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Exhibit 10.1
LOAN AGREEMENT
Dated as of August 25, 2005
among
NOBLE ROMAN'S, INC., an Indiana corporation,
PIZZACO, INC., an Indiana corporation
and
N.R. REALTY, INC., an Indiana corporation,
as Borrower
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Lender
Loan No.: ▇▇-▇▇▇▇▇▇▇
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TABLE OF CONTENTS
Section Page
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Article I. DEFINITIONS AND ACCOUNTING TERMS...............................1
1.01 Defined Terms. ...............................................1
1.02 Other Interpretive Provisions.................................19
1.03 Accounting Terms..............................................19
1.04 Rounding. ...................................................20
1.05 References to Agreements and Laws. ..........................20
1.06 Times of Day. ...............................................20
Article II. the COMMITMENTS and LOAN......................................20
2.01 Commitment to Make Loan.......................................20
2.02 Prepayments...................................................20
2.03 Repayment of Loan.............................................21
2.04 Interest......................................................22
2.05 Fees. .......................................................22
2.06 Evidence of Debt..............................................22
2.07 Payments Generally............................................23
Article III. TAXES, YIELD PROTECTION AND ILLEGALITY........................23
3.01 Taxes.........................................................23
3.02 Illegality. .................................................24
3.03 Inability to Determine Rates. ...............................24
3.04 Increased Cost and Reduced Return; Capital Adequacy...........24
3.05 Funding Losses. .............................................25
3.06 Matters Applicable to all Requests for Compensation. ........25
3.07 Survival. ...................................................26
Article IV. CONDITIONS PRECEDENT TO FUNDING OF LOAN.......................26
4.01 Conditions to Funding of Loan. ..............................26
Article V. REPRESENTATIONS and WARRANTIES................................27
5.01 Existence, Qualification and Power. .........................27
5.02 Authorization; No Contravention. ............................28
5.03 No Consent or Other Action. .................................28
5.04 Binding Effect. .............................................28
5.05 Financial Statements; No Material Adverse Effect..............29
5.06 Litigation. .................................................29
5.07 No Default. .................................................29
5.08 Ownership of Property; Liens. ...............................29
5.09 Environmental Compliance. ...................................30
5.10 Insurance. ..................................................30
5.11 Taxes. ......................................................30
5.12 ERISA Compliance..............................................30
5.13 Borrower Information; Subsidiaries, Etc.; Scheduled
Affiliates....................................................31
5.14 Purpose of Loan; Margin Regulations; Investment Company Act;
Public Utility Holding Company Act............................31
5.15 Disclosure. .................................................32
5.16 Compliance with Laws. .......................................32
5.17 Business and Location. ......................................32
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5.18 Transactions with Affiliates. ...............................32
5.19 Financing Statements; Perfected Security Interest. ..........33
5.20 Operating Experience. .......................................33
5.21 Title; Sufficiency; No Liens. ...............................33
5.22 No Further Disposition. .....................................33
5.23 Principal Agreements. .......................................33
5.24 Capitalization; Solvency. ...................................34
5.25 Intellectual Property; Licenses, Etc. .......................34
5.26 Brokers and Financial Advisors. .............................34
5.27 Compliance with OFAC Rules and Regulations. .................34
5.28 Foreign Assets Control Regulations, Etc. ....................35
Article VI. AFFIRMATIVE COVENANTS.........................................35
6.01 Financial Statements. .......................................35
6.02 Certificates; Other Information...............................37
6.03 Notices. ....................................................38
6.04 Payment of Obligations. .....................................38
6.05 Preservation of Existence, Etc. .............................39
6.06 Maintenance of Properties. ..................................39
6.07 Maintenance of Insurance. ...................................39
6.08 Compliance with Laws. .......................................39
6.09 Books and Records. ..........................................39
6.10 Inspection Rights. ..........................................39
6.11 Conduct of Business. ........................................40
6.12 Principal Agreements. .......................................40
6.13 Capitalization; Solvency......................................40
6.14 Banks and Payments............................................40
6.15 Equipment.....................................................41
6.16 Escrows. ....................................................41
6.17 Taxes. ......................................................41
6.18 Rate Protection Agreement. ..................................42
6.19 Exchange Transaction. .......................................42
6.20 Additional Covenants..........................................42
Article VII. NEGATIVE COVENANTS............................................43
7.01 Liens. ......................................................43
7.02 Investments. ................................................43
7.03 Indebtedness. ...............................................44
7.04 Fundamental Changes; Subsidiaries.............................44
7.05 Dispositions. ...............................................44
7.06 Restricted Payments. ........................................45
7.07 Change in Nature of Business. ...............................45
7.08 Transactions with Affiliates..................................45
7.09 Burdensome Agreements. ......................................45
7.10 Use of Proceeds...............................................45
7.11 Real Property. ..............................................46
7.12 Principal Agreements..........................................46
Article VIII. SECURITY FOR OBLIGATIONS......................................46
8.01 Grant of Security in the Collateral. ........................46
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Article IX. SPECIAL PROVISIONS CONCERNING RIGHTS AND DUTIES WHILE IN
POSSESSION OF COLLATERAL......................................46
9.01 Borrower's Possession. ......................................46
9.02 Lender's Possession. ........................................47
Article X. EVENTS OF DEFAULT AND REMEDIES................................48
10.01 Events of Default.............................................48
10.02 Remedies Upon Event of Default. .............................49
10.03 Application of Funds. .......................................51
10.04 Required Notice of Sale. ....................................51
Article XI. Right to cure; post-Default Power of attorney.................52
11.01 Right to Cure. ..............................................52
11.02 Power of Attorney. ..........................................52
Article XII. INTENTIONALLY OMITTED.........................................53
Article XIII. FINANCIAL COVENANTS...........................................53
13.01 Leverage Ratio. :............................................53
13.02 Consolidated Cash Flow Ratio. ...............................53
13.03 Consolidated Rental Expense. ................................53
Article XIV. MISCELLANEOUS.................................................54
14.01 Amendments, Etc. ............................................54
14.02 Notices and Other Communications; Facsimile Copies............54
14.03 No Waiver; Cumulative Remedies. .............................54
14.04 Attorney Costs, Expenses and Taxes. .........................55
14.05 Indemnification by Borrower. ................................55
14.06 Payments Set Aside. .........................................56
14.07 Successors and Assigns. .....................................56
14.08 Confidentiality. ............................................57
14.09 Set-off. ....................................................57
14.10 Interest Rate Limitation. ...................................58
14.11 Counterparts. ...............................................58
14.12 Integration. ................................................58
14.13 Survival of Representations and Warranties. .................58
14.14 Severability. ...............................................59
14.15 Estoppel Certificates. ......................................59
14.16 Recourse. ...................................................59
14.17 Governing Law; Consent to Jurisdiction........................59
14.18 Waiver of Right to Trial by Jury and Other Rights. ..........60
14.19 Time of the Essence. ........................................60
14.20 Patriot Act Notice. .........................................60
14.21 Joint and Several Liability of Borrower. ....................61
SIGNATURES..........................................................S-1
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SCHEDULES
5.05 Indebtedness as of the Closing Date
5.06 Litigation
5.08 Property
5.13 Mergers, etc., Subsidiaries and Other Equity Investments
5.17 Other Businesses
5.18 Transactions with Affiliates
5.23 Principal Agreements
5.24 Owners of Capital Stock
5.25 IP Rights
6.07 Insurance Requirements
6.14 Banks
7.01 Existing Liens
7.03 Permitted Indebtedness
14.02 Lender's Office, Certain Addresses for Notices
EXHIBITS
A Form of Note
B Form of Compliance Certificate
C Opinion Matters
D Filing Offices
E Permitted Encumbrances
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LOAN AGREEMENT
This LOAN AGREEMENT ("Agreement") is entered into as of August 25,
2005, 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 ▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION ("Lender").
Borrower has requested that Lender provide a term Loan, and Lender is
willing to do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein
contained, the parties hereto covenant and agree as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Accessions" shall have the meaning accorded to such term in the UCC.
"Account" or "Accounts" shall have the meaning accorded to such term in
the UCC.
"Accounting Changes" means: (a) changes in accounting principles
required by GAAP consistently applied and implemented by Borrower and (b)
changes in accounting principles recommended by Borrower's certified public
accountants.
"Actual/360 Basis" means on the basis of a 360-day year and charged on
the basis of actual days elapsed for any whole or partial month in which
interest is being calculated.
"Adjusted LIBO Rate" means the rate of interest per annum, rounded
upward to the nearest whole multiple of one-hundredth of one percent (0.01%),
obtained by dividing (a) the LIBO Rate, by (b) a percentage equal to 100% minus
the Reserve Percentage.
"Affiliate" means, with respect to any Person, (i) any Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified, (ii) any
Person who is a manager, director or officer of, partner in, trustee of, or
blood or legal relative, guardian or representative of the specified Person, or
any Person who acts or serves in a similar capacity with respect to the
specified Person, (iii) any Person of which or whom the specified Person is a
manager, director or officer, partner, trustee, or blood or legal relative,
guardian or representative, or with respect to which or whom, the specified
Person acts or serves in a similar capacity, (iv) any Person, who, directly or
indirectly, is the legal or beneficial owner of or Controls 10% or more of any
class of equity securities of the specified Person, and (v) any Person who is an
Affiliate as defined in clause (i), (ii), (iii) or (iv) of an Affiliate of the
specified Person.
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"Agreement" means this Loan Agreement, as the same may be amended,
restated, modified or otherwise supplemented from time to time in accordance
with the terms hereof.
"Anti-Terrorism Order" means the Executive Order 13224 issued on
September 24, 2001.
"Applicable Rate" means an interest rate per annum equal to 4.00%.
"Approved Providers" means providers of insurance rated not less than
A/X by A.M. Best Company Inc., or otherwise approved by Lender.
"Attorney Costs" means and includes all reasonable fees, expenses and
disbursements of any law firm or other external counsel and, without
duplication, the reasonable allocated cost of internal legal services and all
expenses and disbursements of internal counsel.
"Audited Financial Statements" means the audited consolidated balance
sheet of the Borrower and its Subsidiaries for the fiscal year ended December
31, 2004, and the related consolidated statements of income or operations,
shareholders' equity and cash flows for such fiscal year of the Borrower and its
Subsidiaries, including the notes thereto.
"Balance Sheet Date" means December 31, 2004.
"Base Rate" means for any day a fluctuating rate per annum equal to the
higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the per annum rate
of interest in effect for such day as publicly announced from time to time by
Lender as its "prime rate." The "prime rate" is a rate set by Lender based upon
various factors including Lender's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in such rate announced by Lender shall take effect at the opening of business on
the day specified in the public announcement of such change.
"Borrower" has the meaning specified in the introductory paragraph
hereto.
"Brand" means any of the following: Noble Roman's, Noble Roman's Pizza,
Noble Roman's Pizza Express and ▇▇▇▇▇▇▇'▇ Italian Style Subs.
"Business" means (a) the business of acting as franchisor under
franchise agreements with Persons that are not Affiliates of Borrower, as
franchisees, pursuant to which such Persons either operate restaurant businesses
under one or more of the Brands or serve, at Franchise Units owned or operated
by such Persons, food products sold under one or more of the Brands, (b) the
business of operating Restaurants under one or more of the Brand names, and (c)
the business of owning trademarks and other intellectual property related to the
foregoing businesses.
"Business Day" means any day other than a Saturday, Sunday or other day
on which commercial banks are authorized to close under the Laws of, or are in
fact closed in, New York or California.
"Capital Assets" means fixed assets, both tangible (such as land,
buildings, fixtures, machinery and equipment) and intangible (such as patents,
copyrights, trademarks, franchises and goodwill); provided that Capital Assets
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shall not include any item customarily charged directly to expense or
depreciated over a useful life of twelve (12) months or less in accordance with
GAAP consistently applied.
"Capital Expenditures" means amounts paid or Indebtedness incurred by
Borrower or any of its Subsidiaries (net of any tenant improvement allowances
related to a Restaurant) in connection with (i) the purchase or lease by
Borrower or any of its Subsidiaries of Capital Assets that would be required to
be capitalized and shown on the balance sheet of such Person in accordance with
GAAP consistently applied, including without limitation or duplication,
maintenance capital, build-out and new store expenditures, (ii) without
duplication, Consolidated Restaurant Pre-Opening Costs, and (iii) the lease of
any assets by a Borrower or any of its Subsidiaries as lessee under any
Synthetic Lease to the extent that such assets would have been Capital Assets
had the Synthetic Lease been treated for accounting purposes as a Capitalized
Lease.
"Capitalized Leases" mean leases under which a Borrower or any of its
Subsidiaries is the lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on the balance sheet of
the lessee or obligor in accordance with GAAP consistently applied.
"Capital Stock" means any common stock, partnership interest,
membership interest or other equity interest.
"Certificated and Uncertificated Securities" shall have the meaning
accorded to such term in the UCC.
"Certificate of Title" shall mean any certificate or document
evidencing title.
"Change in Control" means, any act or event (including any assignment,
sale, disposition or issuance) which results in (or with the passage of time
will result in) (a) NRI ceasing to be a publicly-traded company, (b) the Control
Persons collectively owning or controlling, directly or indirectly, more than
49% of the Capital Stock of NRI, or (c) the Control Persons collectively owning
less than 8.5% of the Capital Stock of NRI.
"Change in Law" means (i) the adoption of any applicable law, rule or
regulation after the date of this Agreement, (ii) any change in any applicable
law, rule or regulation, or any change in the interpretation or application
thereof, by any appropriate Governmental Authority after the date of this
Agreement, or (iii) compliance by Lender with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
made or issued after the date of this Agreement.
"Chattel Paper" shall have the meaning accorded to such term in the
UCC.
"Closing Date" means the first date all the conditions precedent in
Section 4.01 are satisfied or waived in accordance with Section 4.01 (or, in the
case of Section 4.01(b), waived by the Person entitled to receive the applicable
payment).
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"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Collateral" means all personal property, including Equipment,
Inventory, Fixtures, Accessions, General Intangibles (including Principal
Agreements), Accounts, Certificates of Title, Money, Instruments, Investment
Property, Documents, Chattel Paper, Deposit Accounts, Letters of Credit,
Commodity Accounts, Commodity Contracts, Health-Care Insurance Receivables,
Commercial Tort Claims, Promissory Notes, Certificated and Uncertificated
Securities, Financial Assets, Securities Accounts, Securities Entitlements,
Payment Intangibles and Software, credit balances, deposits, bankers'
acceptances, guaranties, supporting obligations, letter-of-credit-rights,
credits, claims, choses in action, demands, liens, security interests, rights,
insurance, awards, compensation, remedies, title and interest in, to and in
respect of other Collateral, and all Collateral Revenues and all other personal
property of any kind, wherever located, whether now owned or hereafter acquired,
including, without limitation, any of the same now or hereafter existing,
arising, held, sold, used or consumed in connection with the Business or any
Property and any other property, rights, and interests which at any time relate
to, arise out of or in connection with the foregoing or which come into the
possession, custody or control of Lender, or any of its agents, representatives,
associates or correspondents, for any purpose, and all products and Proceeds of
the foregoing.
"Collateral Revenues" means, with respect to any Collateral, all
interest, income, dividends, distributions, rents, revenues, profits and
earnings thereon or other monies or revenues derived therefrom, including any
such property received in connection with any disposition of any Principal
Agreement, and all moneys which may become payable or received under any policy
insuring the Collateral or otherwise required to be maintained under the Loan
Documents (including return of unearned premium.)
"Commercial Tort Claims" shall have the meaning accorded to such term
in the UCC.
"Commitment" means Lender's obligation to make the Loan to Borrower
pursuant to Section 2.01 in the aggregate principal amount of NINE MILLION AND
NO/100THS DOLLARS ($9,000,000.00).
"Commodity Account" shall have the meaning accorded to such term in the
UCC.
"Commodity Contract" shall have the meaning accorded to such term in
the UCC.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit B.
"Conflict" or "Conflicting" means, with respect to any Contractual
Obligation, Organizational Document, Requirement of Law, Consent or Other Action
or any other item, any conflict with, breach of, default under, any triggering
of rights, benefits, or obligations under or in connection with such item.
"Consent(s) and/or Other Action" shall mean any consent, authorization,
Judgment, directive, approval, license, certificate, registration, permit,
exception, exemption, filing, notice, declaration or other action by, with or to
any Person.
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"Consolidated" or "consolidated" with reference to any term defined
herein, shall mean that term as applied to the accounts and financial statements
of Borrower and its Subsidiaries, consolidated in accordance with GAAP
consistently applied.
"Consolidated Cash Flow Ratio" means, as of the end of any Reference
Period, the ratio of (a) (i) Consolidated EBITDA for such Reference Period minus
(ii) Capital Expenditures for such Period minus (iii) income tax paid during
such period to (b) Consolidated Financial Obligations.
"Consolidated EBITDA" means, with respect to any Reference Period, an
amount equal to the sum of (a) Consolidated Net Income of Borrower and its
Subsidiaries for such period, plus (b) in each case to the extent deducted in
the calculation of such Person's Consolidated Net Income and without
duplication, (i) income tax for such period, plus (ii) depreciation and
amortization for such period, plus (iii) other noncash charges for such period,
plus (iv) Consolidated Total Interest Expense for such period, plus (v)
extraordinary losses, minus (c) extraordinary gains.
