
participant upon retirement at age 65 is equal to the sum of:
(A) 0.85% of the participant's Average Annual Compensation multiplied
by his or her number of years of Benefit Accrual Service, as defined in the
Retirement Plan; and
(B) 0.65% of the excess, if any, of the participant's Average Annual
Compensation over Covered Compensation multiplied by his or her years of
Benefit Accrual Service not in excess of 35 years.
48
<PAGE> 52
The normal form of benefit is calculated in the form of a life only annuity
payable monthly. The participant may elect alternative forms of payment pursuant
to the provisions of the Retirement Plan.
Average Annual Compensation is defined as the average of "includable
compensation" for the five consecutive years in which earnings were the highest
within the last ten years of benefit service. Includable compensation is defined
to include only base pay through December 31, 1988; thereafter it is defined as
all "wages" within the meaning of Code Section 3121(a) (without such base pay
limit), plus employee contributions to Old Gaylord's 401(k) Plan and Code
Section 125 deferrals, subject to additional limitations imposed by the Code.
Accrued benefits are 100% vested after five years of service.
Pursuant to the Distribution Agreement, Old Gaylord is required to amend
the Retirement Plan so that the accrued benefit of each Old Gaylord employee who
becomes an employee of an affiliate of Westinghouse immediately following the
Merger vests, notwithstanding the vesting schedule under the Retirement Plan.
Old Gaylord also maintains two non-qualified retirement plans to provide
benefits to certain employees of Old Gaylord: (i) the NLT Supplemental Executive
Retirement Plan (the "NLT SERP") and (ii) the Benefit Restoration Plan (the
"Restoration Plan"). These plans are not prefunded and the beneficiaries' rights
to receive distributions thereunder constitute unsecured claims to be paid from
the general assets of Old Gaylord.
The NLT SERP provides a benefit to certain executives in an amount equal to
the actuarial difference between benefits provided by the Retirement Plan and
benefits that would have been available to such persons under the defined
benefit pension plan of the predecessor to Opryland USA Inc had service
continued thereunder from the date such predecessor was acquired by Old Gaylord,
August 31, 1983, until the date of retirement, service termination, or death of
the covered employee. The benefits payable under the NLT SERP are determined as
of the effective date of termination of employment and are restricted to the
maximum benefit limitation imposed by Section 415 of the Code. Mr. Vaughn is the
only Named Executive Officer currently covered by the NLT SERP and the estimated
benefit payable to Mr. Vaughn (calculated as of December 31, 1996) upon
retirement at normal retirement age is $32,864 annually.
The Restoration Plan provides a benefit to certain employees to "replace"
benefits lost due to Code limitations imposed upon qualified defined benefit
pension plans. The benefit is determined by calculating the Retirement Plan
benefit without respect to limitations of the Code and subtracting the benefit
payable from the Retirement Plan. The total annual benefit is limited to 45% of
Average Annual Compensation (without respect to Code limitations) and consists
of benefits payable pursuant to the Restoration Plan, the Retirement Plan, the
NLT SERP, employer matching contributions to New Gaylord's 401(k) Savings Plan
and Supplemental Deferred Compensation Plan (assuming the maximum match), and
one-half of any annual Social Security benefit payable to the employee. To
determine the maximum benefit, all benefits are converted to a life only annuity
benefit payable at age 65. The Restoration Plan benefit is reduced (not below
zero) if the total annual benefit exceeds the 45% maximum limitations.
The Distribution Agreement provides that New Gaylord will assume
sponsorship of and continue the Retirement Plan, the Restoration Plan, and the
NLT SERP.
The following table shows the estimated annual pension payable under the
Retirement Plan and the Restoration Plan to employees upon retirement in
specified remuneration and years-of-service classifications. The amounts shown
in the table do not include benefits payable from Social Security. The amount of
estimated annual pension is based upon a pension formula which applies to all
participants in the Retirement Plan and the Restoration Plan. The estimated
amounts are based on the assumption that (i) payments under the Retirement Plan
and the Restoration Plan will commence upon retirement at age 65 in 1996 in the
form of a single life only
49
<PAGE> 53
annuity, (ii) covered compensation is $27,576, and (iii) the Retirement Plan and
the Restoration Plan will continue in force in their present form.
<TABLE>
<CAPTION>
DEFINED BENEFIT PLAN TABLE
- -----------------------------------------------------------------------------------------------------------------------------
ESTIMATED ANNUAL DEFINED BENEFIT PLAN BENEFIT
EXCLUDING SOCIAL SECURITY(3)
ESTIMATED FIVE- ------------------------------------------------------------------
YEAR FINAL YEARS OF SERVICE
PAY AT AVERAGE ------------------------------------------------------------------
AGE 65(1) COMPENSATION(2) 10 15 20 25 30 35 40
- --------------------------------------- --------------- ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
50,000................................ 45,000 4,845 7,268 9,690 12,113 14,536 16,958 20,333
75,000................................ 67,500 8,220 12,330 16,440 20,551 24,661 28,771 33,833
100,000................................ 90,000 11,595 17,393 23,190 28,988 34,786 40,583 47,333
125,000................................ 112,500 14,970 22,455 29,940 37,426 44,911 52,396 60,833
150,000................................ 135,000 18,345 27,518 36,690 45,863 55,036 64,208 74,333
200,000................................ 180,000 25,095 37,643 50,190 62,738 63,295 73,133 84,533
250,000................................ 225,000 31,845 47,768 63,690 79,613 81,107 81,107 84,533
300,000................................ 270,000 38,595 57,893 77,190 96,488 98,920 98,920 98,920
400,000................................ 360,000 52,095 78,143 104,190 130,238 134,545 134,545 134,545
500,000................................ 450,000 65,595 98,393 131,190 163,988 170,170 170,170 170,170
600,000................................ 540,000 79,095 118,643 158,190 197,738 205,796 205,796 205,796
</TABLE>
- ---------------
(1) The maximum annual compensation that can be recognized by a qualified
defined benefit pension retirement plan is $150,000 in 1996 (Code Section
401(a)(17)).
(2) Estimated five-year final average compensation is based on 90% of pay at age
65.
(3) The Restoration Plan benefit for covered employees whose "Pay at 65" equals
or exceeds $200,000 in the table above is calculated by limiting total
benefits payable under both of Old Gaylord's defined benefit plans (namely,
the Retirement Plan and the Restoration Plan) to 45% of the amount of "Pay
at 65." In calculating the 45% limitation, the Restoration Plan also assumes
that company matching contributions have been made to the accounts of
covered employees under the qualified and nonqualified defined contribution
plans sponsored by Old Gaylord (which are described below) and actuarially
converts those assumed matching contributions to a single life annuity
benefit utilizing specified Retirement Plan actuarial assumptions.
Messrs. Wendell, Gaylord, Vaughn, London, and Hall had 44, 49, 20, 18, and
30 years of credited service, respectively, on December 31, 1996. As a result of
the Code Section 401(a)(17) limitation on eligible compensation, the 1996
includable compensation in determining Average Annual Compensation was limited
to $150,000 for the Named Executive Officers in 1996.
401(k) Savings Plan
Old Gaylord maintains the Savings Plan, a defined contribution plan with a
salary deferral arrangement under Section 401(k) of the Code. Certain employees
of Old Gaylord who have attained age 21 and completed at least one year of
service and more than 1,000 hours of service are eligible to participate in the
Savings Plan. The Distribution Agreement provides that, following the
Distribution, New Gaylord will assume sponsorship of and continue the Savings
Plan.
Savings Plan participants are permitted to make elective contributions of
between 1% and 16% of their "Compensation" (as defined in the Savings Plan)
which generally includes W-2 income. Under the Savings Plan, 50% of the
contribution made by each participant is matched by Old Gaylord up to six
percent of compensation with a maximum employer contribution equal to the lesser
of (i) three percent of the participant's Compensation or (ii) such lesser
amount specified by Section 401(k) of the Code.
50
<PAGE> 54
A participant's elective contributions vest immediately. The employer
matching contributions vest according to the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE PERCENT
- ---------------- -------
<S> <C>
Less than 2................................................. 0%
2 to 3...................................................... 40%
3 to 4...................................................... 60%
4 to 5...................................................... 80%
5 or more................................................... 100%
</TABLE>
Pursuant to the Distribution Agreement, Old Gaylord is required to amend the
Savings Plan so that the entire account balance of each Old Gaylord employee who
becomes an employee of Westinghouse immediately following the Merger vests
notwithstanding the vesting schedule under the Savings Plan.
Participants actively participating in the Savings Plan are eligible to
apply for up to three loans. They are also permitted to make in-service
withdrawals and hardship withdrawals in conformity with the terms of the Savings
Plan.
Participating employees may invest both their own contributions and
employer contributions into one of seven funds including up to 30% of their
contributions in a fund comprised exclusively of Old Gaylord Class A Common
Stock.
Upon termination of employment, disability, death, or retirement, a
participant receives the value of his or her account, payable as a lump sum
unless he or she elects to receive the value of his or her account balance in
the form of a joint and survivor annuity.
Supplemental Deferred Compensation Plan
Old Gaylord maintains the SUDCOMP Plan, which is an unfunded deferred
compensation arrangement for a select group of management or highly compensated
employees, including all of Old Gaylord's executive officers, which is intended
to provide benefits like those provided under the Savings Plan, notwithstanding
the limitations under the Savings Plan imposed by Section 401(k) of the Code.
The SUDCOMP Plan is administered by the Old Gaylord Benefits Trust Committee
which has the exclusive authority to select the employees who are entitled to
participate in the SUDCOMP Plan and to interpret and administer the SUDCOMP
Plan. The Distribution Agreement provides that, upon consummation of the Merger,
New Gaylord will assume sponsorship of the SUDCOMP Plan.
The terms of the SUDCOMP Plan are generally the same as the terms of the
Savings Plan except that (i) employer matching contributions (if any) are 50%
vested after two years of service and are vested in full after three years of
service, (ii) upon termination of employment for any reason, distributions from
the SUDCOMP Plan must generally be distributed to participants within 90 days of
their termination of employment, (iii) distributions from the SUDCOMP Plan may
not be rolled into an Individual Retirement Account or another employer's
defined contribution plan, and (iv) distributions from the SUDCOMP Plan are
taxed in full upon distribution. SUDCOMP Plan participants are permitted to
invest both their own contributions and employer contributions in the funds made
available to Savings Plan participants, other than the Old Gaylord Class A
Common Stock Fund.
Pursuant to the Distribution Agreement, Old Gaylord is required to amend
the SUDCOMP Plan so that the entire account balance of each Old Gaylord employee
who becomes an employee of Westinghouse immediately following the Merger is
vested notwithstanding the vesting schedule of the SUDCOMP Plan.
EMPLOYMENT, SEVERANCE, AND CHANGE IN CONTROL ARRANGEMENTS
Awards granted under the 1997 Stock Plan become immediately exercisable or
otherwise nonforfeitable in full in the event of a Change in Control of New
Gaylord (as defined therein), notwithstanding specific terms of the awards
providing otherwise. Furthermore, with respect to stock options granted under
the 1997 Stock Plan, following a Change in Control the Compensation Committee
may, in its discretion, permit the cancellation of
51
<PAGE> 55
such options in exchange for a cash payment in an amount per share equal,
generally, to the difference between the highest closing sales price during the
sixty-day period preceding the Change in Control and the exercise price. A
Change in Control is defined in the 1997 Stock Plan to include, among other
things, (i) the acquisition of securities representing a majority of the
combined voting power of all classes of New Gaylord's capital stock by any
person (other than New Gaylord and other related entities); (ii) the approval by
the stockholders of New Gaylord of a merger or consolidation of New Gaylord into
or with another entity (with certain exceptions), the sale or other disposition
of all or substantially all of New Gaylord's assets, or the adoption of a plan
of liquidation; or (iii) a change in the composition of the Board of Directors
in any two-year period such that individuals who were Board members at the
beginning of such period cease to constitute a majority thereof (with certain
exceptions).
Old Gaylord has entered into severance agreements with certain members of
management (the "Severance Agreements"), including each of the Named Executive
Officers (collectively, the "executive officers"). These Severance Agreements
become effective following a "Change of Control" (as defined therein) and
provide for a two-year employment agreement thereafter. In the event an
executive officer is terminated or his or her compensation is reduced during
such two-year period, he or she is entitled to a lump sum payment equal to 250%
of the sum of his base salary and cash incentive bonus. A Change of Control is
defined in the Severance Agreements to include, among other things, the
acquisition of securities by a person of 33 1/3% or more of the combined voting
power of Old Gaylord's securities; mergers, consolidations, and sales of assets
in which existing Old Gaylord stockholders own less than a majority of the
resulting voting power; and changes in the composition of a majority of the
Board of Directors over a two-year period. The Merger will constitute a Change
of Control for purposes of the Severance Agreements. Accordingly, all executive
officers party thereto will have two-year employment agreements with New Gaylord
following the Distribution as provided by the Severance Agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the New Gaylord Board of Directors will be
composed of Messrs. Dickinson and Rodgers. During 1996, Martin C. Dickinson, Joe
M. Rodgers and, until May 1, 1996, E. K. Gaylord II, served as members of the
Compensation Committee of the Old Gaylord Board of Directors.
From 1989 until October 1991, E. K. Gaylord II, a member of the
Compensation Committee until May 1, 1996, served as Vice President of Old
Gaylord, and has served as Vice-Chairman of the Old Gaylord Board of Directors
since May 2, 1996. He is currently the president and a director of OPUBCO.
Edward L. Gaylord, Chairman of the Board of Directors of Old Gaylord, is
currently the chairman, chief executive officer and a director of OPUBCO, and in
such capacities is in a position to influence the compensation of E. K. Gaylord
II.
In September 1996, Old Gaylord entered into an agreement with OPUBCO
pursuant to which OPUBCO will exchange certain commercial real estate located in
Dallas, Texas (the "OPUBCO Real Estate") for Old Gaylord's interests in the
Oklahoma City '89ers, a minor league baseball franchise. The Voting Trustees,
who control approximately 62.7% of Old Gaylord's voting power and will control
approximately 39.2% of New Gaylord's voting power immediately following the
Distribution (see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT"), also beneficially own a majority of the voting stock of OPUBCO.
Edward L. Gaylord, E.K. Gaylord II, Christine Gaylord Everest, and Martin C.
Dickinson, directors of Old Gaylord, are also directors and officers of OPUBCO.
The OPUBCO Real Estate was appraised at $950,000, which the directors of Old
Gaylord (other than Edward L. Gaylord, E.K. Gaylord II, Christine Gaylord
Everest, Martin C. Dickinson, and Glenn M. Stinchcomb) determined was equal to
or greater than the value of Old Gaylord's interests in the Oklahoma City '89ers
being exchanged. The consummation of this transaction is subject to the approval
of Major League Baseball. Pursuant to the Restructuring, such agreement with
OPUBCO will be assigned to and assumed by New Gaylord.
52
<PAGE> 56
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the outstanding shares of New Gaylord capital stock are and, until
immediately prior to the Distribution, will continue to be held beneficially and
of record by Old Gaylord. The following table sets forth, as of June 19, 1997 or
such other date as indicated in the footnotes to the table, the beneficial
ownership of Old Gaylord Class A Common Stock or Old Gaylord Class B Common
Stock by each Named Executive Officer of Old Gaylord who will continue to be an
executive officer of New Gaylord following the Distribution, the executive
officers and directors of New Gaylord as a group, and each stockholder known to
management of Old Gaylord to beneficially own more than five percent of the
outstanding Old Gaylord Class A Common Stock or Old Gaylord Class B Common
Stock. Also set forth below are the number of shares of New Gaylord Common Stock
that each person or entity will own immediately after the Distribution, on a pro
forma basis, assuming no change in ownership of the outstanding shares of Old
Gaylord Common Stock.
Each share of Old Gaylord Class B Common Stock is convertible into one
share of Old Gaylord Class A Common Stock. Accordingly, under federal securities
laws governing beneficial ownership, holders of Old Gaylord Class B Common Stock
are deemed to beneficially own the same number of shares of Old Gaylord Class A
Common Stock as shares of Old Gaylord Class B Common Stock beneficially owned.
The beneficial ownership of Old Gaylord Class A Common Stock shown in the table
does not include shares of Old Gaylord Class B Common Stock beneficially owned
by such holder. In accordance with the provisions of Rule 13d-3 of the Exchange
Act, the beneficial ownership of Old Gaylord Class A Common Stock in the table
below includes shares issuable upon the exercise of stock options if such
options are currently exercisable or exercisable within 60 days of the date
hereof. The beneficial ownership of New Gaylord Common Stock following the
Distribution shown in the table below does not include shares issuable upon the
exercise of stock options that will be granted upon the conversion of
outstanding Old Gaylord stock options because the number of such shares is
presently indeterminable. See "EXECUTIVE COMPENSATION -- Issuance of New Gaylord
Options and Conversion of Old Gaylord Options." Unless otherwise indicated, Old
Gaylord and New Gaylord believe that the beneficial owner set forth in the table
has sole voting and investment power.
<TABLE>
<CAPTION>
BENEFICIAL
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF OLD OWNERSHIP OF NEW
OLD GAYLORD CLASS A GAYLORD CLASS B COMMON GAYLORD COMMON
COMMON STOCK AND STOCK AND PERCENTAGE PERCENTAGE OF STOCK FOLLOWING THE
PERCENTAGE OF CLASS OF CLASS OLD GAYLORD DISTRIBUTION
----------------------- --------------------------- TOTAL VOTING --------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT POWER NUMBER PERCENT
- ------------------------ ---------- -------- ----------- -------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward L. Gaylord(1)*+...... 669,200(2) 1.47 18,710,286(3)(4) 36.73 31.35 6,415,726 19.97
Edith Gaylord Harper
Revokable Trust(1)........ -- -- 6,400,114(3)(5) 12.56 10.66 2,133,371 6.64
Christine Gaylord
Everest(1)*............... 81,584(6) ** 3,017,110(3)(7) 5.92 5.03 1,005,702 3.13
E. K. Gaylord II(1)*........ 29,767(6) ** 1,593,375(3)(8) 3.13 2.65 531,125 1.65
Louise Gaylord Bennett(1)... 7,717(9) ** 2,834,730(3)(10) 5.56 4.72 947,482 2.95
Martin C. Dickinson*
17461 Avenida De Acacias
Rancho Santa Fe, CA
92067................... 38,534(11) ** 3,880,181(3)(12) 7.62 6.46 1,293,742 4.03
Dickinson Trust
P.O. Box 808
Rancho Santa Fe, CA
92067................... -- -- 3,596,615(13) 7.06 5.99 1,198,871 3.73
Edward L. Gaylord, Edith
Gaylord Harper, Christine
Gaylord Everest, E. K.
Gaylord II, and Martin C.
Dickinson, as Voting
Trustees(1)............... -- -- 37,727,956(3) 74.06 62.84 12,575,981 39.14
Joe M. Rodgers*............. 59,534(6) ** -- -- -- -- --
Terry E. London*+........... 145,220(14) ** 2,409 ** ** 3,133 **
Jack J. Vaughn+............. 166,878(15) ** 3,997 ** ** 9,734 **
The Capital Group Companies,
Inc. 333 South Hope Street
Los Angeles, CA 90071..... 5,430,880(16) 11.95 -- -- 1.81 1,810,293 5.63
</TABLE>
53
<PAGE> 57
<TABLE>
<CAPTION>
BENEFICIAL
BENEFICIAL OWNERSHIP OF BENEFICIAL OWNERSHIP OF OLD OWNERSHIP OF NEW
OLD GAYLORD CLASS A GAYLORD CLASS B COMMON GAYLORD COMMON
COMMON STOCK AND STOCK AND PERCENTAGE PERCENTAGE OF STOCK FOLLOWING THE
PERCENTAGE OF CLASS OF CLASS OLD GAYLORD DISTRIBUTION
----------------------- --------------------------- TOTAL VOTING --------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT POWER NUMBER PERCENT
- ------------------------ ---------- -------- ----------- -------- ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Goldman Sachs Asset
Management, Inc.
(Successor to Liberty
Investment
Management, Inc.)
2502 Rocky Point Drive,
Suite 500 Tampa, FL
33607..................... 4,655,880(17) 10.24 -- -- 1.55 1,551,960 4.83
Wellington Management
Company
75 State Street Boston, MA
02109..................... 4,323,475(18) 9.51 -- -- 1.44 1,441,158 4.49
T. Rowe Price Associates,
Inc.
100 East Pratt Street
Baltimore, MD 21202....... 2,708,702(19) 5.96 -- -- ** 902,900 2.81
All executive officers and
directors of New Gaylord
as a group (12 persons)... 1,352,059(20) 2.93 39,041,594 76.64 65.23 13,209,904 41.11
</TABLE>
- ---------------
* Director of New Gaylord.
+ Named Executive Officer of Old Gaylord who will continue as an executive
officer of New Gaylord.
** Less than one percent.
(1) Mailing address: 9000 N. Broadway, Oklahoma City, Oklahoma 73114.
(2) Includes (a) 44,100 shares beneficially owned as trustee of the Edward L.
Gaylord Revocable Trust; (b) 22,050 shares beneficially owned by Mr.
Gaylord's wife, Thelma Gaylord, as to which Mr. Gaylord disclaims
beneficial ownership; (c) 430,750 shares owned by the Edward L. Gaylord and
Thelma Gaylord Foundation, Edward L. Gaylord and Thelma Gaylord, Trustees;
(d) 40,000 shares beneficially owned as co-trustee of the Mary Gaylord
Foundation; and (e) 132,300 shares issuable upon the exercise of options.
(3) Edward L. Gaylord, Edith Gaylord Harper, and certain other stockholders of
Old Gaylord entered into a Voting Trust Agreement, dated as of October 3,
1990 (the "Voting Trust"), which terminates on October 3, 2000. It is
currently anticipated that the New Gaylord Common Stock received in the
Distribution will be subject to the Voting Trust. Edward L. Gaylord, Edith
Gaylord Harper, Christine Gaylord Everest, E. K. Gaylord II, and Martin C.
Dickinson, as the voting trustees (the "Voting Trustees") under the Voting
Trust, have the shared right to vote the 37,727,956 shares of Class B
Common Stock held in the Voting Trust, and it is currently anticipated that
the Voting Trustees will have the shared right to vote the 12,575,981
shares of New Gaylord Common Stock which will be held in the Voting Trust
following the Distribution. Although the Voting Trustees do not have the
right to make any investment decisions with respect to the shares
beneficially owned by the Voting Trust, a stockholder party to the Voting
Trust needs the written consent of at least 60% of the Voting Trustees (the
"Trustees' Consent") to withdraw such holder's shares from the Voting Trust
(the "Trust Withdrawal Restriction").
(4) Includes (a) 13,907,995 shares beneficially owned as trustee for the Edward
L. Gaylord Revocable Trust; (b) 2,545,940 shares beneficially owned as
trustee for the Mary I. Gaylord Revocable Living Trust of 1985; (c)
1,035,709 shares beneficially owned by Thelma Gaylord; (d) 47,582
additional shares beneficially owned as trustee for the Edward L. Gaylord
Revocable Trust; (e) 787,185 shares beneficially owned by Gayno, Inc., a
corporation controlled by Edward L. Gaylord; and (f) 385,875 shares
beneficially owned by The Oklahoman Foundation (the "Charitable Trust"), a
charitable trust of which Edward L. Gaylord is a trustee. Edward L. Gaylord
has shared voting power and sole investment power (subject to the Trust
Withdrawal Restriction) with respect to the shares listed in (a) and (b)
above, which together with the shares listed in (c) above are deposited
with the Voting Trust (to which Edward L. Gaylord is party as a stockholder
and as a Voting Trustee), such 17,489,644 shares being referred to herein
as the "ELG Voting Trust Shares;" sole voting power and investment power
with respect to the shares listed in (d) and (e) above, and shared voting
power and shared investment power with respect to the shares in the
Charitable Trust. Does
54
<PAGE> 58
not include the shares owned by Edward L. Gaylord's son and daughters, E.
K. Gaylord II, Christine Gaylord Everest and Louise Gaylord Bennett,
respectively. Does not include 20,238,312 shares of Old Gaylord Class B
Common Stock beneficially owned by the Voting Trust (excluding the ELG
Voting Trust Shares), as to which Edward L. Gaylord has shared voting power
and shared investment power (limited solely to the Trustees' Consent). See
Note 3.
(5) Includes (a) 1,190,802 shares owned by the Edith Gaylord Harper 1995
Revokable Trust, Edith Gaylord Harper, W.I. Ross and David Hogan Trustees
(the "EGH Revokable Trust") and (b) 5,209,312 shares owned by the EGH
Revokable Trust which are deposited with the Voting Trust (to which Mrs.
Harper is party as a stockholder and as a Voting Trustee), such shares
being referred to herein as the "EGH Voting Trust Shares." Mrs. Harper,
Edward L. Gaylord's sister, has sole voting power and investment power with
respect to the shares in (a) above and shared voting power and sole
investment power (subject to the Trust Withdrawal Restriction) with respect
to the EGH Voting Trust Shares. Does not include 32,518,644 shares of Old
Gaylord Class B Common Stock beneficially owned by the Voting Trust
(excluding the EGH Voting Trust Shares), as to which Mrs. Harper has shared
voting power and shared investment power (limited solely to the Trustees'
Consent). See Note 3.
(6) Shares issuable upon the exercise of options.
(7) Includes (a) 2,595,489 shares owned directly; (b) 11,239 shares owned or
beneficially owned by Mrs. Everest's husband, James H. Everest; (c) 11,278
shares owned by Mrs. Everest's daughter, Mary C. Everest; (d) 11,278 shares
owned by Mrs. Everest's daughter, Tricia L. Everest; (e) 1,951 additional
shares owned by James H. Everest; and (f) 385,875 shares beneficially owned
by the Charitable Trust of which Mrs. Everest is a trustee. Does not
include the shares owned by Mrs. Everest's father, mother, brother, and
sisters, Edward L. Gaylord, Thelma Gaylord, E. K. Gaylord II, and Louise
Gaylord Bennett and Mary I. Gaylord, respectively. Mrs. Everest has shared
voting power and sole investment power (subject to the Trust Withdrawal
Restriction) with respect to the shares listed in (a) above, which together
with the shares listed in (b), (c), and (d) above are deposited with the
Voting Trust (to which Mrs. Everest is party as a stockholder and as a
Voting Trustee), such 2,629,284 shares being referred to herein as the "CGE
Voting Trust Shares," and shared voting power and shared investment power
with respect to the shares in the Charitable Trust. Does not include
35,098,672 shares of Old Gaylord Class B Common Stock beneficially owned by
the Voting Trust (excluding the CGE Voting Trust Shares), as to which Mrs.
Everest has shared voting power and shared investment power (limited solely
to the Trustees' Consent). See Note 3.
(8) Includes (a) 1,207,500 shares owned directly which are deposited with the
Voting Trust (to which E. K. Gaylord II is party as a stockholder and as a
Voting Trustee), such shares being referred to herein as the "EKG Voting
Trust Shares," and (b) 385,875 shares beneficially owned by the Charitable
Trust of which E. K. Gaylord II is a trustee. E. K. Gaylord II has shared
voting power and sole investment power (subject to the Trust Withdrawal
Restriction) with respect to the EKG Voting Trust Shares, and shared voting
power and shared investment power with respect to the shares in the
Charitable Trust. Does not include the shares owned by E. K. Gaylord II's
father, mother, and sisters, Edward L. Gaylord, Thelma Gaylord, and
Christine Gaylord Everest, Louise Gaylord Bennett, and Mary I. Gaylord,
respectively. Does not include 36,520,456 shares of Old Gaylord Class B
Common Stock beneficially owned by the Voting Trust (excluding the EKG
Voting Trust Shares), as to which E. K. Gaylord II has shared voting power
and shared investment power (limited solely to the Trustees' Consent). See
Note 3.
(9) Includes (a) 5,512 shares owned directly, and (b) 2,205 shares owned by
Mrs. Bennett's husband, Clayton I. Bennett, as to which Mrs. Bennett
disclaims beneficial ownership.
(10) Deposited with the Voting Trust (to which Louise Gaylord Bennett is party
as a stockholder), such shares being referred to herein as the "LGB Voting
Trust Shares." Louise Gaylord Bennett has no voting power and sole
investment power (subject to the Trust Withdrawal Restriction) with respect
to the LGB Voting Trust Shares. See Note 3. Does not include the shares
owned by Louise Gaylord Bennett's father, mother, brother, and sisters,
Edward L. Gaylord, Thelma Gaylord, E. K. Gaylord II, and Christine Gaylord
Everest and Mary I. Gaylord, respectively, as to which Louise Gaylord
Bennett disclaims beneficial ownership.
(11) Includes (a) 1,050 shares beneficially owned by Mr. Dickinson's wife, Carol
D. Dickinson, as to which Mr. Dickinson disclaims beneficial ownership, and
(b) 37,484 shares issuable upon the exercise of options.
(12) Includes (a) 198,998 shares beneficially owned as trustee for the Martin C.
Dickinson Revocable Trust (the "MCD Revokable Trust") which are deposited
with the Voting Trust; (b) 82,479 additional shares in the
55
<PAGE> 59
MCD Revokable Trust; (c) 771 shares beneficially owned by Mr. Dickinson's
wife, Carol D. Dickinson, which are deposited with the Voting Trust; (d)
1,318 additional shares beneficially owned by Carol D. Dickinson; and (e)
3,596,615 shares beneficially owned by the Dickinson Trust. See Note 13.
Mr. Dickinson disclaims beneficial ownership with respect to the shares in
(c) and (d) above. The shares listed in (a), (c), and (e) above are
deposited with the Voting Trust (to which Mr. Dickinson is party as a
stockholder and as a Voting Trustee), such 3,796,384 shares being referred
to herein as the "MCD Voting Trust Shares." Mr. Dickinson has shared voting
power and sole investment power (subject to the Trust Withdrawal
Restriction) with respect to the shares in (a) above, sole voting power and
investment power with respect to the shares in (b) above, and shared voting
power and shared investment power with respect to the shares in the
Dickinson Trust. Does not include 33,931,572 shares of Old Gaylord Class B
Common Stock beneficially owned by the Voting Trust (excluding the MCD
Voting Trust Shares), as to which Mr. Dickinson has shared voting power and
shared investment power (limited solely to the Trustees' Consent). See Note
3.
(13) Deposited with the Voting Trust. Elizabeth M. Dickinson, Martin C.
Dickinson, and Elizabeth D. Smoyer, as trustees of the Dickinson Trust,
have no voting power and sole investment power (subject to the Trust
Withdrawal Restriction) as to these shares. However, Mr. Dickinson has
shared voting power as to these shares as a trustee of the Voting Trust.
See Note 3.
(14) Includes (a) 2,586 shares owned directly; (b) 6,614 shares of restricted
stock issued pursuant to the 1993 Stock Plan; and (c) 136,020 shares
issuable upon the exercise of options.
(15) Includes (a) 17,492 shares owned directly; (b) 11,574 shares of restricted
stock issued pursuant to the 1993 Stock Plan; and (c) 137,812 shares
issuable upon the exercise of options.
(16) Based on information set forth in Amendment No. 6 to Schedule 13G, dated
February 12, 1997, filed with the SEC jointly by The Capital Group
Companies, Inc., a parent holding company ("CGC"), Capital Guardian Trust
Company ("CGTC"), a bank and wholly owned subsidiary of CGC, Capital
Research and Management Company ("CRMC"), an investment advisor and wholly
owned subsidiary of CGC, and Capital International Limited ("CIL"). CGC
reported that it has sole voting power with respect to 1,373,980 shares and
sole dispositive power with respect to 5,430,880 shares of Old Gaylord
Class A Common Stock. CRMC reported that it exercised investment discretion
over 3,882,900 shares of Old Gaylord Class A Common Stock.
(17) Effective January 2, 1997, Goldman Sachs Investment Management, Inc., a
subsidiary of Goldman Sachs & Co., purchased substantially all of the
accounts of Liberty Investment Management, Inc. ("Liberty"), including
those holding the Old Gaylord Class A Common Stock as previously reported
in a Schedule 13G, and amendments thereto, filed with the SEC by Liberty.
(18) Based on information set forth in Amendment No. 6 to Schedule 13G, dated
January 24, 1997, filed with the SEC by Wellington Management Company, an
investment advisor ("WMC"). WMC reported that it has shared voting power
with respect to 3,399,260 shares of Old Gaylord Class A Common Stock and
shared dispositive power with respect to 4,323,475 shares of Old Gaylord
Class A Common Stock.
(19) Based on information set forth in Schedule 13G dated February 14, 1997
filed with the SEC by T. Rowe Price Associates, Inc., an investment advisor
("TRPAI"). TRPAI reported that it has shared voting power with respect to
250,181 shares of Old Gaylord Class A Common Stock and sole dispositive
power with respect to 2,708,702 shares of Old Gaylord Class A Common Stock.
(20) Includes 754,008 shares issuable upon the exercise of options.
56
<PAGE> 60
DESCRIPTION OF CAPITAL STOCK
GENERAL
In accordance with the Distribution Agreement, prior to the Time of
Distribution, Old Gaylord will cause New Gaylord to amend and restate its
Certificate of Incorporation to, among other things, (i) authorize one class of
common stock of New Gaylord, (ii) increase the currently authorized number of
shares of common stock of New Gaylord to 150,000,000 shares of New Gaylord
Common Stock, (iii) convert the 1,000 shares of New Gaylord common stock,
$100.00 par value, currently outstanding into that number of shares of New
Gaylord Common Stock equal to one-third the total number of shares of Old
Gaylord Common Stock outstanding immediately prior to the Record Date, and (iv)
authorize 100,000,000 shares of Preferred Stock. Based on the number of shares
of Old Gaylord Common Stock outstanding at July 15, 1997, the 1,000 shares of
New Gaylord common stock would be converted into 32,425,230 shares of New
Gaylord Common Stock, all of which will be distributed to Old Gaylord's
stockholders in the Distribution.
COMMON STOCK
Holders of New Gaylord Common Stock will be entitled to one vote for each
share of New Gaylord Common Stock held of record on all matters on which
stockholders are entitled to vote. There will be no cumulative voting rights and
holders of New Gaylord Common Stock will not have preemptive rights. All issued
and outstanding shares of New Gaylord Common Stock to be distributed to Old
Gaylord's stockholders in the Distribution will be validly issued, fully paid,
and nonassessable. Holders of New Gaylord Common Stock will be entitled to such
dividends as may be declared from time to time by the New Gaylord Board of
Directors out of funds legally available for that purpose. See "Dividend
Policy." Upon dissolution, holders of New Gaylord Common Stock will be entitled
to share pro rata in the assets of New Gaylord remaining after payment in full
of all its liabilities and obligations, including payment of the liquidation
preference, if any, of any preferred stock then outstanding.
PREFERRED STOCK
The New Gaylord Board of Directors, without further action by the
stockholders, will be authorized to issue up to 100,000,000 shares of Preferred
Stock in one or more series and to designate as to any such series the dividend
rate, redemption prices, preferences on liquidation or dissolution, conversion
rights, voting rights, and any other preferences, and relative, participating,
optional, or other special rights and qualifications, limitations, or
restrictions. The rights of the holders of New Gaylord Common Stock will be
subject to, and may be affected adversely by, the rights of the holders of any
Preferred Stock that may be issued in the future. Issuance of a new series of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions or other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of the outstanding voting stock of New
Gaylord. New Gaylord has no present plans to issue any shares of Preferred
Stock.
NYSE LISTING
The shares of New Gaylord Common Stock to be distributed in the
Distribution have been approved for listing, subject to official notice of
issuance, on the NYSE under the symbol "GET," which is currently the symbol for
the Old Gaylord Class A Common Stock. The current rules of the NYSE effectively
preclude the listing on the NYSE of any securities of an issuer which has issued
securities or taken other corporate action that would have the effect of
nullifying, restricting, or disparately reducing the per share voting rights of
holders of an outstanding class or classes of equity securities registered under
Section 12 of the Exchange Act. New Gaylord does not intend to issue any
additional shares of any class of stock that would make the New Gaylord Common
Stock ineligible for continued listing or cause the New Gaylord Common Stock to
be delisted from the NYSE.
57
<PAGE> 61
TRANSFER AGENT AND REGISTRAR
New Gaylord intends to appoint SunTrust Bank, Atlanta, Old Gaylord's
current transfer agent, as the Transfer Agent and Registrar for the New Gaylord
Common Stock.
REDEMPTION PROVISION
Applicable law requires that the total percentage of shares of New Gaylord
capital stock owned of record or voted by non-United States persons or entities
shall not exceed 25% and contains certain other restrictions on stock ownership.
Under Article IV(D) of the Restated Certificate, New Gaylord has the right to
prohibit the ownership or voting, or to redeem outstanding shares, of its
capital stock if the Board of Directors determines that such prohibition or
redemption is necessary to prevent the loss or secure the reinstatement of any
governmental license or franchise held by New Gaylord or to otherwise comply
with the Communications Act or any other similar legislation affecting New
Gaylord.
THE DELAWARE BUSINESS COMBINATION ACT
New Gaylord is a Delaware corporation and, from and after the Time of
Distribution, will be subject to the provisions of Section 203 of the General
Corporation Law of the State of Delaware (the "DGCL"). In general, Section 203
provides that a Delaware corporation may not, for a period of three years,
engage in any of a broad range of business combinations with a person or
affiliate or associate of such person who is an "interested stockholder"
(defined generally as a person who, together with affiliates and associates,
owns (or within three years, did own) 15% or more of a corporation's outstanding
voting stock) unless: (a) the transaction resulting in a person's becoming an
interested stockholder, or the business combination, is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (b) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation in the same transaction that makes
it an interested stockholder; or (c) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock. New Gaylord's Board of Directors has
approved the acquisition in the Distribution of shares of New Gaylord Common
Stock by the Voting Trustees, collectively, and Edward L. Gaylord, individually,
and thereby exempted such persons from the application of DGCL Section 203.
