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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): APRIL 19, 1999
(APRIL 12, 1999)
GAYLORD ENTERTAINMENT COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
1-13079 73-0664379
(Commission File Number) (I.R.S. employer identification number)
ONE GAYLORD DRIVE, NASHVILLE, TENNESSEE 37214
(Address of principal executive offices) (Zip Code)
(615) 316-6000
(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On April 12, 1999 the Registrant announced that it had entered into a
definitive agreement (the "Agreement") whereby CBS Corporation ("CBS") will
acquire the Registrant's interest in the entities that own television station
KTVT-TV located in Dallas-Fort Worth. The Registrant will receive CBS Common
Stock having an aggregate value of $485,000,000, based upon the average market
price of CBS Common Stock shortly before the closing date.
The foregoing summary description of the Agreement and the transactions
contemplated by the Agreement is qualified in its entirety by reference to the
full text of the Agreement, a Tax Matters Agreement among the parties to the
Agreement and a press release issued by the Registrant, copies of which are
annexed hereto as Exhibits 2, 10.1 and 99, respectively, incorporated herein by
this reference. In addition, the Registrant and CBS amended the Post-Closing
Covenants Agreement, dated as of September 30, 1997, among the Registrant, CBS
and certain executive officers of the Registrant, a copy of which is filed as
Exhibit 10.2 to the Registrant's Current Report on Form 8-K, dated October 7,
1997.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) The exhibits filed with this report are listed in the Exhibit
Index set forth elsewhere herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GAYLORD ENTERTAINMENT COMPANY
By: /s/ THOMAS J. SHERRARD
---------------------------------
Thomas J. Sherrard
Secretary
April 19, 1999
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INDEX TO EXHIBITS
Exhibit
Number Description
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2+ 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.
10.1 Tax Matters Agreement, dated as of April 9, 1999, by and among
the Registrant, Gaylord Television Company, Gaylord
Communications, Inc. and CBS Corporation.
10.2 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.
99 Press Release issued by the Registrant on April 12, 1999.
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+ As directed by Item 601(b)(2) of Regulation S-K, certain schedules and
exhibits to this exhibit are omitted from this filing. Registration agrees to
furnish supplementally a copy of any omitted schedule or exhibit to the
Commission upon request.
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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
GAYLORD ENTERTAINMENT COMPANY,
GAYLORD TELEVISION COMPANY,
GAYLORD COMMUNICATIONS, INC.,
CBS CORPORATION,
CBS DALLAS VENTURES, INC.
AND
CBS DALLAS MEDIA, INC.
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TABLE OF CONTENTS
SECTION 1. BASIC PROVISIONS.......................................................................................2
SECTION 1.1. MERGERS...........................................................................................2
SECTION 1.2. CLOSING...........................................................................................2
SECTION 1.3. EFFECTIVE TIME....................................................................................2
SECTION 1.4. EFFECTS OF THE MERGERS............................................................................3
SECTION 1.5. ARTICLES AND CERTIFICATE OF INCORPORATION.........................................................3
SECTION 1.6. BYLAWS............................................................................................3
SECTION 1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATIONS..................................................3
SECTION 1.8. EFFECT ON CAPITAL STOCK OF THE MERGING COMPANIES..................................................4
SECTION 1.9. ISSUANCE OF CBS COMMON STOCK......................................................................4
SECTION 1.10. COMMERCIAL SPOTS.................................................................................4
SECTION 1.11. TAX MATTERS AGREEMENT............................................................................5
SECTION 1.12. PRORATION OF CAPITAL EXPENDITURES................................................................5
SECTION 1.13. PRORATION OF CURRENT ASSETS AND LIABILITIES......................................................6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF GAYLORD..............................................................9
SECTION 2.1. ORGANIZATION; QUALIFICATION; POWER................................................................9
SECTION 2.2. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS......................................................9
SECTION 2.3. CAPITALIZATION; OWNERSHIP........................................................................11
SECTION 2.4. FINANCIAL STATEMENTS.............................................................................11
SECTION 2.5. ABSENCE OF MATERIAL ADVERSE EFFECT...............................................................12
SECTION 2.6. TAXES............................................................................................12
SECTION 2.7. PERMITS..........................................................................................13
SECTION 2.8. REAL PROPERTY....................................................................................14
SECTION 2.9. ASSETS OTHER THAN REAL PROPERTY..................................................................15
SECTION 2.10. ASSETS AND LIABILITIES OF THE LIMITED PARTNERSHIP...............................................16
SECTION 2.11. EMPLOYEES.......................................................................................16
SECTION 2.12. EMPLOYMENT AND SIMILAR AGREEMENTS...............................................................16
SECTION 2.13. ERISA...........................................................................................16
SECTION 2.14. LABOR MATTERS...................................................................................17
SECTION 2.15. INTELLECTUAL PROPERTY...........................................................................17
SECTION 2.16. CONTRACTS.......................................................................................18
SECTION 2.17. STATUS OF CONTRACTS.............................................................................21
SECTION 2.18. LITIGATION......................................................................................21
SECTION 2.19. COMPLIANCE WITH APPLICABLE LAWS.................................................................21
SECTION 2.20. ENVIRONMENTAL MATTERS...........................................................................21
SECTION 2.21. FCC MATTERS.....................................................................................22
SECTION 2.22. NO FINDER.......................................................................................23
SECTION 2.23. INSURANCE.......................................................................................23
SECTION 2.24. YEAR 2000.......................................................................................23
SECTION 2.25. TRANSACTIONS WITH AFFILIATES....................................................................23
SECTION 2.26. CABLE MATTERS...................................................................................23
SECTION 2.27. DIGITAL TELEVISION..............................................................................24
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF CBS.................................................................24
SECTION 3.1. ORGANIZATION; QUALIFICATION; POWER...............................................................25
SECTION 3.2. CBS COMMON STOCK TO BE ISSUED IN THIS TRANSACTION................................................25
SECTION 3.3. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS.....................................................25
SECTION 3.4. SEC DOCUMENTS; UNDISCLOSED LIABILITIES...........................................................27
SECTION 3.5. NO FINDER........................................................................................27
SECTION 3.6. STATUS OF CBS AND THE CBS SUBSIDIARIES...........................................................27
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.............................................................28
SECTION 3.8. LITIGATION.......................................................................................28
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAWS..................................................................28
SECTION 3.10. INTERIM OPERATIONS OF THE CBS SUBSIDIARIES......................................................28
SECTION 3.11. TAXES...........................................................................................29
SECTION 4. ACTIONS PRIOR TO THE CLOSING DATE.....................................................................29
SECTION 4.1. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES..............................................29
SECTION 4.2. FCC CONSENT; IMPROVEMENTS ACT APPROVAL...........................................................29
SECTION 4.3. OPERATIONS PRIOR TO THE CLOSING DATE.............................................................30
SECTION 4.4. COLLECTION OF ACCOUNTS RECEIVABLE................................................................34
SECTION 4.5. PUBLIC ANNOUNCEMENT..............................................................................35
SECTION 4.6. COMPLIANCE WITH LAWS.............................................................................35
SECTION 4.7. ADVICE OF CHANGES................................................................................35
SECTION 4.8. NO SOLICITATION..................................................................................36
SECTION 4.9. OTHER CONSENTS...................................................................................36
SECTION 4.10. NOTICE OF PROCEEDINGS...........................................................................36
SECTION 4.11. TRADE AGREEMENTS................................................................................36
SECTION 4.12. CONFIDENTIALITY AGREEMENTS......................................................................37
SECTION 5. ADDITIONAL AGREEMENTS.................................................................................37
SECTION 5.1. SALES, USE AND TRANSFER TAXES, TITLE INSURANCE...................................................37
SECTION 5.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS................................................................37
SECTION 5.3. GAYLORD SUBSIDIARIES AND THE LIMITED PARTNERSHIP
TO CONTROL OPERATIONS PRIOR TO CLOSING DATE......................................................39
SECTION 5.4. COPYRIGHT ROYALTY TRIBUNAL PAYMENTS..............................................................39
SECTION 5.5. ACCESS TO INFORMATION............................................................................39
SECTION 5.6. REASONABLE BEST EFFORTS..........................................................................40
SECTION 5.7. USE OF GAYLORD NAME..............................................................................40
SECTION 5.8. ENVIRONMENTAL STUDY..............................................................................41
SECTION 5.9. AGREEMENT NOT TO COMPETE.........................................................................41
SECTION 5.10. WAIVER OF CERTAIN CLAIMS........................................................................42
SECTION 5.11. RECORDS.........................................................................................42
SECTION 5.12. POST CLOSING MATTERS............................................................................42
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF CBS............................................................43
SECTION 6.1. CORPORATE ACTION.................................................................................43
SECTION 6.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION......................................................43
SECTION 6.3. FCC CONSENT......................................................................................44
SECTION 6.4. REPRESENTATIONS AND WARRANTIES...................................................................44
SECTION 6.5. NYSE LISTING.....................................................................................44
SECTION 6.6. BREACH OF COVENANT BY GAYLORD....................................................................44
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SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF GAYLORD........................................................44
SECTION 7.1. CORPORATE ACTION.................................................................................44
SECTION 7.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION......................................................45
SECTION 7.3. FCC CONSENT......................................................................................45
SECTION 7.4. REGISTRATION OF SHARES...........................................................................45
SECTION 7.5. NYSE LISTING.....................................................................................45
SECTION 7.6. TAX MATTERS AGREEMENT BRING DOWN CERTIFICATE.....................................................45
SECTION 7.7. NO MATERIAL ADVERSE CHANGE.......................................................................45
SECTION 7.8. TAX OPINION......................................................................................45
SECTION 7.9. BREACH OF COVENANT BY CBS........................................................................46
SECTION 8. INDEMNIFICATION.......................................................................................46
SECTION 8.1. INDEMNIFICATION BY GAYLORD.......................................................................46
SECTION 8.2. INDEMNIFICATION BY CBS...........................................................................47
SECTION 8.3. TERMINATION OF INDEMNIFICATION...................................................................48
SECTION 8.4. PROCEDURES.......................................................................................48
SECTION 8.5. CERTAIN LIMITATIONS..............................................................................50
SECTION 9. TERMINATION...........................................................................................50
SECTION 9.1. TERMINATION......................................................................................50
SECTION 9.2. SPECIFIC PERFORMANCE.............................................................................51
SECTION 9.3. EFFECT OF TERMINATION............................................................................51
SECTION 10. GENERAL PROVISIONS...................................................................................51
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND OBLIGATIONS.........................................51
SECTION 10.2. CONFIDENTIAL NATURE OF INFORMATION..............................................................51
SECTION 10.3. GOVERNING LAW...................................................................................52
SECTION 10.4. NOTICES.........................................................................................52
SECTION 10.5. SUCCESSOR AND ASSIGNS...........................................................................53
SECTION 10.6. ACCESS TO RECORDS AFTER CLOSING.................................................................54
SECTION 10.7. ENTIRE AGREEMENT; AMENDMENTS....................................................................54
SECTION 10.8. INTERPRETATION..................................................................................54
SECTION 10.9. WAIVERS.........................................................................................54
SECTION 10.10. EXPENSES.......................................................................................55
SECTION 10.11. PARTIAL INVALIDITY.............................................................................55
SECTION 10.12. EXECUTION IN COUNTERPARTS......................................................................55
SECTION 10.13. DEFINITIONS....................................................................................55
SECTION 10.14. CONTROLLING PROVISIONS.........................................................................61
SECTION 10.15. RISK OF LOSS...................................................................................61
SECTION 10.16. RESOLUTION OF DISPUTES OVER SATISFACTION OF CONDITIONS.........................................63
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 9, 1999 (the
"Agreement"), is made by and among GAYLORD ENTERTAINMENT COMPANY, a Delaware
corporation ("Gaylord"), GAYLORD TELEVISION COMPANY, a Delaware corporation and
a direct wholly owned subsidiary of Gaylord ("GTC"), GAYLORD COMMUNICATIONS,
INC., a Texas corporation and a direct wholly owned subsidiary of Gaylord
("GCI") (GTC and GCI being sometimes referred to herein as the "Gaylord
Subsidiaries"), CBS CORPORATION, a Pennsylvania corporation ("CBS"), CBS DALLAS
VENTURES, INC., a Delaware corporation and a direct wholly owned subsidiary of
CBS ("CBS Dallas Ventures"), and CBS DALLAS MEDIA, INC., a Delaware corporation
and a direct wholly owned subsidiary of CBS ("CBS Dallas Media") (CBS Dallas
Ventures and CBS Dallas Media being sometimes referred to herein as the "CBS
Subsidiaries") (GTC, GCI, CBS Dallas Ventures and CBS Dallas Media being
sometimes referred to herein as the "Constituent Corporations").
WITNESSETH:
WHEREAS, GAYLORD BROADCASTING COMPANY, L.P., a Texas limited
partnership formerly named New Gaylord Broadcasting, L.P. (the "Limited
Partnership"), is solely engaged in the business of owning and operating
television broadcast station KTVT-TV, Fort Worth/Dallas, Texas (the "Station");
WHEREAS, GCI is the sole general partner of the Limited Partnership,
and GTC is the sole limited partner of the Limited Partnership;
WHEREAS, the respective Boards of Directors of GCI and CBS Dallas
Ventures, and Gaylord and CBS as the respective sole stockholders of GCI and CBS
Dallas Ventures, have approved the merger (the "GCI Merger") of CBS Dallas
Ventures with and into GCI upon the terms and subject to the conditions set
forth in this Agreement, and such Boards of Directors have determined that the
GCI Merger is advisable and in the best interests of the respective stockholders
of GCI and CBS Dallas Ventures;
WHEREAS, the respective Boards of Directors of GTC and CBS Dallas
Media, and Gaylord and CBS as the respective sole stockholders of GTC and CBS
Dallas Media, have approved the merger (the "GTC Merger" and, together with the
GCI Merger, the "Mergers") of CBS Dallas Media with and into GTC upon the terms
and subject to the conditions set forth in this Agreement, and such Boards of
Directors have determined that the GTC Merger is advisable and in the best
interests of the respective stockholders of GTC and CBS Dallas Media;
WHEREAS, under the terms of this Agreement, each outstanding share of
common stock, no par value, of GCI (the "GCI Stock") issued and outstanding
immediately prior to the Effective Time, and each outstanding share of common
stock, par value $.001 per share, of GTC (the "GTC Stock") issued and
outstanding immediately prior to the Effective Time, shall be converted into the
right to receive common stock, par value $1.00 per share, of CBS (the "CBS
Common Stock"); and
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WHEREAS, the parties intend that for federal income tax purposes each
of the Mergers qualifies as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants, conditions and agreements hereinafter set forth, it is hereby agreed
among the parties as follows:
SECTION 1. BASIC PROVISIONS
SECTION 1.1. MERGERS
Upon the terms and subject to the conditions of this Agreement, and in
accordance with the Texas Business Corporation Act (the "TBCA") and the Delaware
General Corporation Law (the "DGCL"), at the Effective Time, CBS Dallas Ventures
shall be merged with and into GCI and the separate corporate existence of CBS
Dallas Ventures shall cease and GCI shall continue as the "surviving
corporation". Upon the terms and subject to the conditions of this Agreement,
and in accordance with the DGCL, at the Effective Time, CBS Dallas Media shall
be merged with and into GTC and the separate corporate existence of CBS Dallas
Media shall cease and GTC shall continue as the "surviving corporation".
SECTION 1.2. CLOSING
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 9, and subject
to any extension permitted by Section 10.15 or 10.16, the consummation of the
Mergers will take place on the third business day after the satisfaction or
(subject to applicable law) waiver of the conditions set forth in Sections 6 and
7 (excluding conditions that, by their terms, cannot be satisfied until the
Closing Date (as defined below)). The Closing shall be at the offices of
Skadden, Arps, Slate, Meagher & Flom, LLP, New York, New York (the "Closing"),
unless another date, time or place is agreed to in writing by Gaylord and CBS.
The date on which the Closing occurs shall be the "Closing Date".
SECTION 1.3. EFFECTIVE TIME
As soon as practicable following the Closing, the parties shall (i)
file articles of merger (the "GCI Articles of Merger") with respect to the GCI
Merger in such form as is required by, and executed and verified in accordance
with, the relevant provisions of the TBCA to effectuate the GCI Merger, (ii)
obtain a certificate of merger from the Secretary of State of the State of Texas
to effectuate the GCI Merger, (iii) file a certificate of merger (the "GCI
Certificate of Merger") with respect to the GCI Merger in such form as is
required by, and executed in accordance with, the relevant provisions of the
DGCL to effectuate the GCI Merger, (iv) file a certificate of merger (the "GTC
Certificate of Merger") with respect to the GTC Merger in such form as is
required by, and executed in accordance with, the relevant provisions of the
DGCL to effectuate the GTC Merger and (v) make all other filings or recordings
required under the laws of Delaware and Texas to effectuate the Mergers. The GCI
Articles of Merger, the GCI Certificate of Merger and the GTC Certificate of
Merger shall specify that the GCI Merger or the GTC Merger, as applicable, shall
become effective
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at 11:59 p.m. on the Closing Date, or at such subsequent time as Gaylord and CBS
shall agree and as shall be specified in the GCI Articles of Merger, the GCI
Certificate of Merger and the GTC Certificate of Merger (the date and time the
respective Mergers become effective being the "Effective Time").
SECTION 1.4. EFFECTS OF THE MERGERS
At and after the Effective Time, the Mergers will have the effects set
forth, in the case of the GCI Merger, in Article 5.06 of the TBCA and in Section
259 of the DGCL, and in the case of the GTC Merger, in Section 259 of the DGCL.
SECTION 1.5. ARTICLES AND CERTIFICATE OF INCORPORATION
In the case of the GCI Merger, the articles of incorporation of GCI, as
in effect immediately prior to the Effective Time, shall be amended at the
Effective time so that Article 1 of such articles of incorporation reads in its
entirety as follows: "The name of this Corporation is `CBS Dallas Ventures,
Inc.'", and, as so amended, such articles of incorporation shall be the articles
of incorporation of the surviving corporation of the GCI Merger until thereafter
changed or amended as provided therein or by applicable law.
In the case of the GTC Merger, the certificate of incorporation of GTC,
as in effect immediately prior to the Effective Time, shall be amended at the
Effective Time so that Article First of such certificate of incorporation reads
in its entirety as follows: "The name of this Corporation is `CBS Dallas Media,
Inc.'", and, as so amended, such certificate of incorporation shall be the
certificate of incorporation of the surviving corporation of the GTC Merger
until thereafter changed or amended as provided therein or by applicable law.
SECTION 1.6. BYLAWS
The bylaws of GCI, as in effect immediately prior to the Effective
Time, shall be the bylaws of the surviving corporation of the GCI Merger at the
Effective Time, and the bylaws of GTC, as in effect immediately prior to the
Effective Time, shall be the bylaws of the surviving corporation of the GTC
Merger at the Effective Time, in each case until thereafter changed or amended
as provided therein or by applicable law.
SECTION 1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATIONS
At the Effective Time, the officers and directors of CBS Dallas
Ventures shall become the officers and directors of the surviving corporation of
the GCI Merger, and the officers and directors of CBS Dallas Media shall become
the officers and directors of the surviving corporation of the GTC Merger, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified. Immediately prior to the Effective Time, Gaylord
shall cause the then current officers and directors of GCI and GTC to resign.
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SECTION 1.8. EFFECT ON CAPITAL STOCK OF THE MERGING COMPANIES
As of the Effective Time, by virtue of the respective Mergers and
without any action on the part of any holder thereof: (i) each issued and
outstanding share of common stock, par value $1.00 per share, of CBS Dallas
Ventures shall be converted into and become one fully paid and nonassessable
share of GCI Stock; (ii) each issued and outstanding share of common stock, par
value $1.00 per share, of CBS Dallas Media shall be converted into and become
one fully paid and nonassessable share of GTC Stock; and (iii) the aggregate of
the shares of GCI Stock and GTC Stock issued and outstanding immediately prior
to the Effective Time shall be converted into the right to receive the number of
duly authorized, validly issued, fully paid and non-assessable shares of CBS
Common Stock determined under Section 1.9 of this Agreement.
SECTION 1.9. ISSUANCE OF CBS COMMON STOCK
As of the Effective Time, CBS shall issue and deliver to Gaylord one or
more certificates registered in the name of Gaylord evidencing in the aggregate
the number of shares (rounded to the nearest whole number) of CBS Common Stock
equal to the quotient of Four Hundred Eighty-five Million Dollars ($485,000,000)
divided by the "Market Price". The "Market Price" means the average of the daily
closing prices per share of CBS Common Stock as reported on the NYSE Composite
Transactions Tape (as reported by the Wall Street Journal or, if not reported
thereby, by another authoritative source mutually selected by Gaylord and CBS)
for the fifteen (15) consecutive full NYSE trading days immediately preceding
the third full NYSE trading day prior to the date on which the Closing Date
shall occur. Gaylord and CBS agree to allocate one percent (1%) and ninety-nine
percent (99%) of the CBS Common Stock received by Gaylord hereunder to the GCI
Stock and the GTC Stock, respectively.
SECTION 1.10. COMMERCIAL SPOTS
For a period of ten years following the Closing Date, CBS shall cause
the Station to provide commercial advertising spots (the "Spots") to Gaylord,
its subsidiaries, and its Affiliates listed on Schedule 1.10 (to the extent such
parties remain Gaylord Affiliates at the applicable time) for goods or services
of the type offered as of the date hereof (i) by Gaylord and its subsidiaries,
and (ii) by Gaylord's Affiliates listed on Schedule 1.10 and as set forth on
Schedule 1.10. During the ten-year period, subject to CBS's consent, such
consent not to be unreasonably withheld, CBS shall also permit the Spots to be
used for future subsidiaries or Affiliates of Gaylord and for additional goods
or services of Gaylord or its current or future subsidiaries or Affiliates. The
Spots will be provided to Gaylord on the following terms and conditions:
(a) During the ten-year period, CBS shall cause the Station
to grant to Gaylord an annual credit in a gross amount of $1 million,
solely to be applied toward the cost of the Spots.
(b) The cost for the Spots will be based upon schedules,
which schedules will include rates by program and by day-part no less
favorable than the average rates by program and by day-part negotiated
by all similarly significant cash-paying customers. It is the
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intention of the parties that the Spots be placed on a substantially
even basis throughout the year, and that Gaylord will request the
placement of Spots accordingly, and that CBS shall use all reasonable
efforts to accommodate such Gaylord requests. The airing of the Spots
will be subject to the Station's normal sales practices including
rates, prompt make-goods of like value, and the normal level of
preemptability for all similarly significant cash-paying customers.
Consistent with Station billing practices, and in no event more than
fifteen (15) days after the end of the month in which any Spots air,
CBS will cause the Station to provide to Gaylord (i) an invoice which
will detail the Spots which aired during the previous month, including
the date, time and value assigned to each Spot, and (ii) written
confirmation of its compliance with this Agreement on a monthly basis
consistent with its standard reporting policies for other commercial
advertisers on the Station, which written confirmation shall include
actual exhibition time and rate charged.
(c) Notwithstanding any of the foregoing, CBS may take such
action with respect to the Spots as necessary to comply with the
reasonable access by federal candidates and equal time for all
candidates provisions of the Communications Act relating to political
broadcasting as well as the FCC's rules and policies, applicable laws
and CBS's standards and practices.
(d) Any unused portion of each annual credit shall expire at
the end of the relevant year and shall not be carried forward to any
subsequent year, unless such credit is not used due to (i) the
preemption or rejection of Spots contemplated by this Section 1.10 or
(ii) any other reason which is outside the control of Gaylord. To the
extent that any credit exists after the end of any annual period for
the reasons set forth in clause (i) or (ii), such credit shall be
carried forward to the immediately succeeding annual period; to the
extent any such credits are not fully used at the end of the ten (10)
year period, Gaylord shall be entitled to an additional eighteen (18)
month period during which it may use any such unused credits, at the
end of which any remaining credits will expire.
CBS and Gaylord agree that the fair market value of the annual credits
provided in this Section 1.10 is six million dollars ($6,000,000), it being
understood that the determination of the fair market value as provided herein
shall not alter the obligation of CBS to provide an annual credit of one million
dollars ($1,000,000) for a period of ten (10) years.
SECTION 1.11. TAX MATTERS AGREEMENT
The parties hereto shall, simultaneously with the execution of this
Agreement, enter into that certain Tax Matters Agreement attached hereto as
Exhibit A.
SECTION 1.12. PRORATION OF CAPITAL EXPENDITURES
Gaylord intends to make capital expenditures with respect to the
Station, in the ordinary course of business, on an as-needed basis in an amount
not to exceed $7,100,000 during the calendar year 1999. Gaylord shall be
responsible for 1/365th of this amount per day from January 1, 1999 until the
Closing. At the Closing, to the extent Gaylord has spent less than such pro rata
amount, Gaylord shall deliver the difference in cash to CBS, and, to the extent
Gaylord has spent more than
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such pro rata amount, CBS shall deliver the difference in cash to Gaylord;
provided, however, that (i) during the period prior to the Closing, Gaylord
agrees to consult with CBS and shall not make any capital expenditures not
otherwise necessary to the operation of the Station in the ordinary course of
business, (ii) to the extent Gaylord and CBS agree to a revised amount of
capital expenditures for calendar year 1999, the proration referred to herein
shall be applied to such revised amount, and (iii) in no event shall CBS be
obligated to pay to Gaylord more than $500,000 under the terms of this Section
1.12. If the Closing takes place after December 31, 1999, an arrangement similar
to that provided for in this Section 1.12 shall be agreed upon by the parties
with respect to capital expenditures in 2000.
