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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NO. 1-13079
GAYLORD ENTERTAINMENT COMPANY
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 73-0664379
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
ONE GAYLORD DRIVE, NASHVILLE, TENNESSEE 37214
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) (615) 316-6000
Securities registered pursuant to Section 12(b) of the Act:
COMMON STOCK--$.01 PAR VALUE NEW YORK STOCK EXCHANGE
(Title of Class) (Name of exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
As of March 13, 2000, there were 33,317,109 shares of Common Stock
outstanding. The aggregate market value of the shares of Common Stock held by
non-affiliates of the registrant based on the closing price of the Common Stock
on the New York Stock Exchange on March 13, 2000 was approximately $478,612,000.
Shares of Common Stock held by non-affiliates exclude only those shares
beneficially owned by officers and directors.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's Annual Report to Stockholders for the year ended
December 31, 1999, are incorporated by reference into Part II of this Form 10-K.
Portions of the registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held May 10, 2000, are incorporated by reference into Part
III of this Form 10-K.
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GAYLORD ENTERTAINMENT COMPANY
1999 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
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PAGE
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PART I
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Item 1 Business.................................................................... 1
Item 2 Properties.................................................................. 14
Item 3 Legal Proceedings........................................................... 16
Item 4 Submission of Matters to a Vote of Security Holders......................... 16
PART II
Item 5 Market for Registrant's Common Equity and Related Stockholder Matters....... 16
Item 6 Selected Financial Data..................................................... 17
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................... 17
Item 7A Quantitative and Qualitative Disclosures About Market Risk.................. 17
Item 8 Financial Statements and Supplementary Data................................. 17
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................................ 17
PART III
Item 10 Directors and Executive Officers of the Registrant.......................... 18
Item 11 Executive Compensation...................................................... 18
Item 12 Security Ownership of Certain Beneficial Owners and Management.............. 18
Item 13 Certain Relationships and Related Transactions.............................. 18
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K............. 18
SIGNATURES ........................................................................... 20
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PART I
ITEM 1. BUSINESS
INTRODUCTION AND HISTORY
Gaylord Entertainment Company (the "Company") is a diversified
entertainment company operating principally in three segments: (i) hospitality
and attractions; (ii) creative content; and (iii) interactive media.
The Company 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, the Company entered the radio broadcasting business
and, in 1949, expanded its broadcasting interests to include television
stations. The Company currently owns three radio stations. See "Interactive
Media."
In 1983, the Company 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 businesses. The
Company 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 Nashville, which is one of the nation's
largest convention/resort hotels, and, until the end of 1997, the Opryland theme
park. Beginning in 2000, the former Opryland theme park site will be home to
Opry Mills, a $200 million entertainment/retail complex to be built in
partnership with The Mills Corporation. See "Other Interests."
Also in 1983, Opryland USA entered the cable networks business by
launching The Nashville Network ("TNN"), a cable network with a national
audience featuring country lifestyles, entertainment, and sports. In 1991, the
Company acquired a 67% interest in Country Music Television ("CMT"), a cable
network with a 24-hour country music video format. The Company subsequently
expanded CMT outside the U.S., and 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 and the Pacific
Rim, as well as Latin America. In 1994, the Company entered into an agreement to
manage the operations of Z Music, a cable network currently featuring
contemporary Christian music videos. During 1998, the Company obtained a
controlling interest in Z Music. In January 1997, the Company acquired the
assets of Word Entertainment ("Word"), one of the largest contemporary Christian
music companies in the world. See "Creative Content."
Prior to September 30, 1997, the Company was a wholly owned subsidiary
of a corporation which was then known as Gaylord Entertainment Company ("Old
Gaylord"). On October 1, 1997, Old Gaylord consummated a transaction with
Westinghouse Electric Corporation, which thereafter changed its name to CBS
Corporation ("CBS") and G Acquisition Corp., a wholly owned subsidiary of CBS,
pursuant to which G Acquisition was merged with and into Old Gaylord (the "CBS
Merger"), with Old Gaylord continuing as the surviving corporation and a wholly
owned subsidiary of CBS. Prior to the CBS Merger, Old Gaylord was restructured
by transferring its assets and liabilities, other than TNN, the U.S. and
Canadian operations of CMT, and certain other related assets and liabilities to
the Company and its subsidiaries. Following the restructuring, on September 30,
1997, Old Gaylord distributed pro rata to its stockholders all of the
outstanding capital stock of the Company (the "Distribution"). In connection
with these transactions, the Company and Old Gaylord entered into various
agreements relating to the future relationship between the Company and Old
Gaylord (as a subsidiary of CBS) after the CBS Merger (the "CBS Transitional
Agreements"), the net cost of which, if any, is expected to be immaterial to the
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Company. Immediately following the CBS Merger, the Company changed its name to
Gaylord Entertainment Company.
Unless the context otherwise requires, references in this Annual Report
on Form 10-K to the "Company" for periods prior to the Distribution are to Old
Gaylord.
HOSPITALITY AND ATTRACTIONS
The Company's hospitality and attractions group consists primarily of
an interrelated group of businesses including the Opryland Hotel Nashville, the
Inn at Opryland, the General Jackson (an entertainment showboat), and other
related businesses. Hotels currently under development in Osceola County,
Florida, (in the Orlando market) and Grapevine, Texas, (in the Dallas-Ft. Worth
market) are also a part of the hospitality and attractions group. See Note 15 to
the Company's Consolidated Financial Statements for the amounts of revenues,
operating income, and identifiable assets attributable to hospitality and
attractions.
OPRYLAND HOTEL NASHVILLE. The Opryland Hotel Nashville, situated on
approximately 120 acres in the Opryland complex, is one of the largest hotels in
the United States in terms of number of guest rooms and it has one of the
highest ratios of meeting and exhibit space per room. The Opryland Hotel
Nashville attracts convention business, which accounted for approximately 80% of
the hotel's revenues in each of 1999, 1998, and 1997 from major trade
associations and corporations. It also serves as a destination resort for
vacationers seeking accommodations in close proximity to the Grand Ole Opry and
the Springhouse Golf Club, the Company's 18-hole championship golf course, as
well as to other attractions in the Nashville area. The Company believes that
the ambiance created at the Opryland Hotel Nashville and the combination of 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. In 2000 the company intends to begin a
three-year renovation and capital improvement program to provide significant
upgrades and additional features to the hotel by the end of 2002, at an
anticipated cost of $50 million.
The following table sets forth information concerning the Opryland
Hotel Nashville for each of the five years in the period ended December 31,
1999.
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YEARS ENDED DECEMBER 31,
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1999 1998 1997 1996 1995
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Average number of guest rooms 2,884 2,884 2,866 2,613 1,907
Occupancy rate 78.0% 79.1% 85.4% 84.7% 87.5%
Average daily rate ("ADR")* $ 137.18 $ 138.51 $ 131.82 $ 128.48 $ 129.71
Food and beverage revenues (in thousands) $ 75,843 $ 72,659 $ 76,408 $ 59,904 $ 50,418
Total revenues (in thousands) $223,389 $223,781 $231,354 $196,226 $153,062
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* The Company has made a slight change in its method of calculating average
daily room rates in order to be more consistent with industry standards.
To serve conventions, the Opryland Hotel Nashville has 2,884 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. Total meeting and exhibit space in the hotel exceeds 600,000 square feet.
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The interior of the hotel is divided into three areas, each featuring
indoor gardens, restaurants and shops. The Delta area features a New Orleans
street scene amidst a 4.5 acre southern-style indoor garden, all under a
15-story glass dome. Among the attractions of this area are a flowing waterfall
that creates a winding river more than a quarter of a mile long on which guests
can take a trip on one of the hotel's flatboats. The region also contains an
85-foot fountain and the Delta Island, which includes seven meeting and board
rooms, retail shops, lounges and a food court with a variety of quick-service
restaurants. The other two areas of the hotel, the Conservatory area, containing
an approximately 1.5 acre Victorian tropical garden, and the Cascades area,
containing an approximately 1.5 acre water garden, also feature interior
landscapes together with eating and shopping options.
Special productions for conventions are often staged in the hotel or on
the General Jackson showboat (described below). The Springhouse Golf Club
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
ABC.
Opry Mills, a 1.2 million square foot retail entertainment center, will
open in May 2000 on a site adjacent to the Opryland Hotel Nashville. Upon
opening, the Company believes this new dimension of shopping and entertainment
will strengthen its position as an entertainment destination. See "Other
Interests."
The Opryland Hotel Nashville directs its convention marketing efforts
primarily to major trade, industry, and professional associations and
corporations. The Company believes that the primary factors in successfully
marketing the Opryland Hotel Nashville to meeting planners have been the
reputation of the hotel's services and facilities; the 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 accessibility and central location of Nashville
within the United States. The Opryland Hotel Nashville typically enters into
contracts for conventions several years in advance. To date, Opryland Hotel
Nashville has experienced a minimal number of cancellations. Conventions under
contract that cancel are required to pay certain penalties and face the possible
loss of future convention space at the hotel. As of February 29, 2000, definite
convention bookings for the balance of 2000 and for 2001 were approximately
536,200 and 435,400 guest room nights, respectively, representing approximately
61% and 41%, respectively, of available guest room nights for such periods, and
the hotel had advance convention bookings extending into the year 2018.
The Company also markets the Opryland Hotel Nashville as a destination
resort through national and local advertising and a variety of promotional
activities. As part of its marketing activities, the Company advertises
promotional "packages" on TNN, CMT and through other media. Pursuant to the CBS
Transitional Agreements, the Company continues to have access to promotional
spots on TNN and CMT, consistent with past practices, allowing the Company to
promote the Opryland Hotel Nashville and other properties on these cable
networks until September 2002. In addition, as part of the divestiture of KTVT
(described below), the Company will receive $1 million worth of advertising time
on KTVT annually over the next 10 years to promote its businesses. Such
promotions include "Springtime Getaway," the International Country Music Fan
Fair Celebration in June of each year, and "A Country Christmas," which begins
each year in November and runs through Christmas Day. The Country Christmas
program has contributed to the hotel's high occupancy rate during the months of
November and December, traditionally a slow period for the hotel industry.
THE INN AT OPRYLAND. During 1998, the Company purchased a 307-room
hotel facility with approximately 6,500 square feet of meeting space and a
175-seat restaurant adjacent to the Opryland complex for approximately $16
million and renamed the facility the Inn at Opryland. The Company's
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planned renovations of the hotel, including a major renovation of the guest
rooms completed in 1999, will cost approximately $7.5 million.
THE GENERAL JACKSON. The Company operates the General Jackson, a
300-foot, four-deck paddle wheel showboat, 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 the Company makes available to conventions held at the
Opryland Hotel Nashville and contributes to the Company's revenues from
convention participants as well as local business. During the day it operates
cruises, serving primarily tourists visiting the Opryland complex and the
Nashville area.
OPRYLAND HOTEL DEVELOPMENT. In February 1998, the Company announced
plans to develop new convention hotels to expand the Opryland Hotel concept to
other areas of the country. The Company's business strategy is to develop
properties in selected locations across the U.S. to serve meetings and
conventions in the same manner as the Opryland Hotel Nashville. These new
convention hotels will allow the Company to capture additional convention
business from groups that currently utilize the Opryland Hotel Nashville but
must rotate their meetings to other locations due to their attendees' desire to
experience different markets.
Plans for the properties to be developed include the following
components which the Company believes are the foundation of its success with the
Opryland Hotel Nashville: (i) state-of-the-art meeting facilities, including a
high ratio of square footage of meeting and exhibit space per guest room; (ii)
expansive atriums themed to capture geographical and cultural aspects of the
region in which the property is located; and (iii) entertainment components and
venues creating a guest experience not typically found in convention hotels.
The Company has researched various markets in the United States and has
determined that markets in the southern half of the country are most desirable
to convention planners due to more favorable year-round weather conditions. Two
markets, Osceola County, Florida, near Orlando, and Grapevine, Texas, near the
Dallas-Fort Worth airport, have been chosen for the first two properties to be
developed. The Company has executed a 75-year lease with a 24-year renewal
option on a 65-acre site in Osceola County, and has acquired or anticipates
acquiring, through ownership or ground lease, approximately 100 acres of
property for the Grapevine location. Construction of Opryland Hotel Florida
began in June 1999 and conceptual and schematic design work is in progress for
Opryland Hotel Texas. Plans for each of the properties include 1,400 guest rooms
for Opryland Hotel Florida and 1,500 guest rooms for Opryland Hotel Texas, with
each hotel having approximately 400,000 square feet of convention space.
The Company expects to open Opryland Hotel Florida in 2002 and to
initiate construction of Opryland Hotel Texas in the summer of 2000, with an
anticipated opening in 2003. Total development costs for the two hotels will be
approximately $800 million. The Company is currently evaluating various
financing alternatives for these projects.
CREATIVE CONTENT
During 1999, the Company's creative content group consisted primarily
of the Grand Ole Opry, the Ryman Auditorium, the Wildhorse Saloon, Acuff-Rose
Music Publishing, Word Entertainment, and other related businesses. See Note 15
to the Company's Consolidated Financial Statements for the amounts of revenues,
operating income, and identifiable assets attributable to the Company's creative
content operations.
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THE GRAND OLE OPRY. Celebrating its 75th anniversary in 2000, the Grand
Ole Opry is the most widely known platform for country music in the world. The
Opry features a live country music show with performances every Friday and
Saturday night, as well as frequent summer matinees. The Opry House, home of the
Grand Ole Opry, is located in the Opryland complex. The Grand Ole Opry moved to
the Opry House in 1974 from its original home in the Ryman Auditorium in
downtown Nashville.
The show is broadcast live by the Company's WSM-AM radio every Friday
and Saturday night, and TNN telecasts a 30-minute live segment every Saturday
night. Pursuant to the CBS Transitional Agreements, TNN will continue to
televise this live segment of the Grand Ole Opry until at least September 2002.
The show has been broadcast since 1925 on WSM-AM, making it the longest running
live radio program in the world.
The Grand Ole Opry currently has 70 performing members who are stars or
other notables in the country music field. There are no financial inducements
attached to membership in the Grand Ole Opry other than the prestige associated
with membership. In addition to performances by members, the Grand Ole Opry
presents performances by many other country music artists. Members include
traditional favorites, such as Loretta Lynn and George Jones, as well as
contemporary artists, like Garth Brooks, Vince Gill, and Trisha Yearwood. The
following is a list of the current members of the Grand Ole Opry (including year
of membership).
MEMBERS OF THE GRAND OLE OPRY
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Bill Anderson-1961 Emmylou Harris-1992 Ray Pillow-1966
Ernie Ashworth-1964 Jan Howard-1971 Charley Pride-1993
Clint Black-1991 Alan Jackson-1991 Jeanne Pruett-1973
Garth Brooks-1990 Stonewall Jackson-1969 Del Reeves-1966
Jim Ed Brown-1963 Jim & Jesse-1964 Riders In The Sky-1982
Bill Carlisle-1953 George Jones*-1969 Johnny Russell-1985
Roy Clark-1987 Hal Ketchum-1994 Jeannie Seely-1967
John Conlee-1981 Alison Krauss-1993 Ricky Van Shelton-1988
Wilma Lee Cooper-1957 Hank Locklin-1960 Jean Shepard-1955
Skeeter Davis-1959 Charlie Louvin-1955 Ricky Skaggs-1982
Diamond Rio-1998 Patty Loveless-1988 Connie Smith-1971
Little Jimmy Dickens*-1948 Loretta Lynn*-1962 Mike Snider-1990
Joe Diffie-1993 Barbara Mandrell-1972 Ralph Stanley-2000
Roy Drusky-1958 Martina McBride-1995 Marty Stuart-1992
Holly Dunn-1989 Mel McDaniel-1986 Randy Travis-1986
The 4 Guys-1967 Reba McEntire-1986 Travis Tritt-1992
Larry Gatlin & The Ronnie Milsap-1976 Porter Wagoner-1957
Gatlin Brothers-1976 Lorrie Morgan-1984 Billy Walker-1960
Don Gibson-1958 Jimmy C. Newman-1956 Charlie Walker-1967
Vince Gill-1991 The Osborne Brothers-1964 Steve Wariner-1996
Billy Grammer-1959 Bashful Brother Oswald-1995 The Whites-1984
Jack Greene-1967 Dolly Parton*-1969 Teddy Wilburn-1953
Tom T. Hall-1980 Johnny PayCheck-1997 Trisha Yearwood-1999
George Hamilton IV-1960 Stu Phillips-1967
</TABLE>
* Members of the Country Music Hall of Fame.
The Opry House contains a 45,000 square foot auditorium with 4,400
seats, a television production center that includes a 300-seat studio and
lighting, audio, and video control rooms, and set design and scenery shops. The
Opry House is used by the Company for the production of television and other
programming and by third parties such as national television networks and the
Public Broadcasting
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System. The Opry House is also rented for concerts, theatrical productions, and
special events and is used by the Opryland Hotel Nashville for convention
entertainment and events. Pursuant to the CBS Transitional Agreements, TNN and
CMT will have access to and use of the Opry House and certain other properties
owned by the Company until at least September 2002.
RYMAN AUDITORIUM. The Ryman Auditorium, built in 1892, is listed on the
National Register of Historic Places and seats approximately 2,100. In 1994, the
Company re-opened the renovated Ryman Auditorium, the former home of the Grand
Ole Opry, for concerts and musical productions.
Since its reopening, the Ryman Auditorium has featured musicals
produced by the Company such as Always . . . Patsy Cline, Lost Highway--The
Music & Legend of Hank Williams, and Bye Bye Love--The Everly Brothers Musical.
In 1999, the Ryman's expanded musical series featured three productions--Pump
Boys & Dinettes, Smoke on the Mountain, and A Musical Christmas Carol. In 2000,
the Ryman Auditorium plans to present a five-show musical series highlighted by
the Broadway touring production of Smokey Joe's Cafe and the return of Always .
. . Patsy Cline. Recent concert performers at the Ryman Auditorium include Faith
Hill, James Brown, Bob Dylan, Amy Grant, Lyle Lovett, The Dave Matthews Band,
Ricky Skaggs, and Bruce Springsteen.
THE WILDHORSE SALOON. Since 1994, the Company has owned and operated
the Wildhorse Saloon, a country music performance venue on historic Second
Avenue in downtown Nashville. The Wildhorse Saloon has featured such performers
as Tim McGraw and the Dixie Chicks. 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' television screen featuring, among other things,
country music videos and sporting events. 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.
In April 1998, a second Wildhorse Saloon was opened at the Walt Disney
World(R) Resort near Orlando, Florida, to expand the Wildhorse Saloon concept
beyond Nashville to a major, high-profile tourist area. The Company acquired a
100% interest in the Orlando Wildhorse Saloon in December 1998. The Orlando
Wildhorse Saloon entertainment venue and restaurant comprises approximately
27,000 square feet.
ACUFF-ROSE MUSIC PUBLISHING. Acuff-Rose Music Publishing is primarily
engaged in the music publishing business and owns one of the world's largest, as
well as Nashville's oldest, catalog of copyrighted country music songs. The
Acuff-Rose catalog also includes popular music, with songs by legendary writers
such as Hank Williams, Pee Wee King, Roy Orbison, and Don and Phil Everly. The
Acuff-Rose catalog contains at least 70 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 Acuff-Rose
songs. Acuff-Rose licenses the use of its songs in films, plays, print,
commercials, videos, cable, and television. In addition to its U.S.-based
business, through various subsidiaries and sub-publishers, Acuff-Rose collects
royalties on licenses granted in a number of foreign countries.
WORD ENTERTAINMENT. Word is one of the largest contemporary Christian
music companies in the world, with four proprietary record labels featuring
artists such as Amy Grant, Sixpence None the Richer, Point Of Grace, Jaci
Velasquez, Shirley Caesar, and Winans Phase2. Word produces and distributes a
wide variety of contemporary Christian and inspirational music, including adult
contemporary, pop, rock, gospel, praise and worship, rap, alternative, and other
emerging genres, with an emphasis on positive and inspirational themes. Other
significant Word operations include the creation of print music, congregational
hymnals, and children's videos. Word's music publishing division includes a
catalog of over 40,000 songs. In addition, Word has entered into exclusive
distribution agreements for the sale of
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music and video products owned by various third parties. Word's products are
distributed in the Christian bookstore market by its own dedicated sales force
and in mainstream retail stores through Word's distribution arrangement with
Epic Records.
PANDORA. In July 1998, the Company acquired Pandora Investment S.A., a
European-based film rights acquisition and distribution company. Pandora is a
worldwide distributor of feature films and syndicated television programming and
conducts most of its business outside of the United States.
OKLAHOMA REDHAWKS. In 1999, the Company acquired an additional 2.9%
interest in OKC Athletic Club Limited Partnership, a limited partnership that
owns the Oklahoma Redhawks, a minor league baseball club, and in certain
concession rights for the club. The additional interest was acquired in exchange
for cash consideration of $250,000. As of December 31, 1999, the Company owned a
68% interest in OKC Athletic Club Limited Partnership. The Company has executed
additional purchase agreements which are being reviewed by Major League
Baseball. If approved by Major League Baseball, these agreements will result in
the Company obtaining an additional 7.1% interest for cash consideration of
approximately $625,000.
OTHER INTERESTS. The creative content group also includes an artist
management company, a professional athlete management company, and a television
production company focusing on specialty golf events.
INTERACTIVE MEDIA
The Company's interactive media group consists primarily of Gaylord
Digital, three radio stations, CMT International, and Z Music. See Note 15 to
the Company's Consolidated Financial Statements for the amounts of revenues,
operating income, and identifiable assets attributable to the Company's
interactive media operations.
GAYLORD DIGITAL. Gaylord Digital, formerly GETdigitalmedia, was
established in 1999 to initiate an Internet strategy that focuses on the
Company's three primary customer groups: country music fans, Christian music
fans, and people involved in the meetings and conventions industry. Gaylord
Digital's revenues are primarily generated by e-commerce, advertising, and
broadcasting.
On July 28, 1999, the Company acquired a majority interest in GBRJ
Music, LLC, which owns Musicforce.com, an online e-commerce community that
concentrates on contemporary Christian music, and all of the assets related to
Lightsource.com, the Christian content provider for the spiritual channel of
broadcast.com (now part of the Yahoo! (R) network). The Company entered into
option agreements regarding the additional interests of GBRJ Music as a part of
the transaction, and as of December 31, 1999, the Company owned approximately
84% of GBRJ Music. Musicforce.com and Lightsource.com serve as the foundation of
Gaylord Digital. In addition to these investments, the Company acquired
Soundmarket.net, a country music search engine created from a fan's perspective,
and related assets in August 1999. The Company also acquired Songs.com, an
e-commerce and community site dedicated to helping independent music artists
connect with their fans on the Internet, and related assets in December 1999.
The Company also has minority investments in Intertainer, Inc., a
leading provider of home entertainment services on demand; Copernicus
Interactive, Inc., which operates Edgate.com, an educational portal and
community focused on grades K-12; and CountryCool.com, Inc., a comprehensive
Internet portal and original content provider for country music fans and
industry insiders.
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KTVT. In October 1999, CBS Corporation acquired television station
KTVT, in Dallas-Fort Worth, Texas, from the Company. KTVT, located in the
nation's 7th-largest television market, was purchased by the Company in 1963 and
operated as an independent station until becoming a CBS affiliate in July 1995.
In consideration for the sale of its interest in KTVT, the Company
received shares of CBS Series B convertible preferred stock that are convertible
into 10,141,691 shares of CBS common stock, approximately $4.2 million in cash,
and other consideration. The Company will also receive $1 million worth of
advertising time on the station annually over the next 10 years.
WSM-AM AND WSM-FM. WSM-AM and WSM-FM commenced broadcasting in 1925 and
1967, respectively. The Company'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, transmitted by a 50,000 watt transmitter, can be heard at night in much
of the United States and parts of Canada. The Company also has radio broadcast
studios in the Opryland Hotel Nashville and at the Wildhorse Saloon in
Nashville.
WWTN-FM. In 1995, the Company acquired the assets of radio station
WWTN-FM, which operates out of Nashville, Tennessee. WWTN-FM has a
news/talk/sports format and is the flagship station of the Nashville Predators,
a National Hockey League club of which the Company owns a minority interest.
CMT INTERNATIONAL. In October 1992, the Company launched CMT
International in Europe. CMT International expanded its reach to include
portions of Asia and the Pacific Rim, 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. In February 1998, the Company
announced its plans to expand the operations of CMT International in Asia and
the Pacific Rim and Latin America and to cease operations in Europe. The Company
ceased its CMT Europe satellite feed on March 31, 1998. The Company currently
plans to pursue reentry into the European market. The programming for CMT
International currently consists primarily of country music videos.
In September 1999, the Company acquired a 15% minority interest in the
operations of two Argentine cable networks, Solo Tango and TV Argentina.
Pursuant to the terms of a program license agreement, CMT International provides
a block of CMT-branded programming for airing on the TV Argentina cable network.
On December 31, 1999, CMT International reached approximately 6.4
million subscribers on a full- and part-time basis, including approximately 1.1
million subscribers in Australia and approximately 1.3 million subscribers in
Brazil.
Z MUSIC. In 1994, the Company agreed to manage Z Music, Inc. in
exchange for an option to purchase 95% of Z Music's outstanding capital stock.
The Company funded Z Music's operations with advances under a note receivable.
During the fourth quarter of 1998, the Company foreclosed on and acquired the
assets of Z Music securing the note receivable.
The Z Music cable network features contemporary Christian music videos
and is currently available in approximately 7.5 million U.S. homes on either a
full- or part-time basis, including 2.7
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<PAGE> 11
million cable homes and 4.8 million broadcast homes. The network's video
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. The
network's programming includes positive, uplifting music by artists that are not
necessarily categorized as Christian.
OTHER INTERESTS
The Company's other interests consist primarily of the Company's
investments in Opry Mills, Bass Pro Shops, and the Nashville Predators. See Note
15 to the Company's Consolidated Financial Statements for the amounts of
revenues, operating income, and identifiable assets attributable to the
Company's Corporate and Other operations.
OPRY MILLS. From 1972 until the end of 1997, the Company operated the
Opryland theme park, a musical show park located within the Opryland complex
that emphasized live productions of country, rock `n' roll, gospel, bluegrass,
and Broadway show tunes. In November 1997, the Company announced plans to close
the Opryland theme park and to develop Opry Mills, a $200 million
entertainment/retail complex, in partnership with The Mills Corporation. The
Company owns a one-third interest in the partnership.
The new Opry Mills retail complex, with 1.2 million square feet of
leasable space, is expected to enhance the Opryland properties, particularly the
Opryland Hotel Nashville, the Grand Ole Opry, and the General Jackson. Unlike
the Opryland theme park, which operated full-time only in the summer and
part-time during the Christmas season and on weekends in the spring and autumn,
Opry Mills will provide shopping, entertainment, and dining experiences for
visitors to the Company's existing properties on a year-round basis. The Company
currently expects that Opry Mills will open in May 2000.
BASS PRO SHOPS. In 1993, the Company purchased a minority interest in
Bass Pro, L.P., 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 additional
retail stores in Atlanta, Georgia; Gurnee, Illinois (near Chicago); Ft.
Lauderdale, Florida; Islamorada, Florida; Concord, North Carolina; Katy, Texas
(near Houston); and Grapevine, Texas, near the location of the planned Opryland
Hotel Texas. Bass Pro Shops has announced plans to build three additional
stores, including one to be located in the new Opry Mills complex. The Company's
properties are featured in the millions of Bass Pro Shops catalogs published
annually.
In December 1999, Bass Pro, L.P., was reorganized to spin off certain
non-essential business assets. As part of the reorganization, the partnership
relinquished its equity interest in various subsidiaries, including those that
owned Tracker Marine, a manufacturer of fiberglass and aluminum fishing boats,
and Big Cedar Lodge, a resort development located in southern Missouri. The
Company and the other limited partners in Bass Pro, L.P., contributed their
limited partnership interest to a newly formed Delaware corporation, Bass Pro,
Inc., which is the successor-in-interest to Bass Pro, L.P.'s assets,
liabilities, and obligations. The Company has a minority interest in Bass Pro,
Inc.
NASHVILLE PREDATORS. The Company owns a 19.9% interest in the Nashville
Hockey Club Limited Partnership, a limited partnership that owns the Nashville
Predators, an expansion franchise of the National Hockey League which began its
second season in the fall of 1999.
In November 1999, the Company entered into a Naming Rights Agreement
with the limited partnership whereby the Company purchased the right to name the
Nashville Arena as the "Gaylord
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<PAGE> 12
Entertainment Center" and to place certain advertising within the arena. Under
the agreement, which has a 20-year term, the Company is required to make annual
payments of $2,050,000, subject to a 5% annual increase, and to purchase a
minimum number of event tickets each year.
COMPETITION
HOSPITALITY AND ATTRACTIONS. The Company's Opryland hospitality and
attractions businesses compete with all other forms of entertainment, lodging,
and recreational activities. In addition to the competitive factors outlined
below for each of the Company's businesses within the hospitality and
attractions group, its success is dependent upon certain factors beyond the
Company's control including economic conditions, amount of available leisure
time, transportation costs, public taste, and weather conditions.
The Opryland Hotel Nashville competes with other hotels throughout the
United States and abroad, including many hotels operated by companies with
greater financial, marketing, and human resources than the Company. 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. The Opryland Hotel Nashville competes with other hotels
throughout the United States for high quality management and marketing
personnel. Although Opryland Hotel Nashville 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
employees with the requisite managerial and marketing skills. The hotel also
competes with other employers for non-managerial 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 non-managerial
employees and has been a substantial factor in the high turnover rate among
those employees.
CREATIVE CONTENT. The Company's various creative content businesses
compete with all other entertainment outlets. Success in the entertainment
industry is dependent on taste and fashion, which may fluctuate from time to
time. Word competes with numerous other companies that publish and distribute
Christian inspirational music. In addition, Word and Acuff-Rose compete with
other record and music publishing companies, both Christian and secular, to sign
artists and songwriters. The Company's ability to sign and re-sign popular
recording artists and successful songwriters depends on a number of factors,
including distribution and marketing capabilities, management teams, and the
royalty and advance arrangements offered.
INTERACTIVE MEDIA. The market for Internet products and services is
rapidly evolving and highly competitive. There are no substantial barriers to
entry in these markets, and the Company expects that competition in the industry
will continue to intensify. As Gaylord Digital expands the scope of its Internet
services, it will compete directly with a greater number of Internet sites and
other media companies across a wide range of different online services.
Gaylord Digital competes with other online vendors, many of whom
possess significant brand awareness, sales volume and customer bases. In
addition, Gaylord Digital competes with traditional retailers who currently may
or may not sell products or services through the Internet, in addition to other
Internet attractions and entertainment products. The Company believes that the
principal competitive factors in this market are brand recognition, selection,
personalized services, convenience, price, accessibility, customer service,
quality of search tools, quality of editorial and other site content, security,
and reliability and speed of fulfillment. Many of Gaylord Digital's existing
competitors, in addition to potential competitors that may enter the industry,
have significantly greater financial, technical, marketing and distribution
resources than Gaylord Digital. In addition, providers of Internet tools and
services may
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<PAGE> 13
be acquired by, receive investments from, or enter into other commercial
relationships with larger, well-established and well-financed companies. These
developments could have an adverse effect on Gaylord Digital's ability to
compete.
WSM-AM, WSM-FM, and WWTN-FM compete for advertising revenues with other
radio stations in the Nashville market on the basis of formats, ratings, market
share, and the demographic makeup of their audiences. Advertising rates of the
radio stations are based principally on the size, market share, and demographic
profile of their listening audiences. The Company's radio stations primarily
compete for both audience share and advertising revenues. They also compete with
the Internet, newspapers, billboards, cable networks, local cable channels, and
magazines for advertising revenues. Management competence and experience,
station frequency signal coverage, network affiliation, effectiveness of
programming format, sales effort, and level of customer service are all
important factors in determining competitive position.
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.
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. The Company 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.
Viewers' tastes in music and television, which impact the acceptance of the
Company's programming, may also change from time to time. Music videos
constitute substantially all of CMT International's and Z Music's programming.
These videos are currently provided to the Company for promotional purposes by
record companies and may also be distributed to other programming services as
well as to other media.
Until September 2001, pursuant to the CBS Transitional Agreements, the
Company is prohibited 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." The Company is also generally prohibited,
until September 2001, 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, the Company 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."
REGULATION AND LEGISLATION
HOSPITALITY AND ATTRACTIONS. The Opryland Hotel Nashville is subject to
certain federal, state, and local governmental regulations including, without
limitation, health, safety, and environmental regulations applicable to hotel
and restaurant operations. The Company believes that it is in substantial
compliance with such regulations. In addition, the sale of alcoholic beverages
by the Opryland Hotel Nashville requires a license and is subject to regulation
by the applicable state and local authorities. The agencies involved have the
power to limit, condition, suspend, or revoke any such license, and any
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<PAGE> 14
disciplinary action or revocation could have an adverse effect upon the results
of the operations of the Company's hospitality and attractions segment.
INTERACTIVE MEDIA. Radio 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 other practices
of broadcasting stations.
Licenses issued for radio stations have terms of eight years. Radio
broadcast licenses are renewable upon application to the FCC and in the past
usually have been renewed except in rare cases. 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. The Company is aware of no reason why its
radio station licenses should not be renewed.
FCC regulations also limit 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). The FCC's
liberal waiver policy for joint television and radio ownership now covers the
top 50 markets. The number of radio stations a single entity may own in the same
market area depends on the number of stations operating in the local radio
market, and the FCC is conducting a rulemaking proceeding 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. There are no
limits on the total number of radio stations commonly owned on a national basis.
The Communications Act also places certain limitations on alien
ownership or control of entities holding broadcast licenses. The Company's
Restated Certificate of Incorporation contains a provision permitting the
Company 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 franchises. Communications companies may have officers
and directors who are not U.S. citizens.
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 the Company cannot predict
whether any such legislation will be enacted or whether new or amended FCC
regulations will be adopted, or the effect on the Company of any such changes.
CMT International's programming and uplink services are handled in the
United States. Although the operations of the Company's cable networks are not
directly subject to regulation, any future legislation or regulatory actions
that increase rate regulation or effect structural changes on the Company's
cable networks could require cable networks to lower charges for their
programming. 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.
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<PAGE> 15
RECENT DEVELOPMENTS
In January 2000, the Company announced plans to form a joint venture
with The Peterson Companies to develop a 2000-room convention hotel on the
Potomac River in Maryland (Washington, D.C. market).
In March 2000, the Company finalized a transaction to become a partner
with MegaCable, Mexico's second-largest cable television operator. The initial
focus of the partnership will be the operations of Video Rola, a 24-hour video
channel, now available in Mexico, that features regional Mexican music. The
Company will be responsible for the distribution, sales, and marketing of Video
Rola in the United States.
EMPLOYEES
As of December 31, 1999, the Company had approximately 4,330 full-time
and 1,490 part-time and temporary employees. The Company believes its relations
with its employees are good.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding executive
officers of the Company. All officers serve at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
E. K. Gaylord II.......... 42 Chairman of the Board
Terry E. London........... 50 Director, President, and Chief Executive Officer
J. Tim DuBois............. 51 President, Creative Content Group
David B. Jones............ 56 President, Opryland Hospitality Group
W. Brian Payne............ 29 President, Interactive Media Group
Jerry O. Bradley.......... 60 President, Acuff-Rose Music Publishing, Inc.
Roderick F. Connor, Jr.... 47 Senior Vice President and Chief Administrative Officer
Jack L. Gaines............ 58 President, Opryland Hotel and Attractions
Carl W. Kornmeyer......... 47 Senior Vice President of Corporate Development and Acting
Chief Financial Officer
Dan E. Harrell............ 51 President, Idea Entertainment, Inc.
</TABLE>
The following is additional information with respect to the above-named
executive officers and directors.
Mr. E. K. Gaylord II has served as Chairman of the Board of the Company
since May 1999. He served as Vice Chairman of the Board from May 1996 until May
1999, and he has been a director of the Company since 1977. 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. He also owns and operates the Lazy E Ranch in Guthrie,
Oklahoma, and is a director of the National Cowboy Hall of Fame & Western
Heritage Center. Mr. Gaylord is the son of Mr. Edward L. Gaylord and the brother
of Mrs. Christine Gaylord Everest, both of whom are directors of the Company.
Mr. London has been the President and Chief Executive Officer and a
director of the Company since May 1997. Mr. London was also the acting Chief
Financial Officer of the Company from March
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<PAGE> 16
1997 until February 1998. Prior to May 1997, Mr. London had served, since March
1997, as Executive Vice President and Chief Operating Officer and, from
September 1993 until March 1997, as Senior Vice President and Chief Financial
and Administrative Officer of the Company. He has been employed by the Company
in various capacities since 1978. Mr. London is a certified public accountant.
Mr. DuBois has served as President of the creative content group since
February 2000. From 1989 until February 2000, he was president of Arista
Nashville, a record company.
Mr. Jones has been the President of the newly formed Opryland
Hospitality Group since May 1999. He served as President of the Opryland Lodging
Group from May 1998 until May 1999. From 1993 until May 1998, Mr. Jones served
as president and chief operating officer of John Q. Hammons Hotels, Inc.
Mr. Payne has served as President of the interactive media group since
November 1999. From June 1999 until November 1999, he was Vice President of the
Company's Internet operations. Mr. Payne was a financial analyst for the Company
from October 1996 until June 1999. Mr. Payne served as an intern at the Company
from May 1995 until October 1996.
Mr. Bradley has served as President of Acuff-Rose Music Publishing
since September 1993.
Mr. Connor has served as the Senior Vice President and Chief
Administrative Officer of the Company since December 1997. From February 1995 to
December 1997, Mr. Connor was the Vice President and Corporate Controller of the
Company. For more than three years prior to February 1995, Mr. Connor was the
Corporate Controller of the Company.
Mr. Gaines has served as President of the Opryland Hotel and
Attractions since February 1998. From 1994 until February 1998, Mr. Gaines
operated JLG Consulting, a hotel consulting business.
Mr. Kornmeyer has been Senior Vice President of Corporate Development
since November 1999 and Acting Chief Financial Officer since December 1999. He
served as President of the Company's broadcasting, cable networks and Internet
operations from October 1997 until November 1999. He served as Senior Vice
President of Broadcast and Business Affairs of the Company's broadcasting and
cable networks operations from March 1996 until October 1997. He served as Vice
President of Business Affairs of the Company's broadcasting and cable networks
operations from March 1994 until February 1996.
Mr. Harrell served as President of the Company's Christian music, film,
and artist and sports management businesses from March 1997 until February 2000.
For over 17 years prior to March 1997, Mr. Harrell was co-owner of Blanton
Harrell Entertainment. Mr. Harrell's employment with the Company terminated as
of February 28, 2000.
ITEM 2. PROPERTIES
The Company owns its executive offices and headquarters located at One
Gaylord Drive, Nashville, Tennessee, which consists of a four-story office
building comprising approximately 80,000 square feet. The Company believes that
its present facilities for each of its business segments as described below are
generally well maintained. The Company believes that it will require additional
office facilities to accommodate its anticipated growth over the next several
years.
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<PAGE> 17
HOSPITALITY AND ATTRACTIONS
The Company owns the land and improvements that comprise the Opryland
complex in Nashville, Tennessee. The Opryland complex includes the site of the
Opryland Hotel Nashville (approximately 120 acres), the site of the Opry Mills
mall which is being constructed on a portion of the site that was formerly the
Opryland theme park (approximately 200 acres), the General Jackson showboat's
docking facility, the production and administration facilities that are
currently being leased to CBS for TNN and CMT, the Opry House, and WSM Radio's
offices and studios.
The Company has entered into 99-year lease agreements with The Mills
Corporation for approximately 124 acres of the Opryland complex in exchange for,
among other consideration, a one-third interest in a partnership formed for the
development of Opry Mills.
The Company also owns the Springhouse Golf Club, an 18-hole golf course
situated on approximately 240 acres, a 26-acre KOA campground, and the 6.7-acre
site of the Inn at Opryland, all of which are located near the Opryland complex.
The Company has acquired, through ownership or ground lease,
approximately 100 acres of property in Grapevine, Texas, for the location of
Opryland Hotel Texas. In addition, the Company has executed a 75-year lease with
a 24-year renewal option on a 65-acre site in Osceola County, Florida, for the
location of Opryland Hotel Florida.
CREATIVE CONTENT
The Company owns the Acuff-Rose Music Publishing building (and adjacent
real estate) located on Nashville's "Music Row" and an office building of
approximately 40,000 square feet, also located on Music Row, for use by Word
Entertainment as executive and administrative office space. Word leases
approximately 36,000 additional square feet on various floors of a Nashville
office building, which space is primarily used for sales and administrative
offices. Leases for the office property described above expire on various dates
ranging from August 2001 to November 2003. Word also leases sales offices and
warehouse space in Delta, Canada and Milton Keynes, United Kingdom.
Additionally, the Company and Word guarantee the lease of warehouse space in
Smyrna, Tennessee, for use in connection with warehousing and distribution.
In addition, the Company owns the Ryman Auditorium and a Wildhorse
Saloon dance hall and production facility in downtown Nashville. The Company
also owns and uses a 100,000 square foot warehouse in Old Hickory, Tennessee.
The Company leases its Wildhorse Saloon site in Orlando.
INTERACTIVE MEDIA
The Company owns the offices and three television studios of TNN and
CMT, all of which are located within the Opryland complex and contain
approximately 87,000 square feet of space. Pursuant to the CBS Transitional
Agreements, these facilities are being leased to CBS. Master control and
satellite uplink operations for CMT International and Z Music are also located
in the facilities being leased to CBS. The services for the satellite uplink
operations are being provided by CBS to the Company pursuant to the CBS
Transitional Agreements. CMT International has offices in the executive office
building and currently leases its transponders. Additionally, CMT International
leases office space in Sydney, Australia, and Miami, Florida.
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<PAGE> 18
The Company acquired a building of approximately 38,800 square feet
located in downtown Nashville, Tennessee, in September 1999. Upon completion of
renovations, the building will serve as administrative and executive office
space for Gaylord Digital. Currently, Gaylord Digital leases approximately
12,000 square feet of office space in two buildings located in downtown
Nashville. Leases for this office property expire on various dates ranging from
March 2000 to December 2000.
ITEM 3. LEGAL PROCEEDINGS
The Company 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 the risks associated with its range of operations.
Various subsidiaries of the Company 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. The Company
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 financial position or results
of operations.
The Company 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 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 assigned its rights under the
OPUBCO Distribution Agreement to the Company, and Old Gaylord has a right of
subrogation to the Company's right to indemnification from OPUBCO. To date, no
litigation has been commenced against the Company, 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. The Company
believes that OPUBCO's indemnification will fully cover the Company's Superfund
liabilities, if any, and that, based on the Company's current estimates of these
liabilities, OPUBCO has sufficient financial resources to fulfill its
indemnification obligations under the OPUBCO Distribution Agreement.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Inapplicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(A) MARKET INFORMATION
The information required by this item is incorporated by reference to
the information under the caption "Corporate Data" in the Company's Annual
Report to Stockholders for the year ended December 31, 1999, and is included in
Exhibit 13.1 to this Form 10-K.
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<PAGE> 19
(B) HOLDERS
The information required by this item is incorporated by reference to
the information under the caption "Corporate Data" in the Company's Annual
Report to Stockholders for the year ended December 31, 1999, and is included in
Exhibit 13.1 to this Form 10-K.
(C) CASH DIVIDENDS
The information required by this item is incorporated by reference to
the information under the captions "Corporate Data" in the Company's Annual
Report to Stockholders for the year ended December 31, 1999, and is included in
Exhibit 13.1 to this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item is incorporated by reference to
the information under the caption "Selected Financial Data" in the Company's
Annual Report to Stockholders for the year ended December 31, 1999, and is
included in Exhibit 13.1 to this Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item is incorporated by reference to
the information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's Annual Report to
Stockholders for the year ended December 31, 1999, and is included in Exhibit
13.1 to this Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information required by this item is incorporated by reference to
the information under the caption "Market Risk" within the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report to Stockholders for the year ended
December 31, 1999, and is included in Exhibit 13.1 to this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is incorporated by reference to
the information on pages 25 through 44 of the Company's Annual Report to
Stockholders for the year ended December 31, 1999, and is included in Exhibit
13.1 to this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Inapplicable.
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<PAGE> 20
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information about our Directors is incorporated by reference to the
discussion under the heading "Item 1 - Election of Class III Directors" in our
Proxy Statement for the 2000 Annual Meeting of Stockholders, to be filed with
the Securities and Exchange Commission pursuant to Rule 14a-6.
Information required by Item 405 of Regulation S-K is incorporated by
reference to the discussion under the heading "Section 16(a) Beneficial
Ownership Reporting Compliance" in our Proxy Statement for the 2000 Annual
Meeting of Stockholders, to be filed with the Securities and Exchange Commission
pursuant to Rule 14a-6.
Certain other information concerning executive officers of the Company
is included in Part I of this Form 10-K under the caption "Executive Officers of
the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to
the discussion under the heading "Executive Compensation" in our Proxy Statement
for the 2000 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission pursuant to Rule 14a-6.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference to
the discussion under the heading "Beneficial Ownership" in our Proxy Statement
for the 2000 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission pursuant to Rule 14a-6.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference to
the discussion under the heading "Certain Relationships and Related
Transactions" in our Proxy Statement for the 2000 Annual Meeting of
Stockholders, to be filed with the Securities and Exchange Commission pursuant
to Rule 14a-6.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
14(A)(1) FINANCIAL STATEMENTS
The following financial statements are filed as part of this report,
with reference to the applicable pages of Exhibit 13.1 to this Form 10-K:
<TABLE>
<CAPTION>
Exhibit 13.1
Page
------------
<S> <C>
Consolidated Statements of Income for the Years Ended December
31, 1999, 1998 and 1997 ............................................... 15
</TABLE>
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<PAGE> 21
<TABLE>
<S> <C>
Consolidated Balance Sheets as of December 31, 1999 and 1998................. 16
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998, and 1997...................................... 17
Consolidated Statements of Stockholders' Equity for the Years
Ended December 31, 1999, 1998, and 1997................................ 18
Notes to Consolidated Financial Statements .................................. 19
14(A)(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules are filed as a part of this
report, with reference to the applicable pages of this Form 10-K:
Schedule II - Valuation and Qualifying Accounts for the Year Ended
December 31, 1999...................................................... S-2
Schedule II - Valuation and Qualifying Accounts for the Year Ended
December 31, 1998...................................................... S-3
Schedule II - Valuation and Qualifying Accounts for the Year Ended
December 31, 1997...................................................... S-4
</TABLE>
All other financial statement 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.
14(A)(3) EXHIBITS
See Index to Exhibits, pages 21 through 25.
14(B) REPORTS ON FORM 8-K
A Current Report on Form 8-K, dated October 27, 1999, reporting the
completion of the sale of the Company's interest in the entities that own
television station KTVT to CBS Corporation was filed with the Securities and
Exchange Commission.
19
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GAYLORD ENTERTAINMENT COMPANY
By: /s/ E. K. Gaylord II
---------------------------------------
E. K. Gaylord II
Chairman of the Board
March 30, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ E. K. Gaylord II Chairman of the Board March 30, 2000
- -------------------------------------------
E. K. Gaylord II
/s/ Terry E. London Director, President and Chief March 30, 2000
- ------------------------------------------- Executive Officer (Principal
Terry E. London Executive Officer)
/s/ Martin C. Dickinson Director March 30, 2000
- -------------------------------------------
Martin C. Dickinson
/s/ Christine Gaylord Everest Director March 30, 2000
- -------------------------------------------
Christine Gaylord Everest
Chairman Emeritus March ___, 2000
- -------------------------------------------
Edward L. Gaylord
/s/ Craig L. Leipold Director March 30, 2000
- -------------------------------------------
Craig L. Leipold
Director March ___, 2000
- -------------------------------------------
Joe M. Rodgers
/s/ Mary Agnes Wilderotter Director March 30, 2000
- -------------------------------------------
Mary Agnes Wilderotter
/s/ Howard L. Wood Director March 30, 2000
- -------------------------------------------
Howard L. Wood
/s/ Carl W. Kornmeyer Senior Vice President of March 30, 2000
- ------------------------------------------- of Corporate Development
Carl W. Kornmeyer (Principal Accounting and
Financial Officer)
</TABLE>
20
<PAGE> 23
INDEX TO EXHIBITS
Exhibit
Number Description
2.1+ 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).
2.2+ 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).
2.3 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).
2.4 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 Old Gaylord 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.).
2.5+ 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 Old
Gaylord 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.).
2.6+ 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.).
2.7+ 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.).
2.8+ 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).
2.9+ Agreement and Plan of Merger dated February 9, 1997 by and
among Westinghouse Electric Corporation ("Westinghouse"), G
Acquisition Corp. and Old Gaylord (incorporated by reference
to Exhibit 2.1 to Old Gaylord's Current Report on Form 8-K
dated February 9, 1997).
21
<PAGE> 24
2.10+ Agreement and Plan of Merger, dated as of April 9, 1999, by
and among the Registrant, Gaylord Television Company, Gaylord
Communications, Inc., CBS Corporation, CBS Dallas Ventures,
Inc. and CBS Dallas Media, Inc. (incorporated by reference to
Exhibit 2 to the Registrant's Current Report on Form 8-K dated
April 19, 1999).
2.11+ First Amendment to the Agreement and Plan of Merger, dated as
of October 8, 1999, by and among the Registrant, Gaylord
Television Company, Gaylord Communications, Inc., CBS
Corporation, CBS Dallas Ventures, Inc. and CBS Dallas Media,
Inc. (incorporated by reference to Exhibit 2.3 to the
Registration Statement on Form S-3 of CBS Corporation, as
filed with the Securities and Exchange Commission on October
12, 1999).
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3 to the Registrant's
Current Report on Form 8-K dated October 7, 1997).
3.2 Restated Bylaws of the Registrant (incorporated by reference
to Exhibit 3.2 to the Company's Registration Statement on Form
10, as amended (File No. 1-13079)).
4.1 Specimen of Common Stock certificate (incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form 10, as amended (File No. 1-13079)).
4.2 Credit Agreement dated as of August 19, 1997 among Old
Gaylord, the banks named therein and NationsBank of Texas,
N.A., ("NationsBank") as Administrative Lender (including form
of Swing Line Note, form of Revolving Credit Note, and form of
Assumption Agreement) (incorporated by reference to Exhibit
4.2 to the Company's Registration Statement on Form 10, as
amended (File No. 1-13079)).
4.3 First Amendment to Credit Agreement, dated as of September 30,
1997, among Old Gaylord, the Registrant, the banks named
therein, and NationsBank (incorporated by reference to Exhibit
4.3 to Gaylord's Annual Report on Form 10-K for the year ended
December 31, 1997).
4.4 Second Amendment to Credit Agreement, dated as of March 24,
1998 but effective as of October 1, 1997, among the
Registrant, the banks named therein, and NationsBank
(incorporated by reference to Exhibit 4.4 to Gaylord's Annual
Report on Form 10-K for the year ended December 31, 1997).
4.5 Third Amendment to Credit Agreement, dated as of March 22,
1999 but effective as of December 31, 1998, among the
Registrant, the banks named therein, and NationsBank, N.A.
(successor by merger to NationsBank) (incorporated by
reference to Exhibit 4.5 to Gaylord's Annual Report on Form
10-K for the year ended December 31, 1998).
4.6 Fourth Amendment to Credit Agreement, dated as of October 8,
1999, among the Registrant, the banks named therein, and
NationsBank, N.A. (successor by merger to NationsBank) as
Administrative Lender (incorporated by reference to Exhibit 4
to Gaylord's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999).
4.7* First Amendment to Fourth Amendment to Credit Agreement, dated
as of March 17, 2000, but effective as of October 8, 1999,
among the Registrant, the banks named therein, and Bank of
America, N.A. (formerly known as NationsBank, N.A.) as
Administrative Lender.
22
<PAGE> 25
4.8* Fifth Amendment to Credit Agreement, dated as of February 2,
2000, among the Registrant, the banks named therein, and Bank
of America, N.A. (formerly known as NationsBank, N.A.), as
Administrative Lender.
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, and E. K. Gaylord II 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, and E. K. Gaylord II 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 the Registrant (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 Tax Disaffiliation Agreement by and among Old Gaylord, the
Registrant and Westinghouse, dated September 30, 1997
(incorporated by reference to Exhibit 10.3 to the Registrant's
Current Report on Form 8-K, dated October 7, 1997).
10.6 Agreement and Plan of Distribution, dated September 30, 1997,
between Old Gaylord and the Registrant (incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report
on Form 8-K dated October 7, 1997).
10.7 Opry Mills Limited Partnership Agreement, executed as of March
31, 1998, by and among Opry Mills, L.L.C., The Mills Limited
Partnership, and Opryland Attractions, Inc. (incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998).
23
<PAGE> 26
10.8 Tax Matters Agreement, dated as of April 9, 1999, by and among
the Registrant, Gaylord Television Company, Gaylord
Communications, Inc. and CBS Corporation (incorporated by
reference to Exhibit 10.1 to the Registrant's Current Report
on Form 8-K dated April 19, 1999).
10.9 Amended and Restated Tax Matters Agreement, dated as of
October 8, 1999, by and among the Registrant, Gaylord
Television Company, Gaylord Communications, Inc. and CBS
Corporation (incorporated by reference to Exhibit 2.4 to the
Registration Statement on Form S-3 of CBS Corporation, as
filed with the Securities and Exchange Commission on October
12, 1999).
10.10 First Amendment to Post-Closing Covenants Agreement and
Non-Competition Agreements, dated as of April 9, 1999, by and
among the Registrant, CBS Corporation, Edward L. Gaylord and
E. K. Gaylord II (incorporated by reference to Exhibit 10.2 to
the Registrant's Current Report on Form 8-K dated April 19,
1999).
10.11* Opryland Hotel - Florida Ground Lease, dated as of March 3,
1999, by and between Xentury City Development Company, L.C.,
and Opryland Hotel - Florida Limited Partnership.
EXECUTIVE COMPENSATION PLANS AND MANAGEMENT CONTRACTS
10.12 1997 Stock Option and Incentive Plan Amended and Restated as
of May 13, 1999 (incorporated by reference to Exhibit 10 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999).
10.13 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)).
10.14 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).
10.15 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).
10.16 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).
10.17* Amended and Restated Gaylord Entertainment Company Directors'
Unfunded Deferred Compensation Plan.
10.18 Form of Severance Agreement between the Registrant and certain
of its 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).
24
<PAGE> 27
10.19 Form of Indemnity Agreement between the Registrant 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).
10.20 Executive Employment Agreement of Dan E. Harrell, dated March
24, 1997, with Word Entertainment Group, Inc., a subsidiary of
the Registrant (incorporated by reference to Exhibit 10.17 to
Gaylord's Annual Report on Form 10-K for the year ended
December 31, 1997).
10.21 Letter Agreement, dated March 26, 1998, regarding employment
of Jerry O. Bradley by the Registrant (incorporated by
reference to Exhibit 10.18 to Gaylord's Annual Report on Form
10-K for the year ended December 31, 1997).
10.22* Severance Agreement, dated February 1999 between the
Registrant and David B. Jones.
10.23* Executive Employment Agreement of James "Tim" DuBois dated
February 15, 2000, with the Registrant.
10.24* Naming Rights Agreement dated as of November 24, 1999, by and
between Registrant and Nashville Hockey Club Limited
Partnership.
13.1* Portions of the Registrant's Annual Report to Stockholders for
the year ended December 31, 1999.
21* Subsidiaries of Gaylord Entertainment Company.
23* Consent of Independent Public Accountants.
27* Financial Data Schedule for year ended December 31, 1999 (for
SEC use only).
+ As directed by Item 601(b)(2) of Regulation S-K, certain schedules and
exhibits to this exhibit are omitted from this filing. The Registrant
agrees to furnish supplementally a copy of any omitted schedule or
exhibit to the Commission upon request.
* Filed herewith.
25
<PAGE> 28
To Gaylord Entertainment Company:
We have audited, in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements of Gaylord Entertainment
Company as of December 31, 1999 and 1998 and for the three years ended December
31, 1999 included in this Annual Report on Form 10-K and have issued our report
thereon dated February 9, 2000. Our audit was made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The financial
statement schedules listed in response to Item 14(a)(2) of this Annual Report on
Form 10-K are the responsibility of the Company's management and are presented
for purposes of complying with the Securities and Exchange Commission's rules
and regulations under the Securities and Exchange Act of 1934 and are not
otherwise a required part of the basic financial statements. The financial
statement schedules have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, fairly state,
in all material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
February 9, 2000
S-1
<PAGE> 29
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Additions charged to
Balance at --------------------- Balance at
beginning Costs and Other end of
of period expenses Accounts Deductions period
--------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
1997 restructuring charge $2,294 -- -- 2,294 $ --
1999 restructuring charge -- 3,102 -- 2,603 499
------ ----- ----- ----- ----
Total $2,294 3,102 -- 4,897 $499
====== ===== ===== ===== ====
</TABLE>
S-2
<PAGE> 30
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Additions charged to
Balance at --------------------- Balance at
beginning Costs and Other end of
of period expenses Accounts Deductions period
--------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
1997 restructuring charge $6,073 -- -- 3,779 $2,294
====== ===== ===== ===== ======
</TABLE>
S-3
<PAGE> 31
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Additions charged to
Balance at --------------------- Balance at
beginning Costs and Other end of
of period expenses Accounts Deductions period
--------- -------- -------- ---------- ------
<S> <C> <C> <C> <C> <C>
1997 Restructuring charge $ -- 13,654 -- 7,581 $6,073
====== ====== ===== ===== ======
</TABLE>
S-4
<PAGE> 1
EXHIBIT 4.7
FIRST AMENDMENT TO FOURTH AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO FOURTH AMENDMENT TO CREDIT AGREEMENT (this
"Amendment"), dated as of March 17, 2000 but effective as of October 8, 1999,
is entered into among GAYLORD ENTERTAINMENT COMPANY, a Delaware corporation
("Borrower"), the banks listed on the signature pages hereof (collectively,
"Lenders"), and BANK OF AMERICA, N.A. (formerly known as NationsBank, N.A.,
successor by merger to NationsBank of Texas, N.A.), as Administrative Lender
(in said capacity, "Administrative Lender").
BACKGROUND
1. Borrower, Lenders and Administrative Lender are parties to
that certain Credit Agreement, dated as of August 19, 1997, as amended by that
certain First Amendment to Credit Agreement, dated as of September 30, 1997,
that certain Second Amendment to Credit Agreement, dated as of March 24, 1998,
that certain Third Amendment to Credit Agreement, dated as of March 22, 1999,
but effective as of December 31, 1998, that certain Fourth Amendment to Credit
Agreement dated as of October 8, 1999 (the "Fourth Amendment"), and that
certain Fifth Amendment to Credit Agreement, dated as of February 2, 2000, but
effective as of February 3, 2000 (said Credit Agreement, as amended, the
"Credit Agreement"; the terms defined in the Credit Agreement and not otherwise
defined herein shall be used herein as defined in the Credit Agreement).
2. Borrower, Lenders and Administrative Lender desire to amend
the Fourth Amendment to waive an anticipated Event of Default that would occur
pursuant to Section 4.2 of the Credit Agreement as a result of falling below
the minimum EBITDA to Interest Charges ratio for the twelve month period ending
December 31, 1999.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
Borrower, Lenders and Administrative Lender covenant and agree as follows:
1. AMENDMENTS TO FOURTH AMENDMENT.
The first sentence of Section 2 of the Fourth Amendment is hereby
deleted in its entirety and replaced with the following:
"Subject to satisfaction of the conditions of effectiveness set forth
in Section 4 of this Fourth Amendment and the termination of the
waiver as provided herein, the Lenders hereby waive the anticipated
Event of Default with respect to (a) Section 4.5 of the Credit
Agreement
<PAGE> 2
which would occur as a result of the CBS Stock Transaction, (b)
Section 4.3 of the Credit Agreement which would occur as a result of
exceeding the permitted Capital Expenditures for the fiscal year 1999,
and (c) Section 4.2 of the Credit Agreement as a result of falling
below the minimum EBITDA to Interest Charges ratio for the twelve
month period ending December 31, 1999."
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By
its execution and delivery hereof, Borrower represents and warrants that after
giving effect to the amendments contemplated by the foregoing Section 1:
(1) the representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct on and as of the
date hereof 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;
(2) no event has occurred and is continuing which constitutes a
Default or Event of Default;
(3) Borrower has full power and authority to execute and deliver
this Amendment, the Fourth Amendment, and the Credit Agreement, as amended
hereby, and this Amendment, the Fourth Amendment and the Credit Agreement, as
amended hereby, constitute the legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable debtor relief laws and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;
(4) neither the execution, delivery and performance of this
Amendment, the Fourth Amendment or the Credit Agreement, as amended by this
Amendment, will contravene or conflict with any Law to which Borrower or any of
its Subsidiaries is subject or any indenture, agreement or other instrument to
which Borrower or any of its Subsidiaries or any of their respective property
is subject; and
(5) no authorization, approval, consent, or other action by,
notice to, or filing with, any Tribunal or other Person, is required for the
execution, delivery or performance by Borrower of this Amendment or the
acknowledgment of this Amendment by any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This Amendment shall be effective
as of October 8, 1999, subject to the following:
(1) Administrative Lender shall have received counterparts of
this Amendment executed by Determining Lenders;
<PAGE> 3
(2) Administrative Lender shall have received counterparts of this
Amendment executed by Borrower and acknowledged by each Guarantor; and
(3) Administrative Lender shall have received, in form and
substance satisfactory to Administrative Lender and its counsel, such other
documents, certificates and instruments as Administrative Lender reasonably
shall require.
4. GUARANTOR ACKNOWLEDGMENT. By signing below, each of the
Guarantors (i) acknowledges, consents and agrees to the execution and delivery
of this Amendment, (ii) acknowledges and agrees that its obligations in respect
of its Guaranty are not released, diminished, waived, modified, impaired or
affected in any manner by this Amendment or any of the provisions contemplated
herein, (iii) ratifies and confirms its obligations under its Guaranty, and
(iv) acknowledges and agrees that it has no claims or offsets against, or
defenses or counterclaims to, its Guaranty.
5. REFERENCE TO THE CREDIT AGREEMENT.
(1) Upon the effectiveness of this Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", or words of like import
shall mean and be a reference to the Credit Agreement, as amended or modified
by this Amendment.
(2) The Credit Agreement, as amended or modified by this
Amendment, and all other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand
all costs and expenses of the Administrative Lender in connection with the
preparation, reproduction, execution and delivery of this Amendment and the
other instruments and documents to be delivered hereunder (including the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Lender with respect thereto and with respect to advising the Lenders as to
their rights and responsibilities under the Credit Agreement, as amended by
this Amendment).
7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.
8. GOVERNING LAW: BINDING EFFECT. This Amendment shall be
governed by and construed in accordance with the laws of the State of Texas and
shall be binding upon Borrower and each Lender and their respective successors
and assigns.
9. HEADINGS. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.
-3-
<PAGE> 4
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
===============================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
===============================================================================
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amendment to be effective as of the date first above written.
GAYLORD ENTERTAINMENT COMPANY
By:
--------------------------------
Name:
---------------------------
Title:
---------------------------
-5-
<PAGE> 6
BANK OF AMERICA, N.A., as a Lender, Swing
Line Bank, Issuing Bank and as
Administrative Lender
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-6-
<PAGE> 7
THE BANK OF NEW YORK
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-7-
<PAGE> 8
THE FUJI BANK, LIMITED, ATLANTA AGENCY
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-8-
<PAGE> 9
SUNTRUST BANK, NASHVILLE, N.A.
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-9-
<PAGE> 10
FIRST AMERICAN NATIONAL BANK
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-10-
<PAGE> 11
CREDIT LYONNAIS NEW YORK BRANCH
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
-11-
<PAGE> 12
PARIBAS
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-12-
<PAGE> 13
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-13-
<PAGE> 14
FIRST UNION NATIONAL BANK
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-14-
<PAGE> 15
THE SAKURA BANK, LIMITED
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-15-
<PAGE> 16
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-16-
<PAGE> 17
COMERICA BANK
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-17-
<PAGE> 18
GENERAL ELECTRIC CAPITAL CORPORATION
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-18-
<PAGE> 19
THE SANWA BANK, LIMITED
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-19-
<PAGE> 20
THE BANK OF NOVA SCOTIA
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-20-
<PAGE> 21
WACHOVIA BANK, N.A.
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-21-
<PAGE> 22
BANK OF TOKYO MITSUBISHI TRUST
COMPANY
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-22-
<PAGE> 23
BANK ONE, OKLAHOMA, NATIONAL
ASSOCIATION
By:
---------------------------------
Name:
----------------------------
Title:
---------------------------
-23-
<PAGE> 24
ACKNOWLEDGED AND AGREED:
GAYLORD CREATIVE GROUP, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
GAYLORD BROADCASTING COMPANY, L.P.
By: Gaylord Communications, Inc.,
its General Partner
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
OPRYLAND ATTRACTIONS, INC.
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
OLH, G.P.
By: Opryland Hospitality, Inc.
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
ACUFF-ROSE MUSIC PUBLISHING, INC.
(formerly known as OPRYLAND MUSIC
GROUP, INC.)
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By:
-----------------------------------
Name:
------------------------------
Title:
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EXHIBIT 4.8
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Fifth Amendment"),
dated as of February 2, 2000, but effective as provided herein, is entered into
among GAYLORD ENTERTAINMENT COMPANY, a Delaware corporation ("Borrower"), the
banks listed on the signature pages hereof (collectively, "Lenders"), and BANK
OF AMERICA, N.A. (formerly known as NationsBank, N.A., successor by merger to
NationsBank of Texas, N.A.), as Administrative Lender (in said capacity,
"Administrative Lender").
BACKGROUND
1. Borrower, Lenders and Administrative Lender are parties to
that certain Credit Agreement, dated as of August 19, 1997, as amended by that
certain First Amendment to Credit Agreement, dated as of September 30, 1997,
that certain Second Amendment to Credit Agreement, dated as of March 24, 1998,
that certain Third Amendment to Credit Agreement, dated as of March 22, 1999,
but effective as of December 31, 1998, and that certain Fourth Amendment to
Credit Agreement, dated as of October 8, 1999 (said Credit Agreement, as
amended, the "Credit Agreement"; the terms defined in the Credit Agreement and
not otherwise defined herein shall be used herein as defined in the Credit
Agreement).
2. Borrower, Lenders and Administrative Lender desire to amend
the Credit Agreement.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
Borrower, Lenders and Administrative Lender covenant and agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(1) The following defined terms are hereby added to Section 1.1
of the Credit Agreement in proper alphabetical order to read as follows:
"Bank of America" means Bank of America, N.A., a national
banking association.
"CBS Stock" means, initially, the 10,081.691 shares of CBS
Series B Participating Preferred Stock acquired by the Company in the
CBS Stock Transaction, and, subsequently, any other stock that may be
obtained in exchange or conversion of such
<PAGE> 2
stock, including, but not limited to, CBS Common Stock, Series C
Preferred Stock of Viacom Inc., and Class B Common Stock of Viacom
Inc.
"CBS Stock Market Value" means, as of the date of
determination, the product of (a) the closing New York Stock Exchange
price of the CBS Stock on such date, or if the CBS Stock is not listed
on the New York Stock Exchange on such date, the closing New York
Stock Exchange price of any stock into which the CBS Stock may be
exchanged or converted and (b) the number of shares of CBS Stock (or,
if the CBS Stock is not listed on the New York Stock Exchange, the
number of shares of other stock into which the CBS Stock may be
exchanged or converted) pledged to the Administrative Lender pursuant
to the Pledge Agreement.
"CMBS Event" means the refinancing of Debt related to The
Opryland Hotel in a manner acceptable to the Determining Lenders and
the Administrative Lender, resulting in Net Proceeds of at least
$300,000,000, 100% of which are applied to repay Revolving Credit
Loans.
"Collateral" means any collateral in which a Lien is granted
by any Person to the Administrative Lender to secure the Obligations.
"Collateral Coverage Ratio" means the ratio of Funded Debt to
the CBS Stock Market Value.
