<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 28, 1999
BULL RUN CORPORATION
(Exact name of registrant as specified in its charter)
GEORGIA 0-9385 91-1117599
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
4370 PEACHTREE ROAD, N.E., ATLANTA, GEORGIA 30319
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 266-8333
Former name or former address, if changed since last report: Not Applicable
Page 1 of 3 pages
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Item 5. Other Events
On January 28, 1999, Bull Run Corporation (the "Company") entered into
a Stock Purchase Agreement (the "Agreement"), between the Company and U.S. Trust
Company of Florida Savings Bank, as Personal Representative of the Estate of
Mary Tarzian (the "Estate"). Pursuant to the Agreement, the Company purchased
301,119 shares (the "Shares") of common stock, $4.00 par value of Sarkes
Tarzian, Inc. ("Sarkes Tarzian"), an Indiana corporation. The Company's purchase
price of $10,000,000 (the "Purchase Price") was paid in cash to the Estate at
closing. The purchase price was the result of negotiations between the parties
based on a variety of factors. The source of the funds was a loan to the Company
pursuant to the Secured Promissory Note (the "Note") dated January 28, 1999 by
and between the Company and NationsBank, N.A.
The Shares represent 33.5% of the total outstanding common stock of
Sarkes Tarzian both in terms of number of shares of common stock outstanding and
in terms of voting rights, which represents 73% of the equity of Sarkes Tarzian
for purposes of dividends and distributions in the event of any liquidation,
dissolution or other termination of Sarkes Tarzian. Sarkes Tarzian owns and
operates two television stations and four radio stations: WRCB-TV Channel 3 in
Chattanooga, Tennessee, an NBC affiliate; KTVN-TV Channel 2 in Reno, Nevada, a
CBS affiliate; WGCL-AM and WTTS-FM in Bloomington, Indiana; and WAJI-FM and
WLDE-FM in Fort Wayne, Indiana. The Chattanooga and Reno markets rank as the
86th and the 119th largest television markets in the United States,
respectively.
Gray Communications Systems, Inc. ("Gray"), the Company's 16.9%-owned
affiliate, has agreed to obtain an option (the "Option") to purchase the Shares
from the Company. Gray owns and operates three NBC-affiliated television
stations, seven CBS-affiliated television stations and three daily newspapers.
No definitive agreement has yet been reached with Gray regarding the form of the
Option or consideration to be provided by Gray in exchange for the Shares;
however, the Company believes that such consideration would, at a minimum, be
equal to the Purchase Price, plus acquisition costs, plus interest incurred on
the Note during the period of time the Company held the Shares and the Note was
outstanding. If the Shares are not sold to Gray, the Company intends to
refinance the Note under a long-term bank credit facility.
On February 1, 1999, the Company issued a press release (the "Press
Release") regarding the Agreement and the transactions consummated thereunder.
The Press Release, the Agreement and the Loan are being filed as
exhibits hereto and are hereby incorporated by reference herein.
2
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) and (b) Financial Statements and Pro Forma Financial Information None
(c) Exhibits
99.1 Press Release issued February 1, 1999
99.2 Stock Purchase Agreement dated January 28, 1999 by and between
U.S. Trust Company of Florida Savings Bank, as Personal
Representative of the Estate of Mary Tarzian and Bull Run
Corporation
99.3 Secured Promissory Note dated January 28, 1999 by and between
NationsBank, N.A. and Bull Run Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 12, 1999 BULL RUN CORPORATION
By: /s/ FREDERICK J. ERICKSON
--------------------------------------
Frederick J. Erickson
Vice President - Finance,
Chief Financial Officer, Treasurer and
Assistant Secretary
3
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EXHIBIT 99.1
News Release
February 1, 1999
BULL RUN CORPORATION INVESTS IN
BROADCASTING BUSINESS
Atlanta, Georgia - Bull Run Corporation (Nasdaq: BULL) announced that it has
acquired 73% of the outstanding common stock of Sarkes Tarzian, Inc. from the
estate of Mary Tarzian. The shares constitute a less than controlling interest
in the company's voting rights. Sarkes Tarzian owns and operates two television
stations and four radio stations: WRCB-TV Channel 3 in Chattanooga, Tennessee,
an NBC affiliate; KTVN-TV Channel 2 in Reno, Nevada, a CBS affiliate; WGCL-AM
and WTTS-FM in Bloomington, Indiana; and WAJI-FM and WLDE-FM in Fort Wayne,
Indiana. The Chattanooga and Reno markets rank as the 86th and the 119th largest
television markets in the United States, respectively.
Gray Communications Systems, Inc. (NYSE: GCS and GCS.B), Bull Run's 16.9%-owned
affiliate, has agreed to obtain an option to purchase the investment from Bull
Run. Gray owns and operates three NBC-affiliated television stations, seven
CBS-affiliated television stations and three daily newspapers.
For additional information, contact Robert S. Prather, Jr., President & CEO, at
(404) 266-8333.
