Exhibit 10.12
FOURTH AMENDMENT TO LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT ("Amendment") is entered into as of
July 19, 2011, by and among NOBLE ROMAN'S, INC., an Indiana corporation,
PIZZACO, INC., an Indiana corporation and N.R. REALTY, INC., an Indiana
corporation (individually and collectively, as the context requires, with such
determination to be made by Lender in its Sole Discretion, "Borrower"), and
XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Lender").
R E C I T A L S
A. Borrower and Lender have entered into that certain Loan Agreement dated
as of August 25, 2005 as amended by First Amendment to Loan Agreement dated as
of February 4, 2008 and Second Amendment to Loan Agreement entered into on
November 9, 2010 but effective as of October 1, 2010 and Third Amendment to Loan
Agreement entered into on March 14, 2011 but effective as of March 1, 2011 (as
so amended and as amended from time to time, the "Loan Agreement").
B. Borrower has defaulted in the payment of principal payments of the Loan
in the amount of $125,000 each that were due and payable on May 1, 2011, June 1,
2011 and July 1, 2011 (the "Existing Defaults").
C. Borrower has requested that Lender waive the Existing Defaults, and
Lender is prepared to do so on the condition that the Loan Agreement and other
Loan Documents be amended and modified as herein provided, including without
limitation to change the Maturity Date from August 31, 2013 to October 1, 2012,
to change the amounts of the Required Principal Amortization Payments, to
increase the Applicable Rate after June 1, 2012, to provide for the payment to
Lender of any payments received by or on behalf of Borrower in connection with
certain pending litigation, and as otherwise herein provided.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby
covenant and agree as follows:
1. Definitions. Capitalized terms used herein and not defined herein shall
have the meanings provided therefor in the Loan Agreement.
2. Amendments to Loan Agreement. Effective as of the Fourth Amendment
Closing Date:
(a) Section 1.01 of the Loan Agreement is hereby amended by amending
and restating the following definitions in their entirety as follows:
"Applicable Rate" means an interest rate per annual equal to
(a) 4.25% through and including June 1, 2012, and (b) 7.25%
thereafter.
"Base Rate" means the LIBOR Market Index Rate; provided, that
if for any reason the LIBOR Market Index Rate is unavailable,
Base Rate shall mean the sum of the per annum rate of interest
equal to the Federal Funds Rate plus one and one-half of one
percent (1.50%).
"Interest Rate" means (a) a variable interest rate per annum
equal to the Applicable Rate plus the Adjusted LIBO Rate, or
(b) in the circumstances, and for the periods, described in
Section 3.02 and 3.03, a variable interest rate per annum
equal to the Base Rate plus the Applicable Rate.
"Maturity Date" means October 1, 2012.
"Principal Agreement" or "Principal Agreements" shall mean (i)
any Distribution Agreement, (ii) any Manufacturing Agreement
and (iii) any other agreement to which Borrower or any
Subsidiary is a party under which the annual expenditures or
annual receipts by Borrower or such Subsidiary exceed, or are
reasonably expected to exceed, $100,000.
"Required Principal Amortization Payment" means on each date
set forth below the corresponding amount set forth below.
Date Amount
---- ------
August 1, 2011 $100,000
September 1, 2011 $100,000
October 1, 2011 $125,000
November 1, 2011 $125,000
December 1, 2011 $125,000
January 1, 2012 $125,000
February 1, 2012 $200,000
March 1, 2012 $200,000
April 1, 2012 $200,000
May 1, 2012 $200,000
June 1, 2012 $200,000
July 1, 2012 $200,000
August 1, 2012 $200,000
September 1, 2012 $200,000
October 1, 2012 $1,675,000
(b) Section 1.01 of the Loan Agreement is hereby amended by inserting
the following new definitions in their proper alphabetical order:
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"Assignment of Distribution Agreements" means the Collateral
Assignment of Distribution Agreements dated as of the date of
the Fourth Amendment by Borrower in favor of Lender.
"Assignment of Franchise Agreements" means the Collateral
Assignment of Franchise Agreements dated as of the date of the
Fourth Amendment by Borrower in favor of Lender.