"Collateral Documents" means the Pledge Agreement and any
document related thereto.
"Pledge Agreement" means the pledge agreement executed by the
Company substantially in the form of Exhibit T hereto, and any
amendments, modifications, or restatements thereof.
(2) The definition of "Applicable Law" set forth in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read as follows:
"Applicable Law" means the Laws of the State of Texas,
including, without limitation, Chapter 303 of the Texas Finance Code,
as amended to date 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.
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(3) The definition of "Applicable LIBOR Rate Margin" set forth in
Section 1.1 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"Applicable LIBOR Rate Margin" means a per annum percentage
equal to 1.000%.
(4) The definition of "Commitment" set forth in Section 1.1 of
the Credit Agreement is hereby amended in its entirety to read as follows:
"Commitment" means, as to a Lender, the amounts set forth
opposite its name on Schedule I of this Agreement under the caption
"Commitment" (and designated as "Prior to CMBS Event" and "After CMBS
Event") 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 (a)
$525,000,000 prior to the date of the CMBS Event and (b) $275,000,000
from and including the date of the CMBS Event.
(5) The definition of "Dividends" set forth in Section 1.1 of the
Credit Agreement is hereby amended in its entirety to read as follows:
"Dividends" means, for any Company, (a) any dividend, payment
or other distribution (other than a dividend, payment or distribution
payable in such Company's common Capital Stock) of assets, rights,
obligations or securities on account of any Capital Stock of such
Company and (b) any purchase, redemption or other acquisition or
retirement for value by any Company of any shares of Capital Stock of
such Company.
(6) The definition of "Highest Lawful Rate" set forth in Section
1.1 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"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 weekly rate ceiling
described in and computed in accordance with the provisions of Chapter
303.301 of the Texas Finance Code, as amended, or (b) if the parties
subsequently contract as allowed by Applicable Law, either the
annualized or quarterly ceiling computed pursuant to Chapter 303.302
of the Texas Finance Code.
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<PAGE> 4
(7) The definition of "Loan Documents" set forth in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read as follows:
"Loan Documents" means this Agreement, the Guaranty, the L/C
Related Documents, the Collateral Documents and all other documents,
instruments and certificates to be executed by any Company pursuant to
the terms of this Agreement.
(8) The definition of "Permitted Debt" set forth in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read as follows:
"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, (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 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,
(j) Contingent Debt in respect of operating lease obligations and
other obligations (excluding Debt other than Permitted Debt) of any
Company incurred in the ordinary course of business, and (k) Debt in
respect of the CMBS Event.
(9) The definition of "Permitted Investments" set forth in
Section 1.1 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"Permitted Investments" means (i) accounts receivable that
arise in the ordinary course of business, (ii) Cash and Cash
Equivalents, (iii) Investments that were made prior to January 1, 2000
and were permitted pursuant to the terms of this Agreement, and (iv)
additional Investments made on and after January 1, 2000 in an
aggregate amount equal to the remainder of $190,000,000 minus the
aggregate amount of Capital Expenditures made and Acquisition
Consideration paid by all Companies on and after January 1, 2000.
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(10) The definition of "Permitted Lien" set forth in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read as follows:
"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 (i) 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, (i) Liens
against The Opryland Hotel as a result of the CMBS Event, (j) Liens to
secure the Obligation hereunder, and (k) extensions, renewals and
replacements of Existing Liens.
(11) The definition of "Termination Date" set forth in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read as follows:
"Termination Date" means July 31, 2000, or the earlier date
of termination in whole of the Commitments of all Lenders pursuant to
Section 2.4 or 6.2.
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(12) Section 1.1 of the Credit Agreement is hereby amended by
deleting the following defined terms therefrom: "Funded Debt to Capitalization
Ratio", "Total Capital", "Interest Charges", "Net Worth", "Index Debt Rating",
"Initial Adjustment Date", and "Initial Pricing Period".
(13) All references in the Credit Agreement and the other Loan
Documents to "NationsBank" are hereby amended to refer to "Bank of America".
(14) Section 2.3(a) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(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 at a per annum rate equal to the
product of 0.375% and the average daily unused portion of the Total
Commitment. The Commitment Fee shall be payable quarterly in arrears
on each Quarterly 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 Credit from time to time
will reduce the unused portion of the Total Commitment."
(15) Section 2.4(b) of the Credit Agreement is hereby amended in
its entirety to read as follows:
"(b) On the Termination Date, the Total Commitment shall
automatically be reduced to zero. On the date of the CMBS Event, the
Total Commitment shall be automatically reduced to $275,000,000."
(16) Section 2.7(b)(i) of the Credit Agreement is hereby amended by
adding the following at the end of said Section:
"Borrower shall, on the date of the CMBS Event, prepay
Revolving Credit Loans in an aggregate principal amount equal to the
Net Proceeds received by Borrower from the CMBS Event. On the date of
receipt of Net Proceeds by any Company from the sale or disposition of
any assets (other than any such sales or dispositions permitted under
clauses (a) through (e) of Section 4.11), Borrower shall prepay
Revolving Credit Loans in an aggregate principal amount equal to 100%
of such Net Proceeds."
(17) Section 4.1 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"4.1. INTENTIONALLY OMITTED"
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(18) Section 4.2 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"4.2. INTENTIONALLY OMITTED"
(19) Section 4.3 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"4.3. Capital Expenditures. Borrower shall not, nor shall
it permit any other Company to, made or commit to make any Capital
Expenditures in an aggregate for all Companies in excess of (a)
$125,000,000 during fiscal year 1999 and (b) the remainder of
$190,000,000 minus the Investments made by all Companies pursuant to
clause (iv) of the definition of Permitted Investments and the
Acquisition Consideration paid by all Companies during the period from
January 1, 2000 through the Termination Date."
(20) Section 4.4 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"4.4. INTENTIONALLY OMITTED"
(21) Section 4.6 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"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), and (iv) during the period from and including
January 1, 2000 though the Termination Date, the aggregate Acquisition
Consideration for such period shall not exceed the remainder of
$190,000,000 minus the Capital Expenditures and Permitted Investments
made by all Companies during such period.
(22) Section 4.11 of the Credit Agreement is hereby amended in its
entirety to read as follows:
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"4.11. Disposition of Assets. Borrower shall not, nor shall
it permit any other Company to, sell, lease, transfer or otherwise
dispose of any of its assets, including any equity in any of its
assets (each a "Disposition") except (a) Dispositions of inventory in
the ordinary course of business, (b) Dispositions of obsolete or
worn-out assets, (c) Dispositions of Cash and Cash Equivalents in the
ordinary course of business, (d) Dispositions of any asset for full
and fair consideration and in which the Net Proceeds do not exceed
$100,000, (e) Disposition of The Opryland Hotel concurrently with the
occurrence of the CMBS Event for full and fair consideration and
provided the Net Proceeds thereof are applied to repay Revolving
Credit Loans as required pursuant to Section 2.7(b)(i) and (f) other
Dispositions of assets (other than The Opryland Hotel) for full and
fair consideration and provided the Net Proceeds thereof are applied
to repay Revolving Credit Loans as required pursuant to Section
2.7(b)(i); provided, however, no Company shall make any Disposition
permitted by this Section 4.11 if a Default or Event of Default exists
or would result therefrom."
(23) Section 4.7 of the Credit Agreement is hereby amended by
adding the following sentence at the end thereof:
"No Company shall enter into any agreement, contract or
otherwise whereby such Company is prohibited from, or would otherwise
be in default of as a result of, creating, assuming, incurring or
suffering to exist, directly or indirectly, any Lien on any of its
assets. The Lenders agree that the CBS Stock may be held by a
collateral agent for the benefit of the Lenders pursuant to
documentation and under terms and conditions satisfactory to the
Administrative Lender."
(24) Article IV of the Credit Agreement is hereby further amended
by adding the following new Sections 4.16 and 4.17 thereto to read as follows:
"4.16. Collateral Coverage Ratio. Borrower shall not permit
the Collateral Coverage Ratio at any time (a) prior to the date of the
CMBS Event, to exceed 1.00 to 1 and (b) on and after the date of the
CMBS Event, to exceed 0.50 to 1.
"4.17. Dividends. Borrower shall not, nor shall it permit
any other Company to, directly or indirectly declare, pay or make any
Dividends except (a) Dividends payable by a Subsidiary to Borrower and
(b) Dividends not to exceed $17,000,000 in aggregate amount during the
period form and including January 1, 2000 through and including the
Termination Date; provided, however, no Company shall pay or make any
Dividend permitted by this Section 4.17 unless there shall exist no
Default or Event of Default prior to or after giving effect to any
such proposed Dividend."
(25) The first sentence of Section 5.8 of the Credit Agreement is
hereby amended to read as follows:
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"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 no
proceeds of any Loan or Letter of Credit hereunder has been used or
shall be used, directly or indirectly, to purchase or carry the CBS
Stock within the meaning of Regulation U."
(26) Article VI of the Credit Agreement is hereby amended by adding
a Section 6.1(l) thereto to read as follows:
"(l) CBS Stock. Administrative Lender shall fail to have a
perfected first priority Lien in the CBS Stock.
(27) Schedule I to the Credit Agreement is hereby amended to be in
the form of Schedule I attached hereto.
(28) The Officer's Certificate-Financial in the form of Exhibit N
to the Credit Agreement is hereby amended to be in the form of Exhibit N
attached hereto.
(29) The Pledge Agreement is hereby added as Exhibit T to the
Credit Agreement to be in the form of Exhibit T attached hereto.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By
its execution and delivery hereof, Borrower represents and warrants that after
giving effect to the amendments contemplated by the foregoing Section 1:
(1) the representations and warranties contained in the Credit
Agreement and the other Loan Documents are true and correct on and as of the
date hereof 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;
(2) no event has occurred and is continuing which constitutes a
Default or Event of Default;
(3) Borrower has full power and authority to execute and deliver
this Fifth Amendment, the $161,875,000 replacement Revolving Credit Note
payable to the order of Bank of America, N.A., the $43,750,000 replacement
Revolving Credit Note payable to the order of Wells Fargo Bank (Texas),
National Association, the $52,500,000 replacement Revolving Credit Note payable
to the order of SunTrust Bank, Nashville, N.A., the $30,625,000 replacement
Revolving Credit Note payable to the order of Credit Lyonnais New York Branch,
the $26,250,000 replacement Revolving Credit Note payable to the order of
Wachovia Bank, N.A., the $17,500,000 replacement Revolving Credit Note payable
to the order of Paribas, the
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<PAGE> 10
$17,500,000 replacement Revolving Credit Note payable to the order of The Bank
of New York, the $17,500,000 replacement Revolving Credit Note payable to the
order of The Industrial Bank of Japan, Limited, Atlanta Agency, the $8,750,000
replacement Revolving Credit Note payable to the order of The Sakura Bank,
Limited, the $17,500,000 replacement Revolving Credit Note payable to the order
of The Sanwa Bank, Limited, the $17,500,000 replacement Revolving Credit Note
payable to the order of First Union National Bank, the $17,500,000 replacement
Revolving Credit Note payable to the order of Comerica Bank, the $17,500,000
replacement Revolving Credit Note payable to the order of First American
National Bank, the $8,750,000 replacement Revolving Credit Note payable to the
order of Bank of Tokyo Mitsubishi Trust Company, the $8,750,000 replacement
Revolving Credit Note payable to the order of The Bank of Nova Scotia, the
$8,750,000 replacement Revolving Credit Note payable to the order of The Fuji
Bank, Limited, Atlanta Agency, the $8,750,000 replacement Revolving Credit Note
payable to the order of Bank One, Oklahoma, National Association, and the
$43,750,000 replacement Revolving Credit Note payable to the order of General
Electric Capital Corporation (collectively, the "Replacement Revolving Credit
Notes"), the Pledge Agreement, and the Credit Agreement, as amended hereby, and
this Fifth Amendment, the Replacement Revolving Credit Notes, the Pledge
Agreement and the Credit Agreement, as amended hereby, constitute the legal,
valid and binding obligations of Borrower, enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable debtor
relief laws and by general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and except as rights
to indemnity may be limited by federal or state securities laws;
(4) neither the execution, delivery and performance of this Fifth
Amendment, the Replacement Revolving Credit Notes, the Pledge Agreement or the
Credit Agreement, as amended by this Fifth Amendment, will contravene or
conflict with any Law to which Borrower or any of its Subsidiaries is subject
or any indenture, agreement or other instrument to which Borrower or any of its
Subsidiaries or any of their respective property is subject; and
(5) no authorization, approval, consent, or other action by,
notice to, or filing with, any Tribunal or other Person (other than the Board
of Directors of Borrower), is required for the execution, delivery or
performance by Borrower of this Fifth Amendment, the Replacement Revolving
Credit Notes or the Pledge Agreement or the acknowledgment of this Fifth
Amendment by any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This Fifth Amendment shall be
effective as of February 3, 2000, subject to the following:
(1) Administrative Lender shall have received counterparts of this
Fifth Amendment executed by Determining Lenders;
(2) Administrative Lender shall have received counterparts of this
Fifth Amendment executed by Borrower and acknowledged by each Guarantor;
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(3) each Lender shall have received its Replacement Revolving
Credit Note, duly executed by Borrower;
(4) Administrative Lender shall have received the Pledge
Agreement, duly executed by Borrower, stock certificates evidencing the CBS
Stock, executed, blank stock powers and related UCC-1 financing statements;
(5) Administrative Lender shall have received certified
resolutions of the Board of Directors of Borrower approving the execution,
delivery and performance of this Fifth Amendment, the Replacement Revolving
Credit Notes and the Pledge Agreement and all other documents related thereto;
(6) Administrative Lender shall have received from Borrower, for
the account of each Lender that consented to this Fifth Amendment by 5:00 p.m.,
Dallas time, January 27, 2000, an amendment fee equal to the product of 0.05%
and each Lender's Commitment (after giving effect to the reduction of each
Lender's Commitment as contemplated by this Fifth Amendment);
(7) Administrative Lender shall have received an opinion of
counsel to Borrower in form and substance satisfactory to Administrative Lender
and its Special Counsel; and
(8) Administrative Lender shall have received, in form and
substance satisfactory to Administrative Lender and its counsel, such other
documents, certificates and instruments as Administrative Lender reasonably
shall require.
4. GUARANTOR ACKNOWLEDGMENT. By signing below, each of the
Guarantors (i) acknowledges, consents and agrees to the execution and delivery
of this Fifth Amendment, (ii) acknowledges and agrees that its obligations in
respect of its Guaranty are not released, diminished, waived, modified,
impaired or affected in any manner by this Fifth Amendment or any of the
provisions contemplated herein, (iii) ratifies and confirms its obligations
under its Guaranty, and (iv) acknowledges and agrees that it has no claims or
offsets against, or defenses or counterclaims to, its Guaranty.
5. REFERENCE TO THE CREDIT AGREEMENT.
(1) Upon the effectiveness of this Fifth Amendment, each reference
in the Credit Agreement to "this Agreement", "hereunder", or words of like
import shall mean and be a reference to the Credit Agreement, as amended or
modified by this Fifth Amendment.
(2) The Credit Agreement, as amended or modified by this Fifth
Amendment, and all other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand
all costs and expenses of the Administrative Lender in connection with the
preparation, reproduction,
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<PAGE> 12
execution and delivery of this Fifth Amendment and the other instruments and
documents to be delivered hereunder (including the reasonable fees and
out-of-pocket expenses of counsel for the Administrative Lender with respect
thereto and with respect to advising the Lenders as to their rights and
responsibilities under the Credit Agreement, as amended by this Fifth
Amendment).
7. EXECUTION IN COUNTERPARTS. This Fifth Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
8. GOVERNING LAW: BINDING EFFECT. This Fifth Amendment shall be
governed by and construed in accordance with the laws of the State of Texas and
shall be binding upon Borrower and each Lender and their respective successors
and assigns.
9. HEADINGS. Section headings in this Fifth Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Fifth Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS
FIFTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Fifth
Amendment to be effective as of the date first above written.
GAYLORD ENTERTAINMENT COMPANY
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-13-
<PAGE> 14
BANK OF AMERICA, N.A., as a Lender, Swing
Line Bank, Issuing Bank and as Administrative
Lender
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-14-
<PAGE> 15
THE BANK OF NEW YORK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-15-
<PAGE> 16
THE FUJI BANK, LIMITED, ATLANTA AGENCY
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-16-
<PAGE> 17
SUNTRUST BANK, NASHVILLE, N.A.
By:
------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-17-
<PAGE> 18
FIRST AMERICAN NATIONAL BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-18-
<PAGE> 19
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-19-
<PAGE> 20
PARIBAS
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-20-
<PAGE> 21
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-21-
<PAGE> 22
FIRST UNION NATIONAL BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-22-
<PAGE> 23
THE SAKURA BANK, LIMITED
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-23-
<PAGE> 24
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
ATLANTA AGENCY
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-24-
<PAGE> 25
COMERICA BANK
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-25-
<PAGE> 26
GENERAL ELECTRIC CAPITAL CORPORATION
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-26-
<PAGE> 27
THE SANWA BANK, LIMITED
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-27-
<PAGE> 28
THE BANK OF NOVA SCOTIA
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-28-
<PAGE> 29
WACHOVIA BANK, N.A.
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-29-
<PAGE> 30
BANK OF TOKYO MITSUBISHI TRUST COMPANY
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-30-
<PAGE> 31
BANK ONE, OKLAHOMA, NATIONAL ASSOCIATION
By:
-------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
-31-
<PAGE> 32
ACKNOWLEDGED AND AGREED:
IDEA ENTERTAINMENT, INC.
By:
--------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
GAYLORD BROADCASTING COMPANY, L.P.
By: Gaylord Communications, Inc.,
its General Partner
By:
--------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
OPRYLAND ATTRACTIONS, INC.
By:
--------------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
OLH, G.P.
By: Opryland Hospitality, Inc.
By:
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
ACUFF-ROSE MUSIC PUBLISHING, INC.
(formerly known as OPRYLAND MUSIC
GROUP, INC.)
-32-
<PAGE> 33
By:
-------------------------------------------
Name:--------------------------------------
Title:-------------------------------------
-33-
<PAGE> 34
<TABLE>
<CAPTION>
Commitment Commitment
Lender (Prior to CMBS Event) (After CMBS Event) Specified Percentage
- ----------------------------------------------------- ------------------ ------------------ --------------------
<S> <C> <C> <C>
Bank of America, N.A. $ 161,875,000.00 $ 84,791,666.70 30.83333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Wells Fargo Bank (Texas), National Association $ 43,750,000.00 $ 22,916,666.60 8.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
SunTrust Bank, Nashville, N.A. $ 52,500,000.00 $ 27,500,000.00 10.00000000%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Credit Lyonnais New York Branch $ 30,625,000.00 $ 16,041,666.65 5.83333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Wachovia Bank, N.A. $ 26,250,000.00 $ 13,750,000.00 5.00000000%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Banque Paribas $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
The Bank of New York $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
The Industrial Bank of Japan, Limited, Atlanta Agency $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
The Sakura Bank, Limited $ 8,750,000.00 $ 4,583,333.45 1.66666667%
- ----------------------------------------------------- ------------------ ------------------ --------------------
The Sanwa Bank, Limited $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
First Union National Bank $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Comerica Bank $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
First American National Bank $ 17,500,000.00 $ 9,166,666.60 3.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Bank of Tokyo Mitsubishi Trust Company $ 8,750,000.00 $ 4,583,333.45 1.66666667%
- ----------------------------------------------------- ------------------ ------------------ --------------------
The Bank of Nova Scotia $ 8,750,000.00 $ 4,583,333.45 1.66666667%
- ----------------------------------------------------- ------------------ ------------------ --------------------
The Fuji Bank, Limited, Atlanta Agency $ 8,750,000.00 $ 4,583,333.45 1.66666667%
- ----------------------------------------------------- ------------------ ------------------ --------------------
Bank One, Oklahoma, National Association $ 8,750,000.00 $ 4,583,333.45 1.66666667%
- ----------------------------------------------------- ------------------ ------------------ --------------------
General Electric Capital Corporation $ 43,750,000.00 $ 22,916,666.60 8.33333333%
- ----------------------------------------------------- ------------------ ------------------ --------------------
TOTALS $ 525,000,000.00 $ 275,000,000.00 100.00000000%
- ----------------------------------------------------- ------------------ ------------------ --------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.11
================================================================================
OPRYLAND HOTEL - FLORIDA GROUND LEASE
DATED AS OF MARCH 3, 1999
BY AND BETWEEN
XENTURY CITY DEVELOPMENT COMPANY, L.C., AS LANDLORD
AND
OPRYLAND HOTEL - FLORIDA LIMITED PARTNERSHIP, AS TENANT
================================================================================
EXECUTION COPY
<PAGE> 2
INDEX
<TABLE>
<S> <C> <C>
1. Certain Defined Terms............................................10
2. Construction of Project..........................................11
3. Landlord's Interest not Subject to Certain Liens.................23
4. Use..............................................................24
5. Landlord's Delivery of Utility Improvements......................30
6. Rent.............................................................30
7. Taxes and Assessments............................................41
8. Insurance........................................................44
9. Casualty.........................................................48
10. Alterations......................................................52
11. Repairs; Maintenance.............................................53
12. Assignment and Transfer; Leasing.................................56
13. Landlord's Right to Inspect......................................62
14. Operating Standards..............................................63
15. Default..........................................................65
16. Permitted Mortgages..............................................70
</TABLE>
2 EXECUTION COPY
<PAGE> 3
<TABLE>
<S> <C> <C>
17. End of Term......................................................76
18. Indemnity........................................................78
19. Easements; Use of Utilities......................................80
20. Condemnation.....................................................80
21. Encumbrances by Subtenants.......................................82
22. No Abatement of Rent.............................................82
23. No Representations...............................................82
24. Use of Names.....................................................83
25. No Waiver........................................................83
26. Estoppel Certificate.............................................84
27. Title to the Buildings and Furnishings...........................84
28. Force Majeure....................................................85
29. Notices..........................................................85
30. Time.............................................................86
31. Interest.........................................................87
32. Successors and Assigns...........................................87
33. Recordation of Lease.............................................87
34. Warranty of Title and Covenant of Quiet Enjoyment................87
</TABLE>
3 EXECUTION COPY
<PAGE> 4
<TABLE>
<S> <C> <C>
35. Costs and Attorneys'Fees.........................................87
36. Entire Agreement.................................................88
37. Applicable Law...................................................88
38. Waiver of Jury Trial.............................................88
39. Landlord May Cure the Tenant's Defaults..........................88
40. Waiver of Right of Redemption....................................89
41. Captions.........................................................89
42. Brokerage........................................................89
43. Consent or Approval of Landlord..................................89
44. Intentionally Omitte.............................................90
45. Limitation of Landlord's Liability...............................90
46. Fee Mortgage.....................................................91
47. No Merger........................................................91
48. Master Ground Lease..............................................92
49. Arbitratio.......................................................92
50. Exhibits.........................................................93
51. Counterparts.....................................................93
52. Construction of Agreement........................................93
</TABLE>
4 EXECUTION COPY
<PAGE> 5
TABLE OF DEFINITIONS
<TABLE>
<CAPTION>
<S> <C>
Annual Escalator............................................................. 3
Annual Escalator Percentage.................................................. 3
Annual Gross Revenues Statements............................................. 27
Approved Sublease............................................................ 49
Base Rent.................................................................... 24
Buildings.................................................................... 2
CDD Project Agreement........................................................ 3
Convention Hotel............................................................. 2
Demised Premises............................................................. 1
Event of Default............................................................. 51
Extension Term............................................................... 1
Fee Mortgage................................................................. 3
First Permitted Leasehold Mortgagee.......................................... 55
Furnishings.................................................................. 51
Gross Revenues............................................................... 22
Hotel Management Agreement................................................... 3
Hotel Year................................................................... 23
Initial Term................................................................. 1
Land......................................................................... 4
Land Development Agreement................................................... 2
Master Ground Lease.......................................................... 74
Novation Ground Lease........................................................ 57
Opening Date................................................................. 23
Operating Standards.......................................................... 50
Percentage Rent.............................................................. 25
Percentage Rent Calculation Date............................................. 25
Percentage Rent Payment Date................................................. 25
Permitted Leasehold Mortgagee................................................ 55
Permitted Mortgage........................................................... 55
Pervious Only Area........................................................... 11
Plans........................................................................ 5
Quarterly Gross Revenues Statement........................................... 26
Rent......................................................................... 23
Shared Use Retention Pond Easement Area...................................... 2
Stabilization Date........................................................... 24
Substantial Commencement..................................................... 5
Taxes........................................................................ 31
Term-end Payment............................................................. 41
Work......................................................................... 4
Xentury City DRI Development Order........................................... 33
Xentury City POA............................................................. 33
</TABLE>
5 EXECUTION COPY
<PAGE> 6
TABLE OF EXHIBITS
EXHIBIT "A" - Overall Xentury City Development Project
EXHIBIT "B" - Opryland Hotel - Florida Legal Description
EXHIBIT "B-1" - International Drive Easement Description
EXHIBIT "B-2" - Shared Use Retention Pond Easement Area Legal
Description
EXHIBIT "B-3" - Shared Drainage Line Easement Area Legal Description
EXHIBIT "B-4" - Southerly Parking Area Legal Description
EXHIBIT "B-5" - Pervious Only Area Legal Description
EXHIBIT "C" - Permitted Exceptions
EXHIBIT "D" - Approved Gaylord Insurance Coverage
EXHIBIT "E" - Approved Form of Assignment and Assumption of Lease
6 EXECUTION COPY
<PAGE> 7
OPRYLAND HOTEL - FLORIDA GROUND LEASE
THIS OPRYLAND HOTEL - FLORIDA GROUND LEASE (herein the "Lease") is made and
entered into as of the 1st day of March, 1999, between XENTURY CITY DEVELOPMENT
COMPANY, L.C., a Florida limited liability company (hereinafter referred to as
"Landlord"), and OPRYLAND HOTEL - FLORIDA LIMITED PARTNERSHIP, a Florida limited
partnership (hereinafter referred to as the "Tenant").
W I T N E S S E S T H :
Landlord and certain of the Landlord's Affiliates (as hereinafter defined)
are the owners and developers of a mixed-use development which consists of
approximately two hundred and twenty-five (225) acres in Osceola County, Florida
(the "Xentury City Development Project"), as depicted in Exhibit A annexed
hereto, and Landlord is the ground lessee of that certain parcel of land within
the Xentury City Development Project, containing sixty-five and three-tenths
(65.3) acres more or less, and more particularly bounded and described in
Exhibit B annexed hereto (the "Land").
LANDLORD HEREBY DEMISES AND LEASES THE LAND TO TENANT, and Tenant hereby
leases and takes the Land from Landlord, upon and subject to the terms,
covenants and conditions set forth herein;
Together with and subject to those easements, rights of way and other
reservations set forth in Exhibits B-1 and B-2 annexed hereto, and subject,
however, to those matters set forth in Exhibit C annexed hereto (all together
referred to herein as the "Demised Premises").
TO HAVE AND TO HOLD the Demised Premises unto the Tenant, on the terms and
subject to the conditions of this Lease, for a term commencing on the date
hereof and, unless sooner terminated as herein provided, expiring on January 31,
2074 (the "Initial Term"). Absent the existence of an uncured Event of Default
hereunder, the Initial Term shall be extended upon written election of the
Tenant by written notice given to Landlord (herein an "Extension Notification")
on or before a date that is two (2) years before the date of expiration of the
Initial Term (except that if any Permitted Leasehold Mortgage, as hereinafter
defined, in effect as of the beginning of such final 2-year period of the
Initial Term has a term extending beyond the Initial Term, such Extension
Notification will be deemed to be automatically given and effective unless
canceled in writing within the next to last year of the Initial Term with the
written joinder and consent of all such Permitted Leasehold Mortgagees, as
hereinafter defined), at the Rent (as hereinafter defined) reserved herein and
upon all of the other terms, conditions, covenants and provisions set forth
herein, for an additional successive period (the "Extension Term") ending on the
date which is the earlier to occur of (i) ninety-nine (99) years following the
Completion Date, as defined below, or (ii) January 31, 2101 (but subject to
sooner termination as herein provided). Promptly following the effectiveness of
such Extension Notification the parties shall execute and deliver for recording
a formal Amendment to Memorandum of Lease reflecting the extension of the Term.
Any reference in this Lease to the "Term" of this Lease shall be deemed to refer
to the Initial Term and, to the extent
7 EXECUTION COPY
<PAGE> 8
appropriate, to the Extension Term, unless sooner terminated in accordance with
the provisions of this Lease.
RESERVING UNTO THE LANDLORD, HOWEVER, a non-exclusive easement for shared
drainage facilities under and within the Shared Drainage Line Easement Area
described and depicted in Exhibit B-3 annexed hereto, a non-exclusive easement
across the driveways and access ways within the Demised Premises for access by
Landlord and its successors and assigns (including without limitation the
Xentury City Property Owners' Association, Inc.) to the Shared Use Retention
Pond Easement Area described in said Exhibit B-2 hereto, and an exclusive
easement for open green space and other compatible uses over and upon the
Pervious Only Area described and depicted in Exhibit B-5 annexed hereto, all in
accordance with the terms and conditions set forth in Sections 2.(h) and
elsewhere herein.
The Tenant has entered into or will enter into a Hotel Development
Agreement (the "Hotel Development Agreement") with Opryland Hospitality, Inc., a
Tennessee corporation ("OHI" or the "Developer"), with respect to the design and
construction of certain improvements to be built upon the Demised Premises
consisting of a first class destination hotel and convention center including
initially not less than One Thousand Four Hundred (1400) hotel guest rooms and
approximately Three Hundred Fifty Thousand (350,000) square feet of
convention/meeting/exhibit space, and related restaurant, retail shops and other
amenities and related improvements, as described in the Plans and to be located
upon the Demised Premises (such improvements being hereinafter referred to as
the "Convention Hotel" and, together with any and all permitted additions
thereto and replacements thereof and all other improvements hereafter located on
the Land, the "Buildings"). All provisions of the Hotel Development Agreement
which are stated therein to survive the expiration or termination of the Hotel
Development Agreement, or which contain obligations which are expressly assumed
in this Lease by a party hereto, or which are referred to in this Lease as
having continuing operative effect after the signing of this Lease are, except
if and to the extent otherwise provided in this Lease, hereby incorporated
herein by reference if and to the extent the same relate to the Demised Premises
and/or the Buildings so that the right and obligations of Tenant and Developer
under such provisions of the Hotel Development Agreement shall be the rights and
obligations of Tenant under this Lease.
The Tenant and Landlord have entered into a Land Development Agreement
dated of even date herewith (the "Land Development Agreement"), with respect to
the Landlord's completion of construction of all off-site improvements and other
work as specified therein to be completed by Landlord in connection with the
construction by the Tenant of the Convention Hotel upon the Demised Premises
(such obligations of the Landlord under the Land Development Agreement being
hereinafter referred to as the "Landlord Responsibilities"). All provisions of
the Land Development Agreement which are stated therein to survive the
expiration or termination of the Land Development Agreement, or which contain
obligations which are expressly assumed in this Lease by a party hereto, or
which are referred to in this Lease as having continuing operative effect after
the signing of this Lease are, except if and to the extent otherwise provided in
this Lease, hereby incorporated in this Lease by reference if and to the extent
the same relate to the Demised Premises and/or the Buildings so that the right
and obligations of Tenant under such provisions of the Land
8 EXECUTION COPY
<PAGE> 9
Development Agreement shall be the rights and obligations of Tenant under this
Lease, and the rights and obligations of Landlord under such provisions of the
Land Development Agreement shall be the rights and obligations of Landlord under
this Lease.
The Tenant has entered into or will enter into a CDD Improvements Purchase
and Sale Agreement with the Xentury City Community Development District (the
"Xentury City CDD"), with respect to the design, construction and purchase and
sale of certain Xentury City CDD improvements to be built upon the Demised
Premises in conjunction with the Convention Hotel, and the sale thereof to the
Xentury City CDD (the "CDD Project Agreement").
AND THE LANDLORD AND THE TENANT desire to set forth the rights and
obligations of the parties hereto with respect to the use and occupancy of the
Demised Premises.
NOW, THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, and the leasing of the Demised Premises hereunder, the Landlord
and the Tenant, for themselves and their respective permitted successors and
assigns, do hereby covenant and agree as follows:
9 EXECUTION COPY
<PAGE> 10
1. Certain Defined Terms. As used herein, the following terms shall have
the following meanings:
(a) "Annual Escalator" - The annual increase of the Base Rent under
Section 6(b)(ii)(3) of Article 6 below, as applicable following the
Stabilization Date.
(b) "Annual Escalator Percentage" - Three Percent (3%).
(c) "Benchmark Hotel" - The Nashville Opryland Hotel, or any replacement
Benchmark Hotel designated and approved in accordance with the provisions of
Section 14(a) hereof.
(d) "Completion Date" - The date on which the Convention Hotel has been
substantially completed (as established by certification of substantial
completion to Landlord by the Project Architect on standard AIA forms) and a
Certificate or Certificates of Occupancy have been issued permitting legal
occupancy of all or substantially all of the Convention Hotel.
(e) "Demised Premises" - The Land together with the easements, rights
of way and other reservations set forth in Exhibits B-1 and B-2 annexed hereto.
(f) "Fee Mortgage" - Any mortgage or mortgages hereafter placed by
Landlord or its successors on its interests in the Land under the Master Ground
Lease, or by the Ground Lessor or its successors on the fee of all or any part
of the Demised Premises.
(g) "Hotel Management Agreement" - Any agreement with an operator for
the management and operation of the Convention Hotel.
(h) "Insurance Requirements" - All requirements of the insurance
underwriting board or any other insurance inspection bureau having or claiming
jurisdiction, or any other body exercising similar functions, and of all
insurance companies from time to time selected by the Tenant to write policies
covering the Buildings or any part thereof, as well as with the insurance
provisions of Article 8 hereof applicable to the Buildings and/or the Demised
Premises and use and/or occupancy thereof.
(i) "Land" - That certain parcel of land within the Xentury City
Development Project, Osceloa County, Florida, and containing sixty-five and
three-tenths (65.3) acres more or less, as more particularly bounded and
described in Exhibit B annexed hereto.
10 EXECUTION COPY
<PAGE> 11
(j) "Legal Requirements" - All laws, ordinances, requirements, orders,
directions, rules and regulations, whether currently existing or promulgated
hereafter, of all federal, state, county and municipal governments and of all
other governmental authorities having or claiming jurisdiction over the Demised
Premises or the Buildings or any part of either, and of all their respective
departments, bureaus and officers.
(k) "Memorandum of Lease" - The Memorandum of this Lease to be executed
by the parties and delivered for recording pursuant to Section 33 hereof.
2. Construction of Project. The following terms and conditions shall apply
to the completion of all Landlord Responsibilities under the Land Development
Agreement and to construction of the Convention Hotel under the Hotel
Development Agreement:
(a) Landlord Responsibilities. Promptly following the execution of this
Lease, and (subject to extensions of said dates for reasons stated in Article
28) in accordance with the commencement, completion and other timing
requirements set forth under the Land Development Agreement, Landlord shall
commence, and shall thereafter diligently complete, the construction and
development of the Landlord Responsibilities under and as described in the Land
Development Agreement. Landlord shall complete the Landlord Responsibilities,
subject only to Excusable Delays, within the time periods provided under the
Land Development Agreement. The Landlord represents and warrants that the
Landlord Responsibilities shall be completed in accordance with the Land
Development Agreement and in a good workmanlike manner.
(b) Tenant Responsibilities. The provisions of this Section 2(b) shall
apply to the construction by the Tenant, or any other person or entity, of the
Convention Hotel in the first instance (other than work for which the Landlord
is responsible pursuant to the terms of this Lease or the Land Development
Agreement), to the construction by the Tenant or any other person or entity of
any further Buildings on the Demised Premises and, unless expressly stated to
the contrary, to all repairs, alterations, reconstruction or restoration
performed pursuant to Sections 8, 9, 10 and 11 hereof (the foregoing
construction being hereinafter referred to as "Work").
(i) Promptly following execution of this Lease, the Tenant shall
undertake completion of a final detailed conceptual Site Plan (the "Site Plan")
and detailed preliminary conceptual plans ("Design Concept Plan") and a detailed
project schedule ("Project Schedule") for construction of the entire Convention
Hotel and all related improvements to be constructed upon the Demised Premises
and to be operated as the "Opryland Convention Hotel") (sometimes referred to
herein as the "Project"). The Site Plan, Design Concept Plans and Project
Schedule, when completed, shall be submitted to the Landlord for approval, which
approval shall be limited to confirmation by Landlord that the Site Plan and
Design Concept Plan, and the Project Schedule for construction thereunder, are
consistent with the preliminary concept and site plans already approved by
Landlord as referenced in the Land Development Agreement (the "Opryland
Conceptual Site Plan"), the existing Xentury City Development Project DRI
approvals and the Tenant's obligation to develop and construct the Convention
Hotel as a first class destination hotel and convention
11 EXECUTION COPY
<PAGE> 12
center of comparable quality and standards with the Benchmark Hotel, in
accordance with the provisions of this Lease, and such approval shall not be
unreasonably withheld or delayed. The final Plans for the entire Project (the
"Plans") shall be provided to Landlord either (x) prior to Substantial
Commencement of construction or (y) on a phased basis commensurate with timely
completion of all Plan elements for each construction component of the Project
under a design-build program approved by Tenant's Architect, and shall be
consistent with the Site Plan and Design Concept Plan approved by the Landlord
and shall comply with all applicable laws and regulations. The Project Schedule
shall be updated as necessary with the approval of the Project Architect, which
updates shall be provided by Tenant to Landlord at least quarterly during the
course of construction of the Project. Notwithstanding other applicable
provisions of this Lease, Landlord shall use diligent efforts to respond to all
requests for approval as quickly as is practicable under the circumstances, and
where an accelerated review time in a specific instance has been identified in
good faith by Tenant as being of material advantage to timely construction of
the Convention Hotel the Landlord shall respond within ten (10) business days or
sooner if possible, provided that such response may if necessary identify
specific issues or questions that reasonably require further information from
Tenant or further review time for Landlord.
(ii) Promptly following the execution of this Lease, and subject to
the Landlord completing the Landlord Responsibilities in a timely manner
pursuant to the Land Development Agreement, the Tenant shall commence and/or
cause the Developer to commence, and shall thereafter diligently complete, the
design, development and construction of the Convention Hotel and all related
improvements described in the Plans. Promptly upon Substantial Commencement of
construction of the Convention Hotel, the Tenant shall give to Landlord written
notice of the date of Substantial Commencement of construction. For purposes of
this Lease the term "Substantial Commencement" of construction of the Convention
Hotel shall mean the completion of all building footings and slabs, including
related plumbing, electrical and mechanical rough work, with building permits in
place, for the primary guest room, entrance lobby and feature atrium and
convention space Buildings within the Convention Hotel, under circumstances
where the Tenant has a mutually-binding construction contract or contracts for
relevant portions of the Convention Hotel consistent with the Project Schedule
and has all necessary governmental approvals (including building permits for the
project, payment or securing agreements for payment of required impact fees, and
reservation of all necessary utility capacities, all as required consistent with
the stage of construction and the Project Schedule).
(iii) The Tenant's Work shall be completed in accordance with the
Plans and in accordance with the Hotel Development Agreement in a good and
workmanlike manner. Nothing herein shall prohibit or limit Tenant's ability to
approve change orders which are approved by the Project Architect and which are
consistent with the Opryland Conceptual Site Plan and the overall design of the
Project as a 1400-room destination convention hotel containing approximately
350,000 square feet of convention/meeting and exhibit space and related retail
and restaurant areas. The Tenant shall, if requested by Landlord, meet with a
representative of Landlord at mutually convenient times on a quarterly basis
during construction to update Landlord on the progress of the Work. For purposes
of the quarterly updates during the initial construction of the Convention
Hotel, the Landlord's
12 EXECUTION COPY
<PAGE> 13
representative shall be Steve Ivins and the Tenant's representative shall be
Pete Cesari and all such quarterly meetings shall be coordinated through such
representatives (who if no longer able to attend shall be replaced only by
mutually-acceptable substitute representatives). At the quarterly reviews Tenant
shall make available for review by Landlord's representative (and accompanying
expert consultant, if reasonably necessary to evaluate any technical information
being provided) current plans, notes, progress and construction reports of and
relating to the status of construction completed to date, including
certification to Landlord by the Architect regarding the completion of work and
compliance with plans on appropriate AIA forms, and shall conduct an in-depth
tour and review of the construction site and work in progress (but Landlord
shall not thereby assume any responsibility for the proper performance of the
Work in accordance with the terms of this Lease, nor any liability arising from
the improper performance thereof). In addition, the Tenant shall also make
available (in connection with such quarterly construction progress meetings)
up-dated as-built plans (by addendum or as otherwise revised and updated) as and
when the same are produced for Tenant, at each of the following four stages of
construction for the Project as construction progresses: (w) completion of
building footings and slabs including related plumbing, electrical and
mechanical rough work for the primary guest room, entrance lobby and feature
atrium and convention space Buildings within the Convention Hotel; (x)
completion of shell and steel erection for the guest room, atrium and convention
and restaurant buildings; (y) enclosure under roof and installation of exterior
windows and doors; and (z) Substantial Completion. In the event that at any time
the Landlord has a reasonable basis for concern that any of the work is
deviating or has deviated materially from the requirements of the approved plans
and specifications, the Landlord shall have the further right to inspect in
detail such work and to notify the Tenant and the Tenant shall promptly correct
any deviation or provide revised plans showing appropriate corrective changes
together with approvals thereof from the Architect.
(iv) The Tenant and Landlord agree to coordinate the Tenant's Work
with any construction activities of the Landlord to assure that the performance
of the Tenant's Work does not unreasonably disrupt or interfere with the other
construction and business activities or traffic in the Xentury City Development
Project. The Tenant and Landlord shall cooperate in coordinating their
respective development and construction activities in accordance with the Land
Development Agreement.
(v) The Tenant represents and warrants to Landlord that all of the
Tenant's Work will be performed in a good and workmanlike manner and in
accordance with the provisions of the Hotel Development Agreement and this
Lease.
(vi) Before the commencement of each stage and component of the
Tenant's Work: (1) the Plans relating to such stage or component shall be filed
with, and approved by, all government departments or authorities having or
claiming jurisdiction, if required by such departments or authorities, and with
any public utility companies having an interest therein, if required by such
utility companies; (2) all necessary governmental approvals and permits shall
have been issued, and (3) the Tenant shall have delivered to Landlord
certificates showing that all applicable insurance required under Section 8
hereof has been secured.
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(vii) If and to the extent applicable, upon substantial completion
of each significant portion or phase of the Tenant's Work in accordance with the
Plans, the Tenant shall deliver to Landlord: (1) copies of a Certificate or
Certificates of Occupancy for those structures or phases completed for which a
Certificate of Occupancy is required (or available when properly completed)
together with copies of any other certificates required for the lawful use and
occupancy of such structures or phases for the uses permitted herein and of all
facilities constructed and to be operated pursuant hereto, including if
applicable (but not limited to) (x) Fire Underwriters certificates; and (z)
certificates from departments having jurisdiction over the supply of water, gas,
electricity and other utilities, sanitation and environmental protection (but,
as to construction of the Buildings in the first instance, excluding
certificates, if any, which may be related solely to the Developer's
Requirements under the Land Development Agreement); (2) a complete copy of the
"as built" plans and specifications with respect to such Work for the initial
Convention Hotel construction and any major improvements, reconstruction or
renovations (instead of delivering same to Landlord the same may be maintained
and updated as necessary by the Tenant at the Convention Hotel, and made
available to Landlord upon request), confirmed in writing to Landlord by the
Project Architect as being complete as built plans in all material respects or
otherwise approved as complete as built plans by Landlord; (3) a final survey
showing the location and configuration of the Buildings on the Land (except that
with respect to any Tenant's Work performed subsequent to the initial
construction of the Convention Hotel, a survey shall only be required if and to
the extent that the Buildings are relocated and/or reconfigured); and (4) a
certificate from the Architect verifying that the Tenant's Work has been
substantially completed in accordance with the Plans. The issuance of the
foregoing shall not be deemed to relieve the Tenant of its obligation under the
terms of this Lease to complete the Tenant's Work in accordance with the Plans.
Reasonably soon following Substantial Completion and the Opening Date the
Tenant's and Landlord's representatives shall coordinate the Landlord's final
inspection of the completed Convention Hotel by Landlord and its consultants and
promptly thereafter the Landlord shall deliver a formal written notification
identifying, if applicable, with reasonable specificity, any aspect of material
non-compliance with the approved Plans or any term of this Lease identified by
Landlord, and if none exist (or at such time as any identified deficiencies are
cured) confirming acceptance by Landlord of the completed Convention Hotel (but
Landlord shall not thereby assume any responsibility for the proper performance
of the Work in accordance with the terms of this Lease, nor any liability
arising from the improper performance thereof).
(viii) In performing any of the Tenant's Work, the Tenant shall
comply (subject to the Tenant's right to contest and defer compliance during
such contest) with all Legal and/or Insurance Requirements. There shall be no
unauthorized encroachment on any street or on any adjoining premises by the
Buildings. Landlord shall sign any governmental applications necessary for the
Tenant's Work if required so to do by law, order, rule, or regulation, and the
Tenant shall reimburse Landlord for reasonable costs incurred by Landlord in
connection therewith.
(ix) Except to the extent specifically provided to the contrary
herein, or in the Land Development Agreement, all of the Tenant's Work shall be
performed at the Tenant's cost and expense and free of any expense to Landlord,
and the Tenant shall, during
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<PAGE> 15
construction and upon completion of the Tenant's Work, timely pay, when due, all
bills for labor or materials supplied in connection with such Tenant's Work.
(c) The Tenant shall use diligent efforts, subject only to Excusable
Delays or other unavoidable delays, to cause the Tenant's Work to be completed
consistent with the Project Schedule, and in any event shall substantially
complete the initial construction of the Convention Hotel on or before July 1,
2004. Upon substantial completion of the Tenant's Work, the Tenant shall apply
for a Certificate or Certificates of Occupancy for the Buildings, copies of
which shall be provided to Landlord. Promptly following the occurrence of the
Completion Date the parties shall execute and deliver for recording a formal
Amendment to Memorandum of Lease reflecting the Completion Date. Any Work which
does not materially conform to the provisions of this Lease shall, if so
required by Landlord or by law, be removed or reconstructed by the Tenant at the
Tenant's cost. Notwithstanding the occurrence of the Completion Date, the Tenant
shall remain responsible to fully complete construction of the Buildings and
other Convention Hotel Improvements.
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(d) Notwithstanding anything to the contrary contained in this
Lease, or in any of the other Development Documents, in the event that the
Tenant, after using its diligent best efforts to obtain all necessary financing
upon reasonable market terms and to obtain all necessary development and
construction permits and to enter into all necessary construction contracts upon
reasonable market terms (and to enforce the same), is unable to substantially
complete construction of the Convention Hotel so that the Completion Date occurs
by no later than July 1, 2004, and provided that the Tenant (i) is able, and
posts reasonable security for all estimated costs, to remove any improvements
and restore the Land if so requested by Landlord, (ii) provides the written
consent and joinder of each Permitted Leasehold Mortgagee to such termination
and (iii) is able, upon termination of this Lease as provided below, to deliver
full possession of the Demised Premises to Landlord free and clear of any and
all lien, encumbrance, claim or interest whatsoever except as has been approved
by Landlord as surviving the termination hereof under Section 17 below; then the
Tenant may, at its option, by written notice to the Landlord on or before July
31, 2004 (a "Termination Notice"), terminate this Lease, in which event: (i) at
the Landlord's option, within ninety (90) days of the Termination Notice (which
90-day period shall be extended by up to an additional 180 if necessary to
complete such removal provided that the Tenant has promptly commenced and is
diligently and continuously prosecuting such removal), the Tenant, at the
Tenant's expense, shall remove any improvements constructed by the Tenant on the
Land and restore the Land to the condition existing as of the date of this Lease
(except for improvements made by Landlord or any other improvements completed by
the Tenant which Landlord chooses to retain); (ii) within ten (10) business days
of the date of the Termination Notice, the Tenant shall execute and deliver to
Landlord a formal Acknowledgment of Termination in recordable form and shall
redeliver possession of the Demised Premises in strict accordance with the terms
and requirements set forth in Section 17 hereof, upon which all interests of the
Tenant and any and all parties claiming by, through or under Tenant in the Land
and Demised Premises shall terminate; (iii) within ten (10) business days of the
date of the Termination Notice, pay to the Landlord all Rent and other amounts
due hereunder through July 1, 2004; and (iv) within ten (10) business days of
the date of the Termination Notice, pay to the Landlord a lease termination fee
of Five Million Eight Hundred Ninety-Six Thousand and No/100 Dollars
($5,896,000.00) plus an additional Ninety Thousand Six Hundred Twenty-Five and
50/100ths Dollars ($90,625.50) per month (prorated for any partial month) for
each month from March 1, 1999 to the date of termination, or to the Base Rental
Increase Date as defined hereinbelow, whichever is earlier. Following
termination of this Lease and satisfaction of the obligations set forth in the
foregoing sub-Sections (d)(i), (ii), (iii) and (iv), the Tenant shall be
released from any further obligations to the Landlord under this Lease.
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(e) In the event that Substantial Commencement of construction of
the Convention Hotel does not occur by December 31, 1999, then the Landlord
shall have a reciprocal right to terminate this Lease by giving formal written
notice at any time thereafter but prior to such Substantial Commencement, after
which the Tenant shall have ninety (90) days [provided however that such 90-day
period shall be extended by one (1) day for each day prior to March 1, 2000 that
any such notice shall be given so long as the Tenant shall have commenced and is
undertaking in good faith significant construction in addition to site grading
and filling activities] to substantially commence construction absent which the
Landlord may, at its option, give a final Termination Notice in accordance with
the foregoing provisions in which event: (i) this Lease and all interests of the
Tenant and any and all parties claiming by, through or under Tenant in the Land
and Demised Premises shall terminate effective as of the date of the Termination
Notice, the Tenant shall execute and deliver to Landlord a formal Acknowledgment
of Termination in recordable form and the Tenant shall immediately redeliver
possession of the Demised Premises to Landlord in strict accordance with the
terms and requirements set forth in Section 17 hereof; (ii) at the Landlord's
option, within ninety (90) days of the Termination Notice (which 90-day period
shall be extended by up to an additional 180 if necessary to complete such
removal provided that the Tenant has promptly commenced and is diligently and
continuously prosecuting such removal), the Tenant, at the Tenant's expense,
shall remove any improvements constructed by the Tenant on the Land and restore
the Land to the condition existing as of the date of this Lease (except for
improvements made by Landlord or any other improvements completed by the Tenant
which Landlord chooses to retain); and (iii) within ten (10) business days of
the date of the Termination Notice, pay to the Landlord Rent and other amounts
due to the Landlord hereunder through the date of termination and full payment
of such sums. Following termination of this Lease and satisfaction of the
obligations set forth in the foregoing sub-Sections (e)(i), (ii), and (iii), the
Tenant shall be released from any further obligations to the Landlord under this
Lease.
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(f) For a non-competition period ending on the earlier of: (i) the
later of July 1, 2006, or two (2) years following the effective date of any such
Termination under the foregoing Sub-sections 2(d) or 2(e), or (ii) any earlier
time following the date of Substantial Commencement when the Tenant has
effectively and irrevocably waived its termination right under this Section 2 by
formal written notice to Landlord, neither the Tenant or OHI or any affiliate
thereof shall own or participate in any way with the development or operation
of, and the Opryland name shall not be used in connection with, any convention
or other hotel in Osceola County or elsewhere within a twenty-five (25) mile
radius of the Xentury City Development Project (this restriction shall not apply
in any event to the potential golf resort hotel project, not involving
significant convention or meeting space areas, currently being considered by OHI
and/or its Affiliate Gaylord Entertainment Company, a Delaware corporation
("GEC") in or adjacent to the Lake Nona project in Orange County and located
southeast of Orlando International Airport, or to any complementary or otherwise
non-competing arrangement (x) taking effect only after Substantial Commencement
and which will not continue during the non-competition period established
hereunder in the event of any termination of this Lease, (y) not involving
during the term of this non-competition period ownership or use of the Opryland
Hotel name by GEC or any affiliate of or for a destination convention hotel and
(z) which is expressly approved by GEC's Board of Directors as a co-existent and
not an alternative project to the Convention Hotel). The Tenant hereby
stipulates and agrees that the foregoing non-competition agreement shall be
enforceable by injunction without the requirement of a bond and that, because
Landlord's actual damages would be difficult if not impossible to estimate, in
the event of any breach of this non-competition agreement by Tenant Landlord
shall be entitled to recover liquidated damages from Tenant in an amount equal
to Tenant's net cash proceeds before taxes from any such activity undertaken by
Tenant in violation of this Paragraph 2.(f).
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(g) Nothing in this Article or elsewhere in this Lease shall be
deemed to authorize the Tenant to construct additional Improvements not set
forth in the Plans, except that the parties acknowledge that the Tenant may
erect additional guest rooms and related improvements, not to exceed a maximum
of Four Hundred (400) additional guest rooms for a total of up to One Thousand
Eight Hundred (1800) guest rooms and related meeting/exhibit and convention
space as contemplated by this Lease, subject only to (i) the Tenant obtaining
all the necessary governmental approvals in addition to the allocation of
available development rights and approvals for 1800 hotel rooms and related
improvements as contemplated herein under and within the current development
phase of the existing development of regional impact ("DRI") approvals for the
Xentury City Development Project, which is hereby granted and acknowledged by
Landlord (the "Current DRI Allocation"), and (ii) approval by Landlord of the
plans and specifications for such additional improvements, which approval shall
be limited to confirmation by Landlord that such plans are consistent with the
Tenant's obligation to operate a first class destination hotel and convention
center comparable to the Benchmark Hotel, in accordance with the provisions of
this Lease, and with the terms and conditions of the Xentury City Development
Project DRI approvals, and such approval shall not be unreasonably withheld or
delayed. The Tenant's right to construct up to 400 additional hotel rooms in
excess of the initial 1400 rooms to be constructed by Tenant as set forth above
and related convention space expansion (the "400-Unit Expansion"), within the
Current DRI Allocation is hereby acknowledged and agreed by Tenant to be subject
to the time limits set forth in the Xentury City Development Project DRI
approvals. In the event that Tenant does not commence construction of the
400-Unit Expansion prior to the currently-scheduled expiration of the Current
DRI Expansion Landlord and Tenant shall cooperate in good faith to obtain either
an extension of the Current DRI Allocation expiration period, if possible, or
else to undertake such steps as are necessary to move the 400-Unit Expansion
into the next available phase under the Xentury City Development Project DRI
approvals so long as Tenant agrees at the time to pay and bear its fair share of
all necessary costs of obtaining any such extension, or of including the
400-Unit Expansion in and of obtaining the right to proceed with development
under, any such succeeding phase, based upon the relative transportation demands
of the 400-Unit Expansion in proportion to other current-phase capacity
successfully deferred or related-phase capacity so enabled, as applicable.
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(h) Landlord reserves (for itself, its parent company, their
related, affiliated and subsidiary companies, their successors and assigns, the
Xentury City POA and Landlord's contractors and agents): (1) a non-exclusive
easement and right of ingress and egress over the service roads and driveways
which will be constructed within the Project for access to (including and
together with the right to cross any intervening areas immediately contiguous to
and which must be crossed to reach) the Shared Pond Easement Area described in
Exhibit B-2 hereto and all improvements constructed by Landlord therein such as
drainage facilities and structures, Xentury City Development Project entrance
features and landscaping, billboard signage, and/or Xentury City POA common area
improvements for the sole purpose of installation and construction and
maintenance of any such improvements and the Landlord shall diligently cooperate
in good faith with Tenant to the extent possible to minimize any unnecessary
interfere of such entrance features and landscaping, billboard signage, and/or
Xentury City POA common area improvements with sight lines from public
rights-of-way adjacent to the Project or otherwise-available on-site Project
signage and to cause the same to be designed consistently with the Project; (2)
a shared use easement and right for underground storm water drainage under and
across the Shared Drainage Line Easement Area described in Exhibit B-3 annexed
hereto ("Shared Drainage Line Easement Area"), and within the underground storm
water drainage facilities to be constructed by Tenant therein as part of the
Project for storm water drainage flows from lands located within the Xentury
City Development Project south of the Land as identified in Schedule 1 to said
Exhibit B-3 and which have been permitted or which in the future obtain any
necessary permits to drain into the storm water retention and/or detention
facilities constructed and located from time to time within the Shared Pond
Easement Area; and (3) an exclusive easement over and upon the Pervious Only
Area described and depicted in Exhibit B-5 annexed hereto ("Pervious Only
Area"), for landscaping, open space, green belt, conservation, recreation,
underground utilities and other uses ("Pervious Land Uses") which (x) are
compatible with adjacent uses within the Convention Hotel and (y) do not prevent
necessary portions of the Pervious Only Area, as designated on the approved land
use and development permits for the Convention Hotel, from qualifying as
"pervious" areas which are deemed and/or classified to be pervious to stormwater
drainage under applicable Legal Requirements including without limitation
permits and approvals issued for the Convention Hotel by Osceola County,
Florida, the South Florida Water Management District and the Reedy Creek
Improvement District ("Pervious Requirements"). Landlord shall provide Tenant
with proper evidence of insurance coverage naming Tenant as an additional
insured as reasonably requested by Tenant at such time and during any time when
uses of the Pervious Only Area by Landlord hereunder are not merely passive or
maintenance uses but instead affect the Tenant's sole possession and control of
the Pervious Only Area. Until the Project access drives are completed the
Landlord and its designees shall have the right to cross the Land for access to
the Shared Pond Easement Area in such locations as may be appropriate for proper
access which does not unreasonably interfere with Tenant's construction, and
thereafter the Tenant shall have the right to designate a suitable access route
for access to the Shared Pond Easement Area hereunder.
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(i) The Plans and all other plans and working drawings with respect
to the development, construction and alterations of the Convention Hotel shall
be the property of the Tenant, provided however that the Tenant shall provide to
Landlord copies of all as-built plans or access to them at the Project as
provided above. No approval of plans and specifications by Landlord shall be
construed as approval of the structural adequacy of the structures detailed
therein or their conformity to applicable building codes or other legal
requirements, it being agreed that the Tenant shall indemnify and hold Landlord
harmless from all claims and liabilities arising therefrom. Notwithstanding the
foregoing, in the event that this Lease is terminated in connection with a
Termination Notice as contemplated above, or by Landlord pursuant to the
provisions of Article 15 by reason of the default of the Tenant prior to
completion of any Work, including, without limitation, the construction of the
Convention Hotel in the first instance, then, and provided the time periods
within which any Permitted Leasehold Mortgagee may exercise any of its rights
under subparagraph c of Section 16 of this Lease shall have elapsed without the
exercise thereof by any Permitted Leasehold Mortgagee (or with such exercise but
without performance by such Permitted Leasehold Mortgagee as required as a
result of such exercise), all plans, specifications, designs, drawings,
sketches, reports, estimates, models and other documents, matters and
information prepared in connection with the construction of the Buildings
including, without limitation, all Plans including Site, Concept, Engineering,
Architectural or other plans for the Project, shall become the sole property of
Landlord, and the Tenant shall deliver same to Landlord, subject, however, to
the rights of any Permitted Leasehold Mortgagee therein if it elects to enter
into a Novation Ground Lease with Landlord pursuant to Article 16 hereof
(j) [Intentionally Omitted]
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(k) Subject to the provisions of Article 28, the failure of the
Tenant to prosecute to completion any Work once commenced (including correction
of any defects or deviations from the Plans) with reasonable diligence
(consistent with the Project Schedule, if applicable) or the failure of the
Tenant either to complete the initial construction of the Convention Hotel in
the absence of a timely Termination Notice and completion of a release and
conveyance to Landlord hereunder and satisfaction of all related conditions
within the time periods provided in Sections (d) and (e) of this Article, shall
constitute a default by the Tenant hereunder. At such time as any default of the
nature referred to in the immediately preceding sentence becomes an Event of
Default (as hereinafter defined) pursuant to the provisions of Article 15
hereof, Landlord may, if it elects so to do and as an alternative to any other
remedies it may have pursuant to this Lease, take over the completion of the
Work in question and, at its option, complete such Work or cause same to be
completed. In such event, the Landlord may receive advances from any Permitted
Leasehold Mortgagee in respect of insurance or condemnation proceeds, if
Landlord and any such Permitted Leasehold Mortgagee so agree, without liability
of either to the Tenant. Whether or not Landlord shall elect to terminate this
Lease by reason of such default by the Tenant and whether or not Landlord shall
elect to complete such Work, the Tenant nevertheless shall not be released from
any liability under this Lease and shall indemnify Landlord for all loss, costs,
damage and expense (including reasonable attorneys', architects', engineers' and
other professional fees and disbursements) sustained by Landlord in connection
with the completion by Landlord of construction of such Work, and which the full
amount thereof shall constitute additional rent under Section 6 below.
Notwithstanding the foregoing provisions of this Section 2(k), unless all the
then Permitted Leasehold Mortgagees otherwise agree in writing, Landlord shall
not have the right to take over completion of any Work pursuant to this
paragraph unless and until the time within which each Permitted Leasehold
Mortgagee could, under the terms of Article 16 hereof, have cured the default
relating to the Tenant's failure to complete or diligently prosecute Work has
elapsed without any such Permitted Leasehold Mortgagee curing such default;
although Landlord may thereafter exercise its right to take over completion of
the Work, nothing in this Section 2(k) is otherwise intended to diminish the
rights of any Permitted Leasehold Mortgagee contained in Article 16 hereof.
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3. Landlord's Interest not Subject to Certain Liens. (a) The Landlord's
interest in the Demised Premises shall not be subjected to liens of any nature
by reason of the Tenant's construction, alteration, repair, restoration,
replacement or reconstruction of any Buildings on the Demised Premises or by
reason of any other act or omission of the Tenant (or of any person claiming by,
through or under the Tenant) including, but not limited to, mechanics' and
materialmen's liens. All persons dealing with the Tenant are hereby placed on
notice that such persons shall not look to Landlord or to Landlord's credit or
assets (including Landlord's interest in the Demised Premises or the Buildings
constructed thereon) for payment or satisfaction of any obligations incurred in
connection with the construction, alteration, repair, restoration, replacement
or reconstruction thereof. The Tenant has no power, right, or authority to
subject Landlord's interest in the Demised Premises or in the Buildings to any
mechanic's or materialman's lien or claim of lien. If a lien, a claim of lien or
an order for the payment of money shall be imposed against the Demised Premises
or the Buildings thereon on account of work performed, or alleged to have been
performed, for or on behalf of the Tenant, the Tenant shall, within thirty (30)
days after written notice of the imposition of such lien, claim or order, cause
the Demised Premises and the Buildings to be released therefrom by the payment
of the obligation secured thereby or by furnishing a bond or by any other method
prescribed or permitted by law or as may be otherwise approved by Landlord
(which approval shall not be unreasonably withheld or delayed). Upon payment or
satisfaction of a lien, the Tenant shall thereupon furnish Landlord with a
written instrument of release otherwise in form for recording in the office of
the Clerk of the Circuit Court, Osceola County, Florida, sufficient to establish
the release as a matter of record.
(b) The Tenant may, at its option, contest the validity of any lien or
claim of lien if the Tenant shall have first posted an appropriate and
sufficient bond in favor of the claimant or paid the appropriate sum into court,
if permitted by law, and thereby obtained the release of the Demised Premises
and the Buildings from such lien, or if Tenant provides other security or
assurances reasonably approved in writing by Landlord. If judgment is obtained
by the claimant of any lien, the Tenant shall pay the same immediately after
such judgment shall have become final and the time for appeal therefrom has
expired without appeal having been taken. The Tenant shall, at its own expense,
defend the interests of the Tenant and Landlord in any and all such suits;
provided, however, that Landlord may, at its election, and at its expense,
engage its own counsel and assert its own defenses, in which event the Tenant
shall cooperate with Landlord and make available to Landlord all information and
data which Landlord deems necessary or desirable for such defense.
(c) Prior to commencement of any of the Tenant's Work on the Demised
Premises for which a Notice of Commencement is required pursuant to Chapter 713,
Florida Statutes (or its successor), the Tenant shall record such a notice in
the office of the Clerk of the Circuit Court, Osceola County, Florida
identifying the Tenant as the party for whom such work is being performed and
requiring the service of copies of all notices, liens or claims of lien upon the
Tenant and the Landlord.
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4. Use. (a) The Tenant shall operate the Project as a first class
destination hotel and convention center in accordance with the Operating
Standards for the accommodation of hotel and convention guests, and for related
convention, meeting and similar purposes, throughout the Term hereof, with
related shops, stores, restaurants and such other amenities as are in keeping
with operation of such a facility, and for no other purpose, and except for
reasonable interruptions for reasonable periods for repairs, renovations,
replacements and rebuilding in the ordinary course of operations, all of which
will be carried out pursuant to, and in accordance with, the applicable
provisions of this Lease. There will be no change in the primary use of the
Project as a first class destination hotel and convention center (time-sharing
or time interval Landlordship will be deemed a change in use) or any
discontinuance of use, without the prior written consent of Landlord. Until and
unless the balance of the Xentury City CDD property shall be fully developed and
built out, the Tenant shall not increase the number of guest rooms above 1800,
or amount of convention area above the greater of (i) 350,000 square feet or
(ii) 260 square feet per hotel guest room (exclusive or "pre-function" or
"back-of-the-house"areas), without the prior written consent of the Landlord
which may be withheld in the Landlord's sole discretion unless the Landlord
determines that any such increase will not limit or delay or potentially
increase the burden or conditions on or otherwise adversely impact, or have a
reasonable potential to adversely impact, the development of all remaining
undeveloped parcels. Notwithstanding the foregoing or any other provision of
this Lease to the contrary, changes in configuration, size or use of the guest
room space, common areas, meeting and exhibit space, number or size of
restaurants, retail facilities or any other aspect of the Project shall not,
subject to the provisions of Section 10 of this Lease, require the consent of
the Landlord, provided the Project shall continue to be operated in a manner
consistent with operation of a first class destination hotel and convention
center consistent and in accordance with the Operating Standards. Throughout the
Term the Tenant shall reserve and make available to Landlord or Landlord's
designee upon reasonable prior request (written or through the Convention Hotel
reservation process) one of the Convention Hotel's larger suites at the
Convention Hotel's most-favored corporate rate for use from time to time on an
as-requested basis, subject to unreserved availability.
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(b) The Tenant represents, covenants and warrants that throughout the
Term, the Tenant shall, at its own cost and expense, timely observe and comply
in all material respects: with all Legal Requirements and with all Insurance
Requirements applicable to the Buildings and/or the Demised Premises and use
and/or occupancy thereof. Anything herein to the contrary notwithstanding, the
Tenant may contest any Legal Requirements or Insurance Requirements which it, in
its reasonable judgment, deems unreasonable or inapplicable, and may, during the
pendency of such contest, defer compliance with any Legal Requirements provided
that such contest and/or non-compliance: (1) does not subject the Tenant's
interest in the Demised Premises, the Buildings, the Furnishings or any part of
the foregoing to the imminent risk of sale or forfeiture; (2) does not
imminently jeopardize the continuing operation of the hotel business as
contemplated under this Lease or Tenant's ability to pay all amounts coming due
and payable hereunder, or imminently threaten any reduction in Gross Revenues;
and (3) does not subject Landlord to damages, a fine or a penalty for which
Tenant has not provided to Landlord adequate security or other adequate
assurances of payment, or the risk of forfeiture of its interest in the Demised
Premises, the Buildings or the Furnishings, or any part thereof. The Tenant
agrees to give Landlord written notice of any violation of any Legal and/or
Insurance Requirement affecting the Project, which is posted on, or fastened or
attached to, the Land, or of which the Tenant otherwise becomes aware, within
ten (10) days after receipt or posting of any such notice or the Tenant obtains
actual knowledge of such violation, unless such violation: (1) would not subject
the Tenant's interest in the Demised Premises, the Buildings, the Furnishings or
any part of the foregoing to the imminent risk of sale or forfeiture; (2) would
not imminently jeopardize the continuing operation of the hotel business as
contemplated under this Lease or Tenant's ability to pay all amounts coming due
and payable hereunder, or imminently threaten any reduction in Gross Revenues;
and (3) would not subject Landlord to damages, a fine or a penalty for which
Tenant has not provided to Landlord adequate security or other adequate
assurances of payment, or the risk of forfeiture of its interest in the Demised
Premises, the Buildings or the Furnishings, or any part thereof. The Tenant
shall indemnify Landlord against all liability for damages, interest, penalties
and expenses (including reasonable attorneys' fees and disbursements) resulting
from, or incurred in connection with, any such contest or non-compliance, except
to the extent of any actual fault of Landlord in connection therewith.