SECTION 1.13. PRORATION OF CURRENT ASSETS AND LIABILITIES
(a) All current assets (excluding any assets to be
transferred to Gaylord or any of its Affiliates pursuant to Section
4.3(b)) and all current liabilities (including accounts payable, bonus
or other incentive payments payable, other payables, accrued
liabilities for talent, accrued salaries and wages, accrued employee
benefits, accrued expenses and accrued deferred income or compensation,
but excluding any liabilities or expenses relating to Taxes, which are
governed by the Tax Matters Agreement, and any liabilities assumed by
Gaylord pursuant to Section 4.3(b)) arising from the conduct of the
business and operations of the Station shall be prorated between
Gaylord and CBS as of the Effective Time, taking into account the
elapsed time or consumption of an asset during the month in which the
Closing occurs. Such current assets and current liabilities relating to
the period prior to such date shall be for the account of Gaylord and
those relating to the period thereafter shall be for the account of
CBS, and shall be prorated accordingly.
(b) There shall be no proration of the payments due under the
film or programming license agreements other than for the calendar
month in which the Effective Time occurs, and except that Gaylord shall
be responsible for any overdue amount under such film or programming
license agreements. Any such prorations shall be based upon the due
date for payments pursuant to the film and program license agreements.
For the purpose of determining the due date for payments due under film
or programming license agreements which are silent as to the day of the
month on which payment is due, such agreements shall be deemed to
provide that the payment is due on the date payment is actually made
during the month of Closing.
(c) The items included in the current assets and current
liabilities referred to above shall be the same items included in the
line items "Current assets" and "Current liabilities" on the balance
sheet as of February 28, 1999 included in the Financial Statements and
such items shall be calculated in accordance with GAAP except that
accruals for taxes and, subject to subparagraph (b) above, all film and
programming license agreements shall be excluded.
(d) At least five days prior to the Closing Date, Gaylord
shall provide CBS with an estimated balance sheet as of the Effective
Time setting forth a good faith estimate of the pro rata adjustments of
current assets and current liabilities contemplated by Section 1.13(a)
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(and all information reasonably necessary to determine the accuracy of
such estimate) on the basis of the then most recently available
month-end financial statements of the Station. Any payment required to
be made by either party pursuant to such preliminary estimate shall be
made by the appropriate party at the Closing in accordance therewith,
absent manifest error. CBS shall be required to pay the amount of any
current assets prorated to Gaylord for which CBS will receive a
corresponding benefit after the Effective Time and which do not relate
to the period prior to the Effective Time. Gaylord shall be required to
pay the amount of any current liabilities prorated to CBS for which
Gaylord received a corresponding benefit prior to the Effective Time
and which do not relate to the period after the Effective Time.
(e) After the Effective Time, the Station shall continue with
its rights and obligations (including barter obligations) pursuant to
the License Agreement between the Station and Columbia Tristar
Television Division for Donnie and Marie dated July 2, 1998 and the
License Agreements with Paramount Pictures for Real TV for the
1998-1999 season dated June 2, 1997 and for the 1999-2000 season dated
June 29, 1998 (the "Identified Agreements"); provided, however, that
Gaylord shall be responsible solely for any cash payments due under the
provisions of the Identified Agreements as in effect at the Effective
Time; provided, further, that upon the expiration of each of the
Identified Agreements, CBS shall promptly account for and pay to
Gaylord one-half of gross revenues net of agency commissions received
by CBS with respect to each Identified Agreement, it being understood
that as part of the aforesaid accounting, CBS shall promptly deliver
written documentation confirming the amount of gross revenues net of
agency commissions received with respect to each of the Identified
Agreements. Under no circumstances will the Station be required to
exhibit the programs represented by the Identified Agreements.
Within 60 days after the Closing Date, CBS shall prepare and deliver to
Gaylord the definitive final balance sheet setting forth final allocations and
related purchase price adjustments for the Station (the "Settlement Statement")
as of the Effective Time. During the 30-day period following Gaylord's receipt
of the Settlement Statement, Gaylord and its independent auditors shall be
permitted to review and make copies reasonably required of (i) the working
papers of CBS relating to the Settlement Statement and (ii) any supporting
schedules, analyses and other documentation relating to the Settlement
Statement. The Settlement Statement shall become final and binding upon the
parties on the thirtieth (30th) day following delivery thereof, unless Gaylord
gives written notice of its disagreement with the Settlement Statement ("Notice
of Disagreement") to CBS prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. If a
Notice of Disagreement is given to CBS in the period specified, then the
Settlement Statement (as revised in accordance with clause (I) or (II) below)
shall become final and binding upon the parties on the earlier of (I) the date
CBS and Gaylord resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement or (II) the date any disputed
matters are finally resolved in writing by the Accounting Firm (as defined
below). Within 10 business days after the Settlement Statement becomes final and
binding upon the parties, payment of the difference must be made via wire
transfer in immediately available funds, together with interest thereon at the
prime rate (as reported by the Wall Street Journal or, if not reported thereby,
by another authoritative source) in effect as of the Effective Time, calculated
on the basis of the actual number of days elapsed over 365, from the Effective
Time to the date of actual payment, compounded annually.
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During the 30-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph, CBS and Gaylord shall
seek in good faith to resolve in writing any differences that they may have with
respect to the matters specified in the Notice of Disagreement. During such
period, CBS and its independent auditors shall be permitted to review and make
copies reasonably required of (i) the working papers of Gaylord relating to the
Notice of Disagreement and (ii) any supporting schedules, analyses and
documentation relating to the Notice of Disagreement. If, at the end of such
30-day period, CBS and Gaylord have not so resolved such differences, CBS and
Gaylord shall submit to an independent accounting firm (the "Accounting Firm")
for review and resolution any and all matters which remain in dispute and which
were properly included in the Notice of Disagreement. The Accounting Firm shall
be a mutually acceptable internationally recognized independent public
accounting firm agreed upon by Gaylord and CBS in writing, which Accounting Firm
shall not have been the auditing firm representing CBS or Gaylord during the
last two years. If Gaylord and CBS do not agree on the selection of an
Accounting Firm within sixty (60) days of the Notice of Disagreement, then the
Washington, D.C. office of Ernst & Young shall be the Accounting Firm. Within
sixty (60) days after selection of the Accounting Firm, Gaylord and CBS shall
submit their respective positions to the Accounting Firm, in writing, together
with any other materials relied upon in support of their respective positions.
CBS and Gaylord shall use reasonable efforts to cause the Accounting Firm to
render a decision resolving the matters in dispute within 30 days following the
submission of such materials to the Accounting Firm. CBS and Gaylord agree that
judgment may be entered upon the determination of the Accounting Firm in any
court having jurisdiction over the party against which such determination is to
be enforced. Except as specified in the following sentence, the cost of any
arbitration (including the fees and expenses of the Accounting Firm) pursuant to
this Section 1.13 shall be borne by CBS and Gaylord in inverse proportion as
they may prevail on each matter resolved by the Accounting Firm, which
proportionate allocations shall also be determined by the Accounting Firm at the
time the determination of the Accounting Firm is rendered on the merits of the
matters submitted. The fees and expenses (if any) of CBS's independent auditors
and attorneys incurred in connection with the review of any Notice of
Disagreement shall be borne by CBS, and the fees and expenses (if any) of
Gaylord's independent auditors and attorneys incurred in connection with their
review of the Settlement Statement shall be borne by Gaylord.
Any payments made pursuant to this Section 1.13 shall (i) in the case
of a payment to be made to Gaylord, be treated as being made immediately before
the Effective Time by the Limited Partnership to GCI or GTC, as the case may be,
and then to Gaylord, and (ii) in the case of a payment to be made by Gaylord, be
treated as being made immediately before the Effective Time as a capital
contribution by Gaylord to GCI or GTC, as the case may be, and then by such
entity to the Limited Partnership. None of Gaylord or any of its subsidiaries,
or CBS or any of its subsidiaries, shall take any position inconsistent with the
treatment described in the immediately preceding sentence before any Tax
Authority except to the extent that a Final Determination causes any such
payment not to be so treated.
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SECTION 2. REPRESENTATIONS AND WARRANTIES OF GAYLORD
Gaylord makes the following representations and warranties to CBS as of
the date hereof and, subject to the following sentence, as of the Closing Date.
The representations and warranties of Gaylord in this Agreement that are
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the Closing
Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date).
SECTION 2.1. ORGANIZATION; QUALIFICATION; POWER
The Limited Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Texas. The
Limited Partnership has full power and authority to own or lease and to operate
the Station and its assets and to carry on its business as now conducted. GCI is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. Gaylord is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. GTC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of GCI and GTC has full power and authority to
own its respective partnership interest in the Limited Partnership. Each of the
Limited Partnership, GTC, Gaylord and GCI is duly qualified to do business as a
foreign entity and in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified would not reasonably
be expected to have a Material Adverse Effect on GTC, GCI and the Limited
Partnership, taken as a whole, or impair the ability of Gaylord, the Gaylord
Subsidiaries or the Limited Partnership to consummate the transactions
contemplated by, or to satisfy their obligations under, the Transaction
Agreements, or delay in any material respect or prevent the consummation of any
of the transactions contemplated by the Transaction Agreements (a "Gaylord
Material Adverse Effect"). Gaylord has delivered to CBS true and complete copies
of (i) the charter document and by-laws of each of GTC and GCI and (ii) the
Certificate of Limited Partnership and Limited Partnership Agreement of the
Limited Partnership (collectively, the "Organizational Documents"), in each case
as amended through the date of this Agreement.
SECTION 2.2. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS
(a) Each of Gaylord, GCI, GTC and the Limited Partnership has
the power and authority to execute, deliver and perform this Agreement
and all of the other agreements and instruments to which it is, or is
specified to be, a party and which are to be executed and delivered
pursuant hereto (collectively, together with this Agreement, the
"Transaction Agreements"), to consummate the transactions contemplated
thereby and to comply with the terms, conditions and provisions
thereof.
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(b) The execution, delivery and performance of the Transaction
Agreements and the consummation of the transactions contemplated
thereby have been duly authorized and approved by all necessary
corporate and partnership action on the part of Gaylord, GCI, GTC and
the Limited Partnership. Each of Gaylord, GTC, GCI and the Limited
Partnership has duly executed and delivered this Agreement and, prior
to the Closing, will have duly executed and delivered the other
Transaction Agreements to which it is, or is specified to be, a party,
and this Agreement constitutes, and each of the other Transaction
Agreements to which it is, or is specified to be, a party will upon
execution and delivery thereof constitute, its legal, valid and binding
agreement enforceable against it in accordance with its respective
terms, except in each case as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization or other similar
laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Except as set forth in Schedule 2.2, neither the execution
and delivery by Gaylord, GTC, GCI or the Limited Partnership of any of
the Transaction Agreements, the consummation of any of the transactions
contemplated thereby nor compliance by Gaylord, GTC, GCI and the
Limited Partnership with or fulfillment by any of them of the terms,
conditions and provisions thereof will conflict with, or result in a
violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or loss of a
material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlement of any person under, or result in the
creation of any Encumbrance upon any of the properties or assets of the
Gaylord Subsidiaries or the Limited Partnership under, (i) any of the
Organizational Documents or the charter or by-laws of Gaylord, (ii) any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract, agreement, obligation, understanding,
commitment or other legally binding arrangement or of any license,
franchise, permit, concession, certificate of authority, order,
approval, application or registration from, of or with a Governmental
Entity (as defined below) (a "Permit") to which Gaylord or any of its
subsidiaries, including GTC and GCI, or the Limited Partnership, is a
party or by which any of their respective properties or assets is or
may be bound or (iii) subject to the governmental filings and other
matters referred to in Section 2.2(d), any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Gaylord or
any of its subsidiaries, including GTC and GCI, or the Limited
Partnership or their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such items that individually or
in the aggregate have not had and would not have a Gaylord Material
Adverse Effect.
(d) Except for (i) consents, approvals, licenses, permits,
orders, authorizations, registrations, declarations, filings or
applications as may be required under, and other applicable
requirements of, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act of 1933 (the "Securities Act"), the
Improvements Act and any foreign competition laws, (ii) filings under
state securities or "blue sky" laws, (iii) filings with the NYSE, (iv)
approvals of and filings with the Federal Communications Commission or
any successor entity (the "FCC") under the Communications Act, (v) the
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filing of the GCI Articles of Merger with the Secretary of State of the
State of Texas, the filing of the GCI Certificate of Merger and the GTC
Certificate of Merger with the Secretary of State of the State of
Delaware and the filing of appropriate documents with the relevant
authorities of other jurisdictions in which GCI, GTC or the Limited
Partnership are qualified to do business and (vi) other consents,
approvals, orders, authorizations, registrations, declarations, filings
and applications expressly provided for in the Transaction Agreements,
no consent, approval, license, permit, order or authorization of, or
registration, declaration, filing or application with, any federal,
state, local or foreign government, or any court, administrative or
regulatory agency or commission or other governmental authority or
agency, domestic or foreign (a "Governmental Entity"), is required to
be obtained or made by or with respect to Gaylord or any of its
subsidiaries, including GCI and GTC, or the Limited Partnership, in
connection with the execution, delivery or performance by Gaylord, GCI,
GTC and the Limited Partnership of each Transaction Agreement to which
any of them is, or is specified to be, a party or the consummation by
Gaylord, GCI, GTC and the Limited Partnership of the transactions
contemplated thereby (except where the failure to obtain such consents,
approvals, licenses, permits, orders or authorizations, or to make such
registrations, declarations, filings or applications, would not,
individually or in the aggregate, have a Gaylord Material Adverse
Effect).
SECTION 2.3. CAPITALIZATION; OWNERSHIP
The authorized capital stock of GCI consists of 1,000 shares of GCI
Stock, all of which shares are issued and outstanding, and the authorized
capital stock of GTC consists of 100,000 shares of GTC Stock, of which 100
shares are issued and outstanding. All of the Gaylord Subsidiary Stock is owned
beneficially and of record by Gaylord, free and clear of all Encumbrances, and
the Gaylord Subsidiary Stock has been duly authorized and validly issued and is
fully paid and nonassessable and not subject to preemptive rights. GCI owns the
entire general partnership interest in the Limited Partnership, free and clear
of all Encumbrances, and such interest is its sole asset. GTC owns the entire
limited partnership interest in the Limited Partnership, free and clear of all
Encumbrances, and such interest is its sole asset. There are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which Gaylord, GTC, GCI or the
Limited Partnership is a party or by which any of them is bound obligating
Gaylord, GCI, GTC or the Limited Partnership to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
voting securities of GTC or GCI or additional limited or general partnership
interests in the Limited Partnership or obligating Gaylord, GTC, GCI or the
Limited Partnership to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding contractual obligations of GTC, GCI or the Limited
Partnership to repurchase, redeem or otherwise acquire any interest in GTC, GCI
or the Limited Partnership. There are no outstanding contractual obligations of
Gaylord, GTC or GCI to vote or to dispose of any of their respective interests
in GTC, GCI or the Limited Partnership.
SECTION 2.4. FINANCIAL STATEMENTS
Schedule 2.4 contains (a) the unaudited balance sheet (the "Balance
Sheet") of GTC, GCI and the Limited Partnership as of February 28, 1999 (the
"Financial Statement Date"), (b) the related
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unaudited statements of income for the two months then ended, and (c) the
unaudited balance sheets and related unaudited statements of income as of and
for the years ended December 31, 1996, 1997 and 1998 (collectively, the
"Financial Statements"). Except as set forth in Schedule 2.4, the Financial
Statements have been prepared in accordance with GAAP consistently applied, are
complete and correct in all material respects, accurately reflect the books,
records and accounts of GTC, GCI and the Limited Partnership (which books and
records are accurate and complete in all material respects), and fairly present
in all material respects the financial position of GTC, GCI and the Limited
Partnership as of their respective dates and the results of their operations for
the periods then ended, subject to the absence of footnotes. None of GTC, GCI or
the Limited Partnership has any material liabilities or obligations of any
nature (whether absolute, accrued, contingent, unasserted or otherwise) except
liabilities or obligations (a) which are accrued or reserved against in the
Balance Sheet, (b) for Taxes with respect to current operations, or (c) which
were incurred after the Financial Statement Date in the ordinary course of
business and not in violation of this Agreement.
SECTION 2.5. ABSENCE OF MATERIAL ADVERSE EFFECT
Except as disclosed in Schedule 2.5, since February 28, 1999, each of
GTC, GCI and the Limited Partnership has conducted its business only in the
ordinary course consistent with past practice, and there has not been any
change, effect, event or occurrence that, individually or in the aggregate, has
had or would reasonably be expected to have a Gaylord Material Adverse Effect.
SECTION 2.6. TAXES
Except as set forth in Schedule 2.6:
(a) As used in this Agreement, (i) "Taxes" shall include all
federal, state, local or foreign income, property, sales, excise and
other taxes or similar governmental charges, including any interest,
penalties, or additions with respect thereto; (ii) "Tax Returns" shall
mean all returns, reports, declarations, information, estimates,
schedules, filings or documents (including any related or supporting
information) filed or required by any tax authority to be filed with
respect to taxes, including, without limitation, all information
returns, claims for refund, amended returns, declarations of estimated
tax, and requests for extensions of time to file any item described in
this paragraph; and (iii) "Treasury Regulations" refer to the Treasury
Department regulations promulgated under the Code;
(b) No Encumbrances for Taxes exist with respect to any of the
assets or properties of any of GTC, GCI or the Limited Partnership,
except for statutory Encumbrances for Taxes not yet due or payable;
(c) All federal income Tax Returns and all other material
federal, state and local, domestic and foreign Tax Returns required to
be filed by or on behalf of any of GTC, GCI or the Limited Partnership,
or any consolidated, combined, affiliated or unitary group of which any
of GTC, GCI or the Limited Partnership is or has ever been a member,
have been timely filed or requests for extensions have been timely
filed and any such extensions have been granted and have not expired;
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(d) Each such Tax Return was complete and correct in all
material respects;
(e) All material Taxes with respect to taxable periods covered
by such Tax Returns and all other material Taxes for which any of GTC,
GCI or the Limited Partnership is liable (together, the "Relevant
Taxes") have been paid in full, or reserves therefor have been
established in accordance with GAAP on the Balance Sheet;
(f) All U.S. federal income Tax Returns filed by or on behalf
of each of GTC, GCI or the Limited Partnership have been examined by
and settled with the Internal Revenue Service, or the statute of
limitations with respect to the relevant tax liability has expired, for
all taxable periods through and including 1995;
(g) All relevant Taxes due with respect to any completed and
settled audit, examination or deficiency litigation with any tax
authority have been paid in full;
(h) There is no audit, examination, deficiency, or refund
litigation pending with respect to any relevant Taxes and no requests
pending for waivers of the time to assess any relevant Taxes and no tax
authority has given written notice of the commencement of any audit,
examination or deficiency litigation, with respect to any relevant
Taxes; and
(i) None of GTC, GCI or the Limited Partnership is bound by
any written agreement or arrangement with respect to Taxes.
SECTION 2.7. PERMITS
Except as set forth in Schedule 2.7, each of GTC, GCI and the Limited
Partnership legally owns, holds or possesses all FCC Authorizations and all
other material Permits which are reasonably necessary to entitle it to own or
lease, operate and use the Station and its assets and to carry on and conduct
the Station's business as currently conducted. Schedule 2.7 sets forth a list
and brief description of each such FCC Authorization and other material Permit
held by each of GTC, GCI and the Limited Partnership. Each of GTC, GCI and the
Limited Partnership has fulfilled and performed in all material respects its
obligations under each such FCC Authorization and other material Permit, and no
event has occurred or condition or state of facts exists which constitutes or,
after notice or lapse of time or both, would constitute grounds for revocation
or termination of any such FCC Authorization or other material Permit, or the
imposition of any materially adverse restriction or limitation on the operation
of the Station. Except as set forth on Schedule 2.7, no application, action or
proceeding is pending for the renewal or modification of any of such FCC
Authorizations or other material Permits, and no notice of cancellation, of
default or of any dispute concerning any such FCC Authorization or other
material Permit, or of any event, condition or state of facts described in the
preceding sentence, has been received by any of Gaylord, GTC, GCI or the Limited
Partnership. Except as set forth on Schedule 2.7, each of such FCC
Authorizations and other material Permits is valid, subsisting and in full force
and effect. The Station's operations are limited only by the conditions and
restrictions specified in the FCC Authorizations or other material Permits and
by the FCC's and the FAA's rules and policies and by the Communications Act,
and, except for matters affecting the television broadcasting industry
generally, are not subject to any
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condition or restriction which would limit in any material respect the operation
of the Station as currently conducted. Subject to the receipt of the FCC Consent
and any other governmental consents expressly required by the Transaction
Agreements, to the best knowledge of Gaylord, GTC, GCI and the Limited
Partnership, upon consummation of the Mergers, such FCC Authorizations and other
material Permits will remain vested in the Limited Partnership immediately after
the Effective Time and, at such time, will be in full force and effect, in each
case without (a) the occurrence of any material breach, default or forfeiture of
rights thereunder or (b) the consent, approval, or act of, or the making of any
filing with, any other Governmental Entity or other party. Except as set forth
on Schedule 2.7, the Limited Partnership has operated the Station in all
material respects in accordance with such FCC Authorizations and other material
Permits and in compliance in all material respects with the Communications Act
and all other laws and regulations, federal, state, local and foreign,
applicable to the Station. Except as set forth on Schedule 2.7, none of the
Limited Partnership, Gaylord, GCI nor GTC has received any notice of any
violations of such FCC Authorizations, the Communications Act or any other
applicable laws and regulations. Except as set forth on Schedule 2.7, there is
no action by or before the FCC currently pending or, to the best knowledge of
Gaylord, GTC, GCI and the Limited Partnership, threatened to revoke, cancel,
rescind, suspend, modify or refuse to renew in the ordinary course any of the
FCC Authorizations. Except as set forth on Schedule 2.7, to the best knowledge
of Gaylord, GTC, GCI and the Limited Partnership, there is no reasonable basis
for the initiation or issuance by the FCC of any investigation, proceeding or
notice of material violation with respect to the Station.
SECTION 2.8. REAL PROPERTY
Schedule 2.8 contains (i) a brief description of all real property and
interests in real property owned (the "Owned Property") by the Limited
Partnership (showing the record title holder, legal description, location,
improvements and any indebtedness secured by a mortgage or other Encumbrance
thereon) and (ii) with respect to real property or interests in real property
leased (the "Leased Property") by the Limited Partnership, a list and brief
description of each lease (a "Lease") or similar agreement (showing the rental,
expiration date, renewal, the uses being made thereof and the location of the
real property covered by such lease or other agreement). The Limited Partnership
has good and sufficient, valid and marketable title to the Owned Property and
good and valid leasehold title to the Leased Property, in each case free and
clear of all Encumbrances, except (A) such Encumbrances as are set forth in
Schedule 2.8, (B) Encumbrances described in clauses (3), (4) and (5) of Section
2.9(c), (C) leases, subleases and similar agreements set forth in Schedule 2.16,
(D) easements, covenants, rights-of-way and other similar restrictions of record
and (E) (i) zoning, building and other similar restrictions, (ii) Encumbrances
that have been placed by any developer, landlord or other third party on
property over which the Limited Partnership has easement rights or on any Leased
Property and subordination or similar agreements relating thereto and (iii)
unrecorded easements, covenants, rights-of-way and other similar restrictions.
None of the items set forth in clauses (D) and (E) above, individually or in the
aggregate, materially impairs or could reasonably be expected materially to
impair, the continued use and operation of the real property to which they
relate in the business of the Station as presently conducted. There are (A) no
outstanding contracts for any improvements to the Owned Property which have not
been fully paid, (B) no expenses of any kind (including brokerage and leasing
commissions) pertaining to the Owned Property which have not been fully paid and
(C) no outstanding contracts for the sale of any of the Owned Property. All
Leases are in full force and effect and grant in all respects the leasehold
estates or rights of
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occupancy or use they purport to grant. Except as provided in Schedule 2.8, the
Limited Partnership has not (A) assigned or otherwise transferred any Lease or
(B) sublet all or any portion of any Leased Property. There are no existing
defaults on the part of the Limited Partnership or, to the best of Gaylord's
knowledge, on the part of any other party thereto, in any material respect under
any Lease and no event has occurred that, with notice or the lapse of time, or
both, would constitute a default on the part of the Limited Partnership or, to
the best of Gaylord's knowledge, on the part of any other party thereto, in any
material respect under any of the Leases. The consummation of the Mergers and
the transactions contemplated hereby will not result in the occurrence of a
default under any of the Leases subject to the receipt of any necessary consents
(whether pursuant to a "change in control" or assignment provision in the Leases
or otherwise). The Parkerville Park Lease Agreement set forth on Schedule 2.16
with respect to a portion of the Owned Property does not materially interfere
with the business and operations of the Station as currently conducted.
SECTION 2.9. ASSETS OTHER THAN REAL PROPERTY
(a) The Limited Partnership has good and valid title to all
assets reflected on the Balance Sheets or thereafter acquired, except
for those sold or otherwise disposed of for fair value since the
Financial Statement Date in the ordinary course of business consistent
with past practice and not in violation of this Agreement, in each case
free and clear of all Encumbrances except Permitted Encumbrances (as
defined below). Schedule 2.9(a) sets forth a true and complete list of
all assets properly categorized as plant, property and equipment
reflected on the Balance Sheet and acquired after December 31, 1993,
and a summary of assets acquired prior to that date by general
category. All the material tangible personal property owned by the
Limited Partnership is and has been maintained in all material respects
in accordance with the past practice of the Limited Partnership and
generally accepted industry practice, is in good working order (normal
wear and tear excepted) and is suitable in all material respects for
the purposes of its intended use.
(b) All personal property leased by the Limited Partnership is
in all material respects in the condition required of such property by
the terms of the lease applicable thereto during the term of the lease
and upon the expiration thereof.