<PAGE> 1
EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (THIS "AGREEMENT") IS MADE AND ENTERED
INTO AS OF THE 28 DAY OF JANUARY , 1999, BY AND BETWEEN U.S. TRUST COMPANY OF
FLORIDA SAVINGS BANK, AS PERSONAL REPRESENTATIVE (EXECUTOR) OF THE ESTATE OF
MARY TARZIAN ("SELLER") AND BULL RUN CORPORATION, A GEORGIA CORPORATION
("BUYER").
BACKGROUND
THE SELLER OWNS, BENEFICIALLY AND OF RECORD, 301,119 SHARES (THE
"SHARES") OF COMMON STOCK, $4.00 PAR VALUE (THE "STOCK") OF SARKES TARZIAN,
INC., AN INDIANA CORPORATION (THE "COMPANY"). SELLER WISHES TO SELL, AND BUYER
WISHES TO PURCHASE, THE SHARES ON THE TERMS AND CONDITIONS SET FORTH HEREIN.
IN CONSIDERATION OF THE FOREGOING AND THE MUTUAL COVENANTS HEREIN
CONTAINED, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HERETO, FOR
THEMSELVES, THEIR SUCCESSORS AND ASSIGNS, AGREE AS FOLLOWS:
I. TERMS OF ACQUISITION
1.1 SALE AND TRANSFER OF SHARES
(A) AT THE CLOSING (AS HEREINAFTER DEFINED), UPON THE TERMS
AND SUBJECT TO THE CONDITIONS OF THIS AGREEMENT, SELLER SHALL SELL, CONVEY,
TRANSFER, ASSIGN AND DELIVER TO BUYER, AND BUYER SHALL PURCHASE AND ACCEPT FROM
SELLER, THE SHARES AS EVIDENCED BY STOCK CERTIFICATE NUMBER 36 OF BUYER.
(B) AT THE CLOSING, SELLER SHALL CONVEY TO BUYER GOOD AND
VALID TITLE TO THE SHARES FREE AND CLEAR OF ANY AND ALL LIABILITIES,
OBLIGATIONS, LIENS, ENCUMBRANCES, RESTRICTIONS OR RIGHTS OF OTHERS OF ANY
CHARACTER WHATSOEVER. SELLER SHALL DELIVER TO BUYER STOCK CERTIFICATE NUMBER 36
EVIDENCING THE SHARES REGISTERED IN THE NAME OF MARY TARZIAN, DULY ENDORSED IN
BLANK ON THE REVERSE THEREOF BY SELLER OR ACCOMPANIED BY A DULY EXECUTED STOCK
POWER.
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1.2 TIME AND PLACE OF CLOSING THE CLOSING FOR THE SALE AND PURCHASE
CONTEMPLATED BY THIS AGREEMENT (THE "CLOSING") SHALL BE HELD AT THE OFFICES OF
U.S. TRUST COMPANY OF FLORIDA SAVINGS BANK ON THE DAY OF THE EXECUTION OF THIS
AGREEMENT.
2. PURCHASE PRICE
2.1 PURCHASE PRICE. IN FULL PAYMENT OF THE PURCHASE PRICE FOR THE
SHARES, AT THE CLOSING, BUYER SHALL PAY TO SELLER TEN MILLION DOLLARS
($10,000,000) IN CASH BY WIRE TRANSFER OR CERTIFIED CHECK.
3. REPRESENTATIONS AND WARRANTIES OF SELLER SELLER REPRESENTS AND WARRANTS
TO BUYER AS FOLLOWS:
3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. SELLER HAS THE REQUISITE
CAPACITY, POWER, AUTHORITY AND LEGAL RIGHT TO EXECUTE AND DELIVER THIS AGREEMENT
AND TO PERFORM ITS OBLIGATIONS HEREUNDER. THIS AGREEMENT HAS BEEN DULY AND
VALIDLY EXECUTED AND DELIVERED BY SELLER AND CONSTITUTES A LEGAL, VALID AND
BINDING OBLIGATION OF SELLER ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS
TERMS.
3.2 CONSENT AND APPROVALS; NO VIOLATION. THERE IS NO REQUIREMENT
APPLICABLE TO SELLER TO MAKE ANY FILING WITH, OR TO OBTAIN ANY PERMIT,
AUTHORIZATION, CONSENT OR APPROVAL OF, ANY GOVERNMENTAL OR REGULATORY AUTHORITY
OR ANY THIRD PARTY AS A CONDITION TO THE LAWFUL CONSUMMATION BY SELLER OF THE
TRANSACTIONS CONTEMPLATED HEREBY. THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT BY SELLER AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY WILL NOT (i) VIOLATE ANY PROVISION OF THE COMPANY'S ARTICLES OF
INCORPORATION, BYLAWS, SHAREHOLDERS' AGREEMENT, DATED AS OF APRIL 24,1979, AS
AMENDED, THE LAST WILL AND TESTAMENT OF MARY TARZIAN OR ANY LAW, REGULATION,
DECREE, JUDGMENT, ORDER OR AWARD, (ii) RESULT IN A BREACH OF OR DEFAULT UNDER OR
REQUIRE THE CONSENT OR APPROVAL OF ANY PARTY TO ANY MATERIAL
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WRITTEN OR ORAL AGREEMENT, CONTRACT OR COMMITMENT OF SELLER OR (iii) RESULT IN
THE CREATION OR IMPOSITION OF ANY LIEN, SECURITY INTEREST OR RESTRICTION UPON
ANY OF THE SHARES.