"Consolidated Financial Obligations" means, for any period, the sum of
(a) all scheduled payments of principal or mandatory redemption amounts and fees
on Indebtedness of Borrower and its Subsidiaries, including Capitalized Leases
and including Synthetic Leases, due and payable during such period or within six
(6) Business Days following the last day of such period, plus (b) Consolidated
Total Interest Expense for such period plus (c) all Restricted Payments paid in
cash on any preferred stock of NRI during such period plus (d) Capital
Expenditures during such period. Demand obligations shall be deemed to be due
and payable during any period during which such obligations are outstanding.
"Consolidated Funded Indebtedness" means, with respect to Borrower and
its Subsidiaries on a consolidated basis, the sum, without duplication, of (a)
the aggregate amount of Indebtedness of Borrower and its Subsidiaries, on a
consolidated basis, to the extent relating to (i) the borrowing of money or the
obtaining of credit, including the issuance of notes or bonds or Indebtedness
issued in connection with the conversion of any Capital Stock, (ii) the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business), and (iii) Synthetic Leases and Capitalized Leases, plus (b)
Indebtedness of the type referred to in clause (a) of another Person guaranteed
by Borrower or any of its Subsidiaries; provided that, for the avoidance of
doubt, subclause (i) shall not include any Derivative Contracts.
"Consolidated Net Income (or Deficit)" means, for any Reference Period,
the consolidated net income (or deficit) of Borrower and its Subsidiaries, after
deduction of all expenses, taxes, and other proper charges, determined in
accordance with GAAP consistently applied.
"Consolidated Rental Expense" means, for any Reference Period, the sum
of all rental expense of Borrower and its Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP consistently applied,
incurred under any Leases or other rental agreements or leases of real or
personal property, including space leases and ground leases, other than
obligations in respect of any Capitalized Leases or any Synthetic Leases.
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"Consolidated Restaurant Pre-Opening Costs" means "Start-up costs" (as
such term is defined in SOP 98-5 published by the American Institute of
Certified Public Accountants) related to the acquisition, opening and organizing
of new Restaurants, such costs including, without limitation, the cost of
feasibility studies, staff-training and recruiting, and travel costs for
employees engaged in such start-up activities.
"Consolidated Total Interest Expense" means, for any Reference Period,
the aggregate amount of cash interest accrued by Borrower and its Subsidiaries
during such period on all Indebtedness of Borrower and its Subsidiaries
outstanding during all or any part of such period, whether such interest was or
is required to be reflected as an item of expense or capitalized, including (a)
payments consisting of interest in respect of any Capitalized Lease or any
Synthetic Lease, (b) commitment fees and letter of credit fees incurred in
connection with the borrowing of money (but not including fees payable under the
Fee Letter) and (c) facility fees, balance deficiency fees and similar fees or
expenses in connection with the borrowing of money other than the financing
provided under this Agreement and the other Loan Documents.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound and shall include, without limitation, any obligation under or
in connection with any Instrument, Document or General Intangible.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling," and "Controlled by" and "under common Control with" have meanings
correlative thereto.
"Control Persons" means ▇▇▇▇ ▇. ▇▇▇▇▇▇ and A. ▇▇▇▇▇ ▇▇▇▇▇▇.
"Current Filings" shall have the meaning accorded to such term in
Section 5.21.
"Debtor Relief Laws" means the Bankruptcy Code of the United States,
and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights of
creditors generally.
"Default" means any event or condition that, with the giving of any
notice, the passage of time, or both, would be an Event of Default.
"Default Rate" means the Interest Rate plus the Default Spread.
"Default Spread" means 400 basis points.
"Deposit Account" or "Deposit Accounts" shall have the meaning accorded
to such term in the UCC.
"Derivative Contracts" means, with respect to any Person, every
obligation of such Person under any forward contract, futures contract, swap,
option or other financing agreement or arrangement (including, without
6
limitation, caps, floors, collars and similar agreements), the value of which is
dependent upon interest rates, currency exchange rates, commodities or other
indices.
"Disposition" or "Dispose" means, with respect to any property, assets,
obligations or other items, the sale, assignment, conveyance, pledge, Grant,
encumbrance, transfer, license, lease, gift, abandonment or other disposition
(including any sale and leaseback transaction) of thereof by any Person,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith.
"Document" shall have the meaning accorded to such term in the UCC.
"Dollar" and the sign "$" mean lawful money of the United States.
"Environmental Laws" means all present and future Laws, Requirements of
Law, or Consents or Other Action, relating to the protection of human health and
safety or the environment, including, without limitation, (a) all Laws,
Requirements of Law, or Consents or Other Action, pertaining to reporting,
licensing, permitting, investigation, and remediation of emissions, discharges,
releases, or threatened releases of hazardous materials, chemical substances,
pollutants, contaminants, or hazardous or toxic substances, materials or wastes
whether solid, liquid, or gaseous in nature, into the air, surface water,
groundwater, or land, or relating to the presence, generation, discharge,
release, removal, manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of chemical substances, pollutants,
emissions, contaminants, or hazardous, radioactive or toxic substances,
materials, or wastes, whether solid, liquid, or gaseous in nature; and (b) all
Laws, Requirements of Law, Consents or Other Action, pertaining to the
protection of the health and safety of employees of the public.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"Equipment" shall have the meaning accorded to such term in the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Section
414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes
of provisions relating to Section 412 of the Code).
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"ERISA Event" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan
subject to Section 4063 of ERISA during a plan year in which it was a
substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation
of operations that is treated as such a withdrawal under Section 4062(e) of
ERISA; (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or
the commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 10.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as amended, modified,
succeeded or replaced from time to time.
"Exchange Agreements" means those certain letters, each dated July 1,
2005, from NRI to all of the holders of NRI's 8% Subordinated Promissory Notes
due December 31, 2006, containing the "Exchange Offer" to enter into the
Exchange Transaction, and accepted by Transmittal Letters (of various dates)
executed by all such holders.
"Exchange Transaction" means the exchange of (a) all of NRI's
outstanding 8% Subordinated Promissory Notes due December 31, 2006 of NRI for
NRI Series B Convertible Preferred Stock, and (b) the warrants to purchase NRI
common stock that expire January 15, 2007 for warrants to purchase the same
number of shares of NRI common stock expiring January 15, 2008, all on the terms
set forth in the Exchange Agreements.
"Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate (rounded upward,
if necessary, to a whole multiple of 1/100 of 1%) charged to Lender on such day
on such transactions as determined by Lender.
"Fee Letter" means the letter agreement, dated as of the date hereof,
among Borrower and Lender.
"Filing Collateral" means all Collateral and all other property with
respect to which a security interest may be perfected by the filing of financing
statements under the UCC.
"Filing Offices" means the filing office(s) listed on Exhibit D.
8
"Financial Assets" shall have the meaning accorded to such term in the
UCC.
"Financing Statements" shall mean financing statements on form UCC-1
naming Borrower as debtor and Lender as secured party and describing the
Collateral as the collateral.
"Fixtures" shall have the meaning accorded to such term in the UCC.
"Franchised Units" means each restaurant or other facility operated by
a franchisee under a franchise agreement with Borrower as franchisor that (among
other things) permits the franchisee to operate such restaurant or other
facility, and/or to sell products, under one or more of the Brands.
"FRB" means the Board of Governors of the Federal Reserve System of the
United States, or any Governmental Authority that succeeds to any of its
principal functions.
"GAAP" or "generally accepted accounting principles" means generally
accepted accounting principles in effect in the United States of America from
time to time and subject to Section 1.03.
"General Intangible" or "General Intangibles" shall have the meaning
accorded to such term in the UCC.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank, public office,
court, arbitration or mediation panel, or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government.
"Grant" or "Grants" or "Granting" shall include to grant, assign,
pledge, transfer, convey, set over and dispose.
"Guarantee" means, as to any Person, any (a) obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such primary obligor, direct or
indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related
primary obligation, or portion thereof, in respect of which such Guarantee is
9
made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the guaranteeing Person in good
faith. The term "Guarantee" as a verb has a corresponding meaning.
"Hazardous Material" means any material or substance that, whether by
its nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Laws, or which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and which is now and hereafter regulated under
any Environmental Laws, or which is or contains petroleum, gasoline, diesel fuel
or another petroleum hydrocarbon product.
"Health-Care Insurance Receivables" shall have the meaning accorded to
such term in the UCC.
"Incurrence Ratio" means, as of any date of determination, the maximum
Leverage Ratio for such date as set forth in the table in Section 13.01, less
0.15.
"Indebtedness" means, as to any Person and whether recourse is secured
by or is otherwise available against all or only a portion of the assets of such
Person and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses,
(c) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person,
(d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith and for which Borrower maintains sufficient reserves in
accordance with GAAP consistently applied),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any Synthetic Lease,
(g) all sales by such Person of (i) accounts or general intangibles for
money due or to become due, (ii) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (iii) other receivables
(collectively "receivables"), whether pursuant to a purchase facility or
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together with
any obligation of such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
10
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
Capital Stock of such Person or any rights measured by the value of such Capital
Stock,
(i) every obligation of such Person under any Derivative Contract,
(j) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law, and
(k) every Guarantee.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (i) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with GAAP consistently
applied, (ii) any Capitalized Lease shall be the principal component of the
aggregate of the rentals obligation under such Capitalized Lease payable over
the term thereof that is not subject to termination by the lessee, (iii) any
sale of receivables shall be the amount of unrecovered capital or principal
investment of the purchaser (other than Borrower or any of its wholly-owned
Subsidiaries) thereof, excluding amounts representative of yield or interest
earned on such investment, (iv) any Synthetic Lease shall be the stipulated loss
value, termination value or other equivalent amount, (v) any Derivative Contract
shall be the maximum amount of any termination or loss payment required to be
paid by such Person if such Derivative Contract were, at the time of
determination, to be terminated by reason of any event of default or early
termination event thereunder, whether or not such event of default or early
termination event has in fact occurred, (vi) any equity related purchase
obligation shall be the maximum fixed redemption or purchase price thereof
inclusive of any accrued and unpaid dividends to be comprised in such redemption
or purchase price and (vii) any Guarantee shall be an amount equal to the stated
or determinable amount of the primary obligation in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith.
"Indemnified Liabilities" has the meaning set forth in Section 14.05.
"Indemnitees" means Lender, together with its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of Lender or its
Affiliates.
"Instrument" shall have the meaning accorded to such term in the UCC.
"Insurance Requirements" means the insurance requirements set forth in
Section 6.07 and Schedule 6.07.
"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 Sections 3.02 and 3.03, a variable interest
rate per annum equal to the Base Rate plus 2.00%.
11
"Inventory" shall have the meaning accorded to such term in the UCC.
"Investment" means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of capital stock or other securities of another Person, (b)
a loan, advance or capital contribution to, Guarantee or assumption of debt of,
or purchase or other acquisition of any other debt or equity participation or
interest in, another Person, including any partnership or joint venture interest
in such other Person, or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
"Investment Property" shall have the meaning accorded to such term in
the UCC.
"IP Rights" has the meaning set specified in Section 5.25.
"IRS" means the United States Internal Revenue Service.
"Judgment" means any order, decision, decree, award or injunction of
any Governmental Authority.
"Late Payment Charge" shall have the meaning accorded to such term in
Section 2.04(b).
"Laws" means, collectively, all international, foreign, Federal, state
and local statutes, treaties, rules, guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.
"Lease" or "Leases" means any lease covering all or a portion of any
Property or any other real or personal property to which Borrower is a party or
in which Borrower owns an interest.
"Lender" means ▇▇▇▇▇ Fargo Bank, National Association, its successors
and assigns.
"Lender's Office" means Lender's address and, as appropriate, account
as set forth on Schedule 14.02, or such other address or account of which Lender
may from time to time notify Borrower.
"Lending Office" means the office or offices of Lender designated by
Lender in writing to Borrower.
"Letters of Credit" shall have the meaning accorded to such term in the
UCC.
"Leverage Ratio" means, as of any date of determination, the ratio of
(a) Consolidated Funded Indebtedness outstanding on such date (or if the
12
Reference Period ending on such date consists of less than four (4) fiscal
quarters, then an amount equal to the actual Consolidated Funded Indebtedness
outstanding on such date multiplied by a fraction, the numerator of which is the
number of weeks contained in such Reference Period and the denominator of which
is the total number of weeks in the applicable fiscal year) to (b) Consolidated
EBITDA for the Reference Period ending on such date.
"LIBO Rate" means the rate of interest, rounded upward to the nearest
whole multiple of one-sixteenth of one percent (0.0625%), quoted by Lender as
the London Inter-Bank Offered Rate for deposits in U.S. Dollars for interest
periods of one month at approximately 9:00 a.m. California time.
"License" means any license, permit, directive, authorization, approval
or stipulation required to operate the Business at any location.
"Lien" means any deed to secure debt, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge,
or preference, priority or other security interest or preferential arrangement
of any kind or nature whatsoever (including any conditional sale or other title
retention agreement, and any financing lease having substantially the same
economic effect as any of the foregoing) and including any right of set off or
offset, rights of others, benefits, claims or other liens (including federal or
state tax liens).
"Litigation" means any action, proceeding, litigation, investigation,
arbitration, mediation, claim or Judgment.
"Loan" has the meaning specified in Section 2.01.
"Loan Documents" means this Agreement, the Note and any other note,
security agreement, mortgage, deed of trust, deed to secure debt, any guarantee
of Borrower's Obligations, collateral assignments, and other contractual
Obligations, filings (including financing statements) and recordings executed,
delivered or filed, including any amendments, supplements, renewals, extensions
or replacements thereof, executed between any Loan Parties or their Affiliates
and Lender or by any Loan Parties or their Affiliates for the benefit of Lender.
"Loan Parties" means, collectively, Borrower and each Scheduled
Affiliate.
"Margin Stock" shall have the meaning accorded to such term in
Regulation U, T or X of the Board of Governors of the Federal Reserve System, as
amended.
"Material Adverse Effect" means, a material adverse change in, or a
material adverse effect on, (i) Borrower, any of its Subsidiaries or any
Scheduled Affiliate, (ii) the business, results of operations, condition
(financial or otherwise), assets, liabilities (actual or contingent) or
prospects of Borrower, any of its Subsidiaries or any Scheduled Affiliate, (iii)
the Business, (iv) any Property, (v) the ability of the Loan Parties to perform
any of their respective obligations under the Loan Documents, (vi) the rights
and remedies of Lender under any of the Loan Documents or (vii) the legality,
validity, binding effect or enforceability of any of the Loan Documents.
"Maturity Date" means August 31, 2011.
13
"Money" shall have the meaning accorded to such term in the UCC.
"Multiemployer Plan" means any employee benefit plan of the type
described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA
Affiliate makes or is obligated to make contributions, or during the preceding
five plan years, has made or been obligated to make contributions.
"Note" means a promissory note made by Borrower in favor of Lender
evidencing the Loan substantially in the form of Exhibit A.
"NRI" means Noble Roman's, Inc., an Indiana corporation, being one of
the parties that is Borrower hereunder.
"N.R. Realty" means N.R. Realty, Inc., an Indiana corporation, being
one of the parties that is Borrower hereunder and a wholly-owned Subsidiary of
NRI.
"Obligations" means the Loan, all other advances to, and debts,
liabilities, obligations, covenants and duties of, any Loan Party arising under
any Loan Document or otherwise with respect to the Loan, whether direct or
indirect (including those acquired by assumption), absolute or contingent, due
or to become due, now existing or hereafter arising, and any future advances
thereon, renewals, extensions, modifications, amendments, substitutions and
consolidations thereof, including Borrower's obligations to pay (or reimburse
Lender for) all costs and expenses (including Attorney Costs) incurred by Lender
in obtaining, maintaining, protecting and preserving its interest in the
Collateral or its security interest therein, foreclosing, retaking, holding,
preparing for sale or lease, selling or otherwise disposing or realizing on the
Collateral or in exercising its rights hereunder or as secured party under the
UCC, any other applicable Law or Loan Document, and including interest and fees
arising under any Loan Document or otherwise with respect to the Loan and that
accrue after the commencement by or against any Loan Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are
allowed claims in such proceeding.
"OFAC" shall mean the U.S. Department of the Treasury's Office of
Foreign Assets Control.
"Organization Documents" means, (a) with respect to any corporation,
the certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed, if necessary, in connection with its formation or organization
with the applicable Governmental Authority in the jurisdiction of its formation
or organization and, if applicable, any certificate or articles of formation or
organization of such entity.
14
"Outstanding Amount" means, with respect to the Loan on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of the Loan occurring on such date.
"Participant" has the meaning specified in Section 14.07(b).
"Patriot Act" has the meaning specified in Section 14.20.
"Payment Date" means the first (1st) Business Day of each calendar
month (the first such Payment Date being October 3, 2005).
"Payment Intangibles" shall have the meaning accorded to such term in
the UCC.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" (as such term
is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by Borrower or any
ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has
an obligation to contribute, or in the case of a multiple employer or other plan
described in Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.
