Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed on a Current Report on Form 8-K filed on May 17, 2019 (the “May 17, 2019 Form 8-K”) with the Securities and Exchange Commission (the “SEC”), on May 17, 2019, The Dallas Morning News, Inc. (“TDMN”), a wholly-owned subsidiary of A. H. Belo Corporation (the “Company”), entered into and consummated a Purchase and Sale Agreement (the “Agreement”) with Charter DMN Holdings, LP (“Purchaser”) relating to the property located at 508 Young Street, Dallas, Texas (the “Property”). Pursuant to the Agreement, TDMN sold to Purchaser the Property, together with any and all improvements, appurtenances, rights, privileges and easements benefiting, belonging or pertaining thereto and all of TDMN’s right, title, and interest in and to certain leases, licenses, easements and agreements relating thereto for a purchase price of $28 million, comprising $5.6 million in cash paid at the closing and a Promissory Note (the “Note”) in the original principal amount of $22.4 million with interest payable quarterly commencing on July 1, 2019 with a final installment of all principal and accrued interest due and payable on June 30, 2021 secured by a first priority lien on the Property. The unpaid principal balance of the Note bears interest at the rate of 3.5% per year from the date of the Note through June 30, 2020 and 4.5% per year from July 1, 2020 through the maturity of the Note. The Agreement and form of Note were previously filed as Exhibit 10.1 to the May 17, 2019 Form 8-K.
Purchaser requested, and on April 3, 2020, the Board of Directors approved, an amendment to the Note (the “Modification Agreement”) deferring Purchaser’s interest payment of $194,929.28 that was due April 1, 2020 (the “April Interest Payment”) and adding the April Interest Payment to a second promissory note, together with a 2019 real property tax reconciliation payment due and owing by Purchaser under the Agreement in the amount of $179,784.24 (the “Second Promissory Note”). The Second Promissory Note, in the principal amount of $374,713.52, is secured by a second lien deed of trust on the Property and is due June 30, 2021. The foregoing summary of the Modification Agreement and the Second Promissory Note is not complete and is qualified in its entirety by reference to the Modification Agreement and Second Promissory Note filed as Exhibits 10.1 and 10.2 hereto and which are incorporated herein by reference.
Tyree B. (Ty) Miller, an independent director of the Company, recused himself from the board’s discussions, consideration and approval of the Modification Agreement and Second Promissory Note. As previously disclosed in the May 17, 2019 Form 8-K, although no related person has any direct or indirect material interest in this transaction that would require disclosure under Item 404(a) of Regulation S-K, the board was aware of, and considered, certain other relationships between Mr. Miller and the individual who is both the president of Purchaser and the owner of all of the interests in the entity that is the sole general partner of both Purchaser and the sole limited partner of Purchaser.