Document:

Ex 10.2 Second Promissory Note

		

			Exhibit 10.2

		

		

			 

		

		
			PROMISSORY NOTE
		

		
			(Interest and Property Tax Reconciliation)
		

		
			$374,713.52April 1, 2020
		

		
			For value received, CHARTER DMN HOLDINGS, LP, a Texas limited partnership, as principal ("Borrower"), promises to pay to the order of THE DALLAS MORNING NEWS, INC., a Delaware corporation ("Lender") at 1954 Commerce Street, Dallas, Texas 75201, Attention:  Chief Financial Officer, or at such other address as Lender shall from time to time specify in writing, the principal sum of THREE HUNDRED SEVENTY-FOUR THOUSAND SEVEN HUNDRED THIRTEEN AND 52/100 DOLLARS ($374,713.52), in legal and lawful money of the United States of America, with interest on the outstanding principal from the date advanced until paid at the rate set out below. Interest shall be computed on a per annum basis of a year of 365 days or 366 days in a leap year, as the case may be, and for the actual number of days elapsed.  
		

			
	
			
				 1.
			Payment Terms. The entire principal amount hereof and principal and accrued interest thereon then remaining unpaid shall then be due and payable on June 30, 2021 (the “Maturity Date”); interest being calculated on the unpaid principal each day principal is outstanding and all payments made credited first to any collection costs, second to the discharge of the interest accrued and third to the reduction of the principal balance of this Note.

			
	
			
				 2.
			Interest Rate.  The unpaid principal balance of this Note shall bear interest prior to maturity (however such maturity is brought about) at (a) a fixed rate of three and one-half percent (3.5%) per annum from the date of this Note through June 30, 2020, and (b) four and one-half percent (4.5%) per annum from July 1, 2020 through the maturity of this Note.

			
	
			
				 3.
			Default Rate.  Principal and/or interest that is not paid when same become due and payable hereunder shall bear interest from the date due until paid at (a) the highest rate permitted by applicable law, or (b) if no such maximum rate is established by applicable law, at the rate stated above plus five percent (5%) per annum.

			
	
			
				 4.
			Prepayment.  Borrower reserves the right to prepay, prior to maturity, all or any part of the principal of this Note without notice, premium or penalty.  Any prepayments shall be applied first to accrued interest and then to principal.  All payments and prepayments of principal or interest on this Note shall be made in lawful money of the United States of America in immediately available funds, at the address of Lender indicated above, or such other place as the holder of this Note shall designate in writing to Borrower. All partial prepayments of principal shall be applied to the last installments payable in their inverse order of maturity.  

		 

		

			 

		

		

			 

		

 

		

			 

		

			
	
			
				 5.
			Default.  It is expressly provided that upon (a) default in the punctual payment of this Note or any part hereof, principal or interest, as the same shall become due and payable; provided, no more than once in any twelve (12) month period, Lender shall provide written notice of such default to Borrower and it shall not be a default unless Borrower fails to cure such default within five (5) calendar days after written notice from ‎Lender, ‎or (b) default under that certain Promissory Note (Fixed Rate) dated May 17, 2019 in the original principal amount of $22,400,000 executed by Borrower payable to the order of Lender (the “Seller Financing Note”) and the failure of such default to be cured within the grace or cure period, if any, applicable ‎thereto under the Seller Financing Note, or (c) the occurrence of an event of default specified in any of the other Loan Documents (as defined below) and the failure of such default to be cured within the grace or cure period, if any, applicable thereto under the Loan Documents,  the holder of this Note may, at its option, without further notice or demand, (i) declare the outstanding principal balance of and accrued but unpaid interest on this Note at once due and payable, (ii) foreclose all liens securing payment hereof, (iii) pursue any and all other rights, remedies and recourses available to the holder hereof, including but not limited to any such rights, remedies or recourses under the Loan Documents, at law or in equity, or (iv) pursue any combination of the foregoing; and in the event default is made in the prompt payment of this Note when due or declared due, and the same is placed in the hands of an attorney for collection, or suit is brought on same, or the same is collected through probate, bankruptcy or other judicial proceedings, then the Borrower agrees and promises to pay all costs of collection, including reasonable attorneys’ fees.