(c) The Tenant shall not use or occupy or allow or suffer the Demised
Premises or the Buildings or any part thereof to be used or occupied for any
purpose other than as set forth in paragraph (a) of this Article, or which is in
contravention of any Certificate of Occupancy, nor shall the Tenant commit or
suffer any use, occupancy, act or omission to be done or condition to exist in
the Buildings, or on the Demised Premises which may constitute a nuisance,
public or private, provided the Tenant shall not be in violation of this
covenant, provided the Tenant has undertaken to cure any such condition upon the
Tenant obtaining knowledge of such condition, and the Tenant is diligently
pursuing the cure of such condition.
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(d) Subject to the rights of the Xentury City CDD and interests and
activities (including public interests) contemplated under the CDD Project
Agreement, the Tenant shall not knowingly suffer or permit the Demised Premises
to be used by the public in a such manner which would impair Landlord's title
to, or its reversionary interest in, the Demised Premises, Buildings or
Furnishings or any portion thereof, or which would support or provide a claim or
claims of adverse usage or adverse possession by the public, or of implied
dedication of the Demised Premises or any portion thereof or interest therein.
(e) The Tenant shall have no right to convert the use of the Buildings
and/or its leasehold estate under this Lease to any time sharing, time interval
or cooperative form of ownership, or to subject the same to any condominium
regime. Tenant shall have no right to otherwise alter the legal nature of its
ownership of the leasehold estate created by this Lease or its ownership of the
Buildings, but nothing in this sentence shall be deemed to limit the rights of
Tenant under Article 12 hereof.
(f) The Tenant's use of that portion of the Demised Premises legally
described in Exhibit B-4 attached hereto and by this reference made a part
hereof (the "Southerly Parking Area") shall be limited at all times hereunder to
use for Convention Hotel guest and employee (and occasional short-term bus)
parking only, and the Southerly Parking Area shall not be used for any other use
including without limitation truck, maintenance vehicle, bus, camper, or RV
parking [other than occasional short-term bus parking for periods of not more
than 5 days during times of peak parking demands], and shall be improved,
maintained and used only in accordance with the terms of this Paragraph 4.(f).
The Southerly Parking Area shall be improved only for passenger vehicle parking
and related access ways, curbs, gutters, drainage and landscaping, and shall be
improved and maintained at all times with adequate landscaping buffers to
minimize visual or other impacts upon adjacent development parcels within the
Xentury City Development Project. The Landlord hereby reserves the right, at
Landlord's sole cost and expense, in connection with the development of adjacent
parcels within the Xentury City Development Project, to unilaterally (and the
Tenant hereby agrees to) modify the boundaries and relocate and reconstruct
improvements of and within the Southerly Parking Area, as required by Landlord
under plans developed with Tenant or provided for Tenant's prior written
approval (which shall not unreasonably be withheld, conditioned or delayed)
provided only that: (1) the number of passenger vehicle parking spaces therein
is not reduced; (2) reasonably equivalent driveway connections to the balance of
the Demised Premises and site landscaping are maintained or replaced; (3) all
Southerly Parking Area site drainage and similar infrastructure facilities are
preserved or replaced in accordance with all applicable Legal Requirements; and
(4) Tenant is provided with a reasonable opportunity to approve in advance all
construction scheduling in order to minimize any necessary adverse impacts on
Tenant's activities at the Demised Premises. To the extent that such relocation
by Landlord requires Tenant to provide temporary off-site parking for guests and
employees other than upon lands adjacent to the Convention Hotel which are
provided at no charge by or at the request of Landlord, then Landlord shall
reimburse Tenant for all additional costs incurred by the Tenant in providing
such facilities such as (but not limited to) the costs of signage, security and
transportation, if any.
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(g) The Tenant's and the Landlord's shared use of the use of the Shared
Drainage Line Easement Area and the Shared Use Retention Pond Easement Area
shall be exercised strictly in accordance with the following terms and
conditions of this Paragraph 4.(g):
(i) Tenant shall (subject to its right to obtain a partial
reimbursement from Landlord as provided below) properly maintain and repair the
Shared Drainage Line Easement Area and the shared use drainage facilities
located therein at Tenant's expense at all times, and the Shared Use Retention
Pond Easement Area and the shared drainage facilities located therein shall be
maintained by the Xentury City POA at its cost and expense at all times as
Common Elements under the Declaration (as identified and defined below);
(ii) The Tenant's right to drain into and drainage capacity within
the Shared Use Retention Pond Easement Area and the drainage facilities located
therein shall be non-exclusive of other properly permitted drainage or other
compatible uses and shall be limited to, and Landlord and/or the Xentury City
POA shall construct and maintain shared drainage facilities therein adequate to
accept, drainage flows only from the specific portion of the Land as generally
depicted in Schedule I to Exhibit B-2 attached hereto and by this reference
incorporated herein and containing approximately twenty-five and six tenths
(25.6) acres and limited to flows which would be generated from development
intensity and impervious surface thereon resulting in a maximum discharge into
the shared drainage facilities within the Shared Drainage Line Easement and then
into the Shared Use Retention Pond Easement Area of no more than one hundred and
forty-three (143) cubic feet per second of properly designed and permitted storm
water flows based on a 50-year 72-hour design storm which is the regulated
design storm as of the initial construction of the Project (the "Design Storm
Event").
(iii) Similarly, the Landlord's right to drainage capacity through
the Shared Drainage Line Easement Area shall be non-exclusive of Tenant's other
properly permitted drainage and shall be limited to, and Tenant shall construct
and maintain shared drainage facilities therein adequate to transmit, drainage
flows only from the adjacent properties in the Xentury City Development Project
as generally depicted in Schedule I to Exhibit B-3 attached hereto and by this
reference incorporated herein, or other adjacent properties, containing not more
than fifteen and five tenths (15.5) acres and limited to flows which would be
generated from development intensity and impervious surface thereon resulting in
a maximum discharge into the shared drainage facilities within the Shared
Drainage Line Easement of no more than eighty-seven (87) cubic feet per second
of properly designed and permitted storm water flows based on the Design Storm
Event. In consideration of Tenant's properly maintaining the Shared Drainage
Line Easement Area and all the shared drainage facilities located therein, the
Landlord shall reimburse Tenant on an annual basis (subject to Tenant furnishing
reasonably acceptable evidence of the costs actually incurred in maintaining all
drainage-related facilities) for its Volumetric Share of available shared
drainage transmission capacity within the Shared Easement Area reserved and
allocated to Landlord, which has been established as Forty Percent (40%).
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(iv) Landlord and Tenant do each hereby covenant and agree for the
benefit of the other not to discharge, or to cause or allow to be discharged,
any pollutants in excess of quantities or levels permitted by law, whether in
connection with a single incident or over time, either directly or indirectly,
from their respective parcels into, onto, through or upon the Shared Drainage
Line Easement Area or the Shared Use Retention Pond Easement Area. For purposes
hereof, "pollutants" shall be defined as any pollutant contaminant, toxic or
hazardous substance, or gasoline, oil or any petroleum product, all as defined
in or contemplated by any federal, state, local or other applicable governmental
authority's law, rule, guideline, standard, regulation or ordinance. Each party
hereto shall be solely and completely responsible for assuring that no
pollutants in excess of quantities or levels permitted by applicable law,
whether in connection with a single incident or over time, will be discharged
from its respective parcel or parcels into, onto, through or upon the Shared
Drainage Line Easement Area or the Shared Use Retention Pond Easement Area. Each
party shall be liable to the other parties hereto, except in the instance of the
active negligence or intentional misconduct of the other party, or its
respective successors and assigns, for any and all damage, loss, cost or other
liability incurred as a result of or in any way connected with pollutants in
excess of such quantities or levels discharged into, onto, through or upon the
Shared Drainage Line Easement Area or the Shared Use Retention Pond Easement
Area from such party's parcel or property without regard to fault, knowledge or
lack of knowledge of, or acquiescence to, such discharge on the part of said
party, it being the intent hereof that each party shall be strictly liable for
the discharge of pollutants into, onto or upon the other party's property. Such
party shall reimburse the other party for any and all costs and expenses
incurred as a result of or in any way connected with any claims related to or
arising out of any such discharge of pollutants from said party's parcel,
including payment of reasonable attorneys' and consultants' fees and costs. In
the event that either party to this Lease, including its successors or assigns,
is actively negligent and such active negligence causes or contributes to any
such damage or liability incurred as a result of or in any way connected with
pollutants discharged from another party's parcel, such actively negligent party
shall be responsible for its negligence and proportionate share of the damages,
including attorneys fees and costs as provided above, as determined by law.
(v) Landlord and Tenant each hereby agree that to the extent that
either party hereto shall be responsible for construction or maintenance of any
of the facilities contemplated to be located within the Shared Drainage Line
Easement Area or the Shared Use Retention Pond Easement Area, then said party
agrees, for the benefit of the other party hereto, that: (i) there shall be no
design or structural defects in such facilities or defects in workmanship
related to such facilities, (ii) there shall be no personal injury or property
damage, including without limitation, personal injury or property damage to
third parties, arising from or in connection with any construction or
maintenance activities, (iii) there shall be no failure to undertake and
complete such maintenance, repair and replacement activity as is contemplated
herein, and (iv) that there shall be no disturbance of or damage to any utility
facilities located within any relevant utility easement areas and the
construction or maintenance activities shall not result in the need for
repairing, replacing and/or relocating any such utility facilities. In the event
that any party breaches the provisions of this subparagraph, the injured parties
shall be entitled to recover all losses and/or damages incurred or assessed
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against such injured parties as a result of such breach, including reasonable
attorneys' and consultants' fee and costs.
(vi) Subject to the rights of third parties under existing
agreements with the Landlord and its affiliates, Landlord agrees that billboard
signage, once constructed by Landlord and its affiliates or their successors or
assigns within the Shared Use Retention Pond Easement Area in accordance with
currently existing billboard signage approvals which have been obtained from
Osceola County, shall not be expanded or enlarged in any material way which
would cause or increase any material and direct adverse impact on sight lines to
the Project or Project signage from adjacent roadway areas without the prior
written approval of the Tenant, which approval shall not unreasonably be
withheld, conditioned or delayed so long as all reasonable efforts are made to
minimize unnecessary impacts on the Project or if such changes are necessitated
by changes in regulations applicable to such billboard signs.
(h) The Tenant's use of that portion of the Demised Premises legally
described in Exhibit B-5 attached hereto and referred to herein as the "Pervious
Only Area" shall be limited at all times hereunder to use for landscaped green
space or similar uses which do not prevent the Landlord from the full exercise
and enjoyment of its reserved easement rights to use the Pervious Only Area for
Pervious Uses, and to other intermittent and short term uses requested by Tenant
and approved in writing by Landlord from time to time, which approval shall not
be unreasonably conditioned, withheld or delayed so long as Tenant's proposed
short-term uses do not materially interfere with Landlord's proper use of the
Pervious Only Area, and the Pervious Only Area shall not be used for any other
use including without limitation stormwater management or other site
infrastructure or parking or any vertical development, and the Pervious Only
Area shall be improved, maintained and used only in accordance with the terms of
this Paragraph 4.(h). The Pervious Only Area shall be improved and maintained at
all times by the Tenant as a properly landscaped green area, recognizing however
the location of the Pervious Only Area toward the rear of the Project, but
landscaped consistently with the adjacent exterior areas of the Convention Hotel
and adjacent areas of development parcels within the Xentury City Development
Project. The Landlord hereby reserves the right, at Landlord's sole cost and
expense, in connection with the development of adjacent parcels within the
Xentury City Development Project, to unilaterally (and the Tenant hereby agrees
to) modify the boundaries of and relocate the Pervious Only Area, as required by
Landlord under plans developed with Tenant or provided for Tenant's prior
written approval (which shall not unreasonably be withheld, conditioned or
delayed) provided only that reasonably equivalent landscaping is maintained or
replaced, that such relocation of the Pervious Only Area does not cause a
violation of any permit issued under applicable Legal Requirements for the
Convention Hotel, and Tenant continues to have reasonable access for ongoing
maintenance of the Pervious Only Area and the Pervious Only Area continues to be
contiguous to the balance of the Demised Premises. Notwithstanding the foregoing
the Tenant shall also be entitled to use the Pervious Only Area for construction
staging activities prior to the Completion Date but only in accordance and
subject to all applicable terms of Paragraph 6(e) of the Land Development
Agreement.
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5. Landlord's Delivery of Utility Improvements. (a) As part of the Landlord
Responsibilities, Landlord shall be responsible, at its sole cost and expense,
to arrange for the delivery of permanent installations for potable water,
sanitary sewer lines, natural gas lines, electricity and storm drainage
connections (the "Utilities"), telephone lines and cable television lines to
locations along the property line of the Land. Landlord covenants that the
Utilities, telephone lines and cable television lines shall enter the Demised
Premises only through the beds of public streets and/or through underground
easements or rights of way which shall be granted by Landlord to the relevant
utility companies (the "Utilities Easements"). The parties shall endeavor to
cooperate with each other and to coordinate their efforts in provision for the
supply of the Utilities, telephone lines and cable television lines to the Land.
The Utilities shall be in place at the property line by the dates set forth in
the Land Development Agreement. In the event the Utilities are not in place by
the dates set forth in the Land Development Agreement, the Tenant may exercise
the remedies set forth in the Land Development Agreement, including, without
limitation, the right to arrange for completion of the delivery and installation
of the Utilities, with the costs incurred by the Tenant to be offset against
Rent owed by the Tenant to the Landlord hereunder.
(b) Except for the Landlord Responsibilities, the Tenant will be
responsible, at its sole cost and expense, for preparation of the Land and will
provide for all other on-site requirements for the Convention Hotel, including,
without limitation, roads, bridges, parking, walkways, any utilities, on-site
drainage requirements and systems, lakes and any recreational activities within
the Land; Landlord shall have no obligation to provide for any on-site
requirements except for the Landlord Responsibilities or as otherwise expressly
provided for in this Lease or in the Land Development Agreement.
(c) Except as otherwise expressly provided herein or in the Land
Development Agreement, the Tenant will be responsible for any on-site utilities
and shall pay customary hook-up and service fees, including, without limitation,
the cost and construction of the substations to be located on the Land with the
exception of the equipment which may be supplied by the utility company, i.e.,
the Tenant shall construct and pay for the duct bank to connect the manhole to
the substation, the pad and the enclosure.
6. Rent. (a) Certain additional Definitions. For the purposes of this
Article 6 the following terms shall have the following definitions:
(i) "Accounting Month" shall mean each period of time consisting
of not less than three (3) nor more than six (6) full calendar weeks that is
used by the Tenant or its manager of the Convention Center and Hotel within the
Project (the "Manager") in its accounting of the operations of the Project as
one of not less than twelve (12) accounting periods in any calendar year during
the Term of this Lease. Tenant shall notify Landlord, promptly following the
Opening Date, of the commencement and expiration dates of each Accounting Month
as in effect following the opening of the Convention Hotel and shall thereafter
notify Landlord of any modifications thereto, forthwith upon Tenant's first
becoming aware of same.
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(ii) "Affiliated Entity" shall mean any entity controlling,
controlled by of under common control with Tenant, or any general partner in
Tenant if Tenant is a partnership, or any officer or director (or stockholder,
if Tenant is a privately held corporation) of Tenant if Tenant is a corporation,
or any trustee of Tenant if Tenant is a trust, or any beneficiary of Tenant if
Tenant is a private trust; and as used in the provisions of this Lease other
than this Article 6, "Affiliate of Tenant" shall mean any entity controlling,
controlled by or under common control with Tenant, or any constituent partner,
or any officer, director, employee, agent, representative, successor or assign
of any of the foregoing (or any stockholder if Tenant is a privately held
corporation), or any trustee of Tenant if Tenant is a trust, or any beneficiary
in Tenant if Tenant is a private trust.
(iii) Intentionally Omitted.
(iv) "Annual Escalator Amount" shall mean, for each period
following the Stabilization Date during which the Base Rent is subject to
increase by the Annual Escalator Amount, the Annual Escalator Percentage times
the annualized amount of Base Rent in effect immediately prior to such increase.
(v) Intentionally Omitted.
(vi) Intentionally Omitted.
(vii) "Exclusion Items" shall mean and include only the following
items of or related to revenue, which shall be excluded from (or deducted to the
extent included in) the calculation of Gross Revenues hereunder:
(1) interest income earned by Tenant;
(2) the sale of used equipment, trade fixtures or other
capital assets, and of supplies or inventory;
(3) loan proceeds, capital contributions, condemnation
proceeds (other than those received in respect of a temporary taking),
and insurance proceeds other than so-called "rent or rent interruption
insurance" proceeds;
(4) such credits, allowances, and refunds as may be
customary from time to time in the hotel industry, including without
limitation actual charge-offs for "errors and concessions" against
hotel revenues and actual bad debt charge-offs of accrued amounts
receivable to the extent previously included in Gross Revenues (but
not allowances for bad debts) and returns of merchandise from or on
behalf of customers;
(5) credit card company fees customarily deducted from
credit card remittances;
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(6) third-party travel agent commissions and amounts
actually disbursed to third parties by the Convention Hotel, if any,
for hotel guest frequency programs;
(7) service charges paid by guests to the extent paid to
employees of the Project as tips and gratuities;
(8) rents and license fees from subtenants and
concessionaires;
(9) the amount of any sales, use or excise taxes, taxes on
rents and other similar taxes; use or excise taxes, taxes on rents and
other similar taxes;
(10) expenses paid by Tenant to licensees, subtenants and
Affiliates of Tenant which are (and only to the extent of the amount)
included again in Gross Revenues hereunder as Gross Revenues of any
such licensee, subtenant or Affiliate;
(11) pass-through charges paid by hotel guests, including
amounts included with guest room charges by contract with
convention-booking agencies, and paid in full to unrelated third
parties without retention of any portion thereof by Tenant, including
items such as transportation charges or parking charges payable to
third-party parking providers; and
(12) deposits received for reservations in any other hotel
to the extent the deposit is paid over to the other hotel.
(viii) "Generally accepted hotel accounting principles" shall mean
the Uniform System of Accounts for Hotels of the Hotel Association of New York
City, Inc. (as the same may be revised from time to time) or, if such system is
no longer generally recognized by the hotel industry in the United States as a
standard for generally accepted hotel accounting principles, such successor or
other standard as is then so recognized and as is most consistent with the
accounting principles and practices theretofore applied with respect to the
Project.
(ix) "Gross Revenues" shall mean and include all revenues and
receipts derived by Tenant, and/or by any subtenants or concessionaires of
Tenant (or when the term is used with respect to any entity other than Tenant,
all revenues derived by such other entity) in respect of the Project from
whatever source, including without limitation all hotel departments, services
and operations, on- and off-premises catering, all meetings, conventions,
entertainment venues, and all sales and services in, about, and originating
from, the Project (including any common areas and the Buildings), and excluding
but only excluding the "Exclusion Items" as defined above. Gross Revenues shall
not be deemed cumulative
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from one Hotel Year to any succeeding Hotel Year but, rather, they shall be
computed separately for each Hotel Year on an accrual basis in accordance with
generally accepted hotel accounting principles, consistently applied. For the
purpose of determining Percentage Rent under this Article, Gross Revenues
derived by a subtenant or concessionaire of Tenant or any Affiliated Entity, or
by any person for the use, account or benefit of Tenant, shall be deemed Gross
Revenues received by Tenant.
(x) "Hotel Year" shall mean, for the first Hotel Year, the period
commencing on the first day of the Accounting Month during which the Opening
Date occurs and ending on December 31 in the calendar year during which the
Hotel is first opened to the public for business and, for subsequent Hotel
Years, each consecutive twelve (12) calendar-month period, after the first Hotel
Year, which commences on January 1 and ends on December 31 throughout the
remainder of the Term; provided, however, that the final Hotel Year shall
consist of the period commencing on the January 1 immediately following the
penultimate Hotel Year and ending on the last day of the Accounting Month during
which this Lease expires or is terminated in accordance with its terms.
(xi) "Opening Date" shall mean the date on which the Project opens
for business with the general public.
(xii) "Prime Rate" shall mean the fluctuating annual rate equal at
all times to two percent (2%) per annum above the highest annual prime rate (or
base rate) published from time to time in The Wall Street Journal under the
heading "Money Rates" or any successor heading as being the rate in effect for
corporate loans at large U.S. money center commercial banks (whether or not such
rate has actually been charged by any such bank) or if such rate is no longer
published, then the highest annual rate charged from time to time at a large
U.S. money center commercial bank selected by Landlord (by notice to Tenant) on
short-term, unsecured loans to its most creditworthy large corporate borrowers.
Each change in the Prime Rate shall take effect on the first day of the
Accounting Month immediately succeeding the Accounting Month in which the
corresponding change occurs in the then applicable rate referred to above, and,
in the event of multiple changes in such applicable rate during the subject
Accounting Month, the change in the Prime Rate shall be based on the last such
applicable rate in effect during the subject Accounting Month.
(xiii) "Rent" shall mean all rent reserved under this Article 6
including the Base Rent, Percentage Rent and all Additional Rent, and any
further sums due from Tenant whether or not characterized as additional rent
under the provisions of this Lease; all such further sums shall be collectible
in the same manner and by the same remedies as rent reserved under this Article.
(xiv) "Rent Commencement Date" shall mean April 1, 1999.
(xv) "Stabilization Date" shall mean the earlier of (i) the first
day of the first calendar month following the first consecutive twelve (12)
month period in which Project hotel room occupancy meets or exceeds an average
of Eighty Percent (80%), or (ii) the fifth (5th) year anniversary of the Opening
Date for the Project.
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(b) Base Rent.
(ii) No Rent shall be payable with respect to any period
during the Term of this Lease prior to the Rent Commencement Date.
(iii) From and after the Rent Commencement Date, Base
Rent shall be payable as follows:
(1) For the period commencing on the Rent
Commencement Date, and expiring on the day immediately prior
to the date (the "Base Rent Increase Date") which is the
earlier of the Opening Date or March 1, 2002, Tenant shall
pay as initial Base Rent for each Hotel Year (or portion
thereof) during such period, an annual sum of Eight Hundred
Fifteen Thousand Four Hundred and Fifty Dollars ($815,450)
per year, payable monthly in advance in equal monthly
payments of Sixty-Seven Thousand Nine Hundred Fifty Four and
17/100 Dollars ($67,954.17) per month commencing on the Rent
Commencement Date and continuing on the first day of each
month thereafter, which initial Base Rent amount shall not
be subject to adjustment by the Annual Escalator.
(2) From and after the Base Rent Increase Date,
the Base Rent shall be increased to Two Million Nine Hundred
Ninety Thousand Four Hundred and Fifty Dollars ($2,990,450)
per year and shall thereafter continue to be payable
monthly, in advance, on or before the first day of each
calendar month in equal monthly installments of Two Hundred
Forty-Nine Thousand Two Hundred Four and 17/100 Dollars
($249,204.17) per month.
(3) On and as of the Stabilization Date, and then
again on and as of the next January 1 immediately following
the Stabilization Date (which the parties acknowledge in all
likelihood will not be a full year thereafter), and then
continuing annually on and as of January 1 of each year
thereafter, the amount of the Base Rent shall be increased
by the Annual Escalator Amount, and the monthly installment
payments thereof shall be increased accordingly.
(c) Percentage Rent. From and after the Opening Date,
Percentage Rent shall be payable by Tenant to the Landlord hereunder as follows:
(i) Tenant shall pay to Landlord Percentage Rent on an
annual basis in an amount equal to the Percentage Rent Percentage of annual
Gross Revenue for the Project for the immediately preceding Hotel Year. The
Percentage Rent Percentage initially shall be equal to Five Tenths of One
Percent (0.5%), but shall be subject to upward adjustment as follows:
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(1) Stabilization of Project. Beginning on the
Stabilization Date, the Percentage Rent Percentage shall
increase by One Quarter of One Percent (.25%); and
(2) Non-Recourse Financing. Beginning with the
year following the year in which the First Permitted
Leasehold Mortgage secures Full Nonrecourse Debt, the
Percentage Rent Percentage shall increase by One Quarter of
One Percent (.25%) [for purposes of this sub-Section
6(c)(i)(2), "Full Nonrecourse Debt" shall be defined as debt
which is non-recourse to the Tenant and its Affiliates as to
the payment of principal and interest (other than for
principal and interest which could become payable with
recourse under specifically-enumerated conditions such as
potential fraud, environmental liability, misapplication of
insurance proceeds or hotel revenues and similar
eventualities), and Tenant agrees to use its best efforts to
secure Full Nonrecourse Debt as such time as the same
becomes available to Tenant upon commercially reasonable
terms acceptable to the Tenant]; and
(3) Ten Year Operation. Beginning with the tenth
(10th) year following the Opening Date for the Project, the
Percentage Rent Percentage used to calculate Percentage Rent
for the 10th Hotel Year (and each Hotel Year thereafter)
shall increase by One Quarter of One Percent (.25%).
In no event shall the total amount of the Percentage Rent in any Hotel
Year exceed One and One-Quarter Percent (1.25%) of Gross Revenue for
the immediately preceding Hotel Year.
(ii) Percentage Rent shall be calculated on or before
the end of the first Accounting Month following the end of each Hotel Year (each
a "Percentage Rent Calculation Date") based on Gross Revenue for the immediately
preceding Hotel Year, and shall be paid to the Landlord on or before forty-five
(45) days following the end of the Hotel Year for which such Percentage Rent is
payable and has been calculated (each a "Percentage Rent Payment Date"). For
purposes of calculating the Percentage Rent the definition of "Gross Revenues"
hereunder shall be deemed to include, without limitation, all revenues within
the definition of Gross Revenues set forth above, and the Tenant's calculation
thereof shall be subject to audit by the Landlord in accordance with the audit
provisions set forth herein.
(iii) As provided above, once commenced the Annual
Escalator shall apply to increase the Base Rent on an annual basis, however the
Percentage Rent shall be subject to adjustment in accordance with this
sub-paragraph 6.(c)(iii). On or before each Percentage Rent Calculation Date
following the Stabilization Date, the Tenant shall deliver to the Landlord
written notice calculating (i) the increase in the Base Rent for the immediately
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preceding Hotel Year (the "Adjustment Year"), resulting from the Annual
Escalator, over the amount of the Base Rent for the previous Hotel Year (the
"Base Rent Increase"), and the amount of the increase, if any, in the Percentage
Rent to be paid to the Landlord for the Adjustment Year over the amount of the
Percentage Rent for the previous Hotel Year (the "Percentage Rent Increase").
The amount of the Percentage Rent shall be reduced by the amount of the
Percentage Rent Increase, if any, up to a maximum reduction amount, however,
equal to (and not to exceed) the amount of the Base Rent Increase.
(iv) Percentage Rent for the final Hotel Year shall be
payable on the last day of the Lease Term, based upon Tenant's good faith
estimate consistent with relevant daily occupancy and sales levels, and shall be
subject to final adjustment between the parties based upon actual Gross Revenues
on or before forty-five (45) days following the end of the Lease Term.
(d) Quarterly Gross Revenues Statements. On or before the
thirtieth (30th) day following the last day of the last Accounting Month during
each calendar quarter of each Hotel Year (the "Subject Quarter"), Tenant shall
submit to the Landlord a statement (the "Quarterly Gross Revenues Statement"),
setting forth in reasonable detail all items of Gross Revenues and the
derivation thereof, and the gross rents and license fees referred to in the
definition of Gross Revenues hereunder, in each case, derived by or for the
benefit of Tenant or otherwise from the Project in respect of the Subject
Quarter and the resulting amount of the Percentage Rent for the Subject Quarter,
notwithstanding that the same shall not be payable until following the end of
the subject Hotel Year; together with copies of any statements received by
Tenant or its Affiliates from the Hotel Manager and/or from Tenant's subtenants
and concessionaires with respect to the matters referred to in the foregoing
clauses of this section [for any Tenant which is, or which is a consolidated
affiliate of, a publicly-traded entity with regulated quarterly and annual
financial statement filing requirements with the United States Securities and
Exchange Commission or equivalent (herein a "SEC Filing Tenant"), the quarterly
and annual statement dates provided in this paragraph and the immediately
following paragraph shall be extended to the date which is two (2) business days
following the regular due dates of such public quarterly and annual filings, as
applicable]. In addition, notwithstanding the provisions of sub-section
6.(c)(ii) above, each Tenant which is a SEC Filing Tenant shall pay each annual
payment of Percentage Rent for the prior Hotel Year on or before the Percentage
Rent Payment Date as set forth above or within five (5) business days following
release of such SEC Filing Tenant's annual earnings announcement, whichever is
earlier, based upon internally-available calculations (or to the extent
unavailable, good faith estimations) of Gross Revenues for the prior Hotel Year
just ended, but shall not be obligated to release to Landlord any Gross Revenues
statements or other financial information relative to the Convention Hotel until
the Annual Gross Revenues Statement is due hereunder.
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(e) Annual Gross Revenues Statements. Tenant shall, by no
later than sixty (60) days following the end of each Hotel Year, furnish to
Landlord for such Hotel Year: (i) a complete statement (the "Annual Gross
Revenues Statements"), certified by an independent certified public accountant
who is actively engaged in the practice of his profession and is acceptable to
Landlord or for any SEC Filing Tenant, certified by internal CPA auditors
employed by the Tenant as also being consistent in all material respects with
information furnished in connection with and forming the basis for independently
audited annual financial statements for the SEC Filing Tenants's consolidated
reporting group (which statement shall also be certified either by an officer
of, or a partner in, Tenant or by the Hotel Manager), setting forth, with
respect to such Hotel Year, the matters dealt with by the Quarterly Gross
Revenues Statement (the term "Hotel Year" being substituted for the term
"Subject Quarter" where applicable for the purposes of the Annual Gross Revenues
Statements), and (ii) copies of statements from the Hotel Manager and from
Tenant's subtenants and concessionaires as to their respective operations at the
Project setting forth in reasonable detail all Gross Revenues derived, by them,
respectively, in respect of the Project [it being understood that Tenant shall
not be in breach of this clause (ii) for failure to provide any such statement
if the Hotel Manager, a subtenant or concessionaire has failed to deliver such
statement to Tenant, provided that: (x) Tenant's Hotel Management Agreement (as
hereinafter defined) with such Hotel Manager or Tenant's sublease or concession
agreement with such subtenant or concessionaire (as the case may be) includes
provisions obligating such Hotel Manager, subtenant or concessionaire to prepare
and deliver such statement in sufficient time to allow Tenant to comply with
this clause (ii); and (y) Tenant is using its best efforts to obtain compliance
with such provisions and continues to do so]. If the Annual Gross Revenues
Statement for any Hotel Year indicates that any payments of Percentage Rent
theretofore made with respect to such Hotel Year exceed the actual final amounts
due for such Hotel Year, the amount of any such overpayment, together with
interest thereon calculated as set forth below in this paragraph, shall be
credited against the next payment or payments of Rent (including Base Rent as
well as Percentage Rent) falling due. Alternatively, if the Annual Gross
Revenues Statement indicates that total payment of Percentage Rent theretofore
made with respect to such Hotel Year is less than the Percentage Rent amount due
for such Hotel Year as established under the Annual Gross Revenues Statement,
then Tenant shall distribute the balance together with interest thereon
calculated as set forth below in this paragraph, to the Landlord concurrently
with the submission of the Annual Gross Revenues Statement. Any underpaid amount
of Percentage Rent shall accrue interest at the Prime Rate from the date due and
payable under the Agreement until the date on which the Annual Gross Revenues
Statement is due, and thereafter shall bear interest at the highest rate allowed
by law until paid in full.
(f) Rent Abatements. There shall be no abatement of any
Rent due under this Lease for any reason except as specifically provided for
herein.
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(g) Miscellaneous Rent Provisions. (i) Tenant shall at all
times during the Term of this Lease keep and maintain (separately from any of
its other books, records and accounts) accurate, complete and up-to-date books
and records pertaining to the Project, including books of account reflecting the
operations of the Project and all matters referred to in this Article and in the
other Articles of this Lease. Following the opening of the Project to the public
for business, the Landlord or its representatives shall have, at all reasonable
times during normal business hours, reasonable access, on reasonable advance
notice, to the books and records of Tenant pertaining to the Project, including
books of account properly reflecting the operations of the Project, which books
and records shall be kept at the Project, and the Landlord shall have the right
to cause an independent audit of said books and records to be made at any time
[but not more frequently than once in any twelve (12) month period unless a
material misrepresentation or omission of Tenant's reported Gross Revenues are
discovered], at Landlord's expense. Such right of inspection and audit may be
exercised by Landlord at any time within three (3) years after the end of the
Hotel Year to which such books and records relate (but only once for each Hotel
Year absent evidence of an material misrepresentation or omission not disclosed
by a prior audit for any Hotel Year), and Tenant shall maintain all such books
and records for at least such period of time and, if any dispute between the
parties with respect to this Lease has arisen and remains unresolved at the
expiration of such period of time, for such further period of time until the
final resolution of such dispute. Further, each lease or concession agreement or
other agreement entered into by Tenant with a subtenant or concessionaire in
connection with the Project shall contain a provision pursuant to which Tenant
and Landlord are granted the same rights with respect to the books and records
to be maintained as aforesaid, which provisions Tenant shall use its best
efforts to enforce. Any Annual Gross Revenues Statement shall be deemed accepted
by Landlord as correct if Landlord does not give its objections to Tenant, with
reasonable specificity as to such objections, within three (3) years after the
giving of such Statement. Should Landlord so request, Tenant shall furnish
Landlord with true copies of sales and use tax returns filed with the Florida
Department of Revenue (or its successor) by Tenant and by its subtenants,
concessionaires and other persons or entities whose revenues are included in
Gross Revenues.
(ii) If, upon any examination by Landlord or its
representatives of the books or records of Tenant or any other person or entity
referred to in this Article 6, an error shall be revealed which results in there
being due to Landlord additional Percentage Rent of any nature, all Percentage
Rent calculations prior to the date such discovery is made shall be reviewed
(whether or not such Percentage Rent has been audited pursuant to this
paragraph) and the amount of any overpayments or underpayments of Percentage
Rent which may be disclosed by such review, together with interest accrued
thereon from the date on which such underpayment or overpayment was made until
the amount thereof is paid at the rates set forth above in the case of an
underpayment, shall be paid by Tenant to Landlord upon demand, or, in the case
of any overpayment, be credited to the next installment or installments of Rent
falling due (or, if this Lease shall have terminated other than by reason of
Tenant's default, be repaid by Landlord to Tenant). If such error results in
there being due to Landlord additional Percentage Rent for any Hotel Year in any
amount as a result of an intentional misrepresentation or omission, or in an
amount equal to or exceeding five percent (5%) of the Percentage Rent
theretofore paid by Tenant in respect of such Hotel Year as to any other error,
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then all actual costs of such examination incurred in good faith by Landlord
shall also be paid by Tenant to Landlord upon demand.
(iii) All payments of Rent shall be made to the
Landlord at the address for Notices to the Landlord set forth hereinbelow, or to
such other mailing address as Landlord may from time to time designate by notice
to Tenant.
(iv) It is the intention of the parties that any and
all rents reserved by this Article shall be net rents, and Landlord shall
receive the same free from all costs, charges, expenses and damages, and in
addition to all other amounts that by the provisions of this Lease are made
expressly, although in general terms, payable by Tenant. All Rent and other
payments due to Landlord under this Lease shall be free from all claims, demands
or set-offs of any nature whatsoever which Tenant may have or allege against
Landlord (other than such credits for overpayment of Percentage Rent as are
expressly provided for in this Article 6 or any other credits or offsets as are
specifically provided for elsewhere under this Lease) and all such payments
shall, upon receipt by Landlord, be the absolute and sole property of the
Landlord.
(v) All payments due under this Lease shall be made in
current legal tender of the United States as the same is by law constituted at
the time of such payment. Any extension, indulgence or change by Landlord in the
mode or time of payment of Rent or any other amount payable hereunder on any
occasion shall not be construed as a waiver of any provision of this Lease, or
as requiring or granting a similar extension, indulgence or change by Landlord
upon any subsequent occasion.
(vi) If and to the extent that the amount of Base Rent
or Percentage Rent should change during any applicable payment period, whether
as a result of the occurrence of the Base Rent Increase Date, the Annual
Escalator, or of changes in the Percentage Rent Percentage, or otherwise, the
amount of the Base Rent or Percentage Rent shall change and be prorated
effectively as of the date of any such change and the applicable payment amount
adjusted accordingly as of the next applicable payment date.
(vii) The obligation to pay all Rent reserved herein
shall survive the expiration or termination of this Lease. Landlord's obligation
to repay to Tenant overpayments of Percentage Rent as expressly provided for in
this Article 6 shall also survive the expiration or termination of this Lease,
unless such termination is by reason of the breach or default of Tenant.
(viii) Whenever the terms "subtenant" or
"concessionaire" are used in this Article they shall include Tenant and any and
all subtenants, concessionaires and licensees whether they receive their rights
in respect of the Demised Premises and/or the Buildings directly from Tenant or
indirectly through another subtenant or licensee.
(ix) Except as may otherwise be provided in this Lease,
Rent shall be prorated as of the expiration of the Term.
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(x) Except as otherwise expressly provided in this
Article 6, in the event that any dispute should arise between Landlord and
Tenant in respect of the application of the terms and provisions of this Article
relating to the calculation and payment of Percentage Rent (other than those
contained in Paragraph 6.(c)(i) above) and/or in respect of any of the
calculations, statements or forecasts made or prepared pursuant thereto and/or
in respect of either party's compliance with such terms and conditions, either
party to this Lease may give the other notice of such dispute (a "Percentage
Rent Dispute Notice") setting forth the subject of such dispute and a brief
description of such party's contentions with respect thereto. If such dispute is
not resolved to the mutual satisfaction of both parties within twenty (20) days
after delivery of the Percentage Rent Dispute Notice relating thereto, either
party shall have the right to submit such dispute to arbitration as provided for
in Article 49 of Lease by serving upon the other party an Arbitration Notice in
accordance with said Article 49, whereupon the provisions of said Article 49
shall apply. The arbitrators appointed pursuant to Article 49 shall resolve such
dispute by applying the terms and provisions of this Article, and their decision
shall specify measures or action which Landlord and/or Tenant must take to
comply with such terms and provisions and shall order Landlord and/or Tenant to
take such measures or action.
(h) Confidentiality Provisions. All Confidential
Information received by one party to this Lease from the other party shall be
kept confidential and shall not, without the prior written consent of the
disclosing party, be disclosed or used in any way by the receiving party, its
agents, representatives, or employees in any manner whatsoever, in whole or in
part, to any person who is not a party to this Lease, unless legally compelled
to do so by proper legal process. This provision shall be binding upon the
parties hereto, their respective successors and assigns and all representatives,
agents, and employees thereof. For purposes hereof, "Confidential Information"
shall mean, collectively, any information relating to the business affairs,
operations or financial conditions of the parties hereto made available by a
party hereto, pursuant to the terms of this Lease, or any other agreements
entered into in connection herewith, including, without limitation, all
financial statements, reports, construction reports, notes, and other data, all
plans and specifications for the Improvements, any advertising, promotion or
marketing plans or procedures, and such other data or information related to the
development and construction of the Improvements and/or the operation of the
Convention Hotel pursuant to the terms of this Lease. Notwithstanding the
foregoing, the Confidential Information shall not include any information which
is or becomes:
(i) generally available to the public, other than as a
result of a disclosure in violation of this provision; or
(ii) available to the receiving party on a
non-confidential basis from a source other than the delivering party which
source is not known or reasonably believed by the receiving party to be
prohibited from disclosing such information to the receiving party by a legal,
contractual, or fiduciary obligation.
In the event that a party hereto which receives Confidential Information becomes
legally compelled to disclose such Confidential Information, the receiving party
shall provide the
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disclosing party with prompt notice so that the disclosing party may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this section.
7. Taxes and Assessments. (a) Subject to apportionment at the beginning and
the end of the Term of this Lease, the Tenant shall bear, pay and discharge, not
later than the last day on which payment may be made without penalty or
interest, all taxes (including any sales and use taxes on rents or that are
otherwise by law imposed on and payable by the Tenant or Landlord in connection
with this Lease, the Demised Premises and all related agreements), assessments
(including special assessments), water and sewer rents, rates and charges,
public and private utility charges, excises, levies, license and permit and
impact fees and other governmental impositions and charges of every kind and
nature whatsoever, general and special, extraordinary as well as ordinary, seen
and unforeseen, and each and every installment thereof which shall or may during
or in respect of the Term be charged, laid, levied, assessed, imposed, become
due and payable or liens upon, or arise in connection with the use, occupancy or
possession of, or grow due or payable out of or for, the Land or any part
thereof, the Buildings or any part thereof, any items of personal property, or
such franchises as may be appurtenant to the Land, Buildings or Demised
Premises, and all taxes charged, laid, levied, assessed or imposed in lieu of or
in addition to the foregoing under or by virtue of all present or future laws,
ordinances, requirements, orders, directions, rules or regulations of federal,
state, county and municipal governments and of all other governmental
authorities whatsoever (each individually a "Tax" and collectively, the
"Taxes"). To the extent that the same may be permitted by law and shall be
permitted by each Permitted Mortgage, the Tenant shall have the right to apply
for the conversion of any special assessment for local improvements in order to
cause the same to be payable in installments and, upon such conversion, shall be
obligated to pay and discharge punctually only such of said installments as
shall become due and payable during or in respect of the Term. The Tenant shall
also pay and discharge punctually all installments due during or in respect of
the Term with respect to special assessments imposed prior to the commencement
of the Term. The Tenant shall furnish Landlord with satisfactory evidence of the
payment of any Tax promptly after the Tenant receives receipts therefor or
within thirty (30) days of any written request therefor by Landlord. Landlord
shall, promptly after the execution hereof, make application to the appropriate
taxing authorities for a separate assessment of the Land together with any
Buildings located thereon, so that the Taxes shall be billed directly to the
Tenant. Until the Land is separately assessed, Landlord shall pay all of the
Taxes (exclusive of any Taxes on rent or any personal property Taxes) on the
Land in the tax lot of which the Demised Premises are a part, and Tenant will
pay to Landlord that portion of such Taxes as is equitably apportioned to the
Demised Premises and the Buildings.
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(b) The Tenant shall have the right to contest or review, by legal
proceedings or in such other manner as it may deem suitable (which, if
instituted, shall be conducted by the Tenant at its own expense and free of any
expense to Landlord), and in the name of Landlord if necessary, the amount of
any assessed valuation or rate in respect of any Taxes or the validity of any
Taxes enacted after the date of this Lease. The Tenant may pay under protest or
defer payment of a contested item to the extent permitted by law provided that
in the case of such a deferral of payment such contest does not subject Landlord
to criminal liability, and that prior to the institution of any such
proceedings, the Tenant shall furnish to Landlord and to any Permitted Leasehold
Mortgagee if so required by the terms of its Permitted Mortgage: (i) an
indemnity from a party with a net worth reasonably acceptable to Landlord and
such mortgagee indemnifying Landlord against all losses, costs, damages and
expenses including, without limitation, reasonable attorneys' fees and
disbursements incurred by reason of such contest; or (ii) a surety company bond,
cash deposit or other security reasonably satisfactory to Landlord and such
mortgagee, sufficient to cover the amount of the contested item or items and
interest and penalties covering the period which such proceedings may be
expected to take, securing payment of such contested items, interest, penalties
and all costs in connection therewith. Notwithstanding the furnishing of any
such indemnity, bond or security (other than a cash deposit), if the Demised
Premises or the Buildings or any part of either shall at any time be in imminent
danger of being sold, forfeited or otherwise lost, then the Tenant shall
promptly pay such contested item or items; provided, however, that if the Tenant
shall have made a cash deposit, then Landlord or such Permitted Leasehold
Mortgagee, as the case may be, shall thereupon pay the contested item or items
out of the cash deposit, and any balance of the cash deposit remaining after the
payment or cancellation thereof shall be repaid to the Tenant without interest.
The legal proceedings herein referred to shall include appropriate proceedings
to review tax assessments, appeals from orders therein and appeals from any
judgments, decrees or orders, but all such proceedings shall be commenced as
soon as practicable after the imposition or assessment of any contested item and
shall be prosecuted to final adjudication with dispatch; except as specifically
permitted by this paragraph, the Tenant shall have no right to contest or review
any Tax. Any refunds recovered by the Tenant may be retained by and shall be the
property of the Tenant except that such refunds (net of the costs of collection)
shall belong to Landlord if and to the extent they are in respect of a period
prior to the commencement of the Term.
(c) Landlord shall not be required to join in any proceedings referred
to in paragraph (b) above unless the provisions of any law or the requirements
of any governmental authority at the time in effect shall require that such
proceedings be brought by or in the name of Landlord, in which event Landlord
shall join in such proceedings or permit the same to be brought in its name.
Landlord shall not be subjected to any liability for the payment of any costs or
expenses in connection with any such proceedings, and the Tenant shall indemnify
and save harmless Landlord from any such costs and expenses, including
reasonable attorneys' fees and disbursements.
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(d) Notwithstanding any provision of this Lease to the contrary, the
Tenant shall not pay any of Landlord's franchise, corporate, estate,
inheritance, succession, capital levy or capital stock taxes, or any of
Landlord's income, profits, gross receipts taxes or any other taxes (except any
sales and use taxes that are by law imposed on and payable by the Tenant or
Landlord in connection with the Demised Premises and all related agreements)
that are imposed solely because of the nature of the business entity of
Landlord; provided, however, that if any tax, excise or fee measured by or
payable in respect of amounts payable to Landlord relating to the Demised
Premises shall be levied against Landlord in lieu of, in substitution for, or
supplemental to, the Taxes in effect at the date of the execution of this Lease,
such tax, excise or fee payable in respect of amounts payable to Landlord
relating to the Demised Premises shall constitute a Tax within the meaning of
that term as used in this Lease, but the amount thereof shall be measured as if
the amounts payable to Landlord relating to the Demised Premises were the sole
taxable income, and the Demised Premises and the Buildings were the sole asset,
of Landlord.
(e) Notwithstanding that the Base Rent and Percentage Rent otherwise
shall be payable to the Landlord hereunder without offset or reduction except as
specifically provided for herein, the Landlord acknowledges and agrees that the
Tenant shall be entitled to deduct from and offset against all Rent and any
other amounts payable to the Landlord hereunder the amount of any Special
Assessments or similar capital charges under the recorded Declaration of
Covenants, Conditions and Restrictions for Xentury City dated July 11, 1994 and
recorded on July 15, 1994 in Official Records Book 1201, Page 607, Public
Records of Osceola County, Florida, as the same may be amended from time to time
with the written consent of the original Declarant thereunder or the Landlord
(the "Declaration"), or by the Xentury City CDD, other than and not including,
however, "Normal Assessments," as defined below. For purposes of the foregoing,
"Normal Assessments" shall be defined as assessments attributable to the
operation, administration, maintenance, repair and replacement (but not the
initial construction of) those items of infrastructure, or project
administration under zoning requirements (including, without limitation,
landscaping, drainage, sewer, wetlands, potable and irrigation water, roads,
sidewalks and utilities) directly benefitting or servicing, or intended to serve
or benefit, the Land or more than one site or parcel of land within the Xentury
City Development Project included within the lands developed under the DRI
Development Order for Xentury City (and referred to as the "Xenorida DRI
Project") under the Amendment to the Little England Development Order dated
August 23, 1994 and recorded on September 9, 1994, in Official Records Book
1211, Page 17, and as amended by the Second Amendment thereto dated December 12,
1994 and recorded on January 27, 1995, in Official Records Book 1236, Page 1947,
both in the Public Records of Osceola County, Florida, as further amended from
time to time (herein the "Xentury City DRI Development Order"), or adjacent
lands in Orange County owned by Landlord or its Affiliates and developed and
operated as part of the Xentury City Development Project (and subjected to the
Declaration), and which meet the following criteria:
(i) They are owned by or are the responsibility of the Xentury City
CDD or the Xentury City Property Owners' Association as the "Association" under
the Declaration (the "Xentury City POA") or their successors; and
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(ii) Such items of infrastructure are commonly found in first class
resorts or first class mixed-use developments in the Central Florida area; or
such items of infrastructure or project administration are required by the
zoning and land use approvals applicable to all of the Xentury City Development
Project land such as the cost of a "Ride Share Coordinator" as required in the
Xentury City DRI Development Order.
So long as the Landlord or Landlord's Affiliates continue to have the power to
do so, Tenant shall be entitled to appoint or have approved or elected as the
case may be one member to each of the Board of Directors of the Xentury City POA
and the Board of Supervisors of the Xentury City CDD. Similarly, so long as the
Landlord or Landlord's Affiliates have the power to do so, Tenant shall be
entitled to contract with the Xentury City POA and/or Xentury City CDD for
Tenant to maintain Xentury City Development Project common areas and
improvements located within and immediately adjacent to the Demised Premises in
return for payment to Tenant by the Xentury City POA or Xentury City CDD, as
applicable, of the amounts which normally would otherwise be payable for such
maintenance, provided only that the Tenant fully and properly fulfills and has
fulfilled its obligations to so maintain Xentury City Development Project common
areas within or adjacent to the Demised Premises.
8. Insurance. (a) During the Term, the Tenant shall:
(i) keep the Buildings and the Furnishings, including all
alterations, changes, additions and replacements thereto, insured against loss
or damage caused by: (1) fire, windstorm and perils generally included under
extended coverage; (2) sprinkler leakage; (3) vandalism and malicious mischief;
and (4) boilers and machinery, all in an amount which reasonably assures there
will be sufficient proceeds to replace the Buildings (excluding excavation and
foundation costs and costs of underground tanks, conduits, pipes, pilings and
other similar underground items) and the Furnishings in the event of a loss
against which such insurance is issued. All insurance required hereunder, and
all other insurance maintained by the Tenant on the Buildings and the furnishing
in excess of or in addition to that required hereunder, shall include the
Tenant, as named insured (and shall name Landlord and the Tenant as loss payees
but may provide that any loss shall be adjusted only with the Tenant, subject to
the rights of any Permitted Leasehold Mortgagee, unless all or a portion of the
insurance proceeds on account of the loss are payable to Landlord pursuant to
the provisions of this Lease), and shall include: the interest of each Permitted
Leasehold Mortgagee and each Fee Mortgagee (as hereinafter defined), to then be
held for the benefit of the parties hereto and such mortgagees and applied as in
this Lease provided); and in the case of insurance on the Furnishings, the
interest of any person who is the holder of a security interest encumbering any
of the Furnishings or the lessor or title holder of any of the Furnishings, as
such person's interest may appear (in which event the loss to the extent of such
person's security interest on or other interests in the Furnishings will be
payable only to such person or the First Permitted Mortgagee). The Tenant and
the Landlord shall negotiate in good faith upon the request of Landlord at not
greater than three (3) year intervals (and in no event before three (3) years
after the Completion Date), to determine a mutually-acceptable insurance
purposes valuation of the Buildings and the Furnishings and adjust the amount of
the foregoing insurance, if necessary, to limits which will then satisfy the
requirements set forth above. Notwithstanding the provisions of the preceding
sentence, immediately after completion of any additional
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Tenant's Work (except non-structural repair work performed pursuant to the
provisions of Article 11 hereof), the Tenant and Landlord shall also negotiate
in good faith at Landlord's request, to determine a new insurance purposes
valuation of the Buildings and adjust the amount of the foregoing insurance, if
necessary, to limits which will then satisfy the requirements set forth above
(if for any reason the parties can't in good faith agree on an insurance
purposes valuation as provided for hereunder, or if Tenant's insurer requires an
appraisal to issue required insurance hereunder, then the Tenant shall obtain
and provide an acceptable appraisal within ninety (90) days after the request of
Landlord based upon a mutually-selected appraiser or if the parties can't agree
an appraiser the average of the two closest appraisal value under a 3-appraisal
whereby Landlord and Tenant each provide an appraisal and pay for a third
appraisal from an appraiser selected by the two appraisers selected by Landlord
and Tenant.
(ii) provide and keep in force general liability insurance
(including blanket contractual, commercial operations, broad form property
damage, Explosion, Collapse and Underground Hazard) and automobile insurance
against liability for personal injury, death or property damage having a
combined single limit of not less than Fifty Million Dollars ($50,000,000) with
respect to injuries or damages in any one occurrence or accident provided. Said
insurance, and any and all other liability insurance maintained by the Tenant in
excess of or in addition to that required hereunder, shall include protection
for, and shall name, Landlord [and, to the extent insurance providing protection
for the following is available, Landlord's managers and affiliates having an
insurable interest in or contractual or common law liability for activities at
the Land (herein collectively referred to as "Landlord's Affiliates")] as an
additional insured under said insurance, the effect of which will insure it
(and, if so available, them) in respect of any and all loss or liability
resulting from personal injury, death or property damage arising or occurring
upon, or in connection with, the Land, the Buildings, the Furnishings or
equipment (including, but not limited to, boilers and elevators) or by reason of
the operation of the Buildings or occupancy of the Demised Premises. All
applicable deductible, coverage and other specified dollar amounts established
under this Article 8, and the stated casualty proceeds deposit dollar figure in
the third line of Paragraph 9.(b) below, shall automatically increase every
three (3) years during the Term based upon increases in the Consumer Price Index
applicable to the Orlando, Florida area, and also at the end of each three (3)
years of the Term, upon Landlord's request, the Tenant shall review with
Landlord the limits of the said policy or policies and, at that time, shall
cause such liability limits to be adjusted if necessary in view of reasonable
exposure anticipated by Tenant in connection with operations at the Demised
Premises over the next ensuing three (3) years; provided, however, that in no
event shall such limits be adjusted lower than the limits stated above (without
taking into account any CPI-based increases for the most recent three-year
period.
(iii) provide and keep in force workers' compensation insurance
covering all persons employed in connection with the performance of work of any
nature in or about the Land, in a form prescribed by the laws of the State of
Florida, and employers' liability insurance in an amount of at least One Million
Dollars ($1,000,000).
(iv) provide and keep in force, prior to the commencement of, and
during, any construction on the Land, and as often as the Tenant may construct,
replace,
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reconstruct, restore or make a substantial alteration to, any improvement
thereon; property insurance in the so-called "All Risk Contract Form," on a
"completed value basis," in accordance with the requirements of this Article.
(v) Intentionally Omitted.
(vi) procure policies for all such insurance for periods of not
less than one (1) year and renewals thereof from time to time at least ten (10)
days prior to the expiration thereof; and
(vii) perform and satisfy the requirements of such insurance
carriers as the Tenant may from time to time select hereunder so that Tenant's
selected Qualifying Insurers shall at all times be willing to write and continue
such insurance.
(b) All insurance which the Tenant is required to provide under this
Lease shall be effected under valid, enforceable policies written, in form
reasonably acceptable to Landlord, by insurers of recognized responsibility,
which have been approved by Landlord, which approval shall not be unreasonably
withheld or delayed [insurers having a general policy holders rating of no less
than A/Category "X" or higher in Best's' rating guide (or equivalent if Best's
ratings are ever no longer available) shall be deemed to be "Qualifying
Insurers" not requiring Landlord's approval hereunder].
(c) All insurance which the Tenant is required to maintain under this
Lease shall, to the extent obtainable, contain clauses or endorsements to the
effect that:
(i) such insurance shall not be canceled without at least thirty
(30) days' prior written notice to Landlord, or modified in any way to
materially reduce the coverage afforded thereunder below the insurance required
hereunder without at least ten (10) days' prior written notice to Landlord;
(ii) Landlord shall not be liable for any premiums thereon or
subject to any assessments thereunder;
(iii) the coverage afforded thereby shall not be affected by any
work in or about the Buildings or the Land; and
(iv) the insurer waives its rights of subrogation except with
respect to workers' compensation insurance and any gross negligence of Landlord.
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(d) Nothing contained in this Article 8 shall prohibit the Tenant
from obtaining insurance of the nature and in the amounts provided for in this
Lease under a blanket policy or policies covering the Demised Premises and other
properties owned or operated by the Tenant, provided, however, that any such
blanket policy shall specify therein, or the Tenant shall furnish Landlord with
a written statement from the insurer or its agent specifying, the amount of the
total insurance allocated to the Demised Premises and the Buildings, the
Furnishings and the equipment thereon.
(e) The Tenant shall pay the premiums for all insurance policies
which the Tenant is obligated to carry under this Article and, at least five (5)
days prior to the date any such insurance must be in effect, deliver to Landlord
signed certificates thereof naming Landlord (and where applicable Landlord's
Affiliates having insurable interests as provided above) as insureds as required
by the provisions of this Article 8, specifying all coverages, exclusions and
endorsements, specifically stating whether the provisions required by paragraph
c. above have been obtained, and otherwise evidencing that all policies of
insurance required under this Lease (and where applicable all renewals thereof)
are in full force and effect. The Tenant shall also deliver to Landlord copies
of all policies, or certificates thereof, of insurance covering the Buildings
and the Furnishings and of all policies of liability insurance maintained by the
Tenant and providing coverage for the Project and the Tenant's activities
relevant thereto in excess of, or in addition to, the insurance required by this
Article.
(f) Any insurance maintained by the Tenant may have deductible
provisions, but the deductible amounts shall not exceed One Hundred Thousand
Dollars ($100,000) for each type of insurance unless the Tenant shall
demonstrate that it or its General Partners have adequate net worth to
reasonably support, and the Landlord shall have consented in writing to, a
higher deductible amount.
(g) Each party will cooperate with the other party in connection with
the collection of any insurance proceeds that may be payable in the event of
loss and execute and deliver to the insurers such proofs of loss and other
documents required for the recovery of any such insurance proceeds.
(h) Notwithstanding the provisions of this Article, Landlord has
approved the insurance, if any, specified on Exhibit D hereto as being in
compliance with the requirements of this Lease on the date hereof, but such
approval shall apply only to the Opryland Hotel - Florida Limited Partnership as
the initial GEC-related Tenant and any permitted successor Tenant which is
controlled by GEC and in which GEC has a significant direct or indirect
ownership interest.
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9. Casualty. (a) If, during the Term, the Buildings shall be destroyed or
damaged in whole or in part by fire or other cause, the Tenant shall give
Landlord immediate written notice thereof and, subject to the provisions of
paragraph (b) of this Article, shall repair, reconstruct or replace, in
accordance with the provisions of Article 2 hereof, the Buildings, or the
portion thereof so destroyed or damaged (whichever is reasonably required),
and/or restore the Furnishings (in compliance with Article 2 hereof), as nearly
as practicable to the function and character thereof existing immediately prior
to such occurrence and as necessary to maintain the Operating Standards. All the
work related to the repair, reconstruction and restoration of the Buildings
shall be started as soon as practicable and diligently completed, at the
Tenant's sole cost and expense (to which the insurance proceeds will be applied
as hereinafter provided), and paid for as promptly as the Tenant's exercise of
due diligence makes practicable. The Tenant shall, however, immediately take
such action as is necessary to assure that neither the Buildings nor the Land,
or any conditions thereat, constitutes a nuisance, otherwise presents a health
or safety hazard, such the work to be accomplished as the Tenant's sole cost and
expense (but the Tenant shall be reimbursed out of the insurance proceeds, such
right of reimbursement to survive the termination of this Lease). Subject to the
rights of a Permitted Leasehold Mortgagee, except as otherwise specifically
provided herein, insurance proceeds shall be paid to the Tenant to be
distributed to pay the cost of rebuilding the Project.
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(b) In the event of a casualty resulting in a loss payment for the
Buildings in an amount greater than three percent (3%) of the total insurable
value of the affected improvements (or $250,000 if larger), the proceeds of all
insurance policies maintained by the Tenant shall be deposited with the First
Permitted Leasehold Mortgagee [or if there be none, then (subject to paragraph e
of this Article) deposited in an escrow account in a bank approved by Landlord
and the Tenant or, failing mutual approval, in the Lending Institution having an
office in the City of Orlando which has the highest net worth of any Lending
Institution in such cities or in another federally-insured commercial bank
selected by Tenant with a greater net worth], and shall be used by the Tenant
for the repair, reconstruction or restoration of the Buildings and Furnishings.
Such proceeds shall be disbursed periodically pursuant to the terms of this
Lease by the First Permitted Leasehold Mortgagee or the escrowee, as the case
may be, upon certification of the architect or engineer having supervision of
the Work that such amounts are the amounts paid or payable for the repair,
reconstruction or restoration (subject to reasonable retentions if required
under the First Permitted Mortgage, as hereinafter defined). As a condition to
such disbursement, the Tenant shall, at the time of such deposit with the First
Permitted Leasehold Mortgagee or establishment of such escrow account, and from
time to time thereafter until said Work shall have been completed and paid for,
furnish Landlord and the First Permitted Leasehold Mortgagee with adequate
evidence that at all times the undisbursed portion of the funds, together with
any funds made available by the Tenant, is sufficient to pay for the repair,
reconstruction or restoration in its entirety. The Tenant shall obtain, and make
available to Landlord and the First Permitted Leasehold Mortgagee, receipted
bills and, upon completion of said Work, full and final waivers of lien. If the
First Permitted Leasehold Mortgagee elects to do any of the work due to any
failure by the Tenant to do so in a satisfactory manner, the First Permitted
Leasehold Mortgagee may use the proceeds to pay for such Work. If any funds
remain after said Work is fully paid for, the remaining funds will be paid over
to the Tenant (subject to the rights of the Permitted Leasehold Mortgagees in
the order of their priority). In the event of a casualty resulting in a loss
payment for the Building in an amount equal to, or less than, three percent (3%)
of the total coverage of all insurance applicable to a loss of such nature, the
proceeds shall be paid directly to the Tenant, unless otherwise provided by the
terms of the First Permitted Mortgage, and shall be applied towards repair,
reconstruction and restoration (and if any funds remain after said Work is fully
paid for, the remaining funds will be kept by the Tenant or the Permitted
Leasehold Mortgagees).
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(c) Notwithstanding (a) above, and subject to the rights of any
Permitted Leasehold Mortgagee, if, at any time during the last ten (10) years of
the Initial Term or any Extension Term then in effect, the Buildings shall be
destroyed or so damaged to an extent greater than the Applicable Percentage, as
defined below, of the full insurable value of the Convention Hotel, the Tenant
may (but only with the consent of all Permitted Leasehold Mortgagees) elect to
terminate this Lease by delivering written notice to that effect in recordable
form given to Landlord not later than sixty (60) days after the occurrence of
the casualty, whereupon this Lease shall cease and terminate as of the effective
date of such termination and the fee simple ownership of any and all interests
in the Land, Buildings, Furnishings and all other elements of the Convention
Hotel shall revert to and automatically vest in Landlord in accordance with the
provisions of Section 17 hereof, provided however, that such election shall not
be effective unless and until (i) all Permitted Leasehold Mortgagees and any
other entity having any claim to such insurance proceeds have released all
rights to all insurance proceeds; (ii) the Tenant shall pay or assign to
Landlord all net proceeds (after payment of any remaining principal amounts
scheduled as of the date of any such termination to be repaid to any Permitted
Leasehold Mortgagee for the balance of the then-current Term for borrowed funds
used to finance, or to refinance the unpaid principal balance of, the costs of
the construction of or capital improvements to the Buildings) received or
receivable under all policies of insurance covering the Buildings attributable
to the Landlord's interest in the Land; (iii) the Tenant shall pay to Landlord
all Rent and all other payments due from the Tenant with respect to the period
up to and including the effective date of termination; and (iv) if such damage
or destruction shall not have been covered by collectible insurance as a result
of the insurance deductibles and/or self-insurance maintained by Tenant or the
failure of the Tenant to maintain insurance in the limits required under this
Lease, the Tenant shall pay to Landlord an amount equal to such insurance
deductibles, self-insurance amounts and the excess of the amount of insurance
proceeds that would have been collectible in connection with such damage if the
Tenant had maintained insurance in accordance with the requirements of Article 8
over the amount of insurance proceeds, if any, actually collectible in
connection with such damage. If the Tenant does not elect to terminate this
Lease as aforesaid, the Term shall be extended as provided in paragraph (g) of
this Article 9, and the Tenant shall promptly comply with the provisions of
paragraph (a) of this Article 9. For purposes of the foregoing the term
"Applicable Percentage" shall mean and be defined as: (x) Fifty Percent (50%) or
more during the Tenth through Sixth Lease Years prior to the end of the
then-current Term, and (y) Ten Percent (10%) or more during or following the
Fifth Lease Year prior to the end of the Term.
(d) Nothing contained herein shall relieve the Tenant of its obligations
under this Article if the destruction or damage is not covered, either in whole
or in part, by insurance, or if the net insurance proceeds shall be insufficient
to pay the entire cost of the repair, restoration or replacement; and the
Tenant's liability under this Article shall survive any termination of this
Lease other than a termination pursuant to paragraph c. of this Article.
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(e) Notwithstanding anything to the contrary contained in this Article,
if at any time there is no Permitted Mortgage in existence, then during such
time the First Fee Mortgagee shall be entitled to exercise the rights granted in
this Article to the First Permitted Leasehold Mortgagee, provided that the First
Fee Mortgagee is any commercial, national or savings bank, savings and loan
association, trust company, insurance company or any other national or
established international lender-mortgagee (such as an eleemosynary institution
or foundation, publicly held corporation or its pension funds, real estate
investment trust, pension fund or the like), that such Fee Mortgagee shall have
agreed in writing to make any proceeds received by it available for the purposes
and in the manner provided in this Article, and that such Fee Mortgagee shall in
fact apply such proceeds in the manner set forth in this Article. It is
understood that any entity meeting the foregoing requirements of this paragraph
e. which makes or holds a mortgage in the capacity of agent or trustee for one
or more parties who have interests in the mortgage, regardless of whether or not
such parties themselves meet such requirements, shall also be entitled to
exercise said rights of a Permitted Leasehold Mortgagee in the circumstances
contemplated by this paragraph e.
(f) Any provision of this Lease (including, without limitation, those
contained in this Article and in Article 20) to the contrary notwithstanding, if
this Lease is terminated by reason of the occurrence of an Event of Default,
unless a Permitted Leasehold Mortgagee complies with the restoration obligations
of the Tenant under this Article and Article 20 of this Lease or the
corresponding provisions of any Novation Ground Lease granted pursuant to
Article 16 hereof (other than any obligations to perform emergency repairs), all
net insurance proceeds and/or condemnation awards (after payment of the
principal amounts scheduled as of the date of any such termination to be repaid
to any Permitted Leasehold Mortgagee for the balance of the current Term for
borrowed funds used to finance or refinance the construction of or capital
improvements to the Buildings) shall be turned over to Landlord, on demand, for
application to restoration of the Buildings or as Landlord otherwise directs.
(g) In the event of the occurrence of (i) a taking by eminent domain of
a portion of the Buildings (as hereinafter defined) and/or the Land, if this
Lease is not terminated pursuant to the provisions of Article 20, or (ii) a fire
or other casualty, if this Lease has not been terminated pursuant to this
Article 9, then and in either such event the Term shall be extended for a number
of days equal to the cumulative number of days that each hotel guest room was
unavailable due to time spent for restoration, building or repairing of the
Buildings divided by the total number of hotel guest rooms in the Convention
Hotel as of the date of the taking or casualty, but the operation of this
sentence shall in no event extend the Term for a cumulative period in excess of
five (5) years; when such restoration, rebuilding or repairing is completed, the
parties shall execute, in recordable form, a certificate stating the expiration
date of the Term as extended pursuant to this paragraph.