"Assignment of Manufacturing Agreements" means the Collateral
Assignment of Manufacturing Agreements dated as of the date of
the Fourth Amendment by Borrower in favor of Lender.
"Distribution Agreement" means an agreement between Borrower
and any third party pursuant to which such third party
distributes proprietary or other products and items to
franchisees and other businesses licensed or authorized to
sell Borrower's proprietary products.
"Fourth Amendment" means the Fourth Amendment to Loan
Agreement dated as of July 19, 2011 between Borrower and
Lender.
"Fourth Amendment Closing Date" means the first date that all
the conditions precedent set forth in the Fourth Amendment are
satisfied.
"Franchisee Lawsuit" means the lawsuit captioned "Xxxxxx et
xx x. Xxxxx Roman's Inc. et al" pending in the Superior
Court of Xxxxxxxx County, Indiana, No. 2901-806-PL-739.
"Franchisee Lawsuit Rights" has the meaning specified in
Section 8.02.
"LIBOR Market Index Rate" means, for any day, LIBO Rate as of
that day for an interest period of one-month determined at
approximately 12:00 noon, New York time for such day (or if
such day is not a Business Day, the immediately preceding
Business Day). The LIBOR Market Index Rate shall be determined
on a daily basis.
"Manufacturing Agreement" means an agreement between Borrower
and any third party pursuant to which such third party
manufactures or otherwise supplies products used in the
business of Borrower or franchisees or other businesses
licensed or authorized to sell Borrower's proprietary
products.
"Material Manufacturing Agreement" means the following
agreements (and any extensions, amendments, modifications,
restatements or replacements thereof):
(a) Manufacturing Agreement effective as of January 1, 2007 between
Goglanian Bakeries, Inc. and NRI, as amended by First Amendment dated as of
July 13, 2011;
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(b) Manufacturing and Supply Agreement between Xxxx Xxxxx Food Company
(executed by it on August 3, 2010) and NRI (executed by it on August 4,
2010);
(c) Supply Agreement effective as of January 1, 2011 between Leprino
Foods Dairy Products Company and NRI; and
(d) Manufacturing and Supply Agreement effective January 1, 2011
between Nestle USA, Inc. and NRI.
(c) The parties acknowledge and agree that the Deferred Principal has
been incorporated into the other principal payments provided for herein, no
separate payments of Deferred Principal shall be required after the Fourth
Amendment Closing Date, and the definition of "Deferred Principal" is
hereby deleted from Section 1.01 of the Loan Agreement.
(d) Section 2.03(b) is hereby amended by deleting the following
clauses at the end of the first sentence thereof:
; and provided, further, that the Required Monthly
Amortization Payments due and payable on March 1, 2011 and
April 1, 2011 shall each be in the amount of $25,000.00.
(e) Section 2.03(d) of the Loan Agreement is hereby amended and
restated in its entirety as follows.
(d) Additional Principal Payment; Application of Payments. Borrower
shall pay to Lender on the Fourth Amendment Closing Date a principal
payment of the Loan in the amount of $225,000. All principal payments after
the Fourth Amendment Closing Date (other than Required Principal
Amortization Payments) shall be applied to the Required Principal
Amortization Payments in the inverse order of their maturity.
(f) Section 5.25 is hereby amended by adding the following sentence at
the end thereof:
Borrower does not own, hold or have any interest in any patent
or trademark other than those identified in Schedule 5.25.
(g) Section 6.18 of the Loan Agreement is hereby amended by adding the
following sentence at the end thereof:
The interest rate swap or transaction between Lender and
Borrower evidenced by ISDA Confirmation dated February 12,
2008 (No. 308558) shall (unless sooner terminated) terminate
on the Maturity Date, and all payments required to be made
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thereunder shall be paid upon such termination in accordance
with the terms of such agreement.
(h) The following new Sections 6.21, 6.22 and 6.23 are hereby added to
the Loan Agreement:
6.21 Franchisee Lawsuit. Pay or cause to be paid to
Lender, as a principal payment of the Loan, to be applied in
accordance with the last sentence of Section 2.03(d), all
payments received by or on behalf of Borrower with respect to
the Franchisee Lawsuit, whether by judgment, settlement or
otherwise (net of Borrower's reasonable attorneys' fees and
expenses in connection with such litigation not to exceed
$200,000 in the aggregate).