CERTAIN RESTATED CERTIFICATE AND BY-LAW PROVISIONS
General
Certain provisions of the Restated Certificate and New Gaylord's By-laws
(the "By-laws") could have an antitakeover effect. These provisions are intended
to enhance the likelihood of continuity and stability in the composition of the
New Gaylord Board of Directors and in the policies formulated by the New Gaylord
Board of Directors and to discourage certain types of transactions described
below, which may involve an actual or threatened change of control of New
Gaylord. The provisions are designed to reduce the vulnerability of New Gaylord
to an unsolicited proposal for a takeover of New Gaylord that does not
contemplate the acquisition of all of its outstanding shares or an unsolicited
proposal for the restructuring or sale of all or part of New Gaylord. The
provisions are also intended to discourage certain tactics that may be used in
proxy fights. New Gaylord's Board of Directors believes that, as a general rule,
such takeover proposals would not be in the best interests of New Gaylord and
its stockholders.
Classified Board
The Restated Certificate provides for New Gaylord's Board of Directors to
be divided into three classes of directors serving staggered three-year terms.
As a result, approximately one-third of New Gaylord's Board of Directors will be
elected each year. In addition, under the DGCL, the directors on a classified
board may be removed from office only for cause and only by the affirmative vote
of holders of a majority of the outstanding voting stock. The overall effect of
the provisions in the Restated Certificate with respect to the classified Board
may be to render more difficult a change in control of New Gaylord or the
removal of incumbent management.
Special Meetings of Stockholders; Action by Written Consent
The Restated Certificate provides that no action may be taken by
stockholders except at an annual or special meeting of stockholders and
prohibits action by written consent in lieu of a meeting. The Restated
Certificate
58
<PAGE> 62
provides that special meetings of stockholders of New Gaylord may be called only
by the Chairman or by a majority of the members of New Gaylord's Board of
Directors. This provision will make it more difficult for stockholders to take
action opposed by New Gaylord's Board of Directors.
Advance Notice Requirements for Stockholder Proposals and Director Nominations
The By-laws establish an advance notice procedure for the nomination, other
than by or at the direction of New Gaylord's Board of Directors or a committee
thereof, of candidates for election as directors as well as for other
stockholder proposals to be considered at stockholders' meetings. These
limitations on stockholder proposals do not restrict a stockholder's right to
include proposals in New Gaylord's annual proxy materials pursuant to rules
promulgated under the Exchange Act. The purpose of requiring advance notice is
to afford New Gaylord's Board of Directors an opportunity to consider the
qualification of the proposed nominees or the merits of other stockholder
proposals and, to the extent deemed necessary or desirable by New Gaylord's
Board of Directors, to inform stockholders about those matters.
Restated Certificate and By-laws Amendments
The Restated Certificate requires the affirmative vote of the holders of at
least 66 2/3% of the voting power of New Gaylord's capital stock in order to
amend certain of its provisions, including any provisions concerning (i) the
classified board, (ii) the amendment of the By-laws, (iii) any proposed
compromise or arrangement between New Gaylord and its creditors, (iv) the
authority of stockholders to act by written consent or to call a special
meeting, (v) the liability of directors, and (vi) the percentage of votes
represented by capital stock required to approve certain amendments to the
Restated Certificate. These voting requirements will make it more difficult for
stockholders to make changes in the Restated Certificate which would be designed
to facilitate the exercise of control over New Gaylord. In addition, the
requirement of approval by at least a 66 2/3% stockholder vote will enable the
holders of a minority of the voting securities of New Gaylord to prevent the
holders of a majority or more of such securities from amending such provisions.
In addition, the Restated Certificate provides that the By-laws may only be
amended by stockholders by the affirmative vote of 66 2/3% of New Gaylord's
outstanding voting stock. After giving effect to the Distribution, the directors
and executive officers of New Gaylord, together with the Voting Trust, will hold
in the aggregate approximately 41.1% of the voting power of New Gaylord. See
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
Indemnification and Insurance
Pursuant to authority conferred by DGCL Section 102(b)(7), the Restated
Certificate contains a provision providing that no director of New Gaylord shall
be liable to it or its stockholders for monetary damages for breach of fiduciary
duty as a director, except to the extent that such exemption from liability or
limitation thereof is not permitted under the DGCL as then in effect or as the
same may be amended. This provision is intended to eliminate the risk that a
director might incur personal liability to New Gaylord or its stockholders for
breach of the duty of care.
DGCL Section 145 contains provisions permitting, and in some situations
requiring, Delaware corporations, such as New Gaylord, to provide
indemnification to their officers and directors for losses and litigation
expenses incurred in connection with their service to the corporation in those
capacities. The By-laws of New Gaylord contain provisions requiring
indemnification by New Gaylord of, and advancement of expenses to, its directors
and officers to the fullest extent permitted by law. Among other things, these
provisions provide indemnification for New Gaylord's officers and directors
against liabilities for judgments in and settlements of lawsuits and other
proceedings and for the advance and payment of fees and expenses reasonably
incurred by the director or officer in defense of any such lawsuit or
proceeding.
New Gaylord intends to purchase and maintain insurance on behalf of any
person who is or was a director or officer of New Gaylord, or is now or was a
director or officer of New Gaylord serving at the request of New Gaylord as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise, against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not New Gaylord would have the
power or the obligation to indemnify him against such liability under the
provisions of the By-laws.
59
<PAGE> 63
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NEW GAYLORD ENTERTAINMENT COMPANY CONSOLIDATED FINANCIAL
STATEMENTS
Report of Independent Public Accountants.................. F-2
Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994....................... F-3
Consolidated Balance Sheets as of December 31, 1996 and
1995................................................... F-4
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994...................... F-5
Consolidated Statements of Stockholder's Equity for the
years ended December 31, 1996, 1995, and 1994.......... F-6
Notes to Consolidated Financial Statements................ F-7
NEW GAYLORD ENTERTAINMENT COMPANY UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Statements of Income for the six
months ended June 30, 1997 and 1996.................... F-16
Condensed Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996.................................. F-17
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1997 and 1996................ F-18
Notes to Condensed Consolidated Financial Statements...... F-19
NEW GAYLORD ENTERTAINMENT COMPANY UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
Unaudited Pro Forma Consolidated Financial Statements..... F-21
Unaudited Pro Forma Consolidated Statement of Income for
the six months ended June 30, 1997..................... F-22
Unaudited Pro Forma Consolidated Statement of Income for
the year ended December 31, 1996....................... F-23
Unaudited Pro Forma Consolidated Balance Sheet as of June
30, 1997............................................... F-24
</TABLE>
The schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.
F-1
<PAGE> 64
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To New Gaylord Entertainment Company:
We have audited the accompanying consolidated balance sheets of New Gaylord
Entertainment Company (a Delaware corporation and a wholly owned subsidiary of
Gaylord Entertainment Company) and its subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of income, stockholder's equity
and cash flows for each of the three years in the period ended December 31,
1996. These financial statements are the responsibility of New Gaylord's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The accompanying financial statements of New Gaylord Entertainment Company
have been prepared from the separate records of New Gaylord maintained by
Gaylord Entertainment Company and may not be necessarily indicative of the
conditions that would have existed or the results of operations if New Gaylord
had been operated as an unaffiliated company. Portions of certain expenses
represent corporate expenses of Gaylord Entertainment Company as a whole for
which Gaylord Entertainment Company maintains the related assets or liabilities.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New Gaylord Entertainment
Company and its subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
Arthur Andersen LLP
Nashville, Tennessee
April 4, 1997
F-2
<PAGE> 65
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenues.................................................... $747,158 $707,460 $687,931
Operating expenses:
Operating costs........................................... 443,236 442,177 427,853
Selling, general and administrative....................... 125,456 115,355 108,624
Depreciation and amortization............................. 48,856 38,086 32,945
-------- -------- --------
Operating income....................................... 129,610 111,842 118,509
Interest expense............................................ (49,880) (40,856) (27,578)
Interest income............................................. 21,580 5,968 738
Other gains (losses)........................................ 72,220 (8,088) (15,172)
-------- -------- --------
Income from continuing operations before provision for
income taxes.............................................. 173,530 68,866 76,497
Provision for income taxes.................................. 62,947 27,500 29,451
-------- -------- --------
Income from continuing operations......................... 110,583 41,366 47,046
Discontinued operations, net of taxes....................... -- 42,998 --
-------- -------- --------
Net income................................................ $110,583 $ 84,364 $ 47,046
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 66
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 9,785 $ 8,863
Trade receivables, less allowance of $3,276 and $3,297,
respectively........................................... 108,643 105,779
Program rights............................................ 14,072 26,583
Other assets.............................................. 45,975 48,222
---------- ----------
Total current assets.............................. 178,475 189,447
---------- ----------
Program rights.............................................. 26,472 37,641
Property and equipment, net of accumulated depreciation..... 640,319 571,549
Intangible assets, net of accumulated amortization.......... 39,363 36,935
Investments................................................. 65,190 63,817
Long-term notes and interest receivable..................... 184,138 163,158
Other assets................................................ 18,669 9,295
---------- ----------
Total assets...................................... $1,152,626 $1,071,842
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 84,276 $ 94,748
Program contracts payable................................. 14,943 23,574
---------- ----------
Total current liabilities......................... 99,219 118,322
---------- ----------
Payable to Old Gaylord...................................... 476,316 554,488
Program contracts payable................................... 24,661 34,058
Deferred income taxes....................................... 129,381 140,480
Other liabilities........................................... 6,991 7,858
Minority interest........................................... 14,847 13,008
Commitments and contingencies
Stockholder's equity:
Common stock, $100 par value, 10,000 shares authorized,
1,000 shares issued and outstanding.................... 100 100
Class B common stock, $.01 par value, 10,000 shares
authorized, no shares issued or outstanding............ -- --
Additional paid-in capital.................................. 92,400 5,400
Retained earnings........................................... 308,711 198,128
---------- ----------
Total stockholder's equity........................ 401,211 203,628
---------- ----------
Total liabilities and stockholder's equity........ $1,152,626 $1,071,842
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 67
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income............................................. $ 110,583 $ 84,364 $ 47,046
Amounts to reconcile net income to net cash flows
provided by operating activities:
Depreciation and amortization....................... 48,856 38,086 32,945
Provision (benefit) for deferred income taxes....... 4,596 460 (1,121)
Write-down of television program rights............. -- 13,302 --
Noncash interest income............................. (20,479) (4,970) --
Discontinued operations, net of taxes............... -- (42,998) --
Provision for losses on disposal of Fiesta Texas
partnership interest.............................. -- 5,529 26,000
Gain on sale of television stations................. (73,850) -- (10,689)
Changes in:
Trade receivables................................. (8,974) (6,703) (19,522)
Program rights and program contracts payable...... (3,667) 12,042 (100)
Accounts payable and accrued liabilities.......... (631) (1,658) 14,102
Other, net........................................ (7,002) (6,494) (5,430)
--------- --------- ---------
Net cash flows provided by operating
activities................................... 49,432 90,960 83,231
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sale of discontinued operations, net of
direct selling costs................................ -- 190,838 --
Purchase of minority interest in discontinued
operations.......................................... -- (10,585) --
Proceeds from sale of television stations, net of
direct selling costs................................ 96,840 -- 13,231
Investments in, advances to and distributions from
affiliates, net..................................... 237 1,912 (5,017)
Purchases of property and equipment, net............... (115,542) (175,225) (134,947)
Payment upon disposal of Fiesta Texas partnership
interest............................................ (12,976) -- --
Other, net............................................. (9,078) (4,167) 249
--------- --------- ---------
Net cash flows provided by (used in) investing
activities................................... (40,519) 2,773 (126,484)
--------- --------- ---------
Cash Flows from Financing Activities:
Borrowings from (repayments to) Old Gaylord, net....... (6,960) (97,618) 37,595
Borrowings (repayments) of long-term debt, net......... (1,031) (453) 17
--------- --------- ---------
Net cash flows provided by (used in) financing
activities................................... (7,991) (98,071) 37,612
--------- --------- ---------
Cash Flows from Discontinued Operations:
Operating activities................................... -- 16,758 30,995
Investing activities................................... -- (12,985) (21,474)
Increase in cash balance............................... -- 2,856 (1,340)
--------- --------- ---------
Net cash flows provided by discontinued
operations................................... -- 6,629 8,181
--------- --------- ---------
Net change in cash....................................... 922 2,291 2,540
Cash, beginning of year.................................. 8,863 6,572 4,032
--------- --------- ---------
Cash, end of year........................................ $ 9,785 $ 8,863 $ 6,572
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 68
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS B ADDITIONAL TOTAL
COMMON COMMON PAID-IN RETAINED STOCKHOLDER'S
STOCK STOCK CAPITAL EARNINGS EQUITY
------ ------- ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993............... $100 $ -- $ 400 $ 66,718 $ 67,218
Net income............................. -- -- -- 47,046 47,046
---- ---- ------- -------- --------
Balance, December 31, 1994............... 100 -- 400 113,764 114,264
Net income............................. -- -- -- 84,364 84,364
Capital contribution................... -- -- 5,000 -- 5,000
---- ---- ------- -------- --------
Balance, December 31, 1995............... 100 -- 5,400 198,128 203,628
Net income............................. -- -- -- 110,583 110,583
Capital contribution................... -- -- 87,000 -- 87,000
---- ---- ------- -------- --------
Balance, December 31, 1996............... $100 $ -- $92,400 $308,711 $401,211
==== ==== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 69
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
New Gaylord Entertainment Company ("New Gaylord"), formerly Gaylord
Broadcasting Company, is a wholly owned subsidiary of Gaylord Entertainment
Company ("Old Gaylord"). New Gaylord is a diversified entertainment and
communications company operating, through its subsidiaries, principally in three
business segments: hospitality and attractions, broadcasting and music, and
cable networks. Subsequent to December 31, 1996, Old Gaylord entered into a
definitive agreement with Westinghouse Electric Corporation ("Westinghouse")
whereby substantially all of the assets and liabilities of the cable networks
segment will be acquired by Westinghouse as further described in Note 2. New
Gaylord sold its cable television systems segment (the "Systems") on September
29, 1995. Prior to the sale, the Systems were accounted for as discontinued
operations in the accompanying consolidated financial statements as further
described in Note 4.
HOSPITALITY AND ATTRACTIONS
New Gaylord owns and operates the Opryland entertainment complex in
Nashville, Tennessee and various other Nashville-based tourist attractions. The
Opryland complex primarily includes the Opryland Hotel, the Opryland theme park
and the Grand Ole Opry. New Gaylord also owns a minority limited partnership
interest in Bass Pro, L.P. ("Bass Pro"), which is a leading retailer of premium
outdoor sporting goods and fishing products.
BROADCASTING AND MUSIC
At December 31, 1996, New Gaylord owned and operated two broadcast
television stations: KTVT (Dallas-Fort Worth, Texas) and KSTW (Tacoma-Seattle,
Washington). In January 1997, New Gaylord announced it had entered into a
definitive agreement to sell KSTW as further described in Note 2. New Gaylord
sold its television station KHTV (Houston, Texas) in January 1996 as further
described in Note 3. New Gaylord affiliated KTVT and KSTW with CBS, Inc. during
1995. In addition, New Gaylord owns and operates three radio stations in
Nashville, Tennessee and a music publishing company.
CABLE NETWORKS
New Gaylord owns The Nashville Network ("TNN") which is a national basic
cable television network carried by substantially all United States cable
operators, as well as by many Canadian cable services. In addition, New Gaylord
operates and owns 67% of the outstanding stock of Country Music Television, Inc.
("CMT"), a country music video cable network. CMT Europe, a country music video
cable network established to provide service to Europe, was launched in October
1992. CMT expanded into the Asia-Pacific region in October 1994 and into Latin
America in April 1995.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of New Gaylord
and all of its majority owned subsidiaries. All assets, liabilities, revenues
and expenses in the accompanying financial statements have been derived from the
separate records or identified costs maintained by Old Gaylord with the
exception of the allocation of certain expenses incurred by Old Gaylord on
behalf of New Gaylord. These allocated expenses primarily consist of interest
charged to New Gaylord (which Old Gaylord allocates based on the amounts
advanced to each of its business segments) and certain corporate overhead
expenses of Old Gaylord (which Old Gaylord allocates based on the revenues of
each of its business segments). Management estimates that such interest charges
and other allocated expenses approximate the expenses which would have been
incurred had New Gaylord operated on a stand-alone basis. However, the
consolidated financial information included herein may not necessarily reflect
the consolidated results of operations, financial position, changes in
stockholder's equity
F-7
<PAGE> 70
and cash flows of New Gaylord in the future or what such financial information
would have been had New Gaylord been a separate, stand-alone entity during the
periods presented. All significant intercompany accounts and transactions have
been eliminated in consolidation.
PROGRAM RIGHTS
New Gaylord acquires exhibition rights for certain theatrical and
television programs. The program rights are recorded at the gross contract
amount when certain conditions are met, including availability of the program
for broadcast, and are amortized over the shorter of the estimated number of
program showings or the contract periods. Program rights are continually
evaluated for impairment based upon undiscounted cash flows to be derived from
related program rights. The current portion of program rights represents those
rights currently available for telecast which will be amortized in the
succeeding year. New Gaylord had commitments for program rights and related
program contract payables of $8,850 and $32,507 at December 31, 1996 and 1995,
respectively, which were not available for telecast until a future date. These
amounts are not included in the accompanying consolidated balance sheets.
During 1995, New Gaylord recorded a pre-tax charge to operations of $13,302
for the write-down to net realizable value of certain program rights. The
write-down is primarily related to excess program rights resulting from the
affiliation of KTVT and KSTW with CBS.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, including interest on funds
borrowed to finance the construction of major capital additions, and are
depreciated or amortized using straight-line and accelerated methods over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings................................................... 20-40 years
Leasehold and land improvements............................. 20 years
Theme park rides and attractions............................ 15-20 years
Furniture, equipment and vehicles........................... 3-10 years
</TABLE>
Effective January 1, 1994, New Gaylord changed to the straight-line method
of depreciation for substantially all newly acquired property. Maintenance and
repairs are charged to expense as incurred.
INTANGIBLE ASSETS
Intangible assets consist primarily of goodwill which is amortized using
the straight-line method over a period not to exceed 40 years. New Gaylord
continually evaluates whether later events and circumstances have occurred that
indicate the remaining balance of goodwill may not be recoverable. In evaluating
possible impairment, New Gaylord uses the most appropriate method of evaluation
given the circumstances surrounding the particular acquisition, which has
generally been an estimate of the related business unit's undiscounted operating
income before interest and taxes over the remaining life of the goodwill.
Amortization expense related to intangible assets for 1996, 1995 and 1994
was $3,212, $2,445 and $2,118, respectively. At December 31, 1996 and 1995,
accumulated amortization of intangible assets was $14,817 and $15,304,
respectively.
INVESTMENTS
Investments consist primarily of the minority interest in Bass Pro, which
distributes its products through retail centers and an extensive mail order
catalog operation. Bass Pro also owns and operates a resort hotel and
development in Southern Missouri. New Gaylord accounts for the Bass Pro
investment using the equity method of accounting. New Gaylord's original
investment exceeded its share of the underlying equity in the net assets of Bass
Pro by approximately $36,000, which is being amortized on a straight-line basis
over 40 years. New Gaylord's recorded investment in Bass Pro was $62,852 and
$62,537 at December 31, 1996 and 1995, respectively.
F-8
<PAGE> 71
OTHER ASSETS
Other current and long-term assets consist primarily of program
inventories, merchandise inventories, deferred preopening expenses and prepaid
expenses. Program inventories, $20,175 and $22,484 in 1996 and 1995,
respectively, are amortized at a rate based upon the broadcast periods of the
programs and the revenues estimated to be earned over these periods, and are
continually evaluated for impairment based upon undiscounted cash flows to be
derived from the related programming assets. Inventories of $15,436 and $15,111
in 1996 and 1995, respectively, consist primarily of merchandise held for resale
and are priced at the lower of average cost or market. To provide for a better
matching of revenues and expenses, New Gaylord defers expenses prior to a new
venture becoming operational. These deferred preopening expenses, $12,335 and
$7,387 in 1996 and 1995, respectively, are amortized on a straight-line basis
over five years. Prepaid expenses were $11,784 and $10,295 in 1996 and 1995,
respectively.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities at December 31 consisted of:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Trade accounts payable...................................... $ 9,644 $15,027
Commissions payable......................................... 16,877 15,954
Accrued royalties........................................... 10,153 10,617
Deferred revenues........................................... 15,174 11,472
Accrued salaries and benefits............................... 4,805 3,616
Property and other taxes payable............................ 10,089 8,835
Other accrued liabilities................................... 17,534 29,227
------- -------
Total accounts payable and accrued liabilities.... $84,276 $94,748
======= =======
</TABLE>
Other accrued liabilities included approximately $15,000 in 1995 for the
liabilities related to the disposal of New Gaylord's 14% limited partnership
interest in the Fiesta Texas theme park, as further described in Note 3. Accrued
royalties consist primarily of music royalties and licensing fees at New
Gaylord's television stations, cable networks and music publishing business.
Deferred revenues consist primarily of deposits on advance room bookings at the
Opryland Hotel and advance ticket sales at the Opryland theme park and the Grand
Ole Opry.
PAYABLE TO OLD GAYLORD
Old Gaylord has a centralized cash management system whereby cash is made
available to New Gaylord for normal operating activities when needed and excess
cash is transferred back to Old Gaylord when available. The net effect of these
cash transactions is included in the payable to Old Gaylord in the consolidated
balance sheets and is presented as borrowings from (repayments to) Old Gaylord
in the consolidated statements of cash flows.
STOCK PLANS AND STOCK BASED COMPENSATION
Old Gaylord provides stock option and incentive plans in which certain of
New Gaylord's key employees are eligible to participate. Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," encourages, but does not require, companies to record
compensation cost for stock-based employee compensation plans at fair value. New
Gaylord has chosen to continue to account for stock-based compensation using the
intrinsic value method as prescribed in Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees." In addition, based on the number
of the options outstanding and the historical and expected future trends of
factors affecting valuation of those options, management believes that any
compensation cost which would be expected on New Gaylord's financial statements
under SFAS No. 123 attributable to options granted is immaterial.
RETIREMENT PLANS AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Old Gaylord provides a noncontributory defined benefit pension plan in
which substantially all of New Gaylord's employees are eligible to participate
upon meeting the pension plan's participation requirements. The benefits are
based on years of service and compensation levels.
F-9
<PAGE> 72
In addition, Old Gaylord has contributory retirement savings plans in which
substantially all of New Gaylord's employees are eligible to participate. Old
Gaylord contributes an amount equal to the lesser of one-half of the amount of
the employee's contribution or 3% of the employee's salary.
Old Gaylord also sponsors unfunded defined benefit postretirement health
care and life insurance plans for certain of New Gaylord's employees. Under this
plan, Old Gaylord contributes toward the cost of health insurance benefits and
contributes the full cost of providing life insurance benefits. In order to be
eligible for these postretirement benefits, an employee must retire after
attainment of age 55 and completion of 15 years of service, or attainment of age
65 and completion of 10 years of service.
All of the plans discussed above are administered and funded by Old Gaylord
which also maintains the related assets and liabilities on its records.
INCOME TAXES
New Gaylord's operations are included in the consolidated income tax return
filed by Old Gaylord and the current liability for federal income taxes payable
is recorded by Old Gaylord. The provision for income taxes in New Gaylord's
consolidated financial statements has been calculated on a separate tax return
basis.
In accordance with SFAS No. 109, "Accounting for Income Taxes", New Gaylord
establishes deferred tax liabilities and assets based on the difference between
the financial statement and income tax carrying amounts of assets and
liabilities using existing tax rates.
FINANCIAL INSTRUMENTS
Estimated fair values and carrying amounts of New Gaylord's financial
instruments at December 31, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
------------------- -------------------
FAIR CARRYING FAIR CARRYING
VALUE AMOUNT VALUE AMOUNT
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Long-term notes and interest receivable....... $187,279 $184,138 $164,792 $163,158
======== ======== ======== ========
</TABLE>
The fair value estimates were determined using discounted cash flow
analyses. The discount rate was determined based upon similar instruments. The
carrying amount of short-term financial instruments (cash, trade receivables,
accounts payable and accrued liabilities) approximates fair value due to the
short maturity of those instruments. Credit risk on trade receivables is
minimized by the large and diverse nature of New Gaylord's customer base.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
2. SUBSEQUENT EVENTS:
During January 1997, New Gaylord entered into a definitive agreement to
sell its Tacoma-Seattle, Washington, television station, KSTW, for $160,000 in
cash to Cox Broadcasting, Inc., which subsequently assigned its rights under the
agreement to Paramount Stations Group, Inc. The transaction requires the
approval of the Federal Communications Commission and will result in the
recognition of a gain.
On February 9, 1997, Old Gaylord entered into an agreement (the "Merger
Agreement") with Westinghouse and G Acquisition Corp., a wholly owned subsidiary
of Westinghouse ("Sub"), pursuant to which Sub will be merged (the "Merger")
with and into Old Gaylord, with Old Gaylord continuing as the surviving
corporation and a wholly owned subsidiary of Westinghouse. Prior to the Merger,
Old Gaylord will be restructured (the
F-10
<PAGE> 73
"Restructuring") so that the assets and liabilities that are part of Old
Gaylord's hospitality, attractions, music, television and radio businesses,
including all of Old Gaylord's long-term debt, as well as the Country Music
Television cable networks outside of the United States and Canada ("CMT
International") and the management of and option to acquire Z Music, Inc. ("Z
Music"), will be transferred to or retained by New Gaylord. As a result of the
Restructuring and the Merger, substantially all of the assets of Old Gaylord's
cable networks business, consisting primarily of TNN and the U.S. and Canadian
operations of CMT, and certain other related businesses (collectively, the
"Cable Networks Business") and certain liabilities to the extent that they arise
out of the Cable Networks Business, will be held by Old Gaylord or one of its
subsidiaries (other than New Gaylord or its subsidiaries after giving effect to
the Restructuring) and will be acquired by Westinghouse in the Merger.
Following the Restructuring and on the day prior to the effective time of
the Merger, Old Gaylord will distribute (the "Distribution") pro rata to its
stockholders all of the outstanding capital stock of New Gaylord. As a result of
the Distribution, each holder of record of Class A Common Stock, $.01 par value
("Old Gaylord Class A Common Stock"), and Class B Common Stock, $.01 par value
("Old Gaylord Class B Common Stock," and together with Old Gaylord Class A
Common Stock, "Old Gaylord Common Stock"), of Old Gaylord on the record date for
the Distribution will receive a number of shares of Common Stock, $.01 par
value, of New Gaylord ("New Gaylord Common Stock") equal to one-third the number
of shares of Old Gaylord Common Stock held by such holder, and cash in lieu of
any fractional shares of New Gaylord Common Stock.
In the Merger, Old Gaylord's stockholders will receive shares of
Westinghouse common stock valued at the agreed upon transaction price of
$1,550,000, at a per share consideration to be determined in accordance with the
Merger Agreement that will be based upon the market price of the Westinghouse
common stock and the number of outstanding shares of Old Gaylord Common Stock.
The Distribution and the Merger are subject to the satisfaction or waiver of a
number of conditions, including Old Gaylord stockholder approval of the Merger
and certain regulatory approvals, including an Internal Revenue Service ruling
that the Distribution, the Merger, and certain aspects of the Restructuring will
be tax-free transactions. The Distribution and the Merger are expected to occur
during 1997.
In connection with the Merger, New Gaylord and Old Gaylord (or one or more
of their respective subsidiaries) plan to enter into agreements pertaining to
their ongoing business relationship. In addition, each party will agree not to
compete with the other in certain areas of the cable networks industry.
3. ACQUISITIONS AND DIVESTITURES:
In January 1996, New Gaylord sold its Houston, Texas, television station,
KHTV, to Tribune Broadcasting Company for $97,800, including certain working
capital and other adjustments of approximately $4,300. The sale resulted in a
pretax gain of $73,850 which is included in other gains (losses) in the
consolidated statements of income. The sale of the television station included
program rights of $32,235 and related program contracts payable of $23,766.
In December 1995 and December 1994, New Gaylord recorded pretax losses of
$5,529 and $26,000, respectively, included in other gains (losses) in the
consolidated statements of income, to reflect losses related to the January 1996
disposal of its 14% limited partnership interest in the Fiesta Texas theme park.
The charges were based on the permanent impairment in the value of the
investment and New Gaylord's guarantee on certain indebtedness related to the
original construction of Fiesta Texas. New Gaylord paid $12,976 to transfer its
partnership interest and related obligations to a subsidiary of USAA, the
majority investor, in January 1996. In connection with New Gaylord's termination
of its interest in Fiesta Texas, New Gaylord was released from the loan
guarantee.
Sinclair Broadcast Group, Inc. ("Sinclair") purchased the non-license
assets of New Gaylord's WVTV television station in Milwaukee, Wisconsin, in May
1994. Total proceeds from the sale of the non-license assets were $18,231,
resulting in a pretax gain of $10,689, which is included in other gains (losses)
in the 1994 consolidated statement of income. Sinclair retained an option to
purchase the license assets of WVTV which it subsequently assigned to Glencairn,
Ltd., which exercised the option and purchased the license assets in July 1995.
F-11
<PAGE> 74
4. DISCONTINUED OPERATIONS:
On September 29, 1995, New Gaylord completed the sale of the Systems to CCT
Holdings Corp. ("CCTH"). Net proceeds, after a working capital adjustment of
$5,512, consisted of $198,800 in cash and a 10-year note receivable with a face
amount of $165,688. The note receivable and related accrued interest are
included in long-term notes and interest receivable in the accompanying
consolidated balance sheets in the amount of $176,138 and $155,658, for 1996 and
1995, respectively, net of a $15,000 discount in both years to reflect the note
at fair value based upon financial instruments of comparable credit risk and
interest rates. The note is currently classified as held to maturity and bears
interest at an initial rate of 12% which increases to 15% in September 2000 and
2% each year thereafter with principal and interest payable at maturity in 2005.
New Gaylord recorded $20,479 and $4,970 of interest income related to the note
receivable during 1996 and 1995, respectively. Immediately prior to the sale,
New Gaylord purchased the remaining 2.9% minority interest in the Systems for
$10,585. In addition, New Gaylord received the contractual right to 15% of the
net distributable proceeds, as defined, from certain future asset sales by the
buyer of the Systems. A significant stockholder and certain directors of Old
Gaylord own, indirectly, less than a 5% interest in CCTH.
New Gaylord recorded a gain in 1995 on the sale of the Systems of $42,998,
net of applicable income taxes of $30,824. The Systems have been accounted for
as discontinued operations and, accordingly, the Systems' losses subsequent to
the November 1993 measurement date, including interest expense on debt that can
be specifically attributed to the Systems, were deferred and are reflected as a
reduction in the gain on the sale of the Systems.
Selected results of operations related to the Systems prior to their sale
are summarized below for the period ended September 29, 1995 and the year ended
December 31, 1994 :
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Revenues.................................................... $ 67,157 $ 85,200
======== ========
Depreciation and amortization............................... 39,178 57,383
======== ========
Interest expense............................................ 17,051 19,728
======== ========
Loss before income taxes.................................... (29,344) (40,975)
Benefit for income taxes.................................... 9,831 13,953
Loss deferred subsequent to measurement date................ 19,513 27,022
-------- --------
Net loss.......................................... $ -- $ --
======== ========
</TABLE>
Net cash flows related to the Systems for the period ended September 29,
1995 and the year ended December 31, 1994 were:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net losses from discontinued operations................... $(19,513) $(27,022)
Depreciation and amortization............................. 39,178 57,383
Other, net................................................ (2,907) 634
-------- --------
Net cash flows provided by operating activities... 16,758 30,995
-------- --------
Cash flows from investing activities:
Purchases of property and equipment, net.................. (12,924) (21,625)
Other, net................................................ (61) 151
-------- --------
Net cash flows used in investing activities....... (12,985) (21,474)
-------- --------
Increase (decrease) in cash balance......................... 2,856 (1,340)
-------- --------
Net cash flows.................................... $ 6,629 $ 8,181
======== ========
</TABLE>
F-12
<PAGE> 75
5. PROPERTY AND EQUIPMENT:
Property and equipment at December 31 is recorded at cost and summarized as
follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Land and improvements....................................... $105,669 $100,715
Buildings................................................... 478,955 318,105
Furniture, fixtures, and equipment.......................... 379,822 327,808
Construction in progress.................................... 9,742 128,449
-------- --------
974,188 875,077
Accumulated depreciation.................................... 333,869 303,528
-------- --------
Property and equipment, net $640,319 $571,549
======== ========
</TABLE>
Depreciation expense for 1996, 1995, and 1994 was $42,101, $33,416, and
$28,953, respectively. Capitalized interest for 1996, 1995, and 1994 was $3,383,
$5,308, and $2,227, respectively.
6. INCOME TAXES:
The provision for income taxes for the years ended December 31 consisted
of:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Current:
Federal provision....................................... $56,698 $23,179 $28,851
State provision......................................... 1,653 3,861 1,721
------- ------- -------
Total current provision......................... 58,351 27,040 30,572
------- ------- -------
Deferred:
Federal provision (benefit)............................. 3,918 (568) (2,191)
State provision......................................... 678 1,028 1,070
------- ------- -------
Total deferred provision (benefit).............. 4,596 460 (1,121)
------- ------- -------
Total provision for income taxes................ $62,947 $27,500 $29,451
======= ======= =======
</TABLE>
The effective tax rate as applied to income from continuing operations for
the years ended December 31 differed from the statutory federal rate due to the
following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory federal rate...................................... 35% 35% 35%
State taxes................................................. 2 3 3
Other items, net............................................ (1) 2 1
-- -- --
36% 40% 39%
== == ==
</TABLE>
F-13
<PAGE> 76
The components of the net deferred tax liability as of December 31 were:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred tax assets:
Amortization.............................................. $ 10,816 $ 10,851
Accounting reserves and accruals.......................... 6,452 17,480
Other, net................................................ 3,987 (4,640)
-------- --------
Total deferred tax assets......................... 21,255 23,691
-------- --------
Deferred tax liabilities:
Depreciation.............................................. 43,916 36,658
Accounting reserves and accruals.......................... 106,720 127,513
-------- --------
Total deferred tax liabilities.................... 150,636 164,171
-------- --------
Net deferred tax liability........................ $129,381 $140,480
======== ========
</TABLE>
Provision is made for deferred federal and state income taxes in
recognition of certain temporary differences in reporting items of income and
expense for financial statement purposes and income tax purposes.
7. PAYABLE TO OLD GAYLORD:
New Gaylord has an intercompany account payable to Old Gaylord. New Gaylord
records interest expense on amounts borrowed from Old Gaylord at a rate
equivalent to the prime lending rate plus 1.25%. Interest expense recorded on
amounts payable to Old Gaylord, net of amounts capitalized and amounts deferred
related to the Systems, was $49,385, $40,197 and $26,988 for 1996, 1995 and
1994, respectively.
8. SIGNIFICANT BUSINESS RELATIONSHIP:
Westinghouse is primarily responsible for promoting and marketing TNN, CMT
and CMT International, selling advertising time on TNN and CMT, marketing TNN
and CMT to cable operators, and providing a satellite transponder to deliver TNN
programming to cable systems. In addition, Westinghouse owns 33% of CMT and CMT
International. Westinghouse receives a commission of 33% of TNN's applicable
gross receipts, net of agency commissions, and a commission of 10% of CMT's
gross receipts, net of agency commissions, up to a current maximum of $3,800
annually with regard to CMT, for its services. Westinghouse commissions under
these agreements were approximately $86,600, $73,700 and $65,900 in 1996, 1995
and 1994, respectively. Commissions payable to Westinghouse at December 31, 1996
and 1995, were approximately $15,300 and $15,100 respectively, and are included
in accounts payable and accrued liabilities in the accompanying consolidated
balance sheets.
9. COMMITMENTS AND CONTINGENCIES:
Rental expense was $11,111, $8,259, and $8,247 for 1996, 1995 and 1994,
respectively. Future minimum lease commitments under all noncancelable operating
leases in effect as of December 31, 1996 are as follows:
<TABLE>
<S> <C>
1997........................................................ $ 14,075
1998........................................................ 16,224
1999........................................................ 16,255
2000........................................................ 16,581
2001........................................................ 6,508
Years thereafter............................................ 58,013
--------
Total............................................. $127,656
========
</TABLE>
New Gaylord is involved in certain legal actions and claims on a variety of
matters. It is the opinion of management that such legal actions will not have a
material effect on the results of operations, financial condition or liquidity
of New Gaylord.