3.3 THE SHARES. SELLER HAS GOOD AND VALID TITLE TO THE SHARES, FREE AND
CLEAR OF ANY CLAIMS, LIENS, ENCUMBRANCES, SECURITY INTERESTS, OPTIONS, CHARGES
AND RESTRICTIONS. UPON DELIVERY TO BUYER OF CERTIFICATES REPRESENTING SUCH
SHARES, DULY ENDORSED BY SELLER FOR TRANSFER TO BUYER, AND UPON SELLER'S RECEIPT
OF THE PURCHASE PRICE HEREUNDER, GOOD AND VALID TITLE TO THE SHARES WILL PASS TO
BUYER, FREE AND CLEAR OF ANY CLAIMS, LIENS, ENCUMBRANCES, SECURITY INTERESTS,
OPTIONS, CHARGES AND RESTRICTIONS OTHER THAN THOSE, IF ANY ARISING FROM ACTS OF
THE BUYER OR ITS AFFILIATES. IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, SELLER WAS THE SOLE REGISTERED
OWNER AND BENEFICIAL OWNER OF THE SHARES. THE SHARES REPRESENT 33.5% OF THE
TOTAL VOTING RIGHTS OF ALL ISSUED AND OUTSTANDING CAPITAL STOCK OF THE COMPANY
AND 73% OF ALL EQUITY AS RELATES TO COMMON DIVIDEND AND LIQUIDATING
DISTRIBUTIONS.
3.4 PERSONAL REPRESENTATIVE. SELLER WAS VALIDLY APPOINTED, AND IS
CURRENTLY VALIDLY SERVING, AS PERSONAL REPRESENTATIVE (EXECUTOR) PURSUANT TO
THAT CERTAIN LAST WILL AND TESTAMENT OF MARY TARZIAN, A CORRECT AND COMPLETE
COPY OF WHICH HAS BEEN DELIVERED TO BUYER PRIOR TO THE DATE HEREOF.
3.5 SHAREHOLDERS AGREEMENT. THE SHAREHOLDERS AGREEMENT PROVIDED TO
BUYER IS A TRUE, CORRECT AND COMPLETE COPY OF THE SHAREHOLDERS AGREEMENT.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
BUYER REPRESENTS AND WARRANTS TO SELLER AS FOLLOWS:
4.1 ORGANIZATION AND GOOD STANDING. BUYER IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
GEORGIA.
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4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. BUYER HAS THE REQUISITE
POWER, AUTHORITY AND LEGAL RIGHT TO EXECUTE AND DELIVER THIS AGREEMENT AND TO
PERFORM ITS OBLIGATIONS HEREUNDER. THE EXECUTION AND DELIVERY OF THIS AGREEMENT
AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY HAVE BEEN DULY AND
VALIDLY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION, AND THIS AGREEMENT HAS
BEEN DULY AND VALIDLY EXECUTED AND DELIVERED BY BUYER AND CONSTITUTES A LEGAL,
VALID AND BINDING OBLIGATION OF BUYER ENFORCEABLE AGAINST IT IN ACCORDANCE WITH
ITS TERMS.
4.3 CONSENTS AND APPROVALS: NO VIOLATION: THERE IS NO REQUIREMENT
APPLICABLE TO BUYER TO MAKE ANY FILING WITH, OR TO OBTAIN ANY PERMIT,
AUTHORIZATION, CONSENT OR APPROVAL OF, ANY GOVERNMENTAL OR REGULATORY AUTHORITY
OR ANY THIRD PARTY AS A CONDITION TO THE LAWFUL CONSUMMATION BY BUYER OF THE
TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN ANY FILINGS, PERMITS,
AUTHORIZATIONS, CONSENTS OR APPROVALS REQUIRED BY THE UNITED STATES FEDERAL
COMMUNICATIONS COMMISSION OR THE LAWS, RULES OR REGULATIONS RELATED THERETO. THE
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT BY BUYER AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY WILL NOT (i) VIOLATE ANY
PROVISION OF THE ARTICLES OF INCORPORATION OR BYLAWS OF BUYER OR ANY LAW,
REGULATION, DECREE, JUDGMENT, ORDER OR AWARD OR (ii) RESULT IN A BREACH OF OR
DEFAULT UNDER OR REQUIRE THE CONSENT OR APPROVAL OF ANY PARTY TO ANY MATERIAL
WRITTEN OR ORAL AGREEMENT, CONTRACT OR COMMITMENT OF BUYER, OTHER THAN THE
FILINGS, PERMITS, AUTHORIZATIONS, CONSENTS OR APPROVALS REQUIRED BY THE UNITED
STATES FEDERAL COMMUNICATIONS COMMISSION OR THE LAWS, RULES OR REGULATIONS
RELATED THERETO.