"Permitted Encumbrances" means those matters listed on Exhibit E and
which individually and in the aggregate will not materially and adversely affect
the ability of Borrower to pay in full the Obligations, the use of any Property
for the use currently being made thereof, or the operation or value of any
Property.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Pizzaco" means Pizzaco, Inc., an Indiana corporation, being one of the
parties that is Borrower hereunder and a wholly-owned Subsidiary of NRI.
"Plan" means any "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) established by Borrower or, with respect to any such plan
that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.
"Prepayment Charge" shall have the meaning accorded to such term in
Section 2.02(b).
"Principal Agreement" or "Principal Agreements" shall mean any
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.
"Proceeds" shall include "proceeds", "products", and "commingled goods"
within the meaning accorded to such terms in the UCC.
"Promissory Notes" shall have the meaning accorded to such term in the
UCC.
15
"Property" means each location leased by Borrower in connection with
the Business.
"Reference Period" means, as of any date of determination, the period
of four (4) consecutive fiscal quarters of Borrower and its Subsidiaries ending
on such date, or if such date is not a fiscal quarter end date, the period of
four (4) consecutive fiscal quarters most recently ended (in each case treated
as a single accounting period); provided, however, until four (4) fiscal
quarters of Borrower and its Subsidiaries have elapsed since the Closing Date,
"Referenced Period" shall mean, such shorter period of one (1), two (2) or three
(3) full fiscal quarters elapsed since the Closing Date.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time, and any
successor regulations.
"Reportable Event" means any of the events set forth in Section 4043(c)
of ERISA, other than events for which the 30-day notice period has been waived.
"Required Monthly Amortization Payment" means ONE HUNDRED TWENTY-FIVE
THOUSAND AND NO/100THS DOLLARS ($125,000.00).
"Requirement of Law" or "Requirements of Law" means any requirement,
direction, policy or procedure of any Law or License, Judgment, or Consent or
Other Action or of the National Association of Securities Dealers or any
exchange on which the Capital Stock of NRI is traded.
"Reserve Percentage" means at any time the percentage announced within
Lender as the reserve percentage under Regulation D for loans and obligations
making reference to an Adjusted LIBO Rate. The Reserve Percentage shall be based
on Regulation D or other regulations from time to time in effect concerning
reserves for Eurocurrency Liabilities as defined in Regulation D from related
institutions as though Lender were in a net borrowing position, as promulgated
by the Board of Governors of the Federal Reserve System, or its successor.
"Responsible Officer" means the chief executive officer, president,
chief financial officer, treasurer, assistant treasurer or vice president of a
Loan Party. Any document delivered hereunder that is signed by a Responsible
Officer of a Loan Party shall be conclusively presumed to have been authorized
by all necessary corporate, partnership and/or other action on the part of such
Loan Party and such Responsible Officer shall be conclusively presumed to have
acted on behalf of such Loan Party.
"Restaurant" means a particular restaurant at a particular location
that is operated by Borrower or a Subsidiary of Borrower.
"Restricted Payment" means any dividend or other distribution (whether
in cash, securities or other property) with respect to any Capital Stock or
other equity interest of Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such capital stock or other equity interest
16
or of any option, warrant or other right to acquire any such capital stock or
other equity interest.
"Sanctioned Country" means a country subject to a sanctions program
identified on the list maintained by OFAC and available at
▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/▇▇▇▇▇▇/▇▇▇▇/▇▇▇▇▇▇▇▇▇/ index.html, or as otherwise
published from time to time.
"Sanctioned Person" means (i) a Person named on the list of "Specially
Designated Nationals and Blocked Persons" maintained by OFAC available at
▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇/▇▇▇▇▇▇▇/ eotffc/ofac/sdn/index.html, or as otherwise
published from time to time, or (ii) (A) an agency of the government of a
Sanctioned Country, (B) an organization controlled by a Sanctioned Country, or
(C) a Person resident in a Sanctioned Country, to the extent subject to a
sanctions program administered by OFAC.
"Scheduled Affiliate" shall have the meaning accorded to such term in
Section 5.13(c).
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Securities Accounts" shall have the meaning accorded to such term in
the UCC.
"Securities Entitlements" shall have the meaning accorded to such term
in the UCC.
"Settlement Agreement" means that certain Settlement Agreement dated as
of August 1, 2005 among NRI, Oak Grove Corp., Pizzaco, Inc., LPS, Inc., G.N.R.,
Inc., N.R. East, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇, A. ▇▇▇▇▇ ▇▇▇▇▇▇, SummitBridge, Drawbridge
Special Opportunities Fund LP and ▇.▇. ▇▇▇▇▇ & Co., formerly known as
Highbridge/▇▇▇▇▇ Special Opportunities Fund, L.P.
"Settlement Transaction" means, collectively, the transactions provided
for in the Settlement Agreement to be consummated on or about the Closing Date
consisting of (a) the payment to SummitBridge of the sum of $8,300,000; (b) the
release and satisfaction of the Tranche Y Term Loan Promissory Note made by NRI
on or about April 30, 1999 in the amount of $8,000,000 (defined in the
Settlement Agreement as the "Note") and related security interests and
guarantees; (c) the relinquishment and cancellation by the SummitBridge Parties
of a warrant to purchase 385,000 shares of common stock of NRI (defined in the
Settlement Agreement as the "Warrant"); (d) the relinquishment and transfer by
the SummitBridge Parties to NRI of 814,748 shares of common stock of NRI
(defined in the Settlement Agreement as the "Surrendered Shares"); and (e) the
relinquishment and transfer by the SummitBridge Parties to NRI of $4,929,275
stated amount of non-yield preferred stock in NRI, convertible into 1,643,092
shares of common stock of NRI (defined in the Settlement Agreement as the
"Preferred Stock").
"Software" shall have the meaning accorded to such term in the UCC.
"Sole Discretion" means with respect to any decision or action
(including granting of any consent or approval) the discretion to make or take
or fail to take or make any decision or action with or without any reason,
taking into account such factors, if any, as the decision maker or action taker
determines (including self interest), and any decision or action may be subject
17
to any such conditions or no conditions as the decision maker or action taker
determines and shall be final and conclusive.
"Subsidiary" of a Person (the "parent") means a corporation,
partnership, joint venture, limited liability company or other business entity
of which a majority of the shares of securities or other interests having
ordinary voting power for the election of directors or other governing body
(other than securities or interests having such power only by reason of the
happening of a contingency) are at the time beneficially owned, or the
management of which is otherwise Controlled, by the parent. Unless otherwise
specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall
refer to a Subsidiary or Subsidiaries of a Borrower.
"SummitBridge" means SummitBridge National Investments LLC, being one
of the parties to the Settlement Agreement.
"SummitBridge Parties" means SummitBridge and the other Persons
collectively identified as the "SummitBridge Parties" in the Settlement
Agreement.
"Synthetic Lease" means any lease of goods or other property, whether
real or personal, which is treated as an operating lease under GAAP consistently
applied and as a loan or financing for U.S. income tax purposes.
"Tax Party" has the meaning specified in Section 5.11.
"Taxes and Other Charges" means all taxes, assessments and other
governmental charges, ground rents, or other rents, rates and charges, excises,
levies, fees and other charges (public or private) which may be assessed,
levied, confirmed or imposed on, or in respect of or be a lien upon the
Collateral, a Property or the Business or any part thereof or any interest
therein.
"30/360 Basis" means on the basis of a 360-day year consisting of 12
months of 30 days each.
"Transaction Documents" means, collectively, the Settlement Agreement
and the Exchange Agreements.
"Transactions" means, collectively, the Settlement Transaction and the
Exchange Transaction.
"UCC" or "Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time as adopted in the State of New York.
"Unfunded Pension Liability" means the excess of a Pension Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Pension Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." mean the United States of America.
18
1.02 Other Interpretive Provisions.With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) (i) The words "herein," "hereto," "hereof" and "hereunder" and
words of similar import when used in any Loan Document shall refer to such Loan
Document as a whole and not to any particular provision thereof.
(ii) Article, Section, Exhibit and Schedule references are to
the Loan Document in which such reference appears.
(iii) The term "including" is by way of example and not
limitation and shall be deemed to be followed by the phrase "without
limitation."
(iv) The term "documents" includes any and all instruments,
documents, agreements, certificates, notices, reports, financial
statements and other writings, however evidenced, whether in physical
or electronic form.
(c) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including;" the words "to"
and "until" each mean "to but excluding;" and the word "through" means "to and
including."
(d) Section headings herein and in the other Loan Documents are
included for convenience of reference only and shall not affect the
interpretation of this Agreement or any other Loan Document.
1.03 Accounting Terms. (a) All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, and applied in a manner consistent with that used in preparing the Audited
Financial Statement, except as otherwise specifically prescribed herein.
(b) In the event any Accounting Changes shall occur and such changes
affect financing covenants, standards or terms in this Agreement, then Borrower
shall promptly notify Lender of such changes and Borrower and Lender agree to
enter into negotiations in order to amend such provisions of this Agreement so
as to equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition and results of operation of
Borrower shall be the same as if such Accounting Changes had not been made, and
until such time as such an amendment shall have been executed and delivered by
Borrower and Lender, (a) all financial covenants, standards and terms in this
Loan Agreement shall be calculated and/or construed as if such Accounting
Changes had not been made, and (b) Borrower shall prepare schedules to be
included with all financial statements required to be delivered hereunder that
show the differences between the financial statements delivered (which reflect
such Accounting Changes) and the basis for calculating financial covenant
compliance (without reflecting such Accounting Changes).
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1.04 Rounding. Any financial ratios required to be maintained by
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).
1.05 References to Agreements and Laws. Unless otherwise expressly
provided herein, (a) references to Organization Documents, agreements (including
the Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements and other
modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements and other modifications are not prohibited
by any Loan Document; and (b) references to any Law shall include all statutory
and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting such Law.
1.06 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Pacific time (daylight or standard, as
applicable).
ARTICLE II.
the COMMITMENTS and LOAN
2.01 Commitment to Make Loan.
Subject to the terms and conditions set forth herein, Lender agrees to
make a loan (the "Loan") to Borrower on the Closing Date, in the amount of the
Commitment. Upon satisfaction of the applicable conditions set forth in Section
4.01, Lender shall make the Loan available to Borrower either by (i) crediting
the account of Borrower on the books of Lender with the amount of such funds or
(ii) wire transfer of such funds, in each case in accordance with instructions
provided to (and reasonably acceptable to) Lender by Borrower. No amounts of the
Loan that are paid or prepaid may be reborrowed.
2.02 Prepayments.
Borrower acknowledges that any prepayment of the Loan will cause Lender
to lose its interest rate yield thereon and will possibly require that Lender
reinvest any such prepayment amounts in loans of a lesser interest rate yield.
As a consequence Borrower agrees as follows, as an integral part of the
consideration for Lender making the Loan:
(a) Voluntary Prepayment. Any voluntary prepayment of the Loan is
prohibited except as expressly permitted hereunder.
(b) Prepayment Charge. If all or any portion of the Loan is prepaid on
or before the first anniversary of the Closing Date, whether such prepayment is
voluntary, involuntary, pursuant to Section 2.03(c) or upon acceleration of the
principal amount thereof by Lender or otherwise, Borrower shall pay to Lender on
the prepayment date (in addition to all other sums then due and owing to Lender
under the Loan Documents) a prepayment charge (the "Prepayment Charge") equal to
two percent (2%) of the principal amount then being prepaid.
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(c) Permitted Prepayments. Borrower may, upon notice to Lender, on any
Payment Date voluntarily prepay the Loan in whole but not in part; provided that
(i) such notice must be received by Lender not later than 8:00 a.m. three
Business Days prior to the Payment Date on which such prepayment of the Loan is
anticipated and (ii) in addition to all other sums then due and owing under the
Loan Documents, Borrower shall pay any Prepayment Charge required in accordance
with Section 2.02(b) above. If such notice is given by Borrower, Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the Payment Date specified therein. Any prepayment of the
Loan shall be accompanied by all accrued interest thereon, together with any
Prepayment Charge required as set forth above in this Section 2.02, any
additional amounts required pursuant to Section 3.05 and all other Obligations.
2.03 Repayment of Loan.
(a) On Maturity Date. In addition to any other payments due under this
Agreement, Borrower shall pay to Lender on the Maturity Date all Obligations
then outstanding on such date.
(b) Required Amortization. In addition to any other payments due under
this Agreement, on the Payment Date occurring on October 3, 2005 and on each
Payment Date thereafter, Borrower shall pay to Lender as a principal reduction
of the Loan, an amount equal to the Required Monthly Amortization Payment.
Notwithstanding the principal amortization payments provided for herein, the
principal balance of the Loan outstanding on the Maturity Date shall be fully
due and payable on said date. No principal balance reduction of the Loan may be
reborrowed.
(c) As a Result of Violation of Leverage Ratio Covenant. In addition to
any other payments due under the Agreement, if there shall occur a breach of the
covenant contained in Section 13.01 (as evidenced by any Compliance Certificate
delivered by Borrower pursuant to Section 6.01 or as otherwise determined by
Lender upon review of any Compliance Certificate or other financial information
with respect to Borrower delivered to Lender, pursuant to this Agreement),
Borrower shall repay to Lender on the Payment Date immediately following the
date on which Borrower delivered such Compliance Certificate or the date on
which Lender delivered to Borrower written notice of such determination (or, if
such notice is delivered less than fifteen (15) days prior to such Payment Date,
then on the fifteenth (15th) day following delivery of such notice) a principal
amount of the Loan sufficient, upon application of such payment, to reduce the
Outstanding Amount of the Loan to an amount that would bring Borrower into
compliance with Section 13.01 (determined as of the end of the Reference Period
ended most recently prior to the date of such payment). Any payment of the Loan
pursuant to this Section 2.03(c) shall be accompanied by any Prepayment Charge
provided for in Section 2.02(b) and any additional amounts required pursuant to
Section 3.05. Any such payment of the Loan may not be reborrowed.
2.04 Interest.
(a) Subject to the provisions of subsection (b) below, interest on the
Loan will accrue and be charged on the Outstanding Amount thereof, from time to
time, at the Interest Rate. The Interest Rate shall be determined by Lender on
the Business Day immediately prior to the Closing Date or on the Closing Date,
21
as determined by Lender in its Sole Discretion, and shall be reset on each
Payment Date thereafter until the Maturity Date. All calculations of interest
shall be computed on an Actual/360 Basis (which results in more interest being
paid than if computed on a 30/360 Basis). Notwithstanding the foregoing, if any
date on which the Interest Rate is to be set or reset, as provided above, falls
on a day that the LIBO Rate is not published, Lender may, in its Sole
Discretion, reset the Interest Rate on such date using the LIBO Rate most
recently published prior to the applicable date on which the Interest Rate is
being set or reset.
(b) If Lender has not received on any date on which any payment is due
(whether by acceleration or otherwise) the full amount due on such date, in
addition to any other amounts payable hereunder, Borrower shall pay to Lender,
promptly on demand, a late payment charge ("Late Payment Charge") in an amount
equal to the product of (x) the difference between (1) the amount due on any
such due date and (2) the amount actually received on such due date, multiplied
by (y) .05. In addition, if any amount payable by Borrower under any Loan
Document is not paid when due (without regard to any applicable grace periods),
whether at stated maturity, by acceleration or otherwise, such amount shall
thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.
Furthermore, while any Event of Default exists, Borrower shall pay interest on
the principal amount of all outstanding Obligations hereunder at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws. Accrued and unpaid interest on past due
amounts (including interest on past due interest) shall be due and payable upon
demand.
(c) Interest on the Loan shall be due and payable in arrears on each
Payment Date and at such other times as may be specified herein. Interest
hereunder shall be due and payable in accordance with the terms hereof before
and after judgment, and before and after the commencement of any proceeding
under any Debtor Relief Law.
(d) Interest shall accrue on the Loan for the day on which the Loan is
made, and shall not accrue on the Loan, or any portion thereof, for the day on
which the Loan or such portion is paid.
2.05 Fees. In addition to any other amounts due under this Agreement
and any other Loan Documents, the Borrower shall pay to Lender fees in the
amounts and at the times specified in the Fee Letter. Such fees shall be fully
earned when paid and shall not be refundable for any reason whatsoever.
2.06 Evidence of Debt.
The Loan shall be evidenced by one or more accounts or records
maintained by Lender in the ordinary course of business. The accounts or records
maintained by Lender shall be conclusive absent manifest error of the amount of
the Loan made by Lender to Borrower and the interest and payments thereon. Any
failure to so record or any error in doing so shall not, however, limit or
otherwise affect the obligation of Borrower hereunder to pay any amount owing
with respect to the Obligations. Borrower shall execute and deliver to Lender
the Note, which shall evidence the Loan in addition to such accounts or records.
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The Lender may attach schedules to the Note and endorse thereon the date, type,
amount and maturity of the Loan and payments with respect thereto.
2.07 Payments Generally.
(a) All payments to be made by Borrower shall be made without condition
or deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein, all payments by Borrower hereunder shall be
made to Lender via bank account debit in Dollars and in immediately available
funds not later than 11:00 a.m. on the date specified herein. All payments
received by Lender after 11:00 a.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.