F-14
<PAGE> 77
10. FINANCIAL REPORTING BY BUSINESS SEGMENTS:
The following reflects New Gaylord's revenues, operating income,
depreciation and amortization, capital expenditures and identifiable assets by
business segment for the years ended or as of December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- --------
<S> <C> <C> <C>
Revenues:
Hospitality and attractions....................... $ 313,023 $ 276,638 $274,494
Broadcasting and music............................ 102,368 148,175 169,538
Cable networks.................................... 331,767 282,647 243,899
---------- ---------- --------
Total..................................... $ 747,158 $ 707,460 $687,931
========== ========== ========
Operating income:
Hospitality and attractions....................... $ 45,941 $ 40,215 $ 38,305
Broadcasting and music............................ 23,846 19,578 37,837
Cable networks.................................... 84,884 74,459 63,343
Corporate......................................... (25,061) (22,410) (20,976)
---------- ---------- --------
Total..................................... $ 129,610 $ 111,842 $118,509
========== ========== ========
Depreciation and amortization:
Hospitality and attractions....................... $ 28,861 $ 21,782 $ 19,040
Broadcasting and music............................ 4,421 3,954 3,854
Cable networks.................................... 12,406 9,522 7,758
Corporate......................................... 3,168 2,828 2,293
---------- ---------- --------
Total..................................... $ 48,856 $ 38,086 $ 32,945
========== ========== ========
Capital expenditures:
Hospitality and attractions....................... $ 85,692 $ 147,826 $110,695
Broadcasting and music............................ 4,572 8,506 3,728
Cable networks.................................... 21,522 17,229 9,526
Corporate......................................... 3,756 1,664 10,998
---------- ---------- --------
Total..................................... $ 115,542 $ 175,225 $134,947
========== ========== ========
Identifiable assets:
Hospitality and attractions....................... $ 643,532 $ 565,530 $441,479
Broadcasting and music............................ 86,960 130,742 155,977
Cable networks.................................... 208,482 174,931 147,948
Corporate......................................... 213,652 200,639 28,423
Net assets of discontinued operations............. -- -- 214,649
---------- ---------- --------
Total..................................... $1,152,626 $1,071,842 $988,476
========== ========== ========
</TABLE>
F-15
<PAGE> 78
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Revenues.................................................... $387,840 $348,137
Operating expenses:
Operating costs........................................... 230,916 207,459
Selling, general and administrative....................... 70,614 62,739
Depreciation and amortization............................. 26,781 21,286
-------- --------
Operating income....................................... 59,529 56,653
Interest expense............................................ (22,132) (20,241)
Interest income............................................. 11,674 10,451
Other gains (losses)........................................ 142,828 73,077
-------- --------
Income before provision for income taxes.................. 191,899 119,940
Provision for income taxes.................................. 65,903 45,282
-------- --------
Net income................................................ $125,996 $ 74,658
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-16
<PAGE> 79
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
---------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 9,422 $ 9,785
Trade receivables, less allowance of $4,107 and $3,276,
respectively........................................... 138,348 108,643
Program rights............................................ 10,165 14,072
Other assets.............................................. 54,981 45,975
---------- ----------
Total current assets.............................. 212,916 178,475
---------- ----------
Program rights.............................................. 15,116 26,472
Property and equipment, net of accumulated depreciation..... 634,533 640,319
Intangible assets, net of accumulated amortization.......... 37,674 39,363
Investments................................................. 71,529 65,190
Long-term notes and interest receivable..................... 196,271 184,138
Other assets................................................ 21,819 18,669
---------- ----------
Total assets...................................... $1,189,858 $1,152,626
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued liabilities.................. $ 170,631 $ 84,276
Program contracts payable................................. 15,309 14,943
---------- ----------
Total current liabilities......................... 185,940 99,219
---------- ----------
Payable to Old Gaylord...................................... 324,264 476,316
Program contracts payable................................... 9,936 24,661
Deferred income taxes....................................... 121,144 129,381
Other liabilities........................................... 5,889 6,991
Minority interest........................................... 15,478 14,847
Commitments and contingencies
Stockholder's equity:
Common stock, $100 par value, 10,000 shares authorized,
1,000 shares issued and outstanding.................... 100 100
Class B common stock, $.01 par value, 10,000 shares
authorized, no shares issued or outstanding............ -- --
Additional paid-in capital................................ 92,400 92,400
Retained earnings......................................... 434,707 308,711
---------- ----------
Total stockholder's equity........................ 527,207 401,211
---------- ----------
Total liabilities and stockholder's equity........ $1,189,858 $1,152,626
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-17
<PAGE> 80
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
--------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income................................................ $ 125,996 $ 74,658
Amounts to reconcile net income to net cash flows used in
operating activities:
Depreciation and amortization.......................... 26,781 21,286
Provision (benefit) for deferred income taxes.......... (1,927) 1,120
Noncash interest income................................ (11,135) (9,942)
Gain on sale of television stations.................... (144,259) (73,850)
Changes in:
Trade receivables.................................... (29,705) (28,766)
Program rights and program contracts payable......... 547 (887)
Accounts payable and accrued liabilities............. 75,645 24,421
Other, net........................................... (19,351) (12,872)
--------- --------
Net cash flows provided by (used in) operating
activities...................................... 22,592 (4,832)
--------- --------
Cash Flows from Investing Activities:
Proceeds from sale of television stations, net of direct
selling costs.......................................... 156,301 98,544
Investments in, advances to and distributions from
affiliates, net........................................ (5,879) 467
Purchases of property and equipment, net.................. (23,424) (76,541)
Payment upon disposal of Fiesta Texas partnership
interest............................................... -- (12,976)
Other, net................................................ (1,616) (4,692)
--------- --------
Net cash flows provided by investing activities... 125,382 4,802
--------- --------
Cash Flows from Financing Activities:
Borrowings from (repayments to) Old Gaylord, net.......... (147,156) 4,357
Repayments of long-term debt.............................. (1,181) (425)
--------- --------
Net cash flows provided by (used in) financing
activities...................................... (148,337) 3,932
--------- --------
Net change in cash.......................................... (363) 3,902
Cash, beginning of period................................... 9,785 8,863
--------- --------
Cash, end of period......................................... $ 9,422 $ 12,765
========= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
F-18
<PAGE> 81
NEW GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF GAYLORD ENTERTAINMENT COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. BASIS OF PRESENTATION
New Gaylord Entertainment Company ("New Gaylord"), formerly Gaylord
Broadcasting Company, is a wholly owned subsidiary of Gaylord Entertainment
Company ("Old Gaylord"). The unaudited condensed consolidated financial
statements include the accounts of New Gaylord and its subsidiaries and have
been prepared by New Gaylord pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, although New Gaylord believes that the
disclosures are adequate to make the financial information presented not
misleading. It is suggested that these unaudited condensed consolidated
financial statements be read in conjunction with the audited consolidated
financial statements and notes thereto of New Gaylord as of December 31, 1996
and 1995 and for each of the three years in the period ended December 31, 1996.
In the opinion of management, all adjustments necessary for a fair statement of
the results of operations for the interim periods have been included. However,
the consolidated financial information included herein may not necessarily
reflect the consolidated results of operations, financial position, and cash
flows of New Gaylord had New Gaylord been a separate, stand-alone entity during
the periods presented. The results of operations for such interim periods are
not necessarily indicative of the results for a full year.
2. WESTINGHOUSE MERGER
On February 9, 1997, Old Gaylord entered into an agreement (the "Merger
Agreement") with Westinghouse and G Acquisition Corp., a wholly owned subsidiary
of Westinghouse ("Sub"), pursuant to which Sub will be merged (the "Merger")
with and into Old Gaylord, with Old Gaylord continuing as the surviving
corporation and a wholly owned subsidiary of Westinghouse. Prior to the Merger,
Old Gaylord will be restructured (the "Restructuring") so that certain assets
and liabilities that are part of Old Gaylord's hospitality, attractions, music,
television and radio businesses, including all of Old Gaylord's long-term debt,
as well as the Country Music Television cable networks outside of the United
States and Canada ("CMT International") and the management of and option to
acquire 95% of Z Music, Inc. ("Z Music"), will be transferred to or retained by
New Gaylord. As a result of the Restructuring and the Merger, substantially all
of the assets of Old Gaylord's cable networks business, consisting primarily of
TNN and the U.S. and Canadian operations of CMT, and certain other related
businesses (collectively, the "Cable Networks Business") and certain liabilities
to the extent that they arise out of the Cable Networks Business, will be held
by Old Gaylord or one of its subsidiaries (other than New Gaylord or its
subsidiaries after giving effect to the Restructuring) and will be acquired by
Westinghouse in the Merger.
Following the Restructuring and on the day prior to the effective time of
the Merger, Old Gaylord will distribute (the "Distribution") pro rata to its
stockholders all of the outstanding capital stock of New Gaylord. As a result of
the Distribution, each holder of record of Class A Common Stock, $.01 par value
("Old Gaylord Class A Common Stock"), and Class B Common Stock, $.01 par value
("Old Gaylord Class B Common Stock," and together with Old Gaylord Class A
Common Stock, "Old Gaylord Common Stock"), of Old Gaylord on the record date for
the Distribution will receive a number of shares of Common Stock, $.01 par
value, of New Gaylord ("New Gaylord Common Stock") equal to one-third the number
of shares of Old Gaylord Common Stock held by such holder. Cash will be
distributed in lieu of any fractional shares of New Gaylord Common Stock.
In the Merger, Old Gaylord's stockholders will receive shares of
Westinghouse common stock valued at the agreed upon transaction price of
$1,550,000, at a per share consideration to be determined in accordance with the
Merger Agreement that will be based upon the average market price of the
Westinghouse common stock for a period ending shortly before the date on which
the Merger occurs and the number of outstanding shares of Old
F-19
<PAGE> 82
Gaylord Common Stock prior to the Merger, subject to certain limitations and
termination rights contained in the Merger Agreement. The Distribution and the
Merger are subject to the satisfaction or waiver of a number of conditions,
including certain regulatory approvals, including an Internal Revenue Service
ruling that the Distribution, the Merger, and certain aspects of the
Restructuring will be tax-free transactions. The Distribution and the Merger are
currently expected to occur during the third quarter of 1997.
In connection with the Merger, New Gaylord and Old Gaylord (or one or more
of their respective subsidiaries) plan to enter into agreements pertaining to
their ongoing business relationship. In addition, each party will agree not to
compete with the other in certain areas of the cable networks industry.
3. SALE OF TELEVISION STATION
In June 1997, New Gaylord sold KSTW, its Tacoma-Seattle, Washington
television station, for $160,000 in cash. The sale resulted in a pretax gain of
$144,259, which is included in other gains (losses) in the condensed
consolidated statements of income. New Gaylord utilized the net proceeds from
the sale to reduce the payable to Old Gaylord.
F-20
<PAGE> 83
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying Unaudited Pro Forma Consolidated Statements of Income for
the six-month period ended June 30, 1997 and for the year ended December 31,
1996 are presented as if the Restructuring, the Recapitalization, the
Distribution and the Merger (the "Transactions") had occurred on January 1, 1997
and January 1, 1996, respectively. The Unaudited Pro Forma Consolidated Balance
Sheet is presented as if the Transactions had occurred on June 30, 1997. These
pro forma financial statements are presented for illustrative purposes only and
may not be indicative of the actual financial position or results of operations
that would have been obtained if the Transactions had occurred on such dates or
that may be realized in the future. The results of operations for the interim
period are not necessarily indicative of the results for the full year. The pro
forma information should be read in conjunction with the consolidated financial
statements and the notes thereto included elsewhere herein.
F-21
<PAGE> 84
NEW GAYLORD ENTERTAINMENT COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTED
TO REFLECT TO REFLECT TO REFLECT PRO
HISTORICAL WORD THE THE FORMA
DATA ACQUISITION(1) RESTRUCTURING(2) MERGER(3) DATA(7,8)
---------- -------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues........................ $387,840 $46,838 $ 126 $(178,047)(4) $256,757
Operating expenses:
Operating costs............... 230,916 28,589 131 (99,199)(4) 160,437
Selling, general and
administrative............. 70,614 16,549 298 (24,164)(4) 67,765
4,468(5)
Depreciation and
amortization............... 26,781 1,416 49 (6,017)(4) 22,229
-------- ------- ------- --------- --------
Operating income........... 59,529 284 (352) (53,135) 6,326
Interest expense................ (22,132) (4,299) 11,507 92(4) (14,832)
Interest income................. 11,674 -- 40 (189)(4) 11,525
Other gains (losses)............ 142,828 -- (219) 3,554(4) 144,231
(1,932)(6)
-------- ------- ------- --------- --------
Income before provision for
income taxes.................. 191,899 (4,015) 10,976 (51,610) 147,250
Provision for income taxes...... 65,903 (1,546)(9) 3,955(9) (20,666)(9) 47,646
-------- ------- ------- --------- --------
Net income.................... $125,996 $(2,469) $ 7,021 $ (30,944) $ 99,604
======== ======= ======= ========= ========
Pro forma net income per
share......................... $ 3.07
========
Pro forma weighted average
shares outstanding............ 32,471(10)
========
</TABLE>
- ---------------
(1) Old Gaylord acquired the assets of Word on January 7, 1997. Old Gaylord
will transfer the assets and liabilities of Word to New Gaylord as part of
the Restructuring. The pro forma adjustments reflect Word's results of
operations subsequent to Word's acquisition date.
(2) The pro forma adjustments reflect the effects of the Restructuring (other
than the transfer of the assets and liabilities of Word) as if it had
occurred on January 1, 1997. These adjustments assign Old Gaylord's
external long-term debt and operating activities to New Gaylord and remove
New Gaylord's intercompany debt balance payable to Old Gaylord. Interest
expense has been adjusted to reflect the differences in debt levels and
related interest rates and to remove intercompany interest charges.
(3) The pro forma adjustments reflect the effects of the Merger as if it
occurred on January 1, 1997.
(4) These pro forma adjustments reflect the removal of the results of
operations of the Cable Networks Business from New Gaylord's results of
operations.
(5) These pro forma adjustments reflect corporate expenses historically
allocated to the Cable Networks Business which will be absorbed by New
Gaylord.
(6) This pro forma adjustment reflects the reversal of minority interest
related to Westinghouse's 33% ownership of CMT International that will be
eliminated as a result of the Restructuring and the Merger.
(7) The pro forma adjustments exclude certain non-recurring expenses which will
be incurred in connection with or due to the Transactions. The
non-recurring expenses are estimated to be approximately $30 million.
(8) In connection with the Merger, New Gaylord and Old Gaylord (or one or more
of their respective subsidiaries) will enter into a number of agreements
pertaining to their ongoing business relationship. The financial impact of
such agreements to New Gaylord is not expected to be material and has not
been reflected in the pro forma adjustments.
(9) Reflects the adjustment of income tax expense to the expected effective tax
rates.
(10) The pro forma weighted average shares outstanding assume that the capital
structure subsequent to the Recapitalization and the Distribution was in
place as of January 1, 1997, and gives effect to the dilution related to
common stock equivalents.
F-22
<PAGE> 85
NEW GAYLORD ENTERTAINMENT COMPANY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTED
ADJUSTMENTS ADJUSTMENTS PRO
HISTORICAL TO REFLECT THE TO REFLECT FORMA
DATA RESTRUCTURING(1) THE MERGER(2) DATA(6)(7)
---------- ---------------- ------------- ----------
<S> <C> <C> <C> <C>
Revenues.................................... $747,158 $ -- $(320,612)(3) $426,546
Operating expenses:
Operating costs........................... 443,236 -- (182,061)(3) 261,175
Selling, general and administrative....... 125,456 3 (38,094)(3) 95,586
8,221(4)
Depreciation and amortization............. 48,856 -- (10,415)(3) 38,441
-------- ------- --------- --------
Operating income....................... 129,610 (3) (98,263) 31,344
Interest expense............................ (49,880) 30,342 562(3) (18,976)
Interest income............................. 21,580 1,324 -- 22,904
Other gains (losses)........................ 72,220 (479) 6,519(3) 74,281
(3,979)(5)
-------- ------- --------- --------
Income before provision for income taxes.... 173,530 31,184 (95,161) 109,553
Provision for income taxes.................. 62,947 10,602(8) (37,779)(8) 35,770
-------- ------- --------- --------
Net income................................ $110,583 $20,582 $ (57,382) $ 73,783
======== ======= ========= ========
Pro forma net income per share.............. $ 2.26
========
Pro forma weighted average shares
outstanding............................... 32,585(9)
========
</TABLE>
- ---------------
(1) The pro forma adjustments reflect the effects of the Restructuring as if it
had occurred on January 1, 1996. These adjustments assign Old Gaylord's
external long-term debt and operating activities to New Gaylord and remove
New Gaylord's intercompany debt balance payable to Old Gaylord. Interest
expense has been adjusted to reflect the differences in debt levels and
related interest rates and to remove intercompany interest charges.
(2) The pro forma adjustments reflect the effects of the Merger as if it
occurred on January 1, 1996.
(3) These pro forma adjustments reflect the removal of the results of operations
of the Cable Networks Business from New Gaylord's results of operations.
(4) These pro forma adjustments reflect corporate expenses historically
allocated to the Cable Networks Business which will be absorbed by New
Gaylord.
(5) This pro forma adjustment reflects the reversal of minority interest related
to Westinghouse's 33% ownership of CMT International that will be eliminated
as a result of the Restructuring and the Merger.
(6) The pro forma adjustments exclude certain non-recurring expenses which will
be incurred in connection with or due to the Transactions. The non-recurring
expenses are estimated to be approximately $30 million.
(7) In connection with the Merger, New Gaylord and Old Gaylord (or one or more
of their respective subsidiaries) will enter into a number of agreements
pertaining to their ongoing business relationship. The financial impact of
such agreements to New Gaylord is not expected to be material and has not
been reflected in the pro forma adjustments.
(8) Reflects the adjustment of income tax expense to the expected effective tax
rates.
(9) The pro forma weighted average shares outstanding assume that the capital
structure subsequent to the Recapitalization and the Distribution was in
place as of January 1, 1996, and gives effect to the dilution related to
common stock equivalents.
F-23
<PAGE> 86
NEW GAYLORD ENTERTAINMENT COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
TO REFLECT TO REFLECT TO REFLECT ADJUSTED
HISTORICAL WORD THE THE PRO FORMA
DATA ACQUISITION(1) RESTRUCTURING(2) MERGER(3) DATA
---------- -------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash.......................... $ 9,422 $ 1,160 $ 2,513 $ (2,723)(4) $ 10,372
Trade receivables, net........ 138,348 25,560 380 (72,587)(4) 91,701
Other current assets.......... 65,146 32,146 7,687 (27,262)(4) 74,568
(3,149)(6)
---------- -------- --------- --------- ----------
Total current
assets.............. 212,916 58,866 10,580 (105,721) 176,641
Property and equipment, net..... 634,533 967 140 (53,428)(4) 581,765
(447)(6)
Intangible assets, net.......... 37,674 60,294 6,324 (31,670)(4) 72,622
Investments..................... 71,529 576 640 (1,030)(4) 71,715
Long-term notes and interest
receivable.................... 196,271 4,163 21,963 (1,099)(4) 221,298
Other assets.................... 36,935 12,715 480 (13,872)(4) 36,258
---------- -------- --------- --------- ----------
Total assets.......... $1,189,858 $137,581 $ 40,127 $(207,267) $1,160,299
========== ======== ========= ========= ==========
Current liabilities:
Current portion of long-term
debt $ -- $ -- $ 37,420 $ -- $ 37,420
Accounts payable and accrued
expenses................... 170,631 12,499 30,008 (31,384)(4) 205,271
23,517(6)
Other current liabilities..... 15,309 -- -- (4,823)(4) 10,486
---------- -------- --------- --------- ----------
Total current
liabilities......... 185,940 12,499 67,428 (12,690) 253,177
Due to Old Gaylord.............. 324,264 126,809 (451,073) -- --
Long-term debt.................. 4,836 -- 311,708 (4,836)(4) 311,708
Deferred income taxes........... 121,144 -- (11,625) (8,663)(6) 100,856
Other liabilities and minority
interest...................... 26,467 384 22,407 (28,921)(4) 32,930
12,593(5)
Stockholders' equity............ 527,207 (2,111) 101,282 (133,707)(4) 461,628
(18,450)(6)
(12,593)(5)
---------- -------- --------- --------- ----------
Total liabilities and
stockholders'
equity.............. $1,189,858 $137,581 $ 40,127 $(207,267) $1,160,299
========== ======== ========= ========= ==========
</TABLE>
- ---------------
(1) Old Gaylord acquired the assets of Word on January 7, 1997. Old Gaylord will
transfer the assets and liabilities of Word to New Gaylord as part of the
Restructuring. The pro forma adjustments reflect Word's assets and
liabilities as if the transfer of these assets and liabilities had occurred
on June 30, 1997.
(2) The pro forma adjustments reflect the effects of the Restructuring (other
than the transfer of the assets and liabilities of Word) as if it had
occurred on June 30, 1997. These adjustments assign Old Gaylord's assets and
liabilities, including external long-term debt, to New Gaylord. Intercompany
debt to Old Gaylord is removed in the Restructuring.
(3) The pro forma adjustments reflect the effects of the Merger as if it
occurred on June 30, 1997.
(4) These pro forma adjustments reflect the removal of the financial position of
the Cable Networks Business from New Gaylord's reported financial position.
F-24
<PAGE> 87
(5) These pro forma adjustments reflect the reversal of minority interest
related to Westinghouse's 33% ownership of CMT International that will be
eliminated as a result of the Restructuring and the Merger.
(6) These pro forma adjustments include the accrual of certain non-recurring
expenses which will be incurred in connection with or as a result of the
Transactions. These non-recurring expenses are estimated to be $30 million,
including certain asset write-downs of $3.6 million. The tax effect of these
non-recurring expenses is $11.6 million, including deferred taxes of $8.7
million.
F-25
<PAGE> 88
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this amended registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized.
NEW GAYLORD ENTERTAINMENT COMPANY
By: /s/ TERRY E. LONDON
------------------------------------
Terry E. London
President and Chief Executive
Officer
Date: August 29, 1997
<PAGE> 89
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<C> <C> <S>
2.1+ -- Basic Agreement, dated as of December 15, 1993, among
BASSGEC Management Company, Bass Pro Shops, Inc., Trackmar
Corporation, Finley River Properties, Inc., John L. Morris,
Trustee of the John L. Morris Revocable Living Trust, U/T/A
dated December 23, 1986, as amended, Hospitality and Leisure
Management, Inc., John L. Morris, and the Company
(incorporated by reference to Exhibit 2.1 to Old Gaylord's
Registration Statement on Form S-3 (Registration No.
33-74552)).
2.2+ -- Asset Purchase Agreement by and among Cencom Cable
Television, Inc., Lenoir TV Cable, Inc., CCT Holdings
Corporation and CCA Holdings Corporation dated as of March
30, 1995 (incorporated by reference to Exhibit 2 to Old
Gaylord's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995).
2.3 -- Amendment 1 to the Asset Purchase Agreement by and among
Cencom Cable Television, Inc., Lenoir TV Cable, Inc., CCT
Holdings Corporation and CCA Holdings Corporation dated as
of May 24, 1995 (incorporated by reference to Exhibit 2.2 to
Old Gaylord's Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 13, 1995).
2.4 -- Amendment 2 to the Asset Purchase Agreement by and among
Cencom Cable Television, Inc., Lenoir TV Cable, Inc., CCT
Holdings Corporation and CCA Holdings Corporation dated as
of September 29, 1995 (incorporated by reference to Exhibit
2.3 to Old Gaylord's Current Report on Form 8-K filed with
the Securities and Exchange Commission on October 13, 1995).
2.5+ -- Asset Purchase Agreement dated as of September 15, 1995
between Tribune Broadcasting Company and Gaylord
Broadcasting Company, L.P. (incorporated by reference to
Exhibit 2.5 to Old Gaylord's Annual Report on Form 10-K for
the year ended December 31, 1995).
2.6+ -- Asset Purchase Agreement, dated as of November 21, 1996 by
and among Thomas Nelson, Inc., Word, Incorporated and Word
Direct Partners, L.P. as Sellers and Gaylord Entertainment
Company as Buyer (incorporated by reference to Exhibit 2.1
to the Current Report on Form 8-K, dated January 6, 1997, of
Thomas Nelson, Inc.).
2.7+ -- Amendment No. 1 to the Asset Purchase Agreement dated as of
January 6, 1997, by and among Thomas Nelson, Inc., Word
Incorporated and Word Direct Partners, L.P. as Sellers and
Gaylord Entertainment Company as Buyer (incorporated by
reference to Exhibit 2.2 to the Current Report on Form 8-K,
dated January 6, 1997, of Thomas Nelson, Inc.).
2.8+ -- Asset Purchase Agreement, dated as of January 6, 1997, by
and between Nelson Word Limited and Word Entertainment
Limited (incorporated by reference to Exhibit 2.3 to the
Current Report on Form 8-K, dated January 6, 1997, of Thomas
Nelson, Inc.).
2.9+ -- Subsidiary Asset Purchase Agreement executed on January 6,
1997 and dated as of November 21, 1996 between Word
Communications, Ltd. and Word Entertainment (Canada), Inc.
(incorporated by reference to Exhibit 2.4 to the Current
Report on Form 8-K, dated January 6, 1997, of Thomas Nelson,
Inc.).
2.10+ -- Asset Purchase Agreement by and between Cox Broadcasting,
Inc. and Gaylord Broadcasting Company, L.P. dated January
20, 1997 (incorporated by reference to Exhibit 2.10 to Old
Gaylord's Annual Report on Form 10-K, as amended by Form
10-K/A, for the year ended December 31, 1996).
2.11+ -- Agreement and Plan of Merger dated February 9, 1997 by and
among Westinghouse Electric Corporation, G Acquisition Corp.
and Gaylord Entertainment Company and Agreement and Plan of
Distribution attached as Annex A thereto (incorporated by
reference to Exhibit 2.1 to Old Gaylord's Current Report on
Form 8-K dated February 9, 1997).
3.1* -- Form of Restated Certificate of Incorporation of New
Gaylord.
</TABLE>
<PAGE> 90
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<C> <C> <S>
3.2* -- Form of Restated By-laws of New Gaylord.
4.1* -- Specimen of New Gaylord Common Stock certificate.
4.2** -- The Credit Agreement dated as of August 19, 1997 among Old
Gaylord, the Banks named therein and NationsBank of Texas,
N.A., as Administrative Lender (including form of Swing Line
Note, form of Revolving Credit Note, and form of Assumption
Agreement).
9.1 -- Voting Trust Agreement ("Voting Trust Agreement") dated as
of October 3, 1990 between certain stockholders of The
Oklahoma Publishing Company and Edward L. Gaylord, Edith
Gaylord Harper, Christine Gaylord Everest, E. K. Gaylord II
and Martin C. Dickinson, as Voting Trustees (incorporated by
reference to Exhibit 9.1 to Old Gaylord's Registration
Statement on Form S-1 (Registration No. 33-42329)).
9.2 -- Amendment No. 1 to Voting Trust Agreement dated as of
October 7, 1991 between certain stockholders of The Oklahoma
Publishing Company and Edward L. Gaylord, Edith Gaylord
Harper, Christine Gaylord Everest, Edward K. Gaylord II and
Martin C. Dickinson, as Voting Trustees (incorporated by
reference to Exhibit 9.2 to Old Gaylord's Registration
Statement on Form S-1 (Registration No. 33-42329)).
10.1 -- Senior Subordinated Note issued on September 29, 1995 by CCT
Holdings Corporation in the original principal amount of
$165,687,890 (incorporated by reference to Exhibit 10.1 to
Old Gaylord's Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 13, 1995).
10.2 -- Senior Subordinated Loan Agreement, dated as of September
29, 1995, between CCT Holdings and Cencom Cable Television,
Inc. (incorporated by reference to Exhibit 10.2 to Old
Gaylord's Current Report on Form 8-K filed with the
Securities and Exchange Commission on October 13, 1995).
10.3 -- Contingent Payment Agreement, dated as of September 29,
1995, between Charter Communications Entertainment, L.P.,
CCT Holdings Corporation and Cencom Cable Television, Inc.
(incorporated by reference to Exhibit 10.3 to Old Gaylord's
Current Report on Form 8-K filed with the Securities and
Exchange Commission on October 13, 1995).
10.4 -- Letter Agreement dated September 14, 1994 between CBS, Inc.
and Gaylord Broadcasting Company (d/b/a KTVT, Fort
Worth-Dallas) as modified by the Affiliation Agreement dated
December 2, 1994 between the parties as amended by the
letter agreement between the parties dated December 29, 1994
(incorporated by reference to Exhibit 10.20 of Old Gaylord's
Annual Report on Form 10-K for the year ended December 31,
1994).
10.5 -- Amended and Restated Limited Partnership Agreement of Bass
Pro, L.P. (incorporated by reference to Exhibit 2.3 to Old
Gaylord's Registration Statement on Form S-3 (Registration
No. 33-74552)).
10.6 -- Form of Tax Disaffiliation Agreement by and among Gaylord
Entertainment Company, Gaylord Broadcasting Company and
Westinghouse Electric Corporation (incorporated by reference
to Annex V to Old Gaylord's definitive Proxy Statement
relating to the Special Meeting held on August 15, 1997).
10.7 -- Form of Post-Closing Covenants Agreement among Westinghouse
Electric Corporation, Gaylord Entertainment Company, Gaylord
Broadcasting Company and certain subsidiaries of Gaylord
Broadcasting Company (incorporated by reference to Annex IV
to Old Gaylord's definitive Proxy Statement relating to the
Special Meeting held on August 15, 1997).
EXECUTIVE COMPENSATION PLANS AND MANAGEMENT CONTRACTS
10.8 -- New Gaylord Entertainment Company 1997 Stock Option and
Incentive Plan (incorporated by reference to Annex VII to
Old Gaylord's definitive Proxy Statement relating to the
Special Meeting held on August 15, 1997).
</TABLE>
<PAGE> 91
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
<C> <C> <S>
10.9 -- The Opryland USA Inc Supplemental Deferred Compensation Plan
(incorporated by reference to Exhibit 10.11 to Old Gaylord's
Registration Statement on Form S-1 (Registration No.
33-42329)).
10.10 -- The Opryland USA Inc Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit 10.22 to Old Gaylord's
Annual Report on Form 10-K for the year ended December 31,
1992).
10.11 -- Gaylord Entertainment Company Excess Benefit Plan
(incorporated by reference to Exhibit 10.30 to Old Gaylord's
Annual Report on Form 10-K for the year ended December 31,
1994).
10.12 -- Gaylord Entertainment Company Supplemental Executive
Retirement Plan (incorporated by reference to Exhibit 10.31
to Old Gaylord's Annual Report on Form 10-K for the year
ended December 31, 1994).
10.13 -- Gaylord Entertainment Company Directors' Unfunded Deferred
Compensation Plan (incorporated by reference to Exhibit
10.32 to Old Gaylord's Annual Report on Form 10-K for the
year ended December 31, 1994).
10.14 -- Form of Severance Agreement between Old Gaylord
Entertainment Company and executive officers (incorporated
by reference to Exhibit 10.23 to Old Gaylord's Annual Report
on Form 10-K for the year ended December 31, 1996).
10.15 -- Form of Indemnity Agreement between Old Gaylord
Entertainment Company and its directors (incorporated by
reference to Exhibit 10.24 to Old Gaylord's Annual Report on
Form 10-K for the year ended December 31, 1996).
21* -- Subsidiaries of New Gaylord Entertainment Company (after
giving effect to the Restructuring).
27.1* -- Financial Data Schedule for year ended December 31, 1996
(for SEC use only).
27.2** -- Financial Data Schedule for six months ended June 30, 1997
(for SEC use only).
</TABLE>
- ---------------
+ As directed by Item 601(b)(2) of Regulation S-K, certain schedules and
exhibits to this exhibit are omitted from this filing. Registrant agrees to
furnish supplementally a copy of any omitted schedule or exhibit to the
Commission upon request.
* Previously filed as an Exhibit to this Registration Statement on Form 10.
** Filed herewith.
<PAGE> 1
Exhibit 4.2
CREDIT AGREEMENT
AMONG
GAYLORD ENTERTAINMENT COMPANY
THE BANKS NAMED HEREIN
AND
NATIONSBANK OF TEXAS, N.A.
AS ADMINISTRATIVE LENDER
August 19, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I.
DEFINITIONS
ARTICLE II.
AMOUNTS AND TERMS OF THE LOANS
AND THE LETTERS OF CREDIT
<S> <C> <C>
2.1. The Loans............................................................................ 22
2.2. Making the Loans..................................................................... 23
2.3. Fees................................................................................. 25
2.4. Reduction of Total Commitment........................................................ 26
2.5. Repayment............................................................................ 26
2.6. Interest............................................................................. 27
2.7. Prepayments.......................................................................... 28
2.8. Conversion of Loans.................................................................. 29
2.9. Increased Costs, Etc................................................................. 29
2.10. Payments and Computations............................................................ 31
2.11. Taxes................................................................................ 32
2.12. Sharing of Payments, Etc............................................................. 35
2.13. Letters of Credit.................................................................... 36
2.14. Use of Proceeds...................................................................... 41
2.15. Evidence of Debt..................................................................... 41
2.16. Conditions Precedent to Initial Borrowing and Issuance............................... 42
2.17. Conditions Precedent to Each Borrowing and Issuance.................................. 43
2.18. Determinations Under Section 2.16.................................................... 44
2.19. Legal Details........................................................................ 44
2.20. Substitution of Lender............................................................... 44
ARTICLE III.
AFFIRMATIVE COVENANTS
3.1. General Covenants.................................................................... 45
3.2. Accounts, Reports and other Information.............................................. 46
3.3. Officer's Certificates............................................................... 48
3.4. Auditors' Letters.................................................................... 48
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
3.5. Inspection........................................................................... 48
3.6. Notices Regarding ERISA.............................................................. 48
3.7. Employee Plans....................................................................... 50
3.8. Environmental Notice and Inspection.................................................. 50
3.9. Solvency............................................................................. 51
ARTICLE IV.
NEGATIVE COVENANTS
4.1. Funded Debt to Capitalization Ratio.................................................. 51
4.2. EBITDA To Interest Charges........................................................... 51
4.3. Capital Expenditures................................................................. 51
4.4. Net Worth............................................................................ 51
4.5. Investments.......................................................................... 52
4.6. Acquisitions......................................................................... 52
4.7. Limitation on Liens.................................................................. 53
4.8. Debt................................................................................. 53
4.9. Mergers, etc......................................................................... 53
4.10. ERISA................................................................................ 53
4.11. Dispositions of Assets............................................................... 54
4.12. Transactions with Affiliates......................................................... 54
4.13. Accounting Changes................................................................... 54
4.14. Margin Regulations................................................................... 54
4.15. Hostile Acquisitions................................................................. 54
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
5.1. Organization and Qualification....................................................... 55
5.2. Financial Statements................................................................. 55
5.3. Taxes................................................................................ 55
5.4. Compliance With Laws and Other Matters............................................... 56
5.5. Total Liabilities.................................................................... 56
5.6. Title to Properties.................................................................. 56
5.7. Corporate Authorization; Validity.................................................... 57
5.8. Use of Proceeds...................................................................... 57
5.9. Possession of Franchises, Licenses, Etc.............................................. 57
5.10. Leases............................................................................... 57
5.11. Disclosure........................................................................... 57
5.12. Government Regulation................................................................ 57
5.13. Environmental Matters................................................................ 58
5.14. ERISA................................................................................ 59
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C> <C>
5.15. Solvency............................................................................. 60
5.16. Business............................................................................. 60
ARTICLE VI.
DEFAULT
6.1. Default.............................................................................. 60
6.2. Certain Rights of Lenders............................................................ 63
ARTICLE VII.
AGREEMENT AMONG LENDERS
7.1. Agreement Among Lenders.............................................................. 64
7.2. Lender Credit Decision............................................................... 67
7.3. Benefits of Article.................................................................. 67
ARTICLE VIII.
MISCELLANEOUS
8.1. Accounting Terms..................................................................... 67
8.2. Money................................................................................ 67
8.3. Number and Gender of Words........................................................... 68
8.4. Headings............................................................................. 68
8.5. Articles, Sections, and Exhibits..................................................... 68
8.6. Notices, Etc......................................................................... 68
8.7. No Waiver; Remedies.................................................................. 68
8.8. Survival of Agreements............................................................... 68
8.9. Binding Effect....................................................................... 69
8.10. Expenses............................................................................. 69
8.11. Right of Set-off..................................................................... 69
8.12. Governing Law........................................................................ 69
8.13. Usury Provision...................................................................... 70
8.14. Indemnity............................................................................ 70
8.15. Severability......................................................................... 71
8.16. Assignments and Participations....................................................... 72
8.17. No Liability of Issuing Bank......................................................... 74
8.18. Amendments, Etc...................................................................... 75
8.19. Confidentiality...................................................................... 75
- iii -
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
8.20. Release and Assumption............................................................... 76
8.21. Exceptions to Covenants.............................................................. 76
8.22. Counterparts......................................................................... 76
8.23. WAIVER OF JURY TRIAL................................................................. 76
8.24. ENTIRE AGREEMENT..................................................................... 76
</TABLE>
- iv -
<PAGE> 6
SCHEDULES AND EXHIBITS:
Schedule I - Commitments
Schedule II - Lenders' Addresses
Exhibit A - Assignment and Acceptance
Exhibit B - Existing Debt
Exhibit C - Existing Liens
Exhibit D - Guaranty
Exhibit E - Material Contractual Obligations
Exhibit F - Subsidiaries
Exhibit G - Swing Line Note
Exhibit H - Revolving Credit Note
Exhibit I - Notice of Borrowing
Exhibit J - Officer's Certificate of Borrower - Closing
Exhibit K - Officer's Certificate of Borrower - Authorization
Exhibit L - Officer's Certificate of Guarantor - Authorization
Exhibit M - Opinion of Counsel to Borrower and Guarantors
Exhibit N - Officer's Certificate - Financial
Exhibit O - Existing Litigation
Exhibit P - Total Liabilities
Exhibit Q - Opinion of Special Counsel
Exhibit R - Existing Letters of Credit
Exhibit S - Assumption Agreement
- v -
<PAGE> 7
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of August 19, 1997 (this "Agreement"), among
GAYLORD ENTERTAINMENT COMPANY, a Delaware corporation, having its principal
office at One Gaylord Drive, Nashville, Tennessee 37214 (hereinafter called
"Borrower"), the banks listed on the signature pages hereof (the "Banks"), the
other Lenders that may become a party hereto pursuant to Section 8.16, and
NATIONSBANK OF TEXAS, N.A., as administrative agent hereunder (in such capacity,
together with any successor appointed pursuant to Article VII, herein called
"Administrative Lender").