(c) "Permitted Encumbrances" shall mean those Encumbrances (1)
referred to in Schedule 2.9(c), (2) for Taxes not yet due or payable or
being contested in good faith, (3) that constitute easements,
covenants, rights-of-way and other similar matters of record, (4) that
constitute mechanics', carriers', workers' compensation or like liens
incurred in the ordinary course of business consistent with past
practice, (5) that constitute other imperfections of title or
encumbrances that, individually or in the aggregate, do not materially
impair, and could not reasonably be expected materially to impair, the
continued use and operation of the assets to which they relate in the
business of the Station as presently conducted or (6) incurred, or
deposits made, in the ordinary course of business consistent with past
practice in connection with workers' compensation, unemployment
insurance and social security, retirement and other similar legislation
relating to amounts not yet due or payable.
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(d) This Section 2.9 does not relate to the Owned Property or
the Leased Property, such items being the subject of Section 2.8, or to
Intellectual Property, such items being the subject of Section 2.15.
SECTION 2.10. ASSETS AND LIABILITIES OF THE LIMITED PARTNERSHIP
The assets and liabilities of the Limited Partnership, GTC and GCI,
including those set forth on the Balance Sheet, consist only of assets and
liabilities solely related to the Station and its business as currently
conducted. Except as set forth on Schedule 2.10, and except for the transfers
contemplated by Section 4.3(b), the assets to be held by the Limited
Partnership, GCI and GTC as of the Effective Time will constitute the assets
necessary to operate the Station and its business as currently conducted.
SECTION 2.11. EMPLOYEES
None of GTC, GCI or the Limited Partnership has any employees other
than the employees listed on Schedule 2.11. Schedule 2.11 contains, as of
February 28, 1999: (i) a list of all Station Employees as defined below, and
(ii) the rate of compensation of such Station Employees excluding commissions.
Except as described in Schedule 2.16, the Limited Partnership has no written
contracts of employment with any Station Employee. Except as set forth in
Schedule 2.11, no Station Employee (i) shall be entitled to receive any
termination, severance or deferred compensation payment or benefits as a result
of the transactions contemplated by this Agreement, (ii) has any entitlement on
or following the Effective Time under any individual agreement, or under any
plan, program, policy or other arrangement, to (x) severance pay or benefits, or
(y) bonus or incentive pay other than commission-based incentive pay, or (iii)
is entitled to any such payment in the event any such Station Employee ceases to
be employed at the Station after the Closing Date other than as a result of
actual termination of such employment by the Station. "Station Employees" shall
mean all individuals employed by GTC, GCI, the Limited Partnership or the
Station.
SECTION 2.12. EMPLOYMENT AND SIMILAR AGREEMENTS
Except as disclosed in Schedule 2.16, there exist no consulting,
employment, severance or termination agreements currently in effect between the
Limited Partnership, GTC or GCI, and any current Station Employee or former
employee, officer or director of the Limited Partnership, GTC or GCI.
SECTION 2.13. ERISA
(a) Each "employee welfare benefit plan" and "pension benefit
plan" as defined in Section 3 of the Employment Retirement and Income
Security Act of 1974, as amended, currently available to Station
Employees is listed on Schedule 2.13, and, except as set forth on
Schedule 2.13, copies of summary plan descriptions for each plan listed
on Schedule 2.13 have been furnished to CBS. Such summary plan
descriptions are accurate in all material respects. Each benefit plan
currently available to Station Employees, including those listed on
Schedule 2.13, is herein referred to as a "Benefit Plan".
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(b) There are no material undisclosed liabilities in respect
of the Benefit Plans with respect to which GTC, GCI or the Limited
Partnership could be liable.
SECTION 2.14. LABOR MATTERS
Except as disclosed on Schedule 2.14, as of the date hereof, none of
the Limited Partnership, GCI or GTC is the subject of any suit, action or
proceeding which is pending or, to the best of Gaylord's knowledge, threatened,
asserting that GCI, GTC or the Limited Partnership has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or applicable
state statutes) or seeking to compel GCI, GTC or the Limited Partnership to
bargain with any labor organization as to wages and conditions of employment. No
strike or other labor dispute involving GCI, GTC or the Limited Partnership is
pending or, to the knowledge of Gaylord, GCI, GTC or the Limited Partnership,
threatened, and, to the best of Gaylord's knowledge, there is no activity
involving any employees of the Limited Partnership seeking to certify a
collective bargaining unit or engaging in any other organizational activity.
None of GCI, GTC or the Limited Partnership is a party to, or bound by, any
collective bargaining agreement or other Contract with a labor union or labor
organization. GTC, GCI and the Limited Partnership have complied in all material
respects with all laws relating to wages, hours, collective bargaining and the
payment of social security and similar Taxes, and no person has, to the best of
Gaylord's knowledge, asserted that GCI, GTC or the Limited Partnership is liable
in any material amount for any arrears of wages or any Taxes or penalties for
failure to comply with any of the foregoing.
SECTION 2.15. INTELLECTUAL PROPERTY
As used herein, "Intellectual Property" means domestic and foreign
patents, patent applications, trademark and service mark applications,
registered trademarks, registered service marks, registered copyrights, and
unregistered material trademarks, service marks and trade names. Schedule 2.15
sets forth a list of all Intellectual Property which GTC, GCI or the Limited
Partnership owns, licenses or otherwise uses as of the date hereof.
(a) Except as set forth in Schedule 2.15, (i) all
Intellectual Property owned by the Limited Partnership has been duly
registered in, filed in or issued by the appropriate Governmental
Entity where such registration, filing or issuance is in the reasonable
business judgment of the Limited Partnership necessary for the business
of the Station as currently conducted or (ii) the Limited Partnership
owns, licenses or otherwise has the right to use all Intellectual
Property and material trade secrets, inventions, know-how, formulae,
processes, procedures and computer software ("Technology") used in
connection with the Station as its business is currently conducted. To
the best of Gaylord's knowledge, no Technology currently used in
connection with the Station has been used, divulged or appropriated for
the benefit of any person other than the Limited Partnership.
(b) To the best of Gaylord's knowledge no other person has
violated, infringed upon, misused, misappropriated any Intellectual
Property or Technology of the Limited Partnership. Except as set forth
in Schedule 2.15, none of GTC, GCI or the Limited Partnership has made
any pending claim in writing of a violation, infringement, misuse or
misappropriation by others of rights of GTC, GCI or the Limited
Partnership to or in
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connection with any Intellectual Property or Technology currently used
in connection with the Station and its business as currently conducted.
To the best of Gaylord's knowledge, there are no interferences or other
contested inter partes proceedings, either pending or threatened, in
any copyright office or patent and trademark office or by any other
Governmental Entity relating to any pending application for any
Intellectual Property currently used in connection with the Station as
its business is currently conducted.
(c) To the best of Gaylord's knowledge, the Limited
Partnership has not violated, infringed upon, misused, misappropriated
or otherwise come into conflict with any Intellectual Property of any
other person. The Limited Partnership has not received any written
charge, complaint, claim, demand or notice alleging any violation,
infringement, misuse, misappropriation or other conflict of the type
listed in the prior sentence (including any written claim that the
Limited Partnership must license or refrain from using any Intellectual
Property or other proprietary information of any other person) which
has not been settled or otherwise fully resolved, nor is there any
action, pending or, to the best of Gaylord's knowledge, threatened
against the Limited Partnership claiming that the Limited Partnership
has, whether directly, contributorily or by inducement, interfered
with, infringed, or misappropriated or come into conflict with any
other Intellectual Property.
SECTION 2.16. CONTRACTS
(a) Schedule 2.16 provides a true and complete listing of all
contracts as of the date hereof to which GCI, GTC or the Limited
Partnership is a party or by which GCI, GTC or the Limited Partnership
is bound, or with respect to the Station, GCI, GTC or the Limited
Partnership to which Gaylord or any of its subsidiaries (other than GCI
or GTC) is a party, involving:
(i) the purchase, sale or lease of real property;
(ii) the purchase, rental or use of any films,
recordings, television programming or programming services
which is not terminable by the Limited Partnership without
penalty on thirty (30) days' notice or less or which provides
for performance over a period of more than ninety (90) days or
which involves the payment after the date hereof of more than
$25,000;
(iii) the purchase of merchandise, supplies or other
tangible personal property or the receipt of services which is
not terminable by the Limited Partnership without penalty on
thirty (30) days' notice or less or which provides for
performance over a period of more than ninety (90) days or
which involves the payment after the date hereof of more than
$25,000;
(iv) the lease, sublease or similar agreement with
any person under which any of GCI, GTC or the Limited
Partnership is a lessor or sublessor of, or makes available
for use to any person, (A) any real property of the Limited
Partnership or (B) any portion of the premises otherwise
occupied by the Limited Partnership;
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(v) the lease, sublease or similar agreement with any
person under which (A) the Limited Partnership is a lessee of,
or holds or uses, any machinery, equipment, vehicle or other
tangible personal property owned by any person or (B) the
Limited Partnership is a lessor or sublessor of, or makes
available for use by any person, any tangible personal
property owned or leased by the Limited Partnership, in any
such case which provide for performance over a period of more
than ninety (90) days, which involve the payment or receipt
after the date hereof of more than $25,000 or which require
the payment of any penalties upon assignment or termination.
(vi) any contract under which GTC, GCI or the Limited
Partnership has borrowed any money from, or issued any note,
bond, debenture or other evidence of indebtedness to, any
person (other than the Limited Partnership) or any other note,
bond, debenture or other evidence of indebtedness issued to
any person;
(vii) any contract under which GTC, GCI or the
Limited Partnership has, directly or indirectly, made any
loan, advance, extension of credit or capital contribution to,
or investment in, any person (other than among one another and
other than to officers and employees of the Limited
Partnership for travel, business or relocation expenses in the
ordinary course of business);
(viii) any mortgage, pledge, security agreement, deed
of trust or other instrument granting an Encumbrance upon any
property of GTC, GCI or the Limited Partnership;
(ix) any contract under which GTC, GCI or the Limited
Partnership is or may become obligated to indemnify (except
where such obligation to indemnify is incidental to the
purpose and the other provisions of such contract) any other
person or otherwise to assume any material liability with
respect to liabilities relating to any current or former
business of the Limited Partnership or any predecessor person;
(x) the sale of broadcast time for advertising or
other purposes for cash which was not made in the ordinary
course of business consistent with past practice;
(xi) any guarantee of the obligations of any person
by GTC, GCI or the Limited Partnership;
(xii) any transaction other than in the ordinary
course of business which is not terminable by the Limited
Partnership without penalty on thirty (30) days' notice or
less or which provides for payments over a period of more than
ninety (90) days or which involves, together with any other
such transactions, the payment after the date hereof of more
than $25,000;
(xiii) any agreement relating to a joint venture or
similar arrangement with another person or entity with respect
to all or any part of the operations of the Station or any of
its assets;
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(xiv) any sales agency, advertising representative or
advertising or public relations contract which is not
terminable by the Limited Partnership without penalty on
thirty (30) days' notice or less or which provides for
payments over a period of more than ninety (90) days or which
involves the payment after the date hereof of more than
$25,000;
(xv) any barter agreement or other agreement with
advertisers for broadcasting or commercial time on the Station
in exchange for goods or services;
(xvi) any employee collective bargaining agreement,
employment agreement (other than employment agreements
terminable by the Limited Partnership without penalty on
notice of thirty (30) days or less under which the only
obligation of the Limited Partnership is to make current wage
or salary payments and provide current fringe benefits),
consulting advisory or service agreement, deferred
compensation agreement or covenant not to compete;
(xvii) any agreement with employees (other than
employment agreements disclosed in response to clause (xvi)
above or excluded therefrom), agents or attorneys-in-fact of
the Limited Partnership;
(xviii) any contract (other than this Agreement) with
(A) Gaylord or any of its Affiliates or (B) any officer,
director or employee of Gaylord, GCI, GTC, the Limited
Partnership or any other Affiliate of Gaylord (other than
employment agreements covered by clause (xvi) above); or
(xix) any other agreement, commitment, understanding
or instrument which Gaylord, GCI, GTC or the Limited
Partnership reasonably believes is material to the Station.
(b) Schedule 2.16 also contains a copy of the Station's
syndicated program and feature film "Inventory Report" as of February
28, 1999. Such report has been prepared in the normal course of the
Station's business in a manner consistent with prior reports, but it
has not been audited by or on behalf of the Limited Partnership. The
information contained in such report is, to the best of Gaylord's
knowledge, accurate in all material respects.
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SECTION 2.17. STATUS OF CONTRACTS
Gaylord has delivered to CBS true, complete and current copies of all
contracts listed on Schedule 2.16. To the best of Gaylord's knowledge, all of
the contracts listed on Schedule 2.16 are in full force and effect, and are
valid, binding and enforceable in accordance with their terms (subject in each
case to bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally). To the best of
Gaylord's knowledge, there is not under any such contract any default by any
party thereto or any event that, after notice or lapse of time, or both, could
constitute a default. None of Gaylord, GCI, GTC or the Limited Partnership has
received notice or been otherwise advised of the intention of any party to
terminate any of the contracts listed on Schedule 2.16. To the extent GCI, GTC
or the Limited Partnership leases space on any of its transmission towers
pursuant to a contract listed on Schedule 2.16, such leases, individually or in
the aggregate, do not and would not reasonably be expected materially to impair
the continued use and operation by the Station of any such towers in the
business of the Station as presently conducted.
SECTION 2.18. LITIGATION
Except as disclosed in Schedule 2.18, as of the date hereof, there is
no suit, action, proceeding or investigation pending or, to the best of
Gaylord's knowledge, threatened against Gaylord or any of its subsidiaries,
including GTC and GCI, or the Limited Partnership that, individually or in the
aggregate, would reasonably be expected to have a Gaylord Material Adverse
Effect, nor is there any judgment, order, decree, statute, law, ordinance, rule
or regulation of any Governmental Entity or arbitrator outstanding against
Gaylord, the Limited Partnership, GTC or GCI having, or which would reasonably
be expected to have, a Gaylord Material Adverse Effect.
SECTION 2.19. COMPLIANCE WITH APPLICABLE LAWS
Except as disclosed in Schedule 2.19, there has occurred no default
under any FCC Authorization or other material Permit possessed by GCI, GTC or
the Limited Partnership, except for defaults that, individually or in the
aggregate, would not reasonably be expected to have a Gaylord Material Adverse
Effect. Except as disclosed in Schedule 2.19, GTC, GCI and the Limited
Partnership are in compliance with all judgments, orders, decrees, statutes,
laws, ordinances, rules and regulations of any Governmental Entity applicable to
them, except for possible noncompliance which individually or in the aggregate
would not reasonably be expected to have a Gaylord Material Adverse Effect.
Nothing in this Section 2.19 shall relate to compliance with or Permits under
environmental, health and safety laws which is the subject of Section 2.20.
SECTION 2.20. ENVIRONMENTAL MATTERS
Except as set forth in Schedule 2.20, to the best of Gaylord's
knowledge:
(a) GTC, GCI and the Limited Partnership are in compliance
with all environmental, health and safety Requirements of Law
applicable to them;
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(b) neither the Limited Partnership nor any of its current or
former properties, assets or operation, is subject to any order from or
agreement with any Governmental Entity or private party respecting (i)
any environmental, health or safety Requirements of Law, (ii) any
Remedial Action or (iii) any Liabilities and Costs arising from the
Release or threatened Release of a Contaminant into the environment;
(c) there is not now, nor has there ever been:
(i) any Release of any Contaminant on, in, under or
from any assets or properties currently or formerly owned,
leased or operated by GTC, GCI or the Limited Partnership;
(ii) any underground storage tanks, aboveground
storage tanks or surface impoundments on or under any
properties owned or operated by GTC, GCI or the Limited
Partnership;
(iii) any asbestos containing material in any assets
currently owned, leased or operated by GTC, GCI or the Limited
Partnership; or
(iv) any polychlorinated biphenyls (PCBs) in any
assets owned or operated by GTC, GCI or the Limited
Partnership;
(d) none of Gaylord, GTC, GCI nor the Limited Partnership has
received any notice or claim to the effect that it is or may be liable
to any Governmental Entity or person as a result of the Release or
threatened Release of a Contaminant into the environment;
(e) none of GTC, GCI nor the Limited Partnership is the
subject of any investigation by any Governmental Entity evaluating
whether any Remedial Action is needed to respond to a Release or
threatened Release of a Contaminant into the environment nor, is any
such investigation threatened; and
(f) no facility to which any Contaminant arising from any of
the current or former properties, assets or operations of GTC, GCI or
the Limited Partnership has been taken for disposal is currently
subject to Remedial Action under any environmental, health or safety
Requirement of Law.
SECTION 2.21. FCC MATTERS
Except as set forth on Schedule 2.21, all material notices, reports,
forms, applications and other statements or disclosures required to be filed
with the FCC with respect to the Station have been filed and complied with in
all material respects and are complete, correct and current in all material
respects. The Limited Partnership has timely paid, or caused to be paid, to the
FCC all annual regulatory fees payable with respect to the FCC Authorizations.
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SECTION 2.22. NO FINDER
None of Gaylord, GTC, GCI or the Limited Partnership, nor any party
acting on behalf of any of them has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by any of the Transaction Agreements.
SECTION 2.23. INSURANCE
A copy of the Gaylord insurance manual has been made available to CBS,
it being understood that CBS shall be solely responsible for arranging insurance
coverage with respect to GTC, GCI and the Limited Partnership from and after the
Closing.
SECTION 2.24. YEAR 2000
Gaylord believes that it is using all reasonable efforts to assure that
all computer software used by the Station in its business as currently conducted
and other applicable technology used by the Station in its business as currently
conducted will be able to operate consistently after December 31, 1999 to
accurately process, provide and receive date data (including calculating,
comparing and sequencing) from, into and between the Twentieth and Twenty-first
centuries, including the years 1999 and 2000, and make leap-year calculations.
Gaylord, GTC, GCI and the Limited Partnership believe that they are using all
reasonable efforts to assure that the Year 2000 date change will not adversely
affect the systems and facilities that support the operation of the Station and
its business as currently conducted, except as could not reasonably be expected
to have a Material Adverse Effect on the Limited Partnership or the Station and
its business as currently conducted.
SECTION 2.25. TRANSACTIONS WITH AFFILIATES
None of the contracts set forth in Schedule 2.16 between Gaylord or any
of its Affiliates (excluding GTC and GCI), on the one hand, and GTC, GCI, the
Limited Partnership or any of their respective Affiliates, on the other hand,
will continue in effect subsequent to the Closing.
SECTION 2.26. CABLE MATTERS
(a) To the best of Gaylord's knowledge, Schedule 2.26 sets
forth as of the date hereof a list of all Market Cable Systems which
carry the Station's signal and/or to which the Station has provided a
must-carry notice or retransmission consent notice in accordance with
the provisions of the Cable Television Consumer Protection and
Competition Act of 1992, as amended, and the FCC Regulations
(collectively, the "Cable Act Requirements"), other than those which
have fewer than 2,000 subscribers.
(b) Except as set forth on Schedule 2.26, there are no:
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(i) written must-carry or retransmission consent
notices referred to in clause (a) above which were not
delivered to the Market Cable System in question on or before
the date required under the Cable Act Requirements for such
notices to be effective for the three-year period ending in
1999;
(ii) Market Cable Systems which are carrying the
Station's signal and which have given written notice of such
Market Cable System's intention to delete the Station from
carriage or to change the Station's channel position on such
cable system, other than pursuant to any agreement described
in clause (c) above;
(iii) written notices received by Gaylord from any
Market Cable System alleging that the Station does not deliver
an adequate signal level, as defined in 47 C.F.R.
ss.76.55(c)(3), to such Market Cable System's principal
headend (other than any such notice as to which such failure
has been remedied or been determined not to exist);
(iv) pending petitions filed by Gaylord for special
relief to include any additional community or area as part of
the Station's television market, as defined in 47 C.F.R. ss.
76.55(e); and
(v) pending petitions served on Gaylord for special
relief requesting the deletion of any community or area from
the Station's television market.
SECTION 2.27. DIGITAL TELEVISION
The Station has been assigned a channel (Channel 19) by the FCC for the
provision of digital television ("DTV") service. The FCC Authorizations listed
in Schedule 2.7 include a construction permit and all other authorizations
necessary to permit the construction of a DTV station on such channel (the "DTV
Facility"). Construction of the DTV Facility will be completed, and operation of
the DTV Facility commenced, on or before May 1, 1999, the deadline set forth in
47 C.F.R. ss.73.624(d). To the best of Gaylord's knowledge, there is no fact or
circumstance that will delay the conversion of the Station to DTV operation in
accordance with the May 1, 1999 deadline and the FCC's overall prescribed
timetable for such conversion, or that may cause the conversion of the Station
to DTV operation to have a Gaylord Material Adverse Effect.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CBS
CBS makes the following representations and warranties to Gaylord as of
the date hereof and, subject to the following sentence, as of the Closing Date.
The representations and warranties of CBS in this Agreement that are qualified
as to materiality shall be true and correct, and those not so qualified shall be
true and correct in all material respects, as of the Closing Date as though made
on the Closing Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case such representations and
warranties qualified as to materiality shall be true and correct, and those not
so qualified shall be true and correct in all material respects, on and as of
such earlier date).
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SECTION 3.1. ORGANIZATION; QUALIFICATION; POWER
Each of CBS and the CBS Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of CBS and the CBS Subsidiaries is duly qualified to do business as a
foreign entity and in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect on CBS and its subsidiaries, taken
as a whole, or impair the ability of CBS and the CBS Subsidiaries to consummate
the transactions contemplated by, or to satisfy their obligations under, the
Transaction Agreements, or delay in any material respect or prevent the
consummation of any of the transactions contemplated by the Transaction
Agreements. Each of CBS and the CBS Subsidiaries has the requisite corporate
power and authority to carry on its business as now conducted. CBS has delivered
to Gaylord true and complete copies of the certificates of incorporation and
by-laws of CBS and the CBS Subsidiaries, in each case as amended through the
date of this Agreement.
SECTION 3.2. CBS COMMON STOCK TO BE ISSUED IN THIS TRANSACTION
The issuance of the CBS Common Stock to Gaylord pursuant to this
Agreement has been duly authorized by all necessary corporate action on the part
of CBS. When issued and delivered to Gaylord pursuant to this Agreement, the CBS
Common Stock issued pursuant to this Agreement shall be duly authorized, validly
issued, fully paid, non-assessable and not subject to preemptive rights.
SECTION 3.3. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS
(a) Each of CBS and the CBS Subsidiaries has the requisite
corporate power and authority to execute, deliver and perform each
Transaction Agreement to which it is, or is specified to be, a party
and to consummate the transactions contemplated thereby and to comply
with the terms, conditions and provisions thereof.
(b) The execution, delivery and performance by CBS and the CBS
Subsidiaries of each Transaction Agreement to which it is or will be a
party and the consummation by CBS and the CBS Subsidiaries of the
transactions contemplated thereby have been duly authorized and
approved by all necessary corporate action on the part of CBS and the
CBS Subsidiaries. Each of CBS and the CBS Subsidiaries has duly
executed and delivered this Agreement and, prior to the Closing, will
have duly executed and delivered the other Transaction Agreements to
which it is, or is specified to be, a party, and this Agreement
constitutes, and each of the Transaction Agreements to which it is, or
is specified to be, a party will upon execution and delivery thereof
constitute, its legal, valid and binding obligation, enforceable
against it in accordance with its respective terms, except in each case
as such enforceability may be limited by bankruptcy, moratorium,
insolvency, reorganization or other similar laws affecting or limiting
the enforcement of creditors' rights generally and except as such
enforceability is subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity
or at law).
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(c) Neither the execution and delivery by CBS and the CBS
Subsidiaries of any of the Transaction Agreements to which any of them
is, or is specified to be, a party, the consummation by CBS and the CBS
Subsidiaries of the transactions contemplated thereby nor compliance by
CBS and the CBS Subsidiaries with or fulfillment by any of them of the
terms, conditions and provisions thereof will conflict with, or result
in a violation or breach of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
amendment, cancellation or acceleration of any obligation or loss of a
material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or result in the
creation of any Encumbrance upon any of the properties or assets of CBS
or the CBS Subsidiaries under, (i) the certificates of incorporation or
by-laws of CBS or the CBS Subsidiaries, (ii) subject to the
governmental filings and other matters referred to in Section 3.3(d),
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract, agreement, obligation, understanding,
commitment or other legally binding arrangement or of any Permit
applicable to CBS or any subsidiary of CBS or their respective
properties or assets or (iii) subject to the governmental filings and
other matters referred to in Section 3.3(d), any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to CBS
or any subsidiary of CBS or their respective properties or assets,
other than, in the case of clause (ii) or (iii), any such items that,
individually or in the aggregate, would not have a Material Adverse
Effect on CBS and its subsidiaries taken as a whole, or impair the
ability of CBS and the CBS Subsidiaries to consummate the transactions
contemplated by, or to satisfy their obligations under, the Transaction
Agreements, or delay in any material respect or prevent the
consummation of any of the transactions contemplated by the Transaction
Agreements (a "CBS Material Adverse Effect").
Except for (i) consents, approvals, licenses, permits, orders,
authorizations, registrations, declarations, filings or applications as may be
required under, and other applicable requirements of, the Exchange Act, the
Securities Act, the Improvements Act and any foreign competition laws, (ii)
filings under state securities or "blue sky" laws, (iii) filings with the NYSE,
(iv) approvals of and filings with the FCC under the Communications Act, (v) the
filing of the GCI Articles of Merger with the Secretary of State of the State of
Texas, the filing of the GCI Certificate of Merger and the GTC Certificate of
Merger with the Secretary of State of the State of Delaware and the filing of
appropriate documents with the relevant authorities of other jurisdictions in
which the CBS Subsidiaries are qualified to do business and (vi) other consents,
approvals, orders, authorizations, registrations, declarations, filings and
applications expressly provided for in the Transaction Agreements, no consent,
approval, license, permit, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to CBS or any subsidiary of CBS in connection with the execution,
delivery or performance by CBS and the CBS Subsidiaries of each Transaction
Agreement to which any of them is, or is specified to be, a party or the
consummation by CBS and the CBS Subsidiaries of the transactions contemplated
thereby (except where the failure to obtain such consents, approvals, licenses,
permits, orders or authorizations, or to make such registrations, declarations
or filings, would not, individually or in the aggregate, have a CBS Material
Adverse Effect).