4.4 BUYER ACKNOWLEDGES THE FACTS SET FORTH ON SCHEDULE A HERETO.
5. CONDITIONS TO CLOSING
<PAGE> 5
5.1 CONDITIONS TO THE OBLIGATIONS OF SELLER. THE OBLIGATION OF SELLER
TO EFFECT THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE FURTHER SUBJECT TO THE
FULFILLMENT AT OR PRIOR TO THE CLOSING DATE OF THE FOLLOWING CONDITIONS, ANY ONE
OR MORE OF WHICH MAY BE WAIVED, IN WHOLE OR PART, BY SELLER:
(a) NO LITIGATION, REGULATION, LAW, JUDGMENT, DECREE, AWARD, ORDER OR
LEGISLATION SHALL HAVE BEEN INSTITUTED, THREATENED OR PROPOSED BEFORE OR BY ANY
COURT OR GOVERNMENTAL AUTHORITY TO ENJOIN, RESTRAIN, PROHIBIT OR OBTAIN DAMAGES
IN RESPECT OF THIS AGREEMENT OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY, IF SUCH LITIGATION, REGULATION, LAW, JUDGMENT, DECREE,
AWARD, ORDER OR LEGISLATION, IN THE REASONABLE JUDGMENT OF SELLER, WOULD MAKE IT
INADVISABLE TO CONSUMMATE SUCH TRANSACTIONS; AND
(b) THE REPRESENTATIONS AND WARRANTIES MADE BY BUYER IN THIS AGREEMENT
SHALL BE CORRECT AND COMPLETE ON THE CLOSING DATE WITH THE SAME FORCE AND EFFECT
AS IF SUCH REPRESENTATIONS AND WARRANTIES HAD BEEN MADE ON AND AS OF THE CLOSING
DATE. 5.2 CONDITIONS TO THE OBLIGATIONS OF BUYER. THE OBLIGATIONS OF BUYER TO
EFFECT THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE FURTHER SUBJECT TO THE
FULFILLMENT AT OR PRIOR TO THE CLOSING DATE OF THE FOLLOWING CONDITIONS, ANY ONE
OR MORE OF WHICH MAY BE WAIVED, IN WHOLE OR PART, BY BUYER:
(a) NO LITIGATION, REGULATION, LAW, JUDGMENT, DECREE, AWARD, ORDER OR
LEGISLATION SHALL HAVE BEEN INSTITUTED, THREATENED OR PROPOSED BEFORE OR BY ANY
COURT OR GOVERNMENTAL AUTHORITY TO ENJOIN, RESTRAIN, PROHIBIT OR OBTAIN DAMAGES
IN RESPECT OF THIS AGREEMENT OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY, IF SUCH LITIGATION, REGULATION, LAW, JUDGMENT, DECREE,
AWARD, ORDER OR LEGISLATION IN THE REASONABLE JUDGMENT OF BUYER, WOULD MAKE IT
INADVISABLE TO CONSUMMATE SUCH TRANSACTIONS;
<PAGE> 6
(b) THE REPRESENTATIONS AND WARRANTIES MADE BY SELLER IN THIS AGREEMENT
SHALL BE CORRECT AND COMPLETE ON THE CLOSING DATE WITH THE SAME FORCE AND EFFECT
AS IF SUCH REPRESENTATIONS AND WARRANTIES HAD BEEN MADE ON AND AS OF THE CLOSING
DATE.
6. MISCELLANEOUS PROVISIONS.
6.1 BINDING EFFECT. THIS AGREEMENT SHALL BE BINDING UPON AND INURE TO
THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE HEIRS, LEGAL
REPRESENTATIVES, SUCCESSORS AND ASSIGNS.
6.2 WAIVER. ANY FAILURE ON THE PART OF ANY PARTY HERETO TO COMPLY WITH
ANY OF ITS OBLIGATIONS, AGREEMENTS OR CONDITIONS HEREUNDER MAY BE WAIVED BY ANY
OTHER PARTY TO WHOM SUCH COMPLIANCE IS OWED. NO WAIVER OF ANY PROVISION OF THIS
AGREEMENT SHALL BE DEEMED, OR SHALL CONSTITUTE, A WAIVER OF ANY OTHER PROVISION,
WHETHER OR NOT SIMILAR, NOR SHALL ANY WAIVER CONSTITUTE A CONTINUING WAIVER.
6.3 SURVIVAL. ALL REPRESENTATIONS, WARRANTIES, AGREEMENTS, COVENANTS
AND OBLIGATIONS MADE OR UNDERTAKEN BY SELLER OR BUYER IN THIS AGREEMENT ARE
MATERIAL, HAVE BEEN RELIED UPON BY BUYER OR SELLER, AS THE CASE MAY BE, AND
SHALL SURVIVE THE TRANSFER OF SHARES PURSUANT HERETO AND SHALL NOT MERGE IN THE
PERFORMANCE OF ANY OBLIGATION BY ANY PARTY HERETO.
6.4 AMENDMENTS. THIS AGREEMENT MAY BE AMENDED OR MODIFIED ONLY BY A
WRITTEN INSTRUMENT EXECUTED BY EACH OF THE PARTIES HERETO, OR BY THEIR
RESPECTIVE SUCCESSORS AND ASSIGNS.
6.5 COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN ONE OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT.