BACKGROUND
Lenders have been requested to provide Borrower the funds required to
refinance the Debt of Borrower under the Existing Credit Agreement (as
hereinafter defined), the NationsBank Term Loan Agreement (as hereinafter
defined), finance Acquisitions (as hereinafter defined) permitted hereunder and
finance the ongoing working capital and general corporate requirements of
Borrower and its Subsidiaries (as hereinafter defined). Lenders have agreed to
provide such financing, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, receipt and sufficiency of
which are acknowledged by all parties hereto, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
The terms defined in this Article I (except as otherwise expressly
provided in this Agreement) for all purposes shall have the following meanings,
and the singular shall include the plural, and vice versa, unless otherwise
specifically required by the context:
"Acquisition" means any transaction, other than transactions
contemplated by the Gaylord Restructuring, pursuant to which any Company (a)
whether by means of a capital contribution or purchase or other acquisition of
Capital Stock, (i) acquires more than 50% of the Capital Stock in any Person
pursuant to a solicitation by such Company of tenders of Capital Stock of such
Person, or through one or more negotiated block, market, private or other
transactions, or a combination of any of the foregoing, or (ii) makes any
corporation a Subsidiary of such Company, or causes any corporation, other than
a Subsidiary of such Company, to be merged into such Company (or agrees to be
merged into any other corporation other than a wholly-owned
<PAGE> 8
Subsidiary (excluding directors' qualifying shares) of such Company), or (b)
purchases all or substantially all of the business or assets of any Person or
of any operating division of any Person.
"Acquisition Consideration" means the consideration given by any
Company for an Acquisition, including but not limited to the fair market value
of any cash, property, stock or services given and the amount of any Debt
assumed or incurred by any Company in connection with such Acquisition.
"Adjustment Date" means, for purposes of the Applicable LIBOR Rate
Margin, the Commitment Fee payable pursuant to Section 2.4(a) and the Letter of
Credit fees payable pursuant to Section 2.13(f)(i), (a) with respect to any
change in the Applicable Rate Margin and such fees based on the Debt to
Capitalization Ratio, the date of receipt by the Administrative Lender of the
financial statements (and related Officer's Certificate) required to be
delivered pursuant to Sections 3.2(a) and 3.2(b) which results in a change in
the Applicable LIBOR Rate Margin and (b) with respect to any change in the
Applicable Rate Margin and such fees based on the Index Debt Rating, the date of
receipt by the Administrative Lender of notice of any issuance of, or change in,
the Index Debt Rating which results in a change in the Applicable LIBOR Rate
Margin.
"Administrative Lender" means NationsBank, or any successor
Administrative Lender appointed pursuant to Section 7.1(c).
"Administrative Lender's Fee" means the fee described in Section
2.3(c).
"Affiliate" means a Person that directly or indirectly through one or
more intermediaries, Controls or is Controlled By or is Under Common Control
with any Person.
"Agreement Date" means the date of this Agreement.
"Applicable Law" means the Laws of the State of Texas, including,
without limitation, Article 1.04, Title 79, Revised Civil Statutes of Texas,
1925, as amended to date ("Art. 1.04") and as the same may be amended at any
time and from time to time hereafter and any other statute of the State of Texas
now or at any time hereafter prescribing maximum rates of interest on loans and
extensions of credit; provided, however, with respect to any Lender which is a
national bank (or if not a national bank, is permitted by Law to cause the Law
of one of the following states, as appropriate, to govern for the purpose of
determining the Highest Lawful Rate) located in the State of California or New
York, for purposes of determining the Highest Lawful Rate the Applicable Law
shall mean the Laws of the State of California or New York, as appropriate, as
now or hereafter in effect.
"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
- 2 -
<PAGE> 9
<TABLE>
<CAPTION>
Applicability Percentage
------------- ----------
<S> <C>
(a) Initial Pricing Period 0.750%
(b) Subsequent Pricing Period
Category 1 - The Funded Debt to Capitalization Ratio is less 0.400%
than 0.30 to 1 or the Index Debt Rating is BBB or better by
S&P or Baa2 or better by Moody's
Category 2 - The Funded Debt to Capitalization Ratio is less 0.500%
than 0.35 to 1 but greater than or equal to 0.30 to 1 or the
Index Debt Rating is BBB- by S&P or Baa3 by Moody's
Category 3 - The Funded Debt to Capitalization Ratio is less 0.625%
than 0.40 to 1 but greater than or equal to 0.35 to 1 or the
Index Debt Rating is BB+ by S&P or Ba1 by Moody's
Category 4 - The Funded Debt to Capitalization Ratio is less 0.750%
than 0.45 to 1 but greater than or equal to 0.40 to 1 or the
Index Debt Rating is BB by S&P or Ba2 by Moody's
Category 5 - The Funded Debt to Capitalization Ratio is 1.000%
greater than or equal to 0.45 to 1 or the Index Debt Rating is
below BB by S&P or Ba2 by Moody's
</TABLE>
The Applicable LIBOR Rate Margin payable by Borrower on the LIBOR Advances
outstanding hereunder shall be adjusted on each Adjustment Date if determined
based on the (a) Funded Debt to Capitalization Ratio, according to the
performance of Borrower for the most recent fiscal quarter (or fiscal year with
respect to any adjustment based on fiscal year-end December 31 financial
statements) or (b) the Index Debt Rating, according to the most recent
determination of the Index Debt Rating. For purposes of the foregoing, (a) if
the Index Debt Rating and the Funded Debt to Capitalization Ratio are in
different categories, the Applicable LIBOR Rate Margin shall be determined on
whichever of the Index Debt Rating or the Funded Debt to Capitalization Ratio
falls within the superior (or numerically lower) category, (b) if the Applicable
LIBOR Rate Margin is determined based on the Funded Debt to Capitalization Ratio
and the financial statements (and related Officer's Certificate) required by
Sections 3.2(a) and 3.2(b), as applicable, are not received by Administrative
Lender by the date required, the Applicable LIBOR Rate Margin shall be
determined as if the Funded Debt to Capitalization Ratio is greater than or
equal to 0.45 to 1 until such time as such financial statements are received,
and (c) if the Index Debt Rating established by Moody's and S&P shall fall
within a different category, the Applicable LIBOR Rate Margin shall be
determined by reference to whichever shall be the superior (or numerically
lower) category. If the rating system of S&P or Moody's shall change prior to
the Termination Date, Borrower and Lenders shall negotiate in good faith to
amend the references to specific ratings in this definition to reflect such
changed rating system.
- 3 -
<PAGE> 10
"Art. 1.04" has the meaning specified in the definition herein of
"Applicable Law".
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Administrative
Lender, in substantially the form of Exhibit A hereto.
"Assumption Agreement" means that certain Assumption Agreement to be
executed by New Gaylord and Administrative Lender, in substantially the form of
Exhibit S hereto.
"Auditors" means Arthur Andersen LLP or other independent certified
public accountants selected by Borrower and acceptable to Administrative Lender.
"Banks" has the meaning specified in the recital of parties to this
Agreement.
"Base Rate Basis" means an interest rate per annum for each day equal
to the higher of (a) the Prime Rate in effect on such day without notice to
Borrower or (b) the sum of (i) the Federal Funds Rate in effect on such day plus
(ii) 0.50%.
"Borrower" means Gaylord Entertainment Company, a Delaware corporation,
which (a) prior to the date immediately preceding the effective date of the
Westinghouse Merger will own 100% of the issued and outstanding Capital Stock of
New Gaylord and (b) after the date immediately preceding the effective date of
the Westinghouse Merger, will own no issued and outstanding capital stock of New
Gaylord; provided that as of the date immediately preceding the effective date
of the Westinghouse Merger all references to Borrower herein shall mean and
refer to New Gaylord, which shall change its name after the Westinghouse Merger
to "Gaylord Entertainment Company".
"Borrowing" means a Revolving Credit Borrowing or Swing Line Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized to close in New York, Texas or California and, if the applicable
Business Day relates to any LIBOR Loan, on which dealings are carried on in the
London interbank Eurodollar market.
"Capital Expenditures" means, for any period, expenditures by any
Company to acquire or construct fixed assets, plant and equipment (including
renewals, improvements and replacements during such period and the aggregate
amount of items leased or acquired under Capital Leases at the cost of the item)
computed in accordance with GAAP, consistently applied.
"Capital Leases" means capital leases and subleases, as defined in the
Financial Accounting Standards Board Statement of Financial Accounting Standards
No. 13, dated November 1976, as amended.
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<PAGE> 11
"Capital Stock" means, as to any Person, the equity interests in such
Person, including without limitation, the shares of each class of capital stock
of any Person that is a corporation, each class of partnership interest
(including, without limitation, general, limited and preference units) in any
Person that is a partnership, and each class of member interest of any Person
that is a limited liability company.
"Cash and Cash Equivalents" means with respect to each Company (a)
cash, (b) securities issued or directly and fully guaranteed or insured by the
United States Government or any agency or instrumentality thereof having
maturities of not more than six months from the date of acquisition, (c)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any Lender or with any domestic commercial bank having capital and surplus
in excess of $500,000,000, (d) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (b)
and (c) entered into with a financial institutional meeting the qualifications
specified in clause (c) above, (e) commercial paper issued by any Lender or the
parent corporation of any Lender, and commercial paper rated A-1 or the
equivalent thereof by S&P, or P-1 or the equivalent thereof by Moody's, and in
each case maturing within six months after the date of acquisition, and (f) a
readily redeemable "money market mutual fund" advised by a bank described in
clause (c) hereof, or an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, that has and maintains an investment policy
limiting its investments primarily to instruments of the types described in
clauses (a) through (e) hereof and having on the date of such Investment total
assets of at least $200,000,000.
"CERCLA" has the meaning specified in the definition of Environmental
Law.
"Change of Control" means the occurrence of any of the following events
after the Agreement Date (excluding, however, the effect of the Westinghouse
Merger and the related distribution of New Gaylord Capital Stock immediately
prior thereto): (a) the "beneficial ownership", as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
securities representing more than 33-1/3% of the combined voting power of
Borrower are acquired by any "person" or "group" as defined in Sections 13(d)
and 14(d) of the Exchange Act (other than (A) Borrower, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of Borrower, (C) the
Voting Trust and the Voting Trustees, or (D) Edward L. Gaylord or any member of
his Immediate Family, or (b) the shareholders of Borrower approve a definitive
agreement to merge or consolidate Borrower with or into another company (other
than a merger or consolidation which would result in the voting securities of
Borrower outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of Borrower outstanding immediately after such merger or
consolidation), or to sell or otherwise dispose of all or substantially all of
its assets, or adopt a plan of liquidation; or (c) during any period of two
consecutive years, individuals who at the beginning of such period were members
of the Board of Directors of
- 5 -
<PAGE> 12
Borrower cease for any reason to constitute at least a majority thereof (unless
the election, or the nomination for election by Borrower's shareholders, of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period).
"Closing Fee" means the fee described in Section 2.3(b).
"Code" means the Internal Revenue Code of 1986 (or any successor
thereto), as amended from time to time and all regulations promulgated
thereunder.
"Commitment" means, as to a Lender, the amount set forth opposite its
name on Schedule I of this Agreement under the caption "Commitment" or, if such
Lender has entered into one or more Assignments and Acceptances, the amount set
forth for such Lender in the Register maintained by Administrative Lender
pursuant to Section 8.16 (as the same may be reduced or terminated pursuant to
Section 2.4), which at no time shall exceed such Lender's Specified Percentage
of $600,000,000.
"Commitment Fee" means the fee described in Section 2.3(a).
"Companies" means (a) prior to the Westinghouse Merger, Borrower and
all of its Subsidiaries (including, without limitation, New Gaylord), and (b) on
the date of and after the Westinghouse Merger, New Gaylord and all of its
Subsidiaries. "Company" shall mean (a) prior to the Westinghouse Merger, either
Borrower or any of its Subsidiaries (including, without limitation, New
Gaylord), and (b) on the date of and after the Westinghouse Merger, either New
Gaylord or any of its Subsidiaries.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special or toxic waste, petroleum or
petroleum-derived substance or waste, or any constituent of any such substance
or waste, including any such substance regulated under any Environmental Law.
"Contingent Debt" means, for any Person:
(a) guarantees, endorsements (other than endorsements of
negotiable instruments for collection in the ordinary course of
business) and other contingent liabilities (whether direct or indirect)
in connection with the obligations of any other Person;
(b) obligations under any contract providing for the making of
loans, advances or capital contributions to any other Person, or for
the purchase of any property from any other Person, in each case in
order to enable such other Person primarily to maintain working
capital, net worth or any other balance sheet condition or to pay
debts, dividends or expenses;
- 6 -
<PAGE> 13
(c) obligations under any contract to rent or lease (as
lessee) any real or personal property if such contract (or any related
document) provides that the obligation to make payments thereunder is
absolute and unconditional under conditions not customarily found in
commercial leases then in general use or requires that the lessee
purchase or otherwise acquire securities or obligations of the lessor;
(d) obligations under any other contract which, in economic
effect, is substantially equivalent to a guaranty, including but not
limited to "keep well" or "capital maintenance" agreements; and
(e) obligations in respect of letters of credit to the extent
such letters of credit are not issued with respect to indebtedness
included within the definition of Total Liabilities.
"Control" or "Controlled By" or "Under Common Control" means
possession, direct or indirect, of power to direct or cause the direction of
management or policies (whether through ownership of voting securities, by
contract or otherwise); provided that, in any event (i) any Person which
beneficially owns 10% or more (in number of votes) of the securities having
ordinary voting power for the election of directors of a corporation shall be
conclusively presumed to control such corporation, and (ii) no Person shall be
deemed to be an Affiliate of a corporation solely by reason of his being an
officer or director of such corporation.
"Controlled Group" means, as to any Person, all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
which are under common control with such Person and which, together with such
Person, are treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
"Conversion", "Convert" and "Converted" each refers to a conversion of
Loans of one Type into Loans of another Type pursuant to Section 2.8 or 2.9.
"Country Music Television, Inc." means Country Music Television, Inc.,
a Tennessee corporation.
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (including obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured); (b) all obligations
evidenced by notes, bonds, debentures or similar instruments; (c) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property); (d) all
obligations under Capital Leases; (e) all obligations in respect of interest
swap agreements and other similar agreements designed to hedge against
fluctuations in interest rates; and (f) all Debt referred to in clause (a), (b),
(c), (d) or (e) above secured by (or for which the
- 7 -
<PAGE> 14
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such indebtedness.
"Debtor Relief Laws" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
debtor relief Laws affecting the rights of creditors generally from time to time
in effect.
"Default" means any of the events specified in Section 6.1, whether or
not any requirement in connection with such event for the giving of notice, or
the lapse of time or the happening of any further condition, event or act has
been satisfied.
"Default Rate" has the meaning specified in Section 2.6(d).
"Determining Lenders" means at any time Lenders owed more than 50% of
the Loans (which for purposes of this calculation shall include for each Lender
an amount equal to the product of such Lender's Specified Percentage multiplied
by the aggregate principal amount of Swing Line Loans outstanding) owing to
Lenders, or, if no such principal amount is then outstanding, Lenders having
more than 50% of the Commitments of all Lenders.
"Disposition" has the meaning specified in Section 4.11.
"Dividends" means, for any Company, any dividend, payment or other
distribution (other than a dividend, payment or distribution payable in such
Company's common stock) of assets, rights, obligations or securities on account
of any capital stock (or other similar property right in respect of a Company
which is a partnership, joint venture or other legal entity) of such Company.
"DOL" means the United States Department of Labor or any successor
thereto.
"Dollars" and the sign "$" means lawful money of the United States of
America.
"Domestic Loans" means Revolving Credit Loans which bear interest at
the Base Rate Basis.
"EBITDA" means, for the Companies, on a consolidated basis, for the
twelve (12) month period preceding any date of determination, the sum of (a)
operating income plus (b) depreciation expense, plus (c) amortization expense
(not including amortization expense related to program rights and inventories),
plus (d) to the extent not already included in operating income, the lesser of
(i) earnings or (ii) cash distributions received from unconsolidated
Subsidiaries.
"Eligible Assignee" means (a) a commercial bank organized or licensed
under the laws of the United States, or any State thereof, and having total
assets in excess of $3,000,000,000; (b) a commercial bank organized under the
laws of any other country that is a member of the OECD,
- 8 -
<PAGE> 15
or a political subdivision of any such country, and having total assets in
excess of $3,000,000,000 provided that such bank is acting through a branch or
agency located in the country in which it is organized or another country that
is also a member of the OECD; or (c) a finance company, insurance company or
other financial institution or fund organized under the laws of the United
States, or any State thereof, or under the laws of any other country that is a
member of the OECD, or a political subdivision of any such country, which is
engaged in making, purchasing or otherwise investing in commercial loans in the
ordinary course of its business and which has total assets in excess of
$500,000,000.
"Environmental Claim" means any written notice by any Tribunal alleging
potential liability for damage to the environment, or by any Person alleging
potential liability for personal injury (including sickness, disease or death),
resulting from or based upon (a) the presence or release (including sudden or
non-sudden, accidental or non-accidental, leaks or spills) of any Hazardous
Material at, in or from property, whether or not owned by any Company, or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.
"Environmental Laws" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss.9601 et seq.) ("CERCLA"), the
Hazardous Material Transportation Act (49 U.S.C. ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C ss.6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Clean Air Act (42 U.S.C.
ss.7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss.2601 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. ss.651 et seq.) ("OSHA"),
as such laws have been or hereafter may be amended or supplemented, and any and
all analogous future federal, or present or future state or local, Laws.
"Equity Consideration" means that consideration given by any Company
for an Acquisition in the form of its Capital Stock.
"Equity Issuance" means the issuance of any Capital Stock of any
Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and all regulations promulgated thereunder.
"ERISA Event" means, as to any Company or any member of its Controlled
Group, (a) a Reportable Event (other than a Reportable Event not subject to the
provision for 30-day notice to the PBGC under regulations issued under Section
4043 of ERISA); (b) the withdrawal of Borrower or any member of its Controlled
Group from a Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA; (c) the institution by the PBGC of
proceedings to terminate a Plan or to appoint a trustee to administer a Plan;
(d) the failure to make required contributions which results in the imposition
of a Lien under Section 412 of the Code or Section 302 of ERISA; or (e) any
other event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
- 9 -
<PAGE> 16
appointment of a trustee to administer, any Plan which is subject to Title IV of
ERISA or the imposition of any liability under Title IV of ERISA other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"Eurodollar Reserve Percentage" means the reserve requirement including
any supplemental and emergency reserves (expressed as a percentage) applicable
to member banks of the Federal Reserve System in respect of "Eurocurrency
liabilities" under Regulation D of the Board of Governors of the Federal Reserve
System, or such substituted or amended reserve requirement as may be hereafter
applicable to member banks of the Federal Reserve System.
"Event of Default" means any of the events specified in Section 6.1,
provided there has been satisfied any requirement in connection with such event
for the giving of notice, or the lapse of time, or the happening of any further
condition, event or act.
"Existing Credit Agreement" means that certain Amended and Restated
Credit Agreement, dated as of August 25, 1995, among Gaylord, the lenders party
thereto, and NationsBank of Texas, N.A., as Administrative Lender, as amended,
modified or supplemented.
"Existing Debt" means those Debts of Companies existing on the
Agreement Date and described on Exhibit B.
"Existing Letters of Credit" means those Letters of Credit outstanding
on the Agreement Date, as described on Exhibit R.
"Existing Liens" means those Liens of Companies described on Exhibit C
and other Liens of Companies existing on the Agreement Date involving Debt in an
aggregate amount less than $1,000,000.00.
"FCC" means the Federal Communications Commission and any successor
thereto.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Dallas, or, if such rate is not so published for any day
that is a Business Day, the average of the quotations for such day for such
transactions received by Administrative Lender from three Federal funds brokers
of recognized standing selected by it.
"Film Contracts" means contracts or agreements with suppliers which
provide the right to broadcast certain specified film or video tape motion
pictures or live or syndicated television programs.
- 10 -
<PAGE> 17
"Financial Letter of Credit" means any Letter of Credit issued under
the Letter of Credit Facility backing the financial obligations of any Person.
"Form 4224" and "Form 1001" each has the meaning specified in Section
2.11(e).
"Funded Debt" means, at the date of any determination, with respect to
the Companies, on a consolidated basis, (a) all indebtedness for borrowed money
or for the deferred purchase price of property or services other than trade
payables in the ordinary course of business, (b) all obligations evidenced by
notes, bonds, debentures or similar instruments and (c) all obligations under
Capital Leases; provided, however, Funded Debt shall not include obligations
payable under Film Contracts.
"Funded Debt to Capitalization Ratio" means, for the Companies on a
consolidated basis, the ratio of Funded Debt to Total Capital.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or in such other statements by
such other entity as Determining Lenders may reasonably approve, which are
applicable in the circumstances as of the date in question, and the requisite
that such principles be applied on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period (except for changes
made with Auditors' concurrence). Unless otherwise indicated herein, all
accounting terms will be defined according to GAAP.
"Gaylord Restructuring" means the transactions contemplated by Article
IV of that certain Agreement and Plan of Distribution between the Borrower and
New Gaylord, including the transfer by Borrower to New Gaylord of certain assets
and liabilities of Borrower that are part of Borrower's hospitality,
attractions, music, television and radio businesses, including all of Borrower's
long-term Debt, as well as cable networks of Country Music Television, Inc.
outside of the United States and Canada and the management and option to acquire
Z Music, Inc.
"Guarantor" means (a) prior to the date immediately preceding the
effective date of the Westinghouse Merger, each of the Material Subsidiaries of
the Borrower (including New Gaylord), and (b) on and after the date immediately
preceding the effective date of the Westinghouse Merger, each of the Material
Subsidiaries of New Gaylord.
"Guaranty" means a guaranty of each Guarantor, substantially in the
form of Exhibit D, duly completed and executed, and any amendments,
modifications or restatements thereof.
"Hazardous Material" means those substances which are regulated by or
form the basis of liability under any Environmental Laws.
- 11 -
<PAGE> 18
"hereof", "hereto", "hereunder" and similar terms refer to this
Agreement and not to any particular section or provision of this Agreement.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, any Lender is then
permitted to charge on the Obligation. If the maximum rate of interest which,
under Applicable Law, any Lender is permitted to charge on the Obligation shall
change after the date hereof, the Highest Lawful Rate shall be automatically
increased or decreased, as the case may be, from time to time as of the
effective time of each change in the Highest Lawful Rate without notice to
Borrower. For purposes of determining the Highest Lawful Rate under Applicable
Law, the applicable rate ceiling shall be (a) the indicated rate ceiling
described in and computed in accordance with the provisions of Section (a)(1)
of Art. 1.04; or (b) provided notice is given as required in Section (h)(1) of
Art. 1.04, either the annualized ceiling or quarterly ceiling computed pursuant
to Section (d) of Art. 1.04; provided, however, that at any time the indicated
rate ceiling, the annualized ceiling or the quarterly ceiling, as applicable,
shall be less than 18% per annum or more than 24% per annum, the provisions of
Sections (b)(1) and (2) of Art. 1.04 shall control for purposes of such
determination, as applicable.
"Hostile Acquisition" means the acquisition of a voting interest of 30%
or more in any Person if such acquisition is not approved by the board of
directors, management or Persons owning, directly or indirectly, 51% or more of
the voting securities of such Person.
"Immaterial Subsidiary" means any Subsidiary of any Company which is
not a Material Subsidiary.
"Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, mother-in-law, or sister-in-law, and incudes
adoptive relationships.
"Index Debt Rating" means the rating applicable to Borrower's senior,
unsecured, non-credit enhanced long-term indebtedness for borrowed money.
"Initial Adjustment Date" means the earlier of (a) date that the
Lenders received the financial statements (and related Officer's Certificate)
for the fiscal quarter ending June 30, 1997, required to be delivered pursuant
to Section 3.2(a) or (b) the effective date of the first change in the Index
Debt Rating occurring after the Agreement Date.
"Initial Date" has the meaning specified in Section 2.11(a).
"Initial Pricing Period" means the period from and including the
Agreement Date to and including the Initial Adjustment Date.
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<PAGE> 19
"Interest Charges" means, for Borrower and its Subsidiaries, on a
consolidated basis, determined in accordance with GAAP, for the twelve month
period preceding any date of determination, aggregate gross interest expense
(including interest expense pursuant to Capital Leases).
"Interest Period" means, with respect to any LIBOR Loan, the period
beginning on the date a Loan is made or continued as or Converted into a LIBOR
Loan and ending one, two, three or six months thereafter (as Borrower shall
select) provided, however, that:
(a) Borrower may not select any Interest Period that ends
after any principal repayment date unless, after giving effect to such
selection, the aggregate principal amount of Domestic Loans and of
LIBOR Loans having Interest Periods that end on or prior to such
principal repayment date, shall be at least equal to the principal
amount of Loans due and payable on and prior to such date;
(b) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that if such extension would cause the
last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
next preceding Business Day; and
(c) whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in
such Interest Period, such Interest Period shall end on the last
Business Day of such succeeding calendar month.
"Investment" means any acquisition of any or all assets of any Person,
or any direct or indirect purchase or other acquisition of, or beneficial
interest in, Capital Stock of any other Person, or any direct or indirect loan,
advance (other than loans or advances to employees for moving and travel
expenses, drawing accounts and similar expenditures in the ordinary course of
business) or capital contribution to, or investment in any other Person,
including without limitation the purchase of accounts receivable of any other
Person that are not current assets or do not arise in the ordinary course of
business.
"IRS" means the Internal Revenue Service or any successor thereto.
"Issuing Bank" means NationsBank.
"Laws" means all statutes, laws, ordinances, regulations, orders,
writs, injunctions, and decrees of the United States, any state or commonwealth,
any municipality, any foreign country, any territory or possession, or any
Tribunal.
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<PAGE> 20
"L/C Cash Collateral Account" has the meaning specified in Section
2.13(g).
"L/C Related Documents" has the meaning specified in Section 2.13(e).
"Lenders" means the Banks and each Eligible Assignee that shall become
a party hereto pursuant to Section 8.16.
"Lending Office" means, with respect to each Lender, its branch or
affiliate (a) initially, the office of such Lender, branch or affiliate
identified as such in its signature block hereto, and (b) subsequently, such
other office of such Lender, branch or affiliate as such Lender may designate to
Borrower (through Administrative Lender) as the office from which the Loans of
such Lender will be made and maintained and for the account of which all
payments of principal and interest on the Loans of, and the Commitment Fee
payable to, such Lender will thereafter be made. Any Lender may have one Lending
Office for the purpose of making Domestic Loans and another Lending Office for
the purpose of making LIBOR Loans.
"Letter of Credit" has the meaning specified in Section 2.13(a), and
shall include the Existing Letters of Credit.
"Letter of Credit Agreement" has the meaning specified in Section
2.13(b)(i).
"Letter of Credit Facility" has the meaning specified in Section
2.13(a).
"LIBOR Basis" means an interest rate per annum equal to the lesser of
(a) the Highest Lawful Rate and (b) the sum of (i) the Applicable LIBOR Rate
Margin plus (ii) a rate per annum determined pursuant to the following formula:
LIBOR Rate
----------
100% - Eurodollar Reserve Percentage
"LIBOR Loans" means Revolving Credit Loans which bear interest at the
LIBOR Basis.
"LIBOR Rate" means, for any LIBOR Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Loan for
any Interest Period therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided, however, if more than
one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates.
- 14 -
<PAGE> 21
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give or not to give any of the
foregoing), any conditional sale or other title retention agreement, any lease
in the nature thereof, and the filing of or agreement to give any financing
statement or other similar form of public notice under the Laws of any
jurisdiction.
"Litigation" means any proceeding, claim, lawsuit and/or investigation
conducted or threatened by or before any Tribunal, including, but not limited
to, proceedings, claims, lawsuits, and/or investigations under or pursuant to
any environmental, occupational, safety and health, antitrust, unfair
competition, securities, Tax, or other Law, or under or pursuant to any
contract, agreement or other instrument.
"Loan" or "Loans" means Revolving Credit Loans and/or Swing Line Loans,
as the context requires.
"Loan Documents" means this Agreement, the Guaranty, the L/C Related
Documents and all other documents, instruments and certificates to be executed
by any Company pursuant to the terms of this Agreement.
"Loan Facility" means the aggregate amount of the Lenders' Commitments.
"Material Adverse Effect" means any act or circumstance or event which
individually, or in the aggregate, (a) is material and adverse to the
consolidated financial condition or business operations of Companies, taken as a
whole, (b) in any manner whatsoever materially and adversely affects the
legality, validity or enforceability of any of the Loan Documents or (c) causes
a material adverse change or effect in or on the ability of the Companies to
perform their monetary obligations under the Loan Documents.
"Material Contractual Obligations" means Existing Debt, the other
Material Contractual Obligations described on Exhibit E and any other contracts,
agreements or obligations of any kind whatsoever now or hereafter entered into
by any Company or under which any Company or its property is bound which are
material to the consolidated financial condition or business operations of
Companies, taken as a whole.
"Material Subsidiary" means any Subsidiary of any Company designated as
a Material Subsidiary on Exhibit F or, at any time, any other Subsidiary of any
Company in which one or more of the following are applicable, (a) such
Subsidiary has 5% or more of the Total Assets of the Companies (determined as of
the last day of the most recent fiscal quarter of Borrower), (b) such Subsidiary
has 5% or more of the EBITDA of the Companies for the twelve month period ending
on the last day of the most recent fiscal quarter of Borrower or (c) such
Subsidiary has received loans and advances from all Companies in an aggregate
amount of 5% or more of the Total Assets of the Companies (determined as of the
last day of the most recent fiscal quarter of Borrower).
- 15 -
<PAGE> 22
"Maximum Amount" means the maximum amount of interest which, under
Applicable Law, any Lender is permitted to charge on the Obligation.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association.
"NationsBank Term Loan Agreement" means that certain Amended and
Restated Credit Agreement, dated as of August 25, 1995, among Gaylord,
NationsBank as a lender and as Administrative Lender, as amended, modified or
supplemental.
"Net Income" means, for the Companies, on a consolidated basis, for any
period, the net earnings (or the net deficit, if expenses and charges exceed
revenues and other proper income credits) of Borrower and its Subsidiaries for
such period, after provision for taxes and after extraordinary items, determined
in accordance with GAAP.
"Net Proceeds" means with respect to any sale or disposition of assets
or securities by any Person, the aggregate amount of proceeds, whether cash,
notes, stock or other consideration, received, directly or indirectly, by such
Person from such sale or disposition less all fees and expenses, including but
not limited to customary brokerage commissions, legal and investment banking
fees and other similar commissions, charges or fees incurred by such Person in
connection with such sale or disposition and less any payments with respect to
taxes payable by such Person with respect to such sale.
"Net Worth" means the excess of the total assets over the total
liabilities that are reflected on the balance sheet of the Companies on a
consolidated basis determined in accordance with GAAP.
"New Gaylord" means New Gaylord Entertainment Company, a Delaware
corporation, which (a) prior to the date immediately preceding the date of the
Westinghouse Merger, will be a wholly-owned Subsidiary of the Borrower, and (b)
after the date immediately preceding the effective date of the Westinghouse
Merger, will not be a Subsidiary of any Person.
"Nonfinancial Letter of Credit" means any Letter of Credit issued under
the Letter of Credit Facility which is not a Financial Letter of Credit.
"Note" means any Revolving Credit Note or the Swing Line Note and
"Notes" means the Revolving Credit Notes and the Swing Line Note.
- 16 -
<PAGE> 23
"Notice of Borrowing" has the meaning specified in Section 2.2(a).
"Notice of Issuance" has the meaning specified in Section 2.13(b)(i).
"Notice of Swing Line Borrowing" has the meaning specified in Section
2.2(b).
"Obligation" or "Obligations" means all present and future obligations,
indebtedness and liabilities, and all renewals and extensions of all or any part
thereof, of the Companies to Lenders arising from, by virtue of, or pursuant to
this Agreement, the Guaranty, the L/C Related Documents, any of the other Loan
Documents, and any and all renewals and extensions thereof, or any part thereof,
or future amendments thereto, all interest accruing on all or any part thereof
and attorneys' fees incurred in the enforcement or the collection of all or any
part thereof, whether such obligations, indebtedness and liabilities are direct,
indirect, fixed, contingent, joint, several, or joint and several.
"OECD" means the Organization for Economic Cooperation and Development.
"Officer's Certificate" means a certificate signed in the name of
Borrower by its President, any Vice President, Treasurer or any other officer
acceptable to Administrative Lender.
"Old Gaylord" means Gaylord Entertainment Company, a Delaware
corporation, at such time that it is no longer the Borrower hereunder as a
result of the Westinghouse Merger.
"OSHA" has the meaning specified in the definition of Environmental
Law.
"Other Taxes" has the meaning specified in Section 2.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Debt" means, without duplication, (a) unsecured Debt not to
exceed $20,000,000 in aggregate principal amount, (b) Debt secured by Liens
permitted by clause (g) of the definition of "Permitted Liens", provided, such
Debt does not exceed $20,000,000 in aggregate principal amount, (c) Existing
Debt and extensions, renewals and refinancings (but not increases) thereof, (d)
Debt pursuant to or in connection with Film Contracts, (e) trade payables
incurred in the ordinary course of the Companies' respective businesses, (f)
Debt and Contingent Debt pursuant to this Agreement, (g) intercompany Debt
between Companies, (h) Debt in respect of interest swap agreements and other
similar agreements designed to hedge against fluctuations in interest rates, and
(i) Acquisition Consideration consisting of Debt incurred to the seller of
assets acquired in an Acquisition or assumed pursuant to any single Acquisition
not to exceed (A) during fiscal year 1997, the remainder of (1) $100,000,000
minus (2) the aggregate amount of cash Acquisition Consideration paid for any
such Acquisition during such fiscal year, (B) during fiscal year 1998, the
remainder of (1) $125,000,000 minus (2) the aggregate amount of cash
- 17 -
<PAGE> 24
Acquisition Consideration paid for any such Acquisition during such fiscal year,
and (C) during each fiscal year thereafter, the remainder of (1) $150,000,000
minus (2) the aggregate amount of cash Acquisition Consideration paid for any
such Acquisition during such fiscal year.
"Permitted Investments" means (a) accounts receivable that arise in the
ordinary course of business, (b) Investments which are Acquisitions permitted
pursuant to Section 4.6, (c) Investments in Subsidiaries which have complied
with the requirements of Section 3.1(g), (d) Cash and Cash Equivalents, and (e)
other Investments not to exceed in aggregate amount outstanding at any time 35%
of Total Assets.
"Permitted Liens" means (a) Existing Liens, (b) pledges or deposits
made to secure payment of workmen's compensation, or to participate in any fund
in connection with workmen's compensation, unemployment insurance, pensions, or
other social security programs, (c) good-faith pledges or deposits made to
secure performance of bids, tenders, contracts (other than for the repayment of
borrowed money), or leases, or to secure statutory obligations, surety or appeal
bonds, or indemnity, performance, or other similar bonds in the ordinary course
of business, (d) non-monetary encumbrances, including but not limited to zoning
restrictions, easements, or other restrictions on the use of real property, none
of which impair the use of such property by any Company in the operation of its
business in any manner which would have a Material Adverse Effect, (e) the
following, if (i)(A) the validity or amount thereof is being contested in good
faith and by appropriate and lawful proceedings and so long as levy and
execution thereon have been stayed and continue to be stayed and (B) adequate
reserves, if required by GAAP, are maintained, or (ii) they do not in the
aggregate materially detract from the value of the property of Companies, taken
as a whole, or materially impair the use thereof in the operation of the
business of Companies, taken as a whole: claims and Liens for Taxes due and
payable; Liens under Section 412 of the Code or Section 302 of ERISA; mechanic's
and materialmen's Liens; claims and Liens upon, and defects of title to, real or
personal property or other legal process prior to adjudication of a dispute on
the merits; and adverse judgments on appeal, (f) Liens existing upon property
acquired at the time of Acquisition, provided, that (i) no such Lien shall
extend to or cover any property other than the property acquired, (ii) the Debt
secured by such Lien shall not exceed the fair market value of the property
acquired, (iii) no such Lien shall have been created in contemplation of such
acquisition and (iv) the aggregate principal amount of the Debt secured by the
Liens permitted by this clause (f) shall not exceed the amount specified in
clause (c)(viii) of the definition of "Permitted Debt", (g) Liens arising solely
to secure purchase money Debt; provided, that (i) any such Lien is limited to
the asset or assets acquired or financed, (ii) the Debt secured by such Lien
shall not exceed the fair market value of the asset or assets acquired or
financed and (iii) the aggregate principal amount of the Debt secured by the
Liens permitted by this clause (g) shall not exceed the amount specified in
clause (b) of the definition of "Permitted Debt", (h) Liens arising as a result
of the filing of financing statements for informational purposes only and (i)
extensions, renewals and replacements of Existing Liens.