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SECTION 3.4. SEC DOCUMENTS; UNDISCLOSED LIABILITIES
CBS has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1, 1998 (the
"CBS SEC Documents"). As of their respective dates, the CBS SEC Documents
complied in all material respects with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such CBS SEC Documents, and none of the CBS
SEC Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Except to the extent that information contained
in any CBS SEC Document has been revised or superseded by a later filed CBS SEC
Document, none of the CBS SEC Documents contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of CBS included in the CBS SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of CBS and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the Filed CBS SEC Documents, and except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since the date of the most recent consolidated balance sheet included
in the Filed CBS SEC Documents, neither CBS nor any of its subsidiaries has or
will have any material liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be recognized or
disclosed on a consolidated balance sheet of CBS and its consolidated
subsidiaries or in the notes thereto.
SECTION 3.5. NO FINDER
Neither CBS, the CBS Subsidiaries nor any party acting on its or their
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by any
of the Transaction Agreements.
SECTION 3.6. STATUS OF CBS AND THE CBS SUBSIDIARIES
Subject to the grant of the Waiver, CBS and the CBS Subsidiaries are
legally and financially qualified under existing law, including the
Communications Act, to (i) purchase, own, operate and control the Station and
(ii) own, by means of acquisition of the GTC Stock and the GCI Stock, the
general and limited partnership interests of the Limited Partnership. Neither
CBS nor any of the CBS Subsidiaries has knowingly taken any action which would
reasonably be expected to cause the FCC or any other Governmental Entity to
institute proceedings against CBS or any of the CBS Subsidiaries with respect to
their respective legal qualifications to acquire the GTC Stock and the GCI Stock
or knowingly taken any other action which would reasonably be expected to result
in
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CBS or the CBS Subsidiaries being in noncompliance in any material respect with
the ownership requirements of the Communications Act (or of any other
Governmental Entity having jurisdiction) which would impair CBS's or the CBS
Subsidiaries' qualification to be the transferee of the FCC Authorizations.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as set forth in Schedule 3.7 or as disclosed in the CBS SEC
Documents filed and publicly available prior to the date of this Agreement (as
amended to the date of this Agreement, the "Filed CBS SEC Documents") or as
otherwise expressly contemplated by the Transaction Agreements, since the date
of the most recent audited financial statements included in the Filed CBS SEC
Documents, there has not been any event, change or development which
individually or in the aggregate has had or would reasonably be expected to have
a Material Adverse Effect on CBS and its subsidiaries taken as a whole or the
ability of CBS and the CBS Subsidiaries to consummate the transactions
contemplated by, or to satisfy their obligations under, the Transaction
Agreements.
SECTION 3.8. LITIGATION
Except as disclosed in the Filed CBS SEC Documents, as of the date
hereof, there is no suit, action, proceeding or investigation pending or, to the
best knowledge of CBS, threatened against CBS or any of its subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a CBS
Material Adverse Effect, nor is there, subject to the grant of the Waiver, any
judgment, order, decree, statute, law, ordinance, rule or regulation of any
Governmental Entity or arbitrator outstanding against CBS or any of its
subsidiaries having, or which would reasonably be expected to have, a CBS
Material Adverse Effect.
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAWS
CBS and its subsidiaries have in effect all material Permits reasonably
necessary for them to own, lease or operate their properties and assets and to
carry on their businesses as now conducted, and there has occurred no default
under any such material Permit, except for the lack of permits and defaults
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect on CBS and its subsidiaries taken as a whole. Except
as disclosed in the Filed CBS SEC Documents, CBS and its subsidiaries are in
compliance with all judgments, orders, decrees, statutes, laws, ordinances,
rules and regulations of any Governmental Entity applicable to them, except for
possible noncompliance which individually or in the aggregate would not
reasonably be expected to have a CBS Material Adverse Effect.
SECTION 3.10. INTERIM OPERATIONS OF THE CBS SUBSIDIARIES
The CBS Subsidiaries are and will be at the Effective Time, wholly
owned subsidiaries of CBS. The CBS Subsidiaries were formed solely for the
purpose of engaging in the transactions contemplated hereby and have and will at
the Effective Time have engaged in no other business other than incident to
their respective creation and this Agreement and the transactions contemplated
hereby.
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SECTION 3.11. TAXES
(a) All federal, state and local, domestic and foreign,
material Tax Returns required to be filed by or on behalf of any of CBS
or any of its subsidiaries, or any consolidated, combined, affiliated
or unitary group of which any of CBS or any of its subsidiaries is or
has ever been a member, have been timely filed or requests for
extensions have been timely filed and any such extensions have been
granted and have not expired;
(b) each such Tax Return was complete and correct in all
material respects; and
(c) all material Taxes with respect to taxable periods
covered by such Tax Returns and all other material Taxes for which any
of CBS or any of its subsidiaries are liable have been paid in full, or
reserves therefor have been established in accordance with GAAP on the
balance sheet contained in the Filed CBS SEC Documents.
SECTION 4. ACTIONS PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
SECTION 4.1. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES
Each of the parties hereto shall refrain from taking any action which
would render any representation or warranty in this Agreement that is qualified
as to materiality inaccurate as of, and as if made on, the Closing Date, or
which would render any representation or warranty that is not so qualified
inaccurate in any material respect as of, and as if made on, the Closing Date.
Each party shall promptly notify the other of any action, suit or proceeding
that shall be instituted or threatened against such party to restrain, prohibit
or otherwise challenge the legality of any transaction contemplated by this
Agreement. Gaylord, GCI and GTC shall promptly notify CBS of any lawsuit, claim,
proceeding or investigation that is threatened, brought, asserted or commenced
against Gaylord, GCI, GTC or the Limited Partnership which would have been
required to be listed in Schedule 2.18 if such lawsuit, claim, proceeding or
investigation had arisen prior to the date hereof.
SECTION 4.2. FCC CONSENT; IMPROVEMENTS ACT APPROVAL
(a) As promptly as practicable after the date hereof but in
any event no later than twenty (20) days hereafter, the parties hereto
shall file with the FCC applications requesting its consent to the
transfer of control of the Station pursuant to the Mergers.
Simultaneously with the filing of the applications, CBS will file with
the FCC a request for the Waiver. The parties hereto will cooperate in
the preparation of such applications and the request for the Waiver
(including the furnishing to each other of copies of such applications
and request prior to filing) and will diligently take, or cooperate in
the taking of, all necessary, desirable and proper steps, provide any
additional information reasonably required and otherwise use their
reasonable efforts to prosecute the applications and the request for
the Waiver and to obtain promptly the requested consent and approval of
the FCC to the transfer of control of the Station and the Waiver. Any
fees assessed by the FCC incident to the filing or grant of
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such applications shall be borne by CBS. The parties hereto shall make
available to one another, promptly after the filing thereof, copies of
all reports filed on or prior to the Closing Date with the FCC by any
of the parties hereto, as the case may be, in respect of the Station.
Neither CBS nor the CBS Subsidiaries will act or fail to act in such a
way as would adversely affect their legal qualifications to consummate
the Mergers and the other transactions contemplated hereby pursuant to
the Communications Act.
(b) As promptly as practicable after the date hereof but in
any event no later than twenty (20) days hereafter, the parties hereto
shall file with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice ("DOJ") the
notifications and other information required to be filed by such
commission or department under the Improvements Act, or any rules and
regulations promulgated thereunder, with respect to the transactions
contemplated hereby. Each of the parties hereto covenants to file as
promptly as practicable such additional information as may be requested
to be filed by such commission or department. Each of the parties
hereto warrants that all such filings by it will be, as of the date
filed, true and accurate in all material respects and in accordance
with the requirements of the Improvements Act and any such rules and
regulations. Gaylord and CBS shall each pay one-half of the filing fees
payable under the Improvements Act in connection with the notifications
and information described in this Section 4.2(b).
(c) Notwithstanding any other provision of this Agreement, in
the event the approval of the FCC under Section 4.2(a) is conditioned
upon (i) the outcome of the FCC's pending rule-making proceeding with
respect to the FCC's television ownership rules (MM Docket Nos. 91-221
and 87-8) or (ii) the divestiture by CBS of any (A) broadcast stations
in the Dallas/Forth Worth area or (B) television stations necessary in
order to comply with the FCC's national multiple ownership rule, 47 CFR
Section 73.3555(e), CBS agrees promptly and at its sole expense to take
any and all actions necessary to accept and to comply with such
conditions in order to consummate the Mergers in accordance with this
Agreement without undue delay or prejudice to Gaylord.
SECTION 4.3. OPERATIONS PRIOR TO THE CLOSING DATE
(a) Except as permitted by this Agreement, including the
provisions of Section 4.3(b), or as approved by CBS as provided below,
the Limited Partnership shall operate and carry on the business of the
Station, and the business of GTC, GCI and the Limited Partnership shall
be operated and carried on, only in the ordinary course consistent with
past practice and in compliance in all material respects with all
applicable laws, rules and regulations. Consistent with the foregoing
and subject to Section 4.3(b), the Limited Partnership shall: (i)
retain ownership of and maintain its assets in good operating condition
and repair consistent with past practices and the intended use of such
assets (wear and tear in ordinary usage excepted), (ii) use its
reasonable efforts to retain the Station's libraries of films and other
programming, to maintain the business organization of the Station
intact, to keep available the services of the current officers and
other key employees and to preserve the goodwill of the suppliers,
contractors, licensors, employees, customers, distributors and others
having business relations with the Station, (iii) maintain the budgeted
level of expenditures for marketing and promotions, and (iv) continue
any remediation efforts
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relating to compliance with Year 2000 issues as described in Section
2.24. The Limited Partnership shall complete construction and commence
operation of the DTV Facility on or before May 1, 1999, and shall take
all other steps, including the timely submission of all required
notices, reports, forms, applications and other statements or
disclosures, that are necessary to satisfy the FCC's requirements with
respect to the implementation of DTV service. Without limiting the
foregoing, and except as permitted by this Agreement, including the
provisions of Section 4.3(b), or except with the express prior written
approval of CBS, none of Gaylord and its subsidiaries, including GTC
and GCI, and the Limited Partnership shall:
(i) amend any of the Organizational Documents;
(ii) make any material change in the operations of
the Station;
(iii) sell, lease, transfer or otherwise dispose of
any of the assets of GCI, GTC or the Limited Partnership,
other than (A) tangible personal property having a value, in
the aggregate, of less than $50,000 sold or otherwise disposed
of in the ordinary course of business consistent with past
practice and (B) tangible personal property replaced in the
ordinary course of business consistent with past practice with
items of substantially the same nature and of equal or greater
quality;
(iv) enter into any lease of real property with
respect to the Station, except any renewals of existing leases
in the ordinary course of business consistent with past
practice and as to which CBS shall be permitted to participate
in the negotiation of the terms;
(v) permit any of the assets of GTC, GCI or the
Limited Partnership to become subject to any Encumbrance,
other than Permitted Encumbrances;
(vi) create, incur, guarantee or assume any
indebtedness for borrowed money or enter into any capitalized
leases, but, with respect to Gaylord, only to the extent any
such indebtedness or lease relates to GTC, GCI, the Limited
Partnership or the Station;
(vii) make any change in the compensation of the
employees of the Station, other than changes required to be
made in accordance with existing agreements, the renewal of
employment agreements in the ordinary course of business, and
normal compensation practices, in each case consistent with
past practice;
(viii) make any change in the accounting policies
applied in the preparation of the Financial Statements
contained in Schedule 2.4;
(ix) cancel any material indebtedness (other than
Accounts Receivable) owed to, or waive any material claims
held by, GCI, GTC or the Limited Partnership;
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(x) delay payment of any account payable or other
liability of GCI, GTC or the Limited Partnership beyond its
due date or the date when such liability would have been paid
in the ordinary course of business consistent with past
practice;
(xi) institute any increase in any profit sharing,
bonus, incentive, deferred compensation, insurance, pension,
retirement, medical (except for a contemplated contract with a
preferred provider organization), hospital, disability,
welfare or other employee benefit plan with respect to
employees of the Station other than (A) as required by law,
(B) changes made in accordance with normal practices
consistent with past practice that are not, in the aggregate,
material in amount or effect, or changes which affect
Gaylord's employees on a company-wide basis or (C) stay-on or
reward bonuses or similar incentives paid by Gaylord in its
discretion;
(xii) cause or permit, by any act or failure to act,
any of the FCC Authorizations or other material Permits of
GCI, GTC or the Limited Partnership to expire, to be modified
in any materially adverse respect, to be revoked, or to be
suspended; or take, or fail to take, any action that would be
reasonably likely to cause the FCC or any other Governmental
Entity to institute proceedings for the suspension, revocation
or materially adverse modification of any of the FCC
Authorizations or other material Permits of GCI, GTC or the
Limited Partnership;
(xiii) pay, loan or advance any amount to, or sell,
transfer or lease any of the assets of GCI, GTC or the Limited
Partnership to, or enter into any agreement or arrangement
with, Gaylord, GCI, GTC, the Limited Partnership or any of
their Affiliates other than intercompany transactions in the
ordinary course of business consistent with past practice,
none of which shall survive the Effective Time;
(xiv) permit GCI, GTC or the Limited Partnership to
acquire, in any manner, any business or any corporation,
partnership, association or other business organization or
division thereof or otherwise acquire any assets that are
material;
(xv) with respect to GCI, GTC and the Limited
Partnership, make any material Tax election or settle or
compromise any material Tax liability or refund;
(xvi) with respect to the Station, waive any material
right under the Cable Act Requirements, fail to timely provide
to any Market Cable System a must-carry notice or
retransmission consent notice in accordance with the Cable Act
Requirements (including any such notice necessary for such
notice to be effective for the three-year period beginning in
1999 and ending in 2002), or reach any agreement or
understanding with any Market Cable System on the subject of
retransmission consent or must-carry under the Cable Act
Requirements without prior consultation with CBS;
(xvii) take any action which would materially
adversely affect CBS's ability to deliver the certificate
contemplated by Section 7.6; or
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(xviii) authorize, or commit or agree to take,
whether in writing or otherwise, any of the foregoing actions.
Gaylord agrees that CBS shall have the right to approve any contract or
other agreement to be entered into by GCI, GTC or the Limited
Partnership involving payments of more than $500,000 during its term or
in connection with its termination, or having a duration of more than
one (1) year; provided, however, that such approval shall not be
unreasonably withheld by CBS; and provided further that the Limited
Partnership shall be permitted to enter into a contract substantially
on the terms as set forth on Schedule 4.3(a) without the approval of
CBS.
(b) Notwithstanding anything to the contrary in this Agreement
or any of the other Transaction Agreements, between the date hereof and
the Effective Time, GTC, GCI and the Limited Partnership shall transfer
to Gaylord or any Affiliate of Gaylord (other than GTC, GCI or the
Limited Partnership), any of the following assets, for any
consideration (so long as such consideration does not involve the
assumption by GTC, GCI or the Limited Partnership of attendant
liabilities), or for no consideration, but at the expense of Gaylord:
(i) all of GTC's, GCI's and the Limited Partnership's
cash and cash equivalents (including any marketable securities
or certificates of deposit), and all intercompany receivables
and payables as of the Effective Time;
(ii) all rights to refunds for prepaid expenses
including prepayment for bonds, contracts or policies of
insurance and prepaid insurance with respect to such contracts
or policies as of the Effective Time;
(iii) all records prepared in connection with the
sale of the Station (other than records prepared for CBS or
its Affiliates in connection with this Agreement), including
bids received from others and analyses relating to the Station
and the Station's assets;
(iv) except to the extent the parties shall otherwise
specifically agree in writing, all rights, obligations and
assets under the Benefit Plans;
(v) all of the Limited Partnership's Accounts
Receivable, including rights and claims to payments made by
the Copyright Royalty Tribunal and related to the operations
of the Station arising out of transactions occurring prior to
the Closing Date;
(vi) all of the Limited Partnership's, GTC's and
GCI's right, title and interest in and to that certain unused
parcel of real estate, and the abandoned structure thereon, in
Fort Worth, Texas, which real estate and structure are not
involved in the current operations of the Station and are more
particularly described on Schedule 2.8, and all of the Limited
Partnership's interest in any Affiliate (that owns no assets
related to the Station) to whom it may transfer such parcel;
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(vii) all of Gaylord's and its Affiliates'
Intellectual Property and Technology not used primarily in
connection with the Station, including all computer software
programs (whether or not used primarily in connection with the
Station, and whether or not owned by Gaylord or its
Affiliates) relating to the general ledger, accounts payable,
payroll, and human resources of the Station;
(viii) the programming contracts set forth on
Schedule 4.3(b); and
(ix) all of the Limited Partnership's, GTC's and
GCI's rights and obligations under that certain Advertising
Agreement dated as of December 4, 1998, by and among Marcus
Cable Operating Company, LLC, Charter Communications, Inc.,
and the Limited Partnership.
Gaylord hereby assumes all liabilities and obligations of any
nature (whether accrued, absolute, unasserted, contingent or
otherwise) relating to any of the foregoing.
(c) Gaylord shall, within fifteen (15) days after the end of
each month, provide CBS with copies of (i) the unaudited income
statement of the Limited Partnership for such month and (ii) the
unaudited balance sheet of the Limited Partnership as of the end of
such month.
SECTION 4.4. COLLECTION OF ACCOUNTS RECEIVABLE
(a) At the Closing, Gaylord shall designate CBS, by means of a
mutually acceptable agency agreement, as its agent solely for purposes
of collecting on behalf of Gaylord the Accounts Receivable. Gaylord
shall deliver to CBS, on or immediately after the Closing Date, a
complete and detailed statement of the Accounts Receivable. CBS shall
make reasonable efforts to collect the Accounts Receivable during the
period (the "Collection Period") beginning at the Effective Time and
ending on the last day of the fifth full calendar month following the
Closing Date. Any payment received by CBS (i) at any time following the
Effective Time, (ii) from a customer of the Station after the Effective
Time who was also a customer of the Station prior to the Effective Time
and (iii) which is not designated as a payment of a particular invoice
or invoices or as a security deposit or other prepayment, shall be
presumptively applied to the accounts receivable for such customer
outstanding for the longest amount of time and, if such accounts
receivable shall be an Accounts Receivable, remitted to Gaylord in
accordance with Section 4.4(b); provided, however, that if, prior to
the Effective Time, the Limited Partnership or, after the Effective
Time, the Limited Partnership or CBS received or receives a written
notice of dispute from a customer with respect to an Accounts
Receivable that has not been resolved, then CBS shall apply any
payments from such customer to such customer's oldest, non-disputed
accounts receivable. CBS shall not be obligated to refer any of the
Accounts Receivable to a collection agency or to an attorney for
collection. CBS shall incur no liability to Gaylord for any collected
or uncollected Accounts Receivable. During the Collection Period,
neither Gaylord nor its agents, without the consent of CBS, shall make
any direct solicitation of any customers owing the Accounts Receivable
for collection purposes.
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(b) On or before the fifth day following the end of each
calendar month in the Collection Period, CBS shall deposit into an
account identified by Gaylord at the time of Closing the amounts
collected during the preceding month of the Collection Period with
respect to the Accounts Receivable. CBS shall furnish Gaylord with a
list of the amounts collected during such calendar month with respect
to the Accounts Receivable and a schedule of the amount remaining
outstanding under each particular account. Gaylord shall be entitled to
inspect and/or audit the records maintained by CBS pursuant to this
Section 4.4 from time to time, upon reasonable advance notice.
(c) Following the expiration of the Collection Period, CBS
shall have no further obligations under this Section 4.4, except that
CBS shall immediately pay over to Gaylord any amounts subsequently paid
to it with respect to any Accounts Receivable. Following the Collection
Period, after consultation with CBS, Gaylord may pursue collections of
all Accounts Receivable, and CBS shall deliver to Gaylord all files,
records, notes and any other materials relating to the Accounts
Receivable.
SECTION 4.5. PUBLIC ANNOUNCEMENT
None of the parties hereto shall, without the approval of the other,
make any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such party
shall be so obligated by law or by the rules, regulations or policies of any
national securities exchange or association or Governmental Entity, in which
case the other parties shall be advised and the parties shall use their best
efforts to cause a mutually agreeable release or announcement to be issued;
provided, however, that the parties hereby acknowledge and agree that
communications among employees of the parties hereto and their attorneys,
representatives and agents necessary to consummate the transactions contemplated
hereby shall not be deemed a public announcement for purposes of this Section
4.5. Upon the execution and delivery of this Agreement, the parties hereto will
cooperate in respect of the immediate issuance of a mutually acceptable press
release relating to the transactions contemplated by this Agreement.
SECTION 4.6. COMPLIANCE WITH LAWS
From the date hereof until the Effective Time, none of the parties
hereto shall take any action in respect of the operations, employees or business
of the Station which violates, in any material respect, any law, regulation,
rule, writ, injunction, ordinance, franchise, decree or order of any court or of
any foreign, federal, state, municipal or other Governmental Entity applicable
to the Station or the operations, assets, employees or business of the Station.
SECTION 4.7. ADVICE OF CHANGES
From the date hereof until the Effective Time, CBS and Gaylord shall
promptly advise the other party orally and in writing of (i) any representation
or warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by any party or one of its
Affiliates to comply with or satisfy in any material
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respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement or (iii) any change or event (x) having, or which can
reasonably be expected to have, in the case of CBS, a Material Adverse Effect on
CBS and its subsidiaries taken as a whole and, in the case of Gaylord, a Gaylord
Material Adverse Effect, (y) having, or which can reasonably be expected to
have, the effect set forth in clause (i) above, or (z) which has resulted, or
which can reasonably be expected to result, in any of the conditions set forth
in Sections 6 or 7 not being satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 4.8. NO SOLICITATION
Gaylord shall not, nor shall Gaylord permit any Affiliate or any
officer, director or employee of Gaylord or any Affiliate to (i) solicit,
initiate or encourage any "other bid", (ii) enter into any agreement with
respect to any other bid or (iii) participate in any negotiations regarding any
other bid. As used in this Section 4.9, "other bid" shall mean any proposal for
a merger, sale of securities, sale of substantial assets or similar transaction
involving GCI, GTC or the Limited Partnership, other than the transactions
contemplated by this Agreement.
SECTION 4.9. OTHER CONSENTS
Without limiting the provisions of Section 4.2, Gaylord, GTC, GCI, the
Limited Partnership and CBS shall use all reasonable efforts to obtain or cause
to be obtained prior to the Closing Date any necessary consents from any person
(other than the FCC, DOJ or the FTC, which are covered in Section 4.2) to the
assignment to CBS of any contract, license or other instrument and right of
Gaylord, GTC, GCI and the Limited Partnership that requires the consent of any
third party by reason of the transactions provided for in this Agreement, and
CBS will reasonably cooperate with Gaylord, GTC, GCI and the Limited Partnership
in this regard, but neither Gaylord, GTC, GCI, the Limited Partnership nor CBS
will be obligated to make any special payment or grant any special concession to
any party. For such purpose but without limitation, Gaylord, GTC, GCI and the
Limited Partnership promptly will at and after the Closing execute and deliver
to CBS such assignments, deeds, bills of sale, consents and other instruments as
CBS or its counsel may reasonably request as necessary or desirable for such
purpose.
SECTION 4.10. NOTICE OF PROCEEDINGS
The parties shall notify each other orally and in writing upon (i)
becoming aware of any order or decree or any complaint praying for an order or
decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereunder or (ii) receiving any notice from any
Governmental Entity of its intention (x) to institute an investigation into, or
institute a suit or proceeding to restrain or enjoin, the consummation of this
Agreement or the transactions contemplated hereunder or (y) to nullify or render
ineffective this Agreement or the transactions contemplated hereunder if
consummated.
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SECTION 4.11. TRADE AGREEMENTS
There shall be no proration of current assets and liabilities with
respect to trade and/or barter agreements under Section 1.13 or otherwise.
Gaylord shall use its reasonable efforts to air the advertising contemplated
under any trade and/or barter agreements to the fullest extent practicable prior
to Closing. Gaylord shall not enter into any new trade and/or barter agreements
prior to Closing without the consent of CBS, other than renewals of existing
trade and/or barter agreements in the ordinary course of business.
SECTION 4.12. CONFIDENTIALITY AGREEMENTS
Gaylord hereby assigns, effective at the Closing, to CBS its rights
under all confidentiality agreements entered into by Gaylord or any of its
subsidiaries with any person in connection with the proposed sale of the Station
to the extent such rights relate to GTC, GCI, the Limited Partnership or the
Station. Copies of such agreements shall be provided to CBS on the Closing Date.
SECTION 5. ADDITIONAL AGREEMENTS
SECTION 5.1. SALES, USE AND TRANSFER TAXES, TITLE INSURANCE
Any sales, use, documentary, stamp or other transfer Taxes payable by
reason of the transactions contemplated by this Agreement shall be paid
exclusively by CBS, except that all of the foregoing relating to the transfers
referred to in Section 4.3(b) shall be paid by Gaylord. CBS and Gaylord shall
cooperate in timely preparing and filing all Tax Returns with respect to such
Taxes as may be required to comply with applicable laws. The costs of any
commitments for title insurance and/or surveys obtained by CBS in connection
with this transaction shall be paid solely by CBS.