			
	
			
				 6.
			Joint and Several Liability; Waiver.  Each maker, signer, surety and endorser hereof, as well as all heirs, successors and legal representatives of said parties, shall be directly and primarily, jointly and severally, liable for the payment of all indebtedness hereunder.  Lender may release or modify the obligations of any of the foregoing persons or entities, or guarantors hereof, in connection with this loan without affecting the obligations of the others.  Except as specifically provided herein, all such persons or entities expressly waive presentment and demand for payment, notice of default, notice of intent to accelerate maturity, notice of acceleration of maturity, protest, notice of protest, notice of dishonor, and all other notices and demands for which waiver is not prohibited by law, and diligence in the collection hereof; and agree to all renewals, extensions, indulgences, partial payments, releases or exchanges of collateral, or taking of additional collateral, with or without notice, before or after maturity.  No delay or omission of Lender in exercising any right hereunder shall be a waiver of such right or any other right under this Note.  

		 

		

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				 7.
			No Usury Intended; Usury Savings Clause.  In no event shall interest contracted for, charged or received hereunder, plus any other charges in connection herewith which constitute interest, exceed the maximum interest permitted by applicable law.  The amounts of such interest or other charges previously paid to the holder of the Note in excess of the amounts permitted by applicable law shall be applied by the holder of the Note to reduce the principal of the indebtedness evidenced by the Note, or, at the option of the holder of the Note, be refunded.  To the extent permitted by applicable law, determination of the legal maximum amount of interest shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the period of the full stated term of the loan and indebtedness, all interest at any time contracted for, charged or received from the Borrower hereof in connection with the loan and indebtedness evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform throughout the term hereof.

			
	
			
				 8.
			Security.  This Note is secured by, inter alia, a Second Lien Deed of Trust, Security Agreement - Financing Statement from Borrower in favor of Vicky Pogue Gunning, Trustee for the benefit of the Lender (the “Second Lien Deed of Trust”), covering certain real property situated in Dallas County, Texas, as more particularly described therein (the "Property"). This Note and all other documents evidencing, securing, governing, guaranteeing and/or pertaining to this Note, including but not limited to those documents described above, are hereinafter collectively referred to as the "Loan Documents."  The holder of this Note is entitled to the benefits and security provided in the Loan Documents.  As of the date of this Note, the only Loan Documents are this Note, the Second Lien Deed of Trust, and related UCC-1 financing statements previously filed on or about May 17, 2019.  Borrower hereby agrees to pay all fees and expenses of the title company in order to obtain a mortgagee’s title insurance policy on the Second Lien Deed of Trust and to provide all documents and affidavits required by the title company for issuance of such title policy.

			
	
			
				 9.
			Texas Finance Code.  In no event shall Chapter 346 of the Texas Finance Code (which regulates certain revolving loan accounts and revolving tri-party accounts) apply to this Note.  To the extent that Chapter 303 of the Texas Finance Code is applicable to this Note, the "weekly ceiling" specified in such article is the applicable ceiling; provided that, if any applicable law permits greater interest, the law permitting the greatest interest shall apply.

			
	
			
				 10.
			Governing Law, Venue.  This Note is being executed and delivered, and is intended to be performed in the State of Texas.  Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of Texas shall govern the validity, construction, enforcement and interpretation of this Note.  In the event of a dispute involving this Note or any other instruments executed in connection herewith, the undersigned irrevocably agrees that venue for such dispute shall lie in any court of competent jurisdiction in Dallas County, Texas.

			
	
			
				 11.
			Purpose of Loan.   Borrower agrees that no advances under this Note shall be used for personal, family or household purposes.

			
	
			
				 12.
			Captions.  The captions in this Note are inserted for convenience only and are not to be used to limit the terms herein. 

		 

		

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				 13.
			Assignment.  This Note will be binding upon and inure to the benefit of Lender and Borrower and their respective successors and assigns; provided, however, that Borrower may not, without the prior written consent of Lender, assign or encumber any interests, rights, remedies, powers, duties, or obligations under this Note or any of the other Loan Documents.

			
	
			
				 14.
			George Dahl Building.  Until this Note has been fully paid and satisfied, Borrower will not, and will not permit any other party to, directly or indirectly, demolish the George Dahl former Dallas Morning News headquarters five story building on the Property, or modify in any way the exterior of such building.  This restriction shall not apply to the former printing building which is currently attached to the former headquarters building.  Exterior improvements to the rear of the headquarters building that may be required as a result of a printing building demolition are permitted. 

			
	
			
				 15.
			Ownership Representation.  Borrower represents and warrants to Lender that as of the date of this Note,  Ray W. Washburne is in Control (as defined in the Second Lien Deed of Trust) of Borrower and the sole general partner of Borrower is Charter DMN GP, LLC, a Texas limited liability company, an entity Controlled by Ray W. Washburne.  The ownership of the Borrower and the ultimate owners of all constituent entities comprising the general partner and limited partners of Borrower are as provided in the capitalization schedule certified by Borrower and delivered to Lender on or about May 17, 2019.  As provided in the Second Lien Deed of Trust, upon the sale or transfer of all or any part of the property described therein or a Change in Control (as defined in the Second Lien Deed of Trust) of Borrower, Lender may declare this Note to be immediately due and payable.