- 18 -
<PAGE> 25
"Person" means and includes an individual, a partnership, a joint
venture, a corporation, a trust, a Tribunal, an unincorporated organization, and
a government or any department, agency or political subdivision thereof.
"Plan" means, with respect to any Company or any member of its
Controlled Group, at any time, an employee pension benefit plan as defined in
Section 3(3) of ERISA maintained for the employees of any Company or any member
of its Controlled Group.
"Prime Rate" means the prime interest rate charged by NationsBank as
announced or published by NationsBank from time to time, and which may not be
the lowest interest rate charged by NationsBank.
"Principal Office" means the principal office of Administrative Lender,
located at 901 Main Street, Dallas, Texas 75202.
"Pro Rata", "pro rata", "Pro Rata Part" and "pro rata part", as to each
Lender, means according to its Specified Percentage.
"Quarterly Date" means the first Business Day of each January, April,
July and October, commencing with the first such day after the date hereof.
"Reference Lender" means NationsBank.
"Register" has the meaning specified in Section 8.16(c).
"Regulation U" has the meaning specified in Section 5.8.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit and not theretofore
reimbursed by Borrower.
"Reportable Event" means a reportable event as defined in Section
4043(b) of ERISA.
"Requirement of Law" means, as to any Person, the charter and by-laws
or other organization or governing documents of such Person, and each law, rule
or regulation, including Environmental Laws and ERISA, or order, decree or other
determination of an arbitrator or a court or other Tribunal applicable to or
binding upon such Person or any of its property or to which such Person or any
of its property is subject.
"Retroactive Effective Date" has the meaning specified in Section
2.9(f).
"Revolving Credit Loan" has the meaning specified in Section 2.1(a).
- 19 -
<PAGE> 26
"Revolving Credit Borrowing" means a borrowing consisting of Revolving
Credit Loans of the same Type made on the same day by Lenders.
"Revolving Credit Note" means the Revolving Credit Note of Borrower
payable to the order of a Lender, in substantially the form of Exhibit H, and
any replacements, amendments, renewals and modifications thereof.
"Rights" means rights, remedies, powers and privileges.
"Set Date" has the meaning specified in Section 2.9(f).
"Solvent" means, with respect to any Person, that the fair value of the
assets of such Person (both at fair valuation and at present fair saleable
value) is, on the date of determination, greater than the total amount of
liabilities (including contingent and unliquidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature and such Person does not
have unreasonably small capital with which to carry on its business. In
computing the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., Dallas, Texas, special counsel to Administrative Lender and Lenders.
"Specified Percentage" of each Lender means the percentage which the
then existing aggregate amount of the Commitment of such Lender as set forth on
Schedule I hereto is of the Total Commitment, provided, however, that if such
Lender shall have entered into one or more Assignments and Acceptances, the
Specified Percentage of such Lender shall be that percentage which is set forth
for such Lender in the Register maintained by Administrative Lender pursuant to
Section 8.16(c).
"S&P" means Standard & Poor's Ratings Group, a Division of McGraw-Hill,
Inc., a New York corporation.
"Subsequent Pricing Period" means the period from and including the
date which is the first day following the end of the Initial Pricing Period to
the Termination Date.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, trust, estate or other Person of which (or in which) (a) more than 50%
of:
(i) the outstanding Capital Stock having voting power to elect a
majority of the board of directors of such corporation
(irrespective of whether at the time capital stock
- 20 -
<PAGE> 27
of any other class or classes shall or might have voting power
upon the occurrence of any contingency);
(ii) the ownership interests having voting power to elect persons
performing functions similar to board of directors;
(iii) the interest in the capital or profits of such partnership or
joint venture;
(iv) the beneficial interest of such trust or estate, or
(v) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one of more of such Person's Subsidiaries
or (b) such Person, such Person and one or more of its Subsidiaries or one or
more of such Person's Subsidiaries owns the controlling management interest
thereof and as a result thereof would be reflected in Borrower's consolidated
financial statements.
"Swing Line Bank" means NationsBank.
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
Loan.
"Swing Line Facility" has the meaning specified in Section 2.1(b).
"Swing Line Loan" has the meaning specified in Section 2.1(b).
"Swing Line Note" means the Swing Line Note of Borrower payable to the
order of Swing Line Bank, in substantially the form of Exhibit G, and any
replacements, amendments, renewals and modifications thereof.
"Taxes" has the meaning specified in Section 2.11(a).
"Termination Date" means July 31, 2002, or the earlier date of
termination in whole of the Commitments of all Lenders pursuant to Section 2.4
or 6.2.
"Total Assets" means, as of any date of determination, determined for
the Companies on a consolidated basis, the total assets of the Companies.
"Total Capital" means, as of any date of determination, the sum of (a)
Funded Debt plus (b) Net Worth.
"Total Commitment" means the aggregate amount of the Lenders'
Commitments.
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<PAGE> 28
"Tribunal" means any state, commonwealth, federal, foreign,
territorial, or other court or governmental department, commission, board,
bureau, agency or instrumentality.
"Type" refers to the distinction between Revolving Credit Loans bearing
interest at the base Rate Basis and Revolving Credit Loans bearing interest at
the LIBOR Basis.
"UCC" means the Uniform Commercial Code of Texas, as amended from time
to time.
"United States" and "United States Person" each has the meaning
specified in Section 2.11(d).
"Voting Trust" means the trust created by that certain Voting Trust
Agreement, dated as of October 3, 1990, as amended October 7, 1991, and as
amended from time to time hereafter.
"Voting Trustees" means the trustees of the Voting Trust.
"Westinghouse Merger" means the merger of a wholly-owned Subsidiary of
Westinghouse Electric Corporation ("Westinghouse"), with and into Old Gaylord,
with Old Gaylord continuing as the surviving corporation and a wholly-owned
Subsidiary of Westinghouse, which merger shall take place after the Gaylord
Restructuring, pursuant to the terms of that certain Agreement and Plan of
Merger, dated as of February 9, 1997, among Westinghouse, G Acquisition Corp.
and Borrower
ARTICLE II.
AMOUNTS AND TERMS OF THE LOANS
AND THE LETTERS OF CREDIT
2.1. The Loans.
(a) The Revolving Credit Loans. Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make loans ("Revolving Credit
Loans") to Borrower from time to time on any Business Day during the period from
the date hereof until the Termination Date in an aggregate amount not to exceed
at any time outstanding (i) such Lender's Commitment, less (ii) such Lender's
Specified Percentage of the aggregate principal amount of all Reimbursement
Obligations (assuming compliance with all conditions to drawing) and Swing Line
Loans then outstanding. Notwithstanding the immediately preceding sentence, at
no time shall the sum of the aggregate principal amount of Revolving Credit
Loans outstanding, plus the aggregate principal amount of Swing Line Loans
outstanding, plus the aggregate principal amount of all Reimbursement
Obligations then outstanding exceed the amount of the Total Commitment. Each
Revolving Credit Borrowing shall be in an aggregate amount not less than
$5,000,000 or an integral multiple of $500,000 in excess thereof and shall
consist of Revolving Credit Loans of the
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<PAGE> 29
same Type made on the same day by the Lenders Pro Rata. Within the limits of
each Lender's Commitment, and subject to the limits referred to above, Borrower
may borrow under this Section 2.1(a), prepay pursuant to Section 2.7(a) and
reborrow under this Section 2.1(a).
(b) The Swing Line Loans. Borrower may request Swing Line Bank to make,
and Swing Line Bank may, if in its sole discretion it elects to do so, make, on
the terms and conditions hereinafter set forth, loans ("Swing Line Loans") to
Borrower from time to time on any Business Day during the period from the date
hereof until the Termination Date in an aggregate amount not to exceed at any
time outstanding the lesser of (i) $20,000,000 and (ii) the sum of (A) the Total
Commitment, minus (B) the aggregate principal amount of Revolving Credit Loans
then outstanding, minus (C) the aggregate principal amount of all Reimbursement
Obligations then outstanding (assuming compliance with all conditions to
drawing) (the "Swing Line Facility"). Each Swing Line Borrowing shall be in an
amount not less than $50,000. Within the limits of the Swing Line Facility, so
long as Swing Line Bank, in its sole discretion, elects to make Swing Line
Loans, Borrower may borrow under this Section 2.1(b), repay pursuant to Section
2.5 or prepay pursuant to Section 2.7(a) and reborrow under this Section 2.1(b).
2.2. Making the Loans.
(a) Except as otherwise provided in Section 2.2(b) or 2.13, each
Revolving Credit Borrowing shall be made on notice, given not later than 11:00
a.m. (Dallas time) (i) in the case of such a Borrowing comprised of Domestic
Loans, on the Business Day prior to the date of the proposed Borrowing, and (ii)
in the case of such a Borrowing comprised of LIBOR Loans on the third Business
Day prior to the date of the proposed Borrowing, in either case by Borrower to
Administrative Lender, which shall give to each Lender prompt notice thereof by
telex, telecopier or cable. Each such notice of a Revolving Credit Borrowing (a
"Notice of Borrowing") shall be by telephone (confirmed by sending a Notice of
Borrowing by one of the following means) telex, telecopier or cable, in
substantially the form of Exhibit I, specifying therein the requested (A) date
of such Borrowing, (B) Type of Loans comprising such Borrowing, (C) aggregate
amount of such Borrowing, and (D) in the case of such a Borrowing consisting of
LIBOR Loans, initial Interest Period for each such Loan. In the case of a
proposed Revolving Credit Borrowing comprised of LIBOR Loans Administrative
Lender shall promptly notify each Lender of the applicable interest rate under
Section 2.6. Each Lender shall, before 12:00 noon (Dallas time) on the date of
such Revolving Credit Borrowing, make available to Administrative Lender at
Administrative Lender's Principal Office, in same day funds, such Lender's Pro
Rata Part of such Borrowing. After Administrative Lender's receipt of such funds
and upon fulfillment of the applicable conditions set forth in Sections 2.16 and
2.17, Administrative Lender will make such funds available to Borrower by
depositing such funds received in the general deposit account of Borrower with
Administrative Lender.
(b) Each Swing Line Borrowing shall be made on notice, given not later
than 1:30 p.m. (Dallas time) on the date of the proposed Swing Line Borrowing,
by Borrower to Swing Line Bank and Administrative Lender. Each such notice of a
Swing Line Borrowing (a "Notice of Swing
- 23 -
<PAGE> 30
Line Borrowing") shall be by telephone, telex or telecopier, specifying therein
the requested (i) date of such Borrowing fand (ii) amount of such Borrowing. If,
in its sole discretion, it elects to make the requested Swing Line Loan, Swing
Line Bank will make the amount thereof available to Administrative Lender at
Administrative Lender's Principal Office, in same day funds. After
Administrative Lender's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Sections 2.16 and 2.17, Administrative Lender
will make such funds available to Borrower by depositing such funds received in
the general deposit account of Borrower with Administrative Lender. Forthwith
upon demand by Swing Line Bank and in any event upon the making of the request
or the granting of the consent specified by Section 6.2 to authorize
Administrative Lender to declare the Loans due and payable pursuant to the
provisions of Section 6.2, each Lender, including Swing Line Bank,
notwithstanding the failure of Borrower at such time to satisfy each condition
specified in Section 2.17, shall make, by 12:00 noon (Dallas time) on the first
Business Day following receipt by such Lender of notice from Swing Line Bank, a
Revolving Credit Loan which is a Domestic Loan in an amount equal to the product
of (x) such Lender's Specified Percentage multiplied by (y) the outstanding
principal amount of such Swing Line Loan, and the proceeds of such Revolving
Credit Loans will be applied by Administrative Lender to repay the outstanding
Swing Line Loans.
(c) Anything in subsection (a) above to the contrary notwithstanding,
Borrower may not select LIBOR Loans for any Borrowing if (i) the aggregate
amount of such Borrowing is less than $5,000,000, or (ii) the obligation of
Lenders to make LIBOR Loans shall then be suspended pursuant to Section 2.9.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on Borrower. In the case of any Borrowing that the
related Notice of Borrowing specifies is to be comprised of LIBOR Loans,
Borrower shall indemnify each Lender against any loss, cost or expense incurred
by such Lender as a result of any failure of Borrower to borrow any LIBOR Loans
after a Notice of Borrowing has been given in accordance with Section 2.2(a),
including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Loan to be made by
such Lender as part of such Borrowing when such Loan, as a result of such
failure, is not made on such date. The obligations of Borrower under this
Section 2.2(d) shall survive termination of this Agreement.
(e) Unless Administrative Lender shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to Administrative Lender such Lender's Pro Rata Part, if any, of such
Borrowing, Administrative Lender may assume that such Lender has made such
portion available to Administrative Lender on the date of such Borrowing in
accordance with subsection (a) or (b) of this Section 2.2 and Administrative
Lender may, in reliance upon such assumption, make available to Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have so made such Pro Rata Part available to Administrative Lender, such Lender
and Borrower severally agree to repay to Administrative Lender forthwith on
demand such corresponding amount together with interest thereon, for each
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<PAGE> 31
day from the date such amount is made available to Borrower until the date such
amount is repaid to Administrative Lender, at (i) in the case of Borrower, the
interest rate applicable at the time to Loans comprising such Borrowing and (ii)
in the case of such Lender, the Federal Funds Rate. If such Lender shall repay
to Administrative Lender such corresponding amount, such amount so repaid shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(f) The failure of any Lender to make the Loans to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Loan on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any Borrowing.
2.3. Fees.
(a) Commitment Fee. Subject to the provisions of Section 8.13,
Borrower shall pay to Administrative Lender, for the ratable account of Lenders,
a Commitment Fee, on the average daily unused portion of the Total Commitment at
the following per annum percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Applicability Percentage
------------- ----------
<S> <C> <C>
(a) Initial Pricing Period 0.250%
(b) Subsequent Pricing Period
Category 1 - The Funded Debt to Capitalization Ratio is 0.125%
less than 0.30 to 1 or the Index Debt Rating is BBB or
better by S&P or Baa2 or better by Moody's
Category 2 - The Funded Debt to Capitalization Ratio is 0.150%
less than 0.35 to 1 but greater than or equal to 0.30 to 1 or
the Index Debt Rating is BBB- by S&P or Baa3 by
Moody's
Category 3 - The Funded Debt to Capitalization Ratio is 0.200%
less than 0.40 to 1 but greater than or equal to 0.35 to 1 or
the Index Debt Rating is BB+ by S&P or Ba1 by Moody's
Category 4 - The Funded Debt to Capitalization Ratio is 0.250%
greater than or equal to 0.40 to 1 or the Index Debt Rating
is BB or below by S&P or Ba2 or below by Moody's
</TABLE>
The Commitment Fee shall be payable quarterly in arrears on each Quarterly Date,
commencing on the first Quarterly Date occurring after the Agreement Date, and
on the Termination Date. For purposes of calculation of the Commitment Fee, (i)
outstanding Swing Line Loans from time to time will not reduce the unused
portion of the Total Commitment and (ii) outstanding Letters of
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<PAGE> 32
Credit from time to time will reduce the unused portion of the Total Commitment.
The Commitment Fee shall be adjusted on each Adjustment Date if determined based
on the (a) Funded Debt to Capitalization Ratio, according to the performance of
Borrower for the most recent fiscal quarter (or fiscal year with respect to any
adjustment based on fiscal year-end December 31 financial statements) or (b) the
Index Debt Rating, according to the most recent determination of the Index Debt
Rating. For purposes of the foregoing, (a) if the Index Debt Rating and the
Funded Debt to Capitalization Ratio are in different categories, the Commitment
Fee shall be determined on whichever of the Index Debt Rating or the Funded Debt
to Capitalization Ratio falls within the superior (or numerically lower)
category, (b) if the Commitment Fee is determined based on the Funded Debt to
Capitalization Ratio and the financial statements (and related Officer's
Certificate) required by Sections 3.2(a) and 3.2(b), as applicable, are not
received by Administrative Lender by the date required, the Commitment Fee shall
be determined as if the Funded Debt to Capitalization Ratio is greater than or
equal to 0.40 to 1 until such time as such financial statements are received,
and (c) if the Index Debt Rating established by Moody's and S&P shall fall
within a different category, the Commitment Fee shall be determined by reference
to whichever shall be the superior (or numerically lower) category.
(b) Closing Fee. Subject to the provisions of Section 8.13, Borrower
agrees to pay to each Lender a closing fee as separately agreed with each
Lender. Such fee shall be payable on the Agreement Date, and, subject to Section
8.13, fully-earned when due and non-refundable when paid.
(c) Administrative Lender's Fee. Subject to the provisions of Section
8.13, Borrower shall pay to Administrative Lender for its own account such fees
as are set forth in the separate letter dated August 19, 1997 from
Administrative Lender to Borrower.
2.4. Reduction of Total Commitment.
(a) Voluntary. Borrower shall have the right, without payment of any
premium or penalty, on any Quarterly Date upon not less than ten (10) Business
Days' notice to Administrative Lender (if telephonic, to be confirmed by telex
or in writing on or before the date of reduction or termination) prior to such
Quarterly Date, which shall promptly notify Lenders, to terminate or reduce the
Total Commitment, in whole or in part, provided that (i) each partial
termination shall be in an aggregate amount which is an integral multiple of
$25,000,000, (ii) no such reduction in the Total Commitment shall cause any
LIBOR Loan to be repaid prior to the last day of the Interest Period for such
LIBOR Loan and (iii) no such reduction in the Total Commitment shall cause the
Total Commitment to be in an amount less than the aggregate principal amount of
all Reimbursement Obligations then outstanding. Once reduced or terminated, the
Total Commitment may not be increased.
(b) Mandatory. On the Termination Date, the Total Commitment shall
automatically be reduced to zero.
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<PAGE> 33
(c) Pro Rata. Each reduction in the Total Commitment pursuant to this
Section 2.4 shall permanently reduce the Commitment of each Lender Pro Rata.
2.5. Repayment.
(a) Revolving Credit Loans. Borrower shall repay to Administrative
Lender for the account of each Lender the outstanding principal amount of the
Revolving Credit Loans on the Termination Date.
(b) Swing Line Loans. Borrower shall repay to Administrative Lender for
the account of Swing Line Bank the outstanding principal amount of each Swing
Line Loan on the Termination Date.
2.6. Interest. Borrower shall pay interest on the unpaid principal
amount of each Loan owing to each Lender from the date of such Loan until such
principal amount shall be paid in full, at the following rates per annum:
(a) Domestic Loans. Domestic Loans shall bear interest at a rate per
annum equal to the Base Rate Basis, but no higher than the Highest Lawful Rate;
provided, however, if the amount of interest payable for the account of any
Lender on any interest payment date in respect of the immediately preceding
interest computation period would exceed the Maximum Amount, the amount of
interest payable on such interest payment date shall be automatically reduced to
the Maximum Amount. If the amount of interest payable for the account of any
Lender in respect of any interest computation period is reduced pursuant to the
immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable for its account in
respect of such subsequent interest computation period shall be automatically
increased to such Maximum Amount; provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the immediately preceding
sentence. Interest on Domestic Loans shall be paid quarterly in arrears on each
Quarterly Date and on the Termination Date.
(b) LIBOR Loans. Each LIBOR Loan shall bear interest at a rate per
annum equal to the LIBOR Basis for such LIBOR Loan. Interest on each LIBOR Loan
shall be payable on the last day of the Interest Period for such LIBOR Loan and
on the Termination Date.
(c) Swing Line Loans. Swing Line Loans shall bear interest at a rate
per annum equal to the Prime Rate in effect from time to time minus 0.25%, but
no higher than the Highest Lawful Rate; provided, however, if the amount of
interest payable for the account of Swing Line Bank on any interest payment date
in respect of the immediately preceding interest computation period would exceed
the Maximum Amount, the amount of interest payable on such interest payment date
shall be automatically reduced to the Maximum Amount. If the amount of interest
payable for the
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<PAGE> 34
account of Swing Line Bank in respect of any interest computation period is
reduced pursuant to the immediately preceding sentence and the amount of
interest payable for its account in respect of any subsequent interest
computation period would be less than the Maximum Amount, then the amount of
interest payable for its account in respect of such subsequent interest
computation period shall be automatically increased to such Maximum Amount;
provided that at no time shall the aggregate amount by which interest paid for
the account of Swing Line Bank has been increased pursuant to this sentence
exceed the aggregate amount by which interest paid for its account has
theretofore been reduced pursuant to the immediately preceding sentence.
Interest on Swing Line Loans shall be paid quarterly in arrears on each
Quarterly Date and on the Termination Date.
(d) Default Rate. During the continuance of any Event of Default,
Borrower shall pay, on demand, interest on the principal amount of all Loans
outstanding and on all other Obligations due and unpaid hereunder at a rate per
annum equal to the lesser of the (i) Base Rate Basis plus 2.00% or (ii) Highest
Lawful Rate; provided, however, if the amount of interest payable for the
account of any Lender on any interest payment date in respect of the immediately
preceding interest computation period would exceed the Maximum Amount, the
amount of interest payable on such interest payment date shall be automatically
reduced to the Maximum Amount. If the amount of interest payable for the account
of any Lender in respect of any interest computation period is reduced pursuant
to the immediately preceding sentence and the amount of interest payable for its
account in respect of any subsequent interest computation period would be less
than the Maximum Amount, then the amount of interest payable for its account in
respect of such subsequent interest computation period shall be automatically
increased to such Maximum Amount; provided that at no time shall the aggregate
amount by which interest paid for the account of any Lender has been increased
pursuant to this sentence exceed the aggregate amount by which interest paid for
its account has theretofore been reduced pursuant to the immediately preceding
sentence.
2.7. Prepayments.
(a) Optional. Borrower may, from time to time, prepay the outstanding
principal amount of the Loans in whole or in part without penalty or premium,
provided, however, that (w) each partial prepayment shall be in an aggregate
principal amount not less than $5,000,000 or an integral multiple of $500,000 in
excess thereof, (x) no such prepayment of a LIBOR Loan shall be made other than
on the last day of the Interest Period therefor unless Borrower, simultaneously
with such prepayment, pays the compensation required pursuant to Section 8.14(b)
and (y) each prepayment of the principal amount of a LIBOR Loan shall also
include accrued interest to the date of such prepayment on the principal amount
prepaid.
(b) Mandatory.
(i) Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Credit Loans comprising part of the
same Borrowings and the Swing Line Loans equal to the amount by which
(A) the aggregate principal amount of the
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<PAGE> 35
Revolving Credit Loans plus the Swing Line Loans then outstanding plus
the aggregate principal amount of all Reimbursement Obligations then
outstanding (assuming compliance with all conditions to drawing)
exceeds (B) the Total Commitment.
(ii) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the
principal amount prepaid.
(iii) Borrower shall indemnify Lenders pursuant to Section
8.14(b) in connection with any payment required to be made under this
Section 2.7(b).
2.8. Conversion of Loans.
(a) Optional. Borrower may on any Business Day, subject to the notice
provisions of Section 2.2(a) and the provisions of Section 2.9, Convert all or
any portion of the Loans of one Type; provided, however, that (i) any Conversion
of any LIBOR Loans into Domestic Loans shall be made on, and only on, the last
day of the Interest Period for such LIBOR Loans and any Conversion of Domestic
Loans into LIBOR Loans shall be in an amount not less than the minimum amount
specified in Section 2.2(c) and (ii) no Conversion into LIBOR Loans shall be
permitted at any time that a Default or Event of Default has occurred and is
continuing. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Loans to be
Converted and (iii) if such Conversion is into LIBOR Loans the duration of the
initial Interest Period for such Loans. Each notice of Conversion shall be
irrevocable and binding on Borrower.
(b) Mandatory. If prior to the end of any Interest Period for any LIBOR
Loan Borrower shall fail to give timely notice of the continuance or Conversion
thereof, Administrative Lender will forthwith so notify Borrower and Lenders,
whereupon each such LIBOR Loan will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Domestic Loan. If any notice
given by Borrower pursuant to Section 2.2(a) for a LIBOR Loan or any notice
given by Borrower pursuant to this Section 2.8(b) shall fail to designate an
Interest Period, such notice shall be deemed to have designated an Interest
Period of one (1) month.
2.9. Increased Costs, Etc.
(a) If, due to either (i) the introduction of or any change (other than
any change which is taken into account in the calculation of the LIBOR Basis) in
or in the interpretation or administration of any Law or (ii) the compliance
with any guideline or request from any central bank or other governmental
authority, in any case introduced, changed, interpreted or requested after the
date hereof (whether or not having the force of Law), there shall be any
increase in the cost to any Lender of agreeing to make or making, funding or
maintaining LIBOR Loans to Borrower or there shall be any reduction in the
amount received or receivable by any Lender hereunder (whether of principal,
interest or otherwise), then Borrower shall from time to time, upon demand by
such Lender (with a copy of such demand to Administrative Lender), pay to
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<PAGE> 36
Administrative Lender for the account of such Lender additional amounts
sufficient to compensate such Lender for such increased cost. A certificate as
to the amount of such increased costs or reductions, submitted to Borrower by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.
(b) If any Lender determines that compliance with any Law or any
guideline or request from any central bank or Tribunal (other than as set forth
in the Risked-Based Capital Guidelines issued by the Board of Governors of the
Federal Reserve System, in the form in effect on the date of this Agreement, in
Appendix A to Part 208 of the Federal Reserve Board's Regulation H, 12 CFR Part
208, and in Appendix B to Part 225 of the Federal Reserve Board's Regulation Y,
12 CFR Part 225 (collectively, "Capital Adequacy Guidelines"), but not excluding
from this Section 2.9(b) any increase in cost as a result of any amendment,
modification or change in interpretation or administration of the Capital
Adequacy Guidelines subsequent to the date of this Agreement) (whether or not
having the force of Law) affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation controlling such
Lender or has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of the corporation controlling such Lender
and that the amount of such capital is increased, or the return on such capital
is decreased, by or based upon the existence of such Lender's commitment to lend
hereunder and other commitments of this type or the issuance of, or
participations in, the Letters of Credit (or similar contingent obligations),
then, upon demand by such Lender (with a copy of such demand to Administrative
Lender), Borrower shall pay to Administrative Lender for the account of such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender or such controlling corporation in the
light of such circumstances, to the extent that such Lender or such controlling
corporation reasonably determines such increase in capital, or reduction in the
return on capital, to be allocable to the existence of such Lender's commitment
to lend hereunder or to the issuance or maintenance of, or participations in,
any Letters of Credit. A certificate as to such amounts submitted to Borrower by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.
(c) If Determining Lenders notify Administrative Lender that the LIBOR
Rate for any Interest Period for any LIBOR Loans will not adequately reflect the
cost to such Lenders of making, funding or maintaining their LIBOR Loans for
such Interest Period, Administrative Lender shall forthwith so notify Borrower
and Lenders, whereupon (i) each such LIBOR Loan will automatically, on the last
day of the then existing Interest Period therefor, Convert into a Domestic Loan
and (ii) the obligation of Lenders to make or continue, or to Convert Loans
into, LIBOR Loans shall be suspended until such Determining Lenders notify
Administrative Lender that such Determining Lenders have determined that the
circumstances causing such suspension no longer exist and Administrative Lender
notifies Borrower and Lenders of such fact.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation or administration of
any Law shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender to perform its
obligations hereunder to make LIBOR
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<PAGE> 37
Loans or to continue to fund or maintain LIBOR Loans hereunder, then, on notice
thereof and demand therefor by such Lender to Borrower and the other Lenders
through Administrative Lender, (i) each LIBOR Loan will automatically, upon such
demand, Convert into a Domestic Loan and (ii) the obligation of Lenders to make
or continue, or to Convert Loans into, LIBOR Loans shall be suspended until such
Lender notifies Administrative Lender that such Lender has determined that the
circumstances causing such suspension no longer exist and Administrative Lender
notifies Borrower and the other Lenders of such fact.
(e) Upon the occurrence and during the continuance of any Default or
Event of Default, (i) each LIBOR Loan will automatically, on the last day of the
then existing Interest Period therefor, Convert into a Domestic Loan and (ii)
the obligation of Lenders to make or continue, or to Convert Loans into, LIBOR
Loans shall be suspended.
(f) Failure on the part of any Lender to demand compensation for any
increased costs, increased capital or reduction in amounts received or
receivable or reduction in return on capital pursuant to this Section 2.9 with
respect to any period shall not constitute a waiver of such Lender's right to
demand compensation with respect to such period or any other period; provided,
however, that any such Lender's demand for compensation shall not include any
such compensation with respect to periods more than 90 days prior to such
demand, unless the effective date of any event which causes a right to
compensation is retroactive ("Retroactive Effective Date"). If any such event
has a Retroactive Effective Date and any Lender demands compensation within 90
days after the date setting the Retroactive Effective Date (the "Set Date"),
such Lender shall have the right to receive such compensation from the
Retroactive Effective Date. If such Lender does not demand such compensation
within 90 days after the Set Date, such Lender may not receive compensation with
respect to periods more than 90 days prior to such demand.
(g) The obligations of Borrower under this Section 2.9 shall survive
any termination of this Agreement.
(h) Any certificate delivered to Borrower by a Lender pursuant to this
Section 2.9 shall include in reasonable detail the basis for such Lender's
demand for additional compensation. Any Lender claiming any additional
compensation payable pursuant to this Section 2.9 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to reduce or eliminate any
such additional compensation which may thereafter accrue and which efforts would
not, in the sole determination of such Lender, be otherwise disadvantageous to
such Lender.
2.10. Payments and Computations.
(a) Borrower shall make each payment hereunder not later than 12:00
noon (Dallas time) on the day when due in Dollars to Administrative Lender at
Administrative Lender's Principal Office in same day funds. Administrative
Lender will, on the same day, if received by Administrative Lender by the time
prescribed in the immediately preceding sentence, or, on the next immediately
succeeding Business Day, if received after such time, cause to be distributed
like
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<PAGE> 38
funds relating to the payment of principal or interest or Commitment Fees Pro
Rata (other than amounts payable pursuant to Section 2.9(a), 2.9(b), 2.11 or
2.13(d), amounts payable to Swing Line Bank in respect of Swing Line Loans and
amounts payable to the Issuing Bank in respect of Letters of Credit) to Lenders,
and like funds relating to the payment of any other amount payable to any Lender
to such Lender, in each case to be applied in accordance with the terms of this
Agreement. Such amounts received by Administrative Lender, if not distributed by
Administrative Lender on the day of receipt but received in time for investment
by Administrative Lender, shall bear interest for the account of such Lender to
whom such funds are owed at the Federal Funds Rate. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.16(c), from and after the effective date of
such Assignment and Acceptance, Administrative Lender shall make all payments
hereunder in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) Interest on Domestic Loans and Swing Line Loans, and the Commitment
Fee, shall be calculated on the basis of a 365 or 366 day year, as appropriate.
Subject to Section 8.13, interest on LIBOR Loans, and the commission on the
Letters of Credit, shall be calculated on the basis of actual days elapsed but
computed as if each year consisted of 360 days. Such computations shall be made
including the first day but excluding the last day occurring in the period for
which such interest or Commitment Fee is payable. Each determination by
Administrative Lender of an interest rate, fee or commission hereunder shall be
conclusive and binding for all purposes, absent manifest error.
(c) Whenever any payment hereunder shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation or payment of interest, as the case may be; provided, however, if
such extension would cause payment of interest on or principal of LIBOR Loans to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.
(d) Unless Administrative Lender shall have received notice from
Borrower prior to the date on which any payment is due to any Lenders hereunder
that Borrower will not make such payment in full, Administrative Lender may
assume that Borrower has made such payment in full to Administrative Lender on
such date and Administrative Lender may, in reliance upon such assumption, cause
to be distributed to each such Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent Borrower shall not have so
made such payment in full to Administrative Lender, each such Lender shall repay
to Administrative Lender forthwith on demand such amount distributed to such
Lender together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to
Administrative Lender, at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate or (ii) the Federal Funds Rate.
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<PAGE> 39
2.11. Taxes.
(a) Any and all payments by Borrower hereunder shall be made, in
accordance with Section 2.10, free and clear of and without deduction for any
and all taxes, levies, imposts, deductions, charges and withholdings, and all
liabilities with respect thereto, excluding, (i) in the case of each Lender and
Administrative Lender, taxes imposed on its overall net income, and franchise
taxes imposed on it, by the jurisdiction(s) under the laws of which such Lender
or Administrative Lender (as the case may be) is organized or doing business or
any political subdivision thereof, (ii) in the case of each Lender, taxes
imposed on its overall net income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's applicable Lending Office or any political
subdivision thereof, (iii) in the case of each Lender, United States withholding
tax (other than such tax which while designated as a "withholding tax" is in the
nature of an income or franchise tax) payable with respect to payments hereunder
under Laws (including, without limitation any statute, treaty, ruling,
determination or regulation) in effect on the Initial Date and (iv) taxes
imposed by reason of any failure of such Lender, if such Lender is entitled at
such time to a total or partial exemption from withholding that is required to
be evidenced by a United States Internal Revenue Service Form 1001 or 4224, to
deliver to Administrative Lender or Borrower, from time to time as requested by
Administrative Lender or Borrower, such Form 1001 under penalty of perjury or
4224 (as applicable) or any successor thereto, completed in a manner reasonably
satisfactory to Administrative Lender or Borrower, but not excluding any United
States withholding tax (other than such tax which while designated as a
"withholding tax" is in the nature of an income or franchise tax) payable as a
result of any adoption of or change in such Laws occurring after the Initial
Date (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). For
purposes of this section, the term "Initial Date" shall mean, in the case of
each Bank, the date hereof and, in the case of each Lender other than a Bank,
the date of the Assignment and Acceptance pursuant to which it becomes a Lender.
If Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Lender or Administrative Lender, (x) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.11) such Lender or Administrative Lender (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (y) Borrower shall make such deductions and (z) Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) Borrower will indemnify each Lender and Administrative Lender for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.11) paid by such Lender or
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<PAGE> 40
Administrative Lender (as the case may be) and all liabilities (including
penalties, additions to tax, interest and reasonable expenses) arising therefrom
or with respect thereto whether or not such Taxes or Other Taxes were correctly
or legally asserted, other than penalties, additions to tax, interest and
expenses arising as a result of gross negligence on the part of such Lender or
Administrative Lender, provided, however, that Borrower shall have no obligation
to indemnify such Lender or Administrative Lender unless and until such Lender
or Administrative Lender shall have delivered to Borrower a certificate setting
forth in reasonable detail the basis of Borrower's obligation to indemnify such
Lender or Administrative Lender pursuant to this Section 2.11. This
indemnification shall be made within 30 days from the date such Lender or
Administrative Lender (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, Borrower
will furnish to Administrative Lender, at its address referred to in Section
8.6, the original or a certified copy of a receipt evidencing payment thereof if
Borrower has received such receipt. If no Taxes are payable in respect of any
payment hereunder, Borrower will furnish to Administrative Lender, at such
address, a certificate from each appropriate taxing authority, or an opinion of
counsel acceptable to Administrative Lender, in either case stating that such
payment is exempt from or not subject to Taxes, provided, however, that such
certificate or opinion need only be given if: (i) Borrower makes any payment
from any account located outside the United States, or (ii) the payment is made
by a payor that is not a United States Person. For purposes of this Section 2.11
the terms "United States" and "United States Person" shall have the meanings set
forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees that:
(i) it shall, no later than the Initial Date, deliver to
Borrower through Administrative Lender, with a copy to Administrative
Lender:
(A) if any Lending Office is located in the United States of
America, two (2) accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"),
(B) if any Lending Office is located outside the United States
of America, two (2) accurate and complete signed originals
of Internal Revenue Service Form 1001 or any successor
thereto ("Form 1001").
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such Lending Office or Lending Offices under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender changes its Lending Office or
Lending Offices or selects an additional Lending Office it shall, at
the same time or reasonably promptly thereafter but only to the extent
the forms previously delivered by it hereunder are no
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<PAGE> 41
longer effective, deliver to Borrower through Administrative Lender,
with a copy to Administrative Lender, in replacement for the forms
previously delivered by it hereunder:
(A) if such changed or additional Lending Office is
located in the United States of America, two (2)
accurate and complete signed originals of Form 4224;
or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case indicating that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees
for the account of such changed or additional Lending Office under this
Agreement free from withholding of United States Federal income tax;
(iii) it shall, before or promptly after the occurrence of any
event (including the passing of time but excluding any event mentioned
in clause (ii) above) requiring a change in the most recent Form 4224
or Form 1001 previously delivered by such Lender and if the delivery of
the same be lawful, deliver to Borrower through Administrative Lender
with a copy to Administrative Lender, two (2) accurate and complete
original signed copies of Form 4224 or Form 1001 in replacement for the
forms previously delivered by such Lender; and
(iv) it shall, promptly upon the request of Borrower to that
effect, deliver to Borrower such other forms or similar documentation
as may be required from time to time by any applicable law, treaty,
rule or regulation in order to establish such Lender's tax status for
withholding purposes.
(f) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.11 shall survive the payment in full of principal and interest
hereunder until the date which is 90 (ninety) days after the expiration of the
statutory periods for the assessment of taxes.