SECTION 5.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS
CBS, GTC and GCI agree to the following matters with regard to
employees of GTC, GCI, the Limited Partnership, or the Station after the
Effective Time:
(a) CBS, GTC and GCI will continue the employment of all
actively employed (including employees on short term disability leave
of absence) Station Employees as of the Effective Time. Following the
Effective Time, CBS shall maintain, or shall cause the Limited
Partnership to maintain, on behalf of the Station Employees base
compensation at the same level as in effect immediately prior to the
Effective Time and employee benefit plans and arrangements that are, in
the aggregate, comparable to the employee benefit plans and
arrangements in effect from time to time after the Effective Time for
similarly situated employees of CBS in its broadcasting businesses;
provided, however, that no Station Employee shall be entitled to
participate in CBS's and its Affiliates' tax-qualified or non-qualified
defined benefit pension or excess plans, including any cash balance
component thereof. Notwithstanding the foregoing, for not less than six
months following the Effective Time, CBS shall provide, or cause the
Limited Partnership to provide, severance pay and severance benefits to
each Station Employee that are no less favorable than under the Benefit
Plans or Gaylord's existing employment policies (except where otherwise
provided in existing employment or personal services agreements).
Notwithstanding the foregoing, except where existing employment or
personal services agreements provide otherwise, CBS
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shall have the right to make changes or cause changes to be made in
compensation, benefits and other terms of employment and to terminate
the employment of any employee as CBS determines in its sole
discretion. Nothing in this Agreement shall be construed as granting to
any employee any rights of continuing employment.
(b) For purposes of providing health insurance coverage to
Station Employees, CBS shall waive (or obtain a waiver of) all
preexisting condition limitations for all such employees who are
covered by the Station's existing health care plan as of the Effective
Time (other than known preexisting conditions that were excluded by the
Station's health care plan) and shall provide such health care coverage
effective as of the Effective Time without the application of any
eligibility period for coverage (unless a waiting period applied under
the Station's plan). In addition, CBS shall credit all payments made by
such employees and their dependents (pursuant to the Station's existing
health care plan as of the Effective Time) toward deductible,
co-payment, out-of-pocket and lifetime limits under CBS's health care
and dental care plans for the plan year that includes the Effective
Time.
(c) As of the Effective Time, CBS, GTC and GCI will provide
all Station Employees with credit for years of service at the Station
or Gaylord or its Affiliates for eligibility and vesting purposes (but
not for benefit accrual purposes or where it would result in a
duplication of benefits) under CBS' applicable benefit plans, including
severance arrangements (excluding, for this purpose, any Station
Employee who is a key employee listed in Schedule 5.2(e) and any other
Station Employee with an employment or personal services agreement
which would provide otherwise in respect of severance payable
thereunder), but only to the extent credited under the applicable
Benefit Plan or other applicable Gaylord plan. Without limiting the
foregoing, all Station Employees shall be entitled to full credit for
years of service with respect to their right (if any) to receive stock
options under CBS's Fund the Future Program.
(d) CBS shall indemnify and hold harmless Gaylord and its
Affiliates from and against any liabilities or obligations in
connection with the Workers Adjustment and Retraining Notification Act
(or any similar state or local law) in connection with this
transaction, other than any liabilities or obligations relating to a
violation by Gaylord of such act (or such similar state or local law)
prior to the Effective Time.
(e) The parties agree to those provisions set forth in
Schedule 5.2(e).
(f) Except as specifically provided in this Section 5.2,
Gaylord shall retain responsibility for (i) sponsorship of all of the
Benefit Plans, all other applicable Gaylord benefit and compensation
plans, and any other benefit or compensation plans formerly made
available to employees, and (ii) all liabilities and obligations for
employee benefits (including Gaylord employee stock options) and for
claims relating to employment (or termination of employment) which are
in respect of (y) retirees and other former employees of GTC, GCI, the
Limited Partnership and the Station (regardless of whether such
liabilities accrued before, on or following the Closing) and (z)
Station Employees to the extent the event or events giving rise to the
liability or obligation occurred predominantly on or prior to the
Closing.
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(g) Effective as of the Effective Time, each Station Employee
participating in the Gaylord Pension Plan as of the Effective Time
shall become fully vested in his or her accrued benefit under the
Gaylord Pension Plan.
(h) Effective as of the Effective Time, CBS shall have in
effect a profit-sharing plan that includes a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code (the "CBS
401(k) Plan") that will provide benefits to Station Employees as of the
Effective Time. Each Station Employee participating in the Gaylord
401(k) Plan as of the Effective Time shall become a participant in CBS'
401(k) Plan as of the Effective Time. Effective as of the Effective
Time, each Station Employee participating in the Gaylord 401(k) Plan as
of the Effective Time shall become fully vested in his or her account
balance under the Gaylord 401(k) Plan.
SECTION 5.3. GAYLORD SUBSIDIARIES AND THE LIMITED PARTNERSHIP TO
CONTROL OPERATIONS PRIOR TO CLOSING DATE
At all times commencing on the date hereof and ending on the Closing
Date, the operation, management, control and supervision of all programs,
equipment, operations and other activities of the Station shall be the sole
responsibility and shall remain within the complete control and discretion of
the Gaylord Subsidiaries and the Limited Partnership. Neither CBS, the CBS
Subsidiaries nor any of their respective employees, agents or representatives,
directly or indirectly, shall (or have any right to) control, direct or
otherwise supervise, or attempt to control, direct or otherwise supervise any of
the management or operations of the Station.
SECTION 5.4. COPYRIGHT ROYALTY TRIBUNAL PAYMENTS
To the extent not included in the prorations under Section 1.13, CBS
agrees promptly upon receipt to remit to Gaylord any payments received by CBS as
a Copyright Royalty Tribunal Payment attributable to the Limited Partnership's
ownership and operation of the Station prior to the Closing Date.
SECTION 5.5. ACCESS TO INFORMATION
Subject to the provisions of Section 10.2, and upon reasonable notice,
Gaylord shall, and shall cause each of its subsidiaries to, afford to CBS, its
subsidiaries and their employees, officers, accountants, counsel, financial
advisors and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to all of its properties,
books, contracts, management personnel and records relating to GTC, GCI, the
Limited Partnership and the Station; provided, however, that, to the extent
reasonably possible, such access shall be at Gaylord's offices in Nashville,
Tennessee, and shall not unreasonably interfere with the normal operations of
the Station. During such period, CBS shall, and shall cause each of its
subsidiaries to, furnish promptly to Gaylord upon request a copy of each report,
schedule, registration statement and other document required to be filed by it
during such period pursuant to the requirements of Section 13(a) of the Exchange
Act.
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SECTION 5.6. REASONABLE BEST EFFORTS
Upon the terms and subject to the conditions set forth in this
Agreement, CBS and Gaylord each agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things reasonably
necessary, proper or advisable to consummate and make effective, in a timely
manner, the Mergers and the other transactions contemplated by the Transaction
Agreements, including (i) the obtaining of all necessary actions or non-actions,
waivers (including the Waiver), consents, approvals, orders and authorizations
from Governmental Entities and the making of all necessary registrations,
declarations and filings and the taking of all steps as may be reasonably
necessary to obtain an approval, waiver (including the Waiver), order or
authorization from, or to avoid an action or proceeding by, any Governmental
Entity, including the actions or divestitures by CBS or its Affiliates
contemplated by Section 4.2(c), if required as a condition to the approval of
the FCC or the satisfactory conclusion of DOJ and/or FTC review under the
Improvements Act, (ii) the obtaining of all necessary waivers, consents,
approvals, orders or authorizations from third parties, (iii) the defending of
any suit, action or proceeding, whether judicial or administrative, challenging
any Transaction Agreement or the consummation of any of the transactions
contemplated by any Transaction Agreement, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments necessary to consummate the transactions contemplated by, and to
fully carry out the purposes of, the Transaction Agreements. Gaylord shall
obtain the consent to assignment of the microwave lease between the Limited
Partnership and Dallas Main Center Limited Partnership and the lease with
Crescent Real Estate, each as listed in Schedule 2.8 or, if such consents cannot
be obtained, enter into replacement leases on terms not materially more
disadvantageous to CBS, GTC, GCI and the Limited Partnership than those
contained in the current microwave lease and Crescent Real Estate lease. CBS
shall use its reasonable best efforts to cause the shares of CBS Common Stock
issued and delivered to Gaylord hereunder to be registered pursuant to an
effective registration statement under Section 5 of the Securities Act to be
registered or otherwise duly qualified under all appropriate state securities or
"blue sky" laws or regulations, and to be approved for listing on the NYSE.
SECTION 5.7. USE OF GAYLORD NAME
Immediately following the Effective Time, CBS shall cause the surviving
corporations of the Mergers to: (i) cease and desist from all further use of the
name "Gaylord", or any trade names, trademarks, identifying logos or service
marks related thereto (including "Gaylord Broadcasting" and "GBC"), or any part
or variation of any of the foregoing or any confusingly similar trade names,
trademarks or logos (collectively, "Gaylord's Trademarks and Logos"); and (ii)
to adopt new trade names, trademarks, identifying logos and service marks
related thereto which are not confusingly similar to Gaylord's Trademarks and
Logos. Nothing in this Section 5.7 shall prohibit CBS and the surviving
corporations of the Mergers from using Gaylord's Trademarks and Logos to the
extent reasonably necessary to fulfill their obligations under the Transaction
Agreements; and provided further, that CBS and its subsidiaries, including the
Limited Partnership, shall be permitted a reasonable time to transition signage,
stationery, business cards, and the like, it being understood that CBS will use
all reasonable efforts to expedite such transition.
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SECTION 5.8. ENVIRONMENTAL STUDY
Within forty-five (45) days after the execution of this Agreement, CBS
shall obtain, at its expense, and present to Gaylord, a Phase I environmental
report (the "Phase I Report") from a licensed environmental engineer or firm
(which shall be reasonably acceptable to Gaylord) with respect to the Station's
real property. If the Phase I Report discloses conditions which require, in the
opinion of the environmental engineer or firm performing the assessment, further
sampling or investigation, Gaylord and the Limited Partnership shall grant CBS
and its agents reasonable access to the Station's real property, and CBS shall
cause such sampling or investigation to be performed at its expense and shall
present the results and recommendations of the engineer or firm to Gaylord (the
"Phase II Report"). Gaylord shall be responsible for the prompt correction or
remediation of any environmental, health or safety violations or conditions
disclosed in the Phase I Report or the Phase II Report, to the extent required
by applicable law or any relevant Governmental Entity, it being understood that
the remediation may continue following the Closing. The studies contemplated by
this Section 5.8 and the remediation efforts in response thereto shall not
hinder or delay the Closing of the transactions contemplated by this Agreement.
SECTION 5.9. AGREEMENT NOT TO COMPETE
(a) Gaylord and its subsidiaries shall not, and shall cause
each of their Affiliates not to, directly or indirectly: (i) for a
period of eighteen (18) months from the Effective Time own, manage,
operate, join, control or participate in the ownership, management,
operation or control of, or permit the use of the Gaylord name by, or
be connected in any manner with, any television broadcast station
within a 75 mile radius from the Station's main transmitter site; (ii)
for a period of twenty-four (24) months from the Effective Time induce
or attempt to induce any Station Employee to leave the employ of the
Station; (iii) knowingly hire for work in the Dallas/Fort Worth area
any voluntarily terminating Station Employee for a period of six (6)
months following such Station Employee's termination; (iv) knowingly
hire for work outside the Dallas/Fort Worth area any voluntarily
terminating Station Employee for a period of three (3) months following
such Station Employee's termination; or (v) for a period of twenty-four
(24) months from the Effective Time induce or attempt to induce any
person, business or entity which is an advertiser with or supplier of
the Station, or which otherwise is a contracting party with the
Station, as of the Effective Time or at any time during the twenty-four
(24) month period, to terminate any written or oral agreement or
understanding with the Station. Nothing contained herein shall prevent
Gaylord or its Affiliates from hiring any Station Employee
involuntarily terminated by the Station.
(b) Notwithstanding the provisions of Section 5.9(a), Gaylord
or its Affiliates shall be entitled to invest in or otherwise affiliate
with one or more entities that operate one or more television broadcast
stations within a 75 mile radius from the Station's main transmitter
site, so long as, during the eighteen (18) month period, Gaylord does
not participate, directly or indirectly, in the operation of such
television broadcast station.
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(c) Notwithstanding any other provision of this Agreement, it
is understood and agreed that the remedy of indemnity payments pursuant
to Section 8 and other remedies at law would be inadequate in the case
of any breach of the covenants contained in Section 5.9(a). CBS and its
subsidiaries shall be entitled to equitable relief, including the
remedy of specific performance, with respect to any breach or attempted
breach of such covenants.
SECTION 5.10. WAIVER OF CERTAIN CLAIMS
Neither CBS nor its Affiliates shall be entitled to sue or otherwise
prosecute a claim or cause of action for breach of fiduciary duty on behalf of
the Limited Partnership, GTC or GCI (or their successors in interest) against
any of their officers or directors with respect to any act or omission occurring
prior to the Closing Date.
SECTION 5.11. RECORDS
As soon as practicable following the Closing Date, Gaylord shall
deliver or cause to be delivered to CBS all agreements, documents, books,
records and files, including records and files stored on computer disks or tapes
or any other storage medium (collectively, "Records"), if any, in the possession
of Gaylord or any of its subsidiaries (except GCI and GTC) relating to the
business and operations of GCI, GTC, the Limited Partnership and the Station to
the extent not then in the possession of GCI, GTC and the Limited Partnership,
subject to the following exceptions:
(a) CBS recognizes that certain Records may contain
incidental information relating to GCI, GTC, the Limited Partnership or
the Station or may relate primarily to subsidiaries, divisions or
businesses of Gaylord other than GCI, GTC, the Limited Partnership and
the Station, and that Gaylord may retain such Records and shall provide
copies of the relevant portions thereof to CBS;
(b) Gaylord may retain all Records prepared in connection
with the sale of the Station, including bids received from other
parties and analyses relating to the Limited Partnership and the
Station; and
(c) Gaylord may retain any Tax Returns, and CBS shall be
provided with copies of such Tax Returns if they relate to GCI's, GTC's
or the Limited Partnership's separate Tax Returns or separate Tax
liability.
SECTION 5.12. POST CLOSING MATTERS
The parties agree to the following, from and after the Effective Time:
(a) In the event that prior to the Effective Time any asset
of the Station suffers any damage, destruction or other casualty loss,
Gaylord shall surrender to CBS after the Effective Time (i) all
insurance proceeds received with respect to such damage, destruction or
loss, less any proceeds applied to the physical restoration of such
asset, and (ii) all rights of Gaylord with respect to any causes of
action, whether or not litigation has commenced as
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of the Effective Time, in connection with such damage, destruction or
loss. Gaylord shall make available to CBS the benefit of any workers'
compensation, general liability, product liability, automobile
liability, umbrella (excess) liability or crime or other insurance
policy covering GTC, GCI, the Limited Partnership or the Station with
respect to insured events or occurrences prior to the Effective Time
(whether or not claims relating to such events or occurrences are made
prior to or after the Effective Time); provided, however, that (i) all
of Gaylord's costs and expenses incurred in connection with the
foregoing shall promptly be paid by CBS, and (ii) the benefits of such
insurance shall be subject to (and recovery thereon shall be reduced by
the amount of) any applicable deductibles and co-payment provisions or
any payment or reimbursement obligations of Gaylord in respect thereof.
Gaylord shall promptly pay to CBS all insurance proceeds relating to
the business of the Station received by Gaylord or its subsidiaries
under any insurance policy.
(b) Subject to the provisions of Section 5.7, and to the
extent permitted by any third party licensor, CBS shall have a limited
license to use the Intellectual Property and Technology transferred
pursuant to Section 4.3(b) or that is not owned by GCI, GTC or the
Limited Partnership but is used in the operation of the business of the
Station for a period of ninety (90) days following the Effective Time;
provided, however, that CBS shall use all reasonable efforts to make
the transition to its own computer programs and systems and to
terminate its reliance on the Intellectual Property and Technology as
quickly as possible. To the extent that CBS reasonably requires a
license beyond the first ninety (90) day period, CBS shall make a
request to that effect to Gaylord, or to any applicable third party
licensor, specifying the reasons for such need, and Gaylord shall not
unreasonably withhold its consent to an extension of the limited
license for up to an additional ninety (90) days.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF CBS
The obligations of CBS under this Agreement shall be subject to the
satisfaction (or waiver by CBS), on or prior to the Closing Date, of the
following conditions. CBS shall not be entitled to assert the failure of any
condition set forth herein if such failure is caused, in whole or in material
part, by CBS' breach of any covenant or agreement hereunder.
SECTION 6.1. CORPORATE ACTION
Gaylord and the Gaylord Subsidiaries shall have taken all action
necessary to approve the transactions contemplated by this Agreement, and shall
have delivered certified copies of the resolutions of the boards of directors of
Gaylord and the Gaylord Subsidiaries, and unanimous resolutions of the
shareholders of the Gaylord Subsidiaries, approving the transactions
contemplated by this Agreement.
SECTION 6.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION
Any applicable waiting period under the Improvements Act shall have
expired or have been terminated and there shall not be in effect any preliminary
or permanent injunction or other order, decree or ruling by a court of competent
jurisdiction, and there shall not be in effect any temporary
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restraining order of a court of competent jurisdiction, which, in either case,
restrains or prohibits the transactions contemplated hereby.
SECTION 6.3. FCC CONSENT
The FCC Consent shall have been issued, without any condition or
qualification that is materially adverse to CBS or its subsidiaries or the
Station, and shall have become a Final Order; provided, however, that a
condition contemplated by Section 4.2(c) shall not constitute such a material
adverse condition or qualification.
SECTION 6.4. REPRESENTATIONS AND WARRANTIES
Subject to Section 10.16, the representations and warranties of Gaylord
in this Agreement and the Tax Matters Agreement shall be true and correct as of
the date hereof and as of the Closing Date as though made on the Closing Date,
except to the extent that such representations and warranties expressly relate
to an earlier date (in which case such representations and warranties shall be
true and correct on and as of such earlier date), in each case except for
breaches as to matters that, individually or in the aggregate, would not
reasonably be expected to have a Gaylord Material Adverse Effect the
consequences of which substantially impair the physical assets or economic value
or prospects of the Station taken as a whole.
SECTION 6.5. NYSE LISTING
The shares of CBS Common Stock to be issued and delivered to Gaylord
pursuant to the Mergers shall have been approved for listing on the NYSE,
subject to official notice of issuance.
SECTION 6.6. BREACH OF COVENANT BY GAYLORD
Subject to Section 10.16, Gaylord shall not have materially breached
its obligations in any covenant or agreement hereunder.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF GAYLORD
The obligations of Gaylord under this Agreement shall be subject to the
satisfaction (or waiver by Gaylord), on or prior to the Closing Date, of the
following conditions. Gaylord shall not be entitled to assert the failure of any
condition set forth herein if such failure is caused, in whole or in material
part, by Gaylord's breach of any covenant or agreement hereunder.
SECTION 7.1. CORPORATE ACTION
CBS and the CBS Subsidiaries shall have taken all corporate action
necessary to approve the transactions contemplated by this Agreement, and shall
have delivered certified copies of the resolutions of the boards of directors of
CBS and the CBS Subsidiaries, and unanimous resolutions of the shareholders of
the CBS Subsidiaries, approving the transactions contemplated by this Agreement.
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SECTION 7.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION
Any applicable waiting period under the Improvements Act shall have
expired or been terminated and there shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a court of competent
jurisdiction, and there shall not be in effect any temporary restraining order
of a court of competent jurisdiction, which, in either case, restrains or
prohibits the transactions contemplated hereby.
SECTION 7.3. FCC CONSENT
The FCC Consent shall have been issued and become effective, without
any condition or qualification which is materially adverse to Gaylord.
SECTION 7.4. REGISTRATION OF SHARES
The registration statement to be filed with respect to the shares of
CBS Common Stock to be issued and delivered to Gaylord pursuant to the Mergers
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order, and CBS shall
have received all state securities or "blue sky" authorizations necessary to
issue the CBS Common Stock pursuant to the Mergers.
SECTION 7.5. NYSE LISTING
The shares of CBS Common Stock to be issued and delivered to Gaylord
pursuant to the Mergers shall have been approved for listing on the NYSE,
subject to official notice of issuance.
SECTION 7.6. TAX MATTERS AGREEMENT BRING DOWN CERTIFICATE
The Executive Vice President and Chief Financial Officer or the
Executive Vice President and General Counsel of CBS shall have delivered a duly
executed certificate reaffirming the accuracy of the matters described in
Sections 4.1 and 4.2 of the Tax Matters Agreement as of the Closing Date.
SECTION 7.7. NO MATERIAL ADVERSE CHANGE
Except as disclosed in the Filed CBS SEC Documents or as otherwise
expressly contemplated by the Transaction Agreements, since the date of the most
recent financial statements included in the Filed CBS SEC Documents, there shall
not have been any event, change or development which individually or in the
aggregate has had or would reasonably be expected to have a Material Adverse
Effect on CBS and its subsidiaries taken as a whole.
SECTION 7.8. TAX OPINION
There shall have been, after the date hereof, no changes in law
(including the Code, the Treasury Regulations, revenue rulings or other official
written administrative interpretations, or judicial interpretations) that would
prevent Skadden, Arps, Slate, Meagher & Flom, LLP, special tax
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counsel to Gaylord, from rendering an opinion substantially to the effect that
each of the Mergers should constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering such opinion, such counsel may rely
upon the representations, covenants and warranties of the parties hereto,
reasonably satisfactory to such counsel, contained in the Tax Matters Agreement.
SECTION 7.9. BREACH OF COVENANT BY CBS
Subject to Section 10.16. CBS shall not have materially breached its
obligations in any covenant or agreement hereunder.
SECTION 8. INDEMNIFICATION
SECTION 8.1. INDEMNIFICATION BY GAYLORD
(a) Subject to Section 8.1(b), Gaylord shall indemnify, defend
and hold harmless CBS, its Affiliates (including, after the Effective
Time, GTC, GCI and the Limited Partnership) and each of their
respective officers, directors, employees, stockholders, agents and
representatives and each of the heirs, executors, successors and
assigns of any of the foregoing (the "CBS Indemnitees") from and
against, and pay or reimburse the CBS Indemnitees for, all losses,
liabilities, damages, deficiencies, obligations, fines, expenses,
claims, demands, actions, suits, proceedings, judgments or settlements,
whether or not resulting from Third Party Claims, including interest
and penalties recovered by a third party with respect thereto and
out-of-pocket expenses and reasonable attorneys' and accountants' fees
and expenses incurred in the investigation or defense of any of the
same or in asserting, preserving or enforcing any rights hereunder
(collectively, "Losses"), suffered or incurred by the CBS Indemnitees
(other than any Losses relating to Taxes, for which indemnification
provisions are set forth in the Tax Matters Agreement), relating to or
arising from:
(i) the breach by Gaylord of any agreement or
covenant contained in this Agreement;
(ii) any breach or inaccuracy of any representation
or warranty of Gaylord contained in this Agreement; or
(iii) the ownership of GCI, GTC or the Limited
Partnership or the operation of the Station prior to the
Effective Time or the liabilities and obligations assumed by
Gaylord pursuant to Section 4.3(b); or
(iv) any business or activity of GCI, GTC or the
Limited Partnership other than the ownership by GCI or GTC of
its partnership interest in the Limited Partnership or the
ownership or operation by the Limited Partnership of the
Station and the assets relating thereto.
(b) Gaylord shall not have any liability under Section
8.1(a)(ii) unless the aggregate of all Losses for which Gaylord would,
but for this Section 8.1(b), be liable under Section 8.1(a)(ii) exceed
on a cumulative pre-tax basis an amount equal to $1,000,000, and
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then only to the extent of any such excess; provided further, that
Gaylord shall not have any liability under Section 8.1(a) for any
amount in excess of $485,000,000 in the aggregate; provided, however,
that the foregoing threshold shall not apply to any such Losses
relating to or arising from any breach or inaccuracy of the
representations and warranties contained in Section 2.1, 2.2(a),
2.2(b), and 2.3; and provided further that neither the foregoing
threshold nor the foregoing cap shall apply to any such Losses to the
extent relating to or arising from the liabilities and obligations
assumed by Gaylord pursuant to Section 4.3(b) or any business or
activity of GCI, GTC or the Limited Partnership other than the
ownership by GCI or GTC of its partnership interest in the Limited
Partnership or the ownership or operation by the Limited Partnership of
the Station and the assets relating thereto.
(c) The parties hereto agree that the mere failure to list on
a Schedule a contract required to be listed on the Schedules attached
hereto shall not in and of itself constitute a Loss. The parties hereto
further agree that the foregoing shall in no way limit or impair any
right of any CBS Indemnitee to indemnification under Section 8.1(a) or
to recover any Losses arising out of or otherwise related to any such
contract or the terms thereof, when considered individually or together
with the terms of any other contract, including with respect to any
revenues that may be lower than otherwise reasonably anticipated by
CBS, any expenses that may be higher than otherwise reasonably
anticipated by CBS or any other Losses whatsoever resulting from such
contract or its terms. The parties hereto further agree that this
paragraph is not in any way intended to impose any different or more
stringent burden of proof on any CBS Indemnitee in asserting or
enforcing any right than that which may have existed in the absence of
the foregoing.