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10. Alterations. (a) The Tenant may, at any time or times during the Term,
at its own cost and expense, make alterations, changes and additions to the
Buildings without Landlord's consent provided that:
(i) the same shall not weaken or impair the structural strength of
the Buildings, materially impair the use of any of the service or other
facilities, or fundamentally affect the character or suitability of the
Buildings for first class destination hotel and convention center purposes
consistent with the Operating Standards;
(ii) no structural or substantial portion of the Buildings shall be
demolished or removed unless replaced with functionally equivalent improvements
(either as new construction or within other existing Convention Hotel
improvements) of equal or greater quality consistent with the Operating Standard
and the number of hotel guest rooms and amount of convention and meeting space
shall not be reduced in any way which reasonably could be anticipated to
materially and adversely affect the overall value of and revenue to be generated
from and by the Convention Hotel; and
(iii) to the extent the cost of any such repair or replacement is
estimated to exceed One Million Five Hundred Thousand and No/100 Dollars
($1,500,000), the Tenant shall provide the Landlord with copies of plans and
specifications for such work (provided however that this provision shall not be
construed to require Tenant to generate or obtain any such plans or
specifications which are not required by law or which Tenant otherwise
reasonably determines not to be necessary) and copies of all applicable
governmental permits and approvals if not otherwise previously provided pursuant
to the terms of this Lease.
(b) Except as permitted under Section 9(a) above, the Tenant shall not
have the right to make any other material structural alterations to the
Buildings, or material alterations to the Land, without the Landlord's prior
written consent, which shall not unreasonably be withheld, conditioned or
delayed.
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11. Repairs; Maintenance. (a) The Tenant shall, at all times during the
Term and at its own cost and expense (whether or not insurance proceeds are
available for such purpose), keep and maintain the Buildings in good repair and
in safe order and condition, shall make all repairs thereto, both inside and
outside, structural and non-structural, extraordinary and ordinary, howsoever
the necessity or desirability for repairs may occur, as necessary for the normal
operation of the Project as a first class destination hotel and convention
center consistent with the Operating Standards, and shall not commit, suffer or
knowingly permit waste or injury to the Buildings or the Land. The Tenant shall
also, at its own cost and expense, keep and maintain in good repair the
sidewalks on, or immediately adjacent to, the Land. The Tenant shall also, at
its own cost and expense, keep, replace and maintain the Furnishings in good
repair and in safe order and condition, howsoever the necessity or desirability
for repairs may occur, as necessary for the normal operation of the Project as a
first class destination hotel and convention center consistent with the
Operating Standards. The Tenant may at any time and from time to time remove and
dispose of any of the Furnishings which have become obsolete or unfit for use or
which are no longer useful in the operation of the hotel business conducted by
the Tenant on the Land; provided, however, that the Furnishings so disposed of
shall be promptly replaced with other Furnishings not necessarily of the same
character, but of at least equal usefulness and quality as, those disposed of,
and in any event in accordance with, and in compliance with the Operating
Standards. Landlord shall not be required to make any alterations,
reconstructions, replacements, changes, additions, improvements or repairs
during the Term.
(b) Nothing contained in the foregoing paragraph shall be deemed to
require the Tenant to make repairs to the Buildings or the Furnishings as a
result of ordinary wear and tear so long as the same are maintained at all times
in a manner consistent with operation of a first class destination hotel and
convention center and in accordance with the Operating Standards, taking into
account the age of the Convention Hotel (i.e., the Convention Hotel needn't
always be maintained in an "as new" condition).
(c) The Tenant shall at all times maintain the Buildings, including the
grounds and the landscaping, in a manner consistent with operation of a first
class destination hotel and convention center consistent with the Operating
Standards, and shall have no exterior signage in any Public Area except that
which (i) is shown in the approved Plans, (ii) is permitted by applicable law
and otherwise approved by Landlord, which approval shall not be unreasonably
withheld or delayed.
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(d) In consideration of Tenant's obligation to properly maintain the
Convention Hotel at all times throughout the Term in accordance and consistent
with the Operating Standards and the provisions of this Article 11, and to
re-deliver possession of the Demised Premises and deliver possession of the
Improvements and Furnishings to Landlord in accordance with the requirements of
Article 17 hereof upon expiration of the Term or any earlier termination hereof
(the "End of Term"), the Landlord agrees to pay to the Tenant an amount equal to
the net book value as of the End of Term, as determined below, of all Applicable
Capital Expenditures (the "Term-end Payment"). The Term-end Payment shall be the
sum of (A) the lesser of (x) the sum of all Applicable Capital Expenditures
(defined as the sum of all Maintenance Capital Expenditures and all Approved
Capital Expenditures), less Accumulated Depreciation in respect thereof (and
proper write-offs for obsolete or replaced assets), for the final ten (10) years
of the Term, or (y) eight percent (8%) of the Fair Market Value of the
Convention Hotel including the Furnishings (exclusive of any value attributable
to the Land or the Demised Premises or to lease rights under this Lease which
are expiring) as of the End of Term, plus (B) the Buyout Price of any Additional
Assets under Paragraph 17(e) below. Such Term-end Payment shall be determined
and payable in accordance with the following terms and conditions:
(i) During the eleventh (11th) year before the scheduled end of the
then-current Term, the Landlord and the Tenant will negotiate in good faith in
order to establish (A) the ten-year weighted average, during the immediately
preceding ten (10) Hotel Years (the "Lookback Period"), of the percentage ratio
that the amount of all "Capital Expenditures for Maintenance Purposes" [defined
herein as capital expenditures for ongoing maintenance, repair and replacement
of capital assets within the Convention Hotel, including both Improvements and
Furnishings, with a useful life of no less than three (3) years] during the
Lookback Period (excluding amounts expended during the Lookback Period for
"deferred maintenance" which is maintenance to correct any condition of
non-compliance with Articles 11 or 14 hereof as of the beginning of the Lookback
Period, and including only a 10-year portion on a straight-line amortization
basis of capital expenditures with a useful life in excess of 10 years) bears to
total Gross Revenues for the Lookback Period (the "Cap-ex Percentage"); and (B)
a related depreciation schedule (the "Depreciation Schedule") based upon the
useful life [under generally accepted accounting principles approved by the
AICPA or future equivalent ("GAAP")] of the Capital Expenditures for Maintenance
Purposes during such Lookback Period. If the Landlord and the Tenant cannot
agree on a reasonable Cap-ex Percentage and Depreciation Schedule by the end of
the 11th year before the End of Term, or in the event that there is a dispute
regarding the determination of Accumulated Depreciation or proper write-offs, a
Qualified Accounting Arbiter (defined as a Big Five Accounting Firm approved by
the AICPA or future equivalent) will determine the Cap-ex Percentage and
Depreciation Schedule, and settle such disputes as necessary.
(ii) "Maintenance Capital Expenditures" for purposes hereof shall
equal the lesser of (A) the total cumulative sum of all Capital Expenditures for
Maintenance Purposes, as expended in Tenant's sole discretion in order to comply
with applicable provisions of this Lease or otherwise, during the last ten (10)
years of the Term ending on the End of Term ("Final Lease Decade") (in which
event Accumulated Depreciation in respect thereof shall be based upon actual
depreciation allowances in accordance with GAAP), or (B)
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the cumulative sum of the Cap-ex Percentage of Gross Rents for each year of the
Final Lease Decade (in which event Accumulated Depreciation in respect thereof
shall be based upon the Depreciation Schedule).
(iii) "Approved Capital Expenditures" shall include and be defined
as the sum of (A) the amount of any Capital Expenditures for Maintenance
Purposes which Tenant is required by the terms of this Lease to make for the
Improvements or Furnishings during the Final Lease Decade as a result of a major
failure significantly prior to the reasonably anticipated useful life of any
capital asset or reasonable unanticipated casualty not required to be covered by
insurance hereunder, or as a result of a change in applicable laws during the
Final Lease Decade requiring Tenant to make new capital improvements or
alterations to the Improvements, all as approved by Landlord which approval
shall not be unreasonably withheld, to the extent that the amount thereof would
cause the cumulative sum to date of all Capital Expenditures for Maintenance
Purposes during the Final Lease Decade to exceed the cumulative sum of the
Cap-ex Percentage of Gross Revenues for such period, and (B) amounts expended by
Tenant for any type of extraordinary capital improvement expenditure with a
useful life of no less than three (3) years and as approved in writing in
advance by the Landlord, which approval may be withheld by Landlord in its sole
discretion (provided that Landlord's right to withhold Landlord's consent
consistent with the foregoing shall not preclude Tenant from making capital
improvements consistent with other provisions of this Lease, but such capital
expenditures shall not be deemed to be a part of the Applicable Capital
Expenditures used for calculating the Term-end Payment hereunder).
(iv) The foregoing and all calculations under this Paragraph 11(d)
shall be based upon GAAP and other applicable financial accounting standards
approved by the AICPA or future equivalent, as the same may be modified from
time to time generally consistent with current interpretation and construction
of such terms and concepts. Throughout the Final Lease Decade the Tenant shall
provide to Landlord on at least an annual basis a separate report with all
supporting data and calculations in reasonable detail setting forth all capital
expenditures and related depreciation and other information relating to the
Term-end Payment as may reasonably be requested by Landlord.
(v) The Fair Market Value of the Convention Hotel will be determined
at the End of Term based upon a valuation completed by an independent Qualified
Appraiser acceptable to both parties.
(vi) If the Landlord and Tenant can not agree on acceptable
independent Qualified Accounting Arbiter or Qualified Appraiser, the reasonable
costs of whom shall be paid one-half by each party, then the amounts and
information to be determined thereby shall be determined under a multiple
Arbiter/Appraiser method whereby each party shall have the right to select (and
pay all costs of) a qualified Arbiter/Appraiser who in turn selects a third
Arbiter/Appraiser (paid one-half by each party) and the final determination of
any relevant item shall be based upon the average of the determination of the
closest two out of the three Arbiter/Appraisers.
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(vii) The Landlord and Tenant shall negotiate in good faith in
order to agree upon a mutually-satisfactory mechanism for payment of the
Term-end Payment, which may be paid at Landlord's election as a reduction of or
credit against Rent payable by Tenant hereunder, or simultaneously with the End
of Term and subject to offsets for any sum payable by Tenant to Landlord
hereunder, and if no agreement can be reached then the Term-end Payment shall be
due in cash at the End of Term.
12. Assignment and Transfer; Leasing. (a) Subject to the consent and other
rights of Landlord specifically provided for in this Section 12 of this Lease,
the Tenant shall have the right to sell, assign or otherwise transfer the
Demised Premises, any other interests in the Project, and any rights or interest
which the Tenant may have under this Lease, or sublease the Demised Premises or
any interest therein or any other interest which it has in the Project or any
part thereof, or otherwise permit the use thereof by any other entity.
(b) If the Tenant or any successor to the Tenant hereunder is a
corporation that is neither a Lending Institution or a corporation (or a
wholly-owned consolidated reporting subsidiary thereof) whose shares are traded
on a national securities exchange, or if a corporation that is neither a Lending
Institution or a corporation (or a wholly-owned consolidated reporting
subsidiary thereof) whose shares are traded on a national securities exchange is
a general partner of the Tenant or any such successor, then a sale, assignment,
transfer, exchange or other disposition of the stock in such corporation which
results in a change of control, or a merger, consolidation or other combination
of such corporation with another entity which results in a change of control,
shall be deemed an assignment hereunder, it being the specific intent of the
parties hereto that the sale, assignment, transfer, exchange or other
disposition of the stock in a corporation that is either a Lending Institution
or a corporation (or a wholly-owned consolidated reporting subsidiary thereof)
whose shares are traded on a national securities exchange, shall not be an
assignment subject to the provisions of this Section 12 and shall not require
the consent of the Landlord. If the Tenant or its permitted successor hereunder
is a general or limited partnership, then the sale, assignment, transfer,
exchange or other disposition of a general partner's interest or the
substitution of a general partner (or the addition of a general partner which
will be treated as a general partner for the purposes of this Article 12),
except for the addition of a general partner under circumstances where OHI or
another wholly-owned subsidiary of GEC remains a general partner of the Tenant,
shall be deemed an assignment hereunder, it being the specific intent of the
parties hereto that the sale, assignment, transfer, exchange or other
disposition of a general partner's interest or the substitution of a general
partner (or the addition of a general partner which will be treated as a general
partner for the purposes of this Article 12), except for the addition of a
general partner under circumstances where OHI or another wholly-owned subsidiary
of GEC no longer remains a general partner of the Tenant, shall not be an
assignment subject to the provisions of this Section 12 and shall not require
the consent of the Landlord. For purposes of this Lease, a joint venture shall
be deemed to be a partnership and a joint venturer a partner.
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(c) Notwithstanding any other provision of this Article to the
contrary, and provided that the Xentury City CDD accepts any assignment of
interests of the Tenant in relevant portions of the Demised Premises and the
Convention Hotel pursuant to the CDD Project Agreement subject to the terms and
obligations of the Tenant under this Lease, the Hotel Development Agreement and
all ongoing related agreements relating to the Landlordship and operation of the
Convention Hotel (collectively, the "Related Agreements"), the sale of the CDD
Project to the Xentury City CDD pursuant to the CDD Project Agreement shall not
require the consent or approval of Landlord, and the Landlord shall enter into
such agreements as are reasonably required by the Tenant and/or the Xentury City
CDD to protect its ownership interests in the CDD Improvements subject to and
consistent with the terms of this Lease.
(d) Notwithstanding any other provision of this Article to the
contrary, and provided, as to a transfer described in clauses (i), (ii), (iii),
(iv) and (v) below, that the assignee or transferee of Tenant's interest in this
Lease has agreed, in writing in recordable form consistent in all material
respects with the form of Assignment and Assumption of Lease set forth in
Exhibit E attached hereto and by this reference made a part hereof and delivered
to Landlord promptly after execution thereof (herein a "Conforming Assignment
Document"), to be bound by all the terms and conditions of this Lease and to
accept all the duties and obligations of the Tenant under this Lease and under
the Land Development Agreement and Hotel Development Agreement if then still in
effect (collectively, the "Related Agreements"), none of the following events
shall require the consent or approval of Landlord:
(i) a sale, assignment, transfer, exchange or other disposition of
this Lease (A) to a general partner in Tenant which is a wholly-owned (whether
directly or indirectly) and controlled subsidiary of GEC, or (B) to a limited
partnership having as its sole general partner either (x) a wholly-owned
(whether directly or indirectly) and controlled subsidiary of GEC, or (y) a
limited partnership in which a wholly owned and controlled subsidiary of GEC is
the sole general partner, or (C) to a general partnership having as its sole
general partners an entity described in clauses (A) and (B) above and a Lending
Institution, or its wholly-owned and controlled designee, that has a net worth
at least equal to Fifty Percent (50%) of the then-current market value of the
Convention Hotel exclusive of the value of the Land (hereinafter called the "Net
Worth Test");
(ii) a judicial sale of this Lease in a proceeding to foreclose a
Permitted Leasehold Mortgage;
(iii) an assignment in lieu of foreclosure of a Permitted Leasehold
Mortgage to the holder of such mortgage or a nominee controlled by such holder;
(iv) a sale, assignment, transfer, exchange or other disposition of
this Lease to a Lending Institution that meets the Net Worth Test and a
simultaneous sublease of the Demised Premises by such Lending Institution to its
assignor or to any entity described in clauses (A), (B), or (C) of subparagraph
12.(d)(i) above if such sub-lessee provides an appropriate attornment agreement
in favor of Landlord agreeing to attorn to Landlord under
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this Lease if the sub-lease is terminated for any reason and containing
provisions comparable to the provisions of this Article 12 limiting assignment
rights under the sub-lease;
(v) Provided that no Event of Default (as hereinafter defined)
shall have occurred and be continuing, any assignment or transfer following the
Stabilization Date including, without limitation: (A) an assignment or transfer
of all of the Tenant-assignor's (and all successors and assigns thereof)
leasehold and other ownership interests in the Demised Premises and balance of
the Project, (B) an assignment or transfer of any ownership interest in Tenant
(or the successors or assigns thereof) including any transfer or substitution of
any general partnership or limited partnership interest, any membership interest
to the extent the Tenant is a limited liability company, or any transfer or
assignment by whatever means of any stock of any corporation which is an owner
of an interest in the Tenant, or (C) any other transfer or assignment of any
interest in the Lease, the Project or any ownership interest in the Tenant (or
the successors and assigns thereof), it being the intent of the parties that
(subject to and without limiting applicable provisions of Article 16) following
the Stabilization Date any and all transfers or assignments of any interests in
the Lease, the Project or the Tenant, provided no Event of Default exists and is
continuing, shall not require the consent or approval of the Landlord, subject
to the assignee executing a Conforming Assignment Document;
(vi) a sale, assignment, transfer, exchange or other disposition of
any general partnership interest in Tenant or in a general partner in Tenant if
such sale, assignment, transfer, exchange or other disposition is to a Lending
Institution that meets the Net Worth Test, to such partnership itself or to
another general partner in Tenant or general partner in a general partner in
Tenant;
(vii) a sale, assignment, transfer, exchange or other disposition
of any limited partnership interest in Tenant or any partner in Tenant; or
(viii) a sale, assignment, transfer, exchange or other disposition
of the stock of any corporation which is a general partner in Tenant or which is
a general partner in such general partner if another general partner in Tenant
or in a partnership which is a general partner in Tenant shall own, in the
aggregate, at least fifty percent (50%) of the voting stock in such corporation
after such sale, assignment, transfer, exchange or other disposition.
(e) Prior to the Stabilization Date, the Tenant may not, without the
prior written consent of Landlord, otherwise sell, assign or otherwise transfer
the Demised Premises, or any other interests therein or in the Project, in whole
or in part, or any rights or interest which the Tenant may have under this
Lease, or sublease the Demised Premises or the Buildings or any portion thereof
or any other interest which it has in the Project or any part thereof, or
otherwise permit the use thereof by any other entity, which written consent
shall not be unreasonably withheld, conditioned or delayed, provided that:
(i) No Event of Default (as hereinafter defined) shall be
continuing;
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(ii) The proposed assignee or at least one of its principal or
controlling parties possesses hotel management ability and experience necessary
to maintain the Operating Standard or the proposed assignee has provided for the
management of the Convention Hotel by a third party who possesses such ability
and experience provided, however, that any such contract for the management of
the Convention Hotel which is in effect at the time of the occurrence of any
such transfer or assignment shall be deemed to meet the requirements of this
subparagraph, provided however that the provisions of this subparagraph and any
permitted transfer shall not waive any rights of Landlord to claim a default for
failure of any such Hotel Management Agreement to satisfy the requirements of
Paragraph 14.(b) of this Lease;
(iii) The proposed assignee (or at least one of the parties
involved in the proposed assignee and which will have direct or indirect
recourse liability under the Conforming Assignment Document) meets the Net Worth
Test, or otherwise has adequate financial responsibility to discharge all of the
obligations on its part to be performed hereunder as and when the same fall due
(taking into account the income generated, and reasonably anticipated to be
generated, by hotel operations in the Buildings and on the Land);
(iv) The proposed assignee has entered into a Conforming Assignment
Document;
(v) The proposed assignee has agreed in writing to assume
unconditionally any obligations of the Tenant as assignor hereunder arising
prior to the effective date of such assignment under the Conforming Assignment
Document; and
(vi) The proposed assignee has agreed to execute any and all
documents reasonably required by Landlord in connection with said assignment
provided such documents do not change the rights, liabilities or obligations of
the parties.
The consent of Landlord to an assignment, conveyance, transfer or lease shall in
no event be construed to relieve the Tenant or such assignee, grantee or tenant
from the obligation of obtaining the express consent in writing of Landlord to
any further assignment, conveyance, transfer or lease to the extent required by
this Lease. Any assignment, transfer or lease in violation of this Article shall
be voidable at Landlord's option.
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(f) Any provision of this Lease to the contrary notwithstanding (but
subject to all terms and conditions Article 16 hereof), no consent by Landlord
to an assignment (nor any transfer or Tenant's interest in this Lease pursuant
to this Article or otherwise, whether or not such transfer is deemed an
assignment) shall operate to release the Tenant or any successor assignor from
its obligations hereunder. Notwithstanding the foregoing, however, in the event
of an assignment for which Landlord's consent is obtained under Paragraph 12.(e)
above, or an assignment permitted without Landlord's consent under
sub-paragraphs (iv) or (v) of Paragraph 12.(d)(i) above [other than a partial
assignment only under clause (C) of said sub-paragraph (v) of Paragraph
12.(d)(i) of less than all of Tenant's interests under this Lease and in the
Improvements and Furnishings], and the assignee, in writing, unconditionally
assumes the same under a Conforming Assignment Document as required above, then
and in such event the Tenant-assignor shall automatically be released from any
obligations hereunder arising after the effective date of such assignment and
assumption. Upon Tenant's written request, Landlord shall provide Tenant with
confirmation of any release of Tenant pursuant to the terms of this paragraph
12(f) provided that such written confirmation shall not be required to
effectuate such release which shall be deemed to be automatic.
(g) Except as otherwise permitted under this Article, (i) all
assignments of this Lease (but not of ownership interests in Tenant) must
include the entire interest of the Tenant in, under and to the Demised Premises,
the Land, the Buildings, the Furnishings, this Lease and the Related Agreements,
and no transfer of the Tenant's interest in the Demised Premises and/or the
Buildings shall be made unless the entity receiving such transfer also receives
assignment of and accepts all terms and conditions of and assumes all
obligations under this Lease, and (ii) no assignment, whether or not the same
shall require the consent of Landlord, shall be effective unless and until a
fully executed copy of the instrument effecting the assignment setting forth the
assignee's acceptance and assumption of all of the terms and conditions of and
the Tenant's obligations under this Lease and the Related Agreements arising
from and after the date of such assignment has been delivered to Landlord.
(h) The prohibitions against assignment contained in this Article shall
apply with equal force to any purported assignment by operation of law.
(i) If this Lease is assigned, Landlord may collect rent from the
assignee. Collection of rent from a purported assignee to whom an attempt has
been made to improperly assign this Lease shall not constitute a recognition of
such assignee by Landlord nor a waiver of any of Landlord's right to proceed
against Tenant and/or such purported assignee.
(j) The Tenant shall have the right, without the prior approval or
consent of Landlord, to sublease restaurant or similar space in the Buildings,
or to grant concessions, for beauty or barber shops, airline ticketing,
automobile rental, newsstands, gift shops, apparel shops, arcades, valet parking
or any other commercial or retail activities found in first class convention
hotels, as the Tenant deems appropriate for operation of the Project. The Tenant
agrees that each sublease and concession agreement shall:
(i) require the subtenant or concessionaire to maintain adequate
books and records including reasonably detailed information on gross revenues
and to submit
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the same for inspection and audit by the Tenant and Tenant's authorized
designees and require the subtenant or concessionaire to comply with all laws,
ordinances and regulations of any governmental authority having jurisdiction
over the Buildings and any other rules and regulations of any nature to which
the Tenant is or shall be subject by virtue of this Lease or which otherwise
affects the Demised Premises and the Buildings;
(ii) provide that, in the event of the termination of this Lease,
the subtenant or concessionaire shall, if required by Landlord, attorn to and
pay rents and all other charges directly to Landlord, but that if Landlord does
not so require, then such lease or concession agreement shall be subject to
termination upon thirty (30) days written notice following any termination of
this Lease; and
(iii) obligate the subtenant or concessionaire not to violate any
term, covenant or restriction applicable to the Tenant which is contained in
this Lease, and the Tenant shall, in all events, use its best efforts to require
the faithful performance by subtenants and concessionaires of obligations
imposed by the sublease and concession agreement (specifically including but not
limited to, those set forth in this paragraph).
(k) The Tenant covenants that it will perform and observe all the
terms, covenants, conditions and agreements required to be performed and
observed by it under each sublease, unless such performance shall have been
expressly waived by the subtenant thereunder, to the effect that all things
shall be done by the Tenant which are necessary to keep unimpaired the Tenant's
rights as lessor under each sublease.
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(l) As security for the payment of all Rent and other amounts payable
to Landlord hereunder, the Tenant hereby assigns all subleases, licenses and
concessions to Landlord subject, however, to the rights of any Permitted
Leasehold Mortgagee while this Lease (or any substitute lease granted pursuant
to Article 16 hereof) remains in effect. In the event of the termination of this
Lease, the Tenant shall, on demand, assign, transfer and pay over to Landlord
all security deposits under all or such of the subleases, licenses and
concessions as Landlord may designate.
(m) If for any reason this Lease is terminated by summary proceedings,
such termination shall not result in a termination of any sublease or concession
agreement that was specifically approved by Landlord (with an original term of
three (3) years or more) (herein called an "Approved Sublease"}, and all such
Approved Subleases shall continue for the duration of their respective terms and
any extensions thereof as direct leases between Landlord hereunder and the
subtenant or concessionaire thereunder with the same force and effect as if
Landlord hereunder had originally entered into such sublease or concession
agreement as Landlord thereunder (subject, however, to the right of a Permitted
Leasehold Mortgagee under a Novation Ground Lease granted pursuant to the
provisions of Article 16 below). Provided they are not in default under their
respective Approved Subleases beyond any applicable grace periods provided for
in their respective Approved Subleases, any subtenants or concessionaires under
Approved Subleases shall not be named or joined in any action or proceeding by
Landlord under this Lease to recover possession of the Demised Premises or for
any other relief. Landlord shall, upon request of Tenant, prepare, execute,
acknowledge and deliver agreements evidencing and agreeing to the foregoing
provisions of this paragraph, provided that Tenant shall pay the reasonable
legal fees and disbursements of Landlord's counsel in connection therewith.
13. Landlord's Right to Inspect. Landlord and its agents shall have the
right to enter upon the Demised Premises and into the Buildings at reasonable
times for and for reasonable periods of time, after reasonable advance notice to
the Hotel General Manager, all as appropriate under the circumstances, to
inspect the operation, maintenance and use of the same, and to assure itself
that the Tenant is in full compliance with its obligations under this Lease (but
Landlord shall not thereby assume any responsibility for the performance of any
of the Tenant's obligations hereunder, nor any liability arising from the
improper performance thereof) if but only if:
(a) there is notice of any material violation of a governmental
requirement relating to the condition or operation of the Convention Hotel;
(b) there is any physical condition at the Convention Hotel which poses
a threat of imminent harm to the Convention Hotel or material reduction of Gross
Revenues; or
(c) there exists an uncured monetary Event of Default hereunder or any
other uncured material non-monetary Event of Default which involves the
condition or operation of the Convention Hotel.
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In the event of any bona fide dispute or uncertainty regarding the existence of
conditions requiring Tenant to permit Landlord to inspect as provided hereunder,
the Landlord is entitled to immediately seek under arbitration in accordance
with Section 49 below, and the arbitrator or arbitrators shall order on an
expedited basis the right for Landlord to make such inspections as are
reasonably necessary to determine the status of any such disputed conditions.
Landlord and its agents and consultants also shall be allowed to enter and view
public areas in the Convention Hotel as permitted by Tenant to members of the
public. For any inspection by Landlord as provided for hereunder the Tenant
shall make available an employee of the Tenant or of the hotel operator to
escort Landlord's representatives on any inspection of applicable areas in the
Convention Hotel, and Landlord shall not interrupt or interfere with the conduct
of the Tenant's business in any material way.
14. Operating Standards. (a) The parties agree and acknowledge, and it is a
consideration for entering into this Lease, that the Land is in the Xentury City
Development Project and that the guests of the Convention Hotel will reasonably
expect, because of the nature of the Convention Hotel as planned by the Tenant
and approved by Landlord, that the services provided at the Convention Hotel,
and the manner of providing such services, will be of a high standard consistent
with the Benchmark Hotel; that it is in the best interests of all concerned that
the guests of the Convention Hotel be provided with services of a high standard
consistent with the Benchmark Hotel; and that the Tenant will be held to a high
standard consistent with the Benchmark Hotel in affording such services.
Accordingly, throughout the Term, the Tenant will maintain the appearance and
quality of the Buildings, the Demised Premises and the Furnishings (subject to
permissible ordinary wear and tear as referenced below), and will conduct the
operation and management of the Buildings and the hotel business to be carried
on therein (including, without limitation, as to matters of maintenance, repair,
safety, sanitation, guest service and transportation service provided by or
through the Tenant), or cause the same to be managed and operated, as to all
items and services supplied to hotel guests or forming part of their hotel
experience, and all aspects of operation and management, so as to attain and
maintain a standard (herein referred to as the "Operating Standard" or
"Operating Standards") consistent with the operation of a first class
destination hotel and convention center equivalent, on the whole, with the
standards as are in effect as of the date hereof for the Benchmark Hotel, as the
same may reasonably be modified by the owner of the Benchmark Hotel from time to
time consistent with the current overall quality and standards thereof. The
Operating Standards shall permit and be subject to "ordinary wear and tear," but
only consistent with the level of ordinary wear and tear existing at the
Benchmark Hotel after consideration of the updating, replacement and renovation
activities and standards of the Benchmark Hotel. If for any reason the Benchmark
Hotel is no longer operated consistent with its current standards then either
the Landlord or the Tenant shall have the right to designate, with the written
approval of the other party (which approval shall not unreasonably be withheld),
a suitable replacement Benchmark Hotel for purposes hereof.
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(b) To assure that the Operating Standards are met by the Tenant, the
operation and management of the Buildings and the hotel business conducted
therein shall at all times during the Term be under the direct supervision of
either (i) GEC or one of its wholly-owned subsidiaries, (ii) a nationally
recognized hotel chain having a well-established reputation as a quality
convention hotelier or other entity approved by Landlord (which approval shall
not be unreasonably withheld, conditioned or delayed), or (iii) any other
manager selected by Tenant in the exercise of Tenant's business judgement as
qualified to serve as a quality convention hotelier for a facility such as the
Convention Hotel. Each and every Hotel Management Agreement shall specifically
incorporate the Operating Standards and shall provide (i) that the rights and
obligations of the Tenant under such Hotel Management Agreement shall be
expressly assumable by Landlord and that if the Operating Standards are not met
and the operator fails to cure any such default within a reasonable period, then
the Tenant shall have the right to terminate the Hotel Management Agreement. In
the event that any operator fails to meet any of the Operating Standards, the
Tenant shall, promptly after it becomes aware of such failure (either by notice
from Landlord or otherwise), so notify such operator and Landlord. In the event
of the termination of any Hotel Management Agreement shall use diligent efforts
to seek a substitute operator as expeditiously as possible. Until any such
substitute operator assumes the duties of any defaulting operator, the Tenant
shall use its best efforts to enforce the provisions of the Hotel Management
Agreement against the defaulting operator, and/or to cure any defaults of the
operator which the Tenant is capable of curing, so as to assure, to the extent
possible, compliance with the Operating Standards. Each Hotel Management
Agreement shall contain a covenant requiring management and operation of the
Project in a manner consistent with a first class destination hotel and
convention center.
(c) Without limiting the generality of the foregoing, the Tenant shall,
at its own cost and expense, procure and install and keep and maintain in the
Buildings all furniture and furnishings including, without limitation, all
prefabricated fixtures and operating equipment for all lobbies, dining rooms,
kitchens, laundries, halls, pantries, toilets, foyers, corridors and other
public rooms and places, and for the parlors, suites, dressing rooms, bedrooms,
baths and other private rooms, and for all workshops, storerooms and offices in
the Buildings necessary and proper for the complete and comfortable use,
enjoyment, occupancy and operation of a first class Convention Hotel of a
quality consistent with the Benchmark Hotel (all of said article and items, as
well as all additions thereto and replacements and renewals thereof, other than
articles and items owned by subtenants, concessionaires, contractors, agents,
employees and customers, are hereinafter collectively referred to as the
"Furnishings"), together with an adequate stock and inventory of food, beverages
and other consumable supplies.
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(d) Consistent with and in consideration of the foregoing, the Landlord
hereby agrees with and in favor of the Tenant that the Xentury City Development
Project shall be developed in the first instance as a first-class mixed-use
project focused on hotel and/or timeshare and other tourist commercial,
upper-grade office and related uses (potentially including appropriate
residential uses) which are compatible with the development and operation of the
Convention Hotel as contemplated under the Operating Standards, under a
consistent design review standard which will allow the Xentury City POA to
regulate building and site design in order to prevent development of an
undesirable type or quality which would negatively impact the Convention Hotel.
This standard is not intended to eliminate potentially competing uses or require
particular use types which might benefit the Convention Hotel, but instead is
intended to support site, building and landscaping design which will be
consistent with the first-class standard to be maintained by the Convention
Hotel and Xentury City Development Project and avoid incompatible uses within
areas of the Xentury City Development Project, such as the Osceola Parkway and
International Drive approaches and adjacent sites. Once developed, the Landlord
or Xentury City POA shall require and reasonably enforce site maintenance
standards reasonably calculated to require the proper maintenance and upkeep of
Xentury City Development Project improvements in the vicinity of the Convention
Hotel.
15. Default. (a) Each of the following events shall be an Event of Default
(an "Event of Default") hereunder by the Tenant and a breach of this Lease:
(i) If the Tenant shall fail to pay, or cause to be paid, when
due, any and all payments of Rent or any other sum to be made by the Tenant
hereunder, and such payment remains unpaid for a period of thirty (30) days
after receipt of Landlord's written notice thereof by the Tenant, or for such
longer period as may be required to resolve any payment dispute which is being
contested by the Tenant in accordance with the terms of Section 15(e) of this
Lease.
(ii) If the Tenant fails to construct the Convention Hotel or
otherwise perform its obligations in accordance with the provisions of Section
2(d) of this Lease, and the Tenant does not exercise the termination option set
forth in Section 2(d) hereof, and such failure continues for thirty (30) days
after receipt of Landlord's notice thereof by the Tenant or, if compliance
cannot reasonably be effected within thirty (30) days, the Tenant shall have
failed to commence within such period the steps necessary to comply and
thereafter to proceed diligently therewith to completion.
(iii) If any assignment, subletting, concession or other transfer
shall be made or deemed to be made that is in violation of Article 12, and such
assignment or transfer is not canceled and, if applicable, the transferee
removed from the Land within thirty (30) days after Landlord's notice to cancel
the same has been received by the Tenant.
(iv) If the Tenant shall fail to comply with any other term,
covenant or condition of this Lease (not covered by (i), (ii) and (iii) above),
and such failure to comply shall continue for a period of thirty (30) days after
Landlord's written notice to the Tenant thereof (or, if compliance cannot
reasonably be effected within thirty (30) days, and the
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Tenant shall have failed to commence within such period the steps necessary to
comply and thereafter to proceed diligently therewith to completion), or for
such longer period as may be required to resolve any performance dispute which
is being contested by the Tenant in accordance with the terms of Section 15(e)
of this Lease.
(b) Upon the occurrence of any Event of Default (but subject to the
provisions of Article 16 and, where specifically applicable, Article 49 hereof),
Landlord may obtain relief against Tenant in any court of equity or law and/or
terminate this Lease; provided, however that no termination of this Lease shall
result from such Event of Default except as expressly provided in paragraph
15(c) below. If Landlord obtains relief against Tenant as aforesaid, Tenant
shall immediately comply with the order of said court, failing which the
provisions of paragraph (c) of this Article shall apply (except those relating
to the right to contend that the Event of Default did not occur or is not
continuing). A judgment for damages shall be deemed additional rent payable by
Tenant to Landlord hereunder.
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(c) Any provision of this Lease (including without limitation those
contained in this Article and in Article 16) to the contrary notwithstanding:
(x) Landlord's right to exercise any or all of its remedies [including, without
limitation, termination of this Lease by reason of an Event of Default of the
nature described in subparagraphs (i), (ii), or (iii) of Section (a) of this
Article] shall not be subject to the following sentences of this paragraph 15(c)
but shall be subject to the provisions of Article 16 hereof; and (y) no
provision of this Lease shall delay or otherwise limit Landlord's rights
hereunder or otherwise available under applicable law to seek injunctive relief
(as opposed to damages or termination of this Lease) or Tenant's obligation to
comply with any injunctive relief ordered in arbitration pursuant hereto or by
any court having jurisdiction, or Landlord's right to advance funds and obtain
reimbursement from Tenant for any unpaid obligations of Tenant hereunder.
Subject to the immediately preceding sentence, if any Event of Default under
Section (a) of this Article shall occur and be continuing, Landlord shall give a
second notice to Tenant (which notice must specify in reasonably detail the
nature of such Event of Default), and Tenant and all Permitted Lease-hold
Mortgages shall have an additional thirty (30) days in which to either: (i) cure
such default, or if cure cannot reasonably be effected within thirty (30) days,
to commence within such period the steps necessary to cure and thereafter to
proceed diligently to complete the same; or (ii) give notice (which notice may
also be given during the first notice period with the same effect) to Landlord
that Tenant or any Permitted Leasehold Mortgagee contends that the Event of
Default in question either did not occur or is not continuing, stating in
reasonable detail the basis for such contention (but a Permitted Leasehold
Mortgagee may not so contend so long as Tenant has commenced and is completing
the steps necessary to cure the default). If neither step [i.e., (i) or (ii)] is
taken within such thirty-day period, then Landlord may, at its option, if the
Event of Default is continuing, give to Tenant a notice of election to terminate
this Lease upon a date specified in such notice, which date shall be not less
than ten (10) business days (Saturdays, Sundays and legal holidays excluded)
after the date of receipt by Tenant of such notice from Landlord, and (except as
otherwise provided in Article 16) upon the date specified in said notice if the
default or breach is not then cured, this Lease shall terminate with neither
party having any further rights or liabilities under this Lease except those
which are specifically expressed, or by their nature are intended, to survive
any termination of this Lease. If Tenant or any Permitted Leasehold Mortgagee
gives the specified notice in (ii) above, Landlord shall respond thereto in
writing within ten (10) days of its receipt of said notice and if Landlord fails
to do so, and Tenant or any Permitted Leasehold Mortgagee gives to Landlord a
notice (a "Reminder Notice") citing this Lease and this paragraph, attaching a
copy of Landlord's second notice, and specifying in block capital letters and
bold-face type, that unless Landlord does so respond within twenty (20) days
after receipt of the Reminder Notice the applicable Event of Default shall be
deemed waived by Landlord, then unless Landlord does so respond within the
relevant twenty (20) day period, Landlord shall be deemed to have waived the
applicable Event of Default. If Landlord agrees with said contention, then the
notice of default in respect of the claimed default shall be deemed rescinded.
If, on the other hand, Landlord timely disagrees with said contention, then such
response by Landlord to Tenant shall be deemed the second notice to Tenant, and
Tenant and each Permitted Leasehold Mortgagee shall have the period of time to
cure (or commence to cure) said claimed default as provided in this paragraph
or, alternatively, shall have twenty (20) days in which to submit said
contention (by filing an action in Tenant's name) to arbitration as provided
hereunder;
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provided, however, that if said contention is not so submitted within the time
provided, it shall be deemed waived. Any decision by the arbitrator(s) shall be
subject to any appeals available to either party, and the attorneys' fees and
disbursements of the prevailing party will be paid by the losing party as
provided in Article 35. If judgment is obtained by Landlord that the Event of
Default did occur and is continuing, and such judgment shall have become final
and the time for appeal therefrom shall have expired without appeal having been
taken, Tenant and each Permitted Leasehold Mortgagee shall have an additional
thirty (30) days after it received notice of the judgment in which to cure the
default, or if cure cannot reasonably be effected within thirty (30) days, to
commence within such period the steps necessary to cure and thereafter to
proceed diligently to complete the same. If no such action is taken or commenced
within such thirty (30) day period, then Landlord may, at its option, if the
Event of Default is continuing, give to Tenant a notice of election to terminate
this Lease upon a date specified in such notice, which date shall be not less
than (10) business days (Saturdays, Sundays and legal holidays excluded) after
the date of receipt by Tenant of such notice from Landlord, and (except as
otherwise provided in Article 16) upon the date specified in said notice, if the
default or breach is not then cured, this Lease shall terminate with neither
party having any further rights or liabilities under this Lease except those
which are specifically expressed, or by their nature are intended, to survive
any termination of this Lease. The curing of any default within the time
permitted by any partner in Tenant, if Tenant is a partnership, or by any
Permitted Leasehold Mortgagee, together with payment to Landlord of all costs of
enforcement as provided under Section 35, shall constitute a curing of such
default with like effect as if Tenant had cured the same. Landlord shall not
have any right of termination other than that provided for this Section 15(c),
and Landlord hereby waives any right to terminate this Lease other than the
right provided for in this Section 15(c) which may at any time be provided for
at law or in equity for any breach or default of Tenant under this Lease.
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(d) In the event of a breach, or directly or overtly threatened breach,
by the Tenant of any of the agreements, conditions, covenants or terms herein
(other than and not including breaches limited to failure to pay Rent or other
monetary sums owed to Landlord) which Landlord reasonably determines are not
reasonably likely to be cured within the cure periods available to Tenant
hereunder without a material risk of imminent loss, harm or damage to Landlord
or its interests in the Demised Premises for which Tenant does not post adequate
bond or other security, the Landlord shall have the right after written notice
to Tenant, and without limiting other remedies available to Landlord hereunder
or under applicable law or Landlord's other rights to damages or other relief
hereunder, to seek injunctive relief requiring Tenant to correct or otherwise
granting necessary power and authority to Landlord to correct any such breach or
condition. The rights and remedies given to the Landlord in this Lease are
distinct, separate and cumulative rights and remedies, and no one of them,
whether or not exercised by the Landlord, shall be deemed to be in exclusion of
any of the others. Upon the occurrence of any such event no provision of this
Lease shall delay or otherwise limit Landlord's rights hereunder or under
applicable law to seek injunctive relief or the Tenant's obligation to comply
with any such injunctive relief or Landlord's right to advance funds for any
unpaid obligations of the Tenant hereunder. Any remedy for injunctive relief or
for damages shall be through arbitration pursuant to Section 49 of this Lease,
and the Tenant agrees and stipulates that the arbitrator(s) in any such
arbitration shall be authorized and shall have full power and authority to order
injunctive relief if provided for hereunder or under applicable law, and that
any award of damages against Tenant shall be deemed to be Rent payable by Tenant
under Article 6 of this Lease. The term Permitted Leasehold Mortgagee as used in
this Article shall have reference to only those Permitted Leasehold Mortgagees
to which the provisions of Section 16(c) are applicable.
(e) The Tenant may contest the occurrence of an Event of Default by
submitting such dispute to arbitration pursuant to Section 49 of this Lease
provided and on the condition that any right to contest such Default shall
require the Tenant, within the time provided to cure defaults set forth in
Section 15(a) above, (i) to pay or cause to be paid all amounts and to perform
all obligations which are not disputed in good faith by the Tenant and (ii) to
the extent that the Default relates to the failure by the Tenant to pay or cause
to be paid monetary obligations payable hereunder, to tender to the arbitration
entity with a demand for arbitration a cashier's check to deposit in escrow with
the arbitration panel the amount in dispute. Having a submitted a dispute to
arbitration, neither party shall have the right to contest under Section 15(c) a
final decision under arbitration as to whether or not an Event of Default exists
or is continuing.
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(f) In the event of any breach or default by Landlord under the terms
hereof which remains uncured following written notice from Tenant and cure and
dispute resolution periods consistent with those applicable to defaults by
Tenant as set forth above, then in addition to any other remedies available to
Tenant under applicable law the Tenant shall have the right to seek specific
performance of Landlord's obligations and obtain injunctive relief through
arbitration in accordance with Section 49 below, or to cure or cause the cure of
any such default and recover from the Landlord all costs reasonably incurred to
cure such default together with interest on all such amounts advanced from time
to time at the highest rate allowed by law.
16. Permitted Mortgages. (a) The Tenant is hereby given the right by
Landlord, in addition to any other rights herein granted and without any
requirement to obtain Landlord's consent, to mortgage or grant a security
interest in the Tenant's interest in this Lease, the Demised Premises, the
Buildings and the Furnishings and any sublease(s) under one or more mortgage(s)
to one or more Lending Institution(s), and to assign this Lease and any
sublease(s) as collateral security for such mortgage(s), upon the condition that
all right acquired under such mortgage(s) (herein a "Permitted Mortgage") shall
be subject to each and all of the covenants, conditions and restrictions set
forth in this Lease and to all rights and interests of Landlord herein, none of
which covenants, conditions, restrictions, rights or interests is or shall be
waived by Landlord by reason of the right given to mortgage or grant a security
interest in the Tenant's interest in this Lease and the Demised Premises, the
Buildings and the Furnishings, except as expressly provided herein. In no event,
however, shall there be more than three (3) such Permitted Mortgages in
existence at any one time.
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(b) The holder of, or secured party under, a Permitted Mortgage is
herein referred to as a "Permitted Leasehold Mortgagee". The Permitted Mortgage
that is prior in lien among those in effect is herein referred to as the "First
Permitted Leasehold Mortgage," and the holder of, or secured party under, the
First Permitted Mortgage is herein referred to as the "First Permitted Leasehold
Mortgagee". If a First Permitted Mortgage and a Permitted Mortgage that is
second in priority in lien among those in effect are both held by the same
Permitted Leasehold Mortgagee, the said two Permitted Mortgages are herein
collectively referred to as the "First Permitted Mortgage". A "Permitted
Mortgage" shall include, without limitation, mortgages, mortgage deeds, security
deeds and conditional deeds, as well as financing statements, security
agreements and other documentation which the lender may require. The words
"Lending Institution", as used in this Lease, shall mean any commercial,
national or savings bank, savings and loan association, trust company or
insurance company, non-union or governmental employee pension funds, any
publicly-held corporation or its pension funds or any real estate investment
trust which in either case is actively engaged in the business of making
commercial mortgage loans and meets the Net Worth Test, and any other entity
approved by Landlord as a Lending Institution. Landlord shall not unreasonably
withhold its approval of a nationally-respected lender-mortgagee (such as an
eleemosynary institution or foundation, any other publicly-held corporation or
its pension funds, any other real estate investment trust, a pension fund or the
like). It is understood that a Permitted Mortgage made to, or held by, a Lending
Institution acting as agent or trustee for one or more parties who have
interests in the mortgage, regardless of whether or not such parties are
themselves Lending Institution(s), shall be a Permitted Mortgagee.
(c) Landlord shall not be deemed to have actual or constructive notice
or knowledge of any Permitted Mortgage unless and until the Permitted Leasehold
Mortgagee shall send to Landlord a true copy of its recorded mortgage, together
with written notice specifying the name and address of the Permitted Leasehold
Mortgagee. Within a reasonable time after recording such mortgage, the Tenant
shall deliver to Landlord the appropriate recording information in respect of
such Permitted Mortgage. From and after provision of a copy of such Permitted
Mortgage to Landlord by any Permitted Leasehold Mortgagee pursuant to the first
sentence of this paragraph (c), then so long as such Permitted Mortgage shall
remain unsatisfied of record or until written notice of satisfaction is given by
the holder to Landlord, the following provisions shall apply in respect of each
such Permitted Mortgage:
(i) There shall be no cancellation, termination, surrender,
acceptance of surrender, amendment or modification of this Lease by joint action
of Landlord and the Tenant, nor shall Landlord recognize any such action by the
Tenant alone, without in each case the prior consent in writing of such
Permitted Leasehold Mortgagee.
(ii) Landlord shall, upon serving the Tenant with any notice,
whether of default or any other matter, simultaneously serve a copy of such
notice upon such Permitted Leasehold Mortgagee.
(iii) In the event of any default by the Tenant under this Lease,
such Permitted Leasehold Mortgagee shall have the same period, after service of
notice upon it of such default, to remedy or cause to be remedied or commence to
remedy and complete the
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remedy of the default complained of as the Tenant has hereunder for such
default, and Landlord shall accept such performance by or at the instigation of
such Permitted Leasehold Mortgagee as if the same had been done by the Tenant.
Each notice of default given by Landlord will state the amounts of whatever
payments herein provided for or other obligations hereunder are then claimed to
be in default. In addition, and without limiting the provisions of Paragraph
16(c)(iv) below, in the event that a payment default has not been cured within
the 30-day notice and cure period provided in Paragraph 15(a)(i) above, Landlord
shall so notify each Permitted Leasehold Mortgagee who will then have an
additional five (5) business days in which to cure any such payment default,
provided that such curative right shall not prevent the Landlord from
terminating, or limit the Landlord's right to terminate, this Lease, but in the
event that any Permitted Leasehold Mortgagee does in fact cure any such monetary
default then this Lease shall automatically be reinstated without further action
by Landlord or Tenant upon the written election of the Permitted Leasehold
Mortgagee if delivered at the time such payment is made.
(iv) If the Landlord shall elect to terminate this Lease and
causing a Reversion by reason of any default of the Tenant, each Permitted
Leasehold Mortgagee shall not only have the right to nullify any notice of
termination by curing such default prior to the effective date of termination
but shall also have the separate right to postpone and extend the specified date
for the termination of this Lease, as fixed by Landlord in its notice of
termination, for a period of not more than twelve (12) months from the date so
specified for termination provided that such Permitted Leasehold Mortgagee shall
unconditionally agree with Landlord (by giving a notice to that effect to
Landlord), prior to the effective date of termination, that such Permitted
Leasehold Mortgagee will accomplish the following within the times hereinafter
provided and shall, in fact, accomplish the following in a timely manner: (1)
cure or cause to be cured within thirty (30) days of such notice any then
existing monetary defaults of which the Permitted Leasehold Mortgagee has
knowledge; (2) pay or cause to be paid during such twelve (12) month period any
monetary obligations of the Tenant hereunder of which the Permitted Leasehold
Mortgagee has knowledge, as the same fall due; (3) promptly cure or cause to be
cured any other defaults that such Permitted Leasehold Mortgagee can cure and of
which the Permitted Leasehold Mortgagee has knowledge; and (4) forthwith take
such steps as it shall be lawfully able to acquire or sell the Tenant's interest
in the Demised Premises, Buildings, Furnishings and other Convention Hotel
assets and in this Lease by foreclosure of the Permitted Leasehold Mortgagee or
otherwise, and thereafter prosecute the same to completion with reasonable
diligence. If, at the end of said twelve (12) month period, the Permitted
Leasehold Mortgagee shall be actively engaged in steps to acquire or sell the
Tenant's interest herein including, without limitation, contesting any court
order, or seeking relief from any statutory stay, restricting such acquisition
or sale, and is in compliance with the other conditions set forth in clauses (1)
through (3) above, the time for said Permitted Leasehold Mortgagee to comply
with the applicable provisions of this subparagraph (iv) shall be extended for
such period as shall be reasonably necessary to complete such steps with
reasonable diligence upon the same conditions. If the Tenant's interest is
acquired or sold as aforesaid, the intended termination of this Lease by
Landlord under the aforesaid notice will be automatically nullified, and this
Lease will continue as if said notice of termination had never been given.
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(v) In the event of termination of this Lease and a Reversion by
reason of any uncured default by the Tenant, Landlord will promptly notify such
Permitted Leasehold Mortgagee of such termination and the amount of any sums
then due to Landlord under this Lease, and such Permitted Leasehold Mortgagee
shall have the right (except where such Permitted Leasehold Mortgagee has
extended the date of termination pursuant to the provisions of subparagraph (iv)
of this paragraph 16(c) and has subsequently failed to fulfill its obligations
thereunder) to have Landlord enter into a ground lease of the Demised Premises
and any interest of the Landlord in the Buildings and any other Improvements
(herein a "Novation Ground Lease") with such Permitted Leasehold Mortgagee or a
nominee controlled by such Permitted Leasehold Mortgagee (hereinafter referred
to in this subparagraph as its "nominee") in accordance with the following
provisions:
(1) The Permitted Leasehold Mortgagee or its nominee shall be
entitled to a Novation Ground Lease if the Permitted Leasehold
Mortgagee shall make written request upon Landlord for such Novation
Ground Lease on or before the date which is thirty (30) days after the
date on which such Permitted Leasehold Mortgagee shall have received
the notice from Landlord of termination hereof and if such written
request is accompanied by the Permitted Leasehold Mortgagee's
agreement to pay to Landlord, upon the execution and delivery of the
Novation Ground Lease, the sums which would then be due to Landlord
under this Lease had this Lease remained in effect;
(2) Such Novation Ground Lease shall be for what would have
been the remainder of the Term hereunder if this Lease had not
terminated, effective as of the date of such termination, at the Rent
and upon the terms, provisions, covenants and agreements as herein
contained, including all rights and options herein contained;
(4) To the extent within the control of Landlord, such Novation
Ground Lease shall be prior to any mortgage or other lien, charge or
encumbrance on the fee simple ownership of the Land (except taxes and
assessments and any similar matters required by law to take priority)
and, if so requested by the Permitted Leasehold Mortgagee, shall be
accompanied by a conveyance quit-claiming any right, title or interest
of Landlord in and to the Buildings and the Furnishings during the
Term of the Novation Ground Lease. Such Novation Ground Lease shall,
however, be subject to the same conditions of title as this Lease is
subject to on the date of the execution hereof;
(5) In such Novation Ground Lease, the Permitted Leasehold
Mortgagee or its nominee shall agree to perform and observe all
covenants herein contained on the Tenant's part to be performed and to
cure all defaults of the Tenant hereunder existing at that time which
it is possible for such Permitted Leasehold Mortgagee to cure, except
that all of the obligations and liabilities of the Permitted Leasehold
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Mortgagee or its nominee as the Tenant under the Novation Ground Lease
shall cease and terminate upon assignment of the Novation Ground Lease
or the sooner expiration or termination thereof and shall be subject
to any limitation on liability contained therein;
(6) Landlord shall not warrant possession of the Demised
Premises to the Permitted Leasehold Mortgagee or its nominee under any
such Novation Ground Lease, it being understood that the Novation
Ground Lease shall be expressly made subject to the rights, if any, of
the Tenant under this Lease or any other person claiming the right to
possession through or under the Tenant;
(7) The Permitted Leasehold Mortgagee or its nominee as tenant
under the Novation Ground Lease shall have the same right, title and
interest in and to the Buildings and the Furnishings as the Tenant had
under this Lease.
(8) If more than one Permitted Leasehold Mortgagee shall make
written request upon Landlord in accordance with the provisions hereof
for a Novation Ground Lease, the Novation Ground Lease shall be
delivered pursuant to the request of the Permitted Leasehold Mortgagee
whose leasehold mortgage is prior in lien among those who made the
request, and the written request of any Permitted Leasehold Mortgagee
whose leasehold mortgage is subordinate in lien shall be void and of
no force or effect.
(9) If the required use of the Demised Premises as the
Convention Hotel under this Lease is no longer economically viable
then the Landlord shall not unreasonably withhold its approval of and
consent to a reasonable alternative higher and better use hereunder so
long as the Permitted Leasehold Mortgagee or its nominee under any
such Novation Ground Lease can provide and does in fact provide all
assurances as may reasonably be required by Landlord so that any such
alternative approved use is consistent with other uses within the
Xentury City Development Project and will not result in any material
reduction in the fair market value or value in use of the Improvements
and Demised Premises, or in the Rent or any other sums accruing and
reasonably anticipated to accrue to Landlord hereunder or otherwise
relating to the Convention Hotel, including particularly but without
limitation Percentage Rent, from the sums and amounts which otherwise
would exist or accrue to Landlord were the Demised Premises used
solely for the approved use as the Convention Hotel in accordance with
all applicable requirements hereof.
(vi) The name of each Permitted Leasehold Mortgagee may be added to
the loss payable endorsement of any and all fire and other casualty insurance
policies
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to be carried by the Tenant in respect of the Land, the Buildings and/or the
Furnishings, and all such policies shall stated that the insurance proceeds are
to be paid to the First Permitted Leasehold Mortgagee to be held for the benefit
of the parties hereto and applied in the manner specified in this Lease.
(vii) If there is a condemnation or taking by eminent domain in
respect of the Land, the Buildings and/or the Furnishings which does not result
in a termination of this Lease, any award of payment therein shall be paid to
the First Permitted Leasehold Mortgagee for the benefit of the parties hereto,
and applied in the manner specified in this Lease; and if the same results in a
termination of this Lease, the Tenant's portion of the award or payment shall be
paid to the First Permitted Leasehold Mortgagee for the benefit of the Tenant
and the Permitted Leasehold Mortgagees.
(viii) No fire or casualty loss claims shall be settled and no
agreement will be made in respect of any award or payment in condemnation or
eminent domain without in each case the prior written consent of the First
Permitted Leasehold Mortgagee; provided, however, that such Permitted Leasehold
Mortgagee has agreed to make such award or payment available in the manner
specified in this Lease.
(ix) Except where the Permitted Leasehold Mortgagee has become a
tenant under a Novation Ground Lease, no liability for the payment of any
amounts due or the performance of any of the Tenant's covenants and agreements
hereunder shall attach to or be imposed upon the Permitted Leasehold Mortgagee
(other than any obligations assumed by, or agreed to by, the Permitted Leasehold
Mortgagee), all such liability (other than any obligations assumed by or agreed
to by the Permitted Leasehold Mortgagee) being hereby expressly waived by
Landlord.
(x) Landlord, within ten (10) days after a request in writing by the
Tenant or any Permitted Leasehold Mortgagee, shall furnish a written statement,
duly acknowledged, that this Lease is in full force and effect and unamended, if
such be the case, or if there are any amendments, such statement will specify
the amendments, and that there are no defaults thereunder by the Tenant that are
known to Landlord, or if there are any known defaults, such statement shall
specify the defaults Landlord claims exist.
(xi) No payment made to Landlord by any Permitted Leasehold
Mortgagee shall constitute agreement that such payment was, in fact, due under
the terms of this Lease; and the Permitted Leasehold Mortgagee having made any
payment to Landlord pursuant to Landlord's wrongful, improper or mistaken notice
or demand shall be entitled to the return of any such payment or portion thereof
provided it shall have made demand therefor not later than one (1) year after
the date of its payment.
(xii) The First Permitted Leasehold Mortgagee shall be given notice
of any arbitration or other proceeding or dispute between the parties and shall
have the right to intervene therein and be made a party thereto. In any event,
each Permitted Leasehold Mortgagee shall receive notice, and a copy, of any
award or decision made in said arbitration or other proceeding.
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(d) Landlord shall, upon request, execute, acknowledge and delivery to
each Permitted Leasehold Mortgagee an agreement prepared at the sole cost and
expense of the Tenant, in form satisfactory to the Permitted Leasehold Mortgagee
and Landlord, among Landlord, the Tenant and the Permitted Leasehold Mortgagee,
agreeing to all the provisions of this Article.
(e) Landlord shall at no time be required to subordinate its fee simple
interest in the Demised Premises to the lien of any leasehold or other mortgage,
nor to mortgage its fee simple interest in the Demised Premises as collateral or
additional security for any leasehold or other mortgage. Any provision of this
Lease or of the Related Agreements to the contrary notwithstanding, if a
Permitted Leasehold Mortgagee elects pursuant to this Article to receive a
Novation Ground Lease, it shall also at the time it enters into such Novation
Ground Lease enter into new Related Agreements on the terms which are expressed
to be applicable to Permitted Leasehold Mortgagees as set forth in the
respective Related Agreements.
17. End of Term. (a) The Tenant shall, on or before the last day of the
Term or upon the sooner termination of the Term, peaceably and quietly surrender
and deliver to Landlord the Land, the Buildings and the Furnishings, in good
condition and repair consistent with the Operating Standards [subject to
paragraph (c) of Article 9 and Paragraph (d) of Article 11] and free and clear
of liens, encumbrances and subtenancies (except as otherwise provided in Article
12 or in this paragraph); provided, however, that in the event of the sooner
termination of this Lease, Landlord may, at its option, require any or all
subtenants or concessionaires (other than any which are under common
Landlordship and control with the Tenant) to recognize Landlord under such
sublease or concession agreement, in which event any such subtenant or
concessionaire of Landlord for the balance of the remaining term of the sublease
or concession agreement as determined without regard to, and notwithstanding,
the sooner termination of this Lease.
(b) Upon surrender, or upon the expiration or any sooner termination of
the Term hereof, whichever first occurs, title to the Buildings and the
Furnishings (except those leased by or loaned to the Tenant, as herein
permitted) shall thereupon, and without further act of either party, vest in
Landlord (subject, however, in the event of the sooner termination of this
Lease, to the rights of any Permitted Leasehold Mortgagee to acquire the same in
connection with a Novation Ground Lease granted pursuant to Article 16), and the
Tenant shall promptly thereafter execute and deliver to Landlord such deed or
bill of sale as Landlord may reasonably request, provided they contain no
covenant, warranty, representation or other liability of the Tenant contained
herein.
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(c) If the Tenant holds over or refuses to surrender possession of the
Demised Premises and Buildings in accordance with the provisions of this Lease,
Landlord shall have the right, in additional to all other rights and remedies
available to it, to treat such holding over as a tenancy at sufferance or a
month-to-month tenancy. During such holder over period, the Tenant shall be
deemed to be a tenant at sufferance and as such shall be obligated to perform
all of its obligations under this Lease (as if this Lease had not so expired or
terminated), except that the Base Rent during the period of holding over shall
be doubled. During any such holding over period, Landlord shall have no
obligations of any nature whatsoever under this Lease or otherwise to the
Tenant.
(d) If the Demised Premises, the Buildings, and the Furnishings are not
timely so surrendered, the Tenant shall pay to Landlord all expenses which
Landlord may incur by reason thereof and, in addition, shall indemnify and hold
harmless Landlord from and against all claims made against Landlord by any
tenant or subtenants or other successor or grantee of Landlord succeeding to the
Demised Premises or Buildings or any part thereof, founded upon delay by
Landlord in delivering possession of the Demised Premises and Buildings to any
such successor or upon the improper or inadequate condition of the Demised
Premises and Buildings, to the extent that such delay or improper or inadequate
condition is occasioned by the failure of the Tenant to perform its said
surrender obligations and/or to timely surrender the Demised Premises and all
interests therein and related thereto as provided hereunder. All property of the
Tenant or of any other person which shall remain in the Convention Hotel or at
the Demised Premises after the expiration or sooner termination of this Lease
shall be deemed to have been abandoned and may be retained by Landlord as its
property or be disposed of without accountability in such manner as Landlord may
deem fit and, if the cost of any disposition exceeds any proceeds from the said
of such property, such cost shall be paid by the Tenant to Landlord upon demand.
(e) Notwithstanding the foregoing provisions of Paragraphs 17(a) and
17(d) above, the Landlord shall not be entitled upon the End of Term to unopened
stocks and inventories of food, beverages and other consumable supplies which
are not then in use for the proper current operation of the Convention Hotel,
nor shall Landlord be entitled to receive payment of any accounts receivable or
bank accounts or other financial sums relating to the operation of the
Convention Hotel by Tenant during the Term (except as a proper offset to any
unpaid sums owed by Tenant hereunder) and shall use reasonable efforts to
collect such accounts and sums for the account of Tenant, unless and except to
the extent that Landlord shall so elect with respect to such items thereof as
reasonably designated by Landlord (the "Additional Assets") and agree to pay the
actual cost (or fair market value if no record cost exists) thereof to Tenant as
an additional end of term payment (the "Buyout Price" for such Additional
Assets) hereunder. To the extent that Landlord does not elect to purchase such
Additional Assets as provided above, then Tenant may remove all such Additional
Assets not being acquired by Landlord at the End of Term.
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18. Indemnity. (a) The Tenant shall pay and discharge, and shall defend,
indemnify and hold Landlord (and Landlord's parent company, their related,
affiliated and subsidiary companies, and the officers, directors, agents,
employees, representatives, successors and assigns of each if the Tenant is
required to name those within this parenthetical as additional insureds under
the Tenant's liability policy pursuant to Article 8), harmless from and against
all obligations, settlements, liabilities, losses, damages, injunctions, suits,
actions, proceedings, fines, penalties, claims, liens, demands, costs, charges
and expenses of every kind or nature, including, without limitation, reasonable
fees of attorneys and other professionals, and disbursements, which may be
imposed on, incurred by or asserted against the persons hereby required to be
indemnified (the "Indemnified Parties") (but not against any of the same to the
extent that a negligent, or willful, act or omission or the Indemnified Parties
was the cause of same (individually, a "Liability", and collectively, the
"Liabilities"), arising directly or indirectly from or out of:
(i) any failure by the Tenant to perform any of the agreements,
terms, covenants or conditions on the Tenant's part to be performed under this
Lease or the Hotel Development Agreement (to the extent the provisions thereof
remain in effect on and after the date hereof);
(ii) any accident, injury or damage which shall happen in or on the
Demised Premises or Buildings, however occurring, and any matter or thing
growing out of the condition, occupation, maintenance, alteration, repair, use
or operation by any person of the Land, the Buildings, the Furnishings or any
part of them;
(iii) any wrongful act or negligence on the part of the Tenant or
its Affiliates, and any failure of the Tenant to comply with any laws,
ordinance, requirements, orders, directions, rules or regulations of any
governmental authority;
(iv) any work, construction, demolition or other thing done in, on,
or about the Buildings or the Land, or any part thereof, or any street, alley,
sidewalk, garden, curb, passageway or space adjacent thereto;
(v) any use, non-use, possession, occupation, condition, operation,
maintenance or management of the Buildings or the Demised Premises or any part
thereof or any street, alley, sidewalk, garden, curb, passageway or space
adjacent thereto;
(vi) any claim, proceeding or action brought or taken by a
Permitted Leasehold Mortgagee; and
(vii) any other provision of this Lease which provides that the
Tenant shall indemnify and/or hold harmless Landlord in respect of the matters
contained in such provision.
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(b) In the event that any action or proceeding is brought against
Landlord and/or Landlord's Affiliates by reason of any or all of the foregoing
liabilities which is not covered by insurance maintained pursuant to this Lease,
or if the insurance carrier fails to defend Landlord and/or Landlord's
Affiliates against any such liability, the Tenant, upon written notice from
Landlord, will, at the Tenant's sole cost and expense, resist or defend such
action or proceeding including, if Landlord shall so elect, the institution of
any counterclaim arising out of any transaction or occurrence that is the
subject matter of the opposing party's claim, by counsel approved by Landlord in
writing, which approval shall not be unreasonably withheld or delayed. The
Tenant shall satisfy, pay and discharge any and all judgments, orders and
decrees which may be recovered against Landlord, Landlord's affiliates or the
Demised Premises in any such actions, suits or proceedings. The Tenant's
indemnity obligations under this Article and elsewhere in this Lease arising
prior to the termination or assignment of this Lease shall survive termination
or assignment.
(c) Each of the Indemnified Parties shall reasonably cooperate with the
Tenant in the defense of any such action or proceeding, and will not settle such
action, provided that the Tenant give to such Indemnified Party satisfactory
assurances that it can and will satisfy, pay and discharge any and all judgments
which may be recovered in such action or proceeding, and provided further that
such action or proceeding shall not (i) subject such Indemnified Party to the
risk of criminal sanctions, or (ii) jeopardize the interest of such Indemnified
Party in the Demised Premises and/or the hotel. Notwithstanding the foregoing,
such Indemnified Party shall have the right to settle any such action or
proceeding at any time, provided that it releases the Tenant from any further
indemnification obligation hereunder with respect to such settlement.
(d) Landlord shall pay and discharge, and shall defend, indemnify and
hold the Tenant (and the Tenant's general partners and their parent company,
their related, affiliated and subsidiary companies, and the officers, directors,
agents, employees, representatives, successors and assigns of each) (herein the
"Tenant Indemnitees"), harmless from and against all obligations, settlements,
liabilities, losses, damages, injunctions, suits, actions, proceedings, fines,
penalties, claims, liens, demands, costs, charges and expenses of every kind or
nature, including, without limitation, reasonable fees of attorneys and other
professionals, and disbursements, which may be imposed on, incurred by or
asserted against such Tenant Indemnitees (but not against any of the same to the
extent that a negligent, or willful, act or omission of any such Tenant
Indemnitee), which are not covered by the policies of insurance required to be
obtained by the Tenant hereunder, and arising directly or indirectly from or out
of any gross negligence or willful misconduct on the part of the Landlord or its
Affiliates, any failure of the Landlord to comply with any laws, ordinance,
requirements, orders, directions, rules or regulations of any governmental
authority or any work, construction, demolition or other thing done in, on, or
about the Buildings or the Land, or any part thereof, or any street, alley,
sidewalk, garden, curb, passageway or space adjacent thereto, pursuant to the
Land Development Agreement.