(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.11 shall use its reasonable best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Lending Office, if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter accrue
and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(h) Each Lender (and Administrative Lender with respect to payments to
Administrative Lender for its own account) agrees that (i) it will take all
reasonable actions by all usual means to maintain all exemptions, if any,
available to it from United States withholding taxes (whether available by
treaty, existing administrative waiver, by virtue of the location of any
Lender's
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<PAGE> 42
Lending Office) and (ii) otherwise cooperate with Borrower to minimize
amounts payable by Borrower under this Section 2.11; provided, however, Lenders
and Administrative Lender shall not be obligated by reason of this Section
2.11(h) to contest the payment of any Taxes or Other Taxes or to disclose any
information regarding its tax affairs or tax computations or reorder its tax or
other affairs or tax or other planning.
2.12. Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans and/or fees owing to it (other than
pursuant to Section 2.9(a), 2.9(b), 2.11 or 2.13(d), payments to the Swing Line
Bank in respect of Swing Line Loans and payments to the Issuing Bank in respect
of Letters of Credit) in excess of its pro rata share of payments on account of
the Loans and/or fees obtained by all Lenders, such Lender shall forthwith
purchase from the other Lenders such participations in the Loans owing to them
or make such other payment as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them; provided, however, that
if all or any portion of such excess payment is thereafter recovered from such
purchasing Lender, such purchase from each Lender shall be rescinded and such
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section 2.12 may, to the
fullest extent permitted by Law, exercise all its rights of payment (including
the right of set-off) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.
2.13. Letters of Credit.
(a) The Letter of Credit Facility. Borrower may request Issuing Bank,
on the terms and conditions hereinafter set forth, to issue, and Issuing Bank
shall, if so requested, issue, letters of credit (the "Letters of Credit",
including the Existing Letters of Credit) for the account of Borrower or any
other Company from time to time on any Business Day from the date of the initial
Borrowing until the Termination Date in an aggregate maximum amount (assuming
compliance with all conditions to drawing) not to exceed at any time outstanding
the lesser of (i) $20,000,000 (the "Letter of Credit Facility") and (ii) the sum
of (A) the Total Commitment minus (B) the aggregate principal amount of
Revolving Credit Loans then outstanding, minus (C) the aggregate principal
amount of Swing Line Loans outstanding. If any Letter of Credit is issued for
the account of any Company other than Borrower, Borrower and such other Company
shall be jointly and severally liable for all obligations in respect of such
Letter of Credit and all references to Borrower which relate to obligations or
provisions with respect to any such Letter of Credit shall also mean and refer
to such other Company. No Letter of Credit shall have an expiration date
(including all rights of renewal) later than the earlier of (i) the Termination
Date or (ii) two years after the date of issuance thereof. Immediately upon the
issuance of each Letter of Credit (or as of the Agreement Date, with respect to
the Existing Letters of Credit), Issuing
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Bank shall be deemed to have sold and transferred to each Lender, and each
Lender shall be deemed to have purchased and received from Issuing Bank, in each
case irrevocably and without any further action by any party, an undivided
interest and participation in such Letter of Credit, each drawing thereunder and
the obligations of Borrower under this Agreement in respect thereof in an amount
equal to the product of (x) such Lender's Specified Percentage times (y) the
maximum amount available to be drawn under such Letter of Credit (assuming
compliance with all conditions to drawing). Within the limits of the Letter of
Credit Facility, and subject to the limits referred to above, Borrower may
request the issuance of Letters of Credit under this Section 2.13(a), repay any
Revolving Credit Loans resulting from drawings thereunder pursuant to Section
2.13(c) and request the issuance of additional Letters of Credit under this
Section 2.13(a).
(b) Request for Issuance.
(i) Each Letter of Credit shall be issued upon notice, given
not later than 11:00 a.m. (Dallas time) on the third Business Day prior
to the date of the proposed issuance of such Letter of Credit, by
Borrower to Issuing Bank, which shall give to Administrative Lender and
each Lender prompt notice thereof by telex, telecopier or cable. Each
Letter of Credit shall be issued upon notice given in accordance with
the terms of any separate agreement between Borrower (and if such
Letter of Credit is for the account of any Company other than Borrower,
such other Company) and Issuing Bank in form and substance reasonably
satisfactory to Borrower and Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement and containing terms and
conditions not inconsistent with this Agreement (a "Letter of Credit
Agreement"), provided that if any such terms and conditions are
inconsistent with this Agreement, this Agreement shall control. Each
such notice of issuance of a Letter of Credit (a "Notice of Issuance")
shall be by telex, telecopier or cable, specifying therein the
requested (A) date of such issuance (which shall be a Business Day),
(B) maximum amount of such Letter of Credit, (C) expiration date of
such Letter of Credit, (D) name and address of the beneficiary of such
Letter of Credit, (E) form of such Letter of Credit and (F) such other
information as shall be required pursuant to the relevant Letter of
Credit Agreement. If the requested terms of such Letter of Credit are
acceptable to Issuing Bank in its reasonable discretion, Issuing Bank
will, upon fulfillment of the applicable conditions set forth in
Sections 2.16 and 2.17, make such Letter of Credit available to
Borrower at its office referred to in Section 8.6 or as otherwise
agreed with Borrower in connection with such issuance.
(ii) Issuing Bank shall furnish to each Lender on each
Quarterly Date (A) a written report summarizing issuance and expiration
dates of Letters of Credit issued during the preceding quarter and
drawings during such quarter under all Letters of Credit and setting
forth such Lender's participation therein and (B) a copy of each Letter
of Credit issued during the preceding quarter.
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(c) Drawing and Reimbursement. The payment by Issuing Bank of a draft
drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by Issuing Bank of a Revolving Credit Loan, which shall be
a Domestic Loan, in the amount of such draft (but without any requirement for
compliance with the conditions set forth in Sections 2.16 and 2.17). In the
event that a drawing under any Letter of Credit is not reimbursed by Borrower
by 11:00 a.m. (Dallas time) on the first Business Day after such drawing,
Issuing Bank shall promptly notify Administrative Lender and each other Lender.
Unless the payment by Issuing Bank of a draft drawn under such Letter of Credit
was made upon Issuing Bank's gross negligence or willful misconduct, each such
Lender shall, on the first Business Day following such notification, make a
Revolving Credit Loan, which shall be a Domestic Loan and shall be used to
repay the applicable portion of Issuing Bank's Revolving Credit Loan with
respect to such Letter of Credit, in an amount equal to the amount of its
participation in such drawing for application to reimburse Issuing Bank (but
without any requirement for compliance with the applicable conditions set forth
in Sections 2.16 and 2.17) and shall make available to Administrative Lender
for the account of Issuing Bank, by deposit at Administrative Lender's
Principal Office, in same day funds, the amount of such Revolving Credit Loan.
In the event that any Lender fails to make available to Administrative Lender
for the account of Issuing Bank the amount of such Revolving Credit Loan,
Issuing Bank shall be entitled to recover such amount on demand from such
Lender together with interest thereon at a rate per annum equal to the lesser
of (i) the Highest Lawful Rate or (ii) the Federal Funds Rate.
(d) Increased Costs. If, after the date hereof, any change in any law
or regulation or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof shall either (i)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit or guarantees issued by, or assets held
by, or deposits in or for the account of, Issuing Bank or any Lender or (ii)
impose on Issuing Bank or any Lender any other condition regarding this
Agreement or such Lender or any Letter of Credit, and the result of any event
referred to in the preceding clause (i) or (ii) shall be to increase the cost to
Issuing Bank of issuing or maintaining any Letter of Credit or to any Lender of
purchasing any participation therein or making any Revolving Credit Loan
pursuant to Section 2.13(c), then, upon demand by Issuing Bank or such Lender,
Borrower shall pay to Issuing Bank or such Lender, from time to time as
specified by Issuing Bank or such Lender, additional amounts that shall be
sufficient to compensate Issuing Bank or such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower by
Issuing Bank or such Lender, shall include in reasonable detail the basis for
the demand for additional compensation and shall be conclusive and binding for
all purposes, absent manifest error. The obligations of Borrower under this
Section 2.13(d) shall survive termination of this Agreement. Issuing Bank or any
Lender claiming any additional compensation under this Section 2.13(d) shall use
reasonable efforts (consistent with legal and regulatory restrictions) to reduce
or eliminate any such additional compensation which may thereafter accrue and
which efforts would not, in the sole discretion of Issuing Bank or such Lender,
be otherwise disadvantageous.
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(e) Obligations Absolute. The obligations of Borrower under this
Agreement with respect to any Letter of Credit, any Letter of Credit Agreement
and any other agreement or instrument relating to any Letter of Credit or any
Revolving Credit Loan pursuant to Section 2.13(c) shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement, such Letter of Credit Agreement and such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of this Agreement,
any Letter of Credit Agreement, any Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "L/C
Related Documents");
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of Borrower in
respect of the Letters of Credit or any Revolving Credit Loan pursuant
to Section 2.13(c) or any other amendment or waiver of or any consent
to departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), Issuing Bank, any
Lender or any other Person, whether in connection with this Agreement,
the transactions contemplated hereby or by the L/C Related Documents or
any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) payment by Issuing Bank under a Letter of Credit against
presentation of a draft or certificate that does not comply with the
terms of such Letter of Credit except for any payment made upon Issuing
Bank's gross negligence or willful misconduct;
(vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent to
departure from the Guaranty or any other guarantee, for all or any of
the Obligations of Borrower in respect of the Letters of Credit or any
Revolving Credit Loan pursuant to Section 2.13(c); or
(vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including, without limitation,
any other circumstance that might otherwise constitute a defense
available to, or a discharge of, Borrower or a Guarantor.
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(f) Compensation.
(i) Borrower shall pay to Administrative Lender for the
account of each Lender (including Issuing Bank) a commission on the
average daily amount available for drawing under (i) all outstanding
Financial Letters of Credit equal to 100% of the Applicable LIBOR Rate
Margin which is in effect during the applicable period of calculation
and (ii) all outstanding Nonfinancial Letters of Credit equal to 50% of
the Applicable LIBOR Rate Margin which is in effect during the
applicable period of calculation, in each case payable quarterly in
arrears on each Quarterly Date and on the Termination Date.
(ii) Borrower shall pay to Issuing Bank, for its own account,
an issuance fee equal to the product of (i) 0.125% multiplied by the
average daily amount available for drawing under all outstanding
Financial Letters of Credit and (ii) 0.0625% multiplied by the average
daily amount available for drawing under all outstanding Nonfinancial
Letters of Credit, in each case payable quarterly in arrears on each
Quarterly Date and on the Termination Date.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and demand by
Administrative Lender pursuant to Section 6.2(iv), Borrower will
promptly pay to Administrative Lender in immediately available funds an
amount equal to the maximum amount then available to be drawn under the
Letters of Credit then outstanding. Any amounts so received by
Administrative Lender shall be deposited by Administrative Lender in a
deposit account maintained by Issuing Bank (the "L/C Cash Collateral
Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, Borrower hereby conveys,
assigns, pledges, sets over and transfers to Administrative Lender (for
the benefit of Issuing Bank and Lenders), and grants and creates in
Administrative Lender's favor (for the benefit of Issuing Bank and
Lenders) a Lien in, all money, instruments and securities at any time
held in or acquired in connection with the L/C Cash Collateral Account,
together with all proceeds thereof. The L/C Cash Collateral Account
shall be under the sole dominion and control of Administrative Lender
and Borrower shall have no right to withdraw or to cause Administrative
Lender to withdraw any funds deposited in the L/C Cash Collateral
Account. At any time and from time to time, upon Administrative
Lender's request, Borrower promptly shall execute and deliver any and
all such further instruments and documents, including UCC financing
statements, as may be necessary, appropriate or desirable in
Administrative Lender's judgment to obtain the full benefits (including
perfection and priority) of the security interest created or intended
to be created by this paragraph (ii) and of the rights and powers
herein granted. Borrower shall not create or suffer to exist any Lien
on any amounts or investments held in the L/C Cash Collateral Account
other than the Lien granted under this
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paragraph (ii) and Liens arising by operation of Law and not by
contract which secure amounts not yet due and payable.
(iii) Administrative Lender shall (A) apply any funds in the
L/C Cash Collateral Account on account of Reimbursement Obligations
when the same become due and payable if and to the extent that Borrower
shall fail directly to pay such Reimbursement Obligations and (B) after
the date on which the Commitments of Lenders shall have terminated, all
Letters of Credit shall have expired and all Reimbursement Obligations
shall have been paid in full, apply any proceeds remaining in the L/C
Cash Collateral Account first to pay any unpaid Obligations then
outstanding hereunder and then to refund any remaining amount to
Borrower.
(iv) Borrower, no more than once in any calendar month, may
direct Administrative Lender to invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in (A) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof and (B) one or
more other types of investments permitted by Determining Lenders, in
each case with such maturities as Borrower, with the consent of
Determining Lenders, may specify, pending application of such funds on
account of Reimbursement Obligations or on account of other
Obligations, as the case may be. In the absence of any such direction
from Borrower, Administrative Lender shall invest the funds held in the
L/C Cash Collateral Account (so long as the aggregate amount of such
funds exceeds any relevant minimum investment requirement) in one or
more types of investments with the consent of Determining Lenders with
such maturities as Borrower, with the consent of Determining Lenders,
may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the
case may be. All such investments shall be made in Administrative
Lender's name for the account of Lenders. Borrower recognizes that any
losses or Taxes with respect to such investments shall be borne solely
by Borrower, and Borrower agrees to hold Administrative Lender and
Lenders harmless from any and all such losses and Taxes. Administrative
Lender may liquidate any investment held in the L/C Cash Collateral
Account in order to apply the proceeds of such investment on account of
the Reimbursement Obligations (or on account of any other Obligation
then due and payable, as the case may be) without regard to whether
such investment has matured and without liability for any penalty or
other fee incurred (with respect to which Borrower hereby agrees to
reimburse Administrative Lender) as a result of such application.
(v) Borrower shall pay to Administrative Lender the fees
customarily charged by Issuing Bank with respect to the maintenance of
accounts similar to the L/C Cash Collateral Account.
2.14. Use of Proceeds. The proceeds of the Loans and the Letters of
Credit shall be available (and Borrower agrees that it shall use such proceeds)
solely to refinance Debt of
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Borrower under the Existing Credit Agreement and the NationsBank Term Loan
Agreement, finance Acquisitions permitted hereunder, provide working capital for
Borrower and its Subsidiaries and to pay amounts owing under Letters of Credit
and for other general corporate purposes.
2.15. Evidence of Debt.
(a) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of Borrower to such
Lender resulting from each Loan owing to such Lender from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder. The obligations of Borrower with respect to
the Revolving Credit Loans and the Swing Line Loans shall be evidenced by the
Revolving Credit Notes and the Swing Line Note, respectively.
(b) The Register maintained by Administrative Lender pursuant to
Section 8.16(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made and Letter of Credit issued hereunder, the
Type of Loans comprising such Borrowing and any Interest Period applicable
thereto, (ii) the terms of each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from Borrower to each Lender hereunder and (iv) the
amount of any sum received by Administrative Lender from Borrower hereunder and
each Lender's share thereof.
(c) The entries made in the Register shall be presumed correct for
all purposes, absent manifest error.
2.16. Conditions Precedent to Initial Borrowing and Issuance. The
obligation of each Lender to make the initial Loan on the occasion of the
initial Borrowing, and the right of Borrower to request the initial Swing Line
Borrowing or the issuance of the initial Letter of Credit, shall be subject to
the following conditions precedent on the date of such Borrowing or issuance:
(a) Certificate. Borrower shall have delivered to Administrative
Lenderan Officer's Certificate substantially in the form of Exhibit J, dated
as of the Agreement Date, certifying to the matters described therein.
(b) Proceedings. All actions of Borrower and each Guarantor taken in
connection with the transactions contemplated by this Agreement and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to Administrative Lender and Special Counsel; and Administrative
Lender shall have received copies of all documents or other evidence which
Administrative Lender or Special Counsel may reasonably request in connection
with said transactions, including without limitation, an Officer's Certificate
of Borrower and each Guarantor, substantially in the forms of Exhibits K and L,
respectively, together with all attachments and exhibits thereto.
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(c) Guaranty. Borrower shall have caused to be delivered to
Administrative Lender for Lenders the Guaranty duly executed by each Guarantor,
dated as of the Agreement Date.
(d) Opinion of Counsel to Borrower and Guarantors. Administrative
Lender shall have received from counsel to Borrower and Guarantors reasonably
satisfactory to Administrative Lender and Special Counsel, an opinion
substantially in the form of Exhibit M.
(e) Existing Indebtedness. Simultaneously with the initial Loans under
this Agreement, all obligations of Borrower outstanding under the Existing
Credit Agreement, the Senior Notes and the NationsBank Term Loan Agreement shall
be paid in full, whereupon the Existing Credit Agreement, the Senior Notes and
the NationsBank Term Loan Agreement shall automatically terminate and be of no
further force or effect, except with respect to those obligations which
specifically survive the termination of the Existing Credit Agreement, the
Senior Notes and the NationsBank Term Loan Agreement as provided therein.
(f) Third Party Approvals. Administrative Lender shall have received
appropriate evidence that (i) all shareholder, governmental and regulatory
approvals (including, without limitation, any FCC approvals, which shall be
final orders) and (ii) all other third party approvals the failure of which to
obtain could be reasonably expected to have a Material Adverse Effect, necessary
to the consummation of the transactions contemplated hereby, have been obtained.
(g) Administrative Lender's Fee Letter. Administrative Lender shall
have received the Administrative Lender's fee letter referred to in Section
2.3(c), duly executed by Borrower.
(h) Revolving Credit Notes. Borrower shall have delivered its Revolving
Credit Notes to Administrative Lender for each Lender, dated as of the Agreement
Date, duly executed, with all blanks appropriately filled.
(i) Swing Line Note. Borrower shall have delivered its Swing Line Note
to Administrative Lender for Swing Line Bank, dated as of the Agreement Date,
duly executed, with all blanks appropriately filled.
(j) Opinion of Special Counsel. Administrative Lender shall have
received from Special Counsel an opinion substantially in the form of Exhibit Q.
(k) Closing Fee. Each Lender shall have received its closing fee
referred to in Section 2.3(b).
2.17. Conditions Precedent to Each Borrowing and Issuance. The
obligation of each Lender to make a Loan on the occasion of each Borrowing
(including the initial Borrowing), and the right of Borrower to request a Swing
Line Borrowing or the issuance of Letters of Credit (including the initial
Letter of Credit), shall be subject to the further following conditions
precedent on the date of such Borrowing or issuance:
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(a) the following statements shall be true (and each of the giving of
the applicable Notice of Borrowing, Notice of Swing Line Borrowing or Notice of
Issuance and the acceptance by Borrower of the proceeds of such Borrowing or the
issuance of such Letter of Credit shall constitute a representation and warranty
by Borrower that on the date of such Borrowing or issuance such statements are
true):
(i) The representations and warranties contained in each Loan
Document are correct in all material respects (taking into account any
amendment or supplement to Exhibit F required pursuant to Section
3.2(h)) on and as of the date of such Borrowing or issuance, before
and after giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and as of
such date, except to the extent that any such representation or
warranty relates expressly to a specified date or is no longer correct
because of a change in circumstances permitted by the Loan Documents;
and
(ii) No event has occurred and is continuing, or would result
from such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default or Event of Default; and
(b) Administrative Lender shall have received such other approvals,
opinions or documents as any Lender or Issuing Bank through Administrative
Lender may reasonably request; provided, however, that the obligation of each
Lender to make a Revolving Credit Loan pursuant to Sections 2.2(b) and 2.13(c)
shall each be absolute and unconditional (absent gross negligence or wilful
misconduct on the part of Swing Line Bank or Issuing Bank, as appropriate) and
such Loan shall be made by such Lender notwithstanding the failure of Borrower
to satisfy any condition set forth in this Section 2.17, provided that the Swing
Line Bank or Issuing Bank, as appropriate, had no actual knowledge that any
condition set forth in this Section 2.17 had not been satisfied at the time of
the making of the Swing Line Loan or the issuance of the Letter of Credit, as
applicable, with respect to which such Revolving Credit Loan is being made.
2.18. Determinations Under Section 2.16. For purposes of determining
compliance with the conditions specified in Section 2.16, each Lender, except in
instances of gross negligence or willful misconduct of Administrative Lender,
shall be deemed to have consented to, approved or accepted or to be satisfied
with each document or other matter required thereunder to be consented to or
approved by or acceptable or satisfactory to Lenders unless an officer of
Administrative Lender responsible for the transactions contemplated by the Loan
Documents and holding the position of Vice President or a more senior position
shall have received notice from such Lender prior to the Agreement Date
specifying its objection thereto and either such objection shall not have been
withdrawn by notice to such officer to that effect or such Lender shall not have
made available to Administrative Lender such Lender's Pro Rata Part of the
Loans.
2.19. Legal Details. All documents executed or submitted pursuant
hereto by any Company shall be reasonably satisfactory in form and substance to
Administrative Lender and
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Special Counsel. Administrative Lender and Special Counsel shall receive all
information, and such counterpart originals or certified or other copies of any
such materials, as Administrative Lender or Special Counsel may reasonably
request. All legal matters incident to the transactions contemplated by this
Agreement shall be reasonably satisfactory to Special Counsel and counsel to
each Lender.
2.20. Substitution of Lender. If any Lender has demanded compensation
under Section 2.9 or 2.11 or it becomes illegal for any Lender to continue to
fund or to make LIBOR Loans pursuant to Section 2.9(d), Borrower shall have the
right, with the assistance of Administrative Lender, to designate a substitute
Lender or Lenders for each such Lender mutually satisfactory to Borrower,
Administrative Lender and Lenders to purchase its Revolving Credit Note and
assume the Commitment of such Lender. Such purchase shall be without recourse to
or warranty by, or expense to, such Lender for a purchase price equal to the
outstanding principal amount of the Loans payable to such Lender, plus any
accrued and unpaid interest on such Loans and accrued but unpaid Commitment Fees
and other fees in respect of such Lender's Commitment and any other amounts
payable to such Lender, including but not limited to, the additional amounts due
and owing under Sections 2.9 and 2.11. Any Lender replaced pursuant to this
Section 2.20 shall (i) have no obligation to pay any processing and recordation
fee pursuant to Section 8.16(a) and (ii) continue to be entitled to the Rights
available to Lenders pursuant to Sections 2.9, 2.11, 2.13(d), 8.10 and 8.14.
ARTICLE III.
AFFIRMATIVE COVENANTS
From the Agreement Date, and so long as any Loan shall remain unpaid,
any Letter of Credit shall be outstanding, any Lender shall have any Commitment
hereunder or any part of the Obligation shall remain unpaid:
3.1. General Covenants. Borrower covenants that it will:
(a) Payment of Taxes and Claims. Cause to be paid and discharged (i)
all lawful Taxes imposed upon the income or profits of each Company or upon any
property belonging to any Company before the same shall be in default, except
where contested in good faith by proper proceedings and for which adequate
reserves have been established in accordance with GAAP or where the failure to
so pay and discharge would not have a Material Adverse Effect, and (ii) all
lawful claims for labor, rentals, materials and supplies which, if unpaid, might
become a Lien other than a Permitted Lien; and Borrower shall, and shall cause
each other Company to, pay such Tax, charge or claim before any property subject
thereto shall be sold to satisfy a Lien, except where the failure to so pay
would not have a Material Adverse Effect;
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(b) Maintenance of Corporate Existence. Cause to be done all things
necessary to preserve and keep in full force and effect the corporate existence
of each Company to the extent that a failure to do so could result in a Material
Adverse Effect;
(c) Preservation of Property. Keep, and cause each other Company to
keep, its respective properties, which are necessary to prevent a Material
Adverse Effect, whether owned in fee or otherwise, or leased, in good operating
condition, ordinary wear and tear excepted, and comply, and cause each other
Company to comply, with all material leases to which any Company is a party or
under which any Company occupies property so as to prevent any material loss or
forfeiture thereunder to the extent necessary to prevent a Material Adverse
Effect;
(d) Licenses. Obtain and maintain all material licenses, permits and
franchises necessary for each Company's business except those the loss of which
do not in the aggregate cause a Material Adverse Effect;
(e) Insurance. Maintain, and cause each other Company to maintain, in
force with financially sound and reputable insurers, policies with respect to
its property and business against such casualties and contingencies and in such
amounts as are consistent with their respective past practices;
(f) Compliance with Applicable Laws. Comply, and cause each other
Company to comply, with the requirements of all applicable Laws and orders of
any Tribunal, except where contested in good faith and by proper proceedings,
and obtain and maintain, and cause each other Company to obtain and maintain,
all licenses, permits, franchises and other governmental authorizations
(including FCC approvals), in each case to the extent necessary both for the
ownership of its respective properties and to prevent a Material Adverse Effect;
and
(g) Guaranty. In the event that any Company shall acquire a Material
Subsidiary not listed in Exhibit F or in the event any Subsidiary which has not
executed the Guaranty becomes a Material Subsidiary, Borrower shall promptly
deliver to the Administrative Lender a guaranty of the Obligation by such
Subsidiary substantially in the form of Exhibit D and an Officer's Certificate
of such Subsidiary in the form of Exhibit L, together with an opinion of
counsel, in form and substance reasonably satisfactory to Administrative Lender.
3.2. Accounts, Reports and other Information. The Companies shall
maintain a system of accounting in accordance with GAAP (except as set forth
below) consistently applied, and Borrower shall furnish or caused to be
furnished to each Lender the following:
(a) Quarterly Statements. As soon as practicable after the end of each
of Borrower's quarters in each fiscal year, and in any event within 60 days
after the end of each of said quarters (except the last quarter of each fiscal
year) copies of:
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(i) An unaudited consolidated balance sheet of the
Companies as of the end of such period,
(ii) An unaudited consolidated statement of income of the
Companies for such period and for the portion of the fiscal year
ending with such period, and
(iii) An unaudited consolidated statement of cash flows of the
Companies for the portion of the fiscal year ending with such period,
setting forth in each case in comparative form figures as of the end of and for
the corresponding periods in the previous fiscal year, all in reasonable detail
and certified as (y) being complete and correct and prepared consistently with
past practices and substantially in accordance with GAAP, subject to changes
resulting from year-end adjustment, and (z) presenting fairly the
financial condition of the Companies and their results of operations by the
chief financial officer of Borrower or such other officer of Borrower reasonably
acceptable to Administrative Lender;
(b) Annual Audit. As soon as practicable after the end of each fiscal
year of Borrower, and in any event within 120 days thereafter, copies of:
(i) A consolidated balance sheet of the Companies as of the end
of such year, and
(ii) A consolidated statement of income, consolidated statement
of stockholders' equity and a consolidated statement of cash flows of
the Companies for such year,
setting forth in each case in comparative form the figures as of the end of and
for the previous fiscal year, all in reasonable detail and accompanied by an
opinion by Auditors, which opinion shall state that said consolidated financial
statements have been prepared in accordance with GAAP consistently applied,
except to the extent stated therein (to which Auditors concur), that the
examination of Auditors in connection with such financial statements has been
made in accordance with generally accepted auditing standards and that said
financial statements present fairly the financial condition of the Companies and
their results of operations;
(c) Other Reports. Promptly upon their becoming available a copy of (i)
each regular or periodic report and any registration statement (other than
statements on Form S-8), prospectus or written communication in respect thereof
filed by any Company with any securities exchange or with the Securities and
Exchange Commission or any successor agency, and (ii) all press releases
concerning material financial aspects of any Company;
(d) Notice of Default. Promptly upon the happening of any condition or
event of which an officer of Borrower has actual knowledge and which constitutes
an Event of Default or Default, a written notice specifying the nature and
period of existence thereof and what action Borrower is taking and proposes to
take with respect thereto;
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(e) Notice of Litigation. Promptly upon becoming aware of the existence
of any proceedings before any Tribunal involving any Company which could
reasonably be expected to involve the payment of $5,000,000.00 or more in excess
of insurance coverage by any Company or in which an adverse decision could
reasonably be expected to have a Material Adverse Effect, a written notice
specifying the nature thereof and whether such Company will contest such
proceeding or decision;
(f) Notice of Claimed Default. Promptly upon becoming aware that the
holder of any note or any evidence of indebtedness or other security of any
Company in excess of $1,000,000.00 has given notice or taken any action with
respect to a claimed default or event of default thereunder, a written notice
specifying the notice given or action taken by such holder and the nature of the
claimed default or event of default thereunder and what action such Company is
taking or proposes to take with respect thereto;
(g) Notice from Regulatory Agencies. Promptly upon receipt thereof,
written information with respect to and copies of all notices received from
federal or state regulatory agencies or any Tribunal (including, without
limitation, the FCC) relating to an order, ruling, statute or other Law which
could reasonably be expected to result in the payment of money by any Company in
the amount of $5,000,000 or more, or which would have a Material Adverse Effect;
(h) Exhibit F Amendment. As soon as practicable after the end of each
of Borrower's fiscal quarters in each fiscal year, and in any event within 60
days after the end of said quarters, amendments and supplements to Exhibit F so
as to ensure that, at the time of delivery of such amendment or supplement,
Exhibit F is accurate and complete in all material respects; and
(i) Requested Information. With reasonable promptness, such other
material financial data and information as from time to time may be reasonably
requested by any Lender.
3.3. Officer's Certificates. Each set of financial statements delivered
to Lenders pursuant to Section 3.2(a) or 3.2(b) shall be accompanied by an
Officer's Certificate substantially in the form of Exhibit N, appropriately
completed.
3.4. Auditors' Letters. Each set of annual financial statements
delivered pursuant to Section 3.2(b) shall be accompanied by a letter from
Auditors, stating (i) that, except to the extent stated therein, said statements
are comparative in form and information provided in all material respects to
those previously delivered, (ii) that they have reviewed this Agreement, and
(iii) whether, in making their audit, they have become aware of any condition or
event which then constitutes an Event of Default or Default, and if any such
condition or event then exists, specifying the nature and period of existence
thereof.
3.5. Inspection. Upon the occurrence of a Default or Event of Default,
Borrower shall permit, upon written, telex or cabled application by any Lender
(stating the reasons therefor) any officers of any Lender to visit and inspect
at said Lender's expense, any of the properties of any
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Company, to examine all books of account, records, reports and other papers, to
make copies and extracts therefrom at said Lender's expense, and to discuss the
affairs, finances and accounts with their respective officers, employees and
Auditors (and by this provision Borrower authorizes said Auditors to discuss
with any Lender's representatives the finances and affairs of the Companies),
during normal business hours, after such reasonable notice, and as often as may
be reasonably requested; provided, however, that in no event shall such
inspection, examination or inquiry interfere with or disrupt the operations of
any Company.
3.6. Notices Regarding ERISA. Borrower will, and will cause each other
Company to, furnish to Administrative Lender, with sufficient copies for
Lenders:
(a) promptly and in any event (i) within thirty (30) days after
Borrower or any member of its Controlled Group knows or has reason to know that
any ERISA Event described in clause (a) of the definition of ERISA Event or any
event described in Section 4063(a) of ERISA with respect to any Plan of Borrower
or any member of its Controlled Group has occurred, if such ERISA Event or such
other event has a reasonable likelihood of resulting in liability in excess of
Five Million Dollars ($5,000,000), and (ii) within ten (10) days after Borrower
or any member of its Controlled Group knows that any other ERISA Event with
respect to any Plan has occurred, if such ERISA Event has a reasonable
likelihood of resulting in liability in excess of Five Million Dollars
($5,000,000) or a request for a minimum funding waiver under Section 412 of the
Code with respect to any Plan has been made, if the effect of such waiver has a
reasonable likelihood of resulting in liability in excess of Five Million
Dollars ($5,000,000), a statement of the chief financial officer of Borrower
describing such ERISA Event and the action, if any, which Borrower or such
member of its Controlled Group proposes to take with respect thereto together
with a copy of the notice of such ERISA Event or other event, if required by the
applicable regulations under ERISA, given to the PBGC;
(b) promptly and in any event within thirty (30) days after receipt
thereof, a copy of each notice, determination letter, ruling or opinion Borrower
or any member of its Controlled Group receives from the PBGC, DOL or IRS with
respect to any Plan unless the subject matter of such notice, determination,
letter, ruling or opinion would not have a reasonable likelihood of resulting in
liability in excess of Five Million Dollars ($5,000,000);
(c) promptly and in any event within ten (10) Business Days after
receipt thereof, a copy of all correspondence Borrower or any member of its
Controlled Group receives from the Plan Sponsor (as defined by Section
4001(a)(10) of ERISA) of any Plan concerning potential withdrawal liability of
Borrower or any member of its Controlled Group pursuant to Section 4219 or 4202
of ERISA, and a statement from the chief financial officer of Borrower or such
member of its Controlled Group setting forth details as to the events giving
rise to such potential withdrawal liability and the action which Borrower or
such member of its Controlled Group proposes to take with respect thereto unless
the potential withdrawal liability would not have a reasonable likelihood of
exceeding Five Million Dollars ($5,000,000);
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(d) notification within thirty (30) days prior to any material increase
in the benefits under any existing Plan, or the establishment of any new Plan,
or the commencement of contributions to any Plan, to which Borrower or any
member of its Controlled Group was not previously contributing except to the
extent that any such action (i) is required to maintain the qualified status of
such Plan under Section 401(a) of the Code or (ii) would not have a reasonable
likelihood of resulting in liability in excess of Five Million Dollars
($5,000,000); and
(e) promptly after receipt of written notice of commencement thereof,
notice of any action, suit or proceeding before any Tribunal affecting such
Company or any member of its Controlled Group with respect to any Plan, except
those which, in the aggregate, if adversely determined could not have a Material
Adverse Effect.
3.7. Employee Plans.
(a) Borrower will, and will cause each member of its Controlled Group
to, with respect to other than a Multiemployer Plan, for each existing Plan and
each Plan hereafter adopted or maintained by Borrower or any member of its
Controlled Group which is intended to be "qualified" within the meaning of
Section 401(a) of the Code, (i) seek and receive determination letters from the
IRS to the effect that such Plan is so qualified; (ii) from and after the
adoption of any such Plan, cause such Plan to be so qualified, to be
administered in all material respects in accordance with the requirements of
ERISA and Section 401(a) of the Code and to be amended to incorporate provisions
for such Plan to remain qualified under the Code prior to the expiration of any
remedial amendment period with respect to such Plan; (iii) make all required
contributions by the due date under Section 412 of the Code and Section 302 of
ERISA; and (iv) not take any action which could reasonably be expected to cause
such Plan not to be qualified within the meaning of Section 401(a) of the Code
or not to be administered in all material respects in accordance with the
requirements of ERISA and Section 401(a) of the Code, except where the failure
to perform any of the covenants set forth in clauses (i)-(iv) immediately
preceding would not individually, or in the aggregate, have a reasonable
likelihood of resulting in liability to Borrower or any member of its Controlled
Group in excess of Twenty Million Dollars ($20,000,000); and
(b) Borrower will, and will cause each member of its Controlled Group
to, with respect to each Multiemployer Plan and each Plan which is not intended
to be qualified within the meaning of Section 401(a) of the Code, (i) make all
contributions required by the provisions of such Multiemployer Plan and each
such Plan and (ii) comply in all respects with the provisions of ERISA
applicable to each such Plan, except where the failure to perform any of the
covenants set forth in clauses (i) or (ii) immediately preceding would not
individually, or in the aggregate, have a reasonable likelihood of resulting in
liability to Borrower or any member of its Controlled Group in excess of Twenty
Million Dollars ($20,000,000).
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3.8. Environmental Notice and Inspection.
(a) Borrower will notify Administrative Lender and Lenders in writing,
promptly upon Borrower or any other Company learning, of any of the following
which has a reasonable likelihood of resulting in liability in excess of Five
Million Dollars ($5,000,000):
(i) each Environmental Claim which any Company receives,
including one to take any remedial, removal or other action with
respect to any Hazardous Materials contained on any property, whether
or not owned by such Company;
(ii) each notice of violation of any Environmental Law; and
(iii) each commencement of any judicial or administrative
proceeding or investigation concerning an Environmental Claim with
respect to any of the Companies.
(b) Borrower will permit and cause each other Company to permit
Administrative Lender, any Lender and any agent or any representative thereof,
during normal business hours and with reasonable prior notice, to, at
Administrative Lender's or such Lender's expense, inspect all unprivileged
documents, property and operations, and interview any employees, representatives
or agents, of any Company, in each case pertaining to the areas of environmental
compliance, hazard or liability.
(c) Borrower will upon written request by Administrative Lender or any
Lender, submit and cause each other Company to submit, to Administrative Lender
or such Lender, at reasonable intervals, a report providing an update of the
status of any environmental, health or safety compliance, hazard or liability
issue identified in any notice or report required pursuant to this Section and
any other environmental, health or safety compliance obligation, remedial
obligation or liability that individually has a reasonable likelihood of
resulting in liability in excess of Five Million Dollars ($5,000,000).
3.9. Solvency. Borrower shall continue, and shall cause each of its
Material Subsidiaries to continue, to be Solvent.
ARTICLE IV.
NEGATIVE COVENANTS
From the Agreement Date, and so long as any Loan shall remain unpaid,
any Letter of Credit shall be outstanding, any Lender shall have any Commitment
hereunder or any part of the Obligation shall remain unpaid:
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4.1. Funded Debt to Capitalization Ratio. Borrower shall not permit the
Funded Debt to Capitalization Ratio to exceed (a) 0.55 to 1 at any time during
the period from the Agreement Date to and including September 30, 1999 and (b)
0.50 to 1 at any time thereafter.
4.2. EBITDA To Interest Charges. Borrower shall not permit the ratio of
EBITDA to Interest Charges to be less than (a) 2.50 to 1 at any time during the
period from the Agreement Date to and including September 30, 1998, (b) 3.00 to
1 at any time after September 30, 1998 to and including September 30, 1999, and
(c) 3.25 to 1 at any time thereafter.