			
	
			
				 16.
			Notices.  All notices, requests, demands and other communications required or permitted hereunder shall be in writing, and shall be deemed to be given or delivered when actually received by the party to whom directed, or, if earlier and regardless of whether actually received, on the date of delivery if by personal delivery, one business day after deposit with the overnight delivery service if by reputable overnight courier service, or upon deposit in a regularly maintained receptacle for the United States mail, registered or certified, postage fully prepaid, addressed to the party to whom directed at its address set forth below or at such other address as such party may have previously specified by notice actually received by the other party:

			
					
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						If to Borrower:‎

					
					
						Charter DMN Holdings, LP‎

					
						‎47 Highland Park Village, Suite 200‎

					
						Dallas, Texas 75205‎

					
						Attn:  Ray W. Washburne

					
						 

				
	
					
						With a copy to:‎

					
					
						Munsch Hardt Kopf & Harr, P.C.‎

					
						500 N. Akard, Suite 3800‎

					
						Dallas, Texas 75201‎

					
						Attn:  William T. Cavanaugh, Jr.‎

					
						 

				

		 

		

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						If to Lender:‎

					
					
						The Dallas Morning News, Inc.‎

					
						1954 Commerce Street‎

					
						Dallas, Texas 75201 

					
						Attention:  General Counsel

					
						 

					
						 

				
	
					
						With a copy to:‎

					
					
						Locke Lord LLP

					
						2200 Ross Avenue, 28th Floor‎

					
						Dallas, Texas 75201‎

					
						Attn:  Vicky Gunning

					
						 

				

		
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						4/30/2019

					
					
						 

					
					
						 

					
					
						 

				
	
					
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						BORROWER:

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						CHARTER DMN HOLDINGS, LP,‎ a Texas limited partnership

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:‎Charter DMN GP, LLC,‎ a Texas limited liability company,‎ its General Partner

				
	
					
						 

					
					
						 

				
	
					
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						By:

					
					
						 

					
					
						/s/ Ray W. Washburne

				
	
					
						 

					
					
						 

					
					
						 

					
					
						Ray W. Washburne, President

				
	
					
						 

					
					
						 

					
					
						 

				

		
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			5jan-ex41_182.htm

Exhibit 4.1

Description of JanOne Inc.’s Common Stock

The following summary of terms of our common stock, par value $0.0001 per share (our “Common Stock”), is based upon our Articles of Incorporation (our “Charter”) and Bylaws (our “Bylaws”), currently in effect, and under Chapter 78 of the Nevada Revised Statutes (the “NRS”). This summary is not complete and is subject to, and qualified in its entirety by reference to, our Charter and our Bylaws.  For a complete description of the terms and provisions of our Common Stock, please refer to our Charter and Bylaws, which are filed as exhibits to this Annual Report on Form 10-K. Throughout this section, references to “we,” “our,” and “us” refer to JanOne Inc. We encourage you to carefully read these documents and the applicable provisions of the NRS.

General

Our authorized capital stock consists of 50,000,000 shares of Common Stock and 2,000,000 shares of preferred stock, par value $0.001 per share, of which 259,729 shares are designated as Series A-1 Convertible Preferred Stock, par value $0.001 per share (our “Series A-1 Preferred Stock”). 

As of December 28, 2019, we had 1,826,009 shares of our Common Stock issued and outstanding and 259,729 shares of our Series A-1 Preferred Stock issued and outstanding. 

The authorized and unissued shares of common stock and preferred stock are available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange on which our securities may be listed. Unless approval of our stockholders is so required, our Board of Directors (our “Board”) does not currently intend to seek stockholder approval for the issuance and sale of our common stock.

All of our issued and outstanding shares of our capital stock are fully paid and non-assessable.      

Voting, Dividend, and Liquidation Rights

Each holder of our Common Stock is entitled to one vote for each share issued and outstanding held on all matters to be voted upon by the stockholders. Our Charter does not provide for cumulative voting in the election of directors.  Subject to the rights of the holders of the Series A-1 Preferred Stock to their preferential dividend in accordance with the provisions of our Charter, the holders of shares of our Common Stock and Series A-1 Preferred Stock (on an as-if-converted to Common Stock basis in accordance with the terms of our Charter) will be entitled to such cash dividends as may be declared from time to time by our Board from funds available therefor.  Upon liquidation, dissolution or winding up of the Company, and after all liquidation preferences payable to any series of preferred stock entitled thereto have been satisfied, our remaining assets shall be distributed to all holders of Common Stock and any similarly situated stockholders who are not entitled to any liquidation preference or, if there be an insufficient amount to pay all such stockholders, then ratably among such holders.