(b) If any payment to be made by Borrower shall come due on a day other
than a Business Day, payment shall be made on the next following Business Day,
and such extension of time shall be reflected, without duplication, in computing
interest or fees, as the case may be.
(c) Nothing herein shall be deemed to obligate Lender to obtain the
funds for the Loan in any particular place or manner or to constitute a
representation by Lender that it has obtained or will obtain the funds for the
Loan in any particular place or manner.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes.
(a) Any and all payments by Borrower to or for the account of Lender
under any Loan Document shall be made free and clear of and without deduction
for any and all present or future taxes, duties, levies, imposts, deductions,
assessments, fees, withholdings or similar charges, and all liabilities with
respect thereto, excluding taxes imposed on or measured by Lender's overall net
income, and franchise taxes imposed on Lender (in lieu of net income taxes), by
the jurisdiction (or any political subdivision thereof) under the Laws of which
Lender is organized or maintains a lending office (all such non-excluded taxes,
duties, levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as "Taxes"). If Borrower
shall be required by any Laws to deduct any Taxes from or in respect of any sum
payable under any Loan Document to Lender (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section), Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) Borrower shall make such deductions, (iii) Borrower shall pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable Laws, and (iv) within 30 days after the date of such payment,
Borrower shall furnish to Lender the original or a certified copy of a receipt
evidencing payment thereof.
(b) In addition, Borrower agrees to pay any and all present or future
stamp, court or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under any Loan
Document or from the execution, delivery, performance, enforcement or
registration of, or otherwise with respect to, any Loan Document (hereinafter
referred to as "Other Taxes").
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(c) If Borrower shall be required to deduct or pay any Taxes or Other
Taxes from or in respect of any sum payable under any Loan Document to Lender,
Borrower shall also pay to Lender at the time interest is paid, such additional
amount that Lender specifies is necessary to preserve the after-tax yield (after
factoring in all taxes, including taxes imposed on or measured by net income)
that Lender would have received if such Taxes or Other Taxes had not been
imposed
(d) Borrower agrees to indemnify Lender for (i) the full amount of
Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section) paid by Lender, (ii)
amounts payable under Section 3.01(c), and (iii) any liability (including
additions to tax, penalties, interest and expenses) arising therefrom or with
respect thereto, in each case whether or not such Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
Payment under this subsection (d) shall be made within 30 days after the date
Lender makes a demand therefor, accompanied by a statement of Lender setting
forth in reasonable detail its computation of the amount or amounts to be paid
to it hereunder.
3.02 Illegality. If Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for Lender or its applicable Lending Office to make, maintain or fund the Loan
or to determine or charge interest rates based upon the LIBO Rate, then, on
notice thereof by Lender to Borrower, any obligation of Lender to make the Loan
shall be suspended, and the Interest Rate on the Loans shall immediately be
converted to the Base Rate plus 2.00%, until Lender notifies Borrower that the
circumstances giving rise to such determination no longer exist. Upon any such
prepayment, Borrower shall also pay accrued interest on the amount so prepaid.
Lender agrees to designate a different Lending Office if such designation will
avoid the need for such notice and will not, in the good faith judgment of
Lender, otherwise be materially disadvantageous to Lender.
3.03 Inability to Determine Rates. If Lender determines that for any
reason adequate and reasonable means do not exist for determining the Interest
Rate based upon the Adjusted LIBO Rate or that the Interest Rate with respect to
any period does not adequately and fairly reflect the cost to Lender of funding
the Loan, Lender will promptly so notify Borrower, which notice shall set forth
in reasonable detail the basis for such notice. Thereafter, the obligation of
the Lender to make or maintain the Loan at the Interest Rate based upon the
Adjusted LIBO Rate shall be suspended until Lender revokes such notice, and
until any such notice is revoked, the Interest Rate applicable to the Loan shall
be equal to the Base Rate plus 2.00%.
3.04 Increased Cost and Reduced Return; Capital Adequacy.
(a) If Lender determines that as a result of any Change in Law, or
Lender's compliance therewith, there shall be any increase in the cost to Lender
of agreeing to make or making, funding or maintaining loans at the Interest Rate
based upon the Adjusted LIBO Rate, or a reduction in the amount received or
receivable by Lender in connection with any of the foregoing (excluding for
purposes of this subsection (a) any such increased costs or reduction in amount
resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern),
(ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or any foreign jurisdiction or any political
subdivision of either thereof under the Laws of which Lender is organized or has
24
its Lending Office, and (iii) reserve requirements utilized in the determination
of the Adjusted LIBO Rate), then from time to time upon demand of Lender,
Borrower shall pay to Lender such additional amounts as will compensate Lender
for such increased cost or reduction.
(b) If Lender determines that any Change in Law regarding capital
adequacy or any change therein or in the interpretation thereof, or compliance
by Lender (or its Lending Office) therewith, has the effect of reducing the rate
of return on the capital of Lender or any corporation controlling Lender as a
consequence of Lender's obligations hereunder (taking into consideration its
policies with respect to capital adequacy and Lender's desired return on
capital), then from time to time upon demand of Lender, Borrower shall pay to
Lender such additional amounts as will compensate Lender for such reduction.
3.05 Funding Losses. Upon demand of Lender from time to time, Borrower
shall promptly compensate Lender for and hold Lender harmless from any loss,
cost or expense incurred by it as a result of:
(a) any payment or prepayment in whole or in part of the Loan (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise) other
than the Required Monthly Amortization Payment; or
(b) any failure by Borrower to prepay or borrow the Loan on the date or
in the amount notified by Borrower;
including any loss of anticipated profits and any loss or expense arising from
the liquidation or reemployment of funds obtained by it to maintain the Loan or
from fees payable to terminate the deposits from which such funds were obtained,
provided that Lender shall have delivered to Borrower a statement of the amount
of such losses, costs and expenses. Borrower shall also pay any customary
administrative fees charged by Lender in connection with the foregoing.
For purposes of calculating amounts payable by Borrower to Lender under this
Section 3.05, Lender shall be deemed to have funded the Loan by a matching
deposit or other borrowing in the London interbank eurodollar market for a
comparable amount and for a comparable period, whether or not the Loan was in
fact so funded.
3.06 Matters Applicable to all Requests for Compensation. A certificate
of Lender claiming compensation under this Article III and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, Lender may use any
reasonable averaging and attribution methods.
3.07 Survival. All of Borrower's obligations under this Article III
shall survive termination of the Commitment and repayment of all other
Obligations hereunder.
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ARTICLE IV.
CONDITIONS PRECEDENT TO FUNDING OF LOAN
4.01 Conditions to Funding of Loan. The obligation of Lender to make
the Loan 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 Closing Date (or, in the case of certificates of governmental officials, a
recent date before the Closing Date) and each in form and substance satisfactory
to Lender and its legal counsel:
(i) executed counterparts of this Agreement, the Note and the
other Loan Documents;
(ii) 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
Agreement and the other Loan Documents to which such Loan Party is a
party;
(iii) 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;
(iv) a favorable opinion or opinions of counsel to the Loan
Parties, addressed to Lender, as to the matters set forth in Exhibit C
and such other matters concerning the Loan Parties and the Loan
Documents as Lender may reasonably request;
(v) 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;
(vi) a certificate signed by a Responsible Officer of Borrower
certifying (A) that the conditions specified in Sections 4.01(d) and
(e) below have been satisfied, and (B) that there has been no event or
circumstance since the date of the Audited Financial Statements that
has had or could be reasonably expected to have, either individually or
in the aggregate, a Material Adverse Effect;
(vii) evidence that all Insurance Requirements have been met
and that all insurance required to be maintained pursuant thereto has
been obtained and is in effect;
26
(viii) evidence that there has been filed with the United
States Patent and Trademark Office a trademark assignment evidencing
Lender's security interest in the IP Rights registered with such
office;
(ix) evidence that NRI's quarterly report for the quarter
ended June 30, 2005 to be filed with the SEC on Form 10Q has been filed
with the SEC;
(x) the report provided for in Section 6.01(c) for the month
ended July 31, 2005;
(xi) evidence that the Exchange Transaction and the Settlement
Transaction have been or will, immediately upon disbursement of the
Loan, be fully consummated; and
(xii) such other assurances, certificates, documents, consents
or opinions as Lender reasonably may require.
(b) Any fees required to be paid on or before the Closing Date shall
have been paid.
(c) Unless waived by Lender, Borrower shall have paid all Attorney
Costs of Lender to the extent invoiced prior to or on the 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).
(d) The representations and warranties of Borrower and each other Loan
Party contained in Article V 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 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, or would result from
the proposed Loan.
ARTICLE V.
REPRESENTATIONS and WARRANTIES
Borrower represents and warrants to Lender that:
5.01 Existence, Qualification and Power. Borrower and each Scheduled
Affiliate (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to (i) own its assets and carry on its business except such
licenses, authorizations, consents and approvals the failure to have would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and (ii) execute, deliver and perform its obligations under the
27
Loan Documents and the Transaction Documents to which it is a party, and (c) is
duly qualified and is licensed and in good standing under the Laws of each
jurisdiction where any Property or Collateral is located and in each other
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification or license except for those
jurisdictions in which failure to qualify or maintain good standing would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
5.02 Authorization; No Contravention. The execution, delivery and
performance by Borrower and each Scheduled Affiliate of each Loan Document and
Transaction Document to which such Person is party, have been duly authorized by
all necessary corporate or other organizational action, and do not and will not
(with the passage of time, giving of notice or otherwise) (a) contravene or
Conflict with the terms of any of such Person's Organization Documents; (b)
Conflict with or result in any breach or contravention of, or the creation of
any Lien (except Liens in favor of Lender created by the Loan Documents) under,
(i) any Contractual Obligation to which such Person is a party or (ii) any
order, injunction, writ or decree of any Governmental Authority or any arbitral
award to which such Person or its property is subject; or (c) violate any Law.
5.03 No Consent or Other Action. No Consent or Other Action by, from,
with or to any other Person is required prior to or otherwise in connection with
(a) Borrower's ownership of any Property or Collateral or the conduct of the
Business, (b) Borrower's (or any Scheduled Affiliate's) execution and delivery
of, and performance of its obligations under, the Loan Documents or Transaction
Documents, (c) the Grant of any Lien granted hereby or by any other Loan
Document, or (d) the validity, perfection and maintenance of any Lien created
hereby or by any other Loan Document, except for those that have been obtained
or made and (in the case of the foregoing clauses (c) and (d)) for the filing of
the Financing Statements with the Filing Offices.
5.04 Binding Effect. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered
by each Loan Party that is party thereto. This Agreement constitutes, and each
other Loan Document when so delivered will constitute, a legal, valid and
binding obligation of each such Loan Party, enforceable against each Loan Party
that is party thereto in accordance with its terms except as such enforceability
may be limited by (a) bankruptcy, insolvency or other similar laws affecting
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Each of the Transaction Documents has been, or upon the execution of this
Agreement and the other Loan Documents and the funding of the Loan hereunder,
will have been, duly executed and delivered by each Loan Party that is party
thereto. Each of the Transaction Documents when so delivered will constitute, a
legal, valid and binding obligation of each such Loan Party, enforceable against
each Loan Party that is party thereto in accordance with its terms except as
such enforceability may be limited by (a) bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
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5.05 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; (ii) fairly present the financial condition
of Borrower and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show, in accordance with GAAP consistently applied, all
material indebtedness and other liabilities, direct or contingent, of Borrower
and its Subsidiaries as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness.
(b) The unaudited consolidated financial statements of Borrower and its
Subsidiaries dated June 30, 2005 were (i) prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and (ii) fairly present the financial condition of
Borrower and its Subsidiaries as of the date thereof and the results of
operations for the period covered thereby, subject, in the case of clauses (i)
and (ii), to the absence of footnotes and to normal year-end audit adjustments.
(c) Schedule 5.05 sets forth all Indebtedness of Borrower and its
Subsidiaries as of the Closing Date (taking into account the consummation of the
Settlement Transaction and the Exchange Transaction).
(d) Since the date of the Audited Financial Statements, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could reasonably be expected to have a Material Adverse Effect.
5.06 Litigation. Except as set forth on Schedule 5.06, there is no
Litigation pending or, to the knowledge of Borrower, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, by or
against Borrower, any Scheduled Affiliate, any of their respective Subsidiaries
or against any of their respective properties, assets (including any Collateral
or Principal Agreement), Business or any Property, or revenues, or affecting or
pertaining this Agreement or any other Loan Document, or any of the transactions
contemplated hereby. None of the Litigation identified on Schedule 5.06 would,
individually or in the aggregate, if determined adversely, reasonably be
expected to have a Material Adverse Effect. Borrower will cause the Litigation
with the SummitBridge Parties identified in Schedule 5.06 to be dismissed with
prejudice in accordance with the Settlement Agreement immediately following the
consummation of the Settlement Transaction.
5.07 No Default. Neither Borrower nor any Subsidiary is in default
under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing or
would result from the consummation of the transactions contemplated by this
Agreement or any other Loan Document.
5.08 Ownership of Property; Liens. (a) Neither Borrower nor any
Subsidiary owns or has agreed to acquire any real property.
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(b) Schedule 5.08 accurately identifies all real property leased or
occupied by Borrower or any Subsidiary, and Borrower and each Subsidiary has
valid leasehold interests in all such real property.
(c) The property of Borrower and its Subsidiaries is subject to no
Liens, other than Liens permitted by Section 7.01 and the Permitted
Encumbrances.
5.09 Environmental Compliance. To the knowledge of Borrower, there are
no violations, nor any claims alleging potential liability or responsibility for
violation, of any Environmental Law by Borrower or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
5.10 Insurance. Borrower and its Subsidiaries are in compliance with
the Insurance Requirements.
5.11 Taxes. Since January 1, 2000, Borrower, each Subsidiary, each
Scheduled Affiliate and each Person which would reasonably be expected to have
tax liabilities for which Borrower, any Subsidiary of Borrower or any Scheduled
Affiliate is or may be liable (each, a "Tax Party") have filed, or caused to be
filed, in a timely manner all Federal, state and other material tax returns and
reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable. All information in any such tax returns, reports and declarations is
complete and accurate in all material respects. Each Tax Party has paid or
caused to be paid all taxes due and payable or claimed due and payable in any
assessment received by it, and has collected, deposited and remitted in
accordance with all Requirements of Law, all sales and/or use taxes applicable
to the conduct of its business, except taxes the validity of which are being
contested in good faith by appropriate proceedings diligently pursued and
available to the Tax Party and with respect to which adequate reserves have been
set aside on its books. To the knowledge of Borrower, there are no Liens on any
properties or assets of Borrower, any of its Subsidiaries, or any Scheduled
Affiliates imposed or arising as a result of the delinquent payment or the
nonpayment of any tax, assessment, fee or other governmental charge. The income
tax returns of each Tax Party have been examined and reported upon by the
relevant tax authorities, or closed by applicable statutes of limitations, for
all fiscal years prior to the year 2000, and no Tax Party has given or consented
to any waiver of the statute of limitations with respect to its tax liabilities
for any year. Except as reflected in the financial statements provided to
Lender, Borrower knows of no transaction or matter which might or could result
in additional tax assessments to any Tax Party. There are no applicable Taxes
and Other Charges payable by any Tax Party or Lender in connection with the
execution and delivery of any Loan Documents by Borrower or any Scheduled
Affiliates which have not been paid by the Tax Party.
5.12 ERISA Compliance.
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state Laws. Each
Plan that is intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS or an application for such a letter
is currently being processed by the IRS with respect thereto and, to the best
30
knowledge of Borrower, nothing has occurred which would prevent, or cause the
loss of, such qualification. Borrower and each ERISA Affiliate have made all
required contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of Borrower,
threatened claims, actions or lawsuits, or action by any Governmental Authority,
with respect to any Plan that could be reasonably be expected to have a Material
Adverse Effect. There has been no prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected to occur;
(ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither Borrower
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension Plan (other than
premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Sections 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor
any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.
5.13 Borrower Information; Subsidiaries, Etc.; Scheduled Affiliates.
(a) The legal names, federal taxpayer identification numbers, states of
formation and mailing addresses, as applicable, for each of the Loan Parties are
accurately set forth in the Loan Documents.
(b) Except as disclosed in part (a) of Schedule 5.13, Borrower has not
merged, consolidated, acquired all or substantially all of the assets of any
Person or used any other name (whether in connection with the Business or the
Collateral or for other business, obtaining credit or financing or otherwise) in
the last six years. NRI has no Subsidiaries other than those specifically
disclosed in part (b) of Schedule 5.13 and none of such Subsidiaries (other than
Pizzaco and N.R. Realty) has any assets. Neither Pizzaco nor N.R. Realty has any
Subsidiaries. Borrower has no equity investments in any other Person other than
those specifically disclosed in part (c) of Schedule 5.13.
(c) Part (d) of Schedule 5.13 contains a complete and accurate list of
all Affiliates of Borrower who have executed and delivered any Loan Document
(each, a "Scheduled Affiliate").
5.14 Purpose of Loan; Margin Regulations; Investment Company Act;
Public Utility Holding Company Act.