4.3. Capital Expenditures. Borrower shall not, nor shall it permit any
other Company to, make or commit to make any Capital Expenditures after the
Agreement Date in an aggregate amount for all Companies in excess of (a)
$60,000,000 during fiscal year 1997 and (b) $75,000,000 during any fiscal year
thereafter.
4.4. Net Worth. Borrower shall not permit Net Worth (a) at any time
prior to the Westinghouse Merger to be less than an amount equal to the sum of
(i) $563,000,000, plus (ii) 50% of the cumulative Net Income from and including
July 1, 1997 through the date of calculation (but excluding from the calculation
of cumulative Net Income the effect, if any, of any fiscal quarter (or a portion
of a fiscal quarter not yet ended) of Borrower for which Net Income was a
negative number), plus (iii) 75% of the Net Proceeds received by Borrower or any
of its Subsidiaries from any Equity Issuance occurring on or after the Agreement
Date, plus (iv) any increase in stockholders' equity of Borrower pursuant to the
conversion or exchange of preferred Capital Stock of Borrower into common
Capital Stock of Borrower, plus (v) an amount equal to 75% of the net worth of
any Person that becomes a Subsidiary of Borrower or substantially all of the
assets of which are acquired by Borrower or any of its Subsidiaries to the
extent the purchase price therefor is paid in Capital Stock of Borrower or any
of its Subsidiaries, and (b) as of the date of the Westinghouse Merger (taking
into account the effect thereof) and thereafter to be less than an amount equal
to the sum of (i) the greater of 90% of Net Worth on the date of the
Westinghouse Merger (taking into account the effect thereof) or $425,000,000,
plus (ii) 50% of the cumulative Net Income from and including the date of the
Westinghouse Merger (but excluding from the calculation of cumulative Net Income
the effect, if any, of any fiscal quarter (or a portion of a fiscal quarter not
yet ended) for which Net Income was a negative number), plus (iii) 75% of the
Net Proceeds received by Borrower or any of its Subsidiaries from any Equity
Issuance occurring on and after the Westinghouse Merger, plus (iv) any increase
in stockholders' equity of Borrower pursuant to the conversion or exchange of
preferred Capital Stock of Borrower into common Capital Stock of Borrower, plus
(v) an amount equal to 75% of the net worth of any Person that becomes a
Subsidiary of Borrower or substantially all of the assets of which are acquired
by Borrower or any of its Subsidiaries to the extent the purchase price therefor
is paid in Capital Stock of Borrower or any of its Subsidiaries.
4.5. Investments. Borrower shall not, nor shall it permit any other
Company to, make, acquire or own any Investment other than Permitted
Investments; provided, however, neither Borrower nor any other Company shall
make, acquire or own any Permitted Investment if
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immediately prior to such Investment or as a result of owning such Investment, a
Default or Event of Default exists, or if after giving effect to any such
Investment, a Default or Event of Default exists or would result therefrom.
4.6. Acquisitions. Borrower shall not, nor shall it permit any other
Company to, directly or indirectly, make any Acquisitions; provided, however, if
immediately prior to and after giving effect to the proposed Acquisition there
shall exist no Default or Event of Default, Borrower or any of its Subsidiaries
may make Acquisitions so long as (i) Administrative Lender shall have received
written notice of such proposed Acquisition at least ten days prior to the date
of such Acquisition, which shall include an Officer's Certificate setting forth
the covenant calculations therein both immediately prior to and after giving
effect to such proposed Acquisition, (ii) the assets, property or business
acquired in such proposed Acquisition shall be in a business or activity
described in Section 5.16, (iii) if such Acquisition results in a Material
Subsidiary, such Subsidiary shall simultaneously with or immediately following
such Acquisition comply with Section 3.1(g), (iv) during fiscal year 1997 (A)
the aggregate Acquisition Consideration (excluding Equity Consideration) for any
single Acquisition during such year shall not exceed $100,000,000 and (B) the
aggregate Acquisition Consideration for any single Acquisition during such year
shall not exceed $150,000,000, (v) during fiscal year 1998 (A) the aggregate
Acquisition Consideration (excluding Equity Consideration) for any single
Acquisition during such year shall not exceed $125,000,000 and (B) the aggregate
Acquisition Consideration for any single Acquisition during such year shall not
exceed $200,000,000 and (vi) during each fiscal year thereafter (A) the
aggregate Acquisition Consideration (excluding Equity Consideration) for any
single Acquisition during such year shall not exceed $150,000,000 and (B) the
aggregate Acquisition Consideration for any single Acquisition during such year
shall not exceed $250,000,000.
4.7. Limitation on Liens. Borrower shall not, nor shall it permit any
other Company to, create or suffer to be created or to exist any Lien upon any
of its property or assets except a Permitted Lien.
4.8. Debt. Borrower shall not, nor shall it permit any other Company
to, directly or indirectly, create, incur, assume, become or be liable, in any
manner in respect of, or suffer to exist, any Debt or Contingent Debt except
Permitted Debt.
4.9. Mergers, etc. Neither Borrower nor any other Company shall be a
party to any merger or consolidation other than the Westinghouse Merger, unless
(a) with respect to a merger or consolidation, Borrower shall be the survivor,
unless the merger or consolidation involves a Company other than Borrower, in
which case one of Borrower's Subsidiaries shall be the surviving corporation,
(b) such transaction shall not be utilized to circumvent compliance with any
term or provision herein, and (c) no Default or Event of Default shall then be
in existence or occur as a result of such transaction.
4.10. ERISA. Borrower will not directly or indirectly permit any member
of its Controlled Group to directly or indirectly (a) terminate any Plan so as
to result in any liability to
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Borrower or any member of its Controlled Group in an amount in excess of Twenty
Million Dollars ($20,000,000); (b) permit to exist any ERISA Event or any event
described in Section 4063(a) of ERISA with respect to any Plan which would have
a reasonable likelihood of resulting in liability to Borrower or any member of
its Controlled Group in an amount in excess of Twenty Million Dollars
($20,000,000); (c) make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan so as to result in any
liability to Borrower or any member of its Controlled Group in an amount in
excess of Twenty Million Dollars ($20,000,000); (d) enter into any new Plan or
modify any existing Plan so as to increase its obligations thereunder except (i)
as shall be required to maintain the qualified status of such Plan under Section
401(a) of the Code or (ii) to the extent that any such action would not have a
reasonable likelihood of resulting in liability to Borrower or any member of its
Controlled Group in excess of Twenty Million Dollars ($20,000,000); (e) permit
the present value of all benefit liabilities, as defined in Title IV of ERISA,
under any Plan subject to Title IV of ERISA (using the actuarial assumptions
utilized by the PBGC upon termination of a Plan) to exceed the fair market value
of Plan assets allocable to such benefits all determined as of the most recent
valuation date for each such Plan unless the existence of such deficiency would
not have a reasonable likelihood of resulting in liability to Borrower or any
member of its Controlled Group in excess of Twenty Million Dollars
($20,000,000); or (f) engage in any transaction prohibited by Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not available,
unless such transaction would not have a reasonable likelihood of resulting in
liability in excess of Twenty Million Dollars ($20,000,000) to Borrower or any
member of its Controlled Group.
4.11. Dispositions of Assets. Borrower shall not, nor shall it permit
any other Company to, sell, lease, transfer or otherwise dispose of any of its
assets (each a "Disposition"), if immediately prior to such Disposition, a
Default or Event of Default exists, or if after giving effect to any such
Disposition, a Default or Event of Default would result therefrom.
Notwithstanding anything in this Section 4.11 to the contrary, Borrower shall
not sell The Opryland Hotel.
4.12. Transactions with Affiliates. Except as contemplated by the
Gaylord Restructuring, to the extent not inconsistent with past practices,
Borrower shall not, nor shall it permit any other Company to, directly or
indirectly, enter into any transaction (including, but not limited to, the sale
or exchange of property or the rendering of service) with any of its Affiliates
(other than Borrower or any Guarantor), other than in the ordinary course of
business and upon fair and reasonable terms no less favorable than such Company
could obtain or could become entitled to in an arm's-length transaction with a
Person which was not an Affiliate of such Company.
4.13. Accounting Changes. Borrower shall not, nor shall it permit any
other Company to, make or permit any change in accounting policies affecting the
presentation of financial statements or reporting practices, except as required
or permitted pursuant to GAAP; provided, however, to the extent that any such
change would materially affect any accounting determination contemplated by this
Agreement, Borrower and Lenders agree to negotiate in good faith revisions to
the appropriate covenants and related definitions to account for such changes.
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4.14. Margin Regulations. Borrower shall not, nor shall it permit any
other Company to, use the proceeds of any Loan or Letter of Credit to purchase
or carry any equity security of a class which is registered pursuant to Section
12 of the Securities Exchange Act of 1934, and no Loan or Letter of Credit shall
otherwise be, in violation of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System.
4.15. Hostile Acquisitions. Borrower shall not, nor shall it permit any
other Company to, cause any of the proceeds of the Loans to fund a Hostile
Acquisition without providing Lenders with 10 Business Days' prior written
notice of such Hostile Acquisition specifying the nature thereof. If any Lender
shall inform Borrower and other Lenders, within 5 Business Days of receipt of
notice of such Hostile Acquisition from Borrower, that such Lender has a
conflict with funding such Hostile Acquisition, Borrower agrees to use its best
efforts to designate a replacement Lender or Lenders reasonably satisfactory to
Administrative Lender and Determining Lenders to purchase the Revolving Credit
Note of such Lender and to assume the Commitment of such Lender. Such purchase
shall be without recourse to or warranty by, or expense to, such Lender for a
purchase price equal to the outstanding principal amount of the Loans payable to
such Lender and accrued but unpaid interest, Commitment Fees and other fees in
respect of such Lender's Commitment and any other amounts payable to such Lender
under this Agreement. Any Lender replaced pursuant to this Section 4.12 shall
(i) have no obligation to pay any processing and recordation fee pursuant to
Section 8.16(a) and (ii) continue to be entitled to the Rights available to
Lenders pursuant to Sections 2.9, 2.11, 2.13(d), 8.10 and 8.14.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants, but not any time prior to
the Agreement Date, as follows:
5.1. Organization and Qualification. The Companies (a) are duly
organized, validly existing, and in good standing under the Laws of their
jurisdictions of incorporation to the extent necessary not to have a Material
Adverse Effect; (b) are duly licensed and in good standing as a foreign entity
in each jurisdiction in which the nature of the business transacted or the
property owned is such as to require licensing as such, except where the failure
to be so licensed would not have a Material Adverse Effect; and (c) possess all
legal authority, power, licenses, permits and franchises necessary to conduct
their business the failure to possess which would have a Material Adverse Effect
and to execute, deliver and comply with the terms of the Loan Documents to be
executed by them, all of which have been duly authorized and approved by all
necessary legal action and for which no approval or consent of any Tribunal is
required. The respective jurisdictions of organization and the percentage
ownership by each Company of each other Company listed on Exhibit F (as Exhibit
F is amended or supplemented pursuant to Section 3.2(h)) are true and correct.
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5.2. Financial Statements. The audited consolidated financial
statements of Companies as of and for the period ended December 31, 1996 and the
unaudited financial statements of Companies as of and for the period ended March
31, 1997, heretofore furnished to Lenders are complete and correct in all
material respects and were prepared substantially in accordance with GAAP except
to the extent stated therein, and fairly present the financial condition and
results of operation of Companies as of the dates indicated and for the periods
involved. As of the date of said financial statements there were no contingent
liabilities, liabilities for Taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, any of which
are material in amount in relation to the financial condition of Companies,
except as referred to or reflected or provided for in said financial statements.
Since the date of said financial statements, there has been no material adverse
change in the consolidated financial condition or business operations of
Companies, taken as a whole.
5.3. Taxes. Borrower and each other Company have filed all federal,
state and other income tax returns which are required to be filed (other than
tax returns, none of which concern a material part of the business, operations
or properties of Companies taken as a whole, which in the reasonable opinion of
Borrower are not required to be filed) and have paid all Taxes as shown on said
returns, and all Taxes due or payable without returns and all assessments
received to the extent that such Taxes or assessments have become due, except
for any Taxes and assessments being contested in good faith by proper
proceedings and for which adequate reserves have been established in accordance
with GAAP or where the non-filing or non-payment of which has no reasonable
likelihood of having a Material Adverse Effect. All Tax liabilities of Borrower
and each other Company are adequately provided for on the books of each Company,
including interest and penalties, except where the failure to so provide would
not have a Material Adverse Effect. No income tax liability of a material nature
has been asserted by taxing authorities for Taxes in excess of those already
paid, and federal, state and other income tax returns of Borrower and each other
Company have been examined and reported on by the taxing authorities or closed
by applicable Laws and satisfied for all years prior to and including 1993.
5.4. Compliance With Laws and Other Matters. None of the Companies is,
nor will the execution, delivery and performance and compliance with the terms
of the Loan Documents cause any of the Companies to be: (a) in violation of any
Law or their articles of incorporation or bylaws in any respect which would have
any Material Adverse Effect; or (b) in violation of or in default with the terms
of any Material Contractual Obligation (including, without limitation, network
affiliation agreements) to which any Company is a party which violation or
default would have a Material Adverse Effect or result in or require the
creation or imposition of any Lien (other than a Permitted Lien) upon or with
respect to any of the properties of any Company. Except for matters affecting
the broadcasting, communications and entertainment industries generally and for
matters described in Exhibit O, there is no existing Litigation pending against
or, to the knowledge of Borrower, threatened against any Company or its
properties which is not fully covered by insurance (or for which adequate
reserves have not been set up and reflected on the financial statements
delivered to Lenders and described in Section 5.2) or which would have a
Material
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Adverse Effect. There are no outstanding or unpaid final judgments against any
of the Companies which would have a Material Adverse Effect.
5.5. Total Liabilities. Since the date of the financial statements
referred to in Section 5.2, no Company has incurred any material liability
included within total liabilities, except (i) as referred to or reflected in the
financial statements referred to in Section 5.2, (ii) as disclosed in Exhibit P,
(iii) liabilities incurred in the ordinary course of business, or (iv) such
liabilities as would not have a Material Adverse Effect.
5.6. Title to Properties. Each Company has (a) full power, authority
and legal right to own and operate the properties which it now owns, and to
carry on the business in which it is now engaged; and (b) to the extent
necessary to carry on its business without causing a Material Adverse Effect,
good and marketable title in fee simple to all real property owned by it (except
as to real property or parcels thereof acquired by quitclaim) and good and
merchantable title to all its other properties and assets subject to no Lien of
any kind except Permitted Liens.
5.7. Corporate Authorization; Validity. The Board of Directors of
Borrower and each Guarantor, as appropriate, have duly authorized the execution
and delivery of this Agreement, the Notes and the other Loan Documents and the
performance of their respective terms. No consent of the stockholders of
Borrower or any Guarantor is required as a prerequisite to the validity and
enforceability of this Agreement or any document contemplated herein. Borrower
and each Guarantor have full power, authority and legal right to execute and
deliver and to perform and observe the provisions of this Agreement, the Notes
and all other Loan Documents, as appropriate, to be executed and delivered by
them. This Agreement is, and the Notes and each of the other Loan Documents will
on due execution and delivery thereof be, the legal, valid and binding
obligation of Borrower or the Guarantor executing and delivering it, enforceable
in accordance with their respective terms, subject as to enforcement of remedies
to any Debtor Relief Laws and general equitable principles.
5.8. Use of Proceeds. No Company is engaged principally in the business
of extending credit secured directly or indirectly, in whole or in part, by
margin stock (within the meaning of Regulation U ("Regulation U") of the Board
of Governors of the Federal Reserve System), and, after giving effect to each
Loan and Letter of Credit hereunder and the application of the proceeds thereof,
not more than 25% of the assets of the Companies are or will be margin stock. No
Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or any of the other Loan Documents to violate
any regulation of the Board of Governors of the Federal Reserve System or to
violate the Securities Exchange Act of 1934, in each case as in effect now or as
the same may hereafter be in effect.
5.9. Possession of Franchises, Licenses, Etc. Each Company possesses
all franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities that (i) are
necessary in any material respect for the ownership, maintenance and operation
of their properties and assets, and (ii) the loss of possession of which
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would have a Material Adverse Effect, and no Company is in violation of any
thereof in any material respect the result of which would have a Material
Adverse Effect.
5.10. Leases. Each Company peacefully enjoys possession of all property
leased for the operation of its properties and assets, the loss of possession of
which could have a Material Adverse Effect. All such leases are valid and
subsisting and are in full force and effect to the extent necessary so as to not
result in a Material Adverse Effect.
5.11. Disclosure. Neither this Agreement nor any other document,
certificate or statement, taken as a whole, furnished to the Lenders by or on
behalf of Borrower or any other Company in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein and therein not misleading when
taken as a whole.
5.12. Government Regulation. No Company is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940, the Interstate Commerce Act (other than Grand
Ole Opry Tours, Inc.) (as any of the preceding acts have been amended), or any
other Law which the incurring of Debt by Borrower would violate in any material
respect, including, without limitation, Laws relating to common or contract
carriers or the sale of electricity, gas, steam, water, or other public utility
services; provided, however, that certain of the Companies are regulated by the
FCC, and are subject to requirements of the Communications Act of 1934, as
amended, and the current rules and regulations of the FCC, but (a) are in
compliance with respect thereto in all circumstances where the failure to do so
would have a Material Adverse Effect and (b) no approval or authorization by or
filing with any Tribunal is necessary or required for the execution and delivery
of any of the Loan Documents or the performance of their respective terms;
provided, however, that this Agreement may be required to be filed with the FCC
within thirty (30) days after execution hereof.
5.13. Environmental Matters.
(a) The operations of Borrower and each other Company comply in all
respects with all Environmental Laws and all other applicable Requirements of
Law concerning environmental health and safety, except for such non-compliance
which may not result in liability in excess of Twenty Million Dollars
($20,000,000).
(b) Except where the failure to obtain would not have a Material
Adverse Effect, Borrower and each other Company have obtained or applied for all
environmental, health and safety permits necessary for their operations. With
respect to all such permits which have been obtained, all such permits are in
good standing other than those which have expired as to which applications for
renewal or extension are pending. With respect to all such permits which have
been obtained and those which have expired as to which applications for renewal
or extension have been made, Borrower and each other Company are in compliance
with all terms and conditions
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of such permits except where the failure of such compliance could not be
reasonably expected to have a Material Adverse Effect.
(c) Except as set forth on Exhibit O, neither Borrower nor any other
Company nor any of their present property or operations (as well as their past
property or operations) is subject to any outstanding written order from or
agreement with any Tribunal or other Person or subject to any judicial or
docketed administrative proceeding respecting (i) any Environmental Law or any
other environmental or health or safety Requirement of Law, the result of which
would have a Material Adverse Effect; (ii) any action required to clean up,
remove, treat or in any other way address Contaminants in the indoor or outdoor
environment, the result of which would have a Material Adverse Effect; or (iii)
any Environmental Claim arising from the release or threatened release of a
Contaminant into the environment which could reasonably be expected to result in
liability in excess of Twenty Million Dollars ($20,000,000).
(d) Except as set forth on Exhibit O, there are no conditions or
circumstances associated with any property of Borrower or any other Company
formerly owned or operated by Borrower or any other Company or any of its
predecessors or with the former operations, including off-site disposal
practices, of Borrower or any other Company or its predecessors which could
reasonably be expected to give rise to Environmental Claims which could result
in liability in excess of Twenty Million Dollars ($20,000,000).
(e) Except as set forth on Exhibit O, there are no conditions or
circumstances which may give rise to any Environmental Claim arising from the
operations of Borrower or any other Company which could reasonably be expected
to result in liability in excess of Twenty Million Dollars ($20,000,000). (i)
Neither Borrower nor any other Company has any underground storage tanks (A)
that are not properly permitted under applicable Environmental Laws or (B) that
are leaking or dispose of Contaminants off-site which could reasonably be
expected to result in liability in excess of Twenty Million Dollars
($20,000,000) and (ii) Borrower and each other Company have notified all of its
employees of the existence, if any, of any health hazard arising from the
conditions of its employment and have met all notification requirements under
Title III of CERCLA and under OSHA, the violation of which has a reasonable
likelihood of resulting in liability in excess of Twenty Million Dollars
($20,000,000) in the aggregate.
5.14. ERISA. Each Plan is in compliance in all respects with the
applicable provisions of ERISA, the Code and all other applicable federal or
state Laws. With respect to each Plan, all reports required under ERISA or any
other applicable Law to be filed with the relevant Tribunal have been duly filed
and all such reports are true and correct in all material respects as of the
date given. No Plan which is subject to Section 412 of the Code has been
terminated nor has any accumulated funding deficiency (as defined in Section
412(a) of the Code) been incurred (without regard to any waiver granted under
Section 412 of the Code) nor has any funding waiver from the IRS been received
or requested. Neither Borrower nor any member of its Controlled Group has failed
to make any contribution or pay any amount due or owing as required by Section
412 of the Code or Section 302 of ERISA or the terms of any Plan prior to the
due date under Section 412
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of the Code and Section 302 of ERISA or the terms of any Plan. There has been no
ERISA Event or any event requiring disclosure under ERISA with respect to any
Plan or trust maintained pursuant to any Plan of Borrower or any member of its
Controlled Group. The value of the assets of each Plan (other than a
Multiemployer Plan) equalled or exceeded the present value of the benefit
liabilities, as defined in Title IV of ERISA, of each such Plan as of the most
recent valuation date using Plan actuarial assumptions at such date. There are
no pending or threatened claims, lawsuits or actions (other than routine claims
for benefits in the ordinary course) asserted or instituted against and neither
Borrower nor any member of its Controlled Group has knowledge of any threatened
litigation or claims against the assets of any Plan or trust maintained pursuant
to any Plan or against any fiduciary of such Plan or such trust with respect to
the operation of such Plan or such trust. Neither Borrower nor any member of its
Controlled Group has engaged in any prohibited transaction, within the meaning
of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan
which has not been corrected. Neither Borrower nor any member of its Controlled
Group (i) has incurred or reasonably expects to incur (A) any liability under
Title IV of ERISA (other than premiums due under Section 4007 of ERISA to the
PBGC), (B) any withdrawal liability (and no event has occurred which with the
giving of notice under Section 4219 of ERISA would result in such liability)
under Section 4201 of ERISA as a result of a complete or partial withdrawal
(within the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan
which has not been paid in full or (C) any liability under Section 4062 of ERISA
to the PBGC or to a trustee appointed under Section 4042 of ERISA which has not
been paid in full or (ii) has withdrawn from any Multiemployer Plan. Neither
Borrower nor any member of its Controlled Group nor any organization to which
Borrower or any member of its Controlled Group is a successor or parent
corporation within the meaning of ERISA Section 4069(b) has engaged in a
transaction within the meaning of Section 4069 of ERISA. Neither Borrower nor
any member of its Controlled Group maintains or has established any Plan which
constitutes a welfare benefit plan within the meaning of Section 3(1) of ERISA
which provides for continuing health, medical or hospitalization benefits or
coverage for any participant or any beneficiary of any participant after such
participant's termination of employment except (i) as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
and the regulations thereunder, (ii) to the extent that the full cost thereof is
borne by the participant or beneficiary or (iii) any such arrangement (or the
liability associated with such arrangement) which would not be required to be
disclosed on Borrower's consolidated financial statements pursuant to GAAP.
Borrower and each member of its Controlled Group which maintains a welfare
benefit plan within the meaning of Section 3(1) of ERISA has complied with all
applicable notice and continuation requirements of COBRA and the regulations
thereunder except where the failure to so comply could not result in the loss of
a tax deduction or imposition of a tax or other penalty on Borrower or any
member of its Controlled Group. Notwithstanding anything herein to the contrary,
no statement, representation or warranty contained in this Section 5.14 shall be
deemed to be or to have been false, misleading or erroneous in any material
respect when made if the effect of the failure of such statement, representation
or warranty to be true and correct would not have a reasonable likelihood of
resulting in liability to Borrower or any member of its Controlled Group,
individually or in the aggregate, in excess of Twenty Million Dollars
($20,000,000).
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5.15. Solvency. Borrower and each Guarantor is, and Borrower and its
Subsidiaries on a consolidated basis are, Solvent.
5.16. Business. Borrower and its Subsidiaries, taken as a whole, are
engaged primarily in the broadcasting, communications and entertainment business
and activities directly related thereto.
ARTICLE VI.
DEFAULT
6.1. Default. The term "Event of Default" as used herein means the
occurrence and continuance of any one or more of the following events (including
the passage of time, if any, specified therefor):
(a) Payments. The failure or refusal of Borrower to pay when due the
principal of the Loans, interest on the Loans, the Commitment Fee, the
Administrative Lender's Fee, any fee in respect of the Letters of Credit or any
other obligation created pursuant to this Agreement, the Notes or evidenced by
any of the other Loan Documents and such failure shall not have been remedied by
the earlier of (i) one (1) Business Day after telephonic notice (to be confirmed
in writing) by Administrative Lender to Borrower or (ii) five (5) Business Days
after the date such payment is due.
(b) Negative Covenants. The failure or refusal of any Company to comply
or be in compliance with any covenant, term or provision in Article IV.
(c) Other Covenants. The failure or refusal of any Company punctually
and properly to perform, observe and comply with any covenant, agreement or
condition contained in any of the Loan Documents (other than covenants to pay
the Obligation or contained in Article IV) and such failure shall not have been
remedied within 30 days after the earlier of notice of such failure to such
Company, as applicable, or such other time as an officer of such Company shall
have actual knowledge thereof.
(d) Voluntary Debtor Relief. Borrower or any Guarantor shall (i)
execute an assignment for the benefit of creditors, or (ii) admit in writing its
inability, or be generally unable, to pay its debts generally as they become
due, or (iii) voluntarily seek the benefit or benefits of any Debtor Relief Law,
or (iv) voluntarily become a party to any proceeding provided for by any Debtor
Relief Law, (v) consent to, or acquiesce in, any order, judgment, decree or
petition described in Section 6.1(e) or (vi) take any corporate action to
authorize any of the foregoing.
(e) Involuntary Proceedings. Borrower or any Guarantor shall
involuntarily (i) have an order, judgment or decree entered against it by any
Tribunal pursuant to any Debtor Relief
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Law, and such order, judgment or decree is not stayed or reversed within 60 days
after the entry thereof, or (ii) have a petition filed against it seeking the
benefit or benefits provided for by any Debtor Relief Law, and such petition is
not discharged within 60 days after the filing thereof.
(f) Judgments. Any Company shall have rendered against it a money
judgment which would have a Material Adverse Effect and such judgment is not
stayed or dismissed within 30 days.
(g) Other Debt. Except as to matters being disputed or contested in
good faith, (i) any Company shall default in the payment of principal of or
interest on any other obligation for money borrowed or received as an advance
(or any obligation under any conditional sale or other title retention agreement
or any obligation issued or assumed as full or partial payment for property
whether or not secured by purchase money Lien, or any obligation under notes
payable or drafts accepted representing extensions of credit), excluding any
such obligations which in the aggregate are not in excess of $5,000,000.00 and
which (A) are not secured directly or indirectly by Liens or (B) if secured
directly or indirectly by Liens, the aggregate value of assets secured by said
Liens is not in excess of $5,000,000.00, or (ii) a default or any other event
shall occur or condition shall exist under any agreement or instrument under
which such obligation is created and shall continue after any applicable grace
period, if the effect of such default or the effect of such event or condition
is to cause or permit the holder or holders of such obligation (or any trustee
on their behalf) to cause such obligation to become due prior to its date of
maturity or require such obligation to be purchased, prepaid or redeemed.
(h) Misrepresentation. The discovery by any Lender that any statement,
representation or warranty in the Loan Documents or in any writing ever
delivered to any Lender pursuant to the Loan Documents, shall prove to have been
false, misleading or erroneous in any material respect when made or deemed made.
(i) ERISA. With respect to any Plan of Borrower or any member of its
Controlled Group: (i) Borrower, any such member of its Controlled Group or any
other party-in-interest or disqualified person shall engage in transactions
which in the aggregate would reasonably result in a liability to Borrower or any
member of its Controlled Group under Section 409 or 502 of ERISA or Section 4975
of the Code; (ii) Borrower or any member of its Controlled Group shall incur any
accumulated funding deficiency, as defined in Section 412 of the Code, or
request a funding waiver from the IRS for contributions to a Plan that is
subject to Section 412 of the Code;(iii) Borrower or any member of its
Controlled Group shall incur any withdrawal liability as a result of a complete
or partial withdrawal within the meaning of Section 4203 or 4205 of ERISA; (iv)
Borrower, any member of its Controlled Group or any Plan sponsor shall notify
the PBGC of an intent to terminate, or the PBGC shall institute proceedings to
terminate, a Plan; (v) a Reportable Event shall occur with respect to a Plan;
(vi) a trustee shall be appointed by a court of competent jurisdiction to
administer any Plan or the assets thereof; (vii) except as shall be required to
maintain the qualified status of any Plan under Section 401(a) of the Code, the
benefits of any Plan shall be increased, or Borrower or any member of its
Controlled Group shall begin to maintain,
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or begin to contribute to, any Plan; (viii) any ERISA Event with respect to a
Plan shall have occurred, and thirty (30) days thereafter (A) such ERISA Event
(if correctable) shall not have been corrected and (B) with respect to a Plan
subject to Title IV of ERISA, the then present value of such Plan's benefit
liabilities, as defined in Title IV of ERISA, shall exceed the then current
value of assets accumulated in such Plan; or (ix) Borrower or any member of its
Controlled Group shall fail to make a required contribution by the due date
under Section 412 of the Code or Section 302 of ERISA which would result in the
imposition of a Lien (other than a Permitted Lien) under Section 412 of the Code
or Section 302 of ERISA; provided, however, that the events listed in
subsections (i)-(viii) shall constitute Events of Default only if, as of the
date thereof or any subsequent date, the maximum amount of liability which
Borrower or any member of its Controlled Group has a reasonable likelihood of
incurring in the aggregate under the applicable provisions of ERISA resulting
from such event or such events exceeds Twenty Million Dollars ($20,000,000).
(j) Guaranty. The Guaranty shall, for any reason other than expressly
pursuant to the terms thereof, be deemed invalid or unenforceable with respect
to any Guarantor, or Borrower or any Guarantor shall assert that, for any
reason, the Guaranty is invalid or unenforceable.
(k) Change of Control. A Change of Control shall occur.
6.2. Certain Rights of Lenders.
(a) Remedies Upon Default. If an Event of Default specified in
subparagraph (d) or (e) of Section 6.1 occurs, the Commitments of Lenders shall
automatically terminate concurrently therewith and the Obligation shall
thereupon become due and payable concurrently therewith, without any action by
Administrative Lender or any Lender and without diligence, presentment, demand,
protest, notice of protest or intent to accelerate, or notice of any other kind,
all of which are hereby expressly waived. Should any other Event of Default
occur and be continuing, Administrative Lender may, with the consent of, or
shall, at the request of, Determining Lenders, do any one or more of the
following, without diligence, presentment, demand, protest, notice of protest,
acceleration or intent to accelerate, or notice of any other kind, all of which
are hereby expressly waived:
(i) Acceleration. Declare the entire unpaid balance of the
Obligation (which shall include, without limitation, the aggregate
amount of all obligations with respect to outstanding Letters of
Credit), or any part thereof, immediately due and payable, whereupon it
shall be due and payable.
(ii) Termination. Terminate all or any portion of the
Commitments to lend hereunder.
(iii) Judgment. Reduce any claim to judgment.
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(iv) Letters of Credit. If any Letter of Credit shall be then
outstanding, make demand upon Borrower to, and forthwith upon such
demand, Borrower shall, pay to Administrative Lender in same day funds
at the office of Administrative Lender in such demand, for deposit in
the L/C Cash Collateral Account, an amount equal to the maximum amount
available to be drawn under the Letters of Credit then outstanding,
less any funds previously deposited by Borrower, and then-remaining on
deposit, in the L/C Cash Collateral Account in connection with such
Letters of Credit.
(v) Rights. Exercise any and all Rights afforded by the Laws
of the State of Texas or any other jurisdiction, as Administrative
Lender shall deem appropriate, including, but not limited to, the UCC,
or by any of the Loan Documents, or by Law or equity, or otherwise.
(vi) Guaranties. Exercise any and all Rights under the
Guaranties.
(vii) Offset. Exercise the Rights of offset and/or banker's
Lien against the interest of Borrower or any Subsidiary in and to every
account with any Lender or any participant, and other property in
possession of any Lender or any participant, to the full extent of the
Obligation.
(b) Lenders Not In Control. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give Lenders the
Rights or power to exercise control over the affairs and/or management of
Borrower or any Subsidiary of Borrower, the power of Lenders being limited to
the Right to exercise the remedies provided in the other subparagraphs and
subsections of this Section; provided that, if any Lender becomes the owner of
any stock, or other equity interest in, any Person whether through foreclosure
or otherwise, such Lender shall be entitled to exercise such legal Rights as it
may have by being an owner of such stock, or other equity interest in, such
Person.
(c) Waivers. The acceptance by Administrative Lender or any Lender at
any time and from time to time of part payment on the Obligation shall not be
deemed to be a waiver of any Event of Default then existing. No waiver by
Administrative Lender or any Lender of any particular Event of Default shall be
deemed to be a waiver of any Event of Default other than said particular Event
of Default. No delay or omission by any Lender or Administrative Lender in
exercising any Right under the Loan Documents shall impair such Right or be
construed as a waiver thereof or an acquiescence therein, nor shall any single
or partial exercise of any such Right preclude any other or further exercise
thereof, or the exercise of any other Right under the Loan Documents or
otherwise.
(d) Cumulative Rights. All Rights available to Administrative Lender
and Lenders under the Loan Documents shall be cumulative of and in addition to
all other Rights granted to Administrative Lender and Lenders at Law or in
equity, whether or not the Obligation shall be due
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and payable and whether or not Administrative Lender or any Lender shall have
instituted any suit for collection or other action in connection with the Loan
Documents.
(e) Expenditures by Lenders. After the occurrence of an Event of
Default, any sums spent by Administrative Lender or any Lender pursuant to the
exercise of any Right provided herein shall become part of the Obligation and
shall bear interest at a rate per annum equal to the lesser of (i) the Domestic
Rate plus 2% or (ii) the Highest Lawful Rate from the date spent until the date
repaid by Borrower.
ARTICLE VII.
AGREEMENT AMONG LENDERS
7.1. Agreement Among Lenders. Lenders agree among themselves that:
(a) Administrative Lender. Each Lender hereby appoints NationsBank as
its nominee in its name and on its behalf, to receive all documents and items to
be furnished hereunder; to act as nominee for and on behalf of all Lenders in
and under all the Loan Documents; to hold in trust for the benefit of Lenders
monies received under all Loan Documents (but without creating any trustee
relationship between Administrative Lender and Lenders other than in respect of
the holding of such monies); to take such action as may be requested by
Determining Lenders, provided that, unless and until Administrative Lender shall
have received such requests, Administrative Lender may take such action, or
refrain from taking such action, as it may deem advisable and in the best
interests of Lenders, provided, further, Administrative Lender shall not be
required to take any action which exposes Administrative Lender to personal
liability or which is contrary to this Agreement or applicable Law; to arrange
the means whereby the proceeds of Loans of Lenders are to be made available to
Borrower; to, except as otherwise specifically provided herein, promptly
distribute to each Lender, at such Lender's principal office, information,
requests, documents and items received from Borrower and others, and its share
of each Loan payment and such other payments owing to it pursuant to this
Agreement and the other Loan Documents; and to deliver to Borrower and others,
requests, demands, approvals and consents received from Lenders. Administrative
Lender shall have no trustee or other fiduciary relationship in respect of any
Lender by reason of this Agreement or any other Loan Document. The duties of
Administrative Lender under this Agreement and the other Loan Documents are
mechanical in nature.
(b) Replacement of Administrative Lender. Should NationsBank or any
successor Administrative Lender ever cease to be a Lender herein (and/or sell by
participation 100% of its Commitment), or should NationsBank or any successor
Administrative Lender ever resign as Administrative Lender (which resignation
may not occur earlier than 30 days after Administrative Lender's giving of
notice of resignation), or should NationsBank or any successor Administrative
Lender ever be removed with or without cause by Determining Lenders, then the
Lender
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appointed by Determining Lenders shall forthwith become Administrative
Lender, and each Company and Lenders shall execute such documents as such Lender
may reasonably request to reflect such change in and under the Loan Documents.
Any resignation or removal of NationsBank or any successor Administrative Lender
shall become effective upon the appointment by Determining Lenders of a
successor Administrative Lender and Determining Lenders agree to promptly
appoint a successor Administrative Lender; provided that, if Determining Lenders
fail for any reason to appoint a successor within 60 days after such removal or
resignation, then NationsBank or any successor Administrative Lender (as the
case may be) shall thereafter have no duty or obligation to act as
Administrative Lender hereunder, provided NationsBank or any such successor
Administrative Lender (as the case may be) shall have appointed a successor.
(c) Expenses. Each Lender shall pay its pro rata part of any reasonably
necessary expenses incurred by Administrative Lender in connection with any of
the Loan Documents (other than the initial preparation and negotiation of this
Agreement and the other Loan Documents) if Administrative Lender does not
receive reimbursement therefor from other sources within 60 days after the date
incurred. Any amount so paid by Lenders to Administrative Lender shall be
returned by Administrative Lender pro rata to each paying Lender to the extent
later paid by Borrower to Administrative Lender.