6.22 Notice of Resumption of Salary Payments. Provide
Lender not less than thirty (30) days' written notice prior to
Borrower's resumption of salary payments that certain officers
of Borrower have elected to forego.
6.23 Principal Agreements. Furnish to Lender (a)
promptly upon the execution and delivery thereof, a copy of
any Manufacturing Agreement and any amendment to any
Manufacturing Agreement (without regard to whether this
Agreement requires Lender's consent thereto) and (b) promptly
upon Lender's request from time to time, copies of any other
Principal Agreements.
(i) Section 7.06(j) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
7.06 Restricted Payments. Directly or indirectly,
declare, or pay or make any Restricted Payment, or set aside
or otherwise deposit or invest any sums for such purpose, or
agree to do any of the foregoing; provided, however, that (a)
any Subsidiary of NRI may make Restricted Payments to NRI, (b)
as long as no Event of Default has occurred that is
continuing, NRI may pay dividends to the holders of its
preferred stock not to exceed $25,000 in any fiscal quarter
(except to the extent that NRI is contractually obligated to
pay amounts in excess thereof) but may not pay any common
stock dividends and (c) as long as no Event of Default has
occurred that is continuing, NRI may make payments of interest
(but not principal) when due under the Promissory Note held by
Xxxx X. Xxxxxx identified in Schedule 5.05.
(j) Section 7.12(ii) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
(ii) Amend, modify, restate, substitute or replace
any other Principal Agreement or any term or provision thereof
(or consent thereto) without the consent of Lender except (i)
in the ordinary course of business, (ii) without shortening
the term or affecting any renewal option, (iii) without
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increasing any payment obligations thereunder and (iv) without
modifying any of the other terms or provisions thereof in any
material respect.
(k) The following new Section 8.02 is hereby added to the Loan
Agreement:
8.02 Franchisee Lawsuit. Borrower acknowledges and
agrees that the Collateral includes, without limitation, all
claims, rights and interests of Borrower with respect to the
Franchisee Lawsuit and any recovery thereunder or proceeds
thereof, whether by Judgment, settlement or otherwise
(collectively, the "Franchisee Lawsuit Rights"). Borrower
hereby authorizes Lender to file Financing Statements
identifying the Franchisee Lawsuit Rights as Collateral.
(l) Section 10.01 is hereby amended by deleting the period at the end
of subsection (l), replacing it with "; or " and adding thereafter the
following new subsections (m), (n) and (o):
(m) Manufacturing Agreements. Any Material
Manufacturing Agreement expires or for any reason
terminates or is terminated (except if such Material
Manufacturing Agreement is extended on substantially
the same terms and conditions without any material
interruption of the manufacturer's performance)
unless within thirty (30) days a new Manufacturing
Agreement is entered into by Borrower with a
manufacturer of the same products and on
substantially the same terms and conditions as those
in the expired or terminated Material Manufacturing
Agreement;
(n) Distribution Agreements. During any period of
twelve (12) consecutive months, Distribution
Agreements with three or more distributors shall
expire or for any reason terminate or be terminated,
except if such Distribution Agreement is extended or
replaced with an agreement with the same distributor
on substantially the same terms and conditions
without any material interruption in the
distributor's performance; or
(o) Franchised Units. During any period of twelve
(12) consecutive months, more than twenty percent
(20%) of the Franchised Units in operation at the
beginning of such period shall for any reason cease
to be operated as Franchised Units.
(m) Schedules 5.05, 5.06, 5.08, 5.13, 5.17, 5.18, 5.23, 5.24, 5.25,
6.07, 6.14, 7.01, 7.03 and 14.02 to the Loan Agreement are replaced by the
Schedules attached hereto.
(n) Exhibit B. Exhibit B to the Loan Agreement is replaced by Exhibit
B attached hereto.