(a) Borrower does not intend to use all or any portion of the Loan to
purchase or carry any securities (except pursuant to the Settlement Agreement),
including, without limitation, Margin Stock. None of the proceeds of the Loan
will be used, directly or indirectly, for the purposes of reducing or retiring
any indebtedness which was originally incurred to purchase or carry any Margin
Stock or other security or for any other purpose which might cause the Loan to
31
be considered a "purpose credit" within the meaning of Regulations U, T or X of
the Board of Governors of the Federal Reserve System, as amended. Borrower
intends to and agrees to use the proceeds of each Loan solely for the lawful,
proper business or commercial purposes set forth in its application for the Loan
and any disbursement direction letter furnished by Borrower to Lender in
connection with the Loan.
(b) Borrower is not engaged, principally or as one of its important
activities, in the business of purchasing or carrying Margin Stock, or extending
credit for the purpose of purchasing or carrying Margin Stock.
(c) Neither Borrower, any Person Controlling Borrower, nor any
Subsidiary (i) is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, or (ii) is or is required to be registered as an "investment
company" under the Investment Company Act of 1940.
5.15 Disclosure. Borrower has disclosed to Lender all agreements,
instruments and corporate or other restrictions to which it or any of its
Subsidiaries is subject, and all other matters known to it, that, individually
or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. No report, financial statement, certificate or other information
furnished (whether in writing or orally) by or on behalf of any Loan Party to
Lender in connection with the transactions contemplated hereby and the
negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time.
5.16 Compliance with Laws. Borrower and each Subsidiary is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to its business or properties
or the Transactions.
5.17 Business and Location. NRI and Pizzaco, each under its legal name,
is engaged in the Business or portions thereof and N.R. Realty, in its legal
name, is engaged in activities related to the Business. Schedule 5.17 contains a
complete and accurate list of businesses, if any, conducted by Borrower other
than the Business. All Collateral, including all writings relating thereto and
records thereof, books of record or account, employees, business, offices and
operations are located at, and all operation with respect there to are conducted
out of, the related Properties or Borrower's chief executive office. Borrower's
chief executive office address is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇.
5.18 Transactions with Affiliates. Except as set forth on Schedule
5.18, Borrower is not currently a party to any transaction of any kind with any
Affiliate of Borrower. Each of the transactions listed on Schedule 5.18 was
entered into in the ordinary course of Borrower's business, pursuant to written
agreements and on fair and reasonable terms substantially as favorable to
32
Borrower as were obtainable by Borrower at the time in a comparable arm's length
transaction with a Person other than an Affiliate.
5.19 Financing Statements; Perfected Security Interest. The execution
and delivery of this Agreement and the Grant hereunder creates a valid Lien in
the Collateral and the Proceeds thereof which has attached and is enforceable.
The Filing Office(s) are the only office(s) where financing statements are
required to be filed in order to perfect such security interest in all Filing
Collateral. The Lien of Lender in all Filing Collateral is a first priority
perfected security interest. Upon delivery into Lender's possession of
Collateral other than Filing Collateral, the Lien therein of Lender will be a
first priority perfected security interest.
5.20 Operating Experience. Both of the Control Persons are actively
involved in the Business, and the Control Persons have, in the case of ▇▇▇▇ ▇.
▇▇▇▇▇▇, not less than 30 years, and, in the case of A. ▇▇▇▇▇ ▇▇▇▇▇▇, not less
than 17 years of experience operating the Business.
5.21 Title; Sufficiency; No Liens. Borrower has good and marketable
title to the Collateral free of all Liens (other than the Liens granted to
Lender hereunder and Liens permitted under Section 7.01) and such Collateral is
sufficient to enable Borrower to operate the Business at each Property, in each
case in accordance with the applicable Principal Agreements. Except for the
filings reflected on the UCC searches obtained by Lender together with this
Agreement ("Current Filings"), there is no financing statement (or similar
statement, agreement, pledge, deed to secure debt, deed of trust, mortgage,
notice or registration), Lien, or Judgment filed with, registered, indexed or
recorded in any Governmental Authority (or intended so to be), directly or
indirectly, identifying or encumbering or covering or involving any Collateral
or any Principal Agreement or which could have a Material Adverse Effect.
Borrower shall take all actions necessary to terminate all Current Filings prior
to or concurrently with the funding of the Loan, except that the financing
statements identified in Schedule 7.01 shall not be required to be terminated.
5.22 No Further Disposition. Other than with respect to the Lien
granted herein to Lender and, to the extent of the Permitted Encumbrances and
Liens permitted under Section 7.01, Borrower has not entered into any agreement
or understanding or taken, permitted or suffered to exist any action (including
the filing of a financing statement, agreement, pledge, deed to secure debt,
deed of trust or mortgage, notice or registration) or event (whether by
operation of law or otherwise) for the purpose of, or that may have the effect
of, directly or indirectly, Granting or permitting any Lien on or Disposing of
any Collateral (including the Principal Agreements), any interest therein or
rights pertaining thereto.
5.23 Principal Agreements. Every Principal Agreement currently in
effect is listed on Schedule 5.23 and Borrower has provided Lender with a true,
correct and complete copy of each of the same. Borrower is in good standing
under, and in compliance with, the Principal Agreements. Borrower has not been,
and is not, in Conflict with or under, any of the Principal Agreements. Borrower
has no knowledge of any claim of (or basis for any claim of) any such Conflict
or of any termination or nonrenewal of any Principal Agreement. Each of the
Principal Agreements listed on Schedule 5.23 was entered into in the ordinary
course of Borrower's business, pursuant to written agreements and on fair and
reasonable terms and, to the extent the same is with an Affiliate, on terms
33
substantially as favorable to Borrower as were obtainable by Borrower at the
time in a comparable arm's length transaction with a Person other than an
Affiliate.
5.24 Capitalization; Solvency. Schedule 5.24 accurately identifies
(taking into account the consummation of the Transactions) each Person that
holds more than five percent (5%) of the Capital Stock of NRI and the amount of
Capital Stock it holds. NRI owns one hundred percent (100%) of the Capital Stock
of Pizzaco and one hundred percent (100%) of the Capital Stock of N.R. Realty.
All of the Capital Stock of NRI has been duly authorized and is fully paid and
non-assessable. Borrower (and each Scheduled Affiliate) (a) is solvent after
giving effect to the Obligations, the security interests of Lender and the other
transactions contemplated hereunder, and (b) is able to pay its debts as they
mature and has (and has reason to believe it will continue to have) sufficient
capital (and not unreasonably small capital) to carry on its business and all
businesses in which it is about to engage. The assets and properties of Borrower
(and each Scheduled Affiliate) at a fair valuation and at their present fair
salable value are greater than the Indebtedness of Borrower (and each Scheduled
Affiliate), and including any subordinated and contingent liabilities computed
at the amount which, to the best of Borrower's knowledge, represents an amount
which can reasonably be expected to become an actual or matured liability.
5.25 Intellectual Property; Licenses, Etc. Borrower and its
Subsidiaries own, or possess the right to use, all of the trademarks, service
marks, trade names, copyrights, patents, patent rights, franchises, licenses and
other intellectual property rights (collectively, "IP Rights") that are
reasonably necessary for the operation of the Business (including, without
limitation, those trademarks, service marks, trade names, copyrights, patents,
patent rights, franchises, licenses and other intellectual property rights
listed on Schedule 5.25), without conflict with the rights of any other Person.
To the best knowledge of Borrower, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by Borrower or any Subsidiary infringes upon any
rights held by any other Person. No claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of Borrower, threatened, which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
5.26 Brokers and Financial Advisors. No brokers or finders were used in
connection with the financing contemplated hereby and Borrower hereby agrees to
indemnify and hold Lender harmless from and against any and all liabilities,
costs and expenses (including reasonable attorney's fees and court costs)
suffered or incurred by Lender as a result of or arising out of any of the
transactions contemplated hereby. The provisions of this Section shall survive
the expiration and termination of this Agreement and the payment of the
Obligations.
5.27 Compliance with OFAC Rules and Regulations. Neither Borrower, any
Subsidiary of Borrower or, to Borrower's knowledge, any Affiliate of Borrower
(i) is a Sanctioned Person, (ii) has any assets in Sanctioned Countries, or
(iii) derives any operating income from investments in, or transactions with
Sanctioned Persons or Sanctioned Countries. No part of the proceeds of any
Borrowing hereunder will be used directly or indirectly to fund any operations
in, finance any investments or activities in or make any payments to, a
Sanctioned Person or a Sanctioned Country.
34
5.28 Foreign Assets Control Regulations, Etc. Neither Borrower nor any
of its Subsidiaries is an "enemy" or an "ally of the enemy" within the meaning
of Section 2 of the Trading with the Enemy Act of the United States of America
(50 U.S.C. App. Sections 1 et seq.), as amended. Neither Borrower nor any or its
Subsidiaries is in violation of (a) the Trading with the Enemy Act, as amended,
(b) any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto or (c) the Patriot Act. Borrower
(i) is not a blocked person described in Section 1 of the Anti-Terrorism Order
nor (ii) to the best of its knowledge, does not engage in any dealings or
transactions, nor is Borrower otherwise associated, with any such blocked
person.
5.29 Compliance with Anti-Money Laundering Rules and Regulations.
Neither Borrowers, any Subsidiary of Borrower or, to Borrower's knowledge, any
Affiliate of any Borrower (i) is a foreign shell bank; (ii) is a person or
entity resident in or whose business is conducted in a jurisdiction identified
as non-cooperative by the Financial Action Task Force; or (iii) is a senior
foreign political figure, an immediate family member of a senior foreign
political figure or a close associate of a senior foreign political figure (as
such terms are defined in the Patriot Act and implementing regulations).
Borrower further represents that Loan proceeds will not be used to support
activities that contravene federal, state or international anti-money laundering
laws and regulations.
ARTICLE VI.
AFFIRMATIVE COVENANTS
So long as the Loan or other Obligations are outstanding, Borrower
shall, and shall (except in the case of the covenants set forth in Sections
6.01, 6.02 and 6.03) cause each Subsidiary to:
6.01 Financial Statements. Deliver to Lender, in form and detail
satisfactory to Lender:
(a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each fiscal year of Borrower, the consolidated balance
sheet of Borrower and its Subsidiaries as of the end of such year, and the
related consolidated statement of income and consolidated statement of cash flow
for such year, each setting forth in comparative form the figures for the
previous fiscal year and all such consolidated statements to be in reasonable
detail, prepared in accordance with GAAP consistently applied, and certified,
without qualification and without an expression of uncertainty as to the ability
of Borrower or any of its Subsidiaries to continue as going concerns, by ▇▇▇▇▇
▇. ▇▇▇▇ & Associates, LLC or by other independent certified public accountants
selected by Borrower and reasonably satisfactory to Lender, together with a
written statement from such accountants to the effect that they have read a copy
of this Agreement, and that, in making the examination necessary to said
certification, they have obtained no knowledge of any Default or Event of
Default, or, if such accountants shall have obtained knowledge of any then
existing Default or Event of Default they shall disclose in such statement any
such Default or Event of Default, provided that such accountants shall not be
liable to Lender for failure to obtain knowledge of any Default or Event of
Default;
35
(b) as soon as practicable, but in any event not later than forty-five
(45) days after the end of each of quarter of each fiscal year of Borrower,
copies of the unaudited consolidated balance sheet of Borrower and its
Subsidiaries as of the end of such quarter, and the related consolidated
statement of income and consolidated statement of cash flow for such fiscal
quarter and the portion of Borrower's fiscal year then elapsed, setting forth in
each case in comparative form the figures for the corresponding period or
periods of the previous fiscal year and the comparisons to projections for such
period, all in reasonable detail and prepared in accordance with GAAP
consistently applied (subject to year-end adjustments and absence of footnote
information required by GAAP consistently applied), together with a
certification by the principal financial or accounting officer of Borrower that
the information contained in such financial statements fairly presents in all
material respects the financial position of Borrower and its Subsidiaries on the
date thereof (subject to year-end adjustments and absence of footnote
information required by GAAP consistently applied);
(c) as soon as practicable, but in any event within twenty-eight (28)
days after the end of each calendar month, (i) a statement identifying, by the
name of the franchisee and location, each Franchised Unit that has opened (i.e.,
commenced selling products under one or more Brands) or closed (i.e., ceased
selling products under one or more Brands) during such month and (ii) a
statement of Borrower's revenues for such month, which statements shall be
certified as true, accurate and complete by the principal financial or
accounting officer of Borrower;
(d) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a Compliance Certificate certified
by the principal financial or accounting officer of Borrower and setting forth
in reasonable detail computations evidencing compliance with the covenants
contained in Article XIII and (if applicable) reconciliations to reflect changes
in GAAP since the Balance Sheet Date;
(e) whether or not required by the rules and regulations of the SEC,
within the time periods specified in the rules and regulations of the SEC:
(i) all quarterly and annual reports that would be required to
be filed with the SEC on Forms 10-Q and l0-K if NRI were required to
file such reports; and
(ii) all current reports that would be required to be filed
with the SEC on Form 8-K if NRI were required to file such reports.
All such reports will be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.
Each annual report on Form 10-K will include a report on NRI's consolidated
financial statements by NRI's independent certified accountants. In addition,
NRI will file a copy of each of the reports referred to in clauses (i) and (ii)
above with the SEC for public availability within the time periods specified in
the rules and regulations applicable to such reports (unless the SEC will not
accept such a filing) and will post the reports on its website within those time
periods. If, at any time, NRI is no longer subject to the periodic reporting
requirements of the Exchange Act for any reason, NRI will nevertheless continue
filing the reports specified in this paragraph (e) with the SEC within the time
periods specified above (unless the SEC will not accept such a filing) and will
not take any action for the purpose of causing the SEC not to accept such
filings. If, notwithstanding the foregoing, the SEC will not accept NRI's
36
filings for any reason, NRI will post the reports referred to in the preceding
paragraphs on its website within the time periods that would apply if NRI were
required to file those reports with the SEC;
(f) contemporaneously with the filing or mailing thereof, copies of all
material of a financial nature furnished to the holders of direct or indirect
equity interests in Borrower or filed with the SEC;
(g) prior to the beginning of each fiscal year of Borrower and, if a
Default or Event of Default shall have occurred and be continuing, from time to
time upon the request of Lender, projections and budgets of Borrower and its
Subsidiaries organized for the next fiscal year on a quarter-by-quarter basis
updating those projections delivered to Lender prior to the date hereof and/or,
if applicable, updating any later such projections delivered in response to a
request pursuant to this Section 6.01(g);
(h) promptly following receipt by Borrower, complete copies of any
communications that are or may be materially adverse to Borrower, its Business,
any Property or the Collateral; and
(i) from time to time such other financial data and information
(including accountants, management letters) as Lender may reasonably request.
6.02 Certificates; Other Information. Deliver to Lender, in form and
detail satisfactory to Lender:
(a) concurrently with the delivery of the financial statements referred
to in Section 6.01(a), a certificate of its independent certified public
accountants certifying such financial statements and stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event
of Default or, if any such Default or Event of Default shall exist, stating the
nature and status of such event;
(b) promptly after any request by Lender, copies of any detailed audit
reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors), members or
managers of Borrower by independent accountants in connection with the accounts
or books of Borrower or any Subsidiary, or any audit of any of them;
(c) without limitation of the provisions of Sections 6.01(e) and (f),
promptly after the same are available, copies of each annual report, proxy or
financial statement or other report or communication sent to the members or
other direct or indirect equityholders of Borrower, and copies of all annual,
regular, periodic and special reports and registration statements which Borrower
may file or be required to file with the SEC under Section 13 or 15(d) of the
Exchange Act, and not otherwise required to be delivered to Lender pursuant
hereto;
(d) promptly after Borrower has notified Lender of any intention by
Borrower to treat the Loan and related transactions as being a "reportable
transaction" (within the meaning of Treasury Regulation Section 1.6011-4), a
duly completed copy of IRS Form 8886 or any successor form; and
37
(e) promptly, such additional information regarding the business,
financial or corporate affairs of Borrower, any Subsidiary or any Scheduled
Affiliate, or compliance with the terms of the Loan Documents, as Lender may
from time to time reasonably request.
Borrower shall furnish or cause to be furnished to Lender such budgets,
forecasts, projections and other information respecting the Collateral and the
business of Borrower, as Lender may, from time to time, reasonably request.
Lender is hereby authorized to deliver, from time to time, a copy of any
financial statement or any other information relating to the business of
Borrower to any Person to the extent provided for in Section 14.08. Borrower
hereby irrevocably authorizes and directs all accountants or auditors to deliver
to Lender upon Lender's request, at Borrower's expense, copies of the financial
statements of Borrower and any reports or management letters prepared by such
accountants or auditors on behalf of Borrower and to disclose to Lender such
information as they may have regarding the business of Borrower. Any documents,
schedules, invoices or other papers delivered to Lender may (but shall not be
required to) be destroyed or otherwise disposed of by Lender at any time after
the same are delivered to Lender, except as otherwise designated by Borrower to
Lender in writing.
6.03 Notices. Promptly notify Lender after any officer of Borrower has
knowledge thereof:
(a) of the occurrence of any Default or Event of Default;
(b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of Borrower or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
Borrower or any Subsidiary and any Governmental Authority; (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting Borrower or any Subsidiary, including pursuant to any applicable
Environmental Laws; or (iv) any material loss, damage, or Litigation relating to
the Business, the Collateral, any Scheduled Affiliate or any other property
which is security for the Obligations;
(c) of the occurrence of any ERISA Event; and
(d) of any material change in accounting policies or financial
reporting practices by Borrower or any Subsidiary.