SECTION 8.2. INDEMNIFICATION BY CBS
CBS shall indemnify, defend and hold harmless Gaylord, its Affiliates
(excluding, after the Effective Time, GCI, GTC and the Limited Partnership) and
each of their respective officers, directors, employees, stockholders, agents
and representatives and each of the heirs, executors, successors and assigns of
any of the foregoing (the "Gaylord Indemnitees" and, together with the CBS
Indemnitees, the "Indemnitees") from and against, and pay or reimburse the
Gaylord Indemnitees for, all Losses (other than any Losses relating to Taxes,
for which indemnification provisions are set forth in the Tax Matters
Agreement), suffered or incurred by the Gaylord Indemnitees, relating to or
arising from:
(i) the breach by CBS, CBS Dallas Ventures or CBS
Dallas Media of any agreement or covenant contained in this
Agreement;
(ii) any breach or inaccuracy of any representation
or warranty of CBS contained in this Agreement; or
(iii) except to the extent of Gaylord's
indemnification obligation under Section 8.1, the ownership of
GCI, GTC or the Limited Partnership or the operation of the
Station from and after the Effective Time.
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SECTION 8.3. TERMINATION OF INDEMNIFICATION
The obligations to indemnify and hold harmless any party (i) pursuant
to Section 8.1(a)(ii) and 8.2(ii) shall terminate when the applicable
representation or warranty terminates pursuant to Section 10.1 and (ii) pursuant
to Section 8.1(a)(i) and (iii) and Section 8.2(i) and (iii) shall not terminate;
provided, however, that such obligations to indemnify and hold harmless shall
not terminate with respect to any item as to which an Indemnitee shall have,
before the expiration of the applicable period, previously made a claim by
delivering a notice of such claim pursuant to Section 8.4 to the indemnifying
party.
SECTION 8.4. PROCEDURES
(a) In order for an Indemnitee to be entitled to any
indemnification provided for under this Agreement in respect of,
arising out of or involving a claim made by any person who is not an
Indemnitee against the Indemnitee (a "Third Party Claim"), such
Indemnitee must notify the party who may become obligated to provide
indemnification hereunder (the "indemnifying party") in writing, and in
reasonable detail, of the Third Party Claim reasonably promptly, and in
any event within 20 business days after receipt by such Indemnitee of
written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure. After any
required notification, the Indemnitee shall deliver to the indemnifying
party, promptly after the Indemnitee's receipt thereof, copies of all
notices and documents (including court papers) received by the
Indemnitee relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the
indemnifying party will be entitled to participate in the defense
thereof and, if it so chooses, to assume the defense thereof (at the
expense of the indemnifying party) with counsel selected by the
indemnifying party and reasonably satisfactory to the Indemnitee.
Should the indemnifying party so elect to assume the defense of a Third
Party Claim, the indemnifying party will not be liable to the
Indemnitee for any legal expenses subsequently incurred by the
Indemnitee in connection with the defense thereof. If the indemnifying
party assumes such defense, the Indemnitee shall have the right to
participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by the indemnifying party,
it being understood that the indemnifying party shall control such
defense. The indemnifying party shall be liable for the fees and
expenses of counsel employed by the Indemnitee for any period during
which the indemnifying party has not assumed the defense thereof (other
than during any period in which the Indemnitee shall have failed to
give notice of the Third Party Claim as provided above).
Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Third Party Claim (and shall be
liable for the fees and expenses of counsel incurred by the Indemnitee
in defending such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than
money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its outside counsel, cannot be
separated from any related claim for money damages. If such equitable
relief or other relief portion of the Third Party Claim can
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be so separated from that for money damages, the indemnifying party
shall be entitled to assume the defense of the portion relating to
money damages. The indemnification required by Section 8.1 or 8.2, as
the case may be, shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when
bills are received or the Losses are incurred. If the indemnifying
party chooses to defend or prosecute a Third Party Claim, all the
parties hereto shall cooperate in the defense or prosecution thereof,
which cooperation shall include the retention and (upon the
indemnifying party's request) the provision to the indemnifying party
of records and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. If the indemnifying party chooses to defend or
prosecute any Third Party Claim, the Indemnitee will agree to any
settlement, compromise or discharge of such Third Party Claim which the
indemnifying party may recommend and which by its terms obligates the
indemnifying party to pay the full amount of liability in connection
with such Third Party Claim; provided, however, that, without the
Indemnitee's consent, the indemnifying party shall not consent to entry
of any judgment or enter into any settlement (x) that provides for
injunctive or other nonmonetary relief affecting the Indemnitee or (y)
that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnitee of a release from all
liability with respect to such claim. If the indemnifying party shall
have assumed the defense of a Third Party Claim, the Indemnitee shall
not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the indemnifying party's
prior written consent (which consent shall not be unreasonably
withheld).
(c) In order for an Indemnitee to be entitled to any
indemnification provided for under this Agreement in respect of a claim
that does not involve a Third Party Claim, the Indemnitee shall deliver
notice of such claim (in reasonably sufficient detail to enable the
indemnifying party to evaluate such claim) with reasonable promptness
to the indemnifying party. The failure by any Indemnitee so to notify
the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to such Indemnitee under this
Agreement, except to the extent that the indemnifying party shall have
been actually prejudiced by such failure. If the indemnifying party
does not notify the Indemnitee within 20 calendar days following its
receipt of such notice that the indemnifying party disputes its
liability with respect to such claim under Section 8.1 or 8.2, as the
case may be, the claim shall be conclusively deemed a liability of the
indemnifying party under Section 8.1 or 8.2, as the case may be, and
the indemnifying party shall pay the amount of such liability to the
Indemnitee on demand or, in the case of any notice in which the amount
of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined. If the indemnifying party has timely disputed its liability
with respect to such claim, as provided above, the indemnifying party
and the Indemnitee shall proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations,
such dispute shall be resolved by litigation in an appropriate court of
competent jurisdiction.
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(d) Notwithstanding any of the foregoing, Gaylord shall be
responsible for defending any Third Party Claim pending at the
Effective Time.
SECTION 8.5. CERTAIN LIMITATIONS
(a) The amount of any Losses for which indemnification is
provided under this Agreement shall be net of any amounts actually
recovered by the Indemnitee from third parties (including, without
limitation, amounts actually recovered under insurance policies) with
respect to such Losses.
(b) All indemnification payments under this Agreement shall be
determined on a pre-tax basis, i.e., without regard to the tax
consequences to the Indemnitee of making a payment that is indemnified
by another party under this Agreement or of receiving a payment under
this Agreement as indemnification therefor.
SECTION 9. TERMINATION
SECTION 9.1. TERMINATION
Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated at any time prior to the Closing:
(a) by the mutual consent of Gaylord and CBS;
(b) by Gaylord at any time, if the Closing has not occurred on
or before the first anniversary of the execution of this Agreement;
(c) by CBS at any time, if the Closing has not occurred on or
before the date one (1) year and two (2) months following the execution
of this Agreement; provided, however, that if the granting of the FCC
Consent is materially delayed because of any act or omission on the
part of CBS, this time shall be extended by an additional ten (10)
months;
(d) by Gaylord or CBS if the FCC designates the FCC transfer
applications for an evidentiary hearing;
(e) by Gaylord if the condition set forth in Section 7.8
cannot be satisfied; or
(f) as provided in Section 10.15.
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SECTION 9.2. SPECIFIC PERFORMANCE
The parties recognize that if any party breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
would not be adequate to compensate the other party for its injury. Each of CBS
and Gaylord shall therefore be entitled, in addition to any other legal and
equitable remedies that may be available, including money damages, to obtain
specific performance of the terms of this Agreement. If any action is brought by
either CBS or Gaylord to enforce this Agreement, the other parties shall waive
the defense that there is an adequate remedy at law.
SECTION 9.3. EFFECT OF TERMINATION
The termination of this Agreement shall not affect the following
sections of this Agreement, which shall remain in full force and effect
following any termination: Sections 9.3, 10.2 and 10.10. In the event of any
termination of this Agreement, and (subject to Section 10.16) Gaylord is not in
material breach of its obligations under any covenant or agreement hereunder,
CBS agrees that, at the option of Gaylord, it shall extend the Station's status
as a CBS affiliate for a term of one (1) additional year past its then current
expiration date, on the same terms and conditions then in effect (other than
changes applicable to all affiliates generally and to the extent such changes
would be binding on the Station under its current affiliate agreement), and CBS
shall not unreasonably withhold its consent to any assignment of the Station to
a transferee or assignee approved by the FCC. Any termination of this Agreement
shall not relieve or release a party from responsibility hereunder for any
breaches of or defaults under this Agreement nor shall it impair the right of
any party to compel specific performance by any other party of its obligations
under this Agreement.
SECTION 10. GENERAL PROVISIONS
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND OBLIGATIONS
All representations, warranties, covenants and obligations contained in
this Agreement shall survive the Effective Time; provided, however, that the
representations and warranties contained in Sections 2 and 3 of this Agreement
shall terminate eighteen (18) months after the Closing Date, except that (i) the
representations and warranties in Section 2.20 shall terminate as of the second
anniversary of the Closing Date and (ii) the representations and warranties
relating to Taxes shall terminate at the time the applicable statute of
limitations with respect to the Taxes in question expire (giving effect to any
extension thereof). This Section 10.1 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time.
SECTION 10.2. CONFIDENTIAL NATURE OF INFORMATION
The Confidentiality Agreement between Gaylord and CBS dated as of
January 21, 1999, shall remain in full force and effect to the extent not
superseded by this Agreement; provided, however, that if the Closing takes
place, the Confidentiality Agreement shall no longer apply to the extent it
requires CBS or any of its Affiliates to treat in confidence any documents,
materials or other information relating to GCI, GTC, the Limited Partnership or
the Station. Each party further hereby
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agrees that it will treat in confidence all documents, materials and other
information which it shall have obtained regarding the other party during the
course of the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of this
Agreement), the investigation provided for herein and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated, each party will return to the
other party all copies of nonpublic documents and materials which have been
furnished in connection therewith. Gaylord further agrees that, after the
Closing Date, it will treat in confidence all documents, materials and other
information relating to the business, assets, liabilities and operations of the
Station which were confidential prior to the Closing. The obligation of each
party to treat such documents, materials and other information in confidence
shall not apply to any information which (a) such party can demonstrate was
already lawfully in its possession prior to the disclosure thereof by the other
party, (b) is known to the public and did not become so known through any
violation of a legal obligation, (c) became known to the public through no fault
of such party, (d) is later lawfully acquired by such party from other sources,
(e) such party is permitted to disclose under this Agreement or (f) such party
is required to disclose, pursuant to judicial order or, in the opinion of
counsel, pursuant to applicable law. Without limiting the right of any party to
pursue all other legal and equitable rights available to it for violation of
this Section 10.2 by any other party, it is agreed that other remedies cannot
fully compensate the aggrieved party for such a violation of this Section 10.2
and that the aggrieved party shall be entitled to injunctive relief to prevent a
violation or continuing violation thereof.
SECTION 10.3. GOVERNING LAW
This Agreement and the transactions contemplated hereby shall be
governed by and construed in accordance with the laws of the State of Delaware
without reference to its choice of law rules.
SECTION 10.4. NOTICES
All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered when delivered
personally or by messenger or seventy-two (72) hours after having been sent by
registered or certified mail or when delivered by private courier addressed as
follows:
If to CBS, to:
CBS Corporation
51 West 52nd Street
New York, NY 10019
Attention: Louis J. Briskman, Esq.
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with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Attention: Peter S. Wilson, Esq.
If to Gaylord, to:
Gaylord Entertainment Company
One Gaylord Drive
Nashville, Tennessee 37214
Attention: Joseph B. Crace
with a copy to:
Sherrard & Roe, PLC
424 Church Street, Suite 2000
Nashville, TN 37219
Attention: Thomas J. Sherrard, Esq.
with a copy to:
Reed Smith Shaw & McClay
1301 K Street, N.W.
East Tower - Suite I 100
Washington, D.C. 20005
Attention: Brian A. Johnson, Esq.
or to such other address as such party may indicate by a notice delivered to the
other parties hereto.
SECTION 10.5. SUCCESSOR AND ASSIGNS
(a) The rights of a party under this Agreement shall not be
assignable by such party without the prior written consent of CBS and
Gaylord, except that upon written notice to the other party all or any
portion of the rights of CBS or Gaylord hereunder (but not its
obligations) may be assigned, without the consent of the other party,
only to a direct wholly owned corporate subsidiary of CBS or Gaylord.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted
assigns. The successors and permitted assigns hereunder shall include,
without limitation, any permitted assignee as well as the successors in
interest to such permitted assignee (whether by merger, liquidation
(including successive mergers or liquidations) or otherwise). Except as
expressly provided in Article 8, nothing in this Agreement, expressed
or implied, is intended or shall be construed to confer upon any person
other than the parties and successors and assigns permitted by this
Section 10.5 any right, remedy or claim under or by reason of this
Agreement.
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SECTION 10.6. ACCESS TO RECORDS AFTER CLOSING
For a period of six (6) years after the Closing Date, Gaylord and its
representatives shall have reasonable access to all of the books and records of
the Station transferred to CBS and the CBS Subsidiaries hereunder to the extent
that such access may reasonably be required by Gaylord in connection with
matters relating to or affected by the operations of the Station prior to the
Closing Date. Such access shall be afforded by CBS upon receipt of reasonable
advance notice and during normal business hours. Gaylord shall be solely
responsible for any costs or expenses incurred by it pursuant to this Section
10.6. If CBS shall desire to dispose of any of such books and records prior to
the expiration of such six-year period, CBS shall, prior to such disposition,
give Gaylord a reasonable opportunity, at Gaylord's expense, to segregate and
remove such books and records as Gaylord may select.
For a period of six (6) years after the Closing Date, CBS and its
representatives shall have reasonable access to all of the books and records
relating to the Station which Gaylord or any of its Affiliates may retain after
the Closing Date. Such access shall be afforded by Gaylord and its Affiliates
upon receipt of reasonable advance notice and during normal business hours. CBS
shall be solely responsible for any costs and expenses incurred by it pursuant
to this Section 10.6. If Gaylord or any of its Affiliates shall desire to
dispose of any of such books and records prior to the expiration of such
six-year period, Gaylord shall, prior to such disposition, give CBS a reasonable
opportunity, at CBS's expense, to segregate and remove such books and records as
CBS may select.
SECTION 10.7. ENTIRE AGREEMENT; AMENDMENTS
This Agreement and the Exhibits and Schedules referred to herein, the
other Transaction Agreements and the documents delivered pursuant hereto and
thereto contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all prior
agreements, understandings or intents between or among any of the parties hereto
and related thereto (provided that nothing in this Agreement shall be deemed to
supersede the provisions of the Merger Agreement dated as of February 9, 1997
among Westinghouse Electric Corporation, G Acquisition Corp. and Gaylord
Entertainment Company and all other agreements related thereto, including the
Post-Closing Covenants Agreement dated as of September 30, 1997, among Gaylord
Entertainment Company, New Gaylord Entertainment Company and the subsidiaries of
New Gaylord Entertainment Company party thereto from time to time). The parties
hereto, by mutual agreement in writing, may amend, modify or supplement this
Agreement.
SECTION 10.8. INTERPRETATION
Article titles and headings to sections herein are inserted for
convenience of reference only and are not intended to be a part of or to effect
the meaning or interpretation of this Agreement. The Schedules referred to
herein shall be construed with and as an integral part of this Agreement to the
same extent as if they were set forth verbatim herein, and disclosure of any
information on any Schedule shall be deemed disclosure on all Schedules where
such information is manifestly applicable excluding Schedule 2.5.
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SECTION 10.9. WAIVERS
Any term or provision of this Agreement may be waived, or the time for
its performance may be extended, in a writing signed by the party or parties
entitled to the benefit thereof. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
SECTION 10.10. EXPENSES
Whether or not the Closing takes place, and except as otherwise
provided herein and subject to the following sentence, each party hereto will
pay all of its own costs and expenses incident to its negotiation and
preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel and
accountants. Gaylord will pay all such costs and expenses on behalf of GTC, GCI
and the Limited Partnership.
SECTION 10.11. PARTIAL INVALIDITY
Wherever possible, each provision hereof shall be interpreted in such
manner as to be effective and valid under applicable law, but in case any one or
more of the provisions contained herein shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein unless the deletion of
such provision or provisions would result in such a material change as to cause
completion of the transactions contemplated hereby to be unreasonable.
SECTION 10.12. EXECUTION IN COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be considered an original instrument, but all of which shall be
considered one and the same agreement, and shall become binding when one or more
counterparts have been signed by each of the parties and delivered to each of
the parties.
SECTION 10.13. DEFINITIONS
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 10.13:
"Accounting Firm" has the meaning specified in Section 1.13 of this
Agreement.
"Accounts Receivable" means the accounts held by the Limited
Partnership and to which Gaylord is entitled as of the Effective Time for
advertising and programming aired on the Station
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and for production and other services provided by the Limited Partnership prior
to the Effective Time , including rights and claims to payments made by the
Copyright Royalty Tribunal.
"Affiliate" means, with respect to any person, any other person which
directly or indirectly controls, is controlled by or is under common control
with such person[, excluding, with respect to Gaylord, The Oklahoma Publishing
Company].
"Balance Sheets" has the meaning specified in Section 2.4 of this
Agreement.
"Benefit Plans" has the meaning specified in Section 2.13 of this
Agreement.
"Cable Act Requirements" has the meaning specified in Section 2.26 of
this Agreement.
"CBS" has the meaning specified in the first paragraph of this
Agreement.
"CBS Common Stock" has the meaning specified in the Recitals to this
Agreement.
"CBS Dallas Media" has the meaning specified in the first paragraph of
this Agreement.
"CBS Dallas Ventures" has the meaning specified in the first paragraph
of this Agreement.
"CBS Indemnitees" has the meaning specified in Section 8.1 of this
Agreement.
"CBS Material Adverse Effect" has the meaning specified in Section 3.3
of this Agreement.
"CBS SEC Documents" has the meaning specified in Section 3.4 of this
Agreement.
"CBS Subsidiaries" has the meaning specified in the first paragraph of
this Agreement.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of New Gaylord Broadcasting Company, L.P., filed in the office of
the Secretary of State of Texas on September 1, 1995, as amended on November 28,
1995 and December 4, 1995 to change its name to Gaylord Broadcasting Company,
L.P.
"Closing" has the meaning specified in Section 1.2 of this Agreement.
"Closing Date" has the meaning specified in Section 1.2 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Period" has the meaning specified in Section 4.4 of this
Agreement.
"Communications Act" means the Communications Act of 1934, as amended,
and the rules and regulations and written policies and procedures promulgated
thereunder.
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"Constituent Corporations" has the meaning specified in the first
paragraph of this Agreement.
"Contaminant" means any waste, pollutant, hazardous substance, toxic or
radioactive substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, or any constituent of any such substance
or waste.
"DTV" has the meaning specified in Section 2.27 of this Agreement.
"DTV Facility" has the meaning specified in Section 2.27 of this
Agreement.
"DOJ" has the meaning specified in Section 4.2 of this Agreement.
"Effective Time" has the meaning specified in Section 1.3 of this
Agreement.
"Encumbrance" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
defect in title, covenant or other restrictions of any kind.
"Event of Loss" has the meaning specified in Section 10.15 of this
Agreement.
"Exchange Act" has the meaning specified in Section 2.2 of this
Agreement.
"FAA" means the Federal Aviation Administration.
"FCC" has the meaning specified in Section 2.2 of this Agreement.
"FCC Authorizations" means those Permits issued by the FCC for the
operation of the Station.
"FCC Consent" means action by the FCC granting its consent to the
transfer of control to CBS (or an Affiliate of CBS) of the FCC Authorizations as
contemplated by this Agreement pursuant to appropriate applications filed by the
parties with the FCC.
"Filed CBS SEC Documents" has the meaning specified in Section 3.7 of
this Agreement.
"Final Determination" has the meaning specified in Section 1.4 of the
Tax Matters Agreement.
"Final Order" means a written action or order issued by the FCC,
setting forth the FCC Consent, (a) which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, and (b) with respect to which (i) no
requests have been filed for administrative or judicial review, reconsideration,
appeal or stay and the time for filing any such requests for administrative or
judicial review, reconsideration or appeal, and the time for the FCC to set
aside the action on its own motion, have expired, or (ii) in the event of
review, reconsideration or appeal, the FCC's order has been affirmed and become
final by expiration of the time for further review, reconsideration or appeal.
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"Financial Statements" has the meaning specified in Section 2.4 of this
Agreement.
"Financial Statement Date" has the meaning specified in Section 2.4 of
this Agreement.
"FTC" has the meaning specified in Section 4.2 of this Agreement.
"GAAP" means generally accepted accounting principles.
"Gaylord" has the meaning specified in the first paragraph of this
Agreement.
"Gaylord's 401(k) Plan" has the meaning specified in Section 5.2 of
this Agreement.
"Gaylord Indemnitees" has the meaning specified in Section 8.2 of this
Agreement.
"Gaylord Material Adverse Effect" has the meaning specified in Section
2.1 of this Agreement.
"Gaylord's Pension Plan" has the meaning specified in Section 5.2 of
this Agreement.
"Gaylord Subsidiaries" has the meaning specified in the first paragraph
of this Agreement.
"Gaylord Subsidiary Stock" has the meaning specified in the Recitals to
this Agreement.
"Gaylord's Trademarks and Logos" has the meaning specified in Section
5.7 of this Agreement.
"GCI" has the meaning specified in the first paragraph of this
Agreement.
"GCI Articles of Merger" has the meaning specified in Section 1.3 of
this Agreement.
"GCI Certificate of Merger" has the meaning specified in Section 1.3 of
this Agreement.
"GCI Merger" has the meaning specified in the Recitals to this
Agreement.
"GCI Stock" has the meaning specified in the Recitals to this
Agreement.
"Governmental Entity" has the meaning specified in Section 2.2 of this
Agreement.
"GTC" has the meaning specified in the first paragraph of this
Agreement.
"GTC Certificate of Merger" has the meaning specified in Section 1.3 of
this Agreement.
"GTC Merger" has the meaning specified in the Recitals to this
Agreement.
"GTC Stock" has the meaning specified in the Recitals to this
Agreement.
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"Identified Agreements" has the meaning specified in Section 1.13(e) of
this Agreement.
"Improvements Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Including" means including, without limitation.
"Indemnitees" has the meaning specified in Section 8.2 of this
Agreement.
"Lease" has the meaning specified in Section 2.8 of this Agreement.
"Leased Property" has the meaning specified in Section 2.8 of this
Agreement.
"Liabilities and Costs" means all liabilities, investigations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including, without limitation, attorney,
expert and consulting fees and expenses, costs of investigation and feasibility
studies), fines, penalties and monetary sanctions, interest, direct or indirect,
known or unknown, absolute or contingent, past, present or future.
"Limited Partnership" has the meaning specified in the Recitals to this
Agreement.
"Limited Partnership Agreement" means the Agreement of Limited
Partnership of New Gaylord Broadcasting Company, L. P. dated as of September 1,
1995, as amended on February 1, 1999 to change its name to Gaylord Broadcasting
Company, L.P.
"Losses" has the meaning specified in Section 8.1 of this Agreement.
"Market Cable System" means any U.S. cable television system within the
Station's market, as defined in 47 C.F.R. ` 76.55(c) with two thousand (2000) or
more subscribers.
"Material Adverse Effect" means, when used in connection with an entity
or group of entities, any change, effect, event or occurrence that is materially
adverse to the business, properties, assets, financial condition, results of
operations or prospects of such entity or group, taken as a whole, other than
any change, effect, event or occurrence relating to the United States or the
Dallas/Fort Worth economies in general, to United States stock market conditions
in general, or to the entity's or group's industry or industries in general and
not to the entity or group specifically.
"Mergers" has the meaning specified in the Recitals to this Agreement.
"Notice of Disagreement" has the meaning specified in Section 1.13 of
this Agreement.
"NYSE" means The New York Stock Exchange.
"Organizational Documents" has the meaning specified in Section 2.1 of
this Agreement.
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"Owned Property" has the meaning specified in Section 2.8 of this
Agreement.
"Permits" has the meaning specified in Section 2.2 of this Agreement.
"Permitted Encumbrances" has the meaning specified in Section 2.9 of
this Agreement.
"Phase I Report" has the meaning specified in Section 5.8 of this
Agreement.
"Phase II Report" has the meaning specified in Section 5.8 of this
Agreement.
"Records" has the meaning specified in Section 5.11 of this Agreement.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any structure, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or structure.
"Relevant Taxes" has the meaning ascribed in Section 2.6 of this
Agreement.
"Remedial Action" means actions required to (a) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Requirements of Law" means any foreign, federal, state or local law,
rule or regulation, common law, order, consent, agreement, judgment, decree,
governmental Permit or other binding determination of any Governmental Entity.
"Securities Act" has the meaning specified in Section 2.2 of this
Agreement.
"Settlement Statement" has the meaning specified in Section 1.13 of
this Agreement.
"Spots" has the meaning specified in Section 1.10 of this Agreement.
"Station" has the meaning specified in the Recitals to this Agreement.
"Station Employees" has the meaning specified in Section 2.11 of this
Agreement.
"Tax Authority" has the meaning specified in Section 1.17 of the Tax
Matters Agreement.
"Taxes" has the meaning specified in Section 2.6 of this Agreement.
"Tax Matters Agreement" means the Tax Matters Agreement dated the date
hereof by and between Gaylord, GTC, GCI and CBS, a copy of which is attached
hereto as Exhibit A.
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"Tax Returns" has the meaning specified in Section 2.6 of this
Agreement.
"Third Party Claim" has the meaning specified in Section 8.4 of this
Agreement.
"To the best of CBS's knowledge" or any similar formulation means to
the actual knowledge, after due inquiry into the areas of their respective
responsibility, including without limitation review of their internal files and
records, of Mel Karmazin, Frederick G. Reynolds and Louis J. Briskman (it being
understood that no attorney-client privilege or work product privilege shall be
waived or compromised by this provision).