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3. Amendment Fee. In addition to any other amounts payable under this
Amendment, any other Loan Document or the Fee Letter, Borrower shall pay to
Lender, on or before the Fourth Amendment Closing Date, a fee in the amount of
$21,000. Such fee shall be fully earned when paid and shall not be refundable
for any reason whatsoever.
4. Conditions Precedent to Effectiveness of this Amendment. The
effectiveness of this Amendment is subject to satisfaction of the following
conditions precedent:
(a) Lender's receipt of the following, each of which shall be
originals or facsimiles (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing
Loan Party, each dated the Fourth Amendment Closing Date (or, in the case
of certificates of governmental officials, a recent date before the Fourth
Amendment Closing Date) and each in form and substance satisfactory to
Lender and its legal counsel:
(i) executed counterparts of this Amendment, the
Assignment of Distribution Agreements, the Assignment
of Franchise Agreements and the Assignment of
Manufacturing Agreements;
(iii) written acknowledgments by each of the
manufacturers that is a party to any Material
Manufacturing Agreement in the form provided for in
the Assignment of Manufacturing Agreements, together
with copies of all Manufacturing Agreements;
(iii) the written agreement of Bose XxXxxxxx & Xxxxx,
LLP, Borrower's counsel in the Franchisee Lawsuit,
acknowledging the terms of Section 6.21 of the Loan
Agreement and including the agreement of such counsel
to provide notice to Lender of any payment received
by such counsel or, to such counsel's knowledge, by
Borrower in connection with the Franchisee Lawsuit,
whether by Judgment, settlement or otherwise, and to
pay to Lender, for and on behalf of Borrower, any
amount received by such counsel in connection with
the Franchisee Lawsuit, whether by judgment,
settlement or otherwise, less any reasonable fees and
expenses of such counsel with respect to the
Franchisee Lawsuit not to exceed the aggregate amount
provided for in Section 6.21.
(iv) a certificate of Borrower certifying that all
Collateral (including but not limited to recipes,
proprietary products, Franchisee Lawsuit Rights
(except for the right of the insurance carrier that
has paid a portion of Borrower's attorneys' fees in
connection with the Franchisee Lawsuit to
reimbursement for such payment from any amounts
received by Borrower with respect to the Franchisee
Lawsuit), Distribution Agreements, Manufacturing
Agreements and other Principal Agreements) is owned
solely by Borrower and not by any other Person,
together with such supporting evidence of such
ownership as Lender may require.
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(v) such certificates of resolutions or other action,
incumbency certificates and/or other certificates of
Responsible Officers of each Loan Party as Lender may
require evidencing the identity, authority and
capacity of each Responsible Officer thereof
authorized to act as a Responsible Officer in
connection with this Amendment and the other Loan
Documents to which such Loan Party is a party;
(vi) such documents and certifications as Lender may
reasonably require to evidence that each Loan Party
is duly organized or formed, and that Borrower and
each other Loan Party executing any of the Loan
Documents is validly existing, in good standing and
qualified to engage in business in each jurisdiction
where its ownership, lease or operation of properties
or the conduct of its business requires such
qualification;
(vii) a certificate signed by a Responsible Officer
of each Loan Party either (A) attaching copies of all
consents, licenses and approvals required in
connection with the execution, delivery and
performance by, and the validity against, such Loan
Party of the Loan Documents to which it is a party,
which consents, licenses and approvals shall be in
full force and effect or (B) stating that no such
consents, licenses or approvals are so required;
(viii) a certificate signed by a Responsible Officer
of Borrower certifying (A) that the conditions
specified in Sections 4(d) and (e) below have been
satisfied, and (B) that there has been no event or
circumstance since December 31, 2010 that has had or
could be reasonably expected to have, either
individually or in the aggregate, a Material Adverse
Effect (other than the Existing Defaults); and
(ix) such other assurances, certificates, documents
or consents as Lender reasonably may require.
(b) Borrower shall have paid to Lender (i) the principal payment of
the Loan in the amount of $225,000 provided for in Section 2.03(d) of the
Loan Agreement and (ii) the fee in the amount of $21,000 provided for in
Paragraph 3 of this Amendment.