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19. Easements; Use of Utilities. Subject to the provisions of Article 5,
Landlord shall not be required to furnish to the Tenant any services of any kind
whatsoever during the Term (including, without limitation, water, steam, heat,
fuel, gas, hot water, electricity, light and power). The Tenant independently
shall subscribe to all utility services which are necessary for all of its
requirements with respect to its operations of the Buildings and the hotel
business conducted therein. Landlord and the Tenant shall grant such easements
to the foregoing specified entities as are reasonably necessary to enable them
to provide utility services to the Demised Premises as necessary for development
of the Project in accordance with the Plans. The Tenant shall pay all bills for
utility services rendered to it on or before the date due in accordance with the
payment instructions contained in such bills; provided, however, that if any
utilities are furnished to the Tenant through Landlord's meters, the Tenant
shall reimburse Landlord for the cost of such utilities. If the Tenant should
construct an improvement which materially encroaches upon, or should landscape
or otherwise improve, a utility or other easement reserved by Landlord
hereunder, whether with or without the consent of Landlord, the Tenant shall
remove the same to the extent necessary to effect the maintenance, repair or
replacement of any utilities within the easement and shall restore the same, all
it its cost and expense.
20. Condemnation. (a) If the Demised Premises and the Buildings shall be
taken or condemned for any public or quasi-public use or purpose, by right of
eminent domain or by purchase in lieu thereof, or if a portion of the Demised
Premises or the Buildings shall be so taken or condemned, such that the portion
remaining is not sufficient and suitable, in the Tenant's reasonable judgment
(subject, however, to the rights of any Permitted Leasehold Mortgagee
hereunder), for the operation of a first class destination hotel and convention
center, then, at the option of the Tenant, this Lease shall cease and terminate
as of the date on which the condemning authority takes possession. The Tenant
shall notify Landlord of such determination made in its reasonable judgment
within ninety (90) days after the date on which title vests in the condemnor
and, if such notice is not timely given, the Tenant shall be deemed to have
waived such termination right.
(b) If a portion of the Demised Premises and the Buildings (or only of
the Demised Premises or only of the Buildings) is taken, and the remaining
portion can, in the Tenant's reasonable judgment (subject, however, to the
rights of any Permitted Leasehold Mortgagee hereunder), be adapted and used for
operation of a first class destination hotel and convention center, or otherwise
adopted to permit the conduct of the Tenant's operations in accordance with all
of the terms of this Lease, then this Lease shall continue in full force and
effect.
(c) If this Lease terminates due to a taking or condemnation, in
accordance with the terms of this Article 20 and subject to applicable terms of
Article 9, the entire award for the Demised Premises and the Buildings or the
portion thereof so taken shall be apportioned between Landlord and the Tenant,
as of the day immediately prior to the vesting of title in the condemnor, as
follows:
(i) First, Landlord shall receive the then fair market value of the
Demised Premises so taken or condemned considered as vacant, unimproved, and
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unencumbered, together with the discounted value of the Buildings (less a
reasonable estimate of what the Term-end Payment would be), discounted from the
stated end of the then-current Term.
(ii) Second, the Tenant shall be entitled to the then fair market
value of its interest under this Lease and in the Buildings, less the discounted
value of the Buildings as allocated to Landlord, together with any and all
business damages suffered by the Tenant (subject, however, to the rights of any
Permitted Leasehold Mortgagees therein); and
(iii) Landlord and the Tenant shall each receive one-half (1/2) of
any remaining balance of the award.
(d) If this Lease does not terminate due to such taking or
condemnation, (i) the Tenant shall be entitled to the entire award to the extent
required, pursuant to the terms of this Lease, for the restoration of the
Demised Premises and the Buildings, and (ii) out of the portion of the award not
applied to restoration, (x) Landlord shall be entitled to the portion of the
award allocated to the fair market value of the Demised Premises which is so
taken, considered as vacant and unimproved, (y) the Tenant shall have the right
(subject, however, to the rights of the Permitted Leasehold Mortgagees) to the
amount by which the value of the Tenant's interest in the Buildings and the
value of the Tenant's Demised Premises were diminished by the taking or
condemnation, and (z) Landlord and the Tenant shall each receive one-half (1/2)
of any remaining balance of the award. If this Lease does not terminate due to a
taking or condemnation, then: (i) the Tenant shall, with due diligence, restore
the remaining portion of the Demised Premises and the Buildings in accordance
with the provisions of Article 2 hereof; (ii) the entire proceeds of the award
shall be deposited and treated in the same manner as insurance proceeds are to
be treated under Article 9 until the restoration has been completed and the
Tenant and Landlord have received their respective shares thereof pursuant to
this paragraph (d); (iii) if the award is insufficient to pay for the
restoration, the Tenant shall be responsible for the remaining cost and expense;
and (iv) the Base Rent payable by Tenant shall be adjusted proportionately based
upon the proportion that the amount received by the Landlord in respect of Land
taken, if any, bears to the total fair market value of the overall Land at that
time.
(e) If the temporary use (but not title) of the Demised Premises and/or
the Buildings, or any part thereof, is taken, this Lease shall remain in full
force and effect, and there shall be no abatement of any amount or sum payable
by or other obligation of the Tenant hereunder. The Tenant shall receive the
entire award for any such temporary taking to the extent it applies to the
period prior to the end of the Term (subject to the rights of the Permitted
Leasehold Mortgagees); and Landlord shall receive the balance of the award.
(f) If Landlord and the Tenant cannot agree in respect of any matters
to be determined under this Article, a determination shall be requested of the
court having jurisdiction over the taking, and if said court will not accept
such matters for determination, either party may have the matter submitted to
arbitration pursuant to Section 49 of this Lease.
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(g) For purposes of this Article, any Furnishings taken or condemned
shall be deemed to be a part of the Buildings, and the provisions hereof shall
be applicable thereto.
(h) Notwithstanding any provision to the contrary, the Tenant shall be
entitled to any separate award or payment for moving and/or relocation.
21. Encumbrances by Subtenants. The Tenant shall not knowingly permit or
suffer any subtenant to encumber such subtenant's leasehold interest without the
prior written approval of Landlord in each instance.
22. No Abatement of Rent. Except as otherwise specifically provided in this
Lease, no abatement, diminution or reduction of any Rent, charges, compensation
or other amount payable by the Tenant shall be allowed to the Tenant or any
person claiming under the Tenant, and no abatement, diminution or reduction of
the Tenant's other obligations hereunder shall be allowed to the Tenant, under
any circumstances whatsoever including, without limitation, inconvenience,
discomfort, interruption of business or otherwise by virtue of, or arising out
of: (a) the making of alterations, changes, additions, improvements or repairs
to the Buildings; (b) any present or future governmental laws, ordinances,
requirements, orders, directions, rules or regulations; (c) restoration or the
Buildings after damage, destruction or partial condemnation; or (d) any other
cause or occurrence.
23. No Representations. The Tenant acknowledges that it has examined the
Land and that except as provided in the Land Development Agreement, this Lease,
the Hotel Development Agreement, or the Related Agreements it is not relying
upon any representation or warranty, either express or implied, made by Landlord
or any of Landlord's Affiliates or any other person or entity in any way
affiliated with Landlord, or being or claiming to be an agent, employee or
servant of Landlord, with respect to: the physical condition of the Land, the
ground, earth or subsoil conditions; the financial reports, data, analyses or
projections that concern the proposed development, operation or projected
occupancy of the Convention Hotel; the proposed construction of, or any
agreement not to construct, any other facilities or amenities adjacent to, or in
proximity to, the Land; any zoning or other applicable Legal Requirements; or
any other matter or thing in respect of the subject matter of this Lease and/or
the Exhibits hereto or the transaction and development contemplated hereby, by
the Hotel Development Agreement or the Related Agreements. Prior to the
commencement of any construction on the Land, the Tenant conducted or shall
conduct such tests of the subsurface and soil conditions as it deemed
appropriate and is fully satisfied therewith; Landlord shall have no liability
because of, or as a result of, the existence of any subsurface or soil
condition, either on the Land or land adjacent thereto, which might affect the
Tenant's construction.
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24. Use of Names. Neither this Lease, nor anything contained in this Lease,
shall be deemed to grant to the Tenant any rights whatsoever to, and the Tenant
hereby covenants that it will not use, the name "Xentury City," or any
combination thereof permutation or related name, without the prior written
consent of Landlord. Similarly, neither this Lease, nor anything contained in
this Lease, shall be deemed to grant to Landlord any rights whatsoever to, and
the Landlord hereby covenants that it will not use, the names, trademarks,
service marks, copyrights, call letters or tradenames of GEC or its Affiliates,
or images, drawings, plans, renderings or photographs of the Project, including
without limitation the names "Opryland Hotel," "Grand Old Opry" or "Opry" or any
derivative, combination or permutation thereof or related name, without the
express prior written consent of GEC or other party with the legal right to use
and allow further use of the subject name (such consent to be required for each
proposed use). For purposes hereof written consent, to be effective, must be
provided in the case of GEC or its Affiliates by the President of the Opryland
Lodging Group or other officer designated in writing by the President of GEC, or
by at least a corporate Vice President, or equivalent, of any other affected
entity. This Section 24 shall survive the expiration or any early termination of
this Lease, and the sole remedies for any violation of this Section absent an
intentional and continuing disregard of a formal written notice of default and
demand specifically referencing the provisions of this Section shall be limited
to the right to obtain and enforce injunctive relief and to obtain damages
consistent with applicable or analogous federal or state laws governing the
remedies for violation of comparable intellectual property rights, together with
the right of the prevailing party in any enforcement or other action by the
parties in connection with this Section 24 to recover its reasonable attorneys',
experts' and paralegals' fees and costs pursuant to Section 35 hereof.
25. No Waiver. This Lease shall not be modified except by a written
instrument executed by Landlord and the Tenant. No release, discharge or waiver
of any provision hereof shall be enforceable against, or binding upon, Landlord
or the Tenant unless in writing and executed by Landlord or the Tenant, as the
case may be. Neither the failure of Landlord or the Tenant to insist upon a
strict performance of any of the agreements, terms, covenants and conditions
hereof, nor the acceptance of rent or any other payment or sum by Landlord with
knowledge of a breach of this Lease by the Tenant in the performance of its
obligations hereunder, shall be deemed a waiver of any rights or remedies that
Landlord or the Tenant may have or a waiver of any subsequent breach or default
in any of such agreements, terms, covenants and conditions.
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26. Estoppel Certificate. Either party shall, within ten (10) days after a
request from time to time made by the other party and without charge, give a
certification in writing to any person, firm or corporation reasonably specified
by the requesting party stating: (a) that this Lease is then in full force and
effect and unmodified or, if modified, stating the modifications; (b) that as
far as the maker of the certificate knows, the Tenant is not in default in the
payment of any Rent or other sum hereunder, or if in default, stating such
default; (c) that so far as the maker of the certificate knows, neither party is
in default in the performance or observance of any other covenant or condition
to be performed or observed under this Lease or, if either party is in default,
stating such default; (d) that so far as the maker of the certificate knows, no
event has occurred which authorized, or with the lapse of time will authorize,
Landlord or the Tenant to terminate this Lease or, if such event has occurred,
stating such event; (e) that so far as the maker of the certificate knows,
neither party has any offsets, counterclaims or defenses or, if so, stating
them; (f) the dates to which amounts payable by the Tenant have been paid; and
(g) any other matters which may be reasonably requested by the requesting party.
27. Title to the Buildings and Furnishings. The Tenant shall, at all times
during the Term have title to the Buildings (subject to Landlord's reversionary
interests).
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28. Force Majeure. If the performance by either of the parties of its
obligations under this Lease (excluding monetary obligations) is delayed or
prevented in whole or in part by any law, rule, regulation, order or other
action adopted or taken by any federal, state or local governmental authority
(and not attributable to an act or omission of said party), or by any Acts of
God, fire or other casualty, floods, storms, explosions, accidents, epidemics,
war, civil disorders, strikes or other labor difficulties, shortages or failure
of supply of materials, labor, fuel, power, equipment, supplies or
transportation, or by any other cause not reasonably within said party's
control, whether or not specifically mentioned herein, said party shall be
excused, discharges and released of performance to the extent such performance
or obligation (excluding any monetary obligation) is so limited or prevented by
such occurrence without liability of any kind. No allowance for delay shall be
made under this Article unless a notice, specifying the cause of such delay, is
delivered by the delayed party to the other party within fifteen (15) days of
the occurrence causing the delay. Nothing herein contained shall be construed as
requiring either of the parties to accede to any demands of, or to settle any
disputes with, labor or labor unions, suppliers or others not a party hereto
which that party considers unreasonable. Both parties hereby agree that, except
if and to the extent otherwise specifically provided in this Lease, (i) the
extension of time provided for in this Article shall be in lieu of all damages
and other remedies which might otherwise arise by reason of such delay, and (ii)
nothing contained in this Article shall be deemed to extend or postpone the
dates for commencement of, or payment of, Rent or any other sum or amount due
from the Tenant to the Landlord hereunder or under any of the other Related
Agreements.
29. Notices. (a) Any notice, request, consent, approval, demand, response
or other communication (collectively "Notice") required or permitted under this
Lease must be in writing, and shall be deemed given if delivered in a sealed
envelope by hand, or if sent by United States registered or certified mail,
postage prepaid, return receipt requested, to the following addresses:
If to Landlord: 7575 Dr. Phillips Boulevard, Suite 260
Orlando, Florida 32819
Attn.: Chief Executive Officer
with a copy to: Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 N. Eola Drive
Orlando, Florida 32801
Attn.: Nicholas A. Pope, Esq.
If to the Tenant: c/o Gaylord Entertainment Company
One Gaylord Drive
Nashville, Tennessee 37214
Attn.: President, Lodging Group
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with a copy to; Sherrard & Roe PLC
424 Church Street, Suite 2000
Nashville, Tennessee 37219
Attn.: Thomas J. Sherrard, Esq.
or such other address as may be designated by either party by written notice to
the other. Except as otherwise provided in this Lease, every Notice shall be
deemed to have been given or served upon actual receipt thereof by either such
personal delivery or United States mails. Accordingly, a Notice shall not be
effective until actually received.
(b) A copy of each Notice given by Landlord to the Tenant shall be
contemporaneously delivered to each Permitted Leasehold Mortgagee which shall
have theretofore satisfied the requirements of the first two sentences of
Paragraph 16(c) hereof. Notice to the Tenant shall not be effective until a
duplicate thereof is sent to each Permitted Leasehold Mortgagee that is entitled
thereto.
(c) The Tenant shall immediately send to Landlord, in the manner
prescribed above for the giving of Notice, copies of each Notice given by it to
any Permitted Leasehold Mortgagee or received by it from any Permitted Leasehold
Mortgagee, and copies of each Notice which is received with respect to the Land,
the Buildings, the Furnishings, or the operation of the Convention Hotel from
any governmental authorities, fire regulatory agencies and similarly constituted
bodies, and copies of its responses thereto.
(d) Notwithstanding anything in this Article to the contrary, any
notice mailed to the last designated address of any entity to which a Notice may
be or is required to be delivered pursuant to this Lease shall not be deemed
ineffective if actual delivery cannot be made due to a change of address of the
person or party to which the Notice is directed or the failure or refusal of
such person or party to accept delivery of the Notice.
(e) Whenever a request for approval is given pursuant to a provision
of this Lease which states that approval shall be deemed given unless the
request is responded to within a given period of time and/or unless reasons are
stated in any disapproving response, such deemed approval shall not occur unless
such request shall conspicuously state at the top thereof: "FAILURE TO RESPOND
TO THIS REQUEST WITHIN ___ DAYS (AND TO STATE REASONS FOR ANY DISAPPROVAL) SHALL
CONSTITUTE AUTOMATIC APPROVAL OF THIS REQUEST PURSUANT TO PARAGRAPH ___ OF THE
OPRYLAND HOTEL - FLORIDA GROUND LEASE DATED MARCH 1, 1999, BETWEEN XENTURY CITY
DEVELOPMENT COMPANY, L.C. AND OPRYLAND HOTEL - FLORIDA LIMITED PARTNERSHIP."
30. Time. Time is of the essence in every particular of this Lease,
including, without limitation, obligations for the payment of money.
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31. Interest. Except as to those instances in respect of which a different
interest rate is specifically provided for in this Lease or the applicable
Related Agreement, as the case may be, all arrearages in the payment of any sum
due to Landlord under the provisions of this Lease or the Related Agreements,
after expiration of all applicable notice and grace periods provided for herein
or in the repaying to Landlord of any sum which Landlord may have paid to cure
or prevent a default of the Tenant (as provided elsewhere herein), shall bear
interest from the date due until paid at the lesser of (i) eighteen percent
(18%) per annum, or (ii) the highest rate of interest then allowable pursuant to
Section 687.02, Florida Statutes (or its successor).
32. Successors and Assigns. The agreements, terms, covenants and conditions
herein shall bind and inure to the benefit of Landlord and the Tenant and, to
the extent permitted herein, their respective successors and assigns. Unless the
context otherwise requires, the term "entity" as used in this Lease is intended
to include natural persons.
33. Recordation of Lease. This Lease shall not be recorded; instead, a
short form memorandum thereof, in form and substance reasonably satisfactory to
Landlord and Tenant, which form shall include, without limitation, the
provisions of Article 46 of this Lease, will be recorded in the public records
of Osceola County, Florida, and Tenant will pay the recording costs. In the
event of a discrepancy between the provisions of this Lease and such short form
thereof, the provisions of this Lease shall prevail. The Memorandum of Lease
executed and recorded pursuant hereto shall include a joinder of the Ground
Lessor providing that the Ground Lessor will honor the Tenant's rights under
this Lease in the event and regardless of any default under or termination of
the Master Ground Lease identified in Section 48 below provided only that Tenant
shall attorn to the Ground Lessor and that Tenant shall continue to perform its
obligations under and in accordance with the terms and conditions of this Lease.
34. Warranty of Title and Covenant of Quiet Enjoyment. Landlord represents
and warrants that (i) it is the ground lessee of the Land under the terms of the
Master Ground Lease identified in Section 48 below subject to the easements,
restrictions, covenants and other matters of record as of the date hereof or as
would be disclosed by current survey and inspection of the Premises; (ii) it has
full right to lease the Land for the term set out herein; and (iii) it has no
knowledge of any condemnation or threat of condemnation affecting any portion of
the Demised Premises. So long as Tenant keeps and performs all of the covenants
and conditions on its part to be kept and performed under this Lease, Landlord
covenants that Tenant shall have quiet and undisturbed possession and enjoyment
of the Demised Premises subject, nevertheless to the provisions of this Lease,
and the matters set forth on the Exhibits and Schedules hereto.
35. Costs and Attorneys' Fees. If either party shall bring an action to
recover any sum due hereunder, or for any breach hereunder, and shall obtain a
judgment or decree in its favor, the court may award to such prevailing party
its reasonable costs and reasonable attorneys' fees and disbursements,
specifically including reasonable attorneys' fees incurred in connection with
any appeals (whether or not taxable as such by law).
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36. Entire Agreement. This Lease contains the entire agreement between the
parties with respect to the subject matter hereof and, except as otherwise
provided herein, can only be changed, modified, amended or terminated by an
instrument in writing executed by the parties. It is mutually acknowledged and
agreed by Landlord and the Tenant that, except as specifically referred to
herein, there are no verbal or written agreements, representations, warranties
or other understandings affecting the subject matter hereof; and that the Tenant
hereby waives, as a material part of the consideration hereof, all claims
against Landlord for rescission, damages or any other form of relief by reason
of any alleged covenant, warranty, representation, agreement or understanding
not contained in this Lease, the Hotel Development Agreement or the Related
Agreement.
37. Applicable Law. This Lease shall be governed by, and construed in
accordance with, the laws of the State of Florida.
38. Waiver of Jury Trial. Landlord and the Tenant hereby waive trial by
jury in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the Tenant's use or occupancy of the Demised Premises
or the Buildings or any claim of injury or damage. Each of the parties hereby
expressly and irrevocably consents to the jurisdiction of the Circuit Court in
and for Osceola County, Florida, or if such Circuit Court shall not have
jurisdiction over the subject matter of such action, proceeding, counterclaim,
cross claim or third-party claim, then to such other court sitting in said
county as shall have subject matter jurisdiction with respect thereto.
39. Landlord May Cure the Tenant's Defaults. If the Tenant shall default in
the performance of any term, covenant or condition to be performed on its part
hereunder, Landlord may, after notice to the Tenant and a reasonable time to
perform after such notice (or without notice if, in Landlord's reasonable
opinion, an emergency exists), perform the same for the account and at the
expense of the Tenant. If, at any time and by reason of such default, Landlord
is compelled to pay, or elects to pay, any sum or money or do any act which will
require the payment of any sum of money, or is compelled to incur any expense in
the enforcement of its rights hereunder or otherwise, such sum or sums shall be
deemed additional rent hereunder and, together with interest thereon pursuant to
Article 31 hereof, shall be repaid to Landlord by the Tenant promptly when
billed therefor, and Landlord shall have the same rights and remedies to levy in
respect thereof as Landlord has in respect of the Rent herein reserved.
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40. Waiver of Right of Redemption. The Tenant, for itself and for all
persons claiming by, through or under it, hereby expressly waives any and all
rights which are or may be conferred upon the Tenant by any present or future
law to redeem the Land, the Buildings and the Furnishings after any Reversion or
termination of this Lease or after re-entry upon the Demised Premises by the
Landlord or after any warrant to dispossess or judgment in ejectment or summary
proceedings. If Landlord shall acquire possession of the Land, the Buildings and
the Furnishings by summary proceedings, or in any other lawful manner without
judicial proceedings, it shall be deemed a re-entry within the meaning of the
word as used in this Lease.
41. Captions. The captions are inserted only as a matter of convenience and
for reference and in no way define, limit or describe the scope or intent of, or
affect, this Lease. References in this Lease to a given Article (e.g., Article
4) shall be construed as a reference to the entirety of such Article; references
to any part of an Article [e.g., Paragraph 1 of Article 4 or Paragraph 4(a)],
shall be construed to include all subparagraphs contained in such part.
42. Brokerage. Landlord and the Tenant hereby represent to each other that
they have not employed any brokers in the negotiation and consummation of the
transaction set forth in this Lease, but have negotiated directly with each
other.
43. Consent or Approval of Landlord. (a) Subject to the provisions of
paragraphs b. and c. of this Article, whenever the consent or approval of
Landlord is referred to or is a condition precedent to the taking of any action
by the Tenant, such consent or approval shall not be unreasonably withheld or
delayed, and the failure of Landlord to notify the Tenant that it does not give
its consent or approval within thirty (30) days after receipt of any request by
the Tenant shall be deemed to constitute such consent or approval. Whenever the
Tenant is required under this Lease to do anything to meet the satisfaction or
judgment of Landlord, the reasonable satisfaction or judgment of Landlord shall
be deemed sufficient.
(b) The foregoing provisions of this Article shall not apply in any
instance where the provisions of this Lease expressly state that the provisions
of this Article do not apply or where the provisions of this Lease expressly
state that such consent, approval or satisfaction are subject to the sole or
absolute discretion or judgment of Landlord, and in each such instance
Landlord's approval or consent may be unreasonably withheld or unreasonable
satisfaction or judgment may be exercised by Landlord, as applicable because, as
the Tenant hereby acknowledges, Landlord and Landlord's Affiliates have very
substantial interests in maintaining the image, reputation, aesthetic
appearance, and quality of, and harmony among, the properties owned by them
which include and surround the area of the Land, and that, accordingly, the use,
development, maintenance and operation of the Land, the Buildings, the
Furnishings and the Convention Hotel, must be, in certain instances, subject to
the approval of Landlord in its sole and absolute discretion.
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(c) Notwithstanding the provisions of Paragraph (b) of this Article,
if Landlord unreasonably or arbitrarily withholds its consent, approval or
acknowledgment of satisfaction or judgment in respect of any matter, Landlord
shall have no liability in connection with such withholding or delay except that
if same is in respect of matters governed by paragraph (a) of this Article, (i)
Landlord shall be deemed to have granted such consent or approval if a court
finally determines that Landlord withheld same unreasonably, and (ii) if such
court determines that Landlord acted in bad faith in withholding such consent,
the foregoing exculpatory language contained in this paragraph (c) shall not
apply.
44. Intentionally Omitted.
45. Limitation of Landlord's Liability. It is specifically understood and
agreed that there shall be absolutely no personal liability on the part of
Landlord or on the part of any of Landlord's Affiliates in respect of any of the
terms, covenants and conditions of this Lease or of the Related Agreements,
other than those which expressly state that the provisions of this Article do
not apply to them (and where the provisions of this Article do not apply,
Landlord shall be personally liable), and the Tenant shall look solely to the
interest of Landlord in the Demised Premises for the satisfaction of each and
every remedy of the Tenant in the event of any breach or default by Landlord or
by any successor in interest of any of the terms, covenants and conditions of
this Lease or of the Related Agreements to be performed by Landlord, other than
those which expressly state that the provisions of this Article do not apply to
them (and where the provisions of this Article do not apply, there shall be
personal liability on the part of Landlord). The term "Landlord" as used in this
Lease shall mean the ground lessee from time to time under the Master Ground
Lease identified in Section 48 below, or if the Master Ground Lease ever
terminates the owner from time to time of the fee simple title to the Land. From
and after any conveyance of the Demised Premises by Landlord, except if and to
the extent that the conveying Landlord is personally liable for an obligation
pursuant to the terms of this Lease, the conveying Landlord shall have no
obligation or liability of any kind under this Lease for obligations arising
from and after such conveyance if and to the extent that the entity receiving
the conveyance shall assume the obligations of Landlord thereafter to be
performed under this Lease.
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46. Fee Mortgage. Each and every Fee Mortgage shall be and is hereby made,
subject and subordinate in all respects (i) to this Lease, and all amendments
and modifications thereto and to any Novation Ground Lease granted pursuant to
the provisions of paragraph 16(c)(v) and to any amendments and modifications
thereto, provided that all such amendments and modifications to this Lease or to
any such Novation Ground Lease are made prior to the date of such Fee Mortgage,
and (ii) to any and all claims of the Tenant arising under this Lease, any such
Novation Ground Lease, and/or the Related Agreements, or under any modifications
of the foregoing which are modifications made prior to the date of such Fee
Mortgage. The holder of a Fee Mortgage is referred to herein as a "Fee
Mortgagee", the Fee Mortgage that is prior in lien among those in effect is
herein referred to as the "First Fee Mortgage", and the holder of the First Fee
Mortgage is herein referred to as the "First Fee Mortgagee". Landlord shall use
good faith efforts to provide written notice to Tenant of the existence of each
Fee Mortgage as the same is executed and becomes effective, but Landlord shall
not be liable for inadvertent failure to provide any such notice and Tenant's
remedies for any failure to provide notice hereunder shall not include
termination of this Lease and shall be limited to recovering any actual damages
resulting from any failure by Landlord to provide notice hereunder.
Notwithstanding that the subordination of each Fee Mortgage to this Lease and to
all interests of Tenant and parties claiming by, through or under Tenant is
automatic and absolute, this Section 46 shall constitute a covenant running with
the title to the Land obligating each Fee Mortgagee to provide a formal written
acknowledgment of such subordination and agreement not to disturb Tenant absent
default by Tenant upon written request of Tenant, in a form reasonably
acceptable to Tenant and such Fee Mortgagee, and Landlord hereby covenants to
use its diligent best efforts to obtain such an acknowledgment from each Fee
Mortgagee as so requested, providing only that as a condition thereof Tenant and
each Permitted Leasehold Mortgagee of Tenant shall in turn provide an attornment
agreement in favor of each such Fee Mortgagee agreeing to attorn to the Fee
Mortgagee in the that such Fee Mortgagee shall succeed to the Landlord's
interests hereunder. The foregoing notice requirements shall also apply to any
assignment of this Lease by Landlord and the Landlord's assignee and Tenant
shall execute an attornment and acceptance agreement reasonably acceptable to
each whereby Tenant shall attorn to Landlord's successor and such successor
shall accept Tenant as the Tenant hereunder.
47. No Merger. There shall be no merger of this Lease or the leasehold
estate created hereby with the fee estate in the Demised Premises or any part
thereof by reason of the same party acquiring or holding, directly or
indirectly, this Lease and the leasehold estate created hereby or any interest
in this Lease or in such estate created hereby as well as the fee estate in the
Demised Premises.
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48. Master Ground Lease. Landlord represents that it is the ground lessee
of the Demised Premises under the terms of that certain Xentury City GP Ground
Lease dated and entered into of even date herewith by and between GP Limited
Partnership, a Florida limited partnership which is the owner of the Demised
Premises, as the "Ground Lessor," and Landlord, as the ground lessee thereunder
(the "Master Ground Lease"), that the Master Ground Lease is in full force and
effect and has not been amended, and that the Master Ground Lease is currently
in good standing with all sums due and payable from Landlord thereunder having
been paid in full.
49. Arbitration. (a) Any dispute arising under any provisions of this Lease
that specifically provides for resolution of such dispute by arbitration may be
referred to arbitration by either party delivering to the other written notice
(an "Arbitration Notice") specifying the name and address of the arbitrator
designated by it, the nature of the dispute, the amount (if any) involved and
the qualifications of such arbitrator necessary to meet the requirements
hereinafter imposed. Within seven (7) days after delivery of an Arbitration
Notice by one party, the other party shall deliver a response (a "Response to
Arbitration Notice") specifying the name and address of the arbitrator
designated by it and the qualifications of such arbitrator necessary to meet the
requirements hereinafter imposed. If a party fails to deliver its Response to
Arbitration Notice within such seven (7) day period, the other party may request
the American Arbitration Association to appoint the second arbitrator. Within
five (5) days after delivery of a Response to Arbitration Notice (or appointment
of the second arbitrator by the American Arbitration Association), the two
arbitrators appointed shall select a third arbitrator. If the two initial
arbitrators cannot agree upon a third within such five (5) day period they shall
immediately notify the parties hereto, whereupon the third arbitrator shall be
appointed upon the application of the arbitrators or of either party, by the
office of the American Arbitration Association located closest to the Land. In
the case of an arbitration in respect of and pursuant to Article 6 hereof, each
arbitrator shall be a Certified Public Accountant with at least ten (10) years'
experience in the field of hotel accounting. In the case of an arbitration in
respect of and pursuant to Article 14 hereof, each arbitrator shall be a
Certified Hotel Administrator or shall be a person who has earned a college
degree in "Hotel Administration" from an accredited college or university with
such a degree program, in each case with at least ten (10) years' experience in
the first of first class hotel management. The third arbitrator shall be a
neutral person with no financial or personal interest in the result of the
arbitration or any present relationship with the parties or their counsel. The
arbitrators appointed as aforesaid shall convene in Orlando, Florida within five
(5) days after the appointment of the third arbitrator and shall render their
decision and award upon the concurrence of at least two of their number, as
promptly as possible, and in any event, within thirty (30) days after the
appointment of the third arbitrator. Such decision and award shall be in writing
and counterpart copies thereof shall be delivered to each of the parties. In
rendering their decision and award, the arbitrators shall not add to, subtract
from, or otherwise modify the provisions of this Lease. The decision and award
of the arbitrators shall be final and judgment may be had on the decision and
the award so rendered.
(b) The following provisions shall apply to any arbitration instituted
pursuant to this Article:
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<PAGE> 93
(i) The arbitration shall be determined in accordance with the
commercial Arbitration Rules then in use by the American Arbitration
Association, as amended by this Article (or, if such Association shall not then
be in existence, such other organization, if any, as shall then become the
successor of said Association or if there be no successor, pursuant to
applicable law of the State of Florida);
(ii) The arbitrators shall not be empowered to call for any
pre-hearing conference, pre-hearing testimony or other pre-hearing examination
of either party and shall limit requests by the parties for the production of
documents and other records to only those necessary to determination of the
issue before them;
(iii) Each party shall pay the fees and expenses of the arbitrator
appointed by it and the fees and expenses of the third arbitrator shall be borne
by the parties equally. The arbitrators may award legal fees and costs in
connection with the arbitration; and
(iii) The arbitrators shall have and are hereby granted full power
and authority to order injunctive relief or such other mandatory relief as may
be provided for hereunder or otherwise available to the parties under applicable
law.
(c) The application for, or pendency of, any arbitration shall not
extend the times for performance by the parties of their respective obligations
under this Lease, except as otherwise provided in paragraph 15(a)(iv) herein, or
limit or delay the right of any party to seek temporary injunctive relief
(during the pendency of such arbitration) from the appropriate court with regard
to the matter being arbitrated. The right of Landlord and/or the Tenant to
submit a dispute to arbitration is limited to disputes arising under those
provisions of this Lease which specifically provide for arbitration.
50. Exhibits. The Exhibits and Schedules to this Lease, as designated
herein and annexed hereto, shall, except as otherwise provided in this Lease,
each be deemed to form an integral part of this Lease and to be incorporated
herein as if herein set out in full.
51. Counterparts. This Lease may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
52. Construction of Agreement. This Lease has been fully reviewed and
negotiated by the parties hereto and their respective counsel. Accordingly, in
interpreting this Lease, no weight shall be placed upon which party hereto or
its counsel drafted the provision being interpreted.
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IN WITNESS WHEREOF, Landlord and the Tenant have caused this Lease to
be duly executed the day and year first above written.
Signed, sealed and delivered LANDLORD:
in the presence of:
XENTURY CITY DEVELOPMENT COMPANY, L.C.,
a Florida limited liability company
Witness:__________________________
(Print Name) By: ___________________________________
James W. Thomas, Manager
Witness: _________________________
(Print Name)
STATE OF _________________ )
COUNTY OF ________________ )
The foregoing Opryland Hotel - Florida Ground Lease was executed before
me the undersigned authority this ____ day of ___________________, 1999, by
James W. Thomas, as Manager of XENTURY CITY DEVELOPMENT COMPANY, L.C., a Florida
limited liability company, on behalf of the Landlord. He is personally known to
me.
(NOTARY SEAL) Notary Public
Print Name:____________________________
Commission No.:________________________
Commission Expires:____________________
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<PAGE> 95
Signed, sealed and delivered TENANT:
in the presence of:
OPRYLAND HOTEL - FLORIDA LIMITED
PARTNERSHIP, a Florida limited
partnership
By: Opryland Hospitality, Inc., a
Tennessee corporation qualified to
do business in Florida, General
Partner
Witness: ________________________
(Print Name) By: _____________________________
Name:____________________________
Witness:_________________________ Title:___________________________
President
(Print Name)
(CORPORATE SEAL)
STATE OF _________________ )
COUNTY OF ________________ )
The foregoing Opryland Hotel - Florida Ground Lease was executed before
me the undersigned authority this ____ day of March, 1999, by
___________________________, as __________ President of Opryland Hospitality,
Inc., a Tennessee corporation qualified to do business in Florida, as General
Partner of OPRYLAND HOTEL - FLORIDA LIMITED PARTNERSHIP, a Florida limited
partnership, on behalf of the Tenant. He is personally known to me.
(NOTARY SEAL) Notary Public
Print Name:____________________________
Commission No.:________________________
Commission Expires:____________________
95 EXECUTION COPY
<PAGE> 1
Exhibit 10.17
AMENDED AND RESTATED
GAYLORD ENTERTAINMENT COMPANY
DIRECTORS' UNFUNDED DEFERRED COMPENSATION PLAN
1. The Purpose of the Plan. The purpose of this Plan is to provide
incentive to directors of the Corporation who have contributed to the success of
the Corporation and are expected to continue to contribute to such success in
the future. Generally, the Plan provides such directors with the opportunity to
defer all or a portion of their regular director fees.
2. Definitions. As used herein, the following words shall have the
meanings indicated unless otherwise defined or required by the context:
(a) "Account" shall have the meaning set forth in Section 7
hereof.
(b) "Administrative Committee" shall mean the committee
appointed pursuant to Section 3 below to administer the
Plan.
(c) "Board" shall mean the Board of Directors of the
Corporation.
(d) "Corporation" shall mean Gaylord Entertainment Company.
(e) "Director" shall mean any non-employee director of the
Corporation.
(f) "Director Fees" shall mean fees payable to a Director for
his or her service to the Corporation as a director.
(g) "Participating Director" shall mean any Director who
participates in the Plan.
(h) "Plan" shall mean the Gaylord Entertainment Company
Directors' Unfunded Deferred Compensation Plan.
3. Administration of the Plan. The Plan shall be administered by an
Administrative Committee consisting of not less than three (3) members, who
shall be appointed by, and hold office at the pleasure of the Board of Directors
of the Corporation; provided, however, that an
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Administrative Committee member who is also a Participating Director shall not
participate in any decision that directly affects such member's participation or
interest in the Plan. Subject to the provisions of the Plan, the Administrative
Committee shall have full and conclusive authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; and to
make all other determinations necessary or advisable for the proper
administration of the Plan. Decisions and determinations by the Administrative
Committee shall be final and binding upon all parties, including the Corporation
and any Participating Director.
4. Eligibility to Participate. Each of the Directors shall be eligible
to participate in the Plan.
5. Election to Participate. A Director who desires to participate in
the Plan shall file with the Administrative Committee a written election to
participate. Such written election shall specify (1) that portion of his or her
Director Fees to be deferred, (2) a deferred fees payment option as described in
Section 8 below, (3) a designation of beneficiary or beneficiaries as described
in Section 9 below, and (4) such other information as required by the
Administrative Committee. An election hereunder (A) shall be effective (i) in
the case of a Director recently appointed or elected who files a written
election to participate within thirty (30) days after the date of the
effectiveness of such appointment or election, for Director Fees earned after
the date the election is filed with the Administrative Committee or (ii) in all
other cases, for Director Fees earned after the commencement of the next
succeeding calendar year and (B) in either case, shall remain in effect until
revoked or until (i) a revocation of participation is filed as to Director Fees
not yet earned or (ii) a new election increasing participation is filed and
becomes effective in accordance with the provisions of clause (A) above. No
Director shall be entitled to participate in the Plan unless he or she files an
election hereunder.
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6. Deferrals Nonforfeitable. A Participating Director's right to fees
so deferred shall be nonforfeitable, and the resignation of such Participating
Director from the Board for any reason shall not in any way diminish the amount
of deferred fees payable to the Participating Director or alter the method or
the time for payment or the beneficiary or beneficiaries thereof.
7. Account Maintenance. The Administrative committee shall cause an
account ("Account") to be kept in the name of each Participating Director. Each
Account shall be credited with a rate of earnings for each calendar quarter or
portion thereof which shall equal the prime rate on the first business day of
each such calendar quarter as reported in the Wall Street Journal.
8. Distributions. In connection with the filing of an initial written
election to participate in the Plan pursuant to Section 5 hereof, each
Participating Director shall be required to elect, in accordance with the
provisions of this Section 8, when he or she shall receive distribution of his
or her Account. A Participating Director may not change his or her election of
distribution for deferred Director Fees subject to the Plan already earned. A
Participating Director may from time to time change in writing his or her
election of distribution for Director Fees subject to the Plan not yet earned,
but any such change shall only be effective for Director Fees earned after the
commencement of the next succeeding calendar year. A Participating Director may
elect from the following deferral options: (i) payment of all benefits payable
hereunder in a lump sum within one hundred and eighty (180) days after the date
of termination of the Participating Director's service with the Board for any
reason, (ii) payment of all benefits payable hereunder in a lump sum within
thirty (30) days after the third (3rd) anniversary of the date of termination of
the Participating Director's service with the Board for any reason or (iii)
payment of all benefits payable hereunder in a lump sum within thirty (30) days
after the fifth (5th) anniversary of the date of termination of the
Participating Director's service with the Board for any reason. With respect to
any deferral option
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set forth immediately above, a Participating Director may elect for any lump sum
payment to be made in equal annual installments over a period of three (3) or
five (5) years, with the first such installment payable on the date a lump sum
would otherwise be payable pursuant to the immediately preceding sentence and
subsequent installments payable on each succeeding anniversary of the date of
termination. The unpaid balance of such installments shall continue to bear
interest at the rate set forth in Section 7 above.
9. Designation of Beneficiary. Each Participating Director shall have
the right to designate one or more beneficiaries to receive any death benefits
payable hereunder. Such designation must be in writing and on a form prescribed
by the Administrative Committee. The Participating Director may revoke any
designation at any time and make a new designation; provided, however, that no
designation shall be effective unless received by the Administrative Committee.
If the Participating Director dies prior to receiving distribution of his or her
Account, such Account shall be paid to the Participating Director's beneficiary
or beneficiaries. If a Participating Director fails to designate a beneficiary
or beneficiaries, any benefits payable hereunder shall be paid to the
Participating Director's surviving spouse. If there is no surviving spouse, such
benefits shall be paid to the estate of the Participating Director.
10. Assignment of Benefits. To the extent permitted by law, the right
of any Participating Director or designated beneficiary to receive any payment
hereunder shall not be subject to attachment or other legal process for payment
of debts of the Participating Director or any beneficiary, and such payments
shall not be subject to anticipation, alienation, assignment, pledge, sale,
transfer or other encumbrance.
11. Ownership of Assets; Relationship with Corporation. Notwithstanding
anything herein to the contrary, no Participating Directors shall have any
right, title, or interest whatsoever in
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or to Director Fees deferred hereunder or his or her Account. Nothing contained
in the Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind or a fiduciary relationship between the
Corporation and any Director or any other person. Notwithstanding anything
contained in this Plan to the contrary, to the extent that any person acquires a
right to receive payments from the Corporation under this Plan, such right shall
be no greater than the right of an unsecured general creditor of the
Corporation.
12. Indemnification. No member of the Administrative Committee shall
have any liability for any decision or action made or taken under this Plan if
made or done in good faith. The Corporation shall indemnify each such member
acting in good faith pursuant to this Plan against any loss or expense arising
therefrom.
13. Termination and Amendment of the Plan. Although the corporation
intends to continue this Plan indefinitely, it reserves the right in the
Administrative Committee to amend, suspend, or terminate this Plan at any time;
provided, however, that no such amendment shall adversely affect rights to
receive any amounts to which Participating Directors or their beneficiaries have
become entitled to prior to payment.
14. Governing Law. This plan shall be construed and administered in
accordance with and governed by the laws of the State of Tennessee.
15. Effective Date; Plan Year. The Plan shall become effective as of
January 1, 1995, and the Plan year shall be the calendar year.
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<PAGE> 1
EXHIBIT 10.22
SEVERANCE AGREEMENT
AGREEMENT between Gaylord Entertainment Company, a Delaware corporation
("GEC"), and David B. Jones (the "Key Employee").
W I T N E S E T H
WHEREAS, the Board of Directors of GEC (the "Board") believes that, in
the event of a threat or occurrence of a "Change of Control" (as defined
hereafter) of GEC, it is in the best interest of GEC and its present and future
shareholders that the business of GEC be continued with a minimum of disruption,
and that such objective will be achieved if GEC key management employees are
given reasonable assurances of employment security during the period of
uncertainty often associated with Change of Control; and
WHEREAS, GEC believes the giving of such assurances by GEC will enable
it (a) to secure the continued services of both its key operational and
management employees in the performance of both their regular duties and such
extra duties as may be required of them during such period of uncertainty, (b)
to be able to rely on such employees to manage and maintain their focus on the
affairs of GEC during any such period, and (c) to have the ability to attract
new key employees as needed; and
WHEREAS, the Board has approved entering into severance agreements with
certain key management employees of GEC in order to achieve the foregoing
objectives; and
WHEREAS, Key Employee is a key management employee of GEC or one of its
subsidiaries;
NOW, THEREFORE, GEC and Key Employee agree as follows:
1. CHANGE OF CONTROL. For the purposes of this Agreement, a
"Change of Control" shall be deemed to have taken place if: (i) any person or
entity, including a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, other than GEC, a wholly-owned subsidiary thereof or any
employee benefit plan of GEC or any of its subsidiaries, and other than E. L.
Gaylord or any member of his immediate family or any affiliate of Mr. Gaylord or
any member of his immediate family, hereafter becomes the beneficial owner of
GEC securities having 40% or more of the combined voting power of the then
outstanding securities of GEC that may be cast for the election of directors of
GEC (other than as a result of an issuance of securities initiated by GEC in the
ordinary course of business); or (ii) as the result of, or in connection with,
any cash tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions,
100% of the combined voting power of the outstanding securities of GEC entitled
to vote generally in the election of directors of GEC prior to any such
transaction is reduced to less than a majority of the combined voting power of
the outstanding securities of GEC or any successor corporation or entity
entitled to vote generally in the election of directors immediately after such
transaction; or (iii) during any period of two consecutive years, individuals
who at the beginning of any such period constitute the Board of Directors of GEC
cease
<PAGE> 2
for any reason to constitute at least a majority thereof, unless the election,
or the nomination for election by GEC's shareholders, of each director of GEC
first elected during such period was approved by a vote of at least two-thirds
of the directors of GEC then still in office who were directors of GEC at the
beginning of any such period. Upon a Change of Control of GEC while the Key
Employee is still an employee of GEC, this Agreement and all of its provisions
shall become operative immediately.
2. EMPLOYMENT. GEC and Key Employee hereby agree that, if Key
Employee is in the employ of GEC on the date on which a Change of Control occurs
(the "Change of Control Date"), GEC will continue to employ Key Employee and Key
Employee will remain in the employ of GEC, for the period commencing on the
Change of Control Date and ending on the Second anniversary of such date (the
"Employment Period"), to exercise such authority and perform such duties as are
commensurate with the authority being exercised and duties being performed by
the Key Employee immediately prior to the Change of Control Date. Nothing
expressed or implied in this Agreement shall create any right or duty on the
part of GEC or the Key Employee to have the Key Employee remain in the
employment of GEC prior to any Change in Control, provided; however, that any
termination of employment of the Key Employee or the removal of the Key Employee
from the office or position in GEC following the commencement of any discussion
with a third person that ultimately results in a Change in Control with that or
another person shall be deemed to be a termination or removal of the Key
Employee after a Change in Control for purposes of this Agreement.
3. COMPENSATION AND BENEFITS. During the Employment Period, GEC
will (a) continue to pay the Key Employee a salary at not less than the amount
paid to Key Employee on the Change of Control Date, (b) pay the Key Employee
cash bonuses not less in amount than 60% of the average of cash bonuses paid
during the two 12-month periods preceding the Change of Control Date, (c)
continue employee benefit programs to or for the benefit of Key Employee and his
or her beneficiaries at levels in effect on the Change of Control Date as more
particularly described in Section 7, and (d) pay to Key Employee any Additional
Amount determined pursuant to Section 4.
4. TAX REIMBURSEMENT PAYMENT.
(a) Notwithstanding anything to the contrary contained in this
Agreement, in any plan of GEC or its affiliates, or in any other agreement or
understanding, GEC will pay to Key Employee, at the times hereinafter specified,
an amount (the "Additional Amount") equal to the excise tax under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), if any, incurred
or to be incurred by Key Employee by reason of the payments under this
Agreement, payments under the supplemental executive retirement plan,
acceleration of vesting of stock options or restricted stock granted under the
1997 Stock Option and Incentive Plan, or any other payments under any plan,
agreement or understanding between Key Employee and GEC or its affiliates,
constituting Excess Parachute Payments (as defined below), plus all excise taxes
and federal, state and local income taxes incurred or to be incurred by the Key
Employee with respect to receipt of the Additional Amount. For purposes of this
Agreement, the term "Excess Parachute Payment" shall mean any payment or any
portion thereof which would be an "excess parachute payment" within the meaning
of Section 280G(b) of the Code, and which would result in the imposition of an
excise tax on the
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Key Employee under Section 4999 of the Code. Attached hereto as Exhibit A is an
example illustrating the computation of the Additional Amount.
(b) All determinations required to be made regarding the
Additional Amount, including whether payment of any Additional Amount is
required and the amount of any Additional Amount, shall be made by the
independent accounting firm which is advising GEC (the "Accounting Firm"), and
the Accounting Firm shall provide detailed support calculations to GEC and Key
Employee within sixty (60) days following the "Termination Event," as such term
is defined in Section 5, below. In computing taxes, the Accounting Firm shall
use the highest marginal federal, state and local income tax rates applicable to
the Key Employee for the year in which the Additional Amount is to be paid (or
if those tax rates are unknown, for the year in which the calculation is made)
and shall assume the full deductibility of state and local income taxes for
purposes of computing federal income tax liability. The portion of the
Additional Amount based on the excise tax as determined by the Accounting Firm
to be due shall be paid to Key Employee no later than March 1 immediately
following the calendar year in which a Termination Event occurs. The portion of
the Additional Amount based on the excise tax as determined by the Accounting
Firm to be due for each calendar year following the calendar year in which a
Termination Event occurs during the Employment Period shall be paid to the Key
Employee on or before March 1 immediately following the end of each such
calendar year. If GEC determines that the excise tax for any year will be
different from the amount originally calculated in the report of the Accounting
Firm delivered within sixty (60) days following the Termination Event, then GEC
shall provide to Key Employee detailed support calculations by the Accounting
Firm specifying the basis for the change in the Additional Amount.
5. TERMINATION OF EMPLOYMENT.
(a) If, during the Employment Period, Key Employee's
employment is terminated by GEC (or a subsidiary of GEC) or a successor thereto
for other than gross misconduct;
(b) or if
(i) there is a reduction in Key Employee's
salary under Section 3(a), a reduction in Key Employee's bonus
below the level set forth in Section 3(b), a reduction in Key
Employee's benefits, or a material change in Key Employee's
status, working conditions or management responsibilities, or
(ii) Key Employee is required to relocate his or
her residence more than 100 miles from his or her city of
employment,
and Key Employee voluntarily terminates his or her employment within 60 days of
any such event, or the last in a series of events, then Key Employee shall be
entitled to continue to receive those benefits described in Section 5(e) and to
receive a lump sum payment ("Severance Compensation") equal to the sum of
(1) For purposes of this Agreement, the term "gross misconduct" shall mean an
intentional act of fraud or embezzlement, intentional wrongful damage to
property of GEC, or intentional wrongful disclosure of material confidential
information of GEC. No act or failure to act on the part of the Key Employee
shall be deemed intentional unless determined by a final judicial decision to be
done, or omitted to be done, by Key Employee not in good faith and without
reasonable belief that his or her action or omission was in the best interest of
GEC.
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(x) 150% of Key Employee's "Base Amount" as
determined under paragraph (c) below, and
(y) any portion of the Additional Amount not
theretofore paid, as described in paragraph (d) below.
The lump sum payment shall be subject to and reduced by all applicable federal
and state withholding taxes and shall be paid to the Key Employee within 30
business days after his or her termination of employment. The termination of
employment pursuant to Section 5(a) or 5(b) shall be referred to herein as a
"Termination Event."
(c) The Base Amount for purposes of this Section 5 shall
be Key Employee's base salary and bonuses paid to him or her during the 12-month
period preceding the date of his or her termination of employment pursuant to
paragraph (a). If Key Employee has not been employed for a 12-month period, his
or her Base Amount shall be his or her annualized base salary at the rate then
in effect and bonuses paid to Key Employee prior to the date of his or her
termination of employment.
(d) The Additional Amount shall be determined in the same
manner described in section 4, as illustrated in Exhibit A. At or prior to the
time of payment of the Additional Amount (or the remainder thereof), GEC shall
provide to Key Employee a report of the Accounting Firm, including detailed
support calculations, describing its determination of the Additional Amount (or
an updated report of the Accounting Firm to its report for the year in which the
Termination Event occurs, if that report has already been provided to Key
Employee). If GEC determines that no Additional Amount is due under this
paragraph (c), it shall provide to Key Employee an opinion of the Accounting
Firm that Key Employee will not incur an excise tax on any or all of the
Severance Compensation, vesting of stock options, or other payments under any
plan, agreement or understanding between Key Employee and GEC. Any such opinion
shall be based upon the proposed regulations under Code Sections 280G and 4999
or substantial authority within the meaning of Code Section 6662.
(e) After termination of employment for which Key
Employee is entitled to Severance Compensation, and continuing until the end of
the Employment Period (i.e., the second anniversary of the Change of Control
Date, or if later, during the extended term of this Agreement pursuant to
Section 16), GEC shall maintain at its expense for the continued benefit of Key
Employee and his or her dependents all medical, dental, basic life insurance,
and basic accident insurance plans of GEC in which Key Employee or his or her
dependents are entitled to participate pursuant to Section 7, provided that such
continued participation is possible under the terms and provisions of such
plans. In the event that the participation by Key Employee or his or her
dependents in any such plan is barred, or if the benefits in any of the plans
are reduced to a level below what they were on the Change of Control Date, GEC
shall arrange to provide Key Employee and his or her dependents with benefits
equivalent to those which they were receiving under such plans immediately prior
to the Change of Control Date, such benefits to be provided at GEC's
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expense by means of individual insurance policies, or if such policies cannot be
obtained, from GEC's assets. If Key Employee should accept employment with
another employer and if Key Employee and/or his or her dependents should become
covered under that employer's medical, dental, life insurance and accident
insurance plans, or any of them, or if Key Employee and/or his or her dependents
should obtain comparable coverage from any other source (e.g. spousal coverage),
then effective on the date that such coverage commences, the obligation of GEC
to provide any benefits under this Section 5(e) to Key Employee or his or her
dependents shall terminate to the extent that equivalent coverage is provided
under the plans of the subsequent employer or otherwise obtained coverage.
The medical and dental benefits required to be provided
pursuant to this Section 5(d) are not intended to be a substitute for any
extended coverage benefits ("COBRA rights") described in Section 4980B of the
Code, and such COBRA rights shall not commence until after the period of
coverage specified in the first sentence of this Section 5(d) comes to an end.
(f) In the event of a dispute concerning the amount of
Severance Compensation, including a dispute as to the calculation of the
Additional Amount or the employee benefits to which Key Employee is entitled
pursuant to the terms of this Agreement, which is not resolved within 60 days
after the date of termination of employment, Key Employee may submit the
resolution of the dispute to arbitration. Any arbitration pursuant to this
Agreement shall be determined in accordance with the rules of the American
Arbitration Association then in effect, by a single arbitrator if the parties
shall agree upon one, or otherwise by three arbitrators, one appointed by each
party, and a third arbitrator appointed by the two arbitrators selected by the
parties, all arbitrators to come from a panel proposed by the American
Arbitration Association. If any party shall fail to appoint an arbitrator within
30 days after it is notified to do so, then the arbitration shall be
accomplished by a single arbitrator. Unless otherwise agreed by the parties
hereto, all arbitration proceedings shall be held in Nashville, Tennessee. Each
party agrees to comply with any award made in any such proceeding, which shall
be final, and to the entry of judgment in accordance with applicable law in any
jurisdiction upon any such award. The decision of the arbitrators shall be
tendered within 60 days of final submission of the parties in writing or any
hearing before the arbitrators and shall include their individual votes. If the
Key Employee is entitled to any award pursuant to the determination reached in
the arbitration proceeding that is greater than that proposed by GEC, he or she
shall be entitled to payment by GEC of all attorneys' fees, costs (including
expenses of arbitration), and other out-of-pocket expenses incurred in
connection with the arbitration.
6. INDEMNIFICATION.
(a) If Key Employee shall have to institute litigation
brought in good faith to enforce any of his or her rights under the Agreement,
GEC shall indemnify Key Employee for his or her reasonable attorney's fees and
disbursements incurred in any such litigation.
(b) In the event that an excise tax is ever assessed by
the Internal Revenue Service against Key Employee (or if GEC and Key Employee
mutually agree that an excise tax is payable) by reason of the payments under
this Agreement, payments under the supplemental executive retirement plan,
acceleration of vesting of stock options or restricted stock granted under the
GEC 1997 Stock Option and Incentive Plan, or any other payments under any plan,
agreement or
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understanding between Key Employee and GEC or its affiliates, constituting
Excess Parachute Payments, and if such excise tax was not included in the
determination by the Accounting Firm of the Additional Amount that has been
actually paid to Key Employee, GEC agrees to indemnify Key Employee by paying to
Key Employee the amount of such excise tax, together with any interest and
penalties, including reasonable legal and accounting fees and other
out-of-pocket expenses incurred by Key Employee, attributable to the failure to
pay such excise tax by the date it was originally due, plus all federal, state
and local income taxes incurred with respect to payment of the excise tax,
calculated in a manner analogous to Exhibit A. This indemnification obligation
shall survive the termination of the Employment Period and shall apply to all
such excise taxes on Excess Parachute Payments, whether due before or after
termination of employment, except that no such right of indemnification shall
exist after termination of employment for gross misconduct (as defined pursuant
to paragraph (a) of Section 5).
(c) If the excise tax for any year which is actually
imposed on Key Employee is finally determined to be less than the amount taken
into account in the calculation of the Additional Amount that was paid to Key
Employee pursuant to Section 4 or Section 5, then Key Employee shall repay to
GEC, at the time that the amount of such reduction in excise tax is finally
determined, the portion of the Additional Amount attributable to such reduction
(including the portion of the Additional Amount attributable to the excise tax
and federal and state income taxes imposed on the Additional Amount being repaid
by Key Employee, to the extent that such repayment results in a reduction in
such excise tax, federal or state income tax), plus interest on the amount of
such repayment at the rate provided in section 1274(b)(2)(B) of the Code.
7. NORMAL EMPLOYEE BENEFITS. During the Employment Period, Key
Employee and his or her dependents shall be entitled to participate in any and
all employee benefit plans maintained by GEC (or a subsidiary of GEC), or a
successor thereto, which provide benefits for its executives and for its
salaried employees generally, including, without limitation, its tax-qualified
retirement plans, supplemental executive retirement plan, stock option and other
stock award plans, and welfare benefit plans providing medical and dental
benefits, group life insurance, disability benefits and accidental death and
dismemberment insurance. Any future increases in benefits in any of such plans
available to executives or salaried employees of GEC generally shall also be
provided to Key Employee.
Nothing in this Agreement shall preclude GEC from amending or
terminating any employee benefit plan, but it is the intent of the parties that
Key Employee and his or her dependents shall be entitled during the Employment
Period to the same level of benefits in all employee benefit plans as the level
in effect in the respective plans of GEC on the Change of Control Date. In the
case of the stock option and other stock award plans, the requirement that the
same level of benefits be provided shall be satisfied if Key Employee enjoys at
least the same reward opportunities as provided by GEC prior to the Change of
Control Date. If any of the employee benefit plans are amended to reduce
benefits to Key Employee or his or her dependents, or if Key Employee or his or
her dependents become ineligible to participate in any such plans, GEC shall
arrange to provide Key Employee and his or her dependents with benefits
equivalent to those which they were receiving under such plans immediately prior
to the Change of Control Date, such benefits to be provided at GEC's expense by
means of individual insurance policies, or if such policies cannot be obtained,
from GEC's assets.
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8. CONFIDENTIALITY. Key Employee recognizes that he or she has or
will have access to and may participate in the origination of non-public
confidential information and will owe a fiduciary duty with respect to such
information to GEC. Confidential information includes, but is not limited to,
trade secrets, supplier information, pricing information, internal corporate
planning, GEC secrets, methods of marketing, methods of showroom selection and
operation, ideas and plans for development, historical financial data and
forecasts, long range plans and strategies, and any other data or information of
or concerning GEC that is not generally known to the public or in the industry
in which GEC is engaged. Key Employee agrees that from the date of this
Agreement and throughout the Employment Period he or she will, except as
specifically authorized by GEC in writing, maintain in strict confidence and
will not use or disclose, other than disclosure made in the ordinary course of
business of GEC or to other employees of GEC, any confidential information
belonging to GEC. If Key Employee shall breach the terms of this Section 8, all
of his or her rights under this Agreement shall terminate.
9. WITHHOLDING OF TAXES. GEC may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulations or ruling.
10. GOVERNING LAW. This Agreement shall be construed according to
the laws of Tennessee, without giving effect to the principles of conflicts of
laws of such State.
11. AMENDMENT; MODIFICATION; WAIVER. This Agreement may not be
amended except by the written agreement of the parties hereto. No provisions of
this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by Key Employee and
GEC. No waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.
12. BINDING EFFECT.
(a) This Agreement shall be binding on GEC, its
successors and assigns. Should there be a consolidation or merger of GEC with or
into another corporation, or a purchase of all or substantially all of the
assets of GEC by another entity, the surviving or acquiring corporation will
succeed to the rights and obligations of GEC under this Agreement.
(b) This Agreement shall inure to the benefit of and be
enforceable by Key Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in paragraphs (a) or (b) hereof. Without limiting the
generality of the foregoing, Key Employee's right to receive payments hereunder
shall not be assignable, transferable or delegable, whether by pledge, creation
of a security interest or otherwise, other than by a transfer by will or by the
laws of descent and distribution and, in the event of any
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attempted assignment or transfer contrary to this Section 13 (c), GEC shall have
no liability to pay any amount so attempted to be assigned, transferred or
delegated.
(d) GEC and Key Employee recognize that each party will
have no adequate remedy at law for breach by the other of any of the agreements
contained herein and, in the event of any such breach, GEC and Key Employee
hereby agree and consent that the other shall be entitled to a decree of
specific performance, mandamus or other appropriate remedy to enforce
performance of this Agreement.
(e) Notwithstanding anything to the contrary contained in
this Agreement, in any plan of GEC or its affiliates, or in any other agreement
or understanding, GEC shall pay to Key Employee all amounts required to be paid
hereunder (including the Additional Amount and Severance Compensation), as well
as amounts required by the terms of any other plan, agreement or understanding
(including the accelerated vesting of stock options and restricted stock upon a
Change of Control), regardless of whether any such amounts or accelerated
vesting constitute Excess Parachute Payments.
13. ENTIRE CONTRACT. This Agreement constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, express or implied with respect to the subject matter of this
Agreement.
14. NOTICE. For all purposes of this Agreement, all communications
provided for herein shall be in writing and shall be deemed to have been duly
given when delivered or after three business days after having been mailed
registered or certified mail, return receipt requested, addressed to the
addresses set forth at the end of this Agreement or to such other address as any
party furnishes in writing to the other party.
15. TERM. This Agreement shall be effective from the date of its
execution by GEC and for the twenty-four (24) months next succeeding any Change
of Control, and shall continue in effect from year to year after such
twenty-four (24) month period, unless GEC shall notify Key Employee in writing
90 days in advance of an anniversary of its execution that the Agreement shall
terminate or unless, prior to a Change of Control or the commencement of any
discussion with a third person that ultimately results in a Change of Control,
the Key Employee ceases for any reason to be an employee of GEC in which event
this Agreement shall immediately terminate and be of no further effect.
Notwithstanding the foregoing, the indemnification provisions of this Agreement
contained in Section 6 shall survive until the expiration of the statute of
limitations for assessment of any excise tax with regard to an Excess Parachute
Payment on account of the Change of Control.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF the parties hereto have executed this Severance
Agreement as of the ____ day of February, 1999.
GAYLORD ENTERTAINMENT COMPANY KEY EMPLOYEE
DAVID B. JONES
By:
--------------------------------- -----------------------------------
Terry E. London, President and Address:
Chief Executive Officer ---------------------------
One Gaylord Drive -----------------------------------
Nashville, TN 37214 -----------------------------------
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EXHIBIT 10.23
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of February 15, 2000, by and between GAYLORD
ENTERTAINMENT COMPANY, a Delaware corporation having its corporate headquarters
at One Gaylord Drive, Nashville, Tennessee 37214 ("the Company") and JAMES
"TIM" DUBOIS, a resident of Nashville, Davidson County, Tennessee
("Executive").
WITNESSETH:
WHEREAS, the Company desires to employ Executive and Executive desires
to serve as Executive Vice President of the Company and the President of its
Creative Content Group pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
AGREEMENT
1. Employment; Term; Place of Employment. The Company hereby employs
Executive, and Executive hereby accepts employment with the Company upon the
terms and conditions contained in this Agreement. The term of Executive's
employment hereunder shall commence on February 15, 2000 (the "Effective Date")
and shall continue for a period of five (5) years from and after the Effective
Date, unless sooner terminated as hereinafter provided (the "Employment
Period"). For purposes of this Agreement, a "Contract Year" shall mean a one
year period commencing on the Effective Date or any anniversary thereof.
Executive shall render services at the offices established by the Company in
the greater Nashville metropolitan area; provided that Executive agrees to
travel on temporary trips to such other places as may be required to perform
Executive's duties hereunder.
2. Duties; Title.
(a) Description of Duties.
(i) During the Employment Period, Executive shall
serve the Company as an Executive Vice President and the President of
its Creative Content Group and shall serve under such other titles as
the Chief Executive Officer of the Company shall determine. Executive
shall report directly to the Chief Executive Officer. Executive shall
be primarily responsible for the management, operations, growth, and
development of the Creative Content Group. Executive shall be assigned
such areas of responsibility as the Chief Executive Officer shall from
time to time determine, including, without limitation, the development
and oversight of country, pop, and Christian music record companies or
divisions, the oversight of the Opry Group (including the Grand Ole
Opry, the Ryman Auditorium, the Wildhorse Saloon, and live
entertainment and theatricals), music publishing, children's
programming, film and video production and distribution (including
Pandora Films), artist management, and sports management and
marketing. During the Employment Period, the Chief Executive Officer
shall be entitled to modify Executive's responsibilities
<PAGE> 2
with respect to the Creative Content Group; provided, however, that
Executive's responsibilities regarding the development and oversight
of the pop, country, and Christian music record companies or
divisions, together with music publishing relating to the foregoing,
shall not be materially reduced without Executive's consent; and
provided, further, that Executive shall not, without his consent,
become other than the most senior executive officer of the Creative
Content Group.
(ii) Executive and the Company acknowledge that a
strategic plan for the Creative Content Group has been established by
the Company, a copy of which has been delivered to Executive. On an
annual basis, at such time as is consistent with the Company's overall
planning and budgeting process, Executive shall prepare a written
update to the strategic plan for the Creative Content Group for
presentation to, and approval by, the Company.
(iii) Executive shall faithfully perform the duties
required of his office. Subject to Section 2(b), Executive shall
devote substantially all of his business time and effort to the
performance of his duties to the Company.
(b) Other Activities. Notwithstanding anything to the
contrary contained in Section 2(a), Executive shall be permitted to engage in
the following activities, provided that such activities do not materially
interfere or conflict with Executive's duties and responsibilities to the
Company:
(i) Executive may serve on the governing boards of,
or otherwise participate in, a reasonable number of trade
associations and charitable organizations, whose purposes are
not inconsistent with the activities and the image of the
Company;
(ii) Executive may engage in a reasonable amount of
charitable activities and community affairs; and
(iii) Subject to the prior approval of the Chief
Executive Officer, Executive may serve on the board of
directors of one or more business corporations, so long as
they do not compete, directly or indirectly, with the
Company.
(c) Executive shall be subject to and shall comply with all
codes of conduct, personnel policies and procedures applicable to senior
executives of the Company, including, without limitation, policies regarding
sexual harassment, conflicts of interest and insider trading.
3. Cash Compensation.
(a) Signing Bonus. The Company shall pay Executive a signing
bonus in the amount of $1,000,000 (the "Signing Bonus"). The Signing Bonus
shall be payable as follows: (i) an amount shall be paid to Executive on the
effective date equal to $1,000,000 less the projected "applicable employee
remuneration" as defined in Section 162(m)(4)* to be received by Executive
during the calendar year ending December 31, 2000; and (ii) the remainder of
the Signing Bonus (the "Deferred Signing Bonus") shall be a fully vested
deferred obligation of the Company which shall be payable, together with
investment earnings thereon, in accordance with Section 6 hereof. Payment of
the Deferred Signing Bonus shall be facilitated by the Company contributing to
the rabbi
* All section references are to the Internal Revenue Code of 1986, as amended,
unless otherwise specified.
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trust established pursuant to Section 6 (the "Rabbi Trust") an amount
of cash equal to the Deferred Signing Bonus, as set forth in Sections 6.
(b) Base Salary. During the initial Contract Year, the
Company shall pay to Executive an annual salary of $650,000. Executive's annual
salary shall be increased in each subsequent Contract Year by a percentage
equal to the annual percentage increase, if any, generally granted to other
senior executives, such percentage to be determined from time to time by the
Compensation Committee of the Board of Directors (such annual salary, together
with any increases under this subsection (b), being herein referred to as the
"Base Salary").
(c) Annual Cash Bonus.
(i) For each of the first two Contract Years,
Executive shall be entitled to receive an annual cash bonus
equal to 60% of his Base Salary for the Contract Year for
which such bonus is awarded (the "Guaranteed Cash Bonus").