"To the best of Gaylord's knowledge" or any similar formulation means
to the actual knowledge, after due inquiry into the areas of their respective
responsibility, including review of their internal files and records, of Joseph
B. Crace, Carl Kornmeyer, Mark Floyd, and Brian Jones.
"Transaction Agreements" has the meaning specified in Section 2.2 of
this Agreement.
"Treasury Regulations" has the meaning specified in Section 2.6 of this
Agreement.
"Waiver" means a permanent waiver or a temporary waiver of at least six
(6) months' duration, including a temporary waiver conditioned on the outcome of
the FCC's pending rule-making proceeding with respect to its television
ownership rules (MM Docket Nos. 91-221 and 87-8), of the "one-to-a-market rule,"
47 C.F.R. ss.73 3555(c), to permit the common ownership and control by CBS of
the Station and the radio stations in the Dallas/Fort Worth area currently under
CBS's ownership and control.
SECTION 10.14. CONTROLLING PROVISIONS
Notwithstanding anything herein to the contrary, nothing in this
Agreement shall be construed as limiting the provisions contained in the Tax
Matters Agreement, and in the case of doubt or conflict, the terms of the Tax
Matters Agreement shall control.
SECTION 10.15. RISK OF LOSS
The risk of loss, damage or destruction to any of the assets of the
Limited Partnership to be transferred to CBS pursuant to this Agreement shall
remain with Gaylord until the Closing. If any of the assets material to the
operation of the Station is lost, damaged or destroyed prior to the Closing Date
(an "Event of Loss"), Gaylord shall promptly notify CBS of all particulars
thereof, including the cause (if known) and the extent to which the cost of
restoration, replacement and/or repair of the lost, damaged or destroyed assets
will be reimbursed under any insurance policy. Gaylord, at its expense, shall
use its reasonable best efforts to restore, repair or replace the assets with
comparable property of like value or quality as soon as practicable after the
Event of Loss and, if applicable, to restore all transmissions that were
interrupted due to the Event of Loss.
If an Event of Loss results in failure to satisfy the condition to CBS'
obligations to close under Section 6.4, then CBS may, at its option:
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(a) terminate this Agreement; or
(b) postpone the Closing Date until such time as the assets
have been restored, repaired or replaced in a manner and to an extent
reasonably satisfactory to CBS, unless the same cannot be reasonably
effected within one hundred twenty (120) days of the date CBS received
notice from Gaylord of the Event of Loss, in which case either Gaylord
or CBS may terminate this Agreement; or
(c) choose to accept the assets "as is", in which event
Gaylord shall assign or cause to be assigned to CBS all rights under
any insurance claims covering the loss, damage or destruction of the
assets and pay over or cause to be paid over to CBS any proceeds under
any such insurance policies received by Gaylord or any of its
subsidiaries prior to or after the Closing Date with respect thereto.
In the event the Closing Date is postponed pursuant to this Section
10.15, CBS and Gaylord will cooperate to extend the time during which this
Agreement must be closed as specified in the consent of the FCC.
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SECTION 10.16. RESOLUTION OF DISPUTES OVER SATISFACTION OF CONDITIONS
In the event (a) CBS or Gaylord, as applicable, determines that the
condition set forth in Section 6.4, 6.6 or 7.9 has not been satisfied at the
Closing Date (and CBS or Gaylord, as applicable, is not prepared to waive such
condition), or (b) CBS shall determine pursuant to Section 9.3 that Gaylord is
in material breach of its obligations and is unwilling to extend the Station's
status as an affiliate for an additional one year term, then the party making
such determination shall deliver to the other party a notice setting forth in
reasonable detail the facts and circumstances upon which the determination was
made. In the event the other party does not agree with such determination, the
Closing shall be delayed or final determination of non-renewal of affiliate
status shall be delayed, as the case may be, and such party shall be entitled to
a ten (10) day period from receipt of the notice within which to cause the
condition to be satisfied or the breach to be cured. If the dispute is not
resolved within the ten (10) day period, CBS and Gaylord shall submit the
dispute to a mutually agreed-upon law professor with at least ten (10) years'
experience in the law of corporate transactions and television broadcasting;
provided, that if the parties cannot agree upon a law professor, the party
making the determination of non-satisfaction of a condition or of material
breach, as applicable, shall select either Jams/Endisputes or CPR Institute for
Dispute Resolution, and the other party may accept the selection or elect the
other entity and the choice of that party shall be binding. The choice of person
or entity to resolve the dispute shall be made within five (5) working days
after the expiration of the ten (10) day grace period, and such person or entity
shall be referred to as the "Arbitrator." Within five (5) days of the selection
of the Arbitrator, CBS and Gaylord shall submit their respective positions to
the Arbitrator, in writing, together with any other material relied upon in
support of their respective positions. The party claiming that a condition has
not been satisfied or alleging a material breach shall have the burden of
persuasion. CBS and Gaylord shall use their reasonable efforts to cause the
Arbitrator to render a decision within ten (10) days following the submission of
such materials to the Arbitrator and in no event later than forty-five (45) days
from the date on which the determination was made by a party that a condition
had not been satisfied or that a material breach had occurred, as applicable.
The Arbitrator's decision shall be final and binding upon the parties. The cost
of any arbitration pursuant to this Section 10.16 shall be borne one-half by CBS
and one-half by Gaylord; provided that CBS and Gaylord shall each pay the fees
and expenses of their respective attorneys.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
GAYLORD ENTERTAINMENT COMPANY
By: ________________________
Its: _______________________
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GAYLORD TELEVISION COMPANY
By: ________________________
Its: _______________________
GAYLORD COMMUNICATIONS, INC
By: ________________________
Its: _______________________
CBS CORPORATION
By: ________________________
Its: _______________________
CBS DALLAS VENTURES, INC.
By: ________________________
Its: _______________________
CBS DALLAS MEDIA, INC.
By: ________________________
Its: _______________________
The Limited Partnership joins in the execution of this Agreement and agrees to
be bound hereby.
GAYLORD BROADCASTING COMPANY, L.P.
By: Gaylord Television Company, its general partner
By: ________________________
Its: _______________________
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1
Exhibit 10.1
TAX MATTERS AGREEMENT
TAX MATTERS AGREEMENT dated as of April 9, 1999 by and among GAYLORD
ENTERTAINMENT COMPANY, a Delaware corporation ("Gaylord"), GAYLORD TELEVISION
COMPANY, a Delaware corporation and direct wholly owned subsidiary of GAYLORD
("GTC"), GAYLORD COMMUNICATIONS, INC., a Texas corporation and a direct wholly
owned subsidiary of GAYLORD ("GCI"), and CBS CORPORATION, a Pennsylvania
corporation ("CBS").
WHEREAS, pursuant to the AGREEMENT AND PLAN OF MERGER (the "Merger
Agreement"), dated as of the date hereof by and among GAYLORD, GTC, GCI, CBS,
CBS DALLAS VENTURES, INC., ("Newco 1"), and CBS DALLAS MEDIA, INC. ("Newco 2"),
both Delaware corporations and direct wholly owned subsidiaries of CBS, Newco 1
will be merged with and into GCI (the "GCI Merger") and Newco 2 will be merged
with and into GTC (the "GTC Merger", and collectively with the GCI Merger, the
"Mergers"), with GCI and GTC as the surviving corporations;
WHEREAS, GAYLORD BROADCASTING COMPANY, L.P., a Texas limited partnership
(the "Limited Partnership"), is engaged in the business of owning and operating
television broadcast station KTVT-TV, Fort Worth/Dallas, Texas;
WHEREAS, GCI is the sole general partner of the Limited Partnership, and
GTC is the sole limited partner of the Limited Partnership;
WHEREAS, pursuant to the Mergers, Gaylord will receive shares of CBS common
stock, par value $1.00 per share (the "CBS Common Stock"), in exchange for all
of the issued and outstanding shares of GCI common stock (the "GCI Stock") and
GTC common stock (the "GTC Stock");
WHEREAS, the parties intend that for federal income tax purposes each of
the Mergers qualifies as a "reorganization" within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, Gaylord is the common parent of an affiliated group of
corporations (the "Gaylord Group") within the meaning of Section 1504(a) of the
Code and the members of the Gaylord Group have heretofore joined in filing
consolidated federal income Tax Returns;
WHEREAS, CBS is the common parent of an affiliated group of corporations
(the "CBS Group") within the meaning of Section 1504(a) of the Code and the
members of the CBS Group have heretofore joined in filing consolidated federal
income Tax Returns;
WHEREAS, Gaylord and CBS desire on behalf of themselves, their
2
Subsidiaries and their successors to set forth their rights and obligations with
respect to Taxes relating to taxable periods before and after the Closing Date;
and
WHEREAS, CBS and Gaylord desire to make certain representations, warranties
and covenants upon which Skadden, Arps, Slate, Meagher & Flom, LLP ("SASM&F")
will rely in rendering its opinion (the "Tax Opinion") as to the qualification
of the Mergers as "reorganizations" within the meaning of Section 368(a) of the
Code;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS(1)
1.1 "Closing Date" shall mean the last day on which, due to the Mergers,
GCI and GTC could be considered members of the Gaylord Group for federal income
Tax purposes.
1.2 "Dispose" (and with correlative meaning, "Disposition") shall mean
pay, discharge, settle or otherwise dispose.
1.3 "Due Date" shall mean, with respect to any Tax Return or payment, the
date on which such Tax Return is due to be filed with or such payment is due to
be made to the appropriate Tax Authority pursuant to applicable law, giving
effect to any applicable extensions of the time for such filing or payment.
1.4 "Final Determination" shall mean (i) the entry of a decision of a
court of competent jurisdiction at such time as an appeal may no longer be taken
from such decision, (ii) the execution of a closing agreement or its equivalent
between the particular taxpayer and the relevant Tax Authority, or (iii) any
other final Disposition complying with the contest provisions of Article VI
hereof.
1.5 "Merger Subsidiaries" shall mean Newco 1 and Newco 2.
1.6 "Payee" shall have the meaning set forth in Section 5.6.
1.7 "Payor" shall have the meaning set forth in Section 5.6.
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(1) Additional definitions are in the preceding portion of this Agreement.
Unless otherwise defined herein, all capitalized terms herein shall have the
meanings ascribed thereto in the Merger Agreement.
3
1.8 "Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
1.9 "Post-Closing Period" shall mean any taxable period beginning after
the Closing Date.
1.10 "Post-Closing Straddle Period" shall mean with respect to a Straddle
Period, that portion of such Straddle Period that begins on the day immediately
following the Closing Date.
1.11 "Pre-Closing Period" shall mean any taxable period that ends on or
prior to the Closing Date.
1.12 "Pre-Closing Straddle Period" shall mean with respect to a Straddle
Period, that portion of such Straddle Period ending on and including the Closing
Date.
1.13 "Related Person" shall mean a related person under Treasury
Regulation Section 1.368-1(e)(3).
1.14 "Section" shall refer to a section of this Agreement unless
otherwise indicated.
1.15 "Straddle Period" shall mean any taxable period that begins before or
on and ends after the Closing Date.
1.16 "Subsidiary" shall mean, with respect to any person, any corporation
or other organization, whether incorporated or unincorporated, of which (i) such
person or any other subsidiary of such person is a general partner or (ii) at
least 50% of the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization or at
least 50% of the value of the outstanding equity is directly or indirectly owned
or controlled by such person or by any one or more of its subsidiaries, or by
such person and one or more of its subsidiaries.
1.17 "Tax Authority" shall mean the Internal Revenue Service and any
other state, local or foreign governmental authority responsible for the
administration of Taxes.
1.18 "Tax Claim" shall mean a notice of deficiency, proposed adjustment,
assessment, audit, examination, suit, dispute or other claim with respect to
Taxes or a Tax Return.
1.19 "Underpayment Rate" shall mean the interest rate specified under
Section 6621(a)(2) of the Code.
4
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
2.1 Preparation and Filing of Pre-Closing Period Tax Returns. Gaylord
shall prepare (or cause to be prepared) and timely file (or cause to be timely
filed) all Tax Returns with respect to any Pre-Closing Period that includes GCI,
GTC or the Limited Partnership (including all Tax Returns filed on a
consolidated, combined or unitary basis). Gaylord shall have sole discretion as
to the positions in and with respect to any Tax Return described in the
preceding sentence to the extent that it relates to GCI, GTC or the Limited
Partnership; provided, however, that such Tax Returns shall be prepared on a
basis consistent with the past practices of GCI, GTC and the Limited
Partnership. Gaylord shall deliver (or shall cause to be delivered) to CBS a pro
forma set of Tax Returns for each of GCI, GTC and the Limited Partnership for
the Pre-Closing Period ending on the Closing Date at least twenty business days
prior to the Due Date thereof.
2.2 Preparation and Filing of Certain Straddle Period Tax Returns. CBS
shall prepare (or cause to be prepared) all Straddle Period Tax Returns which
include GCI or GTC or the Limited Partnership and, at least twenty business days
prior to the Due Date thereof, shall deliver (or cause to be delivered) such Tax
Return to Gaylord for its review and comment, together with a statement showing
in reasonable detail CBS's calculation of any Taxes attributable to a
Pre-Closing Straddle Period. Any Tax Return described in the preceding sentence
shall be prepared on a basis consistent with the past practice of GCI, GTC and
the Limited Partnership. Gaylord shall have the right to comment on such Tax
Returns and any changes, modifications, additions, or deletions suggested by
Gaylord shall be made to such Tax Returns to the extent they relate to a
Pre-Closing Straddle Period; provided, that such changes, modifications,
additions, or deletions are consistent with past practice; provided, further,
that Gaylord's comments are received by CBS at least fourteen business days
prior to the Due Date of the applicable Tax Return. If CBS does not accept any
change, modification, addition, or deletion suggested by Gaylord to any Straddle
Period Tax Return, then the provisions of Article IX shall govern the dispute.
If the dispute has not been resolved prior to the Due Date for filing of the Tax
Return, the Tax Return shall be filed as originally proposed by CBS, reflecting
any items agreed to by the parties at such time. Gaylord shall pay (or shall
cause to be paid) to CBS the amount of Taxes relating to any Pre-Closing
Straddle Period based on the Tax Returns prepared by CBS. When the dispute is
resolved pursuant to Article IX, a settlement payment shall be made from CBS to
Gaylord in an amount equal to the excess, if any, of (i) the amounts paid by
Gaylord in respect of such Taxes over (ii) the amount of Taxes for the
Pre-Closing Straddle Period finally determined to be due, plus interest at the
Chase Manhattan Bank prime rate in effect from the date of the original payment
from Gaylord to CBS to the date on which CBS repays Gaylord pursuant to this
paragraph. CBS shall not file (or cause to be filed) such Tax Returns without
Gaylord's written consent, which shall not be unreasonably
5
withheld or delayed and shall be deemed to be given in the absence of timely
written objection.
2.3 Preparation and Filing of Post-Closing Period Tax Returns. CBS shall
prepare (or cause to be prepared) and timely file (or cause to be timely filed)
any Tax Return with respect to any of GCI, GTC or the Limited Partnership for
any Post-Closing Tax Period.
2.4 Straddle Period Tax Years. To the extent permitted by law or
administrative practice, the taxable year of GCI, GTC and the Limited
Partnership which includes the Closing Date shall be treated as closing on (and
including) the Closing Date. All Tax items of the Limited Partnership for the
period ending on the Closing Date shall be included in the Gaylord Group
consolidated return, and in any state or local income tax return of GTC or GCI
for the taxable period ending on the Closing Date.
2.5 Section 754 Election. An election under Section 754 of the Code (and
comparable provisions of state or local tax law) shall be made on the Tax Return
of the Limited Partnership for its taxable year that includes or ends on the
Closing Date.
2.6 Amended Returns and Claims for Refund. Without the written consent of
Gaylord, none of CBS, GCI, GTC or the Limited Partnership shall amend (or cause
to be amended), or file (or cause to be filed) a claim for a Tax refund with
respect to, any Tax Returns for a Pre-Closing Period or which relate to tax
items in a Pre-Closing Straddle Period, other than disputed items with respect
to which Gaylord received payments pursuant to Section 2.2, that included
Gaylord, GCI, GTC or the Limited Partnership.
ARTICLE III
PAYMENT IN RESPECT OF TAXES
3.1 Payment of Taxes by Gaylord. Gaylord shall pay (or cause to be paid)
in a timely manner to the appropriate Tax Authority all Taxes due with respect
to Tax Returns which it is required to file pursuant to Section 2.1. For all
Taxes in respect of Straddle Periods for which CBS is required to file (or cause
to be filed) Tax Returns pursuant to Section 2.2, Gaylord shall pay CBS the
amount of such Taxes relating to any Pre-Closing Straddle Period (as determined
in accordance with Section 2.2) at least five business days prior to the Due
Date of the Tax Return reporting such Taxes.
3.2 Payment of Taxes by CBS. CBS shall remit (or cause to be remitted) in
a timely manner to the appropriate Tax Authority all Taxes due in respect of any
Tax for which it is required to file a Tax Return pursuant to Section 2.2;
provided, however,
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that Gaylord shall have paid CBS for the amount of such Taxes relating to any
Pre-Closing Straddle Period, as provided in Section 3.1.
3.3 Apportionment in Straddle Periods. Where it is necessary pursuant to
this Agreement to apportion between Gaylord, on the one hand, and CBS, on the
other hand, the Tax liability of GCI, GTC or the Limited Partnership for a
Straddle Period which is not treated under Section 2.4 as closing on the Closing
Date, such liability shall be apportioned between the Pre-Closing Straddle
Period and the Post-Closing Straddle Period on the basis of an interim closing
of the books, except that Taxes imposed on a periodic basis (such as real
property Taxes) shall be allocated on a daily basis.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS FOR TAX OPINION
4.1 Joint Representations, Warranties and Covenants of the Parties. Each
of CBS, Newco 1, Newco 2, Gaylord, GTC, and GCI, after due inquiry, hereby
represents, warrants and covenants that, as of the date hereof and the Effective
Time:
(a) It understands that SASM&F will be relying upon the
representations, warranties and covenants set forth in this Article IV in
rendering the Tax Opinion.
(b) The consideration to be received by Gaylord in the Mergers in
exchange for the GCI Stock and the GTC Stock was negotiated by the parties to
the Merger Agreement at arm's length.
(c) There is no intercorporate indebtedness for borrowed money
existing between (x) CBS and any of its Subsidiaries and (y) Gaylord and any of
its Subsidiaries, that was or will be issued, acquired, or settled at a
discount.
(d) In the Mergers, GCI Stock representing control of GCI and GTC
Stock representing control of GTC, each within the meaning of Section 368(c) of
the Code, will be exchanged for CBS Common Stock. For purposes of this
representation, GCI Stock or GTC Stock exchanged in connection with the Mergers
for cash or other property originating with CBS will be treated as outstanding
GCI Stock or GTC Stock at the Effective Time.
(e) It will not take (or cause to be taken) any position on any Tax
Return, in any proceeding before any Tax Authority, or otherwise, that is
inconsistent with the treatment of the Mergers as "reorganizations" within the
meaning of Section 368(a) of the Code, unless otherwise required or permitted by
a Final Determination. This paragraph will not be deemed violated if, with the
prior written consent of Gaylord (which shall not be unreasonably withheld), CBS
makes protective
7
refund claims taking a contrary position, if necessary to keep open the
applicable statutes of limitations for CBS for all taxable years since the
Closing Date, so that such statutes remain open so long as CBS is potentially
subject to an indemnification obligation under Section 5.3.
4.2 Representations, Warranties and Covenants of CBS and the Merger
Subsidiaries. Each of CBS, Newco 1 and Newco 2, after due inquiry, hereby
represents, warrants and covenants that, as of the date hereof and the Effective
Time:
(a) The facts relating to the contemplated Mergers to the extent
described in the Merger Agreement are, insofar as such facts pertain to CBS and
the Merger Subsidiaries, true and correct in all material respects.
(b) Except as provided in the Merger Agreement, CBS and each of the
Merger Subsidiaries will pay their respective expenses, if any, incurred in
connection with the Mergers. However, to the extent any expenses related to the
Mergers are to be funded directly or indirectly by a party other than the
incurring party, such expenses are within the guidelines set forth in Rev. Rul.
73-54, 1973-1 C.B. 187.
(c) Neither CBS nor either of the Merger Subsidiaries is an investment
company within the meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code.
(d) Prior to the Effective Time, CBS will be in control of the Merger
Subsidiaries within the meaning of Section 368(c) of the Code.
(e) Each of the Merger Subsidiaries is a corporation directly owned
by CBS, was formed at or about the date hereof, was created for the sole purpose
of facilitating the Mergers and has not conducted any business activities other
than in connection with the Mergers.
(f) The Merger Subsidiaries will have no material liabilities assumed
by GCI or GTC, and will not transfer to GCI or GTC any assets subject to
material liabilities.
(g) After the Mergers, (i) GCI will hold at least 90% of the fair
market value of its net assets held immediately prior to the Mergers, and at
least 70% of the fair market value of its gross assets held immediately prior to
the Mergers, (ii) GTC will hold at least 90% of the fair market value of its net
assets held immediately prior to the Mergers, and at least 70% of the fair
market value of its gross assets held immediately prior to the Mergers, (iii)
GCI will hold at least 90% of the fair market value of Newco 1's net assets and
at least 70% of the fair market value of Newco 1's gross assets held immediately
prior to the Mergers and (iv) GTC will hold at least 90% of the fair market
value of Newco 2's net assets and at least 70% of the fair market value of Newco
2's gross assets held immediately prior to the Mergers. For purposes of this
8
representation, (w) amounts paid by GCI or GTC to Gaylord in cash or other
property (including any assets distributed to Gaylord prior to the Mergers), (x)
amounts paid by either of the Merger Subsidiaries to CBS in cash or other
property, (y) amounts paid by GCI, GTC or the Merger Subsidiaries to pay
reorganization expenses, and (z) all redemptions and distributions (except for
regular, normal dividends) made prior to or after the Mergers by GTC, GCI or the
Merger Subsidiaries, in each of (w) through (z), in connection with the Mergers,
will be included as assets of GCI, GTC or the Merger Subsidiaries, respectively,
held immediately prior to the Mergers. For purposes of this representation, CBS
assumes that the last sentence of Section 4.3(e) is correct.
(h) Following the Mergers, GCI and GTC will continue their respective
historic business or use a significant portion of their respective historic
business assets in a business.
(i) None of CBS, any Related Person to CBS, or any Person acting as an
intermediary for CBS or such a Related Person has a plan or intention to acquire
any of the CBS Common Stock issued in the Mergers (provided that nothing in this
paragraph will prevent any such person from purchasing CBS Common Stock on the
open market).
(j) CBS has no plan or intention to liquidate GCI or GTC, to merge GCI
or GTC with or into another corporation, to cause GCI or GTC to issue additional
shares of stock that could result in CBS losing control of GCI or GTC within the
meaning of Section 368(c) of the Code, to sell, transfer or otherwise dispose of
the stock of GCI or GTC (except for transfers of stock described in Treasury
Regulation Section 1.368-2(k)(2)), or to cause GCI or GTC to sell, transfer or
otherwise dispose of any of its assets (except for dispositions made in the
ordinary course of business or transfers of assets described in Treasury
Regulation Section 1.368-2(k)(2)). Within the two year period following the
Closing Date, CBS will not liquidate GCI or GTC or cause GCI or GTC to merge
with or into another corporation.
(k) Neither CBS nor any of its Subsidiaries owns, directly or
indirectly, any GCI Stock or GTC Stock. Neither CBS nor any of its Subsidiaries
(during the period they have been Subsidiaries of CBS) owned, directly or
indirectly, any GCI Stock or GTC Stock in the five year period immediately prior
to the Effective Time. In addition, no Related Person of CBS (i) owns any GCI
Stock or GTC Stock or (ii) except pursuant to the Merger Agreement, will acquire
GCI Stock or GTC Stock before the Mergers in connection with the Mergers (within
the meaning of Treasury Regulation Section 1.368-1(e)(2)).
4.3 Representations, Warranties, and Covenants of Gaylord, GCI and GTC.
Each of Gaylord, GCI and GTC, after due inquiry, represents, warrants and
covenants that, as of the date hereof and the Effective Time:
9
(a) The facts relating to the contemplated Mergers to the extent
described in the Merger Agreement are, insofar as such facts pertain to Gaylord,
GCI and GTC, true and correct in all material respects.
(b) Except as provided in the Merger Agreement, Gaylord, GCI and GTC
will pay their respective expenses, if any, incurred in connection with the
Mergers. However, to the extent any expenses related to the Mergers are to be
funded directly or indirectly by a party other than the incurring party, such
expenses are within the guidelines set forth in Rev. Rul. 73-54, 1973-1 C.B.
187.
(c) Neither Gaylord, GCI nor GTC is an investment company within the
meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code.
(d) Neither GCI nor GTC nor any Related Person to GCI or GTC has
redeemed or otherwise acquired or has any present plan or intention to redeem or
otherwise acquire any GCI Stock or GTC Stock in anticipation of the Mergers, or
otherwise as part of a plan of which the Mergers are a part. Except as
contemplated by the Merger Agreement, neither GCI nor GTC nor any Related Person
to GCI or GTC has made or has any present plan or intention to make any
extraordinary distributions with respect to GCI Stock or GTC Stock.
(e) At the time of the Mergers, (i) GCI will hold at least 90% of the
fair market value of its net assets held immediately prior to the Mergers, and
at least 70% of the fair market value of its gross assets held immediately prior
to the Mergers and (ii) GTC will hold at least 90% of the fair market value of
its net assets held immediately prior to the Mergers, and at least 70% of the
fair market value of its gross assets held immediately prior to the Mergers. For
purposes of this representation, (x) amounts paid by GCI or GTC to Gaylord in
cash or other property (including any assets distributed to Gaylord prior to the
Mergers), (y) amounts paid by GCI or GTC to pay reorganization expenses, and (z)
all redemptions and distributions (except for regular, normal dividends) made
prior to the Mergers by GTC or GCI, in each of (x) through (z), in connection
with the Mergers, will be included as assets of GCI or GTC, respectively, held
immediately prior to the Mergers. The sum of (A) the amounts referred to in
clauses (x) through (z) above and (B) any other amounts paid or transferred by
GCI or GTC in connection with the Mergers does not exceed 9% of the fair market
value of the net or gross assets of GCI or GTC, as applicable, held immediately
prior to the Mergers.