(c) Unless waived by Lender, Borrower shall have paid all Attorney
Costs of Lender to the extent invoiced prior to or on the Fourth Amendment
Closing Date, plus such additional amounts of Attorney Costs as shall
constitute its reasonable estimate of Attorney Costs incurred or to be
incurred by it through the closing proceedings (provided that such estimate
shall not thereafter preclude a final settling of accounts between Borrower
and Lender and provided further that the aggregate amount of all Attorney
Costs of Lender payable by Borrower in connection with the execution and
delivery of this Fourth Amendment and the closing proceedings shall not
exceed $18,000).
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(d) The representations and warranties of Borrower and each other Loan
Party contained in Article V of the Loan Agreement (as amended hereby) or
any other Loan Document, or which are contained in any document furnished
at any time under or in connection herewith or therewith, shall be true and
correct on and as of the Fourth Amendment Closing Date, except to the
extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct as of such
earlier date.
(e) No Default or Event of Default shall exist (other than the
Existing Defaults).
5. Outstanding Amount. The parties acknowledge and agree that, upon
Borrower's payment of the principal payment provided for in Paragraph 4(b)(i)
above, the Outstanding Amount of the Loan is $3,975,000.
6. Waiver of Existing Defaults and Fee. Effective as of the Fourth
Amendment Closing Date, (a) Lender waives the Existing Defaults and (b) Lender
waives Borrower's obligation to pay the fee provided for in Section 2.05 of the
Loan Agreement.
7. Ratification. The Loan Agreement, as amended by this Amendment and the
other Loan Documents are each hereby ratified and remain in full force and
effect. Nothing contained herein shall affect the priority of the lien of any
Loan Documents.
8. Release. In consideration of Lender's entering into this Amendment,
Borrower hereby fully and unconditionally releases and forever discharges
Lender, and its respective directors, officers, employees, subsidiaries,
branches, affiliates, attorneys, agents, representatives, successors and assigns
and all persons, firms, corporations and organizations acting on any of their
behalves (collectively, the "Released Parties"), of and from any and all claims,
allegations, causes of action, costs or demands and liabilities, of whatever
kind or nature, from the beginning of the world to the date on which this
Amendment is executed, whether known or unknown, liquidated or unliquidated,
fixed or contingent, asserted or unasserted, foreseen or unforeseen, matured or
unmatured, suspected or unsuspected, anticipated or unanticipated, which any
Borrower or any Subsidiary has, had, claims to have or to have had or hereafter
claims to have or have had against the Released Parties by reason of any act or
omission on the part of the Released Parties, or any of them, on account of or
in any way related to the Loan Agreement, including the administration or
enforcement of the Loan Agreement occurring prior to the date on which this
Amendment is executed, including all such loss or damage of any kind heretofore
sustained or that may arise as a consequence of the dealings among the parties
up to and including the date on which this Amendment is executed (collectively,
all of the foregoing are the "Claims"). Borrower represents and warrants that it
has no knowledge of any Claim by it or by any Subsidiary against the Released
Parties or of any facts or acts or omissions of the Released Parties which on
the date hereof would be the basis of a Claim by it or by any Subsidiary or any
other Loan Party against the Released Parties which is not released hereby, and
Borrower represents and warrants that the foregoing constitutes a full and
complete release of all Claims by or on behalf of each Borrower and any
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Subsidiary. The inclusion of a release provision in this Amendment shall not
give rise to any inference that, but for such release, any Claim otherwise would
exist.
9. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all such counterparts together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
NOBLE ROMAN'S INC.,
an Indiana corporation
By: /s/ Xxxx Xxxxxx
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Xxxx X. Xxxxxx,
Chairman of the Board and Chief Executive
Officer
PIZZACO, INC., an Indiana corporation
By: /s/ Xxxx Xxxxxx
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Xxxx X. Xxxxxx,
Chairman of the Board and Chief Executive
Officer
N.R. REALTY, INC., an Indiana corporation
By: /s/ Xxxx Xxxxxx
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Xxxx X. Xxxxxx,
Chairman of the Board and Chief Executive
Officer
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
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Title: Vice President
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By:
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Name:
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Title:
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