Subject to the provisions of Section 6 herein relating to the
possible deferral of a portion of the Guaranteed Cash Bonus,
the Guaranteed Cash Bonus shall be paid to Executive in a
single lump sum on or before the last business day of each of
the first two Contract Years. To the extent any portion of
the Guaranteed Cash Bonus is deferred pursuant to Section 6,
the Company shall make a corresponding contribution in an
equal amount to the Rabbi Trust, as set forth in Sections 6.
(ii) For each of the third, fourth, and fifth
Contract Years, Executive shall be eligible for an annual
cash bonus that is targeted to be 60% of his Base Salary for
the Contract Year for which such bonus is awarded but which
may be greater or less than the targeted percentage depending
upon actual performance. The cash bonus awarded to Executive
for the third, fourth and fifth Contract Years (the "Cash
Bonus") shall be based upon such criteria as are utilized in
connection with the granting of bonuses to similarly situated
executive officers of the Company under the Company's annual
Management Incentive Plan, and shall further be based on
Executive's performance for each of the Company's calendar
years immediately preceding the third, fourth and fifth
anniversaries of this Agreement. The Cash Bonus shall be paid
to Executive on or before the end of the calendar month in
which the anniversary of this Agreement occurs.
(d) The Base Salary, the Guaranteed Cash Bonus, and the Cash
Bonus shall be subject to applicable withholding and shall be payable in
accordance with the Company's payroll practices.
4. Equity Compensation.
(a) Stock Option Grant. The Company hereby grants to
Executive options to purchase 200,000 shares of common stock of the Company
("Company Common Stock") (the "Stock Options"). The Stock Options shall (i) be
granted pursuant to the Company's 1997 Stock Option and Incentive Plan, as
amended and restated as of August 15, 1998, and as may hereinafter be further
amended; (ii) be subject to the terms of a stock option agreement between the
Company and Executive in the form prescribed for Company executives generally
and attached hereto as Exhibit B; (iii) vest in 40,000 share increments on the
first through the fifth anniversaries of the Effective Date (each a "Vesting
Date"), but shall be subject to accelerated vesting on each such Vesting Date
with respect to an additional 40,000 shares granted hereunder if, as of such
Vesting Date, the Creative
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Content Group has achieved the targets to be determined by the parties hereto
(which when so determined shall be attached as Exhibit C hereto) which relates
to such Vesting Date; (iv) be exercisable at the closing price of the Company
Common Stock as reported in the Wall Street Journal for the trading day
immediately preceding the award of the option grant by the Compensation
Committee of the Board of Directors; and (v) have a term of ten years from the
Effective Date.
(b) Restricted Stock Grant. The Company shall deliver to the
trustee of the Rabbi Trust 50,000 restricted shares of Company Common Stock
(the "Restricted Stock Grant") to be held in a separate share known as "Account
B." The Restricted Stock Grant shares shall become eligible for termination of
restrictions (i.e., become available for distribution to Executive) in 10,000
share increments on the first through the fifth anniversaries of the Effective
Date (each a "Restricted Stock Grant Eligibility Date"). Elimination of
restrictions on eligible Restricted Stock Grant shares shall occur upon the
Creative Content Group achieving, on the Restricted Stock Grant Eligibility
Date to which such eligible shares relate, the performance targets to be
determined by the parties hereto (which when so determined shall be attached as
Exhibit D hereto). Should Executive fail to achieve the aforesaid performance
targets set forth in Exhibit D on any Restricted Stock Grant Eligibility Date,
the eligible shares shall cumulate and the restrictions shall be removed on all
eligible shares if the performance goals are met on a subsequent Restricted
Stock Grant Eligibility Date. Restricted Stock Grant shares not otherwise
eligible for termination of restrictions shall be subject to accelerated
removal of restrictions on each Restricted Stock Grant Eligibility Date with
respect to an additional 10,000 shares of Restricted Stock upon the attainment
of the performance targets set forth in Exhibit D as well as the performance
targets set forth on Exhibit C. The Restricted Stock Grant shall be granted
pursuant to the Company's 1997 Stock Option and Incentive Plan, as amended, and
as may hereafter be further amended, and shall otherwise be subject to the
terms of a restricted stock grant agreement between the Company and Executive
in the form prescribed for Company executives generally, which form is attached
hereto as Exhibit E. If a restriction terminates as to a 10,000 share
increment, the trustee of the Rabbi Trust shall deliver such shares to
Executive unless Section 6 herein requires that the distribution be deferred.
If distribution is deferred, the Restricted Stock Grant shall continue to be
held in Account B of the Rabbi Trust, until distribution is made in accordance
with Section 6(d) hereof. Nothing herein shall, however, prevent the trustee of
the Rabbi Trust upon the direction of the Company, which shall be made only
after consultation with Executive, from selling unrestricted shares held in
Account B and reinvesting the proceeds in other investments selected by Company
(in which event the benefit under this paragraph (b) shall be determined by
reference to the value of such substituted assets). Except as provided in
Section 9(e) and 10(b), if Executive's employment is terminated, any Restricted
Stock held in the Rabbi Trust, the restrictions of which have not been
eliminated, will be delivered to the Company.
5. Benefits; Expenses; Etc.
(a) Custom Non-Qualified Mid-Career Supplemental Employee
Retirement Plan.
(i) The Company shall create a supplemental employee
retirement plan (the "SERP"), for Executive which shall provide for
the payment of a benefit (the "SERP Benefit") to him, equal to the
value of 60 shares of CBS Corporation Series B Participating Preferred
Stock (which shares shall be exchanged for Viacom Class C Preferred
Stock upon completion of the merger of CBS and Viacom Inc., and which
shall thereafter be convertible on a 1,000 for 1 basis into Viacom
Class B Common Stock upon the election of the holder thereof) and any
dividends thereon (the "SERP Shares"), which benefit shall, at the
election of Executive, be payable in cash or SERP Shares. The Company
may, but only at the request
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of the Executive, substitute for the SERP Shares (or for a portion
thereof) one or more mutual funds, to be selected by Company after
consultation with Executive, which have a value equal to the SERP
Shares being substituted. After any such substitution, the SERP
Benefit shall be determined solely by reference to the value of such
substituted assets (the "SERP Replacement Assets"), instead of the
original SERP Shares which have been substituted. The SERP Benefit
shall be payable upon the fifth anniversary of the Effective Date;
provided, however, that no later than the fourth anniversary of the
Effective Date, Executive may, with the permission of the Company,
elect to substitute a date that is later than the fifth annual
anniversary of the Effective Date as the payout date. Furthermore,
Executive may, with the permission of the Company, make a subsequent
election to further defer the payout date, so long as such request is
submitted no less than one year before the payout date then in effect.
At the time Executive makes any such election, Executive may also
elect, with the permission of the Company, to have distributions made
in installments for a period not in excess of his life expectancy in
lieu of a lump sum payment.
(ii) In the event that Executive's employment is not
terminated prior to the fifth anniversary of the Effective Date and
the value of the SERP Benefit on the fifth anniversary of the
Effective Date is less than $2,500,000, the amount of the SERP Benefit
shall automatically be adjusted upward to $2,500,000.
(iii) In order to facilitate the payment of the SERP
Benefit, within five (5) days of the establishment of the Rabbi Trust,
the Company shall deposit the SERP Shares with the trustee of the
Rabbi Trust in a separate share of the Rabbi Trust known as Account C.
Moreover, if the SERP Benefit is adjusted upward to $2,500,000 on the
fifth anniversary of the Effective Date pursuant to Section 5(a)(ii),
at the time of the adjustment the Company shall deposit with the
trustee of the Rabbi Trust an amount in cash equal to the difference
between $2,500,000 and the SERP Benefit immediately before such
adjustment. Except for the guarantee by the Company that the SERP
Benefit as of the fifth anniversary of the Effective Date will not be
less than $2,500,000, the Company shall not be responsible for the
investment performance of the SERP Shares or succeeding investments.
(iv) In the event of Executive's termination for any
reason other than by the Company for Cause or by Executive without
Good Reason, a portion of the SERP Benefit shall vest as hereinafter
provided and be payable within ten (10) days to Executive, subject to
the provisions of Section 6 hereof. If Executive's employment is
terminated, any unvested portion of the SERP Benefit, as determined
pursuant to other provision of this Agreement, shall be delivered to
the Company by the trustee of the Rabbi Trust.
(v) If Executive elects to receive the SERP Shares
rather than cash, and if the merger between CBS and Viacom has not
occurred, Executive acknowledges that the CBS shares will be
"restricted securities," as defined in Rule 144 of the Securities Act
of 1933. As "restricted securities", the CBS shares may not be
transferred, sold, or otherwise disposed of unless registered under
the Securities Act of 1933 or an exemption from registration is
available under such Act. Executive acknowledges that the certificates
evidencing the CBS shares will bear a restrictive legend to this
effect.
(b) Expenses. During the Employment Period, the Company shall
reimburse Executive, in accordance with the Company's policies and procedures,
for all reasonable expenses incurred by Executive, including reimbursement for
his reasonable first class travel expenses and, on
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up to two occasions per year, those of his spouse, in connection with the
performance of his duties for the Company.
(c) Vehicle Allowance. During the Employment Period,
Executive shall be entitled to receive from the Company a vehicle allowance of
$1,050 per month, subject to future increases as may be granted to senior
executives.
(d) Use of Company Aircraft. During the Employment Period and
subject to availability, Executive shall be entitled to use of the Company
airplane for travel in connection with the performance of his duties.
(e) Vacation. During the Employment Period, Executive shall
be entitled to four (4) weeks vacation during each Contract Year.
(f) Company Plans. During the Employment Period, Executive
shall be entitled to participate in and enjoy the benefits of (i) the Company
Health Insurance Plan, (ii) the Company Retirement Plan, (iii) the Company
401(k) Savings Plan, (iv) the Company Retirement Benefit Restoration Plan, (v)
the Company Supplemental Deferred Compensation ("SUDCOMP") Plan, and (vi) any
health, life, disability, retirement, pension, group insurance, or other
similar plan or plans which may be in effect or instituted by the Company for
the benefit of senior executives generally, upon such terms as may be therein
provided. Such benefits as in effect on the date hereof are summarized in
Exhibit F hereto, provided that, notwithstanding Exhibit F, during the
Employment Period, Executive shall be entitled to a life insurance benefit of
not less than $1,800,000.
6. Deferral of Excessive Employee Remuneration.
(a) During any period in which Executive is a "covered
employee" within the meaning of Section 162(m)(3), any "applicable employee
remuneration" otherwise payable to Executive in excess of the limit specified
in Section 162(m)(1) or any successor provision of the Code (currently
$1,000,000) shall not be currently paid, but shall be a deferred payment
obligation of the Company governed by the provisions of this Section 6.
(b) All such deferred payment obligations shall be fully
vested and shall be credited with investment earnings (or losses). The rate of
investment earnings (or losses) of such deferred amounts shall be equal to the
rate of investment earnings (or losses) of one or more mutual funds selected by
the Company after consultation with Executive and identified to Executive as
such, which mutual funds may be changed from time to time by the Company after
consultation with Executive. While the Company shall make reasonable efforts to
act prudently in the selection of such mutual funds, taking into account
Executive's investment preferences, the Company shall not be responsible for
the investment performance of any such fund(s).
(c) In order to facilitate the payment of the Company's
deferred payment obligation, at the time that the Company would otherwise make
a payment to Executive but for the Code Section 162(m) limitations, the Company
shall deposit an amount of cash equal to the amount which is being deferred,
into "Account A" of a "rabbi trust" to be known as the Deferred Compensation
Rabbi Trust (the "Rabbi Trust") to be established by the Company with an
independent corporate trustee acceptable to the Company and Executive within
thirty (30) days from the Effective Date. The Rabbi Trust shall satisfy the
requirements of Section 7 hereof and shall be in substantially the form
attached hereto as Exhibit A.
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(d) Amounts deferred pursuant to this Section 6 and earnings
thereon, shall be paid to the Executive at the earliest time possible without
being nondeductible by the Company under Code Section 162(m), but in all events
not later than ten (10) days following the termination of Executive's
employment with the Company (without regard to the reason of such termination),
except that if the Company believes, based on the written opinion of counsel,
that payment at such time will result in nondeductibility by the Company under
Section 162(m), payment may, at the election of Company be further deferred but
not beyond the end of the first full week following the calendar year in which
the termination of employment occurs. Distributions from the Rabbi Trust shall
to the extent feasible be made from Account A prior to any distributions from
Account B.
(e) The Restricted Shares, which are to be held by the
trustee of the Rabbi Trust pursuant to Section 4(b) herein, shall be subject to
subparagraphs (a) and (d) of this Section 6. The provisions of Section 4(b)
shall apply to the holding and investment of the Restricted Shares by the
trustee of the Rabbi Trust, and accordingly Section 6(b) and 6(c) shall not
apply to the Restricted Shares to the extent that they are inconsistent with
Section 4(b).
7. Rabbi Trust. It is understood and agreed by the parties that (i)
the Rabbi Trust shall remain subject to the claims of the Company's general
creditors; (ii) any income tax payable with respect to the Rabbi Trust shall be
the sole obligation and responsibility of the Company (and shall not reduce the
assets in the Rabbi Trust so long as the Rabbi Trust remains a "grantor trust"
for federal income tax purposes); and (iii) the establishment of the Rabbi
Trust shall not relieve the Company of its liability to pay amounts due under
this Agreement. The Rabbi Trust shall, however, relieve the Company of its
liability to pay amounts due under this Agreement to the extent that payments
are made in accordance with the terms of this Agreement and the Rabbi Trust.
8. Termination. Executive's employment hereunder may be terminated
prior to the expiration of the Employment Period as follows:
(a) Termination by Death. Upon the death of Executive
("Death"), Executive's employment shall automatically terminate as of the date
of Death.
(b) Termination by Company for Permanent Disability. At the
option of the Company, Executive's employment may be terminated by written
notice to Executive or his personal representative in the event of the
Permanent Disability of Executive. As used herein, the term "Permanent
Disability" shall mean a physical or mental incapacity or disability which
renders Executive unable substantially to render the services required
hereunder for a period of ninety (90) consecutive days or one hundred eighty
(180) days during any twelve (12) month period as determined in good faith by
the Company.
(c) Termination by Company for Cause. At the option of the
Company, Executive's employment may be terminated by written notice to
Executive upon the occurrence of any one or more of the following events (each,
a "Cause"):
(i) any action by Executive constituting fraud,
self-dealing, embezzlement, or dishonesty in the course of
his employment hereunder;
(ii) any conviction of Executive of a crime
involving moral turpitude;
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(iii) any action of Executive, regardless of its
relation to his employment, that has brought or reasonably
could bring the Company into substantial public disgrace or
disrepute;
(iv) failure of Executive after reasonable notice
promptly to comply with any valid and legal directive of the
Board of Directors or the Chief Executive Officer;
(v) a material breach by Executive of any of his
obligations under this Agreement and failure to cure such
breach within ten (10) days of his receipt of written notice
thereof from the Company; or
(vi) a failure by Executive to perform adequately
his responsibilities under this Agreement as demonstrated by
objective and verifiable evidence showing that the business
operations under Executive's control have been materially
harmed as a result of Executive's gross negligence or willful
misconduct.
(d) Termination by Executive for Good Reason. At the option
of Executive, Executive may terminate his employment by written notice to the
Company given within a reasonable time after the occurrence of a material
breach by the Company of any of its obligations under this Agreement and the
failure by the Company to cure such breach within thirty (30) days of such
notice ("Good Reason").
(e) Termination by Company Without Cause. At the option of
the Company Executive's employment may be terminated by written notice to
Executive at any time ("Without Cause").
9. Effect of Termination.
(a) Effect Generally. If Executive's employment is terminated
prior to the fifth anniversary of the Effective Date, the Company shall not
have any liability or obligation to Executive other than as specifically set
forth in Section 8 and Section 9 hereof.
(b) Effect of Termination by Death. Upon the termination of
Executive's employment as a result of Death, Executive's estate shall be
entitled to receive an amount equal to the accrued but unpaid Base Salary
through the date of termination and a pro rata portion of Executive's cash
bonus, if any, for the Contract Year in which termination occurs. Such cash
bonus, if not a Guaranteed Cash Bonus, shall be based on Executive's
performance through the date of termination, as reasonably determined by the
Compensation Committee of the Board of Directors at the time bonuses are
determined for Company executives generally. Executive's estate shall be
entitled to any unpaid portion of the Signing Bonus, accrued and unpaid
vacation pay, unreimbursed expenses incurred pursuant to Section 5(b) or (c),
and any other benefits owed to Executive pursuant to any written employee
benefit plan or policy of the Company, excluding benefits payable pursuant to
any plan beneficiary pursuant to a contractual beneficiary designation by
Executive. In addition, Executive's estate shall also be entitled to a pro-rata
portion of the SERP benefit. The vested portion of the SERP Benefit shall be
equal to the value of the SERP Shares (including any SERP Replacement Assets)
at the time of such termination (but in all events the value of the SERP Shares
(including any SERP Replacement Assets) shall be no less than $2,500,000)
multiplied by a fraction, the numerator of which is the total number of months
(including any fractional month) during which Executive was employed hereunder,
and the denominator of which is 60. Executive's estate shall be entitled only
to the Restricted Stock that has vested as of the date of death, and the
exercise of
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<PAGE> 9
Executive's Stock Options shall be governed by the Company's 1997 Stock Option
and Incentive Plan, as amended and restated, and as may hereinafter be further
amended without prejudice to Executive.
(c) Effect of Termination for Permanent Disability. Upon the
termination of Executive's employment hereunder as a result of Permanent
Disability, Executive shall be entitled to receive an amount equal to the
accrued but unpaid Base Salary through the date of termination and a pro rata
portion of Executive's cash bonus, if any, for the Contract Year in which
termination occurs. Such cash bonus, if not a Guaranteed Cash Bonus, shall be
based on Executive's performance through the date of termination, as reasonably
determined by the Compensation Committee of the Board of Directors at the time
bonuses are determined for Company executives generally. In addition, Executive
shall be entitled to long-term disability benefits available to executives of
the Company, accrued and unpaid vacation pay, unreimbursed expenses incurred
pursuant to Section 5(b) or (c), and any other benefits owed to Executive
pursuant to any written employee benefit plan or policy of the Company.
Payments to Executive hereunder shall be reduced by any payments received by
Executive under any worker's compensation or similar law. In addition,
Executive shall also be entitled to a pro-rata portion of the SERP benefit. The
vested portion of the SERP Benefit shall be equal to the value of the SERP
Shares (including any SERP Replacement Assets) at the time of such termination
(but in all events the value of the SERP Shares (including any SERP Replacement
Assets) shall be no less than $2,500,000) multiplied by a fraction, the
numerator of which is the total number of months (including any fractional
month) during which Executive was employed hereunder, and the denominator of
which is 60. Executive shall be entitled only to the Restricted Stock that has
vested as of the date of termination, and the exercise of Executive's Stock
Options shall be governed by the Company's 1997 Stock Option and Incentive
Plan, as amended and restated, and as may hereinafter be further amended
without prejudice to Executive.
(d) Effect of Termination by the Company for Cause or by
Executive Without Good Reason. Upon the termination of Executive's employment
by the Company for Cause or by Executive for any reason other than Good Reason,
Executive shall be entitled to an amount equal to the accrued but unpaid Base
Salary through the date of termination plus any unpaid portion of the Signing
Bonus, unpaid vacation pay, unreimbursed expenses incurred pursuant to Section
5(b) or (c), and any other benefits owed to Executive pursuant to any written
employee benefit plan or policy of the Company. All Stock Options, to the
extent not theretofore exercised, shall terminate on the date of termination of
employment under this Section 7(d).
(e) Effect of Termination by the Company Without Cause or by
Executive for Good Reason. Upon the termination of Executive's employment
hereunder either by the Company Without Cause or by Executive for Good Reason,
Executive shall be entitled to (i) the continued payment of Executive's Base
Salary for the remainder of the initial five-year term of this Agreement; (ii)
continued payment of the annual cash bonuses for the remaining years of the
initial five-year term of this Agreement, each such annual cash bonus to be
calculated as an amount equal to the average amount of the annual cash bonuses
previously granted to Executive hereunder; (iii) any unpaid portion of the
Signing Bonus, accrued and unpaid vacation pay, unreimbursed expenses incurred
pursuant to Section 5(b) or (c), and any other benefits owed to Executive
pursuant to any written employee benefit plan or policy of the Company; and
(iv) the continuation of benefits under (or comparable to those provided under)
the Company's Health Insurance Plan for the remainder of the initial five-year
term, at the same cost to Executive as the cost that he would have paid had his
employment not been terminated. In lieu of the continued payments required
under clauses (i) and (ii) of this Section 9(e), the Company may elect to pay
to Executive a lump sum amount equal to the present value, using an 8% discount
rate, of the payments required under clauses (i) and (ii) of this
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Section 9(e). In addition, Executive shall also be entitled to a pro-rata
portion of the SERP benefit. The vesting portion of the SERP Benefit shall be
equal to the value of the SERP Shares (including any SERP Replacement Assets)
at the time of such termination (but in all events the value of the SERP Shares
(including any SERP Replacement Assets) shall be no less than $2,500,000)
multiplied by a fraction, the numerator of which is the total number of months
(including any fractional month) during which Executive was employed hereunder,
and the denominator of which is 60. Upon termination, all unvested Stock
Options and Restricted Stock Grants shall immediately vest. Executive shall
have 90 days from the date of termination to exercise the Stock Options.
10. Change of Control.
(a) Definition. A "Change of Control" shall be deemed to have
taken place if:
(i) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, other than the Company, a wholly-owned subsidiary
thereof, Edward L. Gaylord or any member of his immediate
family or any trusts or other entities controlled by Edward
L. Gaylord or any member of his immediate family, or any
employee benefit plan of the Company or any of its
subsidiaries becomes the beneficial owner of Company
securities having 50% or more of the combined voting power of
the then outstanding securities of the Company that may be
cast for the election of directors of the Company (other than
as a result of the issuance of securities initiated by the
Company in the ordinary course of business);
(ii) any person or entity, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of
1934, becomes the beneficial owner of Company securities
having greater voting power than the Company securities held
by Edward L. Gaylord, any member of his immediate family, and
any trusts or other entities controlled by Edward L. Gaylord
or any member of his immediate family.
(iii) as the result of, or in connection with, any
cash tender or exchange offer, merger or other business
combination, sale of assets or contested election, or any
combination of the foregoing transactions, less than a
majority of the combined voting power of the then-outstanding
securities of the Company or any successor corporation or
entity entitled to vote generally in the election of the
directors of the Company or such other corporation or entity
after such transactions, is held in the aggregate by the
holders of the Company's securities entitled to vote
generally in the election of directors of the Company
immediately prior to such transaction;
(iv) the Company sells all or substantially all of
the assets of the Company;
(v) the Company sells all or substantially all of
the Creative Content Group business, whether by way of an
asset sale, stock spin-off or other similar transaction; or
(vi) during any period of two consecutive years,
individuals who at the beginning of such period were members
of the Company's Board of Directors cease for any reason to
constitute at least a majority thereof (unless the election,
or the nomination for election by the Company's shareholders,
of each new director was
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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).
(b) Effect of Change of Control. In the event that within one
year following a Change of Control the Company terminates Executive Without
Cause or Executive terminates employment for Good Reason, Executive shall be
entitled to (i) an amount equal to the present value, using an 8% discount
rate, of the continued payment of Executive's Base Salary for the remainder of
the initial five-year term of this Agreement; (ii) an amount equal to the
present value, using an 8% discount rate, of the unpaid annual cash bonuses for
the remainder of the initial five-year term of this Agreement, each such annual
cash bonus to be calculated as an amount equal to the average amount of the
annual cash bonuses previously granted to Executive hereunder; (iii) any unpaid
portion of the Signing Bonus, unpaid vacation pay, unreimbursed expenses
incurred pursuant to Section 5(b) or (c), and any other benefits owed to
Executive pursuant to any written employee benefit plan or policy of the
Company; and (iv) the continuation of benefits under (or comparable to those
provided under) the Company's Health Insurance Plan for the remainder of the
initial five-year term, at the same cost to Executive as the cost that he would
have paid had his employment not been terminated. Upon such termination,
Executive shall also be entitled to receive the full SERP Benefit. In addition,
upon termination, all unvested Stock Options and Restricted Stock Grants shall
immediately vest. Executive shall have 90 days from the date of termination to
exercise the Stock Options.
11. Confidential Information.
(a) Nondisclosure; Etc. Executive agrees that he shall not
commit any act, or in any way assist others to commit any act, which could
reasonably be expected to injure the Company or any of its businesses. Without
limiting the generality of the foregoing, Executive recognizes and acknowledges
that all information about the Company or relating to any of its respective
products, services, or any phase of its operations, business, or financial
affairs which is not a matter of public record, including without limitation,
trade secrets, contracts with agents, artists, distributors, or producers,
computer programs, financial information of every type and kind, plans, and
strategies, ("Confidential Information") is not generally known to the
Company's competitors and is valuable, special, and unique to the business of
the Company. Accordingly, Executive shall not, directly or indirectly, use any
such Confidential Information for his own benefit, divulge, disclose, or make
accessible any such Confidential Information or any part thereof to any person,
firm, corporation, association, or other entity for any reason or purpose
whatsoever (other than in the course of carrying out his duties hereunder), or
render any services to any person, firm, corporation, association, or other
entity to whom any such Confidential Information, in whole or in part, has been
disclosed or is threatened to be disclosed by or at the instance of Executive.
Confidential Information shall not include any information which is or becomes
generally available to the public other than as a result of disclosure in
violation of this Agreement.
(b) Property of Company. All memoranda, notes, lists,
records, and other documents (and all copies thereof) constituting Confidential
Information made or compiled by Executive or made available to Executive shall
be the Company's property, shall be kept confidential in accordance with the
provisions of this Section 11, and shall be delivered to the Company at any
time on request and in any event upon the termination of Executive's employment
for any reason.
(c) Relief. Since the Company shall be irreparably damaged if
the provisions of this Section 11 are not specifically enforced, the Company
shall be entitled to an injunction or any other appropriate decree of specific
performance (without the necessity of posting any bond or other security in
connection therewith) restraining any violation of Executive's covenants or
failure of
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Executive to fulfill such covenants under this Section 11. Such remedies shall
not be exclusive and shall be in addition to any other remedy which the Company
may have for any breach or threatened breach of this Section 11 by Executive.
12. Covenant Against Competition. Executive covenants and agrees that:
(a) Definitions. As used herein:
(i) "Affiliate" shall mean any entity directly or
indirectly controlling, controlled by, or under common
control with the Company and any entity in which the Company,
directly or indirectly, is a general partner, member,
manager, or holder of greater than a 10% common equity,
partnership, or membership interest.
(ii) "Company Business" shall mean the business of
the Company on the date hereof, and any business which the
Company is engaged in or has under development (including
preliminary stages of development), at the earlier to occur
of the time of the alleged violation of this Section 12 or
the termination of Executive's employment under this
Agreement.
(iii) "Geographic Area" shall mean the world.
(b) Non-Competition. During the Employment Period, and, if
Executive's employment is terminated by the Company for Cause or by Executive
for other than Good Reason, for a period of one (1) year thereafter, Executive
shall not, directly or indirectly, in the Geographic Area: (i) engage for his
own account in the Company Business; (ii) render any services in any capacity
to any person or entity (other than the Company or its Affiliates) engaged in
the Company Business; or (iii) become interested in any person or entity
engaged in the Company Business (other than the Company or its Affiliates) as a
partner, shareholder, director, officer, employee, principal, member, manager,
agent, trustee, or consultant or in any other relationship or capacity;
provided, however, Executive may own, directly or indirectly, solely as a
passive investment, securities of any such entity which are traded on any
national securities exchange if Executive (A) is not a controlling person of,
or a member of a group which controls, such entity and (B) does not, directly
or indirectly, own 1% or more of any class of securities of such entity.
(c) Non-Solicitation of Employees, Others. During the
Employment Period, and for a period of one (1) year thereafter, Executive shall
not, without the prior written consent of the Company, directly or indirectly,
solicit or encourage any employee of the Company or any of its Affiliates to
leave the employment of the Company or any of its Affiliates or hire any
employee who has left the employment of the Company or any of its Affiliates,
nor shall Executive directly or indirectly, knowingly solicit or encourage any
artist, producer, writer, distributor, customer, client, agent, or account of
the Company or any of its Affiliates to engage the services of Executive or any
person or entity (other than the Company or its Affiliates) in which Executive
is a partner, shareholder, director, officer, employee, principal, member,
manager, agent, trustee, or consultant or engaged in any other relationship or
capacity.
(d) Remedies. Since the Company shall be irreparably damaged
if the provisions of this Section 12 are not specifically enforced, the Company
shall be entitled to an injunction or any other appropriate decree of specific
performance (without the necessity of posting any bond or other security in
connection therewith) restraining any violation of Executive's covenants or
failure of Executive to fulfill any covenant under this Section 12. Such
remedies shall not be exclusive and
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shall be in addition to any other remedy which the Company may have for any
breach or threatened breach of this Section 12 by Executive.
(e) Enforceability. If any provision of this Section 12 is
held to be unenforceable because of its scope, duration, area of applicability,
or otherwise, it is the intention of the parties that the court making such
determination shall modify such provision and that such modified provision
shall then be applicable.
13. Public Disclosure of Employment Agreement. The Company
acknowledges that Executive has been under contract to Arista Records, Inc. and
has contractual agreements regarding the disclosure of certain information. The
Company hereby agrees that it will make no further public disclosure or
announcement regarding the termination of the agreement between Executive and
Arista Records, Inc. or the employment of Executive or the terms of this
Agreement prior to April 30, 2000, unless agreed to in writing by Arista
Records, Inc, except as otherwise required by applicable law, including the
Securities Exchange Act of 1934.
14. Indemnification. The Company shall indemnify Executive and hold
him harmless from and against any and all costs, expenses, losses, claims,
damages, obligations or liabilities (including actual attorneys fees and
expenses) arising out of or relating to any acts, or omissions to act, made by
Executive on behalf of or in the course of performing services for the Company
to the fullest extent permitted by the Bylaws of the Company, or, if greater,
as permitted by applicable law, as the same shall be in effect from time to
time. If any claim, action, suit or proceeding is brought, or any claim
relating thereto is made, against Executive with respect to which indemnity may
be sought against the Company pursuant to this Section, Executive shall notify
the Company in writing thereof, and the Company shall have the right to
participate in, and to the extent that it shall wish, in its discretion, assume
and control the defense thereof, with counsel satisfactory to Executive.
15. Executive's Representations and Warranties. Executive represents
and warrants that he is free to enter into this Agreement and, as of the
Effective Date, that he is not subject to any conflicting obligation or any
disability which shall prevent or hinder Executive's execution of this
Agreement or the performance of his obligations hereunder; that no lawsuits or
claims are pending or, to Executive's knowledge, threatened against Executive;
and that he has never been subject to bankruptcy, insolvency, or similar
proceedings, has never been convicted of a felony or a crime involving moral
turpitude, and has never been subject to an investigation or proceeding by or
before the Securities and Exchange Commission or any state securities
commission. The Company shall have the authority to conduct an independent
investigation into the background of Executive and Executive agrees to fully
cooperate in any such investigation. The Company shall notify Executive if it
intends to conduct such an investigation.
16. Notices. Any and all notices or other communications required or
permitted to be given under any of the provisions of this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered
or mailed by first class registered mail, return receipt requested, or by
commercial courier or delivery service, or by facsimile or electronic mail,
addressed to the parties at the addresses set forth below (or at such other
address as any party may specify by notice to all other parties given as
aforesaid):
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(a) if to the Company, to:
Gaylord Entertainment Company
One Gaylord Drive
Nashville, Tennessee 37214
Attention: Terry London
Facsimile Number: (615) 316-6010
E-Mail: [email protected]
With a copy to:
Sherrard & Roe, PLC
424 Church Street, Suite 2000
Nashville, TN 37219
Attention: Thomas J. Sherrard, Esq.
Facsimile Number: (615) 742-4539
E-Mail: [email protected]
(b) if to Executive, to:
Tim DuBois
4529 Tyne Valley Boulevard
Nashville, TN 37220
E-Mail: [email protected]
With a copy to:
Loeb & Loeb
10100 Santa Monica Blvd.
Suite 2200
Los Angeles, CA 90067-4164
Attention: John Frankenheimer, Esq.
Facsimile Number: (310) 282-2192
E-Mail: [email protected]
and/or to such other persons and addresses as any party shall have specified in
writing to the other by notice as aforesaid.
17. Miscellaneous.
(a) Entire Agreement. This writing and the Exhibits hereto
constitute the entire agreement of the parties with respect to the subject
matter hereof and may not be modified, amended, or terminated except by a
written agreement signed by all of the parties hereto. Nothing contained in
this Agreement shall be construed to impose any obligation on the Company to
renew this Agreement and neither the continuation of employment nor any other
conduct shall be deemed to imply a continuing obligation upon the expiration of
this Agreement.
(b) Assignment; Binding Effect. This Agreement shall not be
assignable by Executive, but it shall be binding upon, and shall inure to the
benefit of, his heirs, executors,
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<PAGE> 15
administrators, and legal representatives. This Agreement shall be binding upon
the Company and inure to the benefit of the Company and its respective
successors and permitted assigns. This Agreement may only be assigned by the
Company to an entity controlling, controlled by, or under common control with
the Company in connection with a sale and assignment of the assets of the
Creative Content Group to such other entity; provided, however, that no such
assignment shall relieve the Company of any of its obligations hereunder.
(c) Waiver. No waiver of any breach or default hereunder
shall be considered valid unless in writing, and no such waiver shall be deemed
a waiver of any subsequent breach or default of the same or similar nature.
(d) Enforceability. Subject to the terms of Section 12(e)
hereof, if any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not
contained herein, unless the invalidity or unenforceability of such provision
substantially impairs the benefits of the remaining portions of this Agreement.
(e) Headings. The section headings contained herein are for
the purposes of convenience only and are not intended to define or limit the
contents of the sections.
(f) Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall be deemed one original.
(g) Confidentiality of Agreement. The parties agree that the
terms of this Agreement as they relate to compensation, benefits, and
termination shall, unless otherwise required by law (including, in the
Company's reasonable judgment, as required by federal and state securities
laws), be kept confidential; provided, however, that any party hereto shall be
permitted to disclose this Agreement or the terms hereof with any of its legal,
accounting, or financial advisors provided that such party ensures that the
recipient shall comply with the provisions of this Section 16(g).
(h) Governing Law. This Agreement shall be deemed to be a
contract under the laws of the State of Tennessee and for all purposes shall be
construed and enforced in accordance with the internal laws of said state.
(i) No Third Party Beneficiary. This Agreement shall not
confer any rights or remedies upon any person or entity other than the parties
hereto and their respective successors and permitted assigns.
(j) Arbitration. Any controversy or claim between or among
the parties hereto, including but not limited to those arising out of or
relating to this Agreement or any related agreements or instruments, including
any claim based on or arising from an alleged tort, shall be determined by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the law of the
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state of Tennessee), the Commercial Arbitration Rules of the American
Arbitration Association in effect as of the date hereof, and the provisions set
forth below. In the event of any inconsistency, the provisions herein shall
control. Judgment upon any arbitration award may be entered in any court having
jurisdiction. Any party to the Agreement may bring an action, including a
summary or expedited proceeding, to compel arbitration of any controversy or
claim to which this Agreement applies in any court having jurisdiction over
such action; provided, however, that all arbitration proceedings shall take
place in Nashville, Tennessee. The arbitration body shall set forth its
findings of fact and conclusions of law with citations to the evidence
presented and the applicable law, and shall render an award based thereon. In
making its determinations and award(s), the arbitration body shall base its
award on applicable law and precedent, and shall not entertain arguments
regarding punitive damages, nor shall the arbitration body award punitive
damages to any person.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
GAYLORD ENTERTAINMENT COMPANY, INC.
By:
--------------------------------
Terry E. London, President and
Chief Executive Officer
EXECUTIVE:
-----------------------------------
James "Tim" DuBois
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<PAGE> 1
Exhibit 10.24
NAMING RIGHTS AGREEMENT
This Naming Rights Agreement (the "Agreement"), is made and entered
into as of the 24th day of November, 1999 (the "Execution Date"), by and between
the Nashville Hockey Club Limited Partnership, a Wisconsin limited partnership
(the "Club"), and Gaylord Entertainment Company, a Delaware corporation
("Gaylord").
RECITALS:
WHEREAS, the Club owns and operates the "Nashville Predators," a
professional hockey team franchised by the National Hockey League (the "NHL") to
play its home games in Nashville, Tennessee;
WHEREAS, pursuant to that certain License and Use Agreement (the "Use
Agreement"), dated as of June 25, 1997, by and between the Sports Authority of
the Metropolitan Government of Nashville and Davidson County (the "Authority")
and the Club, the Club has been granted certain license and use rights with
regard to that certain facility commonly known as the "Nashville Arena" located
on the land described on Exhibit A hereto (the "Arena");
WHEREAS, pursuant to Article 18.1 of the Use Agreement, the Authority
granted the Club the exclusive power and authority to sell the right to name the
Arena to a sponsor or sponsors; and
WHEREAS, Gaylord desires to acquire from the Club the right to name the
Arena, and the Club desires to transfer to Gaylord the right to name the Arena,
all in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
SECTION 1. TERM
1.1 TERM. The term of this Agreement (the "Term") shall be deemed to
have commenced on August 4, 1999 (the "Commencement Date") and shall terminate,
without the need for notice from either party, on August 3, 2019 (the
"Expiration Date"), unless terminated earlier in accordance with the terms
hereof.
1.2 RIGHT OF FIRST REFUSAL. No later than January 1, 2019, the Club and
Gaylord shall commence good faith and exclusive negotiations regarding the terms
and conditions for a new naming rights agreements similar in nature to this
Agreement. If the parties do not execute a new naming rights agreement by April
1, 2019, then the Club shall provide Gaylord with a final offer for an exclusive
naming rights agreement. Gaylord will have ten (10) business days from the date
that such offer is presented by the Club to accept or reject such offer. If
Gaylord rejects the Club's offer, then the Club will be entitled to negotiate
and execute a naming rights agreement with any other person or entity; provided,
however, that the Club shall not enter into any agreement or accept any third
party offer containing terms and conditions which, in the aggregate, are
materially less
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favorable to the Club than those contained in the offer to Gaylord, without
first offering to enter into a naming rights agreement with Gaylord on similar
terms (the "Third Party Offer"). Gaylord shall have five (5) business days to
respond to the Club following receipt of written notice by Gaylord of any Third
Party Offer received by the Club which the Club is willing to accept. If Gaylord
declines to accept the Third Party Offer, the Club shall be free to enter into a
naming rights agreement with such third party on the basis of the Third Party
Offer. Should the Club not enter into a naming rights agreement based on such
Third Party Offer, then the Club shall not enter into any other naming rights
agreement on terms and conditions which, in the aggregate, are materially less
favorable to the Club than the Third Party Offer, without first giving Gaylord
the opportunity to match such other terms and conditions.
SECTION 2. NAMING RIGHTS; PROMOTIONAL EXPOSURE.
2.1 NAMING RIGHTS; LOGO. As of the Commencement Date, the Club hereby
grants to Gaylord the exclusive right to rename the Arena as the "Gaylord
Entertainment Center," and hereby agrees, subject to the terms and conditions of
this Agreement, to rename the Arena as the Gaylord Entertainment Center. Gaylord
shall be entitled to develop an appropriate logo or symbol for the Gaylord
Entertainment Center, such logo or symbol to be subject to the reasonable
approval of the Club. Attached hereto as Exhibit B is a copy of an
Acknowledgement executed by the Authority approving the renaming of the Arena as
the Gaylord Entertainment Center in accordance with the terms and conditions of
Section 18.1 of the Use Agreement.
2.2 EXPOSURE OF GAYLORD ENTERTAINMENT CENTER NAME AND LOGO; OTHER
SIGNAGE AND ADVERTISING. In addition to the naming rights granted to Gaylord
pursuant to Section 2.1 above, Gaylord will be entitled to certain signage or
other forms of advertisement in, on, or around the Gaylord Entertainment Center,
all such signage or advertisements (i) to promote Gaylord and/or its various
subsidiaries, (ii) to be mutually agreed upon by the parties , (iii) to conform
generally to the architectural design and specifications detailed in the HOK
Arena Architectural Design Specifications which are attached as Exhibit C hereto
(the "HOK Specifications"), and (iv) to be hung, posted, or placed in the
locations detailed below:
(a) EXTERIOR SIGNAGE.
(i) A sign on Sixth and Broadway facing west towards the
Baptist Church (dimensions of 48" x 42");
(ii) Signage upon three facings of the tri-vision (dimensions
of 16' x 12');
(iii) Signage on the WSM-WTN radio tower to be constructed on
the Arena's property (the "Radio Tower");
(iv) Signage on the marquis;
(v) A sign over the main entrance to the Arena on Broadway
(dimensions of 48" x 42");
(vi) A sign on Fifth and Demonbreun facing east (dimensions
of 48" x 42");
(vii) A sign over the south entrance to the Arena on the west
side of the Arena (dimensions of 48" x 42");
(viii) A sign on the wall located near the south entrance of
the Arena;
(ix) A sign on the top level of the garage, which is located
at Sixth and Demonbreun, facing west (dimensions of 48"
x 42"); and
(x) A sign on the roof of the Arena (dimensions of 192" x
530").
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The parties hereby acknowledge and agree that the final location and size of all
exterior signage and advertisements, including without limitation, the location,
design, plans, and buildout for the Radio Tower, are subject to approval by the
Metropolitan Development and Housing Agency ("MDHA"). Furthermore, the parties
acknowledge and agree that any and all signage referenced in this Section
2.2(a), with the exception of the signage referenced in Sections 2.2(a)(ii) and
(iii), shall be used solely for the purpose of identifying the Gaylord
Entertainment Center and displaying the Gaylord Entertainment Center logo.
(b) INTERIOR LOCATIONS.
(i) Four (4) upper level permanent signage panels on the
scoreboard each measuring 16' 1" x 2' 10";
(ii) Lower level and back lit spectacular located in the main
food court on the concourse level (dimensions of 20' x
12');
(iii) The Gaylord Entertainment Center logo on the basketball
floor;
(iv) The Gaylord Entertainment Center logo on center ice,
which Gaylord acknowledges must be in accordance with
the NHL's sight guidelines;
(v) A buildout of the Hall of Fame corridor;
(vi) One position on a rotational dasher board measuring 9'
8" x 31.5"; and
(vii) Signage on the band stage for Predators games.
The parties agree that the Club will be responsible for the first Twenty Five
Thousand Dollars ($25,000) in costs incurred for the buildout of the Hall of
Fame corridor and/or the Radio Tower. Gaylord will be responsible for any costs
incurred in excess of $25,000 for such buildouts of the Hall of Fame corridor
and Radio Tower.
(c) MEDIA ADVERTISING.
(i) Two (2) thirty (30) second advertisements during each
Predators controlled pre-season and regular season
television broadcast;
(ii) Two (2) sixty (60) second advertisements during each
Predators controlled pre-season and regular season radio
broadcast;
(iii) Floating billboards on each Predators' radio and
television broadcast;
(iv) Prominent identification on the Predators' internet web
site, such identification to be equal in stature or
prominence to the current identification on the
Predators' web site as of the Execution Date; and
(v) One full page advertisement in each Predators'
publication, including the Predators Press (game
program), Saber Tooth Times (season ticket holder
monthly publication), and Media Guide.
Gaylord shall be responsible for all production costs associated with any media
advertisements and shall comply with all scheduling, layout, and production
requirements imposed by the media producer or broadcaster.
2.3 REPLACEMENT SIGNAGE. The parties hereby acknowledge and agree that
certain of the signs and advertisements detailed in Section 2.2 above may become
unavailable for reasons which are unforeseen by either party at this time.
Attached hereto as Exhibit D is a document agreed to by both parties which
assigns a certain valuation to each individual sign or advertisement detailed in
Section 2.2. The Club and Gaylord hereby agree that if any individual sign or
advertisement should
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become unavailable for any reason whatsoever, then Gaylord shall be granted (i)
additional signage or advertisements in the Arena and/or (ii) additional
advertisements in or on the Club's media properties, of an equal or comparable
value to the valuation ascribed in Exhibit D for such unavailable signage or
advertisement. If the Club is unable to substitute signage or advertisements of
similar value, then Gaylord and the Club shall attempt in good faith to agree
upon additional mutually acceptable promotional benefits that will provide
Gaylord with substantially equivalent promotional or advertising benefits as the
cancelled benefits. Gaylord and the Club may agree to extend some or all of the
use of the signage or advertisements for additional periods to provide Gaylord
with substantially equivalent promotional benefits, or if no such alternative
benefits shall be reasonably acceptable to Gaylord and the Club, then to a
reduction in the amount of fees payable by Gaylord hereunder.
2.4 ASSIGNMENT OF SIGNAGE OR ADVERTISING RIGHTS. The Club hereby
acknowledges and agrees that Gaylord shall be entitled to sell or assign to, or
to use for the benefit of, any of its various affiliates or subsidiaries
(hereinafter collectively referred to as a "Gaylord Subsidiary"), which (i)
exist as of the Execution Date (each an "Existing Gaylord Subsidiary") or (ii)
are created or acquired after the Execution Date (each a "New Gaylord
Subsidiary"), any of the signage or advertisements acquired pursuant to Sections
2.2 or 2.3 above; provided, however, that Gaylord acknowledges and agrees that
it will not be entitled to advertise by any means in the Arena any New Gaylord
Subsidiary, which is a competitor to one of the Club's "exclusive" sponsors, in
that exclusive sponsor's specific exclusive industry category, unless such New
Gaylord Subsidiary's primary business operations are in the "hospitality
industry" or "entertainment industry". Furthermore, the Club acknowledges and
agrees that Gaylord shall be entitled to sell or assign to, or use for the
benefit of, any of Gaylord's strategic marketing "partners" with which it has a
contractual marketing alliance a portion of any of the signage or advertisements
acquired pursuant to Section 2.2 or 2.3 above for purposes of a co-branded
message or advertisement for the benefit of Gaylord, or a Gaylord Subsidiary,
and such Gaylord "partner"; provided, however, that Gaylord acknowledges and
agrees that it shall not be entitled to use any of such signage or
advertisements for the benefit of a marketing partner if (i) such partner is a
competitor to one of the Club's exclusive sponsors in that exclusive sponsor's
specific exclusive industry category, (ii) such sale or assignment is at a price
below the price currently being charged by the Club for similar signage or
advertisements, (iii) the Club has an existing inventory of similar signage or
advertisements which could be sold to such "partner", or (iv) the Club has made
a written proposal for the purchase of Arena signage or advertisement to such
"partner" within the prior six months, such proposal has not been rejected, and
the Club and such partner are in current negotiations for the purchase of Arena
signage or advertisements. Attached hereto as Exhibit E is a list of the
Existing Gaylord Subsidiaries, and their various trade names and principal
industries, such list to be updated from time to time by the giving of notice to
the Club as New Gaylord Subsidiaries are added or Gaylord Subsidiaries are
deleted. Attached hereto as Exhibit F is a list of the Club's "exclusive"
sponsors and those exclusive sponsor's specific exclusive industry categories as
of the Execution Date, such list to be updated from time to time by the giving
of written notice to Gaylord as exclusive sponsors are added or deleted. For
purposes of this Section 2.4, the following definitions shall apply: (i)
"affiliate" shall mean any entity which is owned or controlled by, is under
common ownership or control, or shares common ownership or control with Gaylord
or the Club (the term "control", including without limitation, the terms
"controlled by" and "under common control with", means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities,
by contract, or otherwise); (ii) "hospitality industry" shall mean for profit
businesses engaged in the ownership or management of hotels or motels; and (iii)
"entertainment industry" shall mean for profit businesses engaged in the
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creation or production of video, film, television, musical, literary, or live
entertainment for a mass audience or the distribution of such entertainment to a
mass audience through an Existing Gaylord Subsidiary, or the internet.
2.5 REMOVAL OF EXISTING SIGNAGE; INSTALLATION OF GAYLORD ENTERTAINMENT
CENTER SIGNAGE. The Club agrees, at its sole cost and expense, to remove, or to
cause Powers, as defined in Section 5 below, to remove, any and all signage or
advertisements in, on, or around the Arena referencing the "Nashville Arena".
Likewise, the Club agrees to hang, post, or place, or to cause Powers to hang,
post, or place, at the Club's sole cost and expense, any and all of the signage
or advertisements referencing the Gaylord Entertainment Center, Gaylord, and/or
Gaylord's subsidiaries detailed in Section 2.2 above. Notwithstanding the prior
sentence, Gaylord acknowledges and agrees that attached hereto as Exhibit G is a
collection of valid and acceptable bids to convert the existing signage to
Gaylord Entertainment Center or Gaylord signage in accordance with the HOK
Specifications for an aggregate cost of Two Hundred and Fifty Two Thousand
Dollars ($252,000); and in the event Gaylord requests any changes or
modifications to the HOK Specifications or the agreed upon Gaylord signage and
such changes or modifications cause the cost of such conversion to exceed Two
Hundred and Fifty Two Thousand Dollars ($252,000), then Gaylord shall pay any
costs in excess of Two Hundred and Fifty Two Thousand Dollars ($252,000) which
are incurred as a result of such changes or modifications requested by Gaylord.
2.6 RIGHT TO RENAME THE GAYLORD ENTERTAINMENT CENTER. Gaylord and its
successors and assigns shall be entitled to rename the Gaylord Entertainment
Center, subject to the prior written approval of the Club, such approval not to
be unreasonably withheld, and subject to the prior written consent of the
Authority, such consent to be given in accordance with the terms of Section 18.1
of the Use Agreement. Gaylord hereby acknowledges and agrees that any and all
costs associated with such renaming of the Gaylord Entertainment Center shall be
the responsibility of Gaylord or its successors or assigns.
2.7 CHANGE OF SIGNAGE. Gaylord shall have the right to change the
signage outlined in Section 2.2 above during the Term of this Agreement upon
reasonable notice to the Club. Any costs associated with the change of signage
shall be at the sole expense of Gaylord. All advertising messages displayed on
such signage shall be in good taste and shall not violate community standards.
2.8 SIGN MAINTENANCE. The Club, at its sole cost and expense, shall
conduct, or shall cause Powers to conduct, all necessary, routine, preventative,
and long term repair and maintenance of the Gaylord signage after installation
to keep such signs in good condition and repair, reasonable wear and tear
accepted. The Club's or Powers' repair and maintenance will include maintenance,
repair and replacements of all electrical, mechanical and structural components
of such signage after installation.
2.9 TYPE OF AGREEMENT. The parties understand, intend and agree that
this Agreement, is a naming rights agreement and not a license to use real
property. It is understood and agreed that Gaylord shall not have the right to
access the advertising signage or the devices, scoreboards or other surfaces
upon which such signage shall be placed. If such signage requires replacement,
removal, repair or modification during the Term of this Agreement, the Club or
Powers exclusively shall perform the same.
2.10 GOVERNMENT APPROVALS. The parties acknowledge and agree that all
signage that is intended to be displayed on the exterior of the Arena and its
surrounding plazas, parking lots,
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landscaped areas and approaching roadways, shall be subject to the applicable
requirements of the Metropolitan Government of Nashville and Davidson County and
the State of Tennessee. Accordingly, all such advertising signage shall comply
with all applicable governmental rules and regulations and with the Use
Agreement.
2.11 NHL RULES. The parties hereto agree that this Agreement
automatically will be subject to any new or amended NHL regulations applicable
to advertising effective as of the date such regulation shall take effect and
that this Agreement shall incorporate and be subject to the Constitution,
By-Laws, rules and regulations, and the duly authorized resolutions of the NHL,
the decrees and rulings of the Commissioner or designees of the NHL and the
terms and conditions of any and all agreements to which the NHL is a party and
to which the NHL has bound its member clubs (collectively, all of such
regulations, resolutions, decrees and agreements are referred to as the
"Governing League Policies"). The Club shall advise Gaylord of any changes to
the Governing League Policies which may materially affect this Agreement. In the
event that any new or amended Governing League Policies materially affect the
terms of this Agreement, including, but not limited to, any of the benefits
afforded to Gaylord hereunder, then the Club acknowledges and agrees that it
shall be responsible for any and all costs incurred by the parties in modifying
the terms of this Agreement to provide Gaylord with new or substitute benefits,
including, but not limited to, any replacement signage or advertisements
pursuant to Section 2.3 above.
2.12 LEAGUE SPONSOR. Except as otherwise provided herein, Gaylord
agrees that the Club, Powers, or NHL Properties, Inc. may allow or authorize any
League Sponsor (as defined below) to engage in advertising and promotional
activities in the Club's market (including, without limitation, the Arena), or
otherwise provide benefits to such League Sponsor, if the Club is required to
allow a League Sponsor to engage in such activities or receive such benefits
pursuant to any sponsorship or promotional licensing arrangement now or
hereafter entered into between such League Sponsor and the NHL or any affiliates
of the NHL (including, without limitation, NHL Enterprises, Inc. and NHL
Enterprises Canada, Inc.). League Sponsor means any person or entity which
currently is, or at anytime becomes, a sponsor or promotional licensee of or
with respect to any NHL event or program now or hereafter in existence. By way
of illustration only and without limiting the generality of the foregoing,
League Sponsors may place advertising and promotional materials (including
displays) in the Arena, in connection with a League Event, such as the NHL
All-Star game, the Stanley Cup Playoffs, or in support of a League program. In
no event shall a League Sponsor's rights supersede or preclude Gaylord's
exercise of rights hereunder (however, such rights may no longer remain
exclusive rights).
2.13 ARENA RULES; PERMANENT SIGNAGE AND ADVERTISING POLICY. Gaylord and
the Club agree that this Agreement shall be performed in accordance with the
reasonable health and safety rules and policies of the Arena, as may be
applicable to this Agreement. Furthermore, notwithstanding any other provision
of this Agreement, the terms of this Agreement shall, in all respects, be
subject to and subordinate to that certain Gaylord Entertainment Center
Permanent Signage and Advertising Policy as amended from time to time by Powers,
LMI, or the current manager of the Arena, a copy of which is attached hereto as
Exhibit H; provided, however, that the Club acknowledges and agrees that (i)
Gaylord will be provided with written notification if the view of any of
Gaylord's signage or advertisements should be precluded pursuant to Section IIA
of such policy, and (ii) Gaylord's outdoor advertisement will not be affected
pursuant to such Policy.
SECTION 3. NAMING RIGHTS FEE. In consideration for the Club's agreement to
rename the Arena as the "Gaylord Entertainment Center", and to confer upon
Gaylord all other rights detailed in this
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Agreement, Gaylord agrees to pay the Club an annual fee (the "Naming Rights
Fee") during each year (August 4 through August 3) of the Term. The Naming
Rights Fee for the first year of the Term shall be Two Million Fifty Thousand
Dollars ($2,050,000.00). Gaylord and the Club acknowledge and agree that the
Naming Rights Fee shall be increased during each successive year of the Term by
an amount equal to five percent (5%) of the then current Naming Rights Fee. The
parties agree that during each year of the Term the Naming Rights Fee will be
paid in two equal installments due on January 1 and July 1 of that year;
provided, however, that during the first year of the Term one-half of the Naming
Rights Fee will be due upon the Execution Date with the remainder due on January
1, 2000.
SECTION 4. SEASON TICKETS. During the first year of the Term, Gaylord agrees to
purchase from the Club that number of season tickets to Predators' home games
necessary to equal or exceed a cumulative value equal to three hundred
fifty-nine (359) multiplied by the average ticket price per season ticket sold
that year. The price for each season ticket will be the published price for such
ticket. Tickets will be selected by Gaylord from those available for purchase.
During the second and third years of the Term, Gaylord agrees to purchase from
the Club that number of season tickets necessary to equal or exceed a cumulative
value equal to three hundred (300) multiplied by the average ticket price per
season ticket sold during that year of the Term. During years four through
twenty of the Term, Gaylord agrees to use reasonable commercial efforts (with
due consideration to be given to Gaylord's then current profitability) to
purchase from the Club that number of season tickets necessary to equal or
exceed a cumulative value equal to the average ticket price per season ticket
sold during that year of the Term multiplied by: (a) three hundred (300) for
year four of the Term; (b) two hundred fifty (250) for years five through ten;
(c) two hundred (200) for years eleven through fifteen; and (d) one hundred
fifty (150) for years sixteen through twenty (the "Targeted Number of Tickets").
Notwithstanding the prior sentence, Gaylord acknowledges and agrees that, during
years four through twenty of the Term, it will annually purchase from the Club
at least that number of season tickets necessary to equal or exceed a cumulative
value equal to the average ticket price per season ticket sold during that year
of the Term multiplied by one hundred fifty (150) (the "Minimum Number of
Tickets"). The parties agree that with regard to years four through twenty of
the Term, Gaylord will be obligated to purchase the Targeted Number of Tickets
for each individual year, unless it gives the Club written notice of its
decision not to purchase the Targeted Number of Tickets for an individual year
on or before February 15 of the preceding year, together with a written
explanation of the reasons for not purchasing the Targeted Number of Tickets.
SECTION 5. POWERS MANAGEMENT. The Club and Gaylord acknowledge that, pursuant to
that certain Operating and Management Agreement (the "Operating Agreement"), by
and between the Authority and Powers Management, L.L.C. ("Powers"), dated as of
June 25, 1997, Powers was granted full power and authority to operate the Arena.
Likewise, pursuant to that certain Management and Consulting Agreement for the
Nashville Arena (the "Management Agreement"), by and between Powers and LMI/HHI,
Ltd. d/b/a Leisure Management International ("LMI"), effective as of May 1,
1999, Powers granted LMI certain rights to operate and manage the Arena, and LMI
assumed certain responsibilities from Powers for the operation and management of
the Arena. The Club and Gaylord acknowledge that Powers, an affiliate of the
Club, and LMI jointly manage the daily operations of the Arena pursuant to the
terms of the Operating Agreement and Management Agreement. The Club hereby
agrees that, simultaneous with the execution of this Agreement, the Club and
Powers will execute that certain Agreement, the form of which is attached hereto
as Exhibit I, pursuant to which Powers will assume certain responsibilities with
respect to this Naming Rights Agreement and pursuant to which Powers will cause
LMI to assume certain responsibilities with respect to this Naming Rights
Agreement (the "Powers Agreement").
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SECTION 6. EXISTING SIGNAGE; PROMOTIONAL MATERIALS.
6.1 EXISTING ARENA SIGNAGE. Subject to Section 2.5, as soon as
practicable after the Commencement Date, the Club shall, at its sole cost and
expense, cause Powers and/or LMI to remove any and all existing signage,
advertisements, or identifications at the Arena, which reference the name of the
Arena as the "Nashville Arena", and to replace same with comparable signage,
advertisements, or identifications referencing the Gaylord Entertainment Center.
6.2 COLLATERAL MATERIALS. The Club shall cause Powers and/or LMI to
cause all tickets produced for, or on behalf of, the Arena to bear prominently
the name and logo of the Gaylord Entertainment Center. Furthermore, the Club
shall cause Powers and/or LMI to cause all promotional or collateral materials
for the Arena to bear prominently the name and logo of the Gaylord Entertainment
Center, if such promotional or collateral materials reference the name of the
facility.
6.3 TENANTS AND LICENSEES OF THE ARENA. The Club shall cause Powers
and/or LMI to (i) require all tenants and licensees of the Arena, including, but
not limited to, food and beverage concessionaires, to use only materials,
containers, or documents which refer to the name of the facility as the "Gaylord
Entertainment Center", and (ii) take all actions necessary to reasonably assure
that any references to the name of the Arena, and any informational materials
provided, distributed, or utilized by Powers, LMI, or tenants or licensees of
the Arena, refer to the name of the Arena as the "Gaylord Entertainment Center".
The Club acknowledges and agrees that, at a minimum, the name and logo of the
Gaylord Entertainment Center will appear on (i) the uniforms (including coats
and jackets) and identification badges of the personnel of the Arena, including,
but not limited to, the security, operations, and box office personnel, ticket
takers, and concierges, (ii) the beer cups, wine cups, and dinner and beverage
napkins of the Arena, and (iii) any and all laniards distributed or sold in or
around the Arena. Gaylord hereby acknowledges that the Club, Powers, LMI, and
tenants and licensees of the Arena shall be entitled to use collateral
materials, containers, cups, napkins, and other concession items which reference
the "Nashville Arena" until the earlier of (i) such time as the existing
inventories for such items are depleted or (ii) December 31, 1999; provided,
however, that at such time as collateral materials, containers, cups, napkins,
or other concession items which reference the "Gaylord Entertainment Center"
become available, then the Club, Powers, LMI, and the tenants and licensees of
the Arena will blend the use of "Nashville Arena" and "Gaylord Entertainment
Center" items to insure that both types are distributed at each event in the
Arena.
6.4 PREDATORS' PROMOTIONS OR ADVERTISEMENTS. The Club shall reference
the Gaylord Entertainment Center in any television or radio commercials for the
Nashville Predators unless (i) the commercial is for an event or events which
will not be held at the Gaylord Entertainment Center or (ii) the parties
mutually agree that the length or content of the commercial make reference to
the Gaylord Entertainment Center inappropriate. The Club shall cause all written
promotions or advertisements for the Predators to bear the name and logo of the
Gaylord Entertainment Center.
6.5 ARENA PROMOTIONS OR ADVERTISEMENTS. The Club shall cause Powers
and/or LMI to (i) reference the Gaylord Entertainment Center in any television
or radio commercials produced by the Club, Powers or LMI for Arena events and
(ii) to cause all written promotions or advertisements
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produced by the Club, Powers or LMI for Arena events to bear the name and logo
of the Gaylord Entertainment Center.
6.6 EXISTING STREET SIGNS. Within a reasonable time following the
Commencement Date, the Club and Gaylord shall use their best efforts to cause
the Metropolitan Government of Nashville and Davidson County ("Metro") and the
State of Tennessee (the "State") to cause all existing directional,
informational and road signs which contain the name "Nashville Arena" or any
variation thereof, located in any public rights-of-way, streets or highways to
be altered to refer to the Arena as the "Gaylord Entertainment Center". The
parties hereby acknowledge that they will mutually agree upon the allocation
between the parties of any costs associated with or stemming from this Section
6.6.
6.7 TOURISM MATERIALS. Within a reasonable time following the
Commencement Date, the Club and Gaylord shall use their best efforts to cause
Metro and the State to cause any and all tourism, informational, or advertising
materials, which are produced by Metro or the State and which reference the
"Nashville Arena" or any variation thereof, to refer to the Arena as the Gaylord
Entertainment Center. The parties hereby acknowledge that they will mutually
agree upon the allocation between the parties of any costs associated with or
stemming from this Section 6.7.
SECTION 7. OTHER BENEFITS. In addition to the various benefits granted to
Gaylord in Section 2 and Section 6 above, in consideration for the Naming Rights
Fee established in Section 3 above, Gaylord shall be entitled to receive the
following benefits:
7.1 PARKING SPACES. Gaylord shall be entitled to six (6) parking spaces
in the Arena garage for all events held in the Arena.
7.2 USE OF THE ARENA. Gaylord shall be entitled to use the Arena for
two (2) employee events, two (2) community events, and two (2) commercial events
during each year of the Term (the "Gaylord Events"). The Club agrees to provide
Gaylord, or to cause Powers and/or LMI to provide Gaylord, with an annual
allowance (the "Arena Rent Allowance") to be applied against the cumulative
"base rent" charged by the Arena for such Gaylord Events during each year of the
Term. The Arena Rent Allowance for the first year of the Term shall be Sixty
Thousand Dollars ($60,000.00), and the Arena Rent Allowance shall be increased
during each successive year of the Term by an amount equal to five percent (5%)
of the then current Arena Rent Allowance. The Club agrees that the base rent
charged to Gaylord for such Gaylord Events will be equal to or less than the
base rent charged to other commercial licensees or lessees of the Arena for
similar events. Gaylord acknowledges that it shall be responsible for any
expenses, including without limitation, any overhead, employee, personnel,
security, food, beverage, or supply expenses associated with such Gaylord Events
and any cumulative base rent in excess of the annual Arena Rent Allowance.
Attached hereto as Exhibit J is a memorandum detailing the existing structure
for the calculation of "base rent" for use of the Arena.
7.3 USE OF THE REHEARSAL HALL. Gaylord shall be entitled to use the
Rehearsal Hall for the Arena prior to, during, and immediately after twelve (12)
games played by the Nashville Predators in the Arena, such games to be mutually
agreed upon by the parties. The Club acknowledges and agrees that Gaylord will
not be charged a usage or rental fee for use of the Rehearsal Hall during such
games; provided, however, that Gaylord acknowledges and agrees that it will be
responsible for any expenses, including, without limitation, any overhead,
employee,
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personnel, security, food, beverage, or supply expenses incurred as a result of
such events in the Rehearsal Hall.
SECTION 8. PROPRIETARY SYMBOLS.
8.1 ARENA PROPRIETARY SYMBOLS. Gaylord shall have the exclusive
ownership of any and all, right, title, and interest in, including, without
limitation, any copyrights, trademarks, service marks, or other intellectual
property, the name or phrase "Gaylord Entertainment Center" and the Gaylord
Entertainment Center logo, and any derivatives, modifications, or alterations
thereof (the "Intellectual Property"). Gaylord acknowledges and agrees that it
shall be solely responsible for any costs associated with registering or
protecting the Intellectual Property.
8.2 LICENSE OF INTELLECTUAL PROPERTY TO CLUB. Subject to the terms of
this Agreement, Gaylord hereby grants to the Club a non-exclusive, royalty free
license during the Term to use and to grant to others, including, but not
limited to, Powers, LMI, the Authority, the Metropolitan Government of Nashville
and Davidson County, and tenants and licensees of the Gaylord Entertainment
Center, the right to use the Intellectual Property in connection with the
advertising, promotion, marketing and operations of the Gaylord Entertainment
Center and events held in the Gaylord Entertainment Center; provided, however,
that any rights granted by the Club to third parties to use the Intellectual
Property shall expire contemporaneously with this Agreement. The Club may,
subject to the prior approval of Gaylord, from time to time, grant non-exclusive
rights to providers of goods and services and advertisers to use the
Intellectual Property. Nothing herein shall prevent Gaylord from using the
Intellectual Property for purposes of promoting itself and the Gaylord
Entertainment Center; provided that such uses are consistent with the provisions
of this Agreement.
8.3 MARKS. Neither party shall use the names, trademarks, service
marks, copyrights, call letters, trade names, or photographs of the facilities
or products of the other party for any purpose, except as provided for in this
Agreement, without the express prior written consent of the subject party, such
consent to be required for each proposed use and each use to be accompanied by
the appropriate trademark, service mark, copyright, or other designation
required by the owner of such property. All such uses must terminate immediately
upon termination or expiration of this Agreement. Notwithstanding the above, the
parties acknowledge and agree that each party shall have the unlimited right to
photograph (including, but not limited to, motion picture, still or video device
photography) the Gaylord Entertainment Center and to exhibit and exploit such
photography in any medium presently existing or hereafter developed.
8.4 INFRINGEMENT. Gaylord represents that it is the sole owner of the
Intellectual Property free and clear of any liens, claims and encumbrances and
that the Intellectual Property does not infringe on any marks, logos,
copyrights, trademarks or other intangible property of any third party. Subject
to Section 13 below, Gaylord agrees to indemnify and hold the Club, Powers, LMI
and their respective sublicensees harmless from all loss, cost and expense,
including attorneys fees, arising out of any claim by a third party that the
Intellectual Property infringes on any property right of such third party.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF CLUB. The Club represents
and warrants to Gaylord as follows:
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9.1 DUE ORGANIZATION AND GOOD STANDING. The Club is a duly organized
and validly existing limited partnership under the laws of the State of
Wisconsin, is in good standing under the laws of the States of Wisconsin and
Tennessee, and has all requisite power and authority, and no consent of a third
party is necessary, to execute, deliver and perform its obligations under this
Agreement.