Each notice pursuant to this Section shall be accompanied by a
statement of a Responsible Officer of Borrower setting forth details of the
occurrence referred to therein and stating what action Borrower has taken and
proposes to take with respect thereto. Each notice pursuant to Section 6.03(a)
shall describe with particularity any and all provisions of this Agreement and
any other Loan Document that have been breached.
6.04 Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP consistently applied are being maintained by Borrower or any
Subsidiary; (b) all lawful claims which, if unpaid, would by law become a Lien
upon Borrower's or any Subsidiary's property; and (c) all Indebtedness, as and
38
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such Indebtedness.
6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain
in full force and effect its legal existence and good standing under the Laws of
the jurisdiction of its organization; (b) take all reasonable action to maintain
all rights, privileges, permits, licenses and franchises which are material to
the business of Borrower; and (c) preserve or renew all of its registered IP
Rights which are material to the business of Borrower.
6.06 Maintenance of Properties. (a) Maintain, preserve and protect the
Properties, the Collateral and all of its other material properties and
equipment necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted; (b) make all necessary repairs
thereto and renewals and replacements thereof except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect; and (c) use
the standard of care typical in the industry in the operation and maintenance of
its facilities.
6.07 Maintenance of Insurance. At Borrower's sole cost and expense, (a)
maintain with Approved Providers insurance policies satisfying the Insurance
Requirements set forth on Schedule 6.07; (b) timely pay all premiums, fees and
charges required in connection with all of its insurance policies and otherwise
continue to maintain such policies in full force and effect; (c) promptly
deliver the insurance policies, certificates (and renewals) thereof or other
evidence of compliance herewith to Lender; and (d) promptly notify Lender of any
loss covered by or claim under or notice made in connection with any such
insurance policies.
6.08 Compliance with Laws. Comply in all material respects with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its business or property or the Transactions.
6.09 Books and Records. (a) Maintain proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the assets and business of Borrower or such Subsidiary, as the case
may be; and (b) maintain such books of record and account in material conformity
with all applicable requirements of any Governmental Authority having regulatory
jurisdiction over Borrower or such Subsidiary, as the case may be.
6.10 Inspection Rights. Permit representatives and independent
contractors of Lender to visit and inspect any of its properties, to examine its
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss its affairs, finances and accounts with its directors,
officers, and independent public accountants, all at the reasonable expense of
Borrower and at such reasonable times during normal business hours and as often
as may be reasonably desired, upon reasonable advance notice to Borrower;
provided, however, that when an Event of Default exists Lender (or any of it
representatives or independent contractors) may do any of the foregoing at the
expense of Borrower at any time during normal business hours and without advance
notice.
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6.11 Conduct of Business. Continue to engage only in the Business
engaged in by Borrower on the Closing Date, and in businesses and activities
reasonably related thereto.
6.12 Principal Agreements. Comply in all material respects with its
obligations under, and enforce in a commercially reasonable manner, all
Principal Agreements.
6.13 Capitalization; Solvency.
(a) Continue to be solvent after giving effect to the Obligations, the
security interests of Lender, and the other transactions contemplated hereunder.
(b) Continue to pay its debts as they mature and continue to have
sufficient capital (and not unreasonably small capital) to carry on its business
and all businesses in which it is about to engage.
6.14 Banks and Payments.
(a) Cause all Collateral Revenues and Proceeds to be deposited in the
account(s) with the bank(s) listed on Schedule 6.14 and Borrower shall pay, and
hereby authorizes Lender to cause to be paid, all Obligations as and when due
from all amounts in any bank required to be listed on Schedule 6.14. Borrower
shall enter into such control agreements or other similar agreements between
each such bank, Borrower and Lender, as Lender shall deem necessary in its Sole
Discretion, in form and substance reasonably acceptable to Lender, providing for
such bank's agreement to disburse any such amounts in accordance with the
instruction of Lender without the further consent of, or notice to, Borrower,
which instructions shall be delivered by Lender only upon or after the
occurrence of an Event of Default (whether or not the same shall be continuing).
Borrower hereby appoints Lender as its attorney-in-fact for the purpose of
executing such agreement(s) on behalf of Borrower. Borrower shall cause the
control agreement with JPMorgan Chase Bank, N.A. to be fully executed and
delivered by Borrower and such bank within thirty (30) days of the Closing Date.
Borrower may also maintain an account with the Bank of Indianapolis, as an
accommodation to its franchisees, for the sole purpose of deposit of funds from
or on behalf of franchisees that are paid to equipment vendors of such
franchisees, which account shall at no time have a balance in excess of
$250,000, and no control agreement shall be required with respect to such
account.
(b) Direct (and Borrower does hereby direct) any and all transferors,
distributors or payors (including insurance companies with whom Borrower
maintains insurance), upon receipt of notice from Lender to make payment of all
Collateral Revenues and Proceeds directly to Lender and authorizes Lender, in
its Sole Discretion, to hold the same in its possession as Collateral, to apply
the same to repayment of the Obligations, to deposit the same into any of the
accounts with the banks listed on Schedule 6.14, or, to apply the same toward
replacement of the Collateral. Lender shall deliver such a notice only upon or
after the occurrence of an Event of Default (whether or not the same shall be
continuing). All Collateral Revenues and Proceeds whether received by Lender, or
by Borrower, or by any other Person will be included in the Collateral subject
to the security interest granted to Lender hereunder. Borrower shall (i)
identify, earmark, segregate and keep separate all Collateral Revenues and
Proceeds received by it, (ii) upon Lender's request, promptly account to Lender,
for all Collateral Revenues and Proceeds, (iii) hold all Collateral Revenues and
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Proceeds received by Borrower in trust for the benefit of Lender and shall
promptly (and in any event not later than the fifth day after receipt) deliver
(or cause to be delivered) the same to Lender and into its possession in the
form received by Borrower and at a time and in a manner satisfactory to Lender.
6.15 Equipment.
(a) On or after an Event of Default, at Borrower's expense, at any time
or times as Lender may request, deliver or cause to be delivered to Lender
written reports or appraisals as to the Equipment in form, scope and methodology
acceptable to Lender in good faith and by an appraiser reasonably acceptable to
Lender;
(b) Keep the Equipment in good order, repair, running and marketable
condition (ordinary wear and tear excepted);
(c) Use the Equipment with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with all
Contractual Obligations, Requirements of Law and Consents and Other Action;
(d) Use the Equipment only in the Business and not for personal,
family, household or farming use;
(e) Not remove any Equipment from any Property or other locations set
forth or permitted herein, except to the extent necessary to have any Equipment
repaired or maintained or replaced with Equipment of equal value or better
quality and free of any Liens (other than Permitted Liens) in the ordinary
course of the business of Borrower, unless such Equipment is removed in the
ordinary course of business or the replacement of Equipment that Borrower
reasonably determines to be obsolete or outdated for use in the Business and is
replaced with other collateral of at least equal value to the Collateral
released; and
(f) Assume (and Borrower does hereby assume) all responsibility and
liability arising from Borrower's use of the Equipment.
6.16 Escrows. Upon or after the occurrence of an Event of Default
hereunder or under the other Loan Documents (whether or not the same shall be
continuing), Borrower shall upon written notice from Lender deposit in escrow
with Lender from time to time, amounts sufficient, in Lender's Sole Discretion,
to pay as the same come due, all taxes, insurance, rentals, and any capital
expenditures required to be expended in connection with the Properties by
Borrower during the term of the Loan.
6.17 Taxes. Continue (and cause each Tax Party to continue) to file in
a timely manner all Federal, state and other material tax returns and reports
required to be filed, and to continue (and cause each Tax Party to continue) to
pay, all Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except for taxes contested in good faith and
with respect to which adequate reserves have been set aside on its books. All
information in such tax returns, reports and declarations will be complete and
accurate in all material respects.
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6.18 Rate Protection Agreement. Maintain, commencing as of a date not
later than thirty (30) days after the Closing Date and thereafter until the
fourth (4th) anniversary of the Closing Date, the continuous existence and
effectiveness of interest rate swap, cap, collar or similar arrangements
designed to protect Borrower against fluctuations in interest rates with respect
to a notional amount equal to at least 50% of the Outstanding Balance of the
Loan, on terms and conditions satisfactory to Lender in its Sole Discretion.
6.19 Exchange Transaction. Within five (5) Business Days of the Closing
Date, (a) deliver or cause to be delivered to each owner of the Preferred Shares
(as defined in the Exchange Agreements) or its agent the stock certificates
evidencing ownership of such Preferred Shares and the New Warrants (as defined
in the Exchange Agreements) and (b) furnish to Lender satisfactory evidence of
such delivery.
6.20 Additional Covenants.
(a) Maintain books and records and bank accounts separate from those of
any other Person;
(b) Maintain its assets in such a manner that it is not costly or
difficult to segregate, identify or ascertain such assets;
(c) Hold regular meetings, or take actions by written consent, of its
members, stockholders, managers and board of directors, as appropriate, to
conduct the business of Borrower, and observe all other corporate or company
formalities;
(d) Hold itself out to creditors and the public as a legal entity
separate and distinct from any other Person;
(e) Prepare separate tax returns and financial statements, or if part
of a consolidated group, then it will be shown as a separate member of such
group;
(f) Allocate and charge fairly and reasonably any common employee or
overhead shared with Affiliates;
(g) Conduct any business in its own name, and use separate stationery,
invoices and checks;
(h) Not commingle its assets or funds with those of any other person or
entity; and
(i) Correct any known misunderstanding as to its separate identity.
ARTICLE VII.
NEGATIVE COVENANTS
So long as the Loan or other Obligations are outstanding, Borrower
shall not, and Borrower shall not permit any Subsidiary to, directly or
indirectly:
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7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired,
other than the following:
(a) Liens pursuant to any Loan Document;
(b) Liens existing on the date hereof and listed on Schedule 7.01,
provided that the property covered thereby is not increased;
(c) Liens for taxes not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person in
accordance with GAAP consistently applied;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are for
sums not overdue for a period of more than 30 days or which are being contested
in good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person;
(e) pledges or deposits in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;
(f) deposits to secure the performance of bids, trade contracts and
leases (other than Indebtedness), statutory obligations, surety bonds (other
than bonds related to judgments or litigation), performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person; and
(h) purchase money Liens not to exceed $200,000 in the aggregate at any
time.
7.02 Investments. Make any Investments, except:
(a) Investments held by Borrower or a Subsidiary in the form of cash
equivalents;
(b) Investments of Borrower in any wholly-owned Subsidiary;
(c) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;
(d) Loans or advances in the usual and ordinary course of business to
officers and employees of Borrower or a Subsidiary for business expenses in the
aggregate principal amount of not more than $50,000 at any time outstanding; and
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(e) Investments identified in Schedule 5.13.
provided, however, that the foregoing Investments shall not be permitted if and
to the extent that they are otherwise prohibited pursuant to any other provision
of this Agreement or any other Loan Document.
7.03 Indebtedness. Create, incur, assume, increase, become liable on or
suffer to exist any Indebtedness other than Indebtedness listed on Schedule
7.03; provided, however, that notwithstanding the foregoing, nothing contained
in this Section 7.03 shall permit Borrower or any Subsidiary to create, incur,
assume, increase, become liable on or suffer to exist any Indebtedness (whether
or not listed on Schedule 7.03) to the extent that Borrower's or such
Subsidiary's ability to do so is otherwise prohibited by any other provision of
this Agreement or any other Loan Document.
7.04 Fundamental Changes; Subsidiaries. (a) Change its name, federal
taxpayer identification number or state of formation, nor assume a different
name, nor conduct its business or affairs under any other name without providing
Lender at least sixty (60) days' prior written notice thereof.
(b) Merge, dissolve, liquidate, consolidate with or into another
Person, change its structure (whether by equity sale, issuance, purchase or
otherwise), change its use of any item of any Property or any Collateral during
the term hereof, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person.
(c) Have any Subsidiaries other than those specifically disclosed in
part (b) of Schedule 5.13 or have any equity investments in any other Person
other than those specifically disclosed in part (c) of Schedule 5.13.
(d) Cause or permit any Subsidiary of NRI (other than Pizzaco and N.R.
Realty) to own any assets.
7.05 Dispositions. Make any Disposition of any Collateral or any other
property or assets of Borrower or any Subsidiary or enter into any agreement to
make any Disposition of any of the same, except:
(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;
(b) Dispositions of inventory in the ordinary course of business; and
(c) Dispositions of equipment to the extent that (i) such property is
exchanged for credit against the purchase price of similar replacement property
or (ii) the proceeds of such Disposition are reasonably promptly applied to the
purchase price of such replacement property;
provided, however, that any Disposition pursuant to clauses (a) through (c)
shall be for fair market value.
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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 and (b) as
long as no Event of Default has occurred that is continuing, NRI may pay
dividends to the holders of its preferred stock in accordance with the terms
thereof.
7.07 Change in Nature of Business. Engage in any material line of
business substantially different from those lines of business conducted by
Borrower and its Subsidiaries on the date hereof or any business substantially
related or incidental thereto.
7.08 Transactions with Affiliates.
(a) Enter into any transaction of any kind with any Affiliate of
Borrower, except in the ordinary course of business, pursuant to written
agreements and on fair and reasonable terms substantially as favorable to
Borrower or such Subsidiary as would be obtainable by Borrower or such
Subsidiary at the time in a comparable arm's length transaction with a Person
other than an Affiliate.
(b) Pay any management or similar fees to any Affiliate of Borrower
(except for reasonable director fees).
7.09 Burdensome Agreements. Enter into any Contractual Obligation
(other than this Agreement or any other Loan Document) that limits the ability
(a) of any Subsidiary to make Restricted Payments to Borrower or to otherwise
transfer property to Borrower, (b) of any Subsidiary to Guarantee the
Indebtedness of Borrower or (c) of Borrower or any Subsidiary to create, incur,
assume or suffer to exist Liens on property of such Person.
7.10 Use of Proceeds.
(a) Use the proceeds of the Loan, whether directly or indirectly, and
whether immediately, incidentally or ultimately, to purchase or carry any
securities (other than pursuant to the Settlement Agreement), including Margin
Stock or to extend credit to others for the purpose of purchasing or carrying
Margin Stock or to refund indebtedness originally incurred for such purpose.
(b) Use the proceeds of the Loan, directly or indirectly, for the
purposes of reducing or retiring any indebtedness which was originally incurred
to purchase or carry any Margin Stock or other security or for any other purpose
which might cause any Loan to be considered a "purpose credit" within the
meaning of Regulations U, T or X of the Board of Governors of the Federal
Reserve System, as amended.
(c) Use the proceeds of the Loan for any purpose other than for the
lawful, proper business or commercial purposes set forth in its application for
the Loan and any disbursement direction letter furnished by Borrower to Lender
in connection with the Loan.
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(d) Engage, principally or as one of their important activities, in the
business of purchasing or carrying Margin Stock, or extending credit for the
purpose of purchasing or carrying Margin Stock.
7.11 Real Property. Acquire any real property or any interest in real
property (other than pursuant to a Lease of the Properties identified in
Schedule 5.08 or otherwise approved by Lender) for any purpose.
7.12 Principal Agreements.
(a) Terminate, fail to renew, or be in Conflict with or under any of
the Principal Agreements.
(b) Amend, modify, restate, substitute or replace any 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, and (iii) without
increasing any payment obligations thereunder.
ARTICLE VIII.
SECURITY FOR OBLIGATIONS
8.01 Grant of Security in the Collateral. To secure the payment and
performance in full of all of the Obligations, Borrower hereby Grants to Lender
a continuing security interest and Lien on and with respect to any and all
right, title and interest of Borrower in and to the Collateral (including the
Principal Agreements but only as provided in the next sentence below), whether
now owned and existing or hereafter acquired or arising; all additions and
accessions thereto, substitutions therefor and replacements and improvements of
or to any or all of the foregoing; and all products and Proceeds of the
foregoing. In the event and to the extent that Borrower now or hereafter may
Grant a security interest in or other Lien on its rights under any Principal
Agreement without Conflicting with such Principal Agreement, either because the
terms of such Principal Agreement do not restrict such Grant, or each of the
other parties thereto have consented to such Grant or applicable Law permits
such Grant, or for any other reason, then Borrower hereby Grants to Lender such
Lien in such Principal Agreements, whether now owned or hereafter acquired, and
all Proceeds thereof. Borrower hereby authorizes Lender to file the Financing
Statements in the Filing Offices or in such other locations as Lender may now or
hereafter deem appropriate in its Sole Discretion.
ARTICLE IX.
SPECIAL PROVISIONS CONCERNING RIGHTS AND DUTIES WHILE IN
POSSESSION OF COLLATERAL
9.01 Borrower's Possession. Upon and during the continuation of an
Event of Default, to the extent the same shall, from time to time, be in
Borrower's possession, Borrower will hold the Collateral and all writings
evidencing or relating to the Collateral in trust for Lender and, upon request
or as otherwise provided herein, promptly deliver the same to Lender, in the
form received and at a time and in a manner satisfactory to Lender. With respect
46
to the Collateral in Borrower's possession Borrower shall at Lender's request
take such action as Lender in its Sole Discretion deems necessary or desirable
to create, perfect and protect the security interest of Lender in any of the
Collateral and to preserve or enhance the value thereof.