(d) Delegation of Duties. Administrative Lender may execute any of its
duties hereunder by or through officers, directors, employees, attorneys or
agents, and shall be entitled to (and shall be protected in relying upon) advice
of counsel concerning all matters pertaining to its duties hereunder.
(e) Reliance by Administrative Lender. Administrative Lender and its
officers, directors, employees, attorneys and agents shall be entitled to rely
and shall be fully protected in relying on any writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telex or teletype
message, statement, order, or other document or conversation believed by it or
them in good faith to be genuine and correct and to have been signed or made by
the proper Person and, with respect to legal matters, upon opinions of counsel
selected by Administrative Lender. Administrative Lender may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless
Administrative Lender shall receive written notice to the contrary from the
payee of any Note.
(f) Limitation of Administrative Lender's Liability. Neither
Administrative Lender nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred upon it or them by the Loan Documents or be
responsible for the consequences of any error of judgment. Except as set forth
in Section 7.1(a), Administrative Lender shall be under no duty to enforce any
Rights with respect to any of the Loans or the security therefor. Administrative
Lender shall not be compelled to do any act hereunder or to take any action
towards the execution or enforcement of the powers hereby created or to
prosecute or defend any suit in respect hereof, unless indemnified to its
satisfaction (but
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excluding indemnification for gross negligence or wilful misconduct of
Administrative Lender) against loss, cost, liability and expense. Administrative
Lender shall not be responsible in any manner to any Lender for the
effectiveness, enforceability, genuineness, validity or due execution (other
than its own) of any of the Loan Documents or for any representation, warranty,
document, certificate, report or statement made herein or furnished under or in
connection with any of the Loan Documents by any other Person, or be under any
obligation to any Lender to ascertain or to inquire as to the performance or
observation of any of the terms, covenants or conditions of any of the Loan
Documents on the part of Borrower. TO THE EXTENT ADMINISTRATIVE LENDER IS NOT
REIMBURSED BY BORROWER THEREFOR, EACH LENDER, INCLUDING NATIONSBANK, SEVERALLY
AGREES TO INDEMNIFY, PRO RATA, ADMINISTRATIVE LENDER AND HOLD IT HARMLESS FROM
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY
ADMINISTRATIVE LENDER IN ANY WAY RELATING TO OR ARISING OUT OF THE LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY ADMINISTRATIVE LENDER UNDER THE LOAN
DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OR INACTION OF ADMINISTRATIVE LENDER),
EXCEPT AND ONLY TO THE EXTENT THE SAME RESULT FROM GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT BY ADMINISTRATIVE LENDER.
(g) Liability Among Lenders. No Lender shall incur any liability to any
other Lender except for acts or omissions in bad faith, and except as provided
in the last sentence of Section 7.1(f).
(h) Liability for Other Lenders. No Lender shall incur any liability to
any Company or any other Person for any act or omission of any other Lender.
(i) Rights as Lender. With respect to its Commitment and Loans made by
it, Administrative Lender shall have the same Rights as a Lender and may
exercise the same as though it were not Administrative Lender, and the term
"Lender" or "Lenders" shall, unless the context otherwise indicates, include
Administrative Lender in its individual capacity. Administrative Lender may
accept deposits from, act as trustee under indentures of, and generally engage
in any kind of business with, Borrower and any Person who may do business with
or own securities of Borrower all as if Administrative Lender were not
Administrative Lender hereunder and without any duty to account therefor to
Lenders.
7.2. Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Administrative Lender or any other
Lender and based upon the financial statements referred to in Section 5.2 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon
Administrative Lender or any other Lender and based upon such documents and
information as it shall deem appropriate at
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the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
7.3. Benefits of Article. None of the provisions of this Article VII
shall inure to the benefit of Borrower or any Subsidiary, or any Person other
than Lenders; consequently, neither Borrower or any Subsidiary, nor any other
Person, shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of any Lender to comply with such provisions.
ARTICLE VIII.
MISCELLANEOUS
8.1. Accounting Terms. All accounting and financial terms used herein,
and the compliance with each covenant contained herein which relates to
financial matters, shall be determined in accordance with GAAP, except to the
extent that a deviation therefrom is expressly stated herein.
8.2. Money. Unless stipulated otherwise, all references herein to
"Dollars", "money", "payments", or other similar financial or monetary terms,
are references to currency of the United States of America.
8.3. Number and Gender of Words. Wherever herein the singular number is
used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.
8.4. Headings. The headings, captions and arrangements used in any of
the Loan Documents are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of the Loan Documents,
or affect the meaning thereof.
8.5. Articles, Sections, and Exhibits. All references to "Articles",
"Sections", "subparagraphs" or "subsections" contained herein are, unless
specifically indicated otherwise, references to articles, sections,
subparagraphs and subsections of this Agreement. All references to "Exhibits"
contained herein are references to exhibits attached hereto, all of which are
made a part hereof for all purposes, the same as if set forth herein verbatim.
If any exhibit attached hereto which is to be executed and delivered contains
blanks or requires attachments or is otherwise required to be updated or
completed from time to time, it shall be completed correctly and in accordance
with the terms and provisions contained and as contemplated herein prior to or
at the time of the execution and delivery thereof.
8.6. Notices, Etc. All notices, demands and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy,
telex or cable communication) and mailed, telegraphed, telecopied, telexed,
cabled or delivered, if to Borrower, at its address at One
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Gaylord Drive, Nashville, Tennessee 37214, Attention: Chief Financial Officer;
if to any Bank, at its office specified opposite its name on Schedule II hereto;
if to any other Lender, at its office specified in the Assignment and Acceptance
pursuant to which it became a Lender; and if to Administrative Lender, at its
address at 901 Main Street, 67th Floor, Dallas, Texas 75202, Attention: Todd A.
Shipley, Southwest Corporate Finance Department; or, as to each party, at such
other address as shall be designated by such party in a written notice to the
other parties. All such notices and communications shall be effective (i) when
received, if mailed or delivered, or (ii) when delivered to the telegraph
company, transmitted by telecopier, confirmed by telex answerback or delivered
to the cable company, respectively, except that notices and communications to
Administrative Lender pursuant to Article II or VI shall not be effective until
received by Administrative Lender.
8.7. No Waiver; Remedies. No failure on the part of any Lender or
Administrative Lender to exercise, and no delay in exercising, any Right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such Right preclude any other or further exercise thereof or the
exercise of any other Right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by Law.
8.8. Survival of Agreements. All covenants, agreements, representations
and warranties made herein shall survive the execution and the delivery of this
Agreement and the other Loan Documents. All statements contained in any
certificate or other instrument delivered by or on behalf of Borrower or any
Subsidiary hereunder shall be deemed to constitute representations and
warranties made by Borrower or such Subsidiary.
8.9. Binding Effect. All covenants and agreements contained in this
Agreement and all other Loan Documents shall bind and inure to the benefit of
the respective permitted successors and assigns of the parties hereto, except
that Borrower may not assign its Rights, obligations and duties hereunder
without the prior written consent of all Lenders.
8.10. Expenses. Borrower agrees to pay (i) all reasonable out-of-pocket
expenses of Administrative Lender, including reasonable fees and expenses of
Special Counsel, from time to time in connection with amendments or consents to,
or waivers of, any of the Loan Documents, and the consideration of legal
questions relevant thereto and (ii) all reasonable out-of-pocket expenses of
Administrative Lender and each Lender in connection with the enforcement of the
Loan Documents following the occurrence of an Event of Default, including,
without limitation, the reasonable fees and expenses of Special Counsel and each
Lender with respect thereto. The obligations of Borrower under this Section 8.10
shall survive any termination of this Agreement.
8.11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) with respect to Events of Default
other than as specified in subparagraph (d) or (e) of Section 6.1, the making of
the request or the granting of the consent specified by Section 6.2 to authorize
Administrative Lender to declare the Loans due and payable pursuant to the
provisions of Section 6.2, each Lender, subject to Section 2.12, is hereby
authorized at any time
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and from time to time, to the fullest extent permitted by Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of Borrower against any and all of the
Obligations of Borrower, irrespective of whether Administrative Lender or such
Lender shall have made any demand under this Agreement and although such
Obligations may be unmatured. Each Lender agrees promptly to notify Borrower
after any such set-off and application made by such Lender; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of each Lender under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender may have.
8.12. Governing Law. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS SHALL
BE DEEMED CONTRACTS MADE UNDER THE LAWS OF TEXAS AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF TEXAS, EXCEPT TO THE
EXTENT FEDERAL LAWS GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF ALL OR ANY PART OF THIS AGREEMENT AND ALL OTHER LOAN
DOCUMENTS. WITHOUT EXCLUDING ANY OTHER JURISDICTION, BORROWER AGREES THAT THE
COURTS OF TEXAS WILL HAVE JURISDICTION OVER PROCEEDINGS IN CONNECTION HEREWITH.
THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS SHALL BE PERFORMABLE IN DALLAS
COUNTY, TEXAS.
8.13. Usury Provision. It is not the intention of any of the parties to
this Agreement to make an agreement violative of the Laws of any applicable
jurisdiction relating to usury. Regardless of any provision in any of the Loan
Documents, no Lender shall ever be entitled to receive, collect or apply, as
interest on the Obligation, any amount in excess of the Maximum Amount. If any
Lender ever receives, collects or applies, as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial repayment of
principal and treated hereunder as such; and if principal is paid in full, any
remaining excess shall be paid to Borrower. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Maximum
Amount, Borrower and Lenders shall, to the maximum extent permitted under
Applicable Laws, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of the
Obligation so that the interest rate is uniform throughout the entire term of
the Obligation; provided that if the Obligation is paid and performed in full
prior to the end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the Maximum Amount,
Lenders shall refund to Borrower the amount of such excess or credit the amount
of such excess against the total principal amount owing, and, in such event, no
Lender shall be subject to any penalties provided by any Laws for contracting
for, charging or receiving interest in excess of the Maximum Amount. This
Section 8.13 shall
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control every other provision of all agreements among the parties to this
Agreement pertaining to the transactions contemplated by or contained in the
Loan Documents.
8.14. Indemnity.
(A) BORROWER AGREES TO, AND DOES INDEMNIFY AND HOLD HARMLESS EACH
LENDER AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS OF ANY KIND
OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST
ANY LENDER IN ANY WAY RELATING TO OR ARISING OUT OF ANY EVENT OF DEFAULT OR ANY
ACT OR OMISSION OR TRANSACTION OF ANY COMPANY OR ANY OF THEIR OFFICERS OR
DIRECTORS, TO THE EXTENT THAT ANY OF THE SAME RESULTS, DIRECTLY OR INDIRECTLY,
FROM ANY CLAIMS MADE OR ACTIONS, SUITS OR PROCEEDINGS COMMENCED BY OR ON BEHALF
OF ANY PERSON OTHER THAN A LENDER OR ANY ACTION IN GOOD FAITH BROUGHT BY
BORROWER OR ANY GUARANTOR. IN ADDITION, BORROWER HEREBY AGREES TO INDEMNIFY
ADMINISTRATIVE LENDER AND EACH LENDER AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES INCURRED BY ANY OF THEM ARISING
OUT OF OR BY REASON OF ANY INVESTIGATION OR LITIGATION OR OTHER PROCEEDINGS
(INCLUDING ANY THREATENED INVESTIGATION OR LITIGATION OR OTHER PROCEEDINGS)
RELATING TO ANY ACTUAL OR PROPOSED USE BY BORROWER OR ANY SUBSIDIARY OF THE
PROCEEDS OF ANY OF THE LOANS, INCLUDING, WITHOUT LIMITATION, THE REASONABLE FEES
AND DISBURSEMENTS OF COUNSEL INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION
OR LITIGATION OR OTHER PROCEEDINGS (BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES,
CLAIMS, DAMAGES OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED, BUT SPECIFICALLY INCLUDING
ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES INCURRED BY REASON OF
MERE NEGLIGENCE OF THE PERSON TO BE INDEMNIFIED).
(b) If (i) any payment of principal of, or Conversion of, any LIBOR
Loan is made by Borrower to or for the account of a Lender other than on the
last day of the Interest Period for such Loan, as a result of a payment or
Conversion pursuant to Section 2.7, 2.8, 2.9(d), 2.20 or 4.13, acceleration of
the maturity of the Loans pursuant to Section 6.1, or for any other reason, (ii)
Borrower shall fail to Convert into or continue a LIBOR Loan or borrow a LIBOR
Loan on the date specified in the notice thereof (other than a result of any
wrongful act or omission of any Lender), or (iii) any Lender shall sell its
rights and obligations under this Agreement to an Eligible Assignee within 180
days after the Agreement Date resulting in breakage of a LIBOR Loan made by such
selling Lender prior to the last day of the Interest Period therefor, Borrower
shall, upon
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demand by such Lender (with a copy of such demand to Administrative Lender),
pay to Administrative Lender for the account of such Lender any and all
amounts required to compensate such Lender for any and all additional losses,
costs and expenses that it may reasonably incur as a result of such payment,
Conversion or failure to Convert or continue, failure to borrow or breakage
cost as a result of such sale, including, without limitation (except that
with respect to clause (iii) immediately preceding the following shall be the
only loss, cost or expense to be received by a selling Lender), any loss
(excluding loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Loan. Such Lender claiming compensation under
this Section 8.14(b) shall deliver to Borrower and Administrative Lender a
certificate setting forth calculation of the additional amounts or amounts to
be paid to it hereunder which shall be conclusive in the absence of manifest
error. In determining such amount, such Lender may use any reasonable averaging
and attribution methods.
(c) The obligations of Borrower under this Section 8.14 shall survive
any termination of this Agreement.
8.15. Severability. If any provision of any of the Loan Documents is
held to be illegal, invalid or unenforceable under present or future Laws during
the term thereof, such provision shall be fully severable, the appropriate Loan
Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part thereof, and the remaining
provisions thereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision there shall be added automatically as a part of such Loan Document a
provision as similar in terms to the illegal, invalid or unenforceable provision
as may be possible and legal, valid and enforceable.
8.16. Assignments and Participations.
(a) Each Lender, with the prior written consent of Borrower and
Administrative Lender (which consents shall not be unreasonably withheld,
provided that no consent of Borrower shall be required for any assignment during
any time that an Event of Default has occurred and is continuing), may assign to
one or more banks or other entities all or a portion of its Rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of its Commitment, the Loans owing to it
and its participation in any Letters of Credit); provided, however, that (i)
each such assignment shall be of a uniform, and not a varying, percentage of all
of the assigning Lender's Rights and obligations under and in respect of all of
its Commitment, (ii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender, the amount of the Commitment
of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than the lesser of (A) the entire
Commitment of such Lender at such time or (B) $10,000,000, (iii) each such
assignment shall be to an Eligible Assignee and (iv) the parties to each such
assignment shall execute and
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deliver to Administrative Lender, for its acceptance and recording in the
Register, an Assignment and Acceptance, together with a processing and
recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
delivery thereof to Administrative Lender or, if so specified in such
Assignment and Acceptance, the date of acceptance thereof by Administrative
Lender, (x) the assignee thereunder shall be a party hereto and, to the extent
that Rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the Rights and obligations of a Lender
hereunder and under the other Loan Documents and (y) the Lender assignor
thereunder shall, to the extent that Rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
Rights and be released from its obligations under this Agreement and under the
other Loan Documents (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's Rights and obligations
under this Agreement and under the other Loan Documents, such Lender shall
cease to be a party hereto, except that such Lender shall continue to be
entitled to the Rights available to Lenders pursuant to Sections 2.9, 2.11,
2.13(d), 8.10 and 8.14).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other Loan Documents or
any other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any
Guarantor or the performance or observance by Borrower or any Guarantor of any
of their respective obligations under this Agreement, the Guaranty or any other
Loan Document or any other instrument or document furnished hereto or thereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 5.2 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon Administrative
Lender, such assigning Lender or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and the
other Loan Documents; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes Administrative Lender to
take such action as nominee on its behalf and to exercise such powers under this
Agreement and the other Loan Documents as are delegated to Administrative Lender
by the terms hereof, together with such powers as are reasonably incidental
thereto; and (vii) such assignee agrees that it will perform in accordance with
its terms all of the obligations that by the terms of this Agreement and the
other Loan Documents are required to be performed by it as a Lender.
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(c) Administrative Lender shall maintain at its address referred to in
Section 8.6 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of Lenders
and the Commitment of, and principal amount of the Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower,
Administrative Lender and Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee representing that it is an Eligible Assignee,
Administrative Lender shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit A, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to Borrower. Within five (5)
Business Days after its receipt of notice that Administrative Lender has
received an executed Assignment and Acceptance, Borrower shall execute and
deliver to Administrative Lender for delivery to the relevant assignee) a new
Revolving Credit Note evidencing such assignee's assigned Loans and Commitment,
and if the Lender assignor has retained a portion of its Loans and its
Commitment, a replacement Revolving Credit Note in the amount of the Commitment
retained by the Lender assignor (such Revolving Credit Note to be in exchange
for, but not payment of, the Revolving Credit Note held by such Lender).
(e) Notwithstanding any other provision set forth in this Agreement to
the contrary, any Lender may at any time and from time to time assign, as
collateral or otherwise in the ordinary course of business of such Lender, all
or any portion of its Rights under the Loan Documents (including without
limitation rights to payment of principal and interest under such Lender's
Revolving Credit Note) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System. Any such
assignment may be made without notice to or consent of Administrative Lender,
Issuing Bank, Swing Line Bank, Borrower and other Lenders.
(f) Each Lender may sell participations to one or more banks or other
entities in or to all or a portion of its Rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment,
the Loans owing to it and its participation in any Letters of Credit); provided,
however, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment to Borrower hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) Borrower, Administrative
Lender and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's Rights and obligations under this
Agreement and (iv) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Loan Document,
or any consent to any departure by any party thereto, except to the extent that
such amendment, waiver or consent would
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reduce or increase the principal of, or interest on, the Loans or any fees or
other amounts payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Loans or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation.
(g) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 8.16, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to Borrower furnished to such Lender by or on behalf of
Borrower; provided, however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information to the extent required of
Lenders hereunder pursuant to Section 8.19.
8.17. No Liability of Issuing Bank. Borrower assumes all risks of the
acts or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. Neither Issuing Bank nor any
Lender nor any of their respective officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to such Letter of Credit, except, as to the Issuing Bank only, for
any payment made upon Issuing Bank's gross negligence or willful misconduct; or
(d) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit, except that Borrower shall have a claim against
Issuing Bank, and Issuing Bank shall be liable to Borrower, to the extent of
any direct, but not consequential, damages suffered by Borrower that Borrower
proves were caused by (i) Issuing Bank's willful misconduct or gross negligence
in determining whether documents presented under any Letter of Credit comply
with the terms of such Letter of Credit or (ii) Issuing Bank's willful failure
to make lawful payment under a Letter of Credit after the presentation to it of
a draft and certificates strictly complying with the terms and conditions of
such Letter of Credit. In furtherance and not in limitation of the foregoing,
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
8.18. Amendments, Etc. No amendment or waiver of any provision of this
Agreement, nor consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in writing and such amendment,
waiver or consent shall be consented to in one or more writings signed by or
consented to by Determining Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by or consented to by all Lenders, do any of the following:
(i) waive any of the conditions specified in Section 2.16 or 2.17, (ii) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans, or the number of Lenders, that shall be required for Lenders or
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any of them to take any action hereunder, (iii) amend this Section 8.18, (iv)
increase the Commitments of Lenders or subject the Lenders to any additional
obligations, (v) reduce or forgive the principal of, or interest on, the Loans,
the Reimbursement Obligations or any fees, commissions or other amounts payable
hereunder, (vi) postpone any date fixed for any payment of principal of, or
interest on, the Loans, the Reimbursement Obligations or any fees, commissions
or other amounts payable hereunder, (vii) release any Guarantor or (viii) change
the definition of Determining Lenders; provided, further, that no term or
condition relating to (A) Swing Line Loans may be amended or waived unless in
writing and signed by Swing Line Bank or (B) the Letters of Credit may be
amended or waived unless in writing and signed by Issuing Bank; provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by Administrative Lender in addition to Lenders required above to take
such action, affect the rights or duties of Administrative Lender under this
Agreement.
8.19. Confidentiality. Each Lender and Administrative Lender agrees (on
behalf of itself and each of its Affiliates, directors, officers, employees and
representatives) to use reasonable precautions to keep confidential, in
accordance with customary procedures for handling confidential information of
this nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by any Company pursuant to this Agreement,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation, judicial process or any
Tribunal, (ii) to counsel for any of Lenders or Administrative Lender, (iii) to
bank examiners, regulators, auditors or accountants, (iv) to Administrative
Lender or any other Lender, (v) in connection with any litigation to which any
one or more of Lenders is a party, (vi) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) agrees to preserve the confidentiality of
any confidential information to the extent required of Lenders pursuant to this
Section 8.19 or (vii) to the extent such information becomes available through a
Person not a Company without knowledge by Administrative Lender or Lender of any
requirements of confidentiality. Except as otherwise provided in the immediately
preceding sentence, all such non-public information supplied to each Lender and
Administrative Lender shall not be copied or distributed to any Person other
than a Lender without the prior written consent of Borrower.
8.20. Release and Assumption. Simultaneously with the execution by New
Gaylord of the Assumption Agreement upon the date immediately prior to the
effective date of the Westinghouse Merger, (a) Borrower, automatically and
without any action by Administrative Lender, any Lender or any other Person,
shall be released and discharged from all obligations and liabilities arising
under this Agreement and any other Loan Documents, (b) New Gaylord shall assume
all obligations and liabilities of Borrower under this Agreement and the other
Loan Documents, as more particularly described in the Assumption Agreement, and
(c) all references to Borrower in this Agreement and the other Loan Documents
shall mean and refer to New Gaylord.
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8.21. Exceptions to Covenants. Borrower shall not be deemed to be
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
8.22. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart. It is not necessary that
each Lender execute the same counterpart, so long as counterparts are executed
by Borrower and each Lender.
8.23. WAIVER OF JURY TRIAL. EACH OF BORROWER, ADMINISTRATIVE LENDER AND
LENDERS HEREBY, TO THE FULLEST EXTENT PERMITTED BY LAW, IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATED TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
8.24. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT THE MATTERS
COVERED HEREIN AND THEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
==============================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
==============================================================================
- 77 -
<PAGE> 84
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GAYLORD ENTERTAINMENT COMPANY
By:
------------------------------------
Terry E. London
President
One Gaylord Drive
Nashville, Tennessee 37214
ACKNOWLEDGED AND AGREED FOR
PURPOSES OF SECTION 8.20 HEREOF:
NEW GAYLORD ENTERTAINMENT COMPANY
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
- 78 -
<PAGE> 85
NATIONSBANK OF TEXAS, N.A.
as a Lender, Swing Line Bank, Issuing
Bank and as Administrative Lender
By:
--------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Lending Office:
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Todd A. Shipley
THE BANK OF NEW YORK
By:
--------------------------------------
Joseph P. Matteo
Vice President
Lending Office:
One Wall Street, 16th Floor
New York, New York 10286
Attention: Joe Matteo
THE FUJI BANK, LIMITED, ATLANTA
AGENCY
By:
-------------------------------------
T.. Mitsui
Senior Vice President
Lending Office:
245 Peachtree Center Avenue
Marquis Towers, Suite 2100
Atlanta, Georgia 30303
Attention: Manijeh Harmon
- 79 -
<PAGE> 86
SUNTRUST BANK, NASHVILLE, N.A.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
201 Fourth Avenue N
Nashville, Tennessee 37219
Attention: J. Lee Lamprecht
FIRST AMERICAN NATIONAL BANK
By:
--------------------------------------
Scott Bane
Senior Vice President
Lending Office:
327 Union Street
Nashville, Tennessee 37237-0310
Attention: Scott Bane
- 80 -
<PAGE> 87
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Lending Office:
1301 Avenue of the Americas
New York, New York 10019
Attention: Robert Ivosevich
with a copy to:
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Blake Wright
BANQUE PARIBAS
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
2029 Century Park East, Suite 3900
Los Angeles, California 90067
Attention: Todd Rodgers
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
- 81 -
<PAGE> 88
By:
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
1445 Ross Avenue, Suite 300
Dallas, Texas 75202
Attention: Drew Keith
FIRST UNION NATIONAL BANK
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Lending Office:
150 Fourth Avenue North
Nashville, Tennessee 37219
Attention: John Nichols
THE SAKURA BANK, LIMITED
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Lending Office:
245 Peachtree Center Avenue, N.E.,
Suite 2703
Atlanta, Georgia 30303
Attention: Charles S. Zimmerman
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
- 82 -
<PAGE> 89
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
One Ninety One Peachtree Tower, Suite 3600
191 Peachtree Street N.E.
Atlanta, Georgia 30303-1757
Attention: James Masters
COMERICA BANK
By:
--------------------------------------
Kristine L. Andersen
Account Officer
Lending Office:
9th Floor, MC 3280
500 Woodward Avenue
Detroit, Michigan 48226
Attention: Kristine L. Andersen
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
Lending Office:
165 Broadway
New York, New York 10006
Attention: Kathy Dorsh-Santiago
- 83 -
<PAGE> 90
THE SANWA BANK, LIMITED
By:
-------------------------------------
Dennis S. Losin
Vice President
Lending Office:
133 Peachtree Street, NE
Suite 4950 Georgia-Pacific Center
Atlanta, Georgia 30303
Attention: Dennis S. Losin
THE BANK OF NOVA SCOTIA
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
One Liberty Plaza
New York, New York 10006
Attention: Margot Bright
WACHOVIA BANK, N.A.
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
191 Peachtree Street (GA3940)
Atlanta, Georgia 30303
Attention: Ken Washington
- 84 -
<PAGE> 91
BANK OF TOKYO MITSUBISHI TRUST
COMPANY
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
Lending Office:
1251 Avenue of the Americas, 12th Floor
New York, New York 10020
Attention: Glenn Eckert
- 85 -
<PAGE> 92
SCHEDULE I
COMMITMENT OF LENDERS
THIS AGREEMENT
<TABLE>
<CAPTION>
LENDER COMMITMENT SPECIFIED
------ ---------- PERCENTAGE
----------
<S> <C> <C>
NationsBank of Texas, N.A. $185,000,000.00 30.833333333%
The Bank of New York $ 20,000,000.00 3.333333333%
The Fuji Bank, Limited, Atlanta Agency $ 10,000,000.00 1.666666667%
SunTrust Bank, Nashville, N.A. $ 50,000,000.00 8.333333333%
First American National Bank $ 20,000,000.00 3.333333333%
Credit Lyonnais New York Branch $ 35,000,000.00 5.833333333%
Banque Paribas $ 20,000,000.00 3.333333333%
Wells Fargo Bank (Texas), National $ 50,000,000.00 8.333333333%
Association
First Union National Bank $ 20,000,000.00 3.333333333%
The Sakura Bank, Limited $ 20,000,000.00 3.333333333%
The Industrial Bank of Japan, Limited, $ 20,000,000.00 3.333333333%
Atlanta Agency
Comerica Bank $ 20,000,000.00 3.333333333%
The Long-Term Credit Bank of Japan, $ 50,000,000.00 8.333333333%
Ltd.
The Sanwa Bank, Limited $ 20,000,000.00 3.333333333%
The Bank of Nova Scotia $ 10,000,000.00 1.666666667%
Wachovia Bank, N.A. $ 30,000,000.00 5.000000000%
Bank of Tokyo Mitsubishi Trust Company $ 20,000,000.00 3.333333333%
</TABLE>
<PAGE> 93
SCHEDULE II
LENDER'S ADDRESSES
NATIONSBANK OF TEXAS, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
THE BANK OF NEW YORK
One Wall Street, 16th Floor
New York, New York 10286
THE FUJI BANK, LIMITED, ATLANTA AGENCY
245 Peachtree Center Avenue
Marquis Towers, Suite 2100
Atlanta, Georgia 30303
SUNTRUST BANK, NASHVILLE, N.A.
201 Fourth Avenue N
Nashville, Tennessee 37219
FIRST AMERICAN NATIONAL BANK
327 Union Street
Nashville, Tennessee 37237-0310
CREDIT LYONNAIS NEW YORK BRANCH
1301 Avenue of the Americas
New York, New York
10019
BANQUE PARIBAS
2029 Century Park East, Suite 3900
Los Angeles, California 90067
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
1445 Ross Avenue, Suite 300
Dallas, Texas 75202
<PAGE> 94
FIRST UNION NATIONAL BANK
150 Fourth Avenue North
Nashville, Tennessee 37219
THE SAKURA BANK, LIMITED
245 Peachtree Center Avenue, N.E.
Suite 2703
Atlanta, Georgia 30303
THE INDUSTRIAL BANK OF JAPAN, LIMITED, ATLANTA AGENCY
One Ninety One Peachtree Tower, Suite 3600
191 Peachtree Street N.E.
Atlanta, Georgia 30303-1757
COMERICA BANK
9th Floor, MC 3280
500 Woodward Avenue
Detroit, Michigan 48226
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
165 Broadway
New York, New York 10006
THE SANWA BANK, LIMITED
133 Peachtree Street, NE
Suite 4950 Georgia-Pacific Center
Atlanta, Georgia 30303
THE BANK OF NOVA SCOTIA
One Liberty Plaza
New York, New York 10006
WACHOVIA BANK, N.A.
191 Peachtree Street (GA3940)
Atlanta, Georgia 30303
BANK OF TOKYO MITSUBISHI TRUST COMPANY
1251 Avenue of the Americas, 12th Floor
New York, New York 10020
<PAGE> 95
EXHIBIT G
SWING LINE NOTE
U.S. $_____________ Dated: August 19, 1997
FOR VALUE RECEIVED, the undersigned, GAYLORD ENTERTAINMENT COMPANY, a
Delaware corporation (the "Company"), HEREBY PROMISES TO PAY to the order of
_______________________________ (the "Swing Line Bank") for the account of its
Lending Office (as defined in the Credit Agreement referred to below) the lesser
of ____________________ Dollars ($_____________) and the unpaid principal
amount of the Swing Line Loans (as defined in the Credit Agreement referred to
below) made by the Swing Line Bank to the Company pursuant to the Credit
Agreement, payable at such times, and in such amounts, as are specified in the
Credit Agreement.
The Company promises to pay interest on the unpaid principal amount of
the Swing Line Loans from the date made until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A. as Administrative Lender for the
Swing Line Bank, at NationsBank Plaza, 901 Main Street, Dallas, Texas 75202 in
immediately available funds.
This Swing Line Note is the Swing Line Note referred to in, and is
entitled to the benefits of, the Credit Agreement dated as of August 19, 1997
among Gaylord Entertainment Company, the Swing Line Bank and certain other banks
parties thereto, and NationsBank of Texas, N.A., as Administrative Lender for
the Swing Line Bank and such other banks (as from time to time amended, modified
or supplemented, the "Credit Agreement"). The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
THIS SWING LINE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.
GAYLORD ENTERTAINMENT COMPANY
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 96
EXHIBIT H
REVOLVING CREDIT NOTE
U.S. $_________________ Dated: August 19, 1997
FOR VALUE RECEIVED, the undersigned, GAYLORD ENTERTAINMENT COMPANY, a
Delaware corporation (the "Company"), HEREBY PROMISES TO PAY to the order of
[Name of Lender] (the "Lender") for the account of its Lending Office (as
defined in the Credit Agreement referred to below) the lesser of ___________
Dollars ($__________) and the unpaid principal amount of the Revolving Credit
Loans made by the Lender to the Company pursuant to the Credit Agreement,
payable at such times, and in such amounts, as are specified in the Credit
Agreement.
The Company promises to pay interest on the unpaid principal amount of
the Revolving Credit Loans from the date made until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to NationsBank of Texas, N.A., as Administrative Lender for
the Lender, at 901 Main Street, Dallas, Texas 75202 in immediately available
funds.
This Revolving Credit Note is one of the Revolving Credit Notes
referred to in, and is entitled to the benefits of, the Credit Agreement dated
as of August 19, 1997 among Gaylord Entertainment Company, the Lender and
certain other banks parties thereto, and NationsBank of Texas, N.A., as
Administrative Lender for the Lender and such other banks (as from time to time
amended, modified or supplemented, the "Credit Agreement"). The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
GAYLORD ENTERTAINMENT COMPANY
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 97
EXHIBIT S
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT (this "Agreement"), dated as of ____________,
1997, is executed by NEW GAYLORD ENTERTAINMENT COMPANY, a corporation organized
under the laws of the State of Delaware ("New Gaylord"), for the benefit of
NATIONSBANK OF TEXAS, N.A., for itself and as Administrative Lender (the
"Administrative Lender"), for itself and certain other lenders (the "Lenders")
party to a Credit Agreement dated as of August 19, 1997 (said Credit Agreement,
as amended, modified, supplemented or restated from time to time, the "Credit
Agreement"; capitalized terms used herein and not defined herein shall have the
meaning given to them in the Credit Agreement) with Gaylord Entertainment
Company, a Delaware corporation ("Old Gaylord"), and for the benefit of Old
Gaylord.
BACKGROUND
A. Contemporaneously herewith the Westinghouse Merger is taking place,
and, pursuant to the terms hereof, New Gaylord is assuming all Loans and all of
the other indebtedness, obligations and liabilities of Old Gaylord under the
Credit Agreement.
B. The Lenders have required this Agreement to, among other things,
confirm and evidence New Gaylord's liabilities under the Loan Documents.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, New Gaylord covenants
and agrees as follows:
1. ASSUMPTION. New Gaylord hereby irrevocably and unconditionally (i)
accepts, assumes and agrees to pay and perform each and all of the indebtedness,
liabilities and obligations of Old Gaylord pursuant to the Credit Agreement, the
Notes and all other Loan Documents to which Old Gaylord is a party in accordance
with their respective terms, (ii) agrees that New Gaylord will perform in
accordance with their terms all the obligations which by the terms of the Credit
Agreement, the Notes and each other Loan Document are required to be performed
by Old Gaylord, as though New Gaylord were a signatory party to each such Loan
Document, (iii) accepts, assumes, and agrees to pay and perform each and all of
the indebtedness, liabilities and obligations of Old Gaylord that expressly
survive termination of the Existing Credit Agreement and the NationsBank Term
Loan Agreement, and (iv) agrees to execute such agreements, replacement Notes
and other documents to further evidence the assumptions provided herein. Upon
the effectiveness of this Agreement and without any action by the Administrative
Lender or any Lender, Old Gaylord shall be released of any and all of its
liabilities and obligations under the Credit Agreement, the Existing Credit
Agreement, and the NationsBank Term Loan
<PAGE> 98
Agreement, and New Gaylord shall be released of any and all of its liabilities
and obligations under the Guaranty.
2. REPRESENTATIONS AND WARRANTIES . By its execution and delivery of
this Agreement, New Gaylord represents and warrants that, as of the date hereof
and after giving effect to this Agreement:
(a) The execution, delivery and performance by New Gaylord of this
Agreement is within its respective powers and has been duly authorized by all
necessary corporate action. This Agreement constitutes the legal, valid and
binding obligation of New Gaylord, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity regardless of
whether enforcement is sought in equity of at law) and except as rights to
indemnity may be limited by federal or state securities laws;
(b) neither the execution, delivery and performance of this Agreement
or any other documents contemplated hereby, nor the consummation of any
transactions herein, will contravene or conflict with any law, rule or
regulation to which New Gaylord is subject or any indenture, agreement or other
instrument to which New Gaylord or any of its property is subject which, in any
case, could reasonably be expected to have a Material Adverse Effect or result
in or require the creation or imposition of any Lien (other than a Permitted
Lien) upon or with respect to any of the properties of New Gaylord; and
(c) no authorization, approval, consent, or other action by, notice to,
or filing with, any governmental authority or other Person which has not
heretofore been obtained, is required for the execution, delivery or performance
by New Gaylord of this Agreement or any other documents contemplated hereby.
3. EFFECTIVENESS. This Agreement shall be effective as of the effective
date of the Westinghouse Merger.
4. COSTS AND EXPENSES. New Gaylord agrees to pay on demand all
reasonable costs and expenses of the Administrative Lender actually incurred in
connection with the preparation, reproduction, execution and delivery of this
Agreement and the other instruments and documents to be delivered hereunder.
5. GOVERNING LAW; BINDING EFFECT. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (except to the
extent federal laws govern the validity, construction, enforcement and
interpretation of all or any part of this Agreement) and shall be binding upon
New Gaylord and the Administrative Lender and their respective successors and
assigns.
-2-
<PAGE> 99
6. HEADINGS. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
-3-
<PAGE> 100
IN WITNESS WHEREOF, New Gaylord and the Administrative Lender have each
executed this Agreement as of the date first above written.
GAYLORD ENTERTAINMENT COMPANY
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
NATIONSBANK OF TEXAS, N.A., as
Administrative Lender
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
-4-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 9,422
<SECURITIES> 0
<RECEIVABLES> 142,455
<ALLOWANCES> 4,107
<INVENTORY> 0
<CURRENT-ASSETS> 212,916
<PP&E> 634,533
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,189,858
<CURRENT-LIABILITIES> 185,940
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 527,107
<TOTAL-LIABILITY-AND-EQUITY> 1,189,858
<SALES> 387,840
<TOTAL-REVENUES> 387,840
<CGS> 0
<TOTAL-COSTS> 328,311
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,132
<INCOME-PRETAX> 191,899
<INCOME-TAX> 65,903
<INCOME-CONTINUING> 125,996
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 125,996
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