Preemptive or Other Rights

Our shares of Common Stock do not have any preemptive, conversion, or redemption rights.

Stockholder Action; Special Meetings

Stockholders’ actions can only be taken at an annual or special meeting of our stockholders.  Our Bylaws provide that special meetings of the stockholders may be called at any time only by our Chief Executive Officer, or two of the members of the Board, or upon a written request of shareholders holding 10% or more of the capital stock entitled to vote. 

Board of Directors; Removal; Vacancies 

Our Bylaws specify that the number of directors is to be determined by a majority vote of the Board. Our Board is currently composed of five directors. We do not have a classified Board. Pursuant to our Bylaws and the NRS, a 

director serves until the regular meeting next following or closely coinciding with the expiration of his term of office and until his or her successor has been elected and qualified, or until his or her earlier death, removal, or resignation.

Limitation of Liability and Indemnification

Our Charter provides that none of our directors and officers shall be personally liable to us or our stockholders for damages for breach of fiduciary duty as a director or officer, except for liability for (i) acts or omissions that involve intentional misconduct, fraud, or knowing violation of law, or (ii) for authorizing any distribution in violation of Section 78.300 of the NRS. Our Bylaws provide that any officer or director who is made a party or witness to an action, suit, or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he or she is or was one of our directors or officers or serving at our request as a director, officer, employee, or agent, shall be indemnified and held harmless by us to the fullest extent authorized by the NRS. The right to indemnification shall include the right of advancement of expenses to the extent permitted under the NRS. 

Listing and Transfer Agent

Our common stock is listed on The Nasdaq Capital Market under the symbol “JAN.” The transfer agent and registrar for our common stock is EQ Shareowner Services.

Anti-Takeover Effects of Certain Provisions of our Charter, our Bylaws, and the NRS

Certain provisions of the NRS and our Charter and Bylaws could make more difficult the acquisition of us by means of a tender offer or otherwise, and the removal of incumbent officers and directors. These provisions are expected to discourage certain types of coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of us.

Business Combinations 

The “business combination” provisions of Sections 78.411 to 78.444, inclusive, of the NRS prohibit a Nevada corporation with at least 200 stockholders (at least 100 of whom are stockholders of record and residents of the State of Nevada) from engaging in various “combination” transactions with any interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved by the entity’s board of directors prior to the date the interested stockholder obtained such status; or after the expiration of the three-year period, unless:

	
 
	
•
	
the transaction is approved by the entity’s board of directors or a majority of the voting power held by disinterested stockholders of the entity, or

 

	
 
	
•
	
if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher.

A “combination” is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer, or other disposition, in one transaction or a series of transactions, with an “interested stockholder” having: (a) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) ten percent (10%) or more of the earning power or net income of the corporation.

In general, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years, did own) ten percent (10%) or more of an entity’s voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire us even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price.

Acquisitions of Controlling Interest

Nevada’s “acquisition of controlling interest” statutes (NRS 78.378 through 78.3793, inclusive) contain provisions governing the acquisition of a controlling interest in certain Nevada corporations. These “control share” laws provide generally that any person who acquires a “controlling interest” in certain Nevada corporations may be denied voting rights, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights. These laws would apply to us as of a particular date if we were to have 200 or more stockholders of record (at least 100 of whom have addresses in Nevada appearing on our stock ledger at all times during the 90 days immediately preceding that date) and do business in the State of Nevada directly or through an affiliated corporation, unless that corporation’s articles of incorporation or bylaws in effect on the tenth day after the acquisition of a controlling interest provide otherwise. These laws provide that a person acquires a “controlling interest” whenever a person acquires shares of a subject corporation that, but for the application of these provisions of the NRS, would enable that person to exercise (1) one-fifth or more, but less than one-third, (2) one-third or more, but less than a majority or (3) a majority or more of all of the voting power of that corporation in the election of its directors. Once an acquirer crosses one of these thresholds, shares that it acquired in the transaction that took it over the threshold and shares that it acquired within the 90 days immediately preceding the date when the acquiring person acquired or offered to acquire a controlling interest become “control shares” to which the voting restrictions described above apply.

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