9.2 BINDING EFFECT. This Agreement has been duly authorized, executed
and delivered by the Club and constitutes the legal, valid and binding
obligation of it, enforceable against it, in accordance with the terms hereof,
except to the extent enforceability is limited by bankruptcy, reorganization and
other similar laws affecting the rights of creditors generally and by general
principles of equity.
9.3 NO CONFLICT. The execution, delivery and performance of this
Agreement by the Club does not conflict with, nor will it result in, a breach or
violation of any material agreement to which it is a party.
SECTION 10. GAYLORD'S REPRESENTATIONS AND WARRANTIES. Gaylord represents
and warrants to the Club as follows:
10.1 DUE ORGANIZATION AND GOOD STANDING. Gaylord is a duly organized
and validly existing corporation under the laws of the State of Delaware, is in
good standing under the laws of the State of Delaware, and has all requisite
legal power and authority to execute, deliver and perform its obligations under
this Agreement.
10.2 BINDING EFFECT. This Agreement has been duly authorized, executed
and delivered by Gaylord and constitutes the legal, valid and binding obligation
of it, enforceable against it, in accordance with the terms hereof, except to
the extent enforceability is limited by bankruptcy, reorganization and other
similar laws affecting the rights of creditors generally and by general
principles of equity.
10.3 NO CONFLICT. The execution, delivery and performance of this
Agreement by Gaylord does not conflict with, nor will it result in, a breach or
violation of any material agreement to which it is a party.
SECTION 11. EXIGENCIES
11.1 FORCE MAJEURE. In the event compliance with any of the parties'
obligations under this Agreement is impractical or impossible due to any
emergency, including, but not limited to, player strikes, management lockouts,
labor disputes, embargoes, flood, earthquake, storm, lightning, fire, epidemic,
acts of God, war, national emergency, civil disturbance or disobedience, riot,
sabotage or terrorism, restraint by court order or public authority, failure of
machinery or equipment or any other occurrence beyond the parties' reasonable
control (each such occurrence being an "Event of Force Majeure"), then the time
for performance of such obligations shall be extended for a period equal to the
duration of the Event of Force Majeure.
11.2 DAMAGE OR DESTRUCTION. The parties acknowledge that in the event
the Arena or any part thereof shall be damaged or destroyed by fire or other
casualty (the "Damaged Facilities"), the Authority has the sole obligation and
authority, pursuant to Section 23 of the Use Agreement, to determine whether to
repair and restore the Damaged Facilities. In the event that the Authority
elects
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<PAGE> 12
not to repair and restore the Damaged Facilities, then this Agreement will
terminate simultaneously with the delivery of notice of such election by the
Authority; and the Club will refund any unearned portion of the Naming Rights
Fee.
11.3 EMINENT DOMAIN. If the Arena or substantially all of the Arena
shall be permanently taken or condemned by any competent authority for any
public use or quasi-public use or purpose, this Agreement shall terminate upon
the earlier of (i) the date when the possession of the part so taken shall be
required for such use or purpose or (ii) the effective date of the taking. If
less than all or substantially all of the Arena shall be taken or condemned by
any competent authority for any public or quasi-public use or purpose, then, in
accordance with Section 24.2 of the Use Agreement, the Authority and the Club
shall mutually determine whether the remaining portion of the Arena can
economically and feasibly be used by the Club. In the event that the Authority
and Club determine that the Arena cannot economically and feasibly be used by
the Club as the result of such partial taking, then this Agreement shall
terminate upon the date of such determination; and the Club shall refund any
unearned portion of the Naming Rights Fee. If any right of temporary possession
or occupancy of all or any portion of the Arena shall be taken, then the Club
shall determine whether such taking materially interferes with the Arena so that
the Arena is no longer suitable for the Club's use as provided in Section 24.4
of the Use Agreement. In the event that the Club determines that such temporary
taking materially interferes with its use of the Arena, then this Agreement
shall terminate upon the date of such determination.
SECTION 12. TERMINATION
12.1 GAYLORD DEFAULTS. The occurrence of any one or more of the
following matters constitutes a default by Gaylord (a "Gaylord Default"):
(a) Gaylord's failure to pay any of the Naming Rights Fee or
any other amounts due to the Club hereunder within thirty (30) days after
receipt by Gaylord of written notice thereof from the Club.
(b) Gaylord's material breach of any of the covenants,
agreements, representations or warranties contained in this Agreement, if such
breach has not been waived in writing, if such breach is not cured or remedied
by Gaylord to the Club's reasonable satisfaction within thirty (30) days after
delivery of written notice specifying the nature of the breach, or, if the
parties agree that the breach is not capable of being cured or remedied within
said thirty (30) days, then within the time period mutually agreed to by the
parties in a jointly approved plan of corrective action developed within thirty
(30) days after delivery of written notice to Gaylord specifying the nature of
the breach.
12.2 RIGHTS AND REMEDIES OF THE CLUB. Upon the occurrence of any
Gaylord Default, the Club may, at its option, upon written notice to Gaylord:
(a) Terminate this Agreement and recover all damages that the
Club may suffer by reason of Gaylord's breach of this Agreement and such early
termination;
(b) Enforce the provisions of this Agreement and enforce and
protect the rights of the Club hereunder by a suit or suits in equity or at law
for the specific performance of any covenant or agreement contained herein;
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<PAGE> 13
(c) Obtain any other available legal or equitable remedy or
relief, including, but not limited to, injunctive relief; and/or
(d) Without terminating this Agreement, recover from Gaylord
all actual, consequential, and incidental damages that the Club suffers as a
result of any Gaylord Default.
12.3 CLUB DEFAULTS. The occurrence of the following constitutes
a default by the Club (a "Club Default"):
(a) The Club's material breach of any of the covenants,
agreements, representations or warranties contained in this Agreement, if such
breach has not been waived in writing, if such breach is not cured or remedied
by the Club to Gaylord's reasonable satisfaction within thirty (30) days after
delivery of written notice specifying the nature of the breach, or, if the
parties agree that the breach is not capable of being cured or remedied within
said thirty (30) days, then within the time period mutually agreed to by the
parties in a jointly approved plan of corrective action developed within thirty
(30) days after delivery of written notice to the Club specifying the nature of
the breach; or
(b) A Team Default, as defined in the Use Agreement, shall
have occurred under the Use Agreement because the Club has breached Section 8.1
of the Use Agreement by failing to play its regular season home games, playoff
home games, and championship home games in the Arena in accordance with the
terms, conditions, and limitations of the Use Agreement.
12.4 RIGHTS AND REMEDIES OF GAYLORD. Upon the occurrence of any Club
Default, Gaylord may, at its option, upon written notice to the Club:
(a) Terminate this Agreement and recover all damages that
Gaylord may suffer by reason of Club's breach of this Agreement and such early
termination;
(b) Enforce the provisions of this Agreement and enforce and
protect the rights of Gaylord hereunder by a suit or suits in equity or at law
for the specific performance of any covenant or agreement contained herein;
(c) Suspend payment of the Naming Rights Fee payable pursuant
to Section 3 until such time as such Club Default no longer exists, provided
that such Club Default has not been cured or remedied by the Club to Gaylord's
reasonable satisfaction within thirty (30) days after delivery of the written
notice referenced in this Section 12.4 (such thirty (30) day period to be in
addition to the thirty (30) day period referenced in Section 12.3(a)), or, if
the parties agree that the breach is not capable of being cured or remedied
within said thirty (30) days, then within the time period mutually agreed to by
the parties in a jointly approved plan of corrective action developed within
thirty (30) days after delivery of the written notice to the Club specified in
this Section 12.4;
(d) Offset any damages that Gaylord may suffer by reason of
the Club's breach of this Agreement against any future payments of the Naming
Rights Fee;
(e) Obtain any other available legal or equitable remedy or
relief, including, but not limited to, injunctive relief; and/or
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(F) Without terminating this Agreement, recover from the Club
all actual, consequential, and incident damages that Gaylord suffers as a result
of any Club Default.
12.5 TERMINATION. This Agreement may be terminated at any time after
the Execution Date (a) by mutual consent of the Club and Gaylord, or (b) in
accordance with the terms and conditions of Sections 12.2 and 12.4 of this
Agreement. This Agreement will automatically terminate without the need for
notice upon the termination of the Use Agreement for any reason whatsoever.
12.6 APPORTIONMENT OF FEES. Upon termination of this Agreement, the
Naming Rights Fee for the year in which such termination occurs shall be
apportioned as of the date of termination.
12.7 NO CONTINUED USE OF ARENA NAME. Upon termination of this
Agreement, the Club shall be free to rename the Arena, shall no longer refer to
the Arena as the "Gaylord Entertainment Center" in its Powers' or LMI's
advertising or promotional materials or any other communications by or on behalf
of the Club or the Arena, and shall make reasonable efforts to notify parties
contracting with the Club or the Arena not to use "Gaylord Entertainment Center"
after the termination of this Agreement; provided, however, that the Club shall
have a maximum of ninety (90) days after the termination of this Agreement to
remove any references to, or displays of, the Arena Intellectual Property on the
signs or advertisements provided for in Sections 2.2 and 2.3 above, or any other
displays within the control of the Club, Powers, or LMI, the costs and expenses
of which shall be borne by the Club unless said termination results from a
Gaylord Default in which case such costs and expenses shall be borne by Gaylord.
Upon termination of this Agreement, Gaylord shall no longer refer to the
"Gaylord Entertainment Center" in its advertising and promotional materials or
any other communications by or on behalf of Gaylord.
12.8 METRO AND AUTHORITY. Gaylord acknowledges that the Metropolitan
Government and the Authority, and their respective officers, directors,
partners, members, officials, shareholders, employees, and agents shall not be
liable or responsible for any default under or breach of this Agreement by the
Club.
SECTION 13. INDEMNIFICATION.
13.1 OBLIGATION OF THE CLUB TO INDEMNIFY. Subject to the opportunity to
contest in Section 13.5 hereof, the Club hereby agrees to indemnify, defend, and
hold harmless Gaylord, its affiliates, and their controlling persons, directors,
officers, employees, representatives, agents, partners, joint ventures, and
assigns from and against any Losses (as defined in Section 13.3) relating to,
based upon, or arising out of (i) any falsity or breach of any representation or
warranty or breach of any covenant or agreement made or to be performed by the
Club pursuant to this Agreement or (ii) any wrongful or negligent act or
omission of the Club or Powers occurring as a result of the Club's performance
of its obligations hereunder, Powers' performance of its obligations under the
Powers Agreement, the operation of the Nashville Predators or the Club's other
businesses, or the operation of the Arena.
13.2 OBLIGATION OF GAYLORD TO INDEMNIFY. Subject to the opportunity to
contest in Section 13.5 hereof, Gaylord hereby agrees to indemnify, defend, and
hold the Club and Powers, and their affiliates, and their controlling persons,
directors, officers, employees, representatives, agents, partners, joint
ventures, and assigns harmless from and against any Losses relating to, based
upon, or arising out of (i) any falsity or breach of any representation or
warranty or breach of any covenant or
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<PAGE> 15
agreement made or to be performed by Gaylord pursuant to this Agreement or (ii)
any wrongful or negligent act or omission of Gaylord occurring as a result of
Gaylord's performance of its obligations hereunder, or the operation of
Gaylord's various businesses.
13.3 DEFINITION OF "LOSSES." As used in this Agreement, the term "Loss"
or "Losses" means any and all claims, actions, suits, proceedings, demands,
assessments, judgments, losses, remedial action requirements, costs,
deficiencies, damages, fines, penalties, liabilities, or expenses (including,
but not limited to, reasonable attorneys' fees), after giving effect to
offsetting recoveries or related proceeds actually received from insurance
policies or similar arrangements or from third parties. The fact that
indemnification is being sought shall not, in and of itself, preclude any party
from contesting the liability pursuant to Section 13.5 hereof.
13.4 NOTICE OF LOSS OR ASSERTED LIABILITY. Promptly, but not more than
ninety (90) days (or such lesser time as is reasonably necessary to allow the
indemnifying party to answer any asserted claim), after (a) becoming aware of
circumstances that have resulted in a Loss for which the party seeking
indemnification (the "Indemnitee") intends to seek indemnification under this
Section 13, or (b) receipt by the Indemnitee of written notice from any third
party of any demand, claim, or circumstance which gives rise or, with the lapse
of time, the giving of notice or both, would give rise to a claim or the
commencement of (or threatened commencement) of any action, proceeding, or
investigation (an "Asserted Liability") that may result in a Loss, the
Indemnitee shall give written notice thereof (the "Claims Notice") to the party
(or parties) obligated to provide indemnification pursuant to this Section 13
(the "Indemnifying Party"). The Claims Notice shall describe the Loss or the
Asserted Liability in reasonable detail. The Claims Notice may be amended by
written notice on one or more occasions with respect to the amount of the
Asserted Liability or the Loss at any time prior to final resolution of the
obligation to indemnify relating to the Asserted Liability or the Loss.
13.5 OPPORTUNITY TO CONTEST. Subject to the provisions of this
Agreement, the Indemnifying Party may elect to compromise or contest, at its own
expense and by its own counsel, any Asserted Liability. If the Indemnifying
Party elects to compromise or contest such Asserted Liability, it shall within
thirty (30) days (or sooner, if the nature of the Asserted Liability so
requires) (the "Notice Period") notify the Indemnitee of its intent to do so by
sending a written Contest Notice to the Indemnitee (the "Contest Notice"), and
the Indemnitee or Indemnitees shall cooperate, at the expense of the
Indemnifying Party, in the compromise or contest of such Asserted Liability;
provided, however, that the Indemnitee shall have the right to approve, to its
reasonable satisfaction, any counsel retained in connection with such Asserted
Liability. If, within the Notice Period, the Indemnifying Party elects not to
compromise or contest the Asserted Liability, fails to notify the Indemnitee of
its election as herein provided, or contests its obligation to indemnify under
this Agreement, the Indemnitee (upon further written notice to the Indemnifying
Party) shall have the right to pay, compromise, or contest such Asserted
Liability on behalf of and for the account and risk of the Indemnifying Party,
and the Indemnifying Party shall have no further right to assume the compromise
or contest of such Asserted Liability but shall retain the right to contest its
obligation, or the extent of its obligation, to indemnify or its responsibility
for any alleged or claimed Loss. Anything in this Section 13.5 to the contrary
notwithstanding, (i) the Indemnitee shall have the right, at its own cost and
expense and for its own account without claim for reimbursement, to compromise
or contest any Asserted Liability, and (ii) the Indemnifying Party shall not,
without the Indemnitee's written consent, which consent will not be unreasonably
withheld or delayed, settle or compromise any Asserted Liability or consent to
the entry of any judgment which does not include an unconditional release of
Indemnitee from all liability in respect of such Asserted Liability. In any
event, any Indemnitee may participate, at its own expense, in the contest of
such Asserted Liability.
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13.6 ATTORNEYS' FEES. In the event of a dispute, the prevailing party
shall be entitled to recover its reasonable attorneys' fees, expenses, and
costs. Nothing contained herein shall be construed to alter the inclusion of
attorneys' fees, expenses, and costs in otherwise indemnifiable Losses, as
provided herein.
13.7 EXCLUSIVE REMEDY AND LIMIT OF LIABILITY. Except for equitable
remedies, the rights and remedies of the parties set forth in this Section 13
shall be the exclusive rights or remedies available with respect to matters for
which indemnification is provided or authorized pursuant to this Agreement.
13.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties, covenants and agreements of the parties contained in this Agreement
shall continue throughout the Term, unless otherwise stated herein.
SECTION 14. INSURANCE. Throughout the Term, each party shall maintain, and the
Club shall cause Powers to maintain, in full force and effect, liability
insurance, written on an occurrence basis, with a combined single limit of at
least Ten Million Dollars ($10,000,000.00), which insurance shall (i) contain a
broad form contractual liability endorsement and a broad form property damage
endorsement, (ii) name the other party as an additional insured (Powers' policy
shall name Gaylord), (iii) provide that it may not be canceled, terminated,
reduced, materially changed, or allowed to expire without renewal unless at
least thirty (30) days advance notice has been given to the other party (Powers'
policy will give notice to Gaylord), (iv) be in form and with an insurer
satisfactory to the other party, and (v) if available, upon commercially
reasonable terms, contain a waiver of the insurer's rights of subrogation. Such
liability insurance shall be primary to the other party's insurance and shall
not call into contribution any insurance maintained by the other party. The
limits of such insurance shall not limit the liability of the parties. Prior to
the Commencement Date and thereafter upon written request, each party shall
furnish the other with a current certificate of insurance or, upon written
request, a certified duplicate policy evidencing the existence of the insurance
required under this Section 14.
SECTION 15. NOTICES
15.1 REQUIRED NOTICES. All notices, demands and other communications
between the parties required hereunder shall be in writing and deemed given upon
personal delivery, confirmed facsimile transmission ("fax"), or if sent by
certified mail, postage prepaid with a return receipt requested, to the
respective addresses and fax numbers as set forth below. Either party may
specify another address or fax number, from the one set forth below, by notice
to the other as provided herein.
If to the Club: Nashville Hockey Club Limited Partnership
501 Broadway
Nashville, TN 37203
Attn: John C. Diller or Current President
If to Gaylord: Gaylord Entertainment Company
One Gaylord Drive
Nashville, TN 37214
Attn: Joseph B. Crace
or Current Chief Operating Officer
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SECTION 16. MISCELLANEOUS
16.1 EXPENSES. All expenses of the preparation of this Agreement and of
the transactions provided for hereby shall be borne by the respective parties
incurring such expense, whether or not such transactions are consummated.
16.2 CHOICE OF LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Tennessee, without regard to the
conflicts of laws principles thereof, and the venue for any dispute arising
hereunder shall be in Davidson County, Tennessee. Furthermore, the parties agree
that the prevailing party in any such proceeding shall be entitled to recover
from the non-prevailing party its reasonable attorneys' fees, expenses and other
costs incurred in connection with any such proceeding, amounts incurred in
preparation for any such proceeding, and amounts incurred in connection with
enforcing any decision or judgment rendered in connection therewith.
16.3 WAIVER OF JURY TRIAL. With respect to any civil action, counter
claim, cross-claim, third party claim, or proceeding, whether in law or equity,
which arises out of, concerns or relates to this Agreement, any transactions
contemplated hereunder, the performance hereof, or the relationship created
hereby, whether sounding in contract, tort, strict liability or otherwise, trial
shall be to a court of competent jurisdiction and not to a jury. Each party
hereby knowingly, voluntarily, intentionally and irrevocably waives any right
(statutory, constitutional, common law or otherwise) it may have to a trial by
jury. Any party may file an original counterpart or a copy of this Agreement
with any court as written evidence of the waiver of the other party's right to
trial by jury, no party has made or relied upon any oral representation by any
other party regarding the enforceability of this provision. Each party has read
and understands the effect of this jury waiver provision.
16.4 CONFIDENTIALITY. Each party agrees to treat as confidential all
information regarding the other party furnished, or to be furnished, pursuant to
this Agreement, or as a part of this naming rights transaction (collectively,
the "Information"), in accordance with the provisions of this paragraph, and to
take, or abstain from taking, other actions set forth herein. The Information
will be used solely for the purpose of fulfilling each party's obligations
hereunder, and will be kept confidential by the receiving party and its
officers, directors, members, employees, representatives, agents, and advisors;
provided that (a) any of such Information may be disclosed to officers,
directors, members, employees, representatives, agents, and advisors who need to
know such Information for the purpose of fulfilling each party's obligations
hereunder, (b) the receiving party may disclose any Information to which the
disclosing party previously and expressly consents in writing, (c) Gaylord may
disclose that portion of the Information that is required to satisfy its
obligations under federal and state securities laws and regulations, and (d)
Information may be disclosed if otherwise required by law. Upon termination or
expiration of this Agreement, each party will return to the other party all
materials containing or reflecting the Information and will not retain any
copies, extracts, or other reproductions thereof. The parties hereto also agree
to hold the terms and conditions hereof in strict confidence and not to make any
disclosure with respect thereto, publicly or privately, other than as jointly
agreed to by the parties.
16.5 RESERVATION OF RIGHTS. Any and all rights not expressly
granted herein are reserved to the Club.
16.6 DEFAULT RATE OF INTEREST. All amounts owed by either party under
this Agreement shall bear interest from the date due until paid at the lesser of
the maximum rate permitted under
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Tennessee law or the Wall Street Journal Prime Rate, plus two percent, as the
same changes from time to time.
16.7 TIME OF THE ESSENCE. Time is of the essence as to this
Agreement and all provisions hereof.
16.8 ACCORD AND SATISFACTION. Neither the acceptance by either party of
a lesser amount than any amount herein required to be paid, nor any endorsement
or statement on a check or an instrument accompanying payment shall be deemed an
accord and satisfaction, and either party may accept such check or payment
without prejudicing such party's right to recover all outstanding amounts due
under this Agreement and pursue all remedies available hereunder or at law or in
equity.
16.9 ADDITIONAL ASSURANCES. From time to time after the date of this
Agreement, without further consideration and subject to the other terms of this
Agreement, the parties shall promptly execute and deliver such other instruments
and take such other actions as the other party reasonably may request to
consummate or perform the transactions and agreements contemplated hereby.
16.10 REMEDIES CUMULATIVE. All rights and remedies of the parties shall
be cumulative, and, except as specifically contemplated otherwise by this
Agreement, none shall exclude any other right or remedy allowed at law or in
equity and said rights or remedies may be exercised and enforced concurrently.
16.11 INTERPRETATION. If any issue arises to the meaning or
construction of any word, phrase or provision hereof, then no party shall be
entitled to the benefit of the principles of the construction and interpretation
of contracts or written instruments that provide that any ambiguity is to be
construed in favor of the party who did not draft the disputed word, phrase or
provision.
16.12 EXHIBITS. All Exhibits and documents referred to herein or
attached to this Agreement are integral parts of this Agreement as if fully set
forth herein and all statements appearing therein shall be deemed to be
representations.
16.13 WAIVER. No waiver by Gaylord or the Club of any covenant or
condition of this Agreement shall constitute a waiver by the waiving party of
any subsequent breach of such covenant or condition or authorize the breach or
non-observance on any other occasion of the same or any other covenant or
condition of this Agreement.
16.14 BINDING EFFECT AND ASSIGNABILITY OF RIGHTS. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding the prior sentence, no party
may assign any of its rights or obligations hereunder without the prior written
consent of the other party, except that no party may withhold its consent to an
assignment of this Agreement in the event of a merger or reorganization of a
party, a sale of all or substantially all of the assets of a party or a
consolidation of a party with any of its affiliates (as such term is defined in
Section 2.4 above) or related parties. Notwithstanding the foregoing, the Club
shall have the right to transfer, assign, convey, pledge or encumber, in whole
or in part, any and all of its rights under this Agreement as security in
connection with a loan transaction.
16.15 ENTIRE AGREEMENT. This Agreement is an integrated contract which
contains all agreements of the parties with respect to the subject hereof. No
other prior or contemporaneous agreement or understanding pertaining to this
subject shall be effective. This Agreement may be
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modified in writing only, signed by the parties hereto. There are no oral or
written statements, representations, agreements or understandings which modify,
amend or vary any of the terms of this Agreement. Unless the context requires
otherwise, references such as or similar to "hereof" refer to this Agreement and
the Exhibits hereto as a whole and not merely to the paragraph, section or other
subdivision in which such words appear. The singular shall include the plural
and the masculine gender shall include the feminine and the neuter, unless the
context otherwise requires. The captions and headings throughout this Agreement
are for convenience and reference only, and they shall not be deemed to define,
modify or add to the meaning, scope or intent of any provision of this
Agreement. In the event that any one or more of the phrases, sentences, clauses
or paragraphs contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if it did not contain such phrase, clause or
paragraph.
16.16 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same and shall be
effective when one or more counterparts have been signed by each party and
delivered to the other parties.
(Remainder of Page Intentionally Left Blank)
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IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first written above.
CLUB:
NASHVILLE HOCKEY CLUB LIMITED PARTNERSHIP
By: NASHVILLE PREDATORS, LLC
ITS GENERAL PARTNER
By:__________________________________
John C. Diller, President
GAYLORD:
GAYLORD ENTERTAINMENT COMPANY
By:________________________________________
Terry E. London, Chief Executive Officer
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EXHIBIT 13.1
ITEM 6. SELECTED FINANCIAL DATA
The following selected historical financial data for the five years
ended December 31, 1999 is derived from the Company's audited consolidated
financial statements. The unaudited selected consolidated pro forma income
statement data for the year ended December 31, 1997 is presented as if the
Distribution and the CBS Merger had occurred on January 1, 1997. The unaudited
selected consolidated pro forma information does not purport to represent what
the Company's results of operations would have been had such transactions, in
fact, occurred on such date or to project the Company's financial position or
results of operations for any future period. The information in the following
table should be read in conjunction with the Company's consolidated financial
statements and related notes included herein.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------------------
UNAUDITED
ACTUAL PRO FORMA ACTUAL
-------------------------- --------- ------------------------------------------
1999 1998 1997(5) 1997(6)(7) 1996 1995
--------- --------- --------- --------- --------- ---------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Hospitality and attractions $ 245,705 $ 246,354 $ 311,418 $ 311,418 $ 280,411 $ 244,279
Creative content 205,565 203,537 162,782 162,782 46,918 48,608
Interactive media 54,224 68,942 85,952 350,415 417,613 413,219
Corporate and other 5,294 5,642 1,380 1,380 2,216 1,354
--------- --------- --------- --------- --------- ---------
Total revenues 510,788 524,475 561,532 825,995 747,158 707,460
--------- --------- --------- --------- --------- ---------
Operating expenses:
Operating costs 324,560 315,077 363,369(8)(9) 511,162(8)(9) 443,236 442,208(8)
Selling, general and
administrative 138,318 123,681 132,511 161,280 125,459 115,361
Merger costs (1,741) -- 22,645(10) 22,645(10) -- --
Restructuring charges 3,102 -- 13,654(10) 13,654(10) -- --
Line of business closing
charges 12,201(1) -- 42,006(11) 42,006(11) -- --
Depreciation and amortization:
Hospitality and
attractions 25,515 23,835 28,544 28,544 25,570 18,570
Creative content 13,757 9,294 6,553 6,553 3,229 2,976
Interactive media 6,553 4,415 4,709 13,870 15,989 12,812
Corporate and other 6,749 5,240 4,430 4,430 4,068 3,728
--------- --------- --------- --------- --------- ---------
Total depreciation and
amortization 52,574 42,784 44,236 53,397 48,856 38,086
--------- --------- --------- --------- --------- ---------
Total operating expenses 529,014 481,542 618,421 804,144 617,551 595,655
--------- --------- --------- --------- --------- ---------
Operating income (loss):
Hospitality and attractions 38,270 44,051 50,846 50,846 42,634 36,843
Creative content (11,366) 11,339 11,689 11,689 7,010 9,235
Interactive media (5,596) 8,211 (14,810)(8)(9) 63,930(8)(9) 103,708 88,553(8)
Corporate and other (25,972) (20,668) (26,309) (26,309) (23,745) (22,826)
Merger costs 1,741 -- (22,645)(10) (22,645)(10) -- --
Restructuring charges (3,102) -- (13,654)(10) (13,654)(10) -- --
Line of business closing
charges (12,201)(1) -- (42,006)(11) (42,006)(11) -- --
--------- --------- --------- --------- --------- ---------
Total operating income
(loss) (18,226) 42,933 (56,889) 21,851 129,607 111,805
Interest expense (16,101) (30,031) (26,994) (27,177) (19,538) (4,200)
Interest income 6,275 25,606 23,726 24,022 22,904 7,011
Other gains and losses 589,574(2)(3) 11,359(3)(4) 146,193(12) 143,532(12) 71,741(15) (8,264)(16)
--------- --------- --------- --------- --------- ---------
Income from continuing
operations before
provision for income
taxes 561,522 49,867 86,036 162,228 204,714 106,352
</TABLE>
1
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Provision for income taxes 211,730 18,673 (19,788)(13) 10,792(13) 73,549 40,945
--------- --------- --------- --------- --------- ---------
Income from continuing
operations 349,792 31,194 105,824 151,436 131,165 65,407
Discontinued operations, net of
taxes -- -- -- -- -- 42,998(3)
Cumulative effect of accounting
change, net of taxes -- -- (7,537)(14) (7,537)(14) -- --
--------- --------- --------- --------- --------- ---------
Net income $ 349,792 $ 31,194 $ 98,287 $ 143,899 $ 131,165 $ 108,405
========= ========= ========= ========= ========= =========
Income per share:
Income from continuing
operations $ 10.63 $ 0.95 $ 3.27 $ 4.68 $ 4.07 $ 2.04
========= ========= ========= ========= ========= =========
Net income $ 10.63 $ 0.95 $ 3.04 $ 4.45 $ 4.07 $ 3.38
========= ========= ========= ========= ========= =========
Income per share - assuming
dilution:
Income from continuing
operations $ 10.53 $ 0.94 $ 3.24 $ 4.64 $ 4.02 $ 2.01
========= ========= ========= ========= ========= =========
Net income $ 10.53 $ 0.94 $ 3.01 $ 4.41 $ 4.02 $ 3.33
========= ========= ========= ========= ========= =========
Dividends per share $ 0.80 $ 0.65 N/A $ 1.05 $ 1.08 $ 0.89
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ---------- ---------- ---------- ----------
BALANCE SHEET DATA: (AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Total assets $1,732,384(2) $1,011,992 $1,117,562 $1,182,248 $1,095,812
Total debt, including current portion 310,123 282,981(3) 388,397 363,409 340,044
Total stockholders' equity 961,159(2) 525,160 516,224 512,963 419,106
</TABLE>
(1) Charge related to the closing of Word's Unison Records label.
(2) Includes a pretax gain of $459,307 on the divestiture of television
station KTVT in Dallas-Fort Worth in exchange for CBS Series B
preferred stock which is convertible into 10,141,691 shares of CBS
common stock, $4,210 of cash, and other consideration. The CBS Series B
preferred stock was included in total assets at its current value of
$648,434 at December 31, 1999.
(3) In 1993, the Company 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. Net
proceeds were $198,800 in cash and a note receivable with a face amount
of $165,688, which was recorded at $150,688, net of a $15,000 discount.
As part of the sale transaction, the Company also received contractual
equity participation rights (the "Rights") equal to 15% of the net
distributable proceeds from future asset sales. During 1998, the
Company collected the full amount of the note receivable and recorded a
pretax gain of $15,000 related to the note receivable discount. During
1999, the Company received cash and recognized a pretax gain of
$129,875 representing the value of the Rights. The proceeds from the
note receivable prepayment and the Rights were used to reduce
outstanding bank indebtedness.
(4) Includes:
(a) a pretax gain of $16,072 on the sale of the Company's
investment in the Texas Rangers Baseball Club, Ltd.;
(b) a pretax gain totaling $8,538 primarily related to the
settlement of contingencies from the sales of television
stations KHTV in Houston and KSTW in Seattle;
(c) a pretax loss of $23,616 on the write-off of a note receivable
from Z Music; and
(d) a pretax loss of $9,200 related to the termination of an
operating lease for a satellite transponder for CMT
International.
(5) Reflects the unaudited pro forma results of operations as if the CBS
Merger had occurred on January 1, 1997.
(6) Includes the results of operations of the Cable Networks Business for
the first nine months of 1997. On October 1, 1997, the Cable Networks
Business was acquired by CBS in the CBS Merger.
(7) In January 1997, the Company purchased the net assets of Word for
approximately $120,000. The results of operations of Word have been
included from the date of acquisition.
(8) Includes pretax charges of $11,740 and $13,302 for 1997 and 1995,
respectively, for the write-down to net realizable value of certain
television program rights.
2
<PAGE> 3
(9) Includes a pretax charge of $5,000 related to plans to cease the
European operations of CMT International effective March 31, 1998.
(10) The merger costs and the 1997 restructuring charge are related to the
CBS Merger.
(11) Charge related to the closing of the Opryland theme park at the end of
the 1997 operating season.
(12) Includes a pretax gain of $144,259 on the sale of television station
KSTW in Seattle.
(13) Includes a deferred tax benefit of $55,000 related to the revaluation
of certain reserves as a result of the 1997 Restructuring and CBS
Merger.
(14) Reflects the cumulative effect of the change in accounting method for
deferred preopening costs to expense these costs as incurred, effective
January 1, 1997, of $12,335, net of a related tax benefit of $4,798.
(15) Includes a pretax gain of $73,850 on the sale of television station
KHTV in Houston.
(16) Includes a pretax loss of $5,529 to reflect the loss upon the disposal
of the Company's 14% limited partnership interest in the Fiesta Texas
theme park.
3
<PAGE> 4
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
During 1999, the Company restated its reportable segments for all
periods presented based upon an internal realignment of operational
responsibilities. The Company is managed using the following four business
segments: hospitality and attractions, creative content, interactive media, and
corporate and other. Certain events which occurred during each of 1999, 1998 and
1997 affect the comparability of the Company's results of operations among the
periods under review. The principal events are as follows:
DIVESTITURE OF KTVT
In October 1999, CBS Corporation acquired the Company's television
station KTVT in Dallas-Ft. Worth in exchange for $485 million of CBS Series B
convertible preferred stock, $4.2 million of cash and other consideration. The
Company recorded a pretax gain of $459.3 million, which is included in other
gains and losses in the consolidated statements of income.
UNISON RECORDS CLOSING
During 1999, the Company recorded a pretax loss of $12.2 million
related to the closing of Unison Records, a specialty record label of Word which
dealt primarily in value-priced acoustical and instrumental recordings. The
Unison closing charge is reflected as a line of business closing charge in the
consolidated statements of income. The Unison closing charge includes
write-downs of the carrying value of inventories, accounts receivable and other
assets of $4.3 million, $3.5 million and $3.9 million, respectively, and other
costs associated with the Unison closing of $0.5 million.
GAYLORD ENTERTAINMENT CENTER NAMING RIGHTS
During 1999, the Company entered into a naming rights agreement related
to the Nashville Arena with the Nashville Predators of the National Hockey
League. The Nashville Arena has been renamed the Gaylord Entertainment Center as
a result of the agreement. The contractual commitment requires the Company to
pay $2.1 million during the first year of the contract, with a 5% escalation
each year for the next 20 years. The Company is accounting for the naming rights
agreement expense on a straight-line basis over the 20 year contract period.
GAYLORD DIGITAL
During the third quarter of 1999, the Company announced the creation of
a new division formed to initiate a focused Internet strategy, and the
acquisition of a controlling equity interest in two online operations,
Musicforce.com and Lightsource.com. This division is currently known as Gaylord
Digital. At December 31, 1999, the Company had acquired 84% of Musicforce.com
and Lightsource.com for $23.4 million in cash. The parties entered into option
agreements regarding the additional equity interests in the online operations.
The acquisition was financed through borrowings under the Company's revolving
credit agreement and has been accounted for using the purchase method of
accounting. The Company expects that Gaylord Digital will have operating losses
of approximately $20 million (excluding goodwill amortization) during the
combined period of 1999 and 2000.
REORGANIZATION AND CBS MERGER
Prior to September 30, 1997, the Company was a wholly owned subsidiary
of a corporation which was then known as Gaylord Entertainment Company ("Old
Gaylord"). On October 1, 1997, Old Gaylord consummated a merger transaction with
CBS (the "CBS Merger"), pursuant to which Old Gaylord became a wholly owned
subsidiary of CBS. Prior to the CBS Merger, Old Gaylord completed the 1997
restructuring whereby certain assets and liabilities that were part of Old
Gaylord's hospitality, attractions, music, television and radio businesses,
including all of its long-term debt, as well as CMT International and the
management of and option to acquire 95% of Z Music, were transferred to or
retained by the Company. As a result of the 1997 restructuring and the CBS
Merger, substantially all of the assets of the Cable Networks Business and its
liabilities, to the extent that they arose out of or related to the Cable
Networks Business, were acquired by CBS. The operating results of the Cable
Networks Business are included in the consolidated statements of income through
September 30, 1997.
OPRYLAND THEME PARK CLOSING
The Company closed the Opryland theme park at the end of the 1997
operating season. During 1998, the Company created a partnership with The Mills
Corporation to develop Opry Mills, a $200 million entertainment / retail complex
located on land previously used for the Opryland theme park. The Company holds a
one-third interest in the partnership.
4
<PAGE> 5
ACQUISITION OF WORD ENTERTAINMENT
In January 1997, the net assets of Word were purchased by the Company
for approximately $120 million in cash. The purchase price included
approximately $40 million of working capital.
DIVESTITURE OF KSTW
In June 1997, the Company sold television station KSTW in Seattle for
$160 million in cash.
RESULTS OF OPERATIONS
The following table contains selected income statement data for each of
the three years ended December 31, 1999, 1998 and 1997 (in thousands). The
unaudited pro forma data for the year ended December 31, 1997 is presented as if
the CBS Merger 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.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------------------------
Unaudited
Actual Actual Pro Forma Actual
1999 % 1998 % 1997 % 1997 %
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Hospitality and attractions $ 245,705 48.1% $ 246,354 47.0% $ 311,418 55.5% $ 311,418 37.7%
Creative content 205,565 40.3 203,537 38.8 162,782 29.0 162,782 19.7
Interactive media 54,224 10.6 68,942 13.1 85,952 15.3 350,415 42.4
Corporate and other 5,294 1.0 5,642 1.1 1,380 0.2 1,380 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Total revenues 510,788 100.0 524,475 100.0 561,532 100.0 825,995 100.0
- ------------------------------------------------------------------------------------------------------------------------------------
Operating expenses:
Operating costs 324,560 63.5 315,077 60.1 363,369 64.7 511,162 61.9
Selling, general and
administrative 138,318 27.1 123,681 23.6 132,511 23.6 161,280 19.5
Merger costs (1,741) (0.3) -- -- 22,645 4.0 22,645 2.7
Restructuring charges 3,102 0.6 -- -- 13,654 2.4 13,654 1.7
Line of business closing charges 12,201 2.4 -- -- 42,006 7.5 42,006 5.1
Depreciation and amortization:
Hospitality and attractions 25,515 23,835 28,544 28,544
Creative content 13,757 9,294 6,553 6,553
Interactive media 6,553 4,415 4,709 13,870
Corporate and other 6,749 5,240 4,430 4,430
- ------------------------------------------------------------------------------------------------------------------------------------
Total depreciation and
amortization 52,574 10.3 42,784 8.1 44,236 7.9 53,397 6.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 529,014 103.6 481,542 91.8 618,421 110.1 804,144 97.4
- ------------------------------------------------------------------------------------------------------------------------------------
Operating income (loss):
Hospitality and attractions 38,270 15.6 44,051 17.9 50,846 16.3 50,846 16.3
Creative content (11,366) (5.5) 11,339 5.6 11,689 7.2 11,689 7.2
Interactive media (5,596) (10.3) 8,211 11.9 (14,810) (17.2) 63,930 18.2
Corporate and other (25,972) -- (20,668) -- (26,309) -- (26,309) --
Merger costs 1,741 -- -- -- (22,645) -- (22,645) --
Restructuring charges (3,102) -- -- -- (13,654) -- (13,654) --
Line of business closing charges (12,201) -- -- -- (42,006) -- (42,006) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating income (loss) $ (18,226) (3.6)% $ 42,933 8.2% $ (56,889) (10.1)% $ 21,851 2.6%
====================================================================================================================================
</TABLE>
5
<PAGE> 6
YEAR ENDED DECEMBER 31, 1999, COMPARED TO YEAR ENDED DECEMBER 31, 1998
REVENUES
TOTAL REVENUES - Total revenues decreased $13.7 million, or 2.6%, to
$510.8 million in 1999 primarily due to the effect of the divestiture of KTVT.
Excluding the total revenues of KTVT from both periods, total revenues increased
$1.9 million, or 0.4%, in 1999.
HOSPITALITY AND ATTRACTIONS - Revenues in the hospitality and
attractions segment decreased $0.6 million, or 0.3%, to $245.7 million in 1999.
Revenues of the Opryland Hotel Nashville decreased $0.4 million to $223.4
million in 1999. The hotel's occupancy rate decreased to 78.0% in 1999 compared
to 79.1% in 1998. The hotel sold 789,600 rooms in 1999 compared to 801,900 rooms
sold in 1998, reflecting a 1.5% decrease from 1998. The hotel's average daily
rate decreased to $137.18 in 1999 from $138.51 in 1998. During 1999, the hotel
changed the calculation of its average daily rates in an attempt to report
amounts that are more consistent with industry standards and restated the
average daily rate calculations for all prior periods. This change is expected
to result in average daily rates that are approximately 2% lower than those
previously reported. Revenues associated with the Company's attractions
properties decreased $1.0 million in 1999 related to continued softness in
Nashville tourism. These decreases were partially offset by increased revenues
of $0.9 million in 1999 from the Inn at Opryland, which was purchased in April
1998.
CREATIVE CONTENT - Revenues in the creative content segment increased
$2.0 million, or 1.0%, to $205.6 million in 1999. The increase results primarily
from the revenues of Jack Nicklaus Productions, which was acquired in December
1999, of $7.1 million. Revenues from the Wildhorse Saloon in Orlando, Florida,
which opened in April 1998, increased $1.9 million in 1999. Pandora revenues
decreased $3.4 million, or 30.2%, to $7.9 million in 1999 due to fewer film
releases in 1999. Revenues of Word decreased $2.5 million, or 1.9%, to $129.6
million in 1999 related to declines at the now-closed Unison label and a decline
in sales of children's products.
INTERACTIVE MEDIA - Revenues in the interactive media segment decreased
$14.7 million, or 21.3%, to $54.2 million in 1999 due to the effect of the
divestiture of KTVT in October 1999. Excluding the revenues of KTVT from both
periods, revenues in the interactive media segment increased $0.8 million to
$18.2 million in 1999. The revenues of KTVT were $36.1 million and $51.6 million
in 1999 and 1998, respectively. Revenues of the Company's Internet division, now
known as Gaylord Digital, subsequent to its formation in 1999 were $1.6 million.
The Company's WWTN FM radio station produced increased revenues of $1.2 million
in 1999. The revenues of CMT International decreased $1.8 million in 1999
primarily related to CMT International ceasing its European operations effective
March 31, 1998.
CORPORATE AND OTHER - Revenues in the corporate and other segment
decreased $0.3 million to $5.3 million in 1999. Corporate and other segment
revenues consist primarily of consulting and other services revenues related to
the Opry Mills partnership in both 1999 and 1998, which will not be continuing
beyond 1999.
OPERATING EXPENSES
TOTAL OPERATING EXPENSES - Total operating expenses increased $47.5
million, or 9.9%, to $529.0 million in 1999. Operating costs, as a percentage of
revenues, increased to 63.5% during 1999 as compared to 60.1% during 1998.
Selling, general and administrative expenses, as a percentage of revenues,
increased to 27.1% during 1999 as compared to 23.6% in 1998.
OPERATING COSTS - Operating costs increased $9.5 million, or 3.0%, to
$324.6 million in 1999. Excluding the operating costs of KTVT from both periods,
operating costs increased $13.1 million, or 4.5%, to $306.1 million in 1999. The
increase is primarily the result of the December 1999 acquisition of Jack
Nicklaus Productions, which had operating costs in 1999 of $6.5 million and the
operating costs of the Company's Internet division, now known as Gaylord
Digital, of $2.7 million. Operating costs of the Wildhorse Saloon locations
increased $3.6 million in 1999 related to increased revenues and the opening of
the Orlando, Florida location in April 1998. The operating costs of Word
increased $2.8 million in 1999 related to increased revenues of lower-margin
distributed products and increased costs associated with the relocation of
Word's warehouse from Texas to Tennessee. Costs associated with the growth
strategy of Z Music increased operating costs by $2.0 million in 1999. These
increases were partially offset in 1999 by decreased operating costs at the
Opryland Hotel Nashville of $1.0 million.
6
<PAGE> 7
SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and
administrative expenses increased $14.6 million, or 11.8%, to $138.3 million in
1999. Excluding the selling, general and administrative expenses of KTVT from
the results of both periods, selling, general and administrative expenses
increased $17.3 million, or 15.1%, in 1999. The 1999 increase is primarily
attributable to higher selling, general and administrative expenses of Word of
$8.3 million and Gaylord Digital of $4.4 million. Corporate selling, general and
administrative expenses, consisting primarily of senior management salaries and
benefits, legal, human resources, accounting, and other administrative costs,
increased $3.7 million in 1999, including $1.4 million of expense associated
with the naming rights for the Gaylord Entertainment Center subsequent to
entering into the naming rights agreement. The expense associated with the
naming rights agreement for the Gaylord Entertainment Center will be
approximately $3.4 million in 2000 based upon the straight-line accounting for
the naming rights expense. Hotel development efforts of the Opryland Hospitality
Group increased selling, general and administrative expenses $2.3 million in
1999. The selling, general and administrative costs of the Opryland Hotel
Nashville increased $2.2 million in 1999 primarily related to higher selling and
marketing costs. These increases were partially offset by the 1998 recognition
of a valuation reserve of $4.3 million on a long-term note receivable from Z
Music, Inc.
MERGER COSTS AND RESTRUCTURING CHARGES - During 1999, the Company
recognized a nonrecurring restructuring charge of $3.1 million related to
streamlining the Company's operations, primarily the Opryland Hotel Nashville.
The restructuring charge includes estimated costs for employee severance and
termination benefits of $2.4 million and other restructuring costs of $0.7
million. As of December 31, 1999, the Company has recorded cash charges of $2.6
million against the restructuring accrual. Additionally, the Company reversed
$1.7 million of the merger costs accrual originally recorded in 1997 related to
the CBS Merger based upon the settlement of the remaining contingencies
associated with the merger transaction.
LINE OF BUSINESS CLOSING CHARGES - During 1999, the Company recorded a
pretax loss of $12.2 million related to the closing of Unison Records, a
specialty record label of Word which dealt primarily in value-priced acoustical
and instrumental recordings. The Unison closing charge is reflected as a line of
business closing charge in the consolidated statements of income. The Unison
closing charge includes write-downs of the carrying value of inventories,
accounts receivable and other assets of $4.3 million, $3.5 million and $3.9
million, respectively, and other costs associated with the Unison closing of
$0.5 million.
DEPRECIATION AND AMORTIZATION - Depreciation and amortization increased
$9.8 million, or 22.9%, to $52.6 million in 1999. Excluding the depreciation and
amortization of KTVT from both periods, depreciation and amortization increased
$9.6 million, or 23.7%, in 1999. The increase is primarily attributable to the
depreciation expense of capital expenditures and the amortization expense of
intangible assets, primarily goodwill, associated with acquisitions.
OPERATING INCOME (LOSS)
Total operating income decreased $61.2 million to an operating loss of
$18.2 million during 1999. Excluding the operating results of KTVT, merger costs
reduction, the restructuring charge and the line of business closing charge from
both periods, total operating income decreased $38.1 million to an operating
loss of $13.0 million in 1999.
Hospitality and attractions segment operating income decreased $5.8
million to $38.3 million in 1999 primarily related to lower operating income
produced by the Opryland Hotel Nashville and expenses associated with the
Opryland Hospitality Group hotel developments. The operating income of the
creative content segment decreased $22.7 million to an operating loss of $11.4
million in 1999 primarily related to lower operating income generated by Word
and Pandora. Excluding the operating income of KTVT from both periods, the
operating loss of the interactive media segment increased $4.4 million to an
operating loss of $14.0 million in 1999 primarily as a result of the operating
losses of the Company's Internet division, now known as Gaylord Digital. The
operating income of KTVT was $8.4 million and $17.8 million in 1999 and 1998,
respectively.
Operating expenses associated with the Company's development plans
related to hotel expansion projects, Gaylord Digital, and record labels are
expected to significantly impact the Company's results of operations during
2000. Currently, the Company is expecting net losses for the year ended December
31, 2000, excluding any nonrecurring items, in the range of $48 million to $50
million, or $1.43 to $1.50 per diluted share.
INTEREST EXPENSE
Interest expense decreased $13.9 million to $16.1 million in 1999. The
decrease in 1999 is primarily attributable to lower average borrowing levels and
lower weighted average interest rates during 1999 than in 1998. During the
fourth quarter of 1998, the Company used proceeds of $238.4 million from a
long-term note receivable to reduce outstanding indebtedness. During the first
quarter of 1999, the Company used the proceeds from the equity participation
rights described below to further reduce outstanding indebtedness. The Company's
weighted average interest rate on its borrowings was 6.4% in 1999 compared to
6.6% in 1998.
7
<PAGE> 8
The Company is currently negotiating with its lenders and others
regarding the Company's future financing arrangements, which may include the
monetization of the CBS preferred stock acquired as part of the KTVT disposal as
well as other financing arrangements. The Company's effective interest rates on
its future financing structure are expected to be higher than the Company's
historical effective interest rates, with such increase potentially being
significantly higher than historical effective interest rates.
INTEREST INCOME
Interest income decreased $19.3 million to $6.3 million in 1999. The
decrease in 1999 primarily relates to the December 1998 collection of a
long-term note receivable. See "Liquidity and Capital Resources" This decrease
was partially offset in 1999 by nonrecurring interest income of $2.0 million
related to the settlement of contingencies between the Company and CBS as well
as interest income earned from Bass Pro, including a $1.8 million prepayment
penalty.
OTHER GAINS AND LOSSES
Other gains and losses during 1999 were comprised of the following
pretax amounts, in millions:
<TABLE>
<CAPTION>
GAIN/
(LOSS)
------
<S> <C>
Gain on divestiture of KTVT $459.3
Gain on equity participation rights 129.9
Other gains and losses, net 0.4
------
$589.6
======
</TABLE>
During 1995, the Company sold its cable television systems (the
"Systems"). Net proceeds consisted of $198.8 million in cash and a 10-year note
receivable with a face amount of $165.7 million. The note receivable was
recorded net of a $15.0 million discount to reflect the note at fair value.
During 1998, the Company received $238.4 million representing prepayment of the
entire balance of the note receivable and related accrued interest. The Company
recorded a $15.0 million pretax gain during 1998 related to the note receivable
discount originally recorded as part of the Systems sale transaction. During
1999, the Company recognized a pretax gain of $129.9 million related to the
collection of $130 million in proceeds from the redemption of certain equity
participation rights in the Systems.
In October 1999, CBS acquired the Company's television station KTVT in
Dallas-Ft. Worth in exchange for $485 million of CBS Series B convertible
preferred stock, $4.2 million of cash and other consideration. The Company
recorded a pretax gain of $459.3 million, which is included in other gains and
losses in the consolidated statements of income.
The Company recorded a pretax loss of $23.6 million during 1998 related
to the write-off of a note receivable from Z Music when the Company foreclosed
on the note receivable and took a controlling interest in the assets of Z Music.
Also during 1998, the Company sold its investment in the Texas Rangers Baseball
Club, Ltd. for $16.1 million and recognized a gain of the same amount.
During 1998, the Company terminated an operating lease for a satellite
transponder related to the European operations of CMT International. The
termination of the satellite transponder lease resulted in a pretax charge of
$9.2 million during 1998. Additionally, the Company recorded a gain of $8.5
million during 1998 primarily related to the settlement of contingencies arising
from the sale of television stations KHTV in Houston and KSTW in Seattle.
INCOME TAXES
The Company's provision for income taxes was $211.7 million in 1999
compared to $18.7 million in 1998. The Company's effective tax rate on its
income before provision for income taxes was 37.7% for 1999 compared to 37.4%
for 1998.
8
<PAGE> 9
YEAR ENDED DECEMBER 31, 1998, COMPARED TO YEAR ENDED DECEMBER 31, 1997
REVENUES
TOTAL REVENUES - Total revenues decreased $301.5 million, or 36.5%,
to $524.5 million in 1998 primarily due to the effect of the CBS Merger. On a
pro forma basis, assuming the CBS Merger had occurred on January 1, 1997, total
revenues would have decreased $37.1 million, or 6.6%, in 1998. The decrease on a
pro forma basis is primarily attributable to the closing of the Opryland theme
park at the end of the 1997 operating season and the sale of television station
KSTW in June 1997. Excluding the total revenues of the Cable Networks Business,
the Opryland theme park and KSTW from the 1997 results, total revenues increased
$33.7 million, or 6.9%, in 1998. The increase was primarily attributable to
increased revenues in the creative content segment, principally from Word.
HOSPITALITY AND ATTRACTIONS - Revenues in the hospitality and
attractions segment decreased $65.1 million, or 20.9%, to $246.4 million in
1998, primarily due to the closing of the Opryland theme park at the end of the
1997 operating season. Excluding the revenues of the Opryland theme park from
1997, revenues in the hospitality and attractions segment decreased $6.6
million, or 2.6%, in 1998. The decrease relates primarily to decreased revenues
from the Opryland Hotel Nashville of $7.6 million, or 3.3%, to $223.8 million in
1998 principally because of fewer rooms sold to convention groups and a slowdown
in the Nashville tourism market. The hotel's occupancy rate decreased to 79.1%
in 1998 compared to 85.4% in 1997. The hotel sold 801,900 rooms in 1998 compared
to 862,300 rooms sold in 1997, reflecting a 7.0% decrease from 1997. The hotel's
average daily rate increased to $138.51 in 1998 from $131.82 in 1997. The
decrease in revenues from the Opryland Hotel Nashville is partially offset in
1998 by revenues from the Inn at Opryland, subsequent to its acquisition in
April 1998, of $4.1 million.
CREATIVE CONTENT - Revenues in the creative content segment
increased $40.8 million, or 25.0%, to $203.5 million in 1998. The increase
results primarily from increased revenues at Word of $19.9 million and
revenues from Pandora subsequent to the date of its acquisition of $11.3
million. Revenues increased from the Oklahoma Redhawks baseball team by
$5.9 million in 1998.
INTERACTIVE MEDIA - Revenues in the interactive media segment
decreased $281.5 million to $68.9 million in 1998 due to the effect of the CBS
Merger. On a pro forma basis, assuming the CBS Merger had occurred on January 1,
1997, revenues in the interactive media segment would have decreased $17.0
million in 1998, primarily as the result of the sale of KSTW in June 1997.
Excluding the revenues of the Cable Networks Business and KSTW from 1997,
revenues in the interactive media segment decreased $4.8 million, or 6.5%, in
1998. The decrease results primarily from CMT International ceasing its European
operations effective March 31, 1998.
CORPORATE AND OTHER - Revenues in the corporate and other segment
increased $4.3 million to $5.6 million in 1998 primarily related to consulting
and other services revenues related to the Opry Mills partnership of $5.0
million.
OPERATING EXPENSES
TOTAL OPERATING EXPENSES - Total operating expenses decreased $322.6
million, or 40.1%, to $481.5 million in 1998. On a pro forma basis, assuming the
CBS Merger had occurred on January 1, 1997, total operating expenses would have
decreased $136.9 million, or 22.1%, in 1998. The decrease is primarily
attributable to the closing of the Opryland theme park at the end of the 1997
operating season and the sale of television station KSTW in June 1997. Excluding
the total operating expenses of the Cable Networks Business, the Opryland theme
park, and KSTW from the 1997 results, total operating expenses decreased $67.1
million, or 12.2%, in 1998, which is primarily attributable to nonrecurring
charges in 1997, as discussed below. Operating costs, as a percentage of
revenues, decreased to 60.1% during 1998 as compared to 64.7% during 1997 on a
pro forma basis, assuming the CBS Merger had occurred on January 1, 1997.
Selling, general and administrative expenses, as a percentage of revenues,
remained unchanged at 23.6% during 1998 as compared to 1997 on a pro forma
basis, assuming the CBS Merger had occurred on January 1, 1997.
9
<PAGE> 10
OPERATING COSTS - Operating costs decreased $196.1 million, or
38.4%, to $315.1 million in 1998. On a pro forma basis, assuming the CBS Merger
had occurred on January 1, 1997, operating costs would have decreased $48.3
million, or 13.3%, in 1998. The decrease on a pro forma basis is primarily the
result of the December 1997 closing of the Opryland theme park and the June 1997
sale of television station KSTW. In addition, during 1997 the Company recorded
nonrecurring charges to operations of $11.7 million for the write-down to net
realizable value of certain program rights at television station KTVT and $5.0
million related to plans to cease the European operations of CMT International.
Excluding the write-down of television program rights, the CMT International
European charge and the operating costs of the Cable Networks Business, the
Opryland theme park and KSTW from the 1997 results, operating costs increased
$13.8 million, or 4.6%, in 1998. The increase during 1998 is primarily
attributable to increased operating costs of Word of $11.3 million related to
increased sales and the operating costs of the Wildhorse Saloon in Orlando,
Florida, which opened in April 1998, of $3.5 million. The acquisition of Pandora
in July 1998 increased operating costs by $8.4 million during 1998.
Additionally, operating costs increased $3.2 million related to the Oklahoma
Redhawks baseball team and increased $2.7 million related to hotel development
costs of the Opryland Hospitality Group. These increases were partially offset
during 1998 by decreased operating expenses of $12.0 million related to the
European operations of CMT International, which ceased operations effective
March 31, 1998, as well as decreased operating costs at the Opryland Hotel
Nashville of $2.5 million.
SELLING, GENERAL AND ADMINISTRATIVE - Selling, general and
administrative expenses decreased $37.6 million, or 23.3%, to $123.7 million in
1998. On a pro forma basis, assuming the CBS Merger had occurred on January 1,
1997, selling, general and administrative expenses would have decreased $8.8
million, or 6.7%, during 1998. The decrease is primarily the result of the
closing of the Opryland theme park at the end of the 1997 operating season and
the June 1997 sale of television station KSTW. Excluding the selling, general
and administrative expenses of the Cable Networks Business, the Opryland theme
park and KSTW from the 1997 results, selling, general and administrative
expenses increased $8.8 million, or 7.7%, in 1998. The increase is primarily
attributable to higher selling, general and administrative expenses of Word and
Blanton Harrell Entertainment, an artist management company, of $7.7 million and
increased valuation reserves of $2.9 million related to a long-term note
receivable from Z Music, as discussed below. Additionally, selling, general and
administrative expenses increased $2.3 million related to the Wildhorse Saloon
in Orlando, Florida, which opened in April 1998. Corporate general and
administrative expenses, consisting primarily of senior management salaries and
benefits, legal, human resources, accounting, and other administrative costs,
decreased $3.6 million in 1998.
MERGER COSTS AND RESTRUCTURING CHARGES - In connection with the CBS
Merger, the Company recognized nonrecurring merger costs and a restructuring
charge in 1997 of $22.6 million and $13.7 million, respectively. Merger costs
included professional and registration fees, debt refinancing costs, and
incentive compensation associated with the CBS Merger. The 1997 restructuring
charge included estimated costs for employee severance and termination benefits
of $6.5 million, asset write-downs of $3.7 million, and other costs associated
with the restructuring of $3.5 million.
LINE OF BUSINESS CLOSING CHARGES - During 1997, the Company recorded
a pretax charge of $42.0 million related to the closing of the Opryland theme
park at the end of the 1997 operating season. Included in this charge were asset
write-downs of $32.0 million related primarily to property, equipment and
inventory, estimated costs for employee severance and termination benefits of
$5.1 million, and other costs related to the closing of the park of $4.9
million.
DEPRECIATION AND AMORTIZATION - Depreciation and amortization
decreased $10.6 million, or 19.9%, to $42.8 million in 1998. On a pro forma
basis, assuming the CBS Merger had occurred on January 1, 1997, depreciation and
amortization would have decreased $1.5 million, or 3.3%, during 1998. The
decrease is primarily related to the closing of the Opryland theme park at the
end of the 1997 operating season and the June 1997 sale of television station
KSTW. Excluding the depreciation and amortization of the Cable Networks
Business, the Opryland theme park and KSTW from the 1997 results, depreciation
and amortization increased $5.3 million, or 14.0%, in 1998. The increase is
primarily attributable to the depreciation expense of new acquisitions and
capital expenditures.
OPERATING INCOME
Total operating income increased $21.1 million to $42.9 million
during 1998. On a pro forma basis, assuming the CBS Merger had occurred on
January 1, 1997, total operating income would have increased $99.8 million in
1998. Excluding merger costs, the restructuring charge, the Opryland theme park
closing charge, the write-down of television program rights, the CMT
International European charge and the operating results of the Cable Networks
Business, the Opryland theme park and KSTW from the 1997 results, total
operating income increased $5.8 million, or 15.5%, in 1998.
10
<PAGE> 11
Excluding the operating income of the Opryland theme park during 1997,
hospitality and attractions segment operating income decreased $6.2 million in
1998 primarily related to lower operating income produced by the Opryland Hotel
Nashville. Creative content segment operating income decreased $0.4 million in
1998 primarily related to the operating loss of the Wildhorse Saloon in
Orlando, Florida partially offset by greater operating income generated by
Word, the Oklahoma Redhawks baseball team and the acquisition of Pandora.
Excluding the 1997 operating income of the Cable Networks Business and KSTW, the
write-down of television program rights at KTVT during 1997 and the CMT
International charge related to ceasing European operations in 1997, the
operating income of the interactive media segment increased $6.7 million in 1998
primarily as a result of CMT International ceasing its European operations
effective March 31, 1998. The operating loss of the corporate and other segment
decreased $5.6 million primarily related to revenues from consulting and other
services provided to the Opry Mills partnership.
INTEREST EXPENSE
Interest expense increased $2.9 million to $30.0 million in 1998. The
increase in 1998 was primarily attributable to higher average debt levels as
compared to 1997. During the fourth quarter of 1998, the Company used proceeds
of $238.4 million from a long-term note receivable to reduce outstanding
indebtedness. The Company utilized the net proceeds from the sale of KSTW in
June 1997 to reduce outstanding indebtedness. The Company's weighted average
interest rate on its borrowings was 6.6% in 1998 and 1997.
INTEREST INCOME
Interest income increased $1.6 million to $25.6 million in 1998.
Interest income primarily resulted from interest income earned on a long-term
note receivable, which was paid in full during the fourth quarter of 1998. See
"Liquidity and Capital Resources"
OTHER GAINS AND LOSSES
Other gains and losses during 1998 were comprised of the following
pretax amounts, in millions:
<TABLE>
<CAPTION>
GAIN/
(LOSS)
-----
<S> <C>
Write-off of Z Music note receivable $(23.6)
Gain on sale of Texas Rangers investment 16.1
Gain on long-term note receivable discount 15.0
Loss on termination of transponder operating lease (9.2)
Settlement of contingencies from television station sales 8.5
Other gains and losses, net 4.6
-----
$ 11.4
=====
</TABLE>
The Company recorded a pretax loss of $23.6 million during 1998 related
to the write-off of a note receivable from Z Music when the Company foreclosed
on the note receivable and took a controlling interest in the assets of Z Music.
Also during 1998, the Company sold its investment in the Texas Rangers Baseball
Club, Ltd. for $16.1 million and recognized a gain of the same amount.
During 1995, the Company sold its cable television systems (the
"Systems"). Net proceeds consisted of $198.8 million in cash and a 10-year note
receivable with a face amount of $165.7 million. The note receivable was
recorded net of a $15.0 million discount to reflect the note at fair value.
During 1998, the Company received $238.4 million representing prepayment of the
entire balance of the note receivable and related accrued interest. The Company
recorded a $15.0 million pretax gain during 1998 related to the note receivable
discount originally recorded as part of the Systems sale transaction.
During 1998, the Company terminated an operating lease for a satellite
transponder related to the European operations of CMT International. The
termination of the satellite transponder lease resulted in a pretax charge of
$9.2 million during 1998. Additionally, the Company recorded a gain of $8.5
million during 1998 primarily related to the settlement of contingencies arising
from the sale of television stations KHTV in Houston and KSTW in Seattle.
In June 1997, the Company sold television station KSTW in Seattle for
$160.0 million in cash. The sale resulted in a pretax gain of $144.3 million,
which is included in other gains and losses in 1997.
11
<PAGE> 12
INCOME TAXES
The Company's provision for income taxes was $18.7 million in 1998
compared to $10.8 million in 1997. During 1997, the Company recorded a deferred
tax benefit of $55.0 million related to the revaluation of certain reserves as a
result of the 1997 restructuring and CBS Merger. The Company's effective tax
rate on its income before provision for income taxes was 37.4% for 1998 compared
to 6.7% for 1997.
ACCOUNTING CHANGE
Effective January 1, 1997, the Company changed its method of accounting
for deferred preopening costs to expense these costs as incurred. Prior to 1997,
preopening costs were deferred and amortized over five years on a straight-line
basis. The Company recorded a $7.5 million charge, net of taxes of $4.8 million,
to record the cumulative effect of this accounting change. This change did not
have a significant impact on results of operations before the cumulative effect
of this accounting change for 1997.
LIQUIDITY AND CAPITAL RESOURCES
In August 1997, the Company entered into a revolving credit facility
(the "1997 Credit Facility") and utilized the proceeds to retire outstanding
indebtedness. The lenders under the 1997 Credit Facility are a syndicate of
banks with Bank of America, N.A. acting as agent (the "Agent"). The 1997 Credit
Facility was amended subsequent to December 31, 1999. As amended, the maximum
amount that can be borrowed under the 1997 Credit Facility is $525 million with
a final maturity of July 31, 2000. As amended, the 1997 Credit Facility is
secured by the CBS Series B preferred stock acquired in the KTVT disposal and is
guaranteed by certain of the Company's subsidiaries. At February 29, 2000, the
Company had approximately $190 million of available borrowing capacity under the
1997 Credit Facility.
Amounts outstanding under the 1997 Credit Facility, as amended
subsequent to December 31, 1999, bear interest at a rate, at the Company's
option, equal to either (i) the higher of the Agent's prime rate or the federal
funds rate plus 0.5%, or (ii) LIBOR plus 1%. At December 31, 1999, the Company's
borrowing rate under the 1997 Credit Facility was LIBOR plus 0.5%. In addition,
the Company is required to pay a commitment fee of 0.375% per year on the
average unused portion of the 1997 Credit Facility, as amended, as well as an
annual administrative fee.
The 1997 Credit Facility, as amended, subjects the Company to
limitations on, among other things, mergers and sales of assets, additional
indebtedness, capital expenditures, investments, acquisitions, liens, and
transactions with affiliates. At December 31, 1999, the Company was in
compliance with all financial covenants under the 1997 Credit Facility, as
amended subsequent to December 31, 1999.
During 1995, the Company sold the Systems to CCT Holdings Corp
("CCTH"). Net proceeds consisted of $198.8 million in cash and a 10-year note
receivable with a face amount of $165.7 million. As part of the sale
transaction, the Company also received contractual equity participation rights
(the "Rights") equal to 15% of the net distributable proceeds, as defined, from
certain future asset sales by the buyer of the Systems. During the fourth
quarter of 1998, the Company received $238.4 million representing prepayment of
the entire balance of the CCTH note receivable and related accrued interest.
During January 1999, the Company received cash and recognized a pretax gain of
approximately $130 million representing the value of the Rights upon the sale of
the Systems. The proceeds from the note receivable prepayment and the Rights
were used to reduce outstanding indebtedness under the 1997 Credit Facility.
During 1999, the Company advanced $28.1 million to Bass Pro, an entity
in which the Company owns a minority interest, under an unsecured note agreement
which bears interest at 8% annually and is due in 2003. During 1999, Bass Pro
prepaid $18.1 million of this note. Bass Pro completed a restructuring at the
end of 1999 whereby certain assets, including a resort hotel in Southern
Missouri and an interest in a manufacturer of fishing boats, are no longer owned
by Bass Pro.
During February 2000, the Company's Board of Directors voted to
discontinue the payment of dividends on its common stock. The Company paid
common stock dividends of $26.4 million in 1999. The Company currently projects
capital expenditures for 2000 of approximately $260 million, which includes
approximately $200 million related to the Company's hotel expansion projects in
Florida and Texas.
The Company is currently negotiating with its lenders and others
regarding the Company's future financing arrangements, which may include the
monetization of the CBS preferred stock acquired as part of the KTVT disposal.
At February 29, 2000, the CBS preferred stock had a fair value of approximately
$600 million, based upon the conversion ratio into CBS common stock. Management
expects that a new financing structure will be finalized prior to the expiration
of the 1997 Credit Facility at July 31, 2000. The Company's management believes
that the net cash flows from operations, together with the amount expected to be
available for borrowing under the 1997 Credit Facility and the Company's future
financing arrangements, will be sufficient to satisfy anticipated future cash
requirements, including its projected capital expenditures, of the Company on
both a short-term and long-term basis.