6.6 REMEDIES. IN THE EVENT OF A BREACH OF THIS AGREEMENT BY SELLER,
BUYER SHALL HAVE AVAILABLE ANY AND ALL REMEDIES AT LAW OR IN EQUITY EXCEPT AS
LIMITED IN THE FOLLOWING SENTENCE. IN THE EVENT THAT A COURT OF COMPETENT
JURISDICTION
<PAGE> 7
ENTERS A FINAL, NON-APPEALABLE ORDER AWARDING TITLE TO THE SHARES TO ANY PERSON
OR ENTITY OTHER THAN BUYER, THIS CONTRACT SHALL BE RESCINDED AND BUYER SHALL
RETURN THE SHARES TO SELLER (OR AS DIRECTED BY SUCH COURT) IN EXCHANGE FOR AND
ONLY UPON RECEIPT OF THE FULL $10 MILLION PURCHASE PRICE PLUS INTEREST FROM THE
DATE HEREOF AT A PER ANNUM RATE EQUAL TO THE PRIME RATE AS PRINTED IN THE WALL
STREET JOURNAL AND BUYER SHALL HAVE NO FURTHER REMEDY AGAINST SELLER.
6.7 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT,
UNDERSTANDING, REPRESENTATIONS AND WARRANTIES OF THE PARTIES HERETO AND
SUPERCEDES ANY PRIOR AGREEMENT, UNDERSTANDING, REPRESENTATIONS, WARRANTIES,
DOCUMENTS OR DRAFTS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
<PAGE> 8
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED AND DELIVERED THIS
AGREEMENT, UNDER SEAL, AS OF THE DATE FIRST WRITTEN ABOVE.
U.S. TRUST COMPANY OF FLORIDA SAVINGS BANK, as
Personal Representative (Executor) of the Estate of Mary Tarzian
By: /s/ Trowbridge Callaway III
-------------------------------
Title: Chairman
----------------------------
ATTEST: BULL RUN CORPORATION
/s/ Hilton Howell By: /s/ Robert S. Prather, Jr.
- --------------------- --------------------------
Title: VP & Secretary Title: President & CEO
- --------------------- ------------------------
[Corporate Seal]
<PAGE> 9
SCHEDULE A
FACTS OF JANUARY 25, 1999, JANUARY 26, 1999 AND JANUARY 27, 1999
Counsel for the Personal Representative (Executor) of the Estate of
Mary Tarzian ("estate counsel") engaged in extensive negotiations with counsel
for Sarkes Tarzian, Inc. and Tom Tarzian ("Company counsel") in New York City on
January 25, 1999. Counsel for Patricia Tarzian participated by telephone. U.S.
Trust Co. of Florida was not present, either in person or by telephone. Estate
counsel advised Company counsel that the Estate's broker was in negotiations
with a public company for the sale of the stock. At about 4:00 p.m. the meeting
ended with the understanding that Company counsel would draft a proposed
definitive agreement of sale for review by estate counsel, and counsel for Pat
Tarzian, and presentation to all of their respective clients for final approval.
The terms of the proposed definitive agreement to be drafted would contain
proposed essential terms that had not yet been discussed or agreed to by counsel
or the parties.
The lawyers agreed to recommend to their respective clients that
certain terms (including the amount of cash and notes - with due date and
interest rate - payable for the stock) were agreeable for inclusion in the yet
to be prepared definitive agreement of sale, but essential terms of the
definitive agreement were not decided, including without limitation the closing
date (which was critical to the Estate), the state law that would control, and
the conditions precedent to closing. Company counsel agreed to furnish certain
information from the Company accountants that would enable the Estate to fully
evaluate a tax issue.
On the evening of January 25, 1999 and supplemented on January 26,
1999, and January 27, 1999 Company counsel presented several versions of a
proposed definitive sale agreement that included proposed essential terms that
had not been discussed at the meeting including without limitation the proposed
closing date, a condition precedent to closing, a proposed indemnification
provision and a propose release. It contained a due on sale clause in the terms
of the promissory note that was not consistent with the discussion on January
25. The proposed definitive sale agreement was unsigned by the Company and
provided that upon signature by both parties it would become a binding agreement
as of the signing date. Neither the Personal Representative nor the Company
<PAGE> 10
has executed the proposed definitive sale agreement. At no time did estate
counsel or the Personal Representative enter into a binding commitment or
otherwise agree to sell the Shares to the Company or any other third party.
<PAGE> 1
EXHIBIT 99.3
Secured Promissory Note
Date: January 28, 1999
Amount: $10,000,000 Maturity Date: May 28, 1999
================================================================================
Bank: Borrower:
NationsBank, N.A. Bull Run Corporation
Banking Center: Financial Strategies 4370 Peachtree Road, N.E.
600 Peachtree Street, N.E. Atlanta, Georgia 30319
Atlanta, Georgia 30308-2213
Attn: Melinda M. Bergbom
County: Fulton County: Fulton
(Street address including county) (Name and street address,
including county)
================================================================================
FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Bank, its
successors and assigns, without setoff, at its offices indicated at the
beginning of this Note, or at such other place as may be designated by Bank, the
principal amount of TEN MILLION DOLLARS ($10,000,000), or so much thereof as may
be advanced from time to time in immediately available funds, together with
interest computed daily on the outstanding principal balance hereunder, at an
annual interest rate, and in accordance with the payment schedule, indicated
below.