9.02 Lender's Possession. With respect to all of the Collateral (and
all other security for the Obligations) delivered or transferred to, or
otherwise in the custody or control of (including any items in transit to or set
apart for) Lender or any of its agents, associates or correspondents, for the
benefit of Lender, in accordance with this Agreement, Borrower agrees that (a)
such Collateral (and other security) will be and be deemed to be in the sole
possession of Lender; (b) Borrower has no right to withdraw or substitute any
such Collateral (or other security); (c) Borrower shall not take or permit any
action, or exercise any voting and other rights, powers and privileges in
respect of the Collateral (or other security) inconsistent with Lender's
interest therein and sole possession thereof; and (d) Lender may in it its Sole
Discretion and without notice, without obligation or liability except to account
for property actually received by it, and without affecting or discharging the
Obligations, (1) further transfer and segregate the Collateral (or other
security) in its possession; (2) receive Collateral Revenues or Proceeds and
hold the same as a part of the Collateral (or other security) and/or apply the
same as hereinafter provided; and (3) exchange any of the Collateral (or other
security) for other property upon reorganization, recapitalization or other
readjustment. Following the occurrence and during the continuation of an Event
of Default, Lender is authorized (i) to exercise or cause its nominee to
exercise all or any rights, powers and privileges (including to vote) on or with
respect to the Collateral (and other security) with the same force and effect as
an absolute owner thereof; (ii) whether any of the Obligations be due, in its
name or in Borrower's name or otherwise, to demand, ▇▇▇ for, collect or receive
any money or property at any time payable or receivable on account of or in
exchange for, or make any compromise or settlement Lender deems desirable with
respect to, any of the Collateral (or other security); and (iii) to extend the
time of payment, arrange for payment in installments, or otherwise modify the
terms of, or release, any of the Collateral (or other security). Notwithstanding
the rights accorded Lender with respect to the Collateral (or other security)
and except to the extent provided below or required by the UCC or other
applicable Law (which requirement cannot be modified, waived or excused),
Lender's sole duty with respect to any Collateral (or other security) in its
possession (with respect to custody, preservation, safekeeping or otherwise and
whether under Section 9-207 of the UCC or otherwise) will be to deal with it in
the same manner that such party deals with similar property owned and possessed
by it. Without limiting the foregoing, Lender, and any of its officers,
directors, members, partners, trustees, owners, debt holders, employees,
representatives, agents and designees, except as otherwise required by
applicable Law (I) will have no duty with respect to the Collateral (or other
security) or the rights granted hereunder; (II) will not be required to sell,
invest, substitute, replace or otherwise dispose of the Collateral (or other
security); (III) will not be required to take any steps necessary to preserve
any rights against prior parties to any of the Collateral (or other security);
(IV) will not be liable for (or deemed to have made an election of or exercised
any right or remedy on account of) any delay or failure to demand, collect or
realize upon any of the Collateral (or other security); and (V) will have no
obligation or liability in connection with the Collateral (or other security) or
arising under this Agreement. Borrower agrees that such standard of care is
reasonable and appropriate under the circumstances.
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ARTICLE X.
EVENTS OF DEFAULT AND REMEDIES
10.01 Events of Default. Any of the following shall constitute an Event
of Default:
(a) Non-Payment. Borrower, any Scheduled Affiliate or any other Loan
Party fails to pay (i) when and as required to be paid herein, any amount of
principal or interest of the Loan, or (ii) within three days after the same
becomes due, any fee or other amount due hereunder or under any other Loan
Document; or
(b) Disclaimer. Borrower, any Scheduled Affiliate or any other Loan
Party disclaims liability under, or enforceability of, any Loan Document; or
(c) Specific Covenants. Borrower fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10,
6.14, Article VII or Article XIII, unless, in the case of nonperformance or
nonobservance of Section 13.01, Borrower shall make the payment provided for in
Section 2.03(c) at the time and in the amount required thereunder; or
(d) Other Defaults. Borrower, any Scheduled Affiliate or any other Loan
Party fails to perform or observe any other covenant or agreement (not specified
in subsection (a), (b) or (c) above) contained in any Loan Document on its part
to be performed or observed and such failure continues for thirty (30) days; or
(e) Representations and Warranties. Any representation, warranty,
certification or statement of fact made or deemed made by or on behalf of
Borrower, any Scheduled Affiliate or any other Loan Party herein, in any other
Loan Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading when made or deemed made; or
(f) Insolvency Proceedings, Etc. Borrower, any Scheduled Affiliate, any
other Loan Party or any of their respective Subsidiaries institutes or consents
to the institution of any proceeding under any Debtor Relief Law, or makes an
assignment for the benefit of creditors; or applies for or consents to the
appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any material part of its
property; or any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer is appointed without the application or consent
of such Person and the appointment continues undischarged or unstayed for 60
calendar days; or any proceeding under any Debtor Relief Law relating to any
such Person or to all or any material part of its property is instituted without
the consent of such Person and continues undismissed or unstayed for sixty (60)
calendar days, or an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment. (i) Borrower, any Scheduled
Affiliate or any other Loan Party or any of their respective Subsidiaries
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
thirty (30) days after its issue or levy; or
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(h) Judgments. There is entered against Borrower or any Subsidiary (i)
a final judgment or order for the payment of money in an aggregate amount
exceeding $25,000 (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage), or (ii) any one or
more non-monetary final judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in either
case, (A) enforcement proceedings are commenced by any creditor upon such
judgment or order, or (B) there is a period of thirty (30) consecutive days
during which a stay of enforcement of such judgment, by reason of a pending
appeal or otherwise, is not in effect; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of $25,000, or
(ii) Borrower or any ERISA Affiliate fails to pay when due, after the expiration
of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in
an aggregate amount in excess of $25,000; or
(j) Invalidity of Loan Documents. Any Loan Document, at any time after
its execution and delivery and for any reason other than as expressly permitted
hereunder or satisfaction in full of all the Obligations, ceases to be in full
force and effect; or any Loan Party or any other Person contests in any manner
the validity or enforceability of any Loan Document; or any Loan Party denies
that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or
(k) Change of Control. There occurs any Change of Control; or
(l) Dissolution, Etc. of Borrower and Other Liable Parties. Borrower,
any Scheduled Affiliate or any other Loan Party or any partnership or limited
liability company in which Borrower or any Subsidiary is a partner or member
(each hereinafter called an "other liable party") shall dissolve, merge or
consolidate, suspend the transaction of business, attempt to terminate, revoke
or disclaim any obligation to Lender (except strictly in accordance with its
terms), or incur any material adverse change in its financial condition or
prospects; or if Borrower or any other liable party shall be expelled from or
suspended by any stock or securities exchange or other exchange; or if Borrower
or any other liable party shall take any action to effect, or which indicates
its acquiescence in, any of the foregoing.
10.02 Remedies Upon Event of Default. If any Event of Default occurs
and is continuing, Lender may take any or all of the following actions:
(a) declare the Commitment to be terminated, whereupon such commitments
and obligation shall be terminated;
(b) declare the outstanding principal amount of the Loan, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by Borrower;
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(c) exercise all rights and remedies available to it under the Loan
Documents or applicable law, which shall include, without limitation, the
rights, powers and remedies (i) granted to secured parties under the UCC or
other applicable Uniform Commercial Code; (ii) granted to Lender under any other
applicable Law; and (iii) granted to Lender under this Agreement, the Notes or
any other Loan Document or any other agreement between Borrower and Lender;
(d) without Borrower's assent, without advertisements or notices of any
kind (except for the notice specified in Section 10.04 below regarding notice
required in connection with a public or private sale), or demand of performance
or other demand, or obligation or liability (except to account for amounts
actually received) to or upon Borrower or any other Person (all such
advertisements, notices and demands, obligation and liabilities, if any, hereby
being expressly waived and discharged to the extent permitted by law),
forthwith, directly or through its agents or representatives, (i) disclose such
default and other matters (including the name of Borrower) in connection
therewith to any Person in Lender's reasonable discretion; (ii) to the extent
permitted by applicable Law enter any Property, with or without the assistance
of other persons or legal process; (iii) require Borrower to account for
(including accounting for any products and Proceeds of any Collateral),
segregate, assemble, make available and deliver to Lender, its agents or
representatives the Collateral, at any place and time designated by Lender; (iv)
take possession of, operate, render unusable, remove from any location, collect,
transfer and receive, recover, appropriate, foreclose, extend payment of,
adjust, compromise, settle, release any claims included in, and do all other
acts or things necessary or, that Lender in their Sole Discretion deem
appropriate, to protect, maintain, preserve and realize upon, the Collateral and
any products and Proceeds thereof, in whole or in part; (v) exercise all rights,
powers and interests with respect to any and all Collateral, and sell, assign,
lease, license, pledge, transfer, negotiate (including endorse checks, drafts,
orders, or instruments), deliver or otherwise dispose (by contract, option(s) or
otherwise) of the Collateral or any part thereof; and (vi) without regard to the
sufficiency of the security for repayment of the Obligations and without notice
to Borrower, or any showing of insolvency, fraud or mismanagement on the part of
Borrower and without the necessity of filing any judicial or other proceeding
other than the proceeding for appointment of a receiver, and without regard to
the then value of the Collateral, Lender shall be entitled to the ex parte
appointment of a receiver or receivers for the protection, control and
management of the Collateral. Any such disposition may be in one or more public
or private sales, at or upon an exchange, board or system or in the State where
any Collateral or any Property is located or elsewhere, at such price, for cash
or credit (or for future delivery without credit risk) and upon such other terms
and conditions as it deems appropriate, with the right of Lender to the extent
permitted by Law upon any such sale or sales, public or private, to purchase the
whole or any part of said Collateral, free of any right, claim or equity of
redemption of or in Borrower (such rights, claims and equity of redemption, if
any, hereby being expressly waived). If any of the Collateral is sold or leased
by Lender upon credit terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefore is finally collected by
Lender. In the event Lender institutes an action to recover any Collateral or
seeks recovery of any Collateral by way of prejudgment remedy, Borrower waives
the posting of any bond which might otherwise be required. Notwithstanding that
Lender, whether in its own behalf and/or on behalf of another or others, may
continue to hold the Collateral and regardless of the value thereof, or any
delay or failure to dispose thereof, unless and then only to the extent that
Lender proposes to retain the Collateral in satisfaction of the Obligations by
50
written notice in accordance with the UCC, Borrower shall be and remain liable
for the payment in full of any balance of the Obligations and expenses at any
time unpaid. Without limiting the foregoing, upon Borrower's failure to abide by
and comply with its obligations under Article VI hereof, in addition to its
other rights and remedies, Lender may (but is not required to), in its Sole
Discretion and to the extent it deems necessary, advisable or appropriate, take
or cause to be taken such actions or things to be done (including the payment or
advancement of funds, or requiring advancement of funds to be held by Lender to
fund such obligations, including taxes or insurance) as may be required hereby
(or necessary or desirable in connection herewith) to correct such failure
(including causing the Collateral to be maintained or insurance protection
required hereby to be procured and maintained) and any and all costs and
expenses incurred (including reasonable attorneys fees and disbursements) in
connection therewith shall be included in Borrower's Obligations and shall be
immediately due and payable and bear interest at the Default Rate;
provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to Borrower under the Bankruptcy Code of the
United States, the obligation of Lender to make the Loan shall automatically
terminate and the outstanding principal amount of the Loan and all interest and
other amounts as aforesaid shall automatically become due and payable, in each
case without further act of Lender.
All such rights, powers and remedies shall be cumulative and not alternative and
enforceable, in Lender's Sole Discretion, alternatively, successively, or
concurrently on any one or more occasions, and shall include, without
limitation, the right to apply to a court of equity for an injunction to
restrain a breach or threatened breach by Borrower of this Agreement or any of
the other Loan Documents. Any single or partial exercise of, or forbearance,
failure or delay in exercising any right, power or remedy shall not be, nor
shall any such single or partial exercise of, or forbearance, failure or delay
be deemed to be a limitation, modification or waiver of any right, power or
remedy and shall not preclude the further exercise thereof; and every right,
power and remedy of Lender shall continue in full force and effect until such
right, power and remedy is specifically waived by an instrument in writing
executed and delivered with respect to each such waiver by such parties.
10.03 Application of Funds. After the exercise of remedies provided for
in Section 10.02 (or after the Loan has automatically become immediately due and
payable as set forth in the proviso to Section 10.02), any amounts received on
account of the Obligations shall be applied by Lender in such order as Lender
may elect.
10.04 Required Notice of Sale. In exercising its rights, powers and
remedies as secured party, Lender agrees to give Borrower at least ten (10)
days' notice of the time and place of any public sale of Collateral or of the
time after which any private sale of Collateral may take place, unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market. Borrower agrees that such period
and notice is commercially reasonable under the circumstances.
ARTICLE XI.
Right to cure; post-Default Power of attorney
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11.01 Right to Cure. Lender may, at its option but without any
obligation, after an Event of Default that is continuing cure any default by
Borrower under any Contractual Obligation including the Principal Agreements and
Leases or pay or bond on appeal any judgment entered against Borrower; discharge
taxes or other Liens at any time levied on or existing with respect to the
Collateral; and pay any amount, incur any expense or perform any act which, in
Lender's judgment, is necessary or appropriate to preserve, protect, insure or
maintain the Collateral and the rights of Lender with respect thereto. Lender
may add any amounts so expended to the Obligations, such amounts to be repayable
by Borrower on demand. Lender shall be under no obligation to effect such cure,
payment or bonding and shall not, by doing so, be deemed to have assumed any
obligation or liability of Borrower. Any payment made or other action taken by
Lender under this Section shall be without prejudice to any right to assert an
Event of Default hereunder and to proceed accordingly.
11.02 Power of Attorney. Borrower hereby irrevocably constitutes and
appoints, effective on and after the occurrence of an Event of Default, Lender
acting through any officer or agent thereof, with full power of substitution, as
Borrower's true and lawful attorney-in-fact with full irrevocable power and
authority in Borrower's place and stead and in Borrower's name or in its own
name, from time to time in Lender's Discretion, to receive, open and dispose of
mail addressed to Borrower, to take any and all action, to do all things, to
execute, endorse, deliver and file any and all writings, documents, instruments,
notices, statements (including financing statements, and writings to correct any
error or ambiguity in any Loan Document), applications and registrations
(including registrations and licenses for securities, copyrights, patents, and
trademarks), checks, drafts, acceptances, money orders, or other evidence of
payment or proceeds, which may be or become necessary or desirable in the Sole
Discretion of Lender to accomplish the terms, purposes and intent of, or to
fulfill Borrower's obligations under this Agreement and the other Loan
Documents, including the right to enter into any control agreements on behalf of
Borrower as described in Section 6.14, to appear in and defend any action or
proceeding brought with respect to the Collateral or any Property, and to bring
any action or proceeding, in the name and on behalf of Borrower, which Lender,
in its Sole Discretion, deems necessary or desirable to protect its interest in
the Collateral or any Property. This power is coupled with an interest and is
irrevocable. THIS POWER DOES NOT AND SHALL NOT BE CONSTRUED TO AUTHORIZE ANY
CONFESSION OF JUDGMENT. Borrower hereby releases Lender and its officers,
directors, members, partners, trustees, debt holders, employees,
representatives, agents and designees from any liabilities arising from any act
or acts under this power of attorney and in furtherance thereof, whether of
omission or commission, except and only to the extent the same results from the
applicable released party's own gross negligence or willful misconduct as
determined pursuant to a final non-appealable order of a court of competent
jurisdiction.
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ARTICLE XII.
INTENTIONALLY OMITTED
ARTICLE XIII.
FINANCIAL COVENANTS
Borrower covenants and agrees that, so long as the Loan or any other
Obligations are outstanding:
13.01 Leverage Ratio. As of the end of any fiscal quarter referenced in
the table below, the Leverage Ratio for the Reference Period then ended shall
not exceed the ratio set forth opposite such fiscal quarter in such table:
------------------------------------------------------------------------------
Fiscal Quarter Ratio
------------------------------------------------------------------------------
FQ4 2005 through FQ2 2006 3.10:1.00
------------------------------------------------------------------------------
FQ3 2006 through FQ2 2007 2.75:1.00
------------------------------------------------------------------------------
FQ3 2007 through FQ2 2008 2.50:1.00
------------------------------------------------------------------------------
FQ3 2008 and Thereafter 2.25:1.00
------------------------------------------------------------------------------
13.02 Consolidated Cash Flow Ratio. As of the end of any fiscal quarter
referenced in the table below, the Consolidated Cash Flow Ratio for the
Reference Period then ended shall not be less than the ratio set forth opposite
such fiscal quarter in such table:
------------------------------------------------------------------------------
Fiscal Quarter Ratio
------------------------------------------------------------------------------
FQ4 2005 through FQ2 2006 1.10:1.00
------------------------------------------------------------------------------
FQ3 2006 through FQ2 2007 1.15:1.00
------------------------------------------------------------------------------
FQ3 2007 through FQ2 2008 1.20:1.00
------------------------------------------------------------------------------
FQ3 2008 and Thereafter 1.30:1.00
------------------------------------------------------------------------------
13.03 Consolidated Rental Expense. Consolidated Rental Expense shall
not exceed $300,000 in any fiscal year.