(f) Neither GCI nor GTC will have outstanding any warrants, options,
convertible securities, or any other type of right pursuant to which any Person
could acquire stock in GCI or GTC, that if exercised or converted, would affect
CBS's acquisition or retention of control of GCI or GTC, as defined in Section
368(c) of the Code.
(g) Neither GTC nor GCI is a party to, or is under the jurisdiction
of a court in a case under Title 11 of the United States Code, and neither
10
GCI nor GTC is in receivership, foreclosure, or similar proceeding in a federal
or state court (including a case within the meaning of Section 368(a)(3)(A) of
the Code.)
ARTICLE V
INDEMNIFICATION
5.1 Obligations of Gaylord. Except as provided in Section 5.3, Gaylord
shall indemnify and hold the CBS Indemnitees harmless from and against the
following:
(a) any liability for Taxes of Gaylord, GCI, GTC or the Limited
Partnership for any Pre-Closing Period and any Pre-Closing Straddle Period,
including any liability of any of GCI or GTC arising under the provisions of
Treasury Regulation Section 1.1502-6(a) or comparable provisions of foreign,
state or local law for any Pre-Closing Period and Pre-Closing Straddle Period
(other than liabilities for Taxes described in Section 5.2(b));
(b) any liability for income, state franchise or similar Taxes
(excluding any transfer or similar taxes covered by Section 5.1 of the Merger
Agreement) of GCI, GTC or the Limited Partnership with respect to any taxable
income recognized solely from the transfer of GTC Stock and GCI Stock to CBS in
exchange for the consideration provided for in the Merger Agreement
(c) any liability for Taxes of the CBS Indemnitees arising from a
breach of any representation or warranty contained in Section 2.6 of the Merger
Agreement, calculated as the amount of the excess of (x) the actual liability
for Taxes of the CBS Indemnitee for the relevant taxable period over (y) the
liability for Taxes of the CBS Indemnitee for such taxable period assuming such
breach of representation or warranty had not occurred but with all other facts
unchanged.
5.2 Obligations of CBS. CBS shall indemnify and hold the Gaylord
Indemnitees harmless from and against the following:
(a) any liability for Taxes of GCI, GTC, or the Limited Partnership
for any Post-Closing Period and any Post-Closing Straddle Period (other than
liabilities for Taxes described in Section 5.1(b) or (c)); and
(b) any liability for Taxes of the Gaylord Indemnitees arising from a
breach of any representation or warranty contained in Section 3.11 of the Merger
Agreement, calculated as the amount of the excess of (x) the actual liability
for Taxes of the Gaylord Indemnitee for the relevant taxable period over (y) the
liability for Taxes of the Gaylord Indemnitee for such taxable period assuming
such breach of representation, covenant or warranty had not occurred but with
all other facts unchanged.
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5.3 Additional Obligations of CBS.
(a) (i) If, notwithstanding the intention of the parties hereto,
(1) there is a Final Determination that the GTC Merger or the GCI Merger does
not qualify as a "reorganization" within the meaning of Section 368(a) of the
Code, (2) such failure to qualify as a "reorganization" is attributable to a
breach by CBS of a representation, covenant or warranty contained in Section 4.1
or Section 4.2, (3) Gaylord has not breached a representation, covenant or
warranty contained in Section 4.1(b), (c), (d) or (e) and (4) there is no breach
of any representation, covenant or warranty by Gaylord, GCI or GTC contained in
Section 4.3 that materially contributes to such failure to qualify as a
reorganization, then CBS shall indemnify and hold the Gaylord Indemnitees
harmless from and against any liability for Taxes of Gaylord, Gaylord's
Subsidiaries, GCI, GTC or the Limited Partnership arising from any such breach,
calculated as the amount of the excess of (x) the actual liability for Taxes of
Gaylord, Gaylord's Subsidiaries, GCI, GTC or the Limited Partnership for the
taxable year that includes the Closing Date over (y) the liability for Taxes of
Gaylord, Gaylord's Subsidiaries, GCI, GTC or the Limited Partnership for such
taxable year assuming such breach of representation, covenant or warranty had
not occurred but with all other facts unchanged. In making the calculation in
the preceding sentence, any Taxes imposed on the Gaylord Indemnitees as a result
of receiving indemnity payments under this Section 5.3(a)(i) shall be
disregarded and not indemnified against by CBS.
(ii) If (1) an amount would be payable by CBS to a Gaylord
Indemnitee under Section 5.3(a)(i), (2) within ten years after the Closing Date
Gaylord (or a successor or affiliate) disposes of all or a portion of its CBS
Common Stock (or a successor asset which is "substituted basis property" within
the meaning of Section 7701(a)(42) of the Code) in one or more taxable
transactions and (3) as a result of the Final Determination described in Section
5.3(a)(i)(1), Gaylord (or a successor or affiliate) has a tax basis in such CBS
Common Stock (or such successor asset) equal to the fair market value of such
CBS Common Stock on the Closing Date, then the amount payable by CBS to the
Gaylord Indemnitees under Section 5.3(a)(i) shall be reduced (or, to the extent
that such taxable disposition within such ten year period occurs after such
Final Determination, Gaylord shall reimburse CBS for any such payment) to the
extent necessary so that the Gaylord Indemnitees are in the same after-Tax
position as if the Mergers qualified as "reorganizations" under Section 368(a)
of the Code (taking into account the Tax consequences of the Mergers, such
taxable disposition(s) of such CBS Common Stock (or such successor asset),
Gaylord's receipt of the indemnity payments from CBS under Section 5.3(a)(i),
and any reduction or return of such indemnity payments to CBS pursuant to this
Section 5.3(a)(ii) but disregarding any increased tax basis in the CBS Common
Stock (or such successor asset) that has not been so disposed of); provided,
however, that if the conditions described in Section 5.3(b)(i), (iii) and (iv)
are satisfied, the net amount of any payments from CBS to the Gaylord
Indemnitees pursuant to this Section 5.3(a)(ii) to be retained by the Gaylord
Indemnitees hereunder
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shall in no event be less than the amount payable by CBS pursuant to Section
5.3(b)(A) and (B).
(b) If, notwithstanding the intention of the parties hereto, (i) there
is a Final Determination that the GTC Merger does not qualify as a
"reorganization" within the meaning of Section 368(a) of the Code, (ii) Section
5.3(a) does not apply, (iii) CBS obtains a "cost" basis in substantially all the
assets of the Limited Partnership (based on the value of the CBS Common Stock
issued to Gaylord in exchange for the stock of GTC), and (iv) CBS is not
precluded from depreciating or amortizing substantially all of the tax basis of
the otherwise depreciable or amortizable assets of the Limited Partnership
because of the "anti-churning" provisions under Section 197(f))(9) of the Code,
then CBS shall pay to Gaylord the amount of (A) $40 million, subject to
reduction, as determined pursuant to Section 6.1(c), plus (B) the amount of
interest, if any, received by CBS from any Taxing Authority which is
attributable to any overpayment of Taxes solely resulting from the GTC Merger
failing to qualify as a "reorganization" within the meaning of Section 368(a) of
the Code.
5.4 Tax Obligations Arising Under a Pre-Closing Period Tax Sharing
Agreement. Except as set forth in this Agreement, all existing tax sharing
agreements and practices regarding Taxes and their payment, allocation or
sharing between any member of the Gaylord Group and any of GCI, GTC or the
Limited Partnership shall be terminated as of the Closing Date and no remaining
liabilities thereunder shall exist thereafter.
5.5 Refunds. Gaylord shall be entitled to any refund of Taxes of GCI, GTC
or the Limited Partnership attributable to any Pre-Closing Period and any
Pre-Closing Straddle Period; provided, however, that Gaylord shall not be
entitled to any such refunds of Taxes with respect to any amounts paid to
Gaylord pursuant to Section 2.2. If CBS, GCI, GTC, the Limited Partnership or
any of their Subsidiaries receives any refund of Tax to which Gaylord is
entitled pursuant to this Section 5.5, CBS shall promptly notify Gaylord and
shall pay the amount of any such refund promptly after the receipt of such
refund.
5.6 Payments.
(a) To the extent that a party (the "Payor") is required to make a
payment to another party (the "Payee") pursuant to this Article V, the Payor
shall pay the Payee the amount of such payment obligation no later than five
business days after the later of (i) a Final Determination or other event giving
rise to the payment obligation and (ii) the Payee's presentment to the Payor of
its calculation of the amount payable by the Payor.
(b) Any amount payable under this Article V shall be payable in cash
in immediately available funds.
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5.7 Limitations. Except as otherwise provided in this Agreement, the
principles of Section 8.5 of the Merger Agreement shall apply to any indemnity
payment under this Agreement.
5.8 Allocation of Indemnity Payments. Gaylord and CBS agree to allocate
any indemnification payments received or paid by either party under this Article
V to the exchange of GTC Stock and GCI Stock, respectively, in the Mergers on
the same percentage basis as is provided in Section 1.9 of the Merger Agreement.
ARTICLE VI
TAX CLAIMS
6.1 General.
6.2 Tax Claim Management. CBS or Gaylord, as the case may be, shall
promptly notify the other party in writing of any Tax Claim that may reasonably
be likely to result in liability of the other party under this Agreement;
provided, however, that the failure to provide such notice shall not diminish
the indemnifying party's obligation hereunder except to the extent such failure
actually prejudices the indemnifying party's position as a result thereof. With
respect to any such Tax Claim, the party not controlling such Tax Claim shall
(i) not make any submission to any Tax Authority without offering the other
party the opportunity to review such submission, (ii) not take any action or
make (or purport to make) any representations in connection with such Tax Claim
with respect to issues affecting the other party's indemnity hereunder, (iii)
keep the other party informed as to any information that it receives regarding
the progress of such Tax Claim, (iv) provide the other party with any
information that it receives regarding the nature and amounts of any proposed
Disposition of the Tax Claim, (v) permit the other party to participate in all
conferences, meetings or proceedings with any Tax Authority in which the
indemnified Tax Claim is or may be a subject, and (vi) permit the other party to
participate in all court appearances in which the indemnified Tax Claim is or
may be a subject. With respect to any Tax Claim relating to a Pre-Closing Period
for which Gaylord is liable pursuant to this Agreement, CBS shall either file
(or cause to be filed) submissions at Gaylord's direction or appoint (or cause
to be appointed) Gaylord or its authorized representatives as additional
authorized representatives entitled to communicate fully with the Internal
Revenue Service with respect to such Tax Claim.
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ARTICLE VII
COOPERATION
CBS and Gaylord shall (and shall cause their respective Subsidiaries to)
cooperate with each other in the preparation and filing of any Tax Returns and
the conduct of any audit or other proceeding and each shall execute and deliver
such powers of attorney and make available such other documents as are necessary
to carry out the intent of this Agreement. Such cooperation shall include,
without limitation, (a) making employees available on a mutually convenient
basis to provide such assistance as might reasonably be required and (b)
providing such information as might reasonably be required in connection with
any such Tax Return or proceeding, including without limitation, records,
returns, schedules, documents, work papers or other relevant materials. In
addition, Gaylord shall provide such available information to CBS as is
reasonably necessary for CBS to determine its tax basis in the stock of GTC and
GCI and in the Limited Partnership, and the tax basis of the Limited Partnership
in its assets.
The parties hereto shall use reasonable efforts to reduce any transfer,
sales or other similar Taxes that may be incurred with respect to the
transactions contemplated by the Merger Agreement.
ARTICLE VIII
RETENTION OF RECORDS; ACCESS
CBS, GCI, GTC and the Limited Partnership and Gaylord shall (a) until the
expiration of the relevant statutes of limitations (giving effect to any
applicable extensions or waivers), retain records, documents, accounting data
and other information (including computer data) necessary for the preparation
and filing of all Tax Returns in respect of Taxes of GCI, GTC and the Limited
Partnership or for a Tax Claim by a Tax Authority relating to such Tax Returns;
and (b) give to the other group reasonable access to such records, documents,
accounting data and other information (including computer data) and to its
personnel (ensuring their cooperation) and premises, with reimbursement by the
requesting group of reasonable out-of-pocket costs incurred therewith, for the
purpose of the review or audit of such Tax Returns to the extent relevant to an
obligation or liability of any party under this Agreement. Prior to destroying
any records, documents, data or other information described in this Article
VIII, the group wishing to destroy such items shall give the other group a
reasonable opportunity to obtain such items (at such other group's expense).
15
ARTICLE IX
DISPUTES
If the parties disagree as to the calculation of a Tax or the amount of
(but not liability for) any payment to be made under this Agreement, the parties
shall cooperate in good faith to resolve any such dispute, and any agreed-upon
amount shall be paid to the appropriate party. If the parties are unable to
resolve any such dispute within fifteen business days thereafter, such dispute
shall be resolved by an internationally recognized accounting firm acceptable to
both CBS and Gaylord. The decision of such firm shall be final and binding. The
fees and expenses incurred in connection with such decision shall be shared by
CBS and Gaylord in accordance with the final allocation of the Tax liability in
dispute. Following the decision of such accounting firm, the parties shall each
take (or cause to be taken) any action that is necessary or appropriate to
implement such decision, including, without limitation, the filing of amended
Tax Returns and the prompt payment of underpayments or overpayments, with
interest calculated on such underpayments or overpayment at the Underpayment
Rate from the date such payment was due.
ARTICLE X
SURVIVAL
Notwithstanding any other provision in this Agreement to the contrary, the
rights and obligations provided for in this Agreement shall not terminate any
earlier than the expiration of the applicable statute of limitation for the
relevant taxable periods in question (giving effect to any applicable waivers or
extensions).
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Interest on Late Payments. Any payment required by this Agreement
which is not made on or before the date required to be made hereunder shall bear
interest after such date at the Underpayment Rate.
11.2 Notices and Governing Law. All notices required or permitted to be
given pursuant to this Agreement shall be given, and the applicable law
governing the interpretation of this Agreement shall be determined, in
accordance with the applicable provisions of the Merger Agreement.
11.3 Amendments. This Agreement may not be amended except by an agreement
in writing, signed by the parties.
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11.4 Binding Effect; No Assignment; Third Party Beneficiaries. This
Agreement shall be binding on, and shall inure to the benefit of, the parties
and the respective successors, assigns, and Persons controlling any of the
corporations bound hereby. CBS, on the one hand, and Gaylord, on the other hand,
hereby guarantee the performance of all actions, agreements and obligations
provided for under this Agreement of CBS's Subsidiaries and Gaylord's
Subsidiaries, respectively. CBS and Gaylord shall, upon the written request of
any other party, cause any of their respective Subsidiaries to execute this
Agreement. No party to this Agreement shall assign any of its rights or delegate
any of its duties under this Agreement without the prior written consent of
Gaylord, in the case of CBS, and CBS, in the case of Gaylord. No Person
(including, without limitation, any employee of a party or any stockholder of a
party) shall be, or shall be deemed to be, a third party beneficiary of this
Agreement.
11.5 Entire Agreement. This Agreement constitutes the entire agreement of
the parties concerning the subject matter hereof and supersedes all prior
agreements, whether or not written, concerning such subject matter. To the
extent that the provisions of this Agreement are inconsistent with the
provisions of the Merger Agreement, the provisions of this Agreement shall
prevail.
11.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute together the same documents.
17
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
GAYLORD ENTERTAINMENT
COMPANY
By: ________________________________
Name:
Title:
GAYLORD TELEVISION COMPANY
By: ________________________________
Name:
Title:
GAYLORD COMMUNICATIONS, INC.
By: ________________________________
Name:
Title:
CBS CORPORATION
By: ________________________________
Name:
Title:
1
EXHIBIT 10.2
FIRST AMENDMENT TO POST-CLOSING COVENANTS AGREEMENT AND
NON-COMPETITION AGREEMENTS
This First Amendment is made this 9th day of April, 1999, effective
upon the execution hereof, by and among CBS Corporation, formerly named
Westinghouse Electric Corporation, a Pennsylvania corporation ("Parent"),
Gaylord Entertainment Company, as successor to New Gaylord Entertainment
Company, a Delaware corporation ("Gaylord"), Edward L. Gaylord, and E. K.
Gaylord II.
RECITALS
1. The parties to this First Amendment were the principal parties to
the Post-Closing Covenants Agreement dated as of September 30, 1997, by and
among Parent, Gaylord, New Gaylord Entertainment Company, and certain
subsidiaries of New Gaylord Entertainment Company (the "Post-Closing Covenants
Agreement"), and Edward L. Gaylord, E. K. Gaylord II and Parent were the parties
to Non-Competition Agreements dated September 30, 1997 affecting Edward L.
Gaylord and E. K. Gaylord II, respectively (the "Non-Competition Agreements").
2. The parties desire to amend the Post-Closing Covenants Agreement and
the Non-Competition Agreements as provided in this First Amendment.
3. Capitalized terms in this First Amendment shall have the meaning
ascribed to them in the Post-Closing Covenants Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and promises herein contained, the parties agree as follows:
1. Section 3.04(a) of the Post-Closing Covenants Agreement, Section 1
of the Non-Competition Agreement, dated September 30, 1997 between Parent and
Edward L. Gaylord, and Section 1 of the Non-Competition Agreement, dated
September 30, 1997 between Parent and E. K. Gaylord II, shall be and are hereby
amended to provide that the terms of the non-competition provisions in each such
agreement shall be four (4) years rather than five (5) years as originally
specified.
2. Reference is made to Section 3.05 of the Post-Closing Covenants
Agreement and in relation thereto the parties agree that: (i) Parent shall pay
to Gaylord the sum of Five Million Dollars ($5,000,000) in cash or immediately
available funds upon execution of this First Amendment, to be credited towards
the final resolution of the obligations, if any, of Parent to Gaylord in
connection with the working capital adjustment described in Section 3.05; (ii)
the parties shall proceed, as promptly as possible, to execute the engagement
letter for the Washington, D.C. office of Ernst & Young, the Accounting Firm
selected to resolve the dispute; and (iii) the parties
1
2
shall use all reasonable efforts to complete the binding arbitration process as
soon as practicable. To the extent that the amount finally determined to be
payable by CBS to Gaylord is less than $5,000,000 plus interest thereon at the
rate specified in Section 3.05 of the Post-Closing Covenants Agreement from the
date of CBS's payment of $5,000,000 pursuant hereto, Gaylord shall pay the
difference to CBS. To the extent the amount finally determined to be payable by
CBS to Gaylord is more than $5,000,000 plus interest thereon at the rate
specified in Section 3.05 of the Post-Closing Covenants Agreement from the date
of CBS's payment of $5,000,000 pursuant hereto, CBS shall pay the excess to
Gaylord. To the extent it is finally determined that Gaylord is obligated to pay
any amount to CBS, Gaylord shall pay to CBS such amount and shall refund the
$5,000,000 plus interest thereon at the rate specified in Section 3.05 of the
Post-Closing Covenants Agreement from the date of CBS's payment of $5,000,000
pursuant hereto.
3. In all other respects, the Post-Closing Covenants Agreement and the
Non-Competition Agreements are not changed or amended.
IN WITNESS WHEREOF, the parties (on behalf of themselves, their
subsidiaries, and their affiliates) have caused this First Amendment to be
executed as of the day and year first above written.
GAYLORD ENTERTAINMENT COMPANY
By: _______________________________
Title: _______________________________
CBS CORPORATION
By: _______________________________
Title: _______________________________
________________________________________
Edward L. Gaylord
________________________________________
E. K. Gaylord II
2
1
EXHIBIT 99
CONTACTS: Alan Hall J. Russell Worsham Gil Schwartz
Gaylord Entertainment Gaylord Entertainment CBS Corporation
(615) 316-6551 (615) 316-6564 (212) 975-2121
FOR IMMEDIATE RELEASE
CBS CORPORATION TO ACQUIRE KTVT-TV IN DALLAS-FORT WORTH FROM GAYLORD
ENTERTAINMENT COMPANY FOR $485 MILLION IN CBS STOCK
NASHVILLE, TN, April 12, 1999 -- Gaylord Entertainment Company (NYSE:GET) and
CBS Corporation (NYSE:CBS) have entered into a definitive agreement whereby CBS
will acquire Gaylord Entertainment's entire interest in the entities that own
KTVT-TV in Dallas-Fort Worth in exchange for $485 million of CBS common stock,
officials of both companies announced today. The transaction is intended to be
tax free.
KTVT, located in the nation's 7th-largest television market, was purchased by
Gaylord Entertainment in 1963 and operated as an independent station until
becoming a CBS affiliate in July 1995.
"The sale of KTVT is good for all of the parties involved," said Gaylord
Entertainment President and Chief Executive Officer Terry London. "We have
achieved a good value for our shareholders, and as part of our agreement, we
will receive $1 million of advertising time on the station annually over the
next 10 years. At the same time, the synergies created by KTVT becoming part of
CBS' large group of Owned-and-operated stations and the potential benefits
created by the addition of a television station to its portfolio of other media
properties within the Dallas-Fort Worth market present great upside potential
for the station, for CBS and for viewers."
"Our strategy is to concentrate our media ownership in the largest advertising
markets in the nation - that's where the people are, that's where the
advertising revenue is, and that's where CBS wants to be," said Mel Karmazin,
President and Chief Executive Officer, CBS Corporation. "Major market VHF
television stations, particularly in the nation's top 10 markets, are the most
scarce assets in this business. This acquisition allows a very rare opportunity
to expand our TV holdings into a growth market in which CBS already has a
significant media position. We believe that KTVT, working with our radio
stations, will be able to improve its competitive position and serve the
citizens of Dallas-Fort Worth with sports, news, entertainment and information
in a way that is unequalled by any other media company. The acquisition will
also help enhance the CBS Television Network, which will benefit from a strong
Owned-and-operated station in a market that serves nearly two percent of the
nation's population."
"The station has served as a tremendous marketing force for our various
entertainment and hospitality businesses - including country music, Christian
music and the Opryland Hotel in Nashville," said London. "Under our agreement,
we will retain access to this key media outlet, allowing us to continue to
promote our remaining businesses as well as new ventures such as the Opryland
Hotel - Texas to Dallas-Fort Worth consumers."
"The sale also further strengthens Gaylord Entertainment's balance sheet and
generates substantial additional capital which we can use to invest in growing
our core hospitality, entertainment and cable businesses, to accelerate our
Internet development activities, and to seek strategic acquisitions.
"KTVT is staffed by dedicated broadcasting professionals, and we are proud of
the job they do. They serve their community extremely well, and I expect that to
continue as they become CBS employees."
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KTVT
Page 2 of 2
KTVT's Channel 11 News Team has been recognized more than any other television
news operation in the area, winning three Emmys in both 1997 and 1998, and more
than 150 awards of excellence overall. In addition, KTVT locally produces a
daily one-hour entertainment program entitled Positively Texas! and owns such
popular syndication properties as ER and Walker, Texas Ranger.
The sale of these entities is expected to result in a gain, after recording
deferred taxes, of approximately $280 million, or $8.45 per diluted share, to be
recorded by Gaylord Entertainment upon the consummation of the transaction.
The transaction is subject to several conditions, including approvals from the
Federal Communications Commission and other regulatory agencies. The value of
the CBS stock to be received by Gaylord Entertainment is fixed at $485 million.
The number of shares to be issued will be based upon the average closing price
of CBS stock during a fifteen-day period that ends three days prior to the
closing of the transaction. There are no upper or lower limits on the number of
CBS shares to be received by Gaylord Entertainment. The transaction is expected
to close by year-end.
Gaylord Entertainment Company is a diversified entertainment company operating
in three business segments: hospitality and attractions, broadcasting and music,
and cable networks. Among its properties are the Opryland Hotel, WSM Radio and
the Grand Ole Opry, Acuff-Rose Music Publishing, Word Entertainment, Z Music
Television, CMT International, Wildhorse Saloon and the Ryman Auditorium.
CBS Corporation, the world's largest pure-play media company, is comprised of
the CBS Television Network, with programming operations in Entertainment, News,
Sports, Syndication and New Media - including CBS.com and Country.com, as well
as stakes in SportsLine USA, Inc. and MarketWatch.com, Inc.; the CBS Television
Stations Division, with 14 CBS Owned television stations, seven of which are in
the Top 10 markets; CBS Cable, with two country networks, and its regional
sports operations; and more than an 80% stake in Infinity Broadcasting
Corporation, which includes 160 radio stations and TDI, the Company's outdoor
business. CBS Corporation recently announced a definitive merger agreement with
King World Productions Inc. (NYSE:KWP), distributors of "The Oprah Winfrey
Show," "Wheel of Fortune," "Jeopardy" and "The Hollywood Squares." That
transaction is expected to close at mid-1999.
(Note: This press release contains forward-looking statements. These statements,
which have been included in reliance on the "safe harbor" provisions of the
Private Litigation Reform Act of 1995, include risks and uncertainties. Readers
are hereby cautioned that these statements may be affected by important factors
set forth in Gaylord Entertainment's filings with the Securities and Exchange
Commission, and consequently, actual results may differ materially from the
anticipated results described herein. Factors that might cause such a difference
include, but are not limited to, the ability of Gaylord Entertainment and CBS to
meet all the conditions to the closing of the agreement and consummate the
transactions contemplated thereunder, uncertainties related to the receipt of
approvals from the Federal Communications Commission and other regulatory
agencies and the ability to invest any proceeds in a manner consistent with the
Company's strategies.)