12
<PAGE> 13
YEAR 2000
During 1996, the Company formed an internal task force responsible for
assessing, testing and correcting the Company's information technology and
systems risks associated with the year 2000. The task force completed its
assessment of the Company's systems, identified the Company's hardware, software
and equipment that would not operate properly in the year 2000, and took the
appropriate action to ensure compliance. In certain instances, hardware,
software and equipment that would not operate properly in the year 2000 was
replaced. The Company has not encountered any significant system problems
associated with the year 2000. The costs of the Company's year 2000 remediation
efforts were approximately $9 million. Included in the Company's costs were
hardware and software replacements of approximately $7 million, which were
capitalized. The Company is unaware of any remaining risks and uncertainties
associated with information technology operating properly in the year 2000 that
would result in a material adverse effect on the Company's business, financial
condition, results of operations or liquidity.
SEASONALITY
Certain of the Company's operations are subject to seasonal
fluctuation. Revenues in the music business are typically weakest in the first
calendar quarter following the Christmas buying season.
NEWLY ISSUED ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective, as amended, for fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS No. 133
requires all derivatives to be recognized in the statement of financial position
and to be measured at fair value. The Company anticipates adopting the
provisions of SFAS No. 133 effective April 1, 2000 and is continuing to
determine the effects of SFAS No. 133 on the Company's financial statements.
FORWARD-LOOKING STATEMENTS / RISK FACTORS
This report contains certain forward-looking statements regarding,
among other things, the anticipated financial and operating results of the
Company. In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions investors that
future financial and operating results may differ materially from those
projected in forward-looking statements made by, or on behalf of, the Company.
Such forward-looking statements involve known and unknown risks, uncertainties,
and other factors that may cause the actual results, performance, or
achievements of the Company to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. The Company's future operating results depend on a number of factors
which were derived utilizing numerous assumptions and other important factors
that, if altered, could cause actual results to differ materially from those
projected in forward-looking statements. These factors, many of which are beyond
the Company's control, include the level of popularity of country music and
country lifestyles; the level of popularity of Christian music and family values
lifestyles; the ability to integrate acquired operations into the Company's
businesses; the ability of the Company to implement successfully its focused
Internet strategy; the ability of the Opryland Hospitality Group to successfully
develop hotel properties in other markets; the advertising market in the United
States in general and in the Company's Nashville radio markets in particular;
the perceived attractiveness of Nashville, Tennessee and the Company's
properties as convention and tourist destinations; consumer tastes and
preferences for the Company's programming and other entertainment offerings;
competition; market risk associated with the CBS stock owned by the Company; the
impact of weather on construction schedules; and consolidation in the
broadcasting and cable distribution industries.
In addition, investors are cautioned not to place undue reliance on
forward-looking statements contained in this report because they speak only as
of the date hereof. The Company undertakes no obligation to release publicly any
modifications or revisions to forward-looking statements contained in this
report to reflect events or circumstances occurring after the date hereof or to
reflect the occurrence of unanticipated events.
13
<PAGE> 14
MARKET RISK
The following discusses the Company's exposure to market risk related
to changes in stock prices, interest rates and foreign currency exchange rates.
Investments - At December 31, 1999, the Company held an investment in
10,141.691 shares of CBS Corporation Series B convertible preferred stock (the
"CBS Stock"), which was acquired in 1999 as consideration in the disposal of
television station KTVT. Each share of the CBS Stock is convertible into 1,000
shares of CBS Corporation common stock and is held for other than trading
purposes. The Company has exposure for changes in the market price of the CBS
Corporation common stock. The Company has not undertaken any actions to manage
market price risk associated with the CBS Stock. At December 31, 1999, the fair
value of the Company's investment in the CBS Stock was $648.4 million. A 20%
increase in the stock price of CBS Corporation common stock would increase the
fair value of the investment in CBS Stock by $129.7 million on a pretax basis.
Conversely, a 20% decrease in the stock price of CBS Corporation common stock
would decrease the fair value of the investment in CBS Stock by $129.7 million
on a pretax basis.
Outstanding Debt - The Company has exposure to interest rate changes
primarily relating to outstanding indebtedness under the 1997 Credit Facility.
As of December 31, 1999, the Company had outstanding debt of $310.1 million,
$294.0 million of which was outstanding under the 1997 Credit Facility. The
majority of the Company's debt, including the 1997 Credit Facility, bears
interest at rates which vary with changes in the London Interbank Offered Rate
(LIBOR). The weighted average interest rate on the Company's borrowings in 1999
was 6.4%. The Company has not undertaken any actions to manage interest market
risk, and does not speculate on the future direction of interest rates. If LIBOR
rates were to increase by 100 basis points, the estimated impact on the
Company's consolidated financial statements would be to reduce net income by
approximately $1.8 million after taxes based on amounts outstanding at December
31, 1999. The Company is currently negotiating with its lenders and others
regarding the Company's future financing arrangements. Increases in interest
rates will increase the interest expense associated with future borrowings by
the Company.
Notes Receivable - The Company also has exposure to interest rate
changes relating to the fair market value of outstanding long-term notes
receivable with fixed interest rates. As of December 31, 1999, the Company had
outstanding long-term notes receivable of $19.7 million. The majority of the
Company's notes receivable bear interest at fixed rates, and therefore would
become less valuable if interest rates were to rise.
Cash Balances - Certain of the Company's outstanding cash balances are
occasionally invested overnight with high credit quality financial institutions.
The Company does not have significant exposure to changing interest rates on
invested cash at December 31, 1999. As a result, the interest rate market risk
implicit in these investments at December 31, 1999, if any, is low.
Foreign Currency Exchange Rates - Substantially all of the Company's
revenues are realized in U.S. dollars and are from customers in the United
States. Although the Company owns certain subsidiaries who conduct business in
foreign markets and whose transactions are settled in foreign currencies, these
operations are not material to the overall operations of the Company. Therefore,
the Company does not believe it has any significant foreign currency exchange
rate risk. The Company does not hedge against foreign currency exchange rate
changes and does not speculate on the future direction of foreign currencies.
Summary - Based upon the Company's overall market risk exposures at
December 31, 1999, the Company believes that the effects of changes in the stock
price of CBS Corporation common stock or interest rates on the Company's
consolidated financial position, results of operations or cash flows could be
material. However, the Company believes that fluctuations in foreign currency
exchange rates on the Company's consolidated financial position, results of
operations or cash flows would not be material.
14
<PAGE> 15
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues $ 510,788 $ 524,475 $ 825,995
Operating expenses:
Operating costs 324,560 315,077 511,162
Selling, general and administrative 138,318 123,681 161,280
Merger costs (1,741) -- 22,645
Restructuring charges 3,102 -- 13,654
Line of business closing charges 12,201 -- 42,006
Depreciation and amortization 52,574 42,784 53,397
--------- --------- ---------
Operating income (loss) (18,226) 42,933 21,851
Interest expense (16,101) (30,031) (27,177)
Interest income 6,275 25,606 24,022
Other gains and losses 589,574 11,359 143,532
--------- --------- ---------
Income before provision for income taxes 561,522 49,867 162,228
Provision for income taxes 211,730 18,673 10,792
--------- --------- ---------
Income before cumulative effect of accounting change 349,792 31,194 151,436
Cumulative effect of accounting change, net of taxes -- -- (7,537)
--------- --------- ---------
Net income $ 349,792 $ 31,194 $ 143,899
========= ========= =========
Income per share:
Income before cumulative effect of accounting change $ 10.63 $ 0.95 $ 4.68
Cumulative effect of accounting change, net of taxes -- -- (0.23)
--------- --------- ---------
Net income $ 10.63 $ 0.95 $ 4.45
========= ========= =========
Income per share - assuming dilution:
Income before cumulative effect of accounting change $ 10.53 $ 0.94 $ 4.64
Cumulative effect of accounting change, net of taxes -- -- (0.23)
--------- --------- ---------
Net income $ 10.53 $ 0.94 $ 4.41
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
15
<PAGE> 16
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,696 $ 18,746
Trade receivables, less allowance of $7,474 and $5,517, respectively 83,289 94,429
Inventories 28,527 27,018
Other assets 33,524 49,009
----------- -----------
Total current assets 164,036 189,202
----------- -----------
Property and equipment, net of accumulated depreciation 611,582 586,898
Intangible assets, net of accumulated amortization 141,874 117,529
Investments 742,155 78,140
Long-term notes receivable, net 19,715 9,015
Other assets 53,022 31,208
----------- -----------
Total assets $ 1,732,384 $ 1,011,992
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 299,788 $ 6,269
Accounts payable and accrued liabilities 128,123 115,837
----------- -----------
Total current liabilities 427,911 122,106
----------- -----------
Long-term debt, net of current portion 10,335 276,712
Deferred income taxes 292,966 52,747
Other liabilities 38,693 33,039
Minority interest 1,320 2,228
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding -- --
Common stock, $.01 par value, 150,000 shares authorized, 33,282 and 32,808 shares
issued and outstanding, respectively 333 328
Additional paid-in capital 512,308 500,434
Retained earnings 351,028 26,699
Unrealized gain on investments 99,858 --
Other stockholders' equity (2,368) (2,301)
----------- -----------
Total stockholders' equity 961,159 525,160
----------- -----------
Total liabilities and stockholders' equity $ 1,732,384 $ 1,011,992
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
16
<PAGE> 17
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 349,792 $ 31,194 $ 143,899
Amounts to reconcile net income to net cash flows provided by
operating activities:
Depreciation and amortization 52,574 42,784 53,397
Provision (benefit) for deferred income taxes 176,644 20,168 (80,570)
Gain on equity participation rights (129,875) -- --
Gain on long-term note receivable -- (15,000) --
Gain on sale of investments -- (20,118) --
Write-off of Z Music note receivable -- 23,616 --
Cumulative effect of accounting change, net of taxes -- -- 7,537
Line of business closing charges 12,201 -- 42,006
Write-down of television program rights -- -- 11,740
Noncash interest income -- -- (22,936)
Gain on divestiture of television stations (459,307) -- (144,259)
Changes in (net of acquisitions and divestitures):
Trade receivables 11,519 (4,485) (6,744)
Interest receivable on long-term note -- 48,385 --
Accounts payable and accrued liabilities 2,121 (19,521) 24,506
Other assets and liabilities (9,512) (28,782) (2,195)
--------- --------- ---------
Net cash flows provided by operating activities 6,157 78,241 26,381
--------- --------- ---------
Cash Flows from Investing Activities:
Purchases of property and equipment (84,050) (51,193) (49,239)
Acquisition of businesses, net of cash acquired (26,421) (31,796) (120,191)
Proceeds from sale of property and equipment 263 6,336 4,228
Proceeds from sale of investments -- 20,130 --
Proceeds from equity participation rights 130,000 -- --
Principal proceeds from collection of long-term note receivable -- 165,688 --
Cash proceeds from divestiture of television stations, net of selling costs 951 -- 155,266
Cash received from (acquired by) CBS related to the Merger 13,155 -- (7,481)
Investments in, advances to and distributions from affiliates, net (27,394) (9,852) (10,880)
Other investing activities (23,703) (10,783) (11,351)
--------- --------- ---------
Net cash flows provided by (used in) investing activities (17,199) 88,530 (39,648)
--------- --------- ---------
Cash Flows from Financing Activities:
Net borrowings (payments) under revolving credit agreements 36,094 (134,690) 178,935
Proceeds from issuance of long-term debt 500 500 420
Repayment of long-term debt (9,452) (1,547) (149,762)
Dividends paid (26,355) (21,332) (33,929)
Proceeds from exercise of stock option and purchase plans 10,205 332 14,304
Purchase of treasury stock -- -- (1,709)
--------- --------- ---------
Net cash flows provided by (used in) financing activities 10,992 (156,737) 8,259
--------- --------- ---------
Net change in cash (50) 10,034 (5,008)
Cash, beginning of year 18,746 8,712 13,720
--------- --------- ---------
Cash, end of year $ 18,696 $ 18,746 $ 8,712
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE> 18
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Additional Other Total
Common Paid-in Retained Treasury Unearned Comprehensive Stockholders'
Stock Capital Earnings Stock Compensation Income Equity
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 967 $ 483,287 $ 39,494 $(5,938) $(4,847) $ -- $ 512,963
Comprehensive income:
Net income -- -- 143,899 -- -- -- 143,899
Unrealized gain on investments -- -- -- -- -- 2,887 2,887
Foreign currency translation -- -- -- -- -- (116) (116)
---------
Comprehensive income 146,670
Cash dividends ($1.05 per share) -- -- (33,929) -- -- -- (33,929)
Exercise of stock options 14 14,290 -- -- -- -- 14,304
Tax benefit on stock options -- 6,598 -- -- -- -- 6,598
Issuance of restricted stock 1 1,321 -- -- (1,322) -- --
Compensation expense -- -- -- -- 3,954 -- 3,954
Old Gaylord stock retirement (975) -- -- -- -- -- (975)
New Gaylord stock distribution 324 651 -- -- -- -- 975
Cable Networks Business net assets -- -- (132,627) -- -- -- (132,627)
Purchase of treasury stock -- -- -- (1,709) -- -- (1,709)
Retirement of treasury stock (4) (7,643) -- 7,647 -- -- --
---------------------------------------------------------------------------------------
Balance, December 31, 1997 327 498,504 16,837 -- (2,215) 2,771 516,224
Comprehensive income:
Net income -- -- 31,194 -- -- -- 31,194
Realized gain on investments -- -- -- -- -- (2,887) (2,887)
Foreign currency translation -- -- -- -- -- (323) (323)
---------
Comprehensive income 27,984
Cash dividends ($0.65 per share) -- -- (21,332) -- -- -- (21,332)
Exercise of stock options -- 332 -- -- -- -- 332
Tax benefit on stock options -- 60 -- -- -- -- 60
Issuance of restricted stock 1 1,538 -- -- (1,539) -- --
Compensation expense -- -- -- -- 1,892 -- 1,892
---------------------------------------------------------------------------------------
Balance, December 31, 1998 328 500,434 26,699 -- (1,862) (439) 525,160
Comprehensive income:
Net income -- -- 349,792 -- -- -- 349,792
Unrealized gain on investments -- -- -- -- -- 99,858 99,858
Foreign currency translation -- -- -- -- -- (359) (359)
---------
Comprehensive income 449,291
Cash dividends ($0.80 per share) -- -- (26,355) -- -- -- (26,355)
CBS Merger arbitration settlement -- -- 892 -- -- -- 892
Exercise of stock options 5 10,125 -- -- -- -- 10,130
Tax benefit on stock options -- 1,443 -- -- -- -- 1,443
Employee stock plan purchases -- 75 -- -- -- -- 75
Issuance of restricted stock -- 231 -- -- (231) -- --
Compensation expense -- -- -- -- 523 -- 523
---------------------------------------------------------------------------------------
Balance, December 31, 1999 $ 333 $ 512,308 $ 351,028 $ -- $(1,570) $ 99,060 $ 961,159
=======================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE> 19
GAYLORD ENTERTAINMENT COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
1. DESCRIPTION OF THE BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Gaylord Entertainment Company (the "Company"), formerly New Gaylord
Entertainment Company, is a diversified entertainment company operating, through
its subsidiaries, principally in four business segments: hospitality and
attractions, creative content, interactive media, and corporate and other.
During 1997, the Company's former parent ("Old Gaylord") consummated a
transaction with CBS Corporation ("CBS") whereby certain assets and liabilities
of the Company were merged with CBS (the "Merger") as further described in Note
3.
BUSINESS SEGMENTS
HOSPITALITY AND ATTRACTIONS
At December 31, 1999, the Company owns and operates the Opryland Hotel
Nashville, the General Jackson showboat and various other tourist attractions
located in Nashville, Tennessee. During 1998, the Company formed the Opryland
Hospitality Group to expand the Opryland Hotel concept into other cities. During
1999, the Company began developing hotel projects near Orlando, Florida and
Dallas, Texas. The Florida and Texas hotel projects are scheduled to open in
2002 and 2003, respectively. The Company formerly owned and operated the
Opryland theme park which was closed at the end of the 1997 operating season.
CREATIVE CONTENT
At December 31, 1999, the Company owns and operates Word Entertainment
("Word"), a contemporary Christian music company, the Grand Ole Opry, the
Wildhorse Saloons and Acuff-Rose Music Publishing. The Company acquired the
assets of Word in January 1997 as further described in Note 4. During 1998, the
Company acquired Pandora Investments, S.A. ("Pandora"), a Luxembourg-based
company which acquires, distributes and produces theatrical feature film and
television programming primarily for markets outside of the United States, as
further described in Note 4. During 1998, the Company purchased the remaining
49% minority interest in a joint venture created to expand the Wildhorse Saloon
concept beyond Nashville to other cities.
INTERACTIVE MEDIA
At December 31, 1999, the Company owns and operates the CMT
International cable television networks operating in Asia and the Pacific Rim,
and Latin America. CMT International ceased its European operations as of March
31, 1998, as further described in Note 5. During 1999, the Company created a new
division formed to initiate a focused Internet strategy, which is now known as
Gaylord Digital, and acquired controlling equity interests in two online
operations, Musicforce.com and Lightsource.com as discussed in Note 4. The
Company divested its television stations, KTVT (Fort Worth-Dallas, Texas) in
October 1999 and KSTW (Tacoma-Seattle, Washington) in June 1997, as further
described in Note 5. During 1998, the Company acquired a controlling interest in
the assets of Z Music, Inc. ("Z Music"), a cable network featuring contemporary
Christian music videos, as further described in Note 2. Prior to October 1997,
the Company also owned The Nashville Network ("TNN"), a national basic cable
television network, and operated and owned 67% of the outstanding stock of
Country Music Television, Inc. ("CMT"), a country music video cable network
operated in the United States and Canada. During October 1997, TNN and CMT were
acquired by CBS in the Merger as further described in Note 3. In addition, the
Company owns and operates three radio stations in Nashville, Tennessee.
CORPORATE AND OTHER
During 1998, the Company created a partnership with The Mills
Corporation to develop Opry Mills, a $200,000 entertainment / retail complex.
The Company contributed land previously used for the Opryland theme park in
exchange for a one-third interest in the partnership, as further described in
Note 6. Opry Mills is anticipated to open in 2000. The Company also owns
minority interests in Bass Pro, Inc. ("Bass Pro"), which is a leading retailer
of premium outdoor sporting goods and fishing products, and the Nashville
Predators, a National Hockey League professional team.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and all of its majority-owned subsidiaries. For accounting purposes, the
consolidated financial statements include Old Gaylord and its subsidiaries,
including the Company, prior to the merger with CBS. All significant
intercompany accounts and transactions have been eliminated in consolidation.
19
<PAGE> 20
INVENTORIES
Inventories consist primarily of merchandise for resale and are carried
at the lower of cost or market. Cost is computed on an average cost basis.
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 using straight-line and accelerated methods over the following
estimated useful lives:
<TABLE>
<S> <C>
Buildings 40 years
Land improvements 20 years
Attractions-related equipment 16 years
Furniture, equipment and vehicles 3-8 years
Leasehold improvements Life of lease
</TABLE>
Depreciation expense includes amortization of capital leases which is
computed on a straight-line basis over the term of the lease. 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 its estimated useful life not exceeding 40
years. The Company continually evaluates whether later events and circumstances
have occurred that indicate the remaining balance of goodwill may not be
recoverable. In evaluating possible impairment, the Company 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 1999, 1998 and
1997 was $7,839, $3,823 and $4,743, respectively. At December 31, 1999 and 1998,
accumulated amortization of intangible assets was $16,829 and $9,169,
respectively.
OTHER ASSETS
Other current and long-term assets consist of:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Other current assets:
Other current receivables $14,440 $34,192
Prepaid expenses 18,042 12,695
Other current assets 1,042 2,122
------- -------
Total other current assets $33,524 $49,009
======= =======
Other long-term assets:
Music and film catalogs $30,344 $16,757
Deferred software costs, net 11,385 5,122
Prepaid pension cost 4,403 5,274
Other long-term assets 6,890 4,055
------- -------
Total other long-term assets $53,022 $31,208
======= =======
</TABLE>
Other current receivables result primarily from non-operating income
and are due within one year. Music and film catalogs consist of the costs to
acquire music and film rights and are amortized over their estimated useful
lives.
The Company capitalizes the costs of computer software for internal use
in accordance with AICPA Statement of Position 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". Accordingly, the
Company capitalized the external costs to acquire and develop computer software
and certain internal payroll costs during 1999. Deferred software costs are
amortized on a straight-line basis over its estimated useful life.
20
<PAGE> 21
DEFERRED PREOPENING COSTS
Effective January 1, 1997, the Company changed its method of accounting
for deferred preopening costs to expense these costs as incurred in accordance
with AICPA Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities". Prior to 1997, preopening costs were deferred and amortized over
five years on a straight-line basis. The Company recorded a $7,537 charge, net
of taxes of $4,798, to record the cumulative effect of this accounting change.
This change did not have a significant impact on results of operations before
the cumulative effect of this accounting change for 1997.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consist of:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Trade accounts payable $ 41,705 $ 31,198
Accrued royalties 10,161 14,709
Deferred revenues 16,992 11,076
Accrued salaries and benefits 5,306 8,202
Accrued interest payable 1,183 1,176
Property and other taxes payable 14,100 13,638
Other accrued liabilities 38,676 35,838
-------- --------
Total accounts payable and accrued liabilities $128,123 $115,837
======== ========
</TABLE>
Accrued royalties consist primarily of music royalties and licensing
fees. Deferred revenues consist primarily of deposits on advance room bookings
at the Opryland Hotel, advance ticket sales at the Company's tourism properties
and music publishing advances.
During 1999, the Company recognized a nonrecurring restructuring charge
of $3,102 related to streamlining the Company's operations, primarily the
Opryland Hotel Nashville. The restructuring charge includes estimated costs for
employee severance and termination benefits of $2,372 and other restructuring
costs of $730. As of December 31, 1999, the Company has recorded cash charges of
$2,603 against the restructuring accrual. The remaining balance of the
restructuring accrual of $499 is included in accounts payable and accrued
liabilities in the consolidated balance sheet at December 31, 1999.
INCOME TAXES
In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes", the Company establishes deferred tax
assets and liabilities based on the difference between the financial statement
and income tax carrying amounts of assets and liabilities using existing tax
rates.
REVENUE RECOGNITION
Revenue is recognized when services are provided or goods are shipped,
as applicable. Provision for returns and other adjustments are provided for in
the same period the revenues are recognized.
STOCK-BASED COMPENSATION
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. The Company 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", and related Interpretations, under which no compensation
cost related to stock options has been recognized as further described in Note
11.
INCOME PER SHARE
SFAS No. 128, "Earnings Per Share", was issued and is effective for
fiscal periods ending after December 15, 1997. SFAS No. 128 establishes
standards for computing and presenting earnings per share. The Company adopted
the provisions of SFAS No. 128 in the fourth quarter of 1997. Under the
standards established by SFAS No. 128, earnings per share is measured at two
levels: basic earnings per share and diluted earnings per share. Basic earnings
per share is computed by dividing net income by the weighted average number of
common shares outstanding during the year. Diluted earnings per share is
computed by dividing net income by the weighted average number of common shares
outstanding after considering the additional dilution related to outstanding
stock options, calculated using the treasury stock method.
21
<PAGE> 22
Income per share amounts are calculated as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------------------------- -------------------------- --------------------------
Per Per Per
Income Shares Share Income Shares Share Income Shares Share
-------- ------ ------- -------- ------ ------ -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income before cumulative effect of
accounting change $349,792 32,908 $ 10.63 $ 31,194 32,805 $ 0.95 $151,436 32,341 $ 4.68
======== ======= ======== ====== ======== ======
Effect of dilutive stock options 305 353 308
------ ------ ------
Income before cumulative effect of
accounting change - assuming dilution $349,792 33,213 $ 10.53 $ 31,194 33,158 $ 0.94 $151,436 32,649 $ 4.64
======== ====== ======= ======== ====== ====== ======== ====== ======
</TABLE>
The Company completed a common stock distribution in 1997 associated
with the Merger as further described in Note 3. All income per share and
dividend per share amounts in the accompanying consolidated financial statements
have been restated to reflect the retroactive application of the common stock
distribution.
COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No.
130, "Reporting Comprehensive Income", effective for fiscal years beginning
after December 15, 1997. SFAS No. 130 requires that changes in the amounts of
certain items, including gains and losses on certain securities, be shown in the
financial statements. The Company adopted the provisions of SFAS No. 130 on
January 1, 1998. The Company's comprehensive income is presented in the
consolidated statements of stockholders' equity.
FINANCIAL INSTRUMENTS
The Company's carrying value of its debt and long-term notes receivable
approximates fair value based upon the variable nature of these financial
instruments' interest rates. Certain of the Company's investments are carried at
fair value determined using quoted market prices as discussed further in Note 6.
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. The concentration of credit risk
on trade receivables is minimized by the large and diverse nature of the
Company'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.
NEWLY ISSUED ACCOUNTING STANDARD
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", effective,
as amended, for fiscal years beginning after June 15, 2000. SFAS No. 133
establishes accounting and reporting standards for derivative instruments and
hedging activities. SFAS No. 133 requires all derivatives to be recognized in
the statement of financial position and to be measured at fair value. The
Company anticipates adopting the provisions of SFAS No. 133 effective April 1,
2000 and is continuing to determine the effects of SFAS No. 133 on the Company's
financial statements.
RECLASSIFICATIONS
Certain reclassifications of 1998 and 1997 amounts have been made to
conform with the 1999 presentation. The Company has restated its reportable
segments for all periods presented based upon internal realignment of
operational responsibilities in accordance with SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information".
22
<PAGE> 23
2. LONG-TERM NOTES RECEIVABLE:
During 1995, the Company sold its cable television systems (the
"Systems") to CCT Holdings Corp. ("CCTH"). Net proceeds consisted of $198,800 in
cash and a 10-year note receivable with a face amount of $165,688. The note
receivable was recorded net of a $15,000 discount to reflect the note at fair
value based upon financial instruments of comparable credit risk and interest
rates. The Company recorded $24,376 and $22,936 of interest income related to
the note receivable during 1998 and 1997, respectively. As part of the sale
transaction, the Company also received contractual equity participation rights
equal to 15% of the net distributable proceeds, as defined, from certain future
asset sales by the buyer of the Systems. During 1998, the Company received
$238,449 representing prepayment of the entire balance of the CCTH note
receivable and related accrued interest. The Company recorded a $15,000 pretax
gain during 1998 related to the note receivable discount originally recorded as
part of the Systems sale transaction. The gain is included in other gains and
losses in the consolidated statements of income. During 1999, the Company
received cash and recognized a pretax gain of $129,875 representing the value of
the 15% contractual equity participation rights upon the sale of the Systems.
The proceeds from the note receivable prepayment and the equity participation
rights were used to reduce outstanding bank indebtedness.
During 1999, the Company advanced $28,080 to Bass Pro under an
unsecured note agreement which bears interest at 8% annually and is due in 2003.
Interest under the note agreement is payable annually. In the fourth quarter of
1999, Bass Pro prepaid $18,080 of this note. The Company recorded interest
income of $2,949, including a prepayment penalty of $1,800, from Bass Pro
related to this note agreement during 1999 in the consolidated statements of
income.
During 1998, the Company recognized a pretax loss of $23,616 related to
the write-off of a note receivable from Z Music. The Company foreclosed on the
note receivable and took a controlling interest in the assets of Z Music during
the fourth quarter of 1998. Prior to the foreclosure, the Company managed the
operations of Z Music, had an option to acquire 95% of the common stock of Z
Music, and funded Z Music's operations through advances under the note
receivable.
3. CBS MERGER:
On October 1, 1997, Old Gaylord consummated the Merger with CBS,
pursuant to which Old Gaylord became a wholly owned subsidiary of CBS. Prior to
the Merger, Old Gaylord was restructured (the "1997 Restructuring") whereby
certain assets and liabilities that were part of Old Gaylord's hospitality,
attractions, music, television and radio businesses, including all of its
long-term debt, as well as CMT International and the management of and option to
acquire 95% of Z Music, were transferred to or retained by the Company. As a
result of the 1997 Restructuring and the Merger, substantially all of the assets
of Old Gaylord's cable networks business, consisting primarily of TNN and CMT,
and certain other related businesses (collectively, the "Cable Networks
Business") and its liabilities, to the extent that they arose out of or related
to the Cable Networks Business, were acquired by CBS. In connection with the
Merger, the Company and CBS (or one or more of their respective subsidiaries)
entered into an agreement which provides, for a specified time period, that the
Company will not engage in certain specified activities which would constitute
competition with the Cable Networks Business and that CBS will not engage in
certain activities which would constitute competition with CMT International.
Following the 1997 Restructuring, on September 30, 1997, Old Gaylord
distributed (the "Distribution") pro rata to its stockholders all of the
outstanding capital stock of the Company. As a result of the Distribution, each
holder of record of the Class A Common Stock, $0.01 par value, and Class B
Common Stock, $0.01 par value (collectively, the "Old Gaylord Common Stock"), of
Old Gaylord on the record date for the Distribution received a number of shares
of Common Stock, $0.01 par value, of the Company ("Common Stock") equal to
one-third the number of shares of Old Gaylord Common Stock held by such holder.
Cash was distributed in lieu of any fractional shares of Common Stock.
23
<PAGE> 24
At the time of the Merger, the book value of the net assets of the
Cable Networks Business was $132,627, which has been reflected in the
consolidated financial statements as a charge against retained earnings. The
following is a summary of the net assets acquired by CBS:
<TABLE>
<S> <C>
Cash $ 7,481
Accounts receivable, net 67,030
Other current assets 20,332
Property and equipment, net 53,386
Intangible assets, net 31,148
Other assets 10,532
Accounts payable and accrued expenses (35,855)
Long-term debt (4,605)
Minority interest (15,048)
Other liabilities (1,774)
--------
Cable Networks Business net assets $132,627
========
</TABLE>
The operating results of the Cable Networks Business are included in
the consolidated statements of income through September 30, 1997 and are as
follows for the nine months ended September 30, 1997:
<TABLE>
<S> <C>
Revenues $264,463
========
Depreciation and amortization $ 9,161
========
Operating income, excluding allocated corporate expenses $ 78,740
========
</TABLE>
Prior to the Merger, CBS was 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, CBS owned 33% of CMT
and CMT International prior to the Merger. CBS received 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, for its services prior
to the Merger. CBS commissions under these agreements were approximately $70,600
in 1997.
In connection with the Merger, 1997 Restructuring and Distribution, the
Company recognized nonrecurring merger costs and a restructuring charge in 1997
of $22,645 and $13,654, respectively. Merger costs included professional and
registration fees, debt refinancing costs, and incentive compensation associated
with the Merger. The Company recognized merger costs of $1,363 related to
restricted stock issued under stock option and incentive plans which vested at
the time of the Merger. The restructuring charge included estimated costs for
employee severance and termination benefits of $6,500, asset write-downs of
$3,653, and other costs associated with the restructuring of $3,501. At December
31, 1998, the Company had a remaining restructuring accrual of $2,294, which was
included in accounts payable and accrued liabilities in the consolidated balance
sheets.
During 1999, the Company settled the remaining contingencies associated
with the Merger and received a cash payment of $15,109 from CBS, including
nonrecurring interest income of $1,954. In addition, the Company recorded an
adjustment to the net assets of the Cable Networks Business of $892 related to
the settlement of Merger-related contingencies between the Company and CBS
during 1999. The Company reversed $1,741 of the merger costs accrual based upon
the settlement of the remaining contingencies associated with the Merger during
1999.
4. ACQUISITIONS:
During 1999, the Company acquired 84% of two online operations,
Musicforce.com and Lightsource.com, for approximately $23,400 in cash. The
parties entered into option agreements regarding the additional equity
interests in the online operations. The acquisition was financed through
borrowings under the Company's revolving credit agreement and has been accounted
for using the purchase method of accounting. The operating results of the online
operations have been included in the consolidated financial statements from the
date of acquisition of a controlling interest. The purchase price allocation has
been completed on a preliminary basis, subject to adjustment should additional
facts about the online operations become known. The excess of purchase price
over the fair values of the net assets acquired as of December 31, 1999 was
$20,368 and has been recorded as goodwill, which is being amortized on a
straight-line basis over seven years.
24
<PAGE> 25
In July 1998, the Company purchased Pandora for approximately $17,000
in cash. The acquisition was financed through borrowings under a revolving
credit agreement and has been accounted for using the purchase method of
accounting. The operating results of Pandora have been included in the
consolidated financial statements from the date of acquisition.
In April 1998, the Company purchased the assets of a 307-room hotel
located adjacent to the Opryland Hotel for approximately $16,000 in cash. The
hotel was renamed the Inn at Opryland. The acquisition was financed through
borrowings under a revolving credit agreement and has been accounted for using
the purchase method of accounting. The operating results of the Inn at Opryland
have been included in the consolidated financial statements from the date of
acquisition.
In January 1997, the net assets of Word were purchased for
approximately $120,000 in cash. The purchase price included approximately
$40,000 of working capital. The acquisition was financed through borrowings
under a revolving credit agreement and has been accounted for using the purchase
method of accounting. The operating results of Word have been included in the
consolidated financial statements from the date of acquisition. The excess of
purchase price over the fair values of the net assets acquired was $64,143 and
has been recorded as goodwill, which is being amortized on a straight-line basis
over 40 years.
5. DIVESTITURES:
In October 1999, CBS acquired the Company's television station KTVT in
Dallas-Ft. Worth in exchange for $485,000 of CBS Series B convertible preferred
stock, $4,210 of cash and other consideration. The Company recorded a pretax
gain of $459,307, which is included in other gains and losses in the
consolidated statements of income, based upon the disposal of the net assets of
KTVT of $29,903, including related selling costs. During 1997, the Company
recorded a pretax charge of $11,740 to write-down certain program rights at KTVT
to net realizable value. This write-down related primarily to movie packages and
certain syndicated programming whose value was impaired by an operating decision
to purchase more first-run programming and is included in operating costs in the
consolidated statements of income. The operating results of KTVT included in the
consolidated statements of income through the disposal date are as follows:
<TABLE>
<CAPTION>
Period Ended Year Ended Year Ended
October 12, December 31, December 31,
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Revenues $36,072 $51,636 $50,673
======= ======= =======
Depreciation and amortization $ 2,419 $ 2,232 $ 1,932
======= ======= =======
Operating income $ 8,372 $17,829 $ 5,176
======= ======= =======
</TABLE>
Also during 1999, the Company recorded a pretax loss of $12,201 related
to the closing of Unison Records, a specialty record label of Word which dealt
primarily in value-priced acoustical and instrumental recordings. The Unison
closing charge is reflected as a line of business closing charge in the
consolidated statements of income. The Unison closing charge includes
write-downs of the carrying value of inventories, accounts receivable and other
assets of $4,270, $3,551 and $3,907, respectively, and other costs associated
with the Unison closing of $473.
During 1998, the Company sold its investment in the Texas Rangers
Baseball Club, Ltd. for $16,072 and recognized a pretax gain of the same amount.
Also during 1998, the Company recorded pretax gains totaling $8,538
primarily related to the settlement of contingencies arising from the sales of
television stations KHTV in Houston in 1996 and KSTW in Seattle in 1997.
During 1997, the Company recorded a pretax charge of $42,006 related to
the closing of the Opryland theme park at the end of the 1997 operating season.
Included in this charge were asset write-downs of $32,020 related primarily to
property, equipment and inventory, estimated costs for employee severance and
termination benefits of $5,100, and other costs related to closing of the park
of $4,886.
Also during 1997, the Company recorded a $5,000 pretax charge to
operations related to its plans to cease the European operations of CMT
International effective March 31, 1998. The Company fully utilized this accrual
during 1998.
25
<PAGE> 26
In addition, the Company sold television station KSTW in Seattle in
1997 for $160,000 in cash. The sale resulted in a pretax gain of $144,259, which
is included in other gains and losses in the consolidated statements of income.
The Company utilized the net proceeds from the sale to reduce outstanding
indebtedness.
6. INVESTMENTS:
Investments at December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
CBS Series B convertible
preferred stock $648,434 $ --
Bass Pro 60,598 61,568
Other investments 33,123 16,572
-------- -------
Total investments $742,155 $78,140
======== =======
</TABLE>
The 10,141.691 shares of CBS Series B convertible preferred stock (the
"CBS Stock") were acquired during 1999 as consideration in the disposal of
television station KTVT as discussed in Note 5. Each share of the CBS Stock is
convertible into 1,000 shares of CBS common stock. The original carrying value
of the CBS Stock was $485,000. The Company has classified the CBS Stock as
available-for-sale as defined by SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", and accordingly is carrying the CBS
Stock at market value, based upon the quoted market price of CBS common stock,
with the difference between cost and market value recorded as a component of
stockholders' equity, net of deferred income taxes.
The Company holds a minority interest in Bass Pro, a supplier of
premium outdoor sporting goods and fishing tackle which distributes its products
through retail centers and an extensive mail order catalog operation. Bass Pro
completed a restructuring at the end of 1999 whereby certain assets, including a
resort hotel in Southern Missouri and an interest in a manufacturer of fishing
boats, are no longer owned by Bass Pro. Subsequent to the Bass Pro
restructuring, the Company owns 19% of Bass Pro and will account for the
investment using the cost method of accounting. The Company accounted for the
Bass Pro investment using the equity method of accounting through December 31,
1999. The Company's original investment exceeded its share of the underlying
equity in the net assets of Bass Pro by approximately $36,000, which was being
amortized on a straight-line basis over 40 years.
During 1999, the Company purchased minority equity investments of
$6,579 in technology-based businesses related to the Company's Internet
strategy. These investments are accounted for using the cost method of
accounting.
During 1998, the Company created a partnership with The Mills
Corporation to develop Opry Mills, a $200,000 entertainment / retail complex
located on land previously used for the Opryland theme park. The Company holds a
one-third interest in the partnership through a non-cash capital contribution of
$2,049 reflecting the book value of the land where Opry Mills will be located.
During 1999, the Company's investment in Opry Mills increased to $5,272 related
to certain costs incurred on behalf of the Opry Mills partnership. The Company
accounts for the Opry Mills partnership using the equity method of accounting.
The Company recognized consulting and other services revenues related to the
Opry Mills partnership in 1999 and 1998 of $5,000 in each year.
The Company holds a preferred minority interest investment in the
Nashville Predators, a National Hockey League professional team, of $12,000 and
$12,095 at December 31, 1999 and 1998, respectively. The Nashville Predators
investment provides an annual 8% cumulative preferred return. A director of the
Company owns a majority equity interest in the Nashville Predators.
In accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", certain of the Company's investments were
considered available-for-sale investments at December 31, 1997 and were carried
at market value, with the difference between cost and market value recorded as a
component of stockholders' equity. These investments were sold during 1998, with
a pretax gain of $3,296 recognized in other gains and losses in the consolidated
statements of income.
26
<PAGE> 27
7. PROPERTY AND EQUIPMENT:
Property and equipment at December 31 is recorded at cost and
summarized as follows:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Land and land improvements $ 95,509 $ 95,300
Buildings 471,419 472,804
Furniture, fixtures and equipment 253,760 261,286
Construction in progress 60,211 15,101
--------- ---------
880,899 844,491
Accumulated depreciation (269,317) (257,593)
--------- ---------
Property and equipment, net $ 611,582 $ 586,898
========= =========
</TABLE>
Depreciation expense for 1999, 1998 and 1997 was $39,844, $35,602 and
$44,839, respectively. Capitalized interest for 1999, 1998 and 1997 was $472, $0
and $186, respectively. The Company recorded capital leases during 1998 of
$9,743, which are included in furniture, fixtures and equipment.
8. INCOME TAXES:
The provision for income taxes for the years ended December 31 consists
of:
<TABLE>
<CAPTION>
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 37,347 $ (2,810) $ 86,342
State (2,261) 1,315 5,020
--------- -------- --------
Total current provision (benefit) 35,086 (1,495) 91,362
--------- -------- --------
Deferred:
Federal 148,608 19,747 (79,496)
State 28,036 421 (1,074)
--------- -------- --------
Total deferred provision (benefit) 176,644 20,168 (80,570)
--------- -------- --------
Total provision for income taxes $ 211,730 $ 18,673 $ 10,792
========= ======== ========
</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. 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>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory federal rate 35% 35% 35%
State taxes 3 1 2
Merger related revaluation of reserves -- -- (37)
Non-deductible losses -- 1 7
---- ---- ----
38% 37% 7%
==== ==== ====
</TABLE>
27
<PAGE> 28
The components of the net deferred tax liability as of December 31 are:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Deferred tax assets:
Amortization $ 2,268 $ 6,546
Accounting reserves and accruals 18,258 23,495
Other, net 16,271 4,780
-------- -------
Total deferred tax assets 36,797 34,821
-------- -------
Deferred tax liabilities:
Depreciation 41,105 42,257
Accounting reserves and accruals 288,658 45,311
-------- -------
Total deferred tax liabilities 329,763 87,568
-------- -------
Net deferred tax liability $292,966 $52,747
======== =======
</TABLE>
The tax benefits associated with the exercise of stock options reduced
income taxes payable by $1,443, $60 and $6,598 in 1999, 1998 and 1997,
respectively, and are reflected as an increase in additional paid-in capital.
The deferred income taxes resulting from the unrealized gain on the investment
in CBS stock are $63,576 at December 31, 1999 and have been reflected as a
reduction in stockholders' equity. During 1997, the Company recorded a deferred
tax benefit of $55,000 related to the revaluation of certain reserves as a
result of the 1997 Restructuring and Merger. In addition, the Company reached
settlements of routine Internal Revenue Service audits of the Company's
1994-1995 tax returns during 1999. These settlements had no material impact on
the Company's financial position or results of operations.
Cash payments for income taxes were approximately $30,400, $11,400 and
$81,700 in 1999, 1998 and 1997, respectively.
9. LONG-TERM DEBT:
Long-term debt at December 31 consists of:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C> <C>
1997 Credit Facility $ 294,000 $ 252,828
Capital lease obligations 8,181 9,384
Other debt 7,942 20,769
--------- ---------
Total debt 310,123 282,981
Less amounts due within one year (299,788) (6,269)
--------- ---------
Total long-term debt $ 10,335 $ 276,712
========= =========
</TABLE>
Annual maturities of long-term debt, including capital lease
obligations, are as follows:
<TABLE>
<S> <C>
2000 $299,788
2001 1,378
2002 4,807
2003 1,577
2004 1,603
Years thereafter 970
--------
Total $310,123
========
</TABLE>
28
<PAGE> 29
In August 1997, the Company entered into a revolving credit facility
(the "1997 Credit Facility") and utilized the proceeds to retire outstanding
indebtedness. The lenders under the 1997 Credit Facility are a syndicate of
banks with Bank of America, N.A. acting as agent (the "Agent"). The 1997 Credit
Facility was amended subsequent to December 31, 1999. As amended, the maximum
amount that can be borrowed under the 1997 Credit Facility is $525,000 with a
final maturity of July 31, 2000. As amended, the 1997 Credit Facility is secured
by the CBS Stock and is guaranteed by certain of the Company's subsidiaries. The
Company is currently negotiating with its lenders and others regarding the
Company's future financing arrangements.
Amounts outstanding under the 1997 Credit Facility, as amended
subsequent to December 31, 1999, bear interest at a rate, at the Company's
option, equal to either (i) the higher of the Agent's prime rate or the federal
funds rate plus 0.5%, or (ii) LIBOR plus 1%. At December 31, 1999, the Company's
borrowing rate under the 1997 Credit Facility was LIBOR plus 0.5%. In addition,
the Company is required to pay a commitment fee of 0.375% per year on the
average unused portion of the 1997 Credit Facility, as amended, as well as an
annual administrative fee. The weighted average interest rates for borrowings
under revolving credit agreements for 1999, 1998 and 1997 were 6.2%, 6.6% and
6.4%, respectively.
The 1997 Credit Facility, as amended, subjects the Company to
limitations on, among other things, mergers and sales of assets, additional
indebtedness, capital expenditures, investments, acquisitions, liens, and
transactions with affiliates. At December 31, 1999, the Company was in
compliance with all financial covenants under the 1997 Credit Facility, as
amended subsequent to December 31, 1999.
Capital lease obligations provide for aggregate payments, including
interest, of approximately $1,900 each year. At December 31, 1999, future
minimum payments for capital leases were $10,153, including $1,972 representing
interest.
Other debt consists primarily of revolving lines of credit utilized by
Pandora in the production of films. At December 31, 1999, Pandora's revolving
lines of credit had $4,442 outstanding, provide for additional borrowings of
approximately $700, and bear interest at LIBOR plus a margin of 1.6%. The
weighted average interest rates related to Pandora's revolving lines of credit
for 1999 and 1998 subsequent to the acquisition of Pandora were 8.9% and 7.0%,
respectively. Pandora had outstanding letters of credit of $19,335 at December
31, 1999 to collateralize its obligations related to film production. The
letters of credit reflect fair value as a condition of their underlying purpose.
Accrued interest payable for 1999 and 1998 was $1,183 and $1,176,
respectively, and is included in accounts payable and accrued liabilities in the
accompanying consolidated balance sheets. Cash paid for interest for 1999, 1998
and 1997, excluding amounts capitalized, was $15,920, $30,217 and $30,747,
respectively.
10. STOCKHOLDERS' EQUITY:
As a result of the Distribution during 1997, each holder of record of
Old Gaylord Common Stock on the record date for the Distribution received a
number of shares of Common Stock of the Company equal to one-third the number of
shares of Old Gaylord Common Stock held by such holder. Cash was distributed in
lieu of any fractional shares of the Common Stock. Holders of Common Stock are
entitled to one vote per share. Holders of Class A Common Stock and Class B
Common Stock of Old Gaylord were entitled to one vote per share and five votes
per share, respectively. All income per share and dividend per share amounts in
the consolidated financial statements have been restated to reflect the
retroactive application of the Distribution.
29
<PAGE> 30
11. STOCK PLANS:
At December 31, 1999 and 1998, 2,604,213 and 2,491,081 shares,
respectively, of Common Stock were reserved for future issuance pursuant to the
exercise of stock options under stock option and incentive plans for directors
and key employees. As a result of the Distribution, the Company adopted a new
stock option plan whereby all options to acquire Old Gaylord Common Stock that
were held by persons who, following the Distribution, were employees, former
employees or directors of the Company were converted into fully vested and
exercisable options to acquire Common Stock. As a result of the conversion of
options to acquire Old Gaylord Common Stock into options to acquire Common
Stock, the number of options issued was adjusted with an offsetting adjustment
in option price to maintain the same intrinsic value and original term of the
option. Under the terms of these plans, stock options are granted with an
exercise price equal to the fair market value at the date of grant and generally
expire ten years after the date of grant. Generally, stock options granted to
non-employee directors are exercisable one year from the date of grant, while
options granted to employees are exercisable two to five years from the date of
grant. The Company accounts for these plans under APB Opinion No. 25 under which
no compensation expense for employee stock options has been recognized. If
compensation cost for these plans had been determined consistent with SFAS No.
123, the Company's net income and income per share for the years ended December
31 would have been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net income:
As reported $ 349,792 $ 31,194 $ 143,899
=========== =========== ===========
Pro forma $ 347,756 $ 29,778 $ 142,146
=========== =========== ===========
Income per share:
As reported $ 10.63 $ 0.95 $ 4.45
=========== =========== ===========
Pro forma $ 10.57 $ 0.91 $ 4.40
=========== =========== ===========
Income per share - assuming
dilution:
As reported $ 10.53 $ 0.94 $ 4.41
=========== =========== ===========
Pro forma $ 10.47 $ 0.90 $ 4.35
=========== =========== ===========
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to January 1, 1995, the resulting pro forma compensation
cost may not be representative of that to be expected in future years. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1999, 1998 and 1997, respectively: risk-free
interest rates of 6.5%, 5.5% and 6.0%; expected volatility of 31.0%, 26.6% and
32.0%; expected lives of 7.5, 7.1 and 6.9 years; expected dividend rates of
2.7%, 2.7% and 2.0%. The weighted average fair value of options granted was
$10.02, $9.52 and $8.77 in 1999, 1998 and 1997, respectively.
The plans also provide for the award of restricted stock. At December
31, 1999 and 1998, awards of restricted stock of 90,226 and 81,940 shares,
respectively, of Common Stock were outstanding. Restricted stock issued prior to
the Distribution and Merger vested under the change in control provisions under
the plans. The market value at the date of grant of these restricted shares was
recorded as unearned compensation as a component of stockholders' equity.
Unearned compensation is amortized over the vesting period of the restricted
stock.
30
<PAGE> 31
Stock option awards available for future grant under the stock plans at
December 31, 1999 and 1998 were 852,460 and 185,873 shares of Common Stock,
respectively. Stock option transactions under the plans are summarized as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
------------------------ ------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE NUMBER EXERCISE
OF SHARES PRICE OF SHARES PRICE OF SHARES PRICE
------------------------ ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 2,491,081 $24.42 2,111,445 $23.06 2,864,184 $14.03
Granted 730,847 28.76 400,500 31.90 998,924 28.24
Exercised (461,995) 21.92 (15,814) 20.96 (1,363,834) 10.49
Effect of option conversions -- -- -- -- (249,548) --
Canceled (155,720) 30.03 (5,050) 28.24 (138,281) 23.74
------------------------ ------------------------- -------------------------
Outstanding at end of year 2,604,213 $25.74 2,491,081 $24.42 2,111,445 $23.06
======================== ========================= =========================
Exercisable at end of year 1,123,698 $21.43 1,312,159 $19.99 1,112,973 $18.41
======================== ========================= =========================
</TABLE>
A summary of stock options outstanding as of December 31, 1999 is as
follows:
<TABLE>
<CAPTION>
WEIGHTED
OPTION WEIGHTED AVERAGE
EXERCISE AVERAGE REMAINING
PRICE EXERCISE NUMBER CONTRACTUAL
RANGE PRICE OF SHARES EXERCISABLE LIFE
--------------- -------------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C>
$ 10.17 $ 10.17 357,189 357,189 1.8 years
19.91-25.05 22.82 302,070 276,702 5.1 years
26.94-34.00 29.06 1,944,954 489,807 8.3 years
--------------- -------------- -------------- ---------------- ------------------
$ 10.17-34.00 $ 25.74 2,604,213 1,123,698 7.0 years
=============== ============== ============== ================ ==================
</TABLE>
During 1999, the Company established an employee stock purchase plan
whereby substantially all employees are eligible to participate in the purchase
of designated shares of the Company's common stock at a price equal to the lower
of 85% of the closing price at the beginning or end of each quarterly stock
purchase period. The Company issued 3,007 shares of common stock at an average
price of $25.08 pursuant to this plan during 1999.
12. COMMITMENTS AND CONTINGENCIES:
Rental expense related to operating leases was $5,460, $5,234 and
$14,552 for 1999, 1998 and 1997, respectively. Future minimum lease commitments
under all noncancelable operating leases in effect as of December 31, 1999 are
as follows:
<TABLE>
<S> <C>
2000 $ 6,072
2001 5,351
2002 5,552
2003 5,493
2004 5,172
Years thereafter 707,253
----------
Total $ 734,893
==========
</TABLE>
31
<PAGE> 32
The Company entered into a 75 year operating lease agreement during
1999 for 65.3 acres of land located near Orlando, Florida for the development of
a new hotel. The lease requires annual lease payments of approximately $873
until the completion of construction in 2002 at which point the annual lease
payments increase to approximately $3,200. The lease agreement provides for a 3%
escalation of base rent each year beginning five years after the opening of the
hotel.
During 1999, the Company entered into a construction contract for the
development of the hotel project near Orlando, Florida. The Company expects
payments of approximately $285,000 related to the construction contract during
the construction period.
During 1999, the Company entered into a naming rights agreement related
to the Nashville Arena with the Nashville Predators. The Nashville Arena has
been renamed the Gaylord Entertainment Center as a result of the agreement. A
director of the Company owns a majority equity interest in the Nashville
Predators. The contractual commitment requires the Company to pay $2,050 during
the first year of the contract, with a 5% escalation each year for the next 20
years. The Company is accounting for the naming rights agreement expense on a
straight-line basis over the 20 year contract period. The Company recognized
naming rights expense of $1,412 during the period of 1999 subsequent to entering
into the agreement, which is included in selling, general and administrative
expenses in the consolidated statements of income.
During 1998, the Company terminated an operating lease for a satellite
transponder related to the European operations of CMT International. The
termination of the satellite transponder lease resulted in a pretax charge of
$9,200 during 1998, which is included in other gains and losses in the
consolidated statements of income.
The Company was notified during 1997 by Nashville governmental
authorities of an increase in appraised value and property tax rates related to
the Opryland Hotel Nashville resulting in an increased tax assessment. The
Company has contested the increases and has been awarded a partial reduction in
the assessed values. The Company is in the process of appealing the appraised
values. At December 31, 1999, the Company's cumulative disputed property taxes
are $4,200, which have not been reflected in the consolidated financial
statements. The Company believes it has adequately provided for its property
taxes and intends to vigorously contest the increased tax assessment.
The Company 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 the Company.
The Company is self-insured for certain losses relating to workers'
compensation claims, employee medical benefits and general liability claims. The
Company has purchased stop-loss coverage in order to limit its exposure to any
significant levels of self-insured claims. The Company recognizes self-insured
losses based upon estimates of the aggregate liability for uninsured claims
incurred using certain actuarial assumptions followed in the insurance industry
or the Company's historical experience.
32
<PAGE> 33
13. RETIREMENT PLANS:
The Company has a noncontributory defined benefit pension plan in which
substantially all of its employees are eligible to participate upon meeting the
pension plan's participation requirements. The benefits are based on years of
service and compensation levels. The funding policy of the Company is to
contribute annually an amount which equals or exceeds the minimum required by
applicable law. During 1999, the Company amended the pension plan to revise the
benefit formula related to benefit payment assumptions.
The following table sets forth the funded status at December 31:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 46,480 $ 41,167
Service cost 3,188 2,124
Interest cost 3,999 3,036
Amendments 3,111 --
Actuarial loss 2,552 4,578
Benefits paid (3,068) (4,425)
-------- --------
Benefit obligation at end of year 56,262 46,480
-------- --------
Change in plan assets:
Fair value of plan assets at beginning of year 48,399 41,048
Actual return on plan assets 1,184 7,348
Employer contributions 3,375 4,428
Benefits paid (3,068) (4,425)
-------- --------
Fair value of plan assets at end of year 49,890 48,399
-------- --------
Funded status (6,372) 1,919
Unrecognized net actuarial loss 8,279 3,758
Unrecognized prior service cost 2,496 (403)
-------- --------
Prepaid pension cost $ 4,403 $ 5,274
======== ========
</TABLE>
Net periodic pension expense reflected in the consolidated statements
of income included the following components for the years ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Service cost $ 3,188 $ 2,124 $ 2,058
Interest cost 3,999 3,036 2,697
Expected return on plan assets (3,862) (3,229) (2,837)
Recognized net actuarial loss 709 -- 824
Amortization of prior service cost 211 (74) 34
------- ------- -------
Total net periodic pension expense $ 4,245 $ 1,857 $ 2,776
======= ======= =======
</TABLE>
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.5% and 7.0% in 1999 and
1998, respectively. The rate of increase in future compensation levels and the
expected long-term rate of return on plan assets were 4% and 8%, respectively,
in both 1999 and 1998.
The Company also has contributory retirement savings plans in which
substantially all employees are eligible to participate. The Company 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. Company contributions under the
retirement savings plans were $1,892, $1,860 and $2,142 for 1999, 1998 and 1997,
respectively.
33
<PAGE> 34
14. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Company sponsors unfunded defined benefit postretirement health
care and life insurance plans for certain employees. The Company 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.
Generally, for employees who retired prior to January 1, 1993 and who
met the other age and service requirements, the Company contributes 100% of the
employee and spouse's health care premium, and provides a life insurance benefit
of 100% of pay up to $50. For employees retiring on or after January 1, 1993 and
who meet the other age and service requirements, the Company contributes from
50% to 90% of the health care premium based on years of service, 50% of the
health care premium for the spouses of eligible retirees regardless of service,
and provides a life insurance benefit of $12.
The following table reconciles the change in benefit obligation of the
postretirement plans to the accrued postretirement liability as reflected in
other liabilities in the accompanying consolidated balance sheets at December
31:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ 22,596 $ 18,044
Service cost 1,815 1,565
Interest cost 1,518 1,288
Actuarial (gain) loss (9,872) 2,245
Contributions by plan participants 81 77
Benefits paid (706) (623)
-------- --------
Benefit obligation at end of year 15,432 22,596
Unrecognized net actuarial gain 11,234 1,569
-------- --------
Accrued postretirement liability $ 26,666 $ 24,165
======== ========
</TABLE>
Net postretirement benefit expense reflected in the consolidated
statements of income included the following components for the years ended
December 31:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- ------
<S> <C> <C> <C>
Service cost $ 1,815 $ 1,565 $1,488
Interest cost 1,518 1,288 1,270
Recognized net actuarial gain (207) (194) --
------- ------- ------
Net postretirement benefit expense $ 3,126 $ 2,659 $2,758
======= ======= ======
</TABLE>
For measurement purposes, an 8% annual rate of increase in the per
capita cost of covered health care claims was assumed for 1999. The health care
cost trend is projected to be 10% in 2000, decline by 1% for each of the next
two years and then decline 0.5% each year thereafter to an ultimate level trend
rate of 5.5% per year in 2007. The health care cost trend rates are not
applicable to the life insurance benefit plan. The health care cost trend rate
assumption has a significant effect on the amounts reported. To illustrate, a 1%
increase in the assumed health care cost trend rate each year would increase the
accumulated postretirement benefit obligation as of December 31, 1999 by
approximately 14% and the aggregate of the service and interest cost components
of net postretirement benefit expense would increase approximately 23%.
Conversely, a 1% decrease in the assumed health care cost trend rate each year
would decrease the accumulated postretirement benefit obligation as of December
31, 1999 by approximately 13% and the aggregate of the service and interest cost
components of net postretirement benefit expense would decrease approximately
20%. The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% and 7.0% in 1999 and 1998,
respectively.
34
<PAGE> 35
15. FINANCIAL REPORTING BY BUSINESS SEGMENTS:
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information",
which the Company adopted on January 1, 1998. The Company is organized and
managed based upon its products and services. The following information is
derived directly from the segments' internal financial reports used for
corporate management purposes.
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Hospitality and attractions $ 245,705 $ 246,354 $ 311,418
Creative content 205,565 203,537 162,782
Interactive media 54,224 68,942 350,415
Corporate and other 5,294 5,642 1,380
----------- ----------- -----------
Total $ 510,788 $ 524,475 $ 825,995
=========== =========== ===========
Operating income (loss):
Hospitality and attractions $ 38,270 $ 44,051 $ 50,846
Creative content (11,366) 11,339 11,689
Interactive media (5,596) 8,211 63,930
Corporate and other (25,972) (20,668) (26,309)
Merger costs and restructuring charges (1,361) -- (36,299)
Line of business closing charges (12,201) -- (42,006)
----------- ----------- -----------
Total $ (18,226) $ 42,933 $ 21,851
=========== =========== ===========
Depreciation and amortization:
Hospitality and attractions $ 25,515 $ 23,835 $ 28,544
Creative content 13,757 9,294 6,553
Interactive media 6,553 4,415 13,870
Corporate and other 6,749 5,240 4,430
----------- ----------- -----------
Total $ 52,574 $ 42,784 $ 53,397
=========== =========== ===========
Capital expenditures:
Hospitality and attractions $ 61,362 $ 13,924 $ 24,737
Creative content 6,587 27,143 8,123
Interactive media 10,617 4,914 13,497
Corporate and other 5,484 5,212 2,882
----------- ----------- -----------
Total $ 84,050 $ 51,193 $ 49,239
=========== =========== ===========
Identifiable assets:
Hospitality and attractions $ 493,613 $ 452,511 $ 461,715
Creative content 344,317 327,369 231,454
Interactive media 58,861 51,472 46,631
Corporate and other 835,593 180,640 377,762
----------- ----------- -----------
Total $ 1,732,384 $ 1,011,992 $ 1,117,562
=========== =========== ===========
</TABLE>
35
<PAGE> 36
16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
1999
- ----
Revenues $ 113,139 $128,362 $135,711 $ 133,576
========= ======== ======== =========
Depreciation and amortization $ 12,024 $ 12,374 $ 13,408 $ 14,768
========= ======== ======== =========
Operating income (loss) $ (4,648) $ 3,425 $ 2,169 $ (19,172)
========= ======== ======== =========
Net income $ 79,792 $ 658 $ 726 $ 268,616
========= ======== ======== =========
Net income per share $ 2.43 $ 0.02 $ 0.02 $ 8.12
========= ======== ======== =========
Net income per share -
assuming dilution $ 2.41 $ 0.02 $ 0.02 $ 8.05
========= ======== ======== =========
1998
- ----
Revenues $ 108,021 $126,963 $134,904 $ 154,587
========= ======== ======== =========
Depreciation and amortization $ 9,830 $ 10,600 $ 11,171 $ 11,183
========= ======== ======== =========
Operating income $ 462 $ 13,010 $ 11,402 $ 18,059
========= ======== ======== =========
Net income $ 2,039 $ 7,322 $ 7,143 $ 14,690
========= ======== ======== =========
Net income per share $ 0.06 $ 0.22 $ 0.22 $ 0.45
========= ======== ======== =========
Net income per share - assuming
dilution $ 0.06 $ 0.22 $ 0.22 $ 0.44
========= ======== ======== =========
</TABLE>
Certain of the Company's operations are subject to seasonal
fluctuation. Revenues in the music business are typically weakest in the first
calendar quarter following the Christmas buying season.
During the first quarter of 1999, the Company recognized a pretax gain
of $129,875 representing the value of the 15% contractual equity participation
rights upon the sale of the Systems. During the third quarter of 1999, the
Company recognized a nonrecurring restructuring charge of $3,102 related to
streamlining the Company's operations, primarily the Opryland Hotel Nashville,
and the reversal of accrued merger costs of $1,741 based upon the settlement of
the remaining contingencies associated with the Merger. During the fourth
quarter of 1999, the Company recorded a pretax gain of $459,307 related to the
divestiture of television station KTVT in Dallas and a pretax loss of $12,201
related to the closing of Unison Records.
During the first quarter of 1998, the Company recognized a pretax gain
of $3,296 on the sale of investments. During the second quarter of 1998, the
Company recognized a pretax gain related to the sale of its investment in the
Texas Rangers Baseball Club, Ltd. of $15,109; a pretax loss of $23,616 related
to the write-off of a note receivable from Z Music; and pretax gains totaling
$8,538 primarily related to the settlement of contingencies arising from the
prior sales of television stations KHTV in Houston and KSTW in Seattle. In the
fourth quarter of 1998, the Company recorded a pretax gain of $15,000 related to
a long-term note receivable and a pretax charge of $9,200 related to the
termination of an operating lease for a satellite transponder.
36
<PAGE> 37
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Gaylord Entertainment Company:
We have audited the accompanying consolidated balance sheets of Gaylord
Entertainment Company (a Delaware corporation) and its subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1999. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Gaylord Entertainment Company and subsidiaries as of December 31, 1999 and 1998,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999 in conformity with
accounting principles generally accepted in the United States.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
February 9, 2000
37
<PAGE> 38
CORPORATE DATA
MARKET INFORMATION
The Common Stock of Gaylord Entertainment is listed on the New
York Stock Exchange under the symbol GET. The approximate number of record
holders of the company's Common Stock on March 13, 2000, was 2,764.
STOCK PRICE AND DIVIDEND INFORMATION
The table below sets forth the high and low sales prices for the company's
Common Stock and the amount of cash dividends paid per share of Common Stock for
each quarter of 1998 and 1999.
<TABLE>
<CAPTION>
High Low Dividend
---- --- --------
<S> <C> <C> <C>
1998
1st Quarter $36.81 $29.88 $0.15
2nd Quarter 37.50 32.00 0.15
3rd Quarter 34.19 25.25 0.15
4th Quarter 30.75 22.00 0.20
1999
1st Quarter $31.13 $24.25 $0.20
2nd Quarter 33.00 23.38 0.20
3rd Quarter 31.44 28.31 0.20
4th Quarter 33.06 28.25 0.20
</TABLE>
In February 2000, the Board of Directors voted to discontinue the
payment of dividends.
38
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF GAYLORD ENTERTAINMENT COMPANY
<TABLE>
<CAPTION>
JURISDICTION OF
NAME ORGANIZATION
---- ------------
<S> <C>
Acuff-Rose Music, Inc. Tennessee
Acuff-Rose Music, Ltd. England
Acuff-Rose Musikverlag GmbH Germany
Acuff-Rose Scandia AB Sweden
Acuff-Rose Music Publishing, Inc. Tennessee
CCK, Inc. Texas
Celebration Hymnal, LLC Tennessee
Country Music Television Australia Pty. Ltd. Australia
Country Music Television International, GmbH Germany
Country Music Television International, Inc. Delaware
Country Music Television International, B. V Netherlands
Dayspring Music, Inc. Tennessee
Deep Indigo Productions United Kingdom
Editions Acuff Rose France SARL France
Gaylord Creative Group, Inc. Delaware
Gaylord Digital, LLC Delaware
Gaylord Investments, Inc. Delaware
Gaylord Production Company Tennessee
Gaylord Program Services, Inc. Delaware
GBRJ Music, LLC Texas
Grand Ole Opry Tours, Inc. Tennessee
Hickory Records, Inc. Tennessee
Idea Entertainment, C.V Netherlands
Idea Films, LLC Delaware
Jack Nicklaus Productions, Inc. California
Lightforce, LLC Delaware
Milene Music, Inc. Tennessee
OKC Athletic Club Limited Partnership Oklahoma
OKC Concession Service Limited Partnership Oklahoma
Oklahoma City Athletic Club, Inc. Oklahoma
OLH, G.P Tennessee
Opryland Attractions, Inc. Delaware
Opryland Hospitality, Inc. Tennessee
Opryland Hotel Florida, L.P. Florida
Opryland Hotel Texas, LLC Delaware
Opryland Hotel Texas, L.P. Delaware
Opryland Productions, Inc. Tennessee
Opryland Theatricals, Inc. Delaware
Pandora EURL France
Pandora Investment (SARL) Luxembourg
Showpark Management, Inc. Delaware
Springhouse Music, Inc. Tennessee
</TABLE>
<PAGE> 2
<TABLE>
<S> <C>
TV Force, LLC Texas
Wildhorse Saloon Entertainment Ventures, Inc. Tennessee
Word Entertainment (Canada), Ltd. Canada
Word Entertainment Direct, LLC Tennessee
Word Entertainment, Ltd. United Kingdom
Word Music Group, Inc. Tennessee
Word Music, Inc. Tennessee
Wordspring Music, Inc. Tennessee
Z Music Management, Inc. Delaware
</TABLE>
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports dated February 9, 2000 included in this Annual Report on Form 10-K of
Gaylord Entertainment Company into the Company's previously filed Registration
Statement File Numbers 333-37051, 333-37053, 333-79323 and 333-31254. It should
be noted that we have not audited any financial statements of the Company
subsequent to December 31, 1999, or performed any audit procedures subsequent to
the date of our reports.
ARTHUR ANDERSEN LLP
Nashville, Tennessee
March 27, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GAYLORD ENTERTAINMENT COMPANY FOR THE 12 MONTHS ENDED
DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 18,696
<SECURITIES> 0
<RECEIVABLES> 90,763
<ALLOWANCES> 7,474
<INVENTORY> 28,527
<CURRENT-ASSETS> 164,036
<PP&E> 611,582
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,732,384
<CURRENT-LIABILITIES> 427,911
<BONDS> 310,123
0
0
<COMMON> 333
<OTHER-SE> 960,826
<TOTAL-LIABILITY-AND-EQUITY> 1,732,384
<SALES> 510,788
<TOTAL-REVENUES> 510,788
<CGS> 0
<TOTAL-COSTS> 529,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,101
<INCOME-PRETAX> 561,522
<INCOME-TAX> 211,730
<INCOME-CONTINUING> 349,792
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 349,792
<EPS-BASIC> 10.63
<EPS-DILUTED> 10.53
</TABLE>