53
ARTICLE XIV.
MISCELLANEOUS
14.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by Lender and Borrower or the applicable Loan Party, as the case may be,
and each such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
14.02 Notices and Other Communications; Facsimile Copies.
(a) General. Unless otherwise expressly provided herein, all notices
and other communications provided for hereunder shall be in writing (including
by facsimile transmission). All such written notices shall be mailed, faxed or
delivered to the applicable address or facsimile number, and all notices and
other communications expressly permitted hereunder to be given by telephone
shall be made to the applicable telephone number, specified on Schedule 14.02 or
to such other address, facsimile number or telephone number as shall be
designated by such party in a notice to the other parties. All such notices and
other communications shall be deemed to be given or made upon the earlier to
occur of (i) actual receipt by the relevant party hereto and (ii) (A) if
delivered by hand or by courier, when signed for by or on behalf of the relevant
party hereto; (B) if delivered by mail, four Business Days after deposit in the
mails, postage prepaid; and (C) if delivered by facsimile, when sent and receipt
has been confirmed by telephone; provided, however, that notices and other
communications to Lender pursuant to Article II shall not be effective until
actually received by Lender. In no event shall a voicemail message be effective
as a notice, communication or confirmation hereunder.
(b) Effectiveness of Facsimile Documents and Signatures. Loan Documents
and/or executed signature pages thereto may be transmitted by facsimile. The
effectiveness of any such documents and signatures shall, subject to applicable
Law, have the same force and effect as manually-signed originals and shall be
binding on all Loan Parties and Lender. Lender may also require that any such
documents and signatures be confirmed by a manually-signed original thereof;
provided, however, that the failure to request or deliver the same shall not
limit the effectiveness of any facsimile document or signature.
(c) Reliance by Lender. Lender shall be entitled to rely and act upon
any notices purportedly given by or on behalf of Borrower even if (i) such
notices were not made in a manner specified herein, were incomplete or were not
preceded or followed by any other form of notice specified herein, or (ii) the
terms thereof, as understood by the recipient, varied from any confirmation
thereof. Borrower shall indemnify each Indemnitee from all losses, costs,
expenses and liabilities resulting from the reliance by such Person on each
notice purportedly given by or on behalf of Borrower. All telephonic notices to
and other communications with Lender may be recorded by Lender, and each of the
parties hereto hereby consents to such recording.
14.03 No Waiver; Cumulative Remedies. No failure by Lender to exercise,
and no delay by any such Person in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
54
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
14.04 Attorney Costs, Expenses and Taxes. Borrower agrees (a) to pay or
reimburse Lender for all costs and expenses incurred in connection with the
development, preparation, negotiation and execution of this Agreement and the
other Loan Documents and any amendment, waiver, consent or other modification of
the provisions hereof and thereof (whether or not the transactions contemplated
hereby or thereby are consummated), and the consummation and administration of
the transactions contemplated hereby and thereby, including all Attorney Costs,
and (b) to pay or reimburse Lender for all costs and expenses incurred in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or the other Loan Documents (including
all such costs and expenses incurred during any "workout" or restructuring in
respect of the Obligations and during any legal proceeding, including any
proceeding under any Debtor Relief Law), including all Attorney Costs. The
foregoing costs and expenses shall include all search, filing, recording, title
insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by Lender and the cost of independent public
accountants and other outside experts retained by Lender. All amounts due under
this Section 16.04 shall be payable within ten (10) Business Days after demand
therefor. The agreements in this Section shall survive the termination of the
Commitment and repayment of all other Obligations.
14.05 Indemnification by Borrower. Whether or not the transactions
contemplated hereby are consummated, Borrower shall indemnify and hold harmless
each of the Indemnitees from and against any and all liabilities, obligations,
losses, damages, penalties, claims, demands, actions, judgments, suits, costs,
expenses and disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time be imposed on, incurred by or asserted against
any such Indemnitee in any way relating to or arising out of or in connection
with (a) the execution, delivery, enforcement, performance or administration of
any Loan Document or any other agreement, letter or instrument delivered in
connection with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) the Commitment or Loan or the use or
proposed use of the proceeds therefrom, or (c) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by Borrower, any Subsidiary or any other Loan Party, or any
Environmental Liability related in any way to Borrower, any Subsidiary or any
other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation or
proceeding) and regardless of whether any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee. No Indemnitee
shall be liable for any damages arising from the use by others of any
information or other materials obtained through IntraLinks, any website or other
similar information transmission systems in connection with this Agreement, nor
shall any Indemnitee have any liability for any indirect or consequential
damages relating to this Agreement or any other Loan Document or arising out of
55
its activities in connection herewith or therewith (whether before or after the
Closing Date). All amounts due under this Section 14.05 shall be payable within
ten (10) Business Days after demand therefor. The agreements in this Section
shall survive the termination of the Commitment and the repayment, satisfaction
or discharge of all the other Obligations.
14.06 Payments Set Aside. To the extent that any payment by or on
behalf of Borrower is made to Lender or Lender exercises its right of set-off,
and such payment or the proceeds of such set-off or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Lender in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any proceeding under any Debtor Relief Law or otherwise, then to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred.
14.07 Successors and Assigns. (a) Conditions to Assignment by Lender.
Except as provided herein, Lender may assign to one or more commercial banks,
other financial institutions or other Persons, all or a portion of its rights
and obligations under this Agreement (including all or a portion of the
Commitment and the Loan at the time owing to it); provided that unless an Event
of Default shall have occurred and be continuing, Borrower shall have given its
prior written consent to such assignment, which consent will not be unreasonably
withheld, conditioned or delayed; except that the consent of Borrower shall not
be required in connection with any assignment by Lender to an Affiliate of
Lender. Upon such assignment, (i) the assignee thereunder shall be a party
hereto and, to the extent of the interest so assigned, have the rights and
obligations of Lender hereunder, and (ii) the assigning Lender shall, to the
extent of the interest so assigned, be released from its obligations under this
Agreement.
(b) Participations. Lender may at any time, without the consent of, or
notice to, Borrower, sell participations to any Person (each, a "Participant")
in all or a portion of Lender's rights and/or obligations under this Agreement
(including all or a portion of the Commitment and/or the Loan owing to it)
provided that (1) Lender's obligations under this Agreement shall remain
unchanged, and (2) Borrower shall continue to deal solely and directly with
Lender in connection with Lender's rights and obligations under this Agreement.
(c) Miscellaneous Assignment Provisions. Any assigning Lender shall
retain its rights to be indemnified pursuant to Section 14.05 with respect to
any claims or actions arising prior to the date of such assignment. Anything
contained in this Section 14.07 to the contrary notwithstanding, Lender may at
any time pledge or assign a security interest in all or any portion of its
interest and rights under this Agreement (including all or any portion of its
Notes) to secure obligations of Lender, including any pledge or assignment to
secure obligations to any of the twelve Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or
the enforcement thereof shall release the pledgor Lender from its obligations
hereunder or under any of the other Loan Documents or affect any rights or
obligations of Borrower or Lender hereunder.
(d) Assignment by Borrower. Borrower shall not assign or transfer any
of its rights or obligations under this Agreement or any of the Loan Documents
without the prior written consent of Lender. For purposes of this Agreement, a
56
Change in Control (whether by equity sale, issuance or otherwise) shall
constitute an assignment hereof.
14.08 Confidentiality. Lender agrees to maintain the confidentiality of
the Information (as defined below), except that Information may be disclosed (a)
to its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority
(including any self-regulatory authority), (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies
hereunder or under any other Loan Document or any action or proceeding relating
to this Agreement or any other Loan Document or the enforcement of rights
hereunder or thereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section, to (i) any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
Borrower and its obligations, (g) with the consent of Borrower or (h) to the
extent such Information (x) becomes publicly available other than as a result of
a breach of this Section or (y) becomes available to Lender on a nonconfidential
basis from a source other than Borrower. For purposes of this Section,
"Information" means all information received from any Loan Party relating to any
Loan Party or any of their respective businesses, other than any such
information that is available to Lender on a nonconfidential basis prior to
disclosure by any Loan Party, provided that, in the case of information received
from a Loan Party after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. Notwithstanding
anything herein to the contrary, "Information" shall not include, and Lender may
disclose without limitation of any kind, any information with respect to the
"tax treatment" and "tax structure" (in each case, within the meaning of
Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby
and all materials of any kind (including opinions or other tax analyses) that
are provided to Lender relating to such tax treatment and tax structure;
provided that with respect to any document or similar item that in either case
contains information concerning the tax treatment or tax structure of the
transaction as well as other information, this sentence shall only apply to such
portions of the document or similar item that relate to the tax treatment or tax
structure of the Loan and transactions contemplated hereby. In addition, Lender
may disclose to any agency or organization that assigns standard identification
numbers to loan facilities such basic information describing the facilities
provided hereunder as is necessary to assign unique identifiers (and, if
requested, supply a copy of this Agreement), it being understood that the Person
to whom such disclosure is made will be informed of the confidential nature of
such Information and instructed to make available to the public only such
Information as such person normally makes available in the course of its
business of assigning identification numbers.
14.09 Set-off. In addition to any rights and remedies of Lender
provided by law, upon the occurrence and during the continuance of any Event of
Default, Lender is authorized at any time and from time to time, without prior
57
notice to Borrower or any other Loan Party, any such notice being waived by
Borrower (on its own behalf and on behalf of each Loan Party) to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, Lender to or for the credit or the account of
the respective Loan Parties against any and all Obligations owing to Lender
hereunder or under any other Loan Document, now or hereafter existing,
irrespective of whether or not Lender shall have made demand under this
Agreement or any other Loan Document and although such Obligations may be
contingent or unmatured or denominated in a currency different from that of the
applicable deposit or indebtedness. Lender agrees promptly to notify Borrower
after any such set-off and application made by Lender; provided, however, that
the failure to give such notice shall not affect the validity of such set-off
and application.
14.10 Interest Rate Limitation. Notwithstanding anything to the
contrary contained in any Loan Document, the interest paid or agreed to be paid
under the Loan Documents shall not exceed the maximum rate of non-usurious
interest permitted by applicable Law (the "Maximum Rate"). If Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess interest
shall be applied to the principal of the Loan or, if it exceeds such unpaid
principal, refunded to Borrower. In determining whether the interest contracted
for, charged, or received by Lender exceeds the Maximum Rate, such Person may,
to the extent permitted by applicable Law, (a) characterize any payment that is
not principal as an expense, fee, or premium rather than interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.
14.11 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.
14.12 Integration. This Agreement, together with the other Loan
Documents, comprises the complete and integrated agreement of the parties on the
subject matter hereof and thereof and supersedes all prior agreements, written
or oral, on such subject matter. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control; provided that the inclusion of
supplemental rights or remedies in favor of Lender in any other Loan Document
shall not be deemed a conflict with this Agreement. Each Loan Document was
drafted with the joint participation of the respective parties thereto and shall
be construed neither against nor in favor of any party, but rather in accordance
with the fair meaning thereof.
14.13 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by Lender,
regardless of any investigation made by Lender or on its behalf and
notwithstanding that Lender may have had notice or knowledge of any Default or
Event of Default at any time, and shall continue in full force and effect as
long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied.
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14.14 Severability. If any provision of this Agreement or the other
Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired thereby
and (b) the parties shall endeavor in good faith negotiations to replace the
illegal, invalid or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14.15 Estoppel Certificates. Borrower, within ten (10) days after
request by Lender and at Borrower's expense, will furnish Lender with a
statement, duly acknowledged and certified, setting forth the amount of the Loan
and other Obligations and the offsets or defenses thereto, if any, all in form
and substance reasonably acceptable to Lender.
14.16 Recourse. Notwithstanding anything to the contrary contained in
this Agreement or in any other Loan Document, the liability for payment of the
Loan and other Obligations and for the payment and performance of all other
agreements, covenants and obligations contained herein or in any of the other
Loan Documents, shall be the full recourse obligations of Borrower.
14.17 Governing Law; Consent to Jurisdiction.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, the LAW OF THE STATE OF NEW YORK applicable to agreements made and to be
performed entirely within such State; PROVIDED THAT LENDER SHALL RETAIN ALL
RIGHTS ARISING UNDER FEDERAL LAW.
(b) EACH PARTY HERETO HEREBY CONSENTS, UNCONDITIONALLY AND IRREVOCABLY,
TO THE NONEXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS OF THE STATE OF
NEW YORK AND WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON CONVENIENS WITH
RESPECT TO ANY PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING UNDER
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
IN CONTRACT, TORT, EQUITY OR OTHERWISE OTHER THAN PURSUIT OF A JUDGMENT ON A
NOTE WHERE SUIT IS ALSO BROUGHT IN THE STATE WHERE ANY PROPERTY IS LOCATED TO
TAKE JURISDICTION OF SUCH PROPERTY. BORROWER FURTHER CONSENTS, GENERALLY,
UNCONDITIONALLY AND IRREVOCABLY, TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS OF EACH STATE WHERE ANY PROPERTY IS LOCATED IN RESPECT OF ANY
PROCEEDING RELATING TO ANY MATTER, CLAIM OR DISPUTE ARISING WITH RESPECT TO SUCH
PROPERTY INCLUDING BUT NOT LIMITED TO FORECLOSURES, AND BORROWER AGREES THAT
LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER
OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH LENDER DEEMS
NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY
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FOR THE OBLIGATIONS OR TO OTHERWISE ENFORCE ITS RIGHTS AGAINST BORROWER, ANY
OTHER LOAN PARTY OR THEIR RESPECTIVE PROPERTY. BORROWER FURTHER IRREVOCABLY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS TO THE
SERVICE OF PROCESS, GENERALLY, UNCONDITIONALLY AND IRREVOCABLY, AT THE ADDRESSES
SET FORTH HEREIN IN CONNECTION WITH ANY OF THE AFORESAID PROCEEDINGS IN
ACCORDANCE WITH THE RULES APPLICABLE TO SUCH PROCEEDINGS. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION
WHICH IT MAY NOW HAVE OR HAVE IN THE FUTURE TO THE LAYING OF VENUE IN RESPECT OF
ANY OF THE AFORESAID PROCEEDINGS BROUGHT IN THE COURTS REFERRED TO ABOVE AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF LENDER TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW OR TO COMMENCE PROCEEDINGS OR OTHERWISE PROCEED AGAINST
BORROWER IN ANY JURISDICTION. To the extent that Borrower has or may hereafter
acquire any immunity from the jurisdiction of any court or from any legal
process (whether through service or notice, attachment prior to JUDGMENT,
attachment in aid of execution, execution or otherwise) with respect to Borrower
or Borrower's property, Borrower hereby irrevocably waives such immunity in
respect of its obligations under this Agreement.
14.18 Waiver of Right to Trial by Jury and Other Rights. TO THE MAXIMUM
EXTENT PERMITTED BY LAW, EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT TO TRIAL BY JURY AND ANY RIGHT OR CLAIM TO ANY
CONSEQUENTIAL DAMAGES, EXEMPLARY DAMAGES, EXPECTANCY DAMAGES, SPECIAL DAMAGES
AND GENERAL DAMAGES IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF ANY PARTY OR ANY
EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS HEREUNDER OR IN ANY WAY
RELATING TO ANY LOAN OR ANY PROPERTY (INCLUDING ANY ACTION TO RESCIND OR CANCEL
THIS AGREEMENT, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS AGREEMENT WAS
FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER BY BORROWER
IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT AND TO MAKE THE
LOAN.
14.19 Time of the Essence. For all payments to be made and all
obligations to be performed under the Loan Documents, time is of the essence.
14.20 Patriot Act Notice. Lender hereby notifies Borrower that,
pursuant to the requirements of the USA Patriot Act, Title III of Pub. L.
107-56, signed into law on December 26, 2001 (the "Patriot Act"), Lender is
required by obtain, verify and record information that identifies Borrower,
which information includes the name and address of Borrower and other
information that will allow Lender to identify Borrower in accordance with the
Patriot Act.
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14.21 Joint and Several Liability of Borrower. The liability hereunder,
under the Notes and under each other Loan Document, of all of the Persons
identified as Borrower shall be joint and several. Each of the Persons
identified as Borrower shall be primarily and directly liable hereunder, under
the Notes and under each other Loan Document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
NOBLE ROMAN'S, INC.,
an Indiana corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman of the Board and Chief Executive
Officer
PIZZACO, INC., an Indiana corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman of the Board and Chief Executive
Officer
N.R. REALTY, INC., an Indiana corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇,
Chairman of the Board and Chief Executive
Officer
Permitted Encumbrances
SIGNATURE PAGE TO LOAN AGREEMENT WITH NOBLE ROMAN'S, INC.,
PIZZACO, INC. AND N.R. REALTY, INC.
▇▇▇▇▇ Fargo Bank, National Association
By:
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Name:
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Title:
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By:
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Name:
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Title:
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Permitted Encumbrances