1. Rate.
Interest shall be calculated and shall accrue at a rate per annum equal to
the rate of interest announced from time to time by Bank as its "prime rate,"
"prime lending rate," "base rate" or similar reference rate (with each change
therein to be effective as of the date of such change). Each such rate announced
by Bank is a reference rate and does not necessarily represent the lowest or
best rate actually charged by it to any customer. Bank may make commercial loans
or other loans at rates of interest at, above or below such reference rate. In
the event Bank ceases to use its "prime rate," prime lending rate," "base rate"
or similar reference rate as a standard, Bank shall designate or substitute
therefore.
Notwithstanding any provision of this Note, Bank does not intend to charge
and Borrower shall not be required to pay any amount of interest or other
charges in excess of the maximum permitted by the applicable law of the State of
Georgia; if any higher rate ceiling is lawful, then that higher rate ceiling
shall apply. Any payment in excess of such maximum shall be refunded to Borrower
or credited against principal, at the option of Bank.
2. Accrual Method. Unless otherwise indicated, interest at the Rate set forth
above will be calculated by the 365/360 day method (a daily amount of interest
is computed for a hypothetical year of 360 days; that amount is multiplied by
the actual number of days for which any principal is outstanding hereunder).
3. Rate Change Date. Any Rate based on a fluctuating index or base rate will
change, unless otherwise provided, each time and as of the date that the index
or base rate changes.
In the event any index is discontinued, Bank shall substitute an index
determined by Bank to be comparable, in its sole discretion.
<PAGE> 2
4. Payment Schedule. All payments received hereunder shall be applied first to
the payment of any expense or charges payable hereunder or under any other loan
documents executed in connection with this Note, then to interest due and
payable, with the balance applied to principal, or in such other order as Bank
shall determine at its option.
Single Principal and Interest Payment. The total outstanding amount of
principal and accrued interest hereunder shall be due and payable in a single
payment on May 28, 1999.
5. Loan Fee. Upon the execution of this Note, an administrative fee in the
amount of $12,500 shall be due and payable.
6. Collateral. This note is secured by (i) Borrower's first-priority and
perfected pledge to Bank of 301,119 shares of Sarkes Tarzian, Inc., an Indiana
corporation, now owned or hereafter acquired by Borrower pursuant to a certain
Borrower Stock Pledge Agreement dated the date hereof between Borrower, as
Pledgor, and Bank, as Pledgee.
7. Waivers, Consents and Covenants. Borrower, any indorser or guarantor hereof,
or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waives presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to Obligor in
connection with the delivery, acceptance, performance, default or enforcement of
this Note, any indorsement or guaranty of this Note, or any other documents
executed in connection with this Note or any other note or other loan documents
now or hereafter executed in connection with any obligation of Borrower to Bank
(the "Loan Documents"); (b) consents to all delays, extensions, renewals or
other modifications of this Note or the Loan Documents, or waivers of any term
hereof or of the Loan Documents, or release or discharge by Bank of any of
Obligors, or release, substitution or exchange of any security for the payment
hereof, or the failure to act on the part of Bank, or any indulgence shown by
Bank (without notice to or further assent from Obligor), and agree that no such
action, failure to act or failure to exercise any right or remedy by Bank shall
in any way affect or impair the obligations of any Obligors or be construed as a
waiver by Bank of, or otherwise affect, any of Bank's rights under this Note,
under any indorsement or guaranty of this Note or under any of the Loan
Documents; and (c) agrees to pay, on demand, all costs and expenses of
collection or defense of this Note or of any indorsement or guaranty hereof
and/or the enforcement or defense of Bank's rights with respect to, or the
administration, supervision, preservation, or protection of, or realization
upon, any property securing payment hereof, including, without limitation,
reasonable attorney's fees, including fees related to any suit, mediation or
arbitration proceeding, out of court payment agreement, trial, appeal,
bankruptcy proceedings or other proceeding, in such amount as may be determined
reasonable by any arbitrator or court, whichever is applicable.
8. "Interest" Limited. As used in this Note and for the purposes of Section
7-4-2 of the Official Code of Georgia Annotated, or any successor thereto, the
term "interest" does not include any fees (including, but not limited to, the
Loan Fee) or other charges imposed on Borrower in connection with the
indebtedness evidenced by this Note, other than the interest described above.
9. Prepayments. Prepayments may be made in whole or in part at any time on any
loan for which the Rate is based on the Prime Rate. All prepayments of principal
shall be applied in the inverse order of maturity, or in such other order as
Bank shall determine in its sole discretion. No prepayment of any other loan
shall be permitted without the prior written consent of Bank. Notwithstanding
such prohibition, if there is a prepayment of any such loan, whether by consent
of Bank, or because of acceleration or otherwise, Borrower shall, within 15 days
of any request by Bank, pay to Bank any loss or expense which Bank may incur or
sustain as a result of such prepayment. For the purposes of calculating the
amounts owed only, it shall be assumed that Bank actually funded or committed to
fund the loan through the purchase of an underlying deposit in an amount and for
a term comparable to the loan, and such determination by Bank shall be
conclusive, absent a manifest error in computation.
10. Delinquency Charge. To the extent permitted by law, a delinquency charge may
be imposed in an amount not to exceed four percent (4%) of any payment that is
more than fifteen days late.
11. Events of Default. The following are events of default (each, an "Event of
Default") hereunder: (a) the failure to pay or perform any obligation, liability
or indebtedness of any Obligor to Bank, or to any affiliate or subsidiary of
NationsBank Corporation, whether under this Note or any Loan Documents, as and
when due (whether upon demand, at maturity or by acceleration); (b) the failure
to pay or perform any other obligation, liability or indebtedness of Obligor to
any other party; (c) the death of any Obligor (if an individual); (d) the
resignation or
<PAGE> 3
withdrawal of any material owner/officer of Borrower, as determined by Bank in
its sole discretion; (e) the commencement of a proceeding against Obligor for
dissolution or liquidation, the voluntary or involuntary termination or
dissolution of Obligor or the merger or consolidation of Obligor with or into
another entity; (f) the insolvency of, the business failure of, the appointment
of a custodian, trustee, liquidator or receiver for or for any of the property
of, the assignment for the benefit of creditors by, or the filing of a petition
under bankruptcy, insolvency or debtor's relief law or the filing of a petition
for any adjustment of indebtedness, composition or extension by or against
Obligor; (g) the determination by Bank that any representation or warranty made
to Bank by Obligor in any Loan Documents or otherwise is or was, when it was
made, untrue or materially misleading; (h) the failure of Obligor to timely
deliver such financial statements, including tax returns, other statements of
condition or other information, as Bank shall request from time to time; (i) the
entry of a judgment against Obligor which Bank deems to be of a material nature,
in Bank's sole discretion; (j) the seizure or forfeiture of, or the issuance of
any writ of possession, garnishment or attachment, or any turnover order for any
property of Obligor; (k) the determination by Bank that it is insecure for any
reason; (l) the determination by Bank that a material adverse change has
occurred in the financial condition of Obligor; (m) the failure of Borrower's
business to comply with any law or regulation controlling its operation; (n) the
aggregate value of all of J. Mack Robinson's (an individual resident of the
State of Georgia, "Purchaser") unpledged and non-affiliated Marketable
Securities (which shall mean any security traded on the American Stock Exchange,
the New York Stock Exchange or NASDAQ) shall be less than $45,000,000; or (o)
the aggregate value of Purchaser's unpledged and non-affiliated Marketable
Securities which constitute the capital stock of Wachovia Bank shall be less
than $30,000,000.
12. Remedies upon Default. Whenever there is a default under this Note (a) the
entire balance outstanding hereunder and all other obligations of Obligor to
Bank (however acquired or evidenced) shall, at the option of Bank, become
immediately due and payable and any obligation of Bank to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of interest on the unpaid principal shall
be increased at Bank's discretion up to 2% per annum above the interest rate
otherwise in effect (the "Default Rate"). The provisions herein for a Default
Rate shall not be deemed to extend the time for any payment hereunder or to
constitute a "grace period" giving Obligor a right to cure any default. At
Bank's option, any accrued and unpaid interest, fees or charges may, for
purposes of computing and accruing interest on a daily basis after the due date
of this Note or any installment thereof, be deemed to be a part of the principal
balance, and interest shall accrue on a daily compounded basis after such date
at the Default Rate provided in this Note until the entire outstanding balance
of principal and interest is paid in full. Upon a default under this Note, Bank
is hereby authorized at any time, at its option and without notice or demand, to
set off and charge against any deposit accounts of Obligor (as well as any
money, instruments, securities, documents, chattel paper, credits, claims,
demands, income and any other property, rights and interests of Obligor), which
at any time shall come into the possession or custody or under the control of
Bank or any of its agents, affiliates or correspondents, any and all obligations
due hereunder. Additionally, Bank shall have all rights and remedies available
under each of the Loan Documents, as well as all rights and remedies available
at law or in equity.
13. Non-Waiver. The failure at any time of Bank to exercise any of its options
or any other rights hereunder shall not constitute a waiver thereof, nor shall
it be a bar to the exercise of any of its options or rights at a later date. All
rights and remedies of Bank shall be cumulative and may be pursued singly,
successively or together, at the option of Bank. The acceptance by Bank of any
partial payment shall not constitute a waiver of any default or of any of Bank's
rights under this Note. No waiver of any of its rights hereunder, and no
modification or amendment of this Note, shall be deemed to be made by Bank
unless the same shall be in writing, duly signed on behalf of Bank; each such
waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Bank or the obligations of Obligor to Bank
in any other respect at any other time.
14. Applicable Law, Venue and Jurisdiction. This Note and the rights and
obligations of Borrower and Bank shall be governed by and interpreted in
accordance with the law of the State of Georgia. In any litigation in connection
with or to enforce this Note or any indorsement or guaranty of this Note or any
Loan Documents, Obligors, and each of them, irrevocably consent to and confer
personal jurisdiction on the courts of the State of Georgia or the United States
located within the State of Georgia and expressly waive any objections as to
venue in any such courts. Nothing contained herein shall, however, prevent Bank
from bringing any action or exercising any rights within any other state or
jurisdiction or from obtaining personal jurisdiction by any other means
available under applicable law.
15. Partial Invalidity. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other provision
herein and the invalidity or unenforceability of any provision of this
<PAGE> 4
Note or of the Loan Documents to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances.
16. Binding Effect. This Note shall be binding upon and inure to the benefit of
Borrower, Obligors and Bank and their respective successors, assigns, heirs and
personal representatives, provided, however, that no obligations of Borrower or
Obligors hereunder can be assigned without prior written consent of Bank.
17. Controlling Document. To the extent that this Note conflicts with or is in
any way incompatible with any other document related specifically to the loan
evidenced by this Note, this Note shall control over any other such document,
and if this Note does not address an issue, then each other such document shall
control to the extent that it deals most specifically with an issue.
18. ARBITRATION. ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES HERETO
INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATING TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT OR ANY RELATED INSTRUMENTS, AGREEMENTS OR
DOCUMENTS, INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL
BE DETERMINED BY BINDING ARBITRATION IN ACCORDANCE WITH THE FEDERAL ARBITRATION
ACT (OR IF NOT APPLICABLE, THE APPLICABLE STATE LAW), THE RULES OF PRACTICE AND
PROCEDURE FOR THE ARBITRATION OF COMMERCIAL DISPUTES OF J.A.M.S./ENDISPUTE OR
ANY SUCCESSOR THEREOF ("J.A.M.S."), AND THE "SPECIAL RULES" SET FORTH BELOW. IN
THE EVENT OF ANY INCONSISTENCY, THE SPECIAL RULES SHALL CONTROL. JUDGMENT UPON
ANY ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. ANY PARTY
TO THIS INSTRUMENT, AGREEMENT OR DOCUMENT MAY BRING AN ACTION, INCLUDING A
SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS AGREEMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH
ACTION.
A. SPECIAL RULES. THE ARBITRATION SHALL BE CONDUCTED IN THE COUNTY OF ANY
BORROWER'S DOMICILE AT THE TIME OF THE EXECUTION OF THIS INSTRUMENT, AGREEMENT
OR DOCUMENT AND ADMINISTERED BY J.A.M.S. WHO WILL APPOINT AN ARBITRATOR; IF
J.A.M.S. IS UNABLE OR LEGALLY PRECLUDED FROM ADMINISTERING THE ARBITRATION, THEN
THE AMERICAN ARBITRATION ASSOCIATION WILL SERVE. ALL ARBITRATION HEARINGS WILL
BE COMMENCED WITHIN 90 DAYS OF THE DEMAND FOR ARBITRATION; FURTHER, THE
ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE
COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60 DAYS.
B. RESERVATION OF RIGHTS. NOTHING IN THIS ARBITRATION PROVISION SHALL BE
DEEMED TO (I) LIMIT THE APPLICABILITY OF ANY OTHERWISE APPLICABLE STATUTES OF
LIMITATION OR REPOSE AND ANY WAIVERS CONTAINED IN THIS INSTRUMENT, AGREEMENT OR
DOCUMENT; OR (II) BE A WAIVER BY BANK OF THE PROTECTION AFFORDED TO IT BY 12
U.S.C. SEC. 91 OR ANY SUBSTANTIALLY EQUIVALENT STATE LAW; OR (III) LIMIT THE
RIGHT OF BANK HERETO (A) TO EXERCISE SELF HELP REMEDIES SUCH AS (BUT NOT LIMITED
TO) SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY
COLLATERAL, OR (C) TO OBTAIN FROM A COURT PROVISIONAL OR ANCILLARY REMEDIES SUCH
AS (BUT NOT LIMITED TO) INJUNCTIVE RELIEF, WRIT OF POSSESSION OR THE APPOINTMENT
OF A RECEIVER. BANK MAY EXERCISE SUCH SELF HELP RIGHTS, FORECLOSE UPON SUCH
PROPERTY, OR OBTAIN SUCH PROVISIONAL OR ANCILLARY REMEDIES BEFORE, DURING OR
AFTER THE PENDENCY OF ANY ARBITRATION PROCEEDING BROUGHT PURSUANT TO THIS
INSTRUMENT, AGREEMENT OR DOCUMENT. NEITHER THIS EXERCISE OF SELF HELP REMEDIES
NOR THE INSTITUTION OR MAINTENANCE OF AN ACTION FOR FORECLOSURE OR PROVISIONAL
OR ANCILLARY REMEDIES SHALL CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,
INCLUDING THE CLAIMANT IN ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE
CONTROVERSY OR CLAIM OCCASIONING RESORT TO SUCH REMEDIES.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
<PAGE> 5
Borrower acknowledges having read and understood, and agrees to be bound by, all
terms and conditions of this Note and hereby executes this Note under seal as of
the date here above written.
Borrower:
BULL RUN CORPORATION
[CORPORATE SEAL] By: /s/ FREDERICK J. ERICKSON
------------------------------
Name: Frederick J. Erickson
Title: Vice President - Finance
