NOBLE ROMAN’S, INC. 10% CONVERTIBLE SUBORDINATED UNSECURED NOTE DUE _____________,2019
EXHIBIT
10.16
Registered
#
NOBLE
ROMAN’S, INC.
10%
CONVERTIBLE SUBORDINATED UNSECURED NOTE
DUE
_____________,2019
$50,000.00
____________,
2016
THIS
NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
PROVISIONS OF THE SECURITIES ACT OF 1933 (THE "ACT") AND
QUALIFICATION PROVISIONS OF APPLICABLE STATE SECURITIES LAWS.
NEITHER IT NOR THE SHARES OF COMMON STOCK INTO WHICH IT CAN BE
CONVERTED CAN BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO THE ACT AND QUALIFIED UNDER APPLICABLE STATE
LAW OR, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO MAKER,
AN EXEMPTION THEREFROM IS AVAILABLE.
FOR
VALUE RECEIVED, the undersigned, Noble Roman’s, Inc., an
Indiana corporation with offices at ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇("Maker"),
promises to pay to _________________
with an address at ________________ ("Payee"), on
__________, 2019,
except as otherwise provided herein (the "Maturity Date"), the
principal amount of Fifty Thousand ($50,000.00) Dollars in lawful
money of the United States of America (the "Principal”)
together with all accrued interest.
This
Note is one of a series of notes (collectively the "Notes"), all
with the same terms and conditions as those set forth herein, which
may be issued by Maker up to the aggregate principal amount of One
Million, Six Hundred Thousand ($1,600,000.00) Dollars. Each Note is
part of an offering (the "Offering") of up to thirty two (32) units
(the "Units") being conducted by Maker. Each Unit consists of one
Note in the principal amount of Fifty Thousand ($50,000.00) Dollars
and fifty thousand (50,000) Class A Redeemable Warrants (the
“Class A Warrants”), each of which will be exercisable, for three years
after issuance, for one (1) share of Common Stock, as defined in
the next succeeding paragraph, at a price equal to one
dollar($1.00) and no cents per share, subject to certain anti
dilution provisions. The Offering will terminate on the
sooner of the sale of all of the Units or _________, 2016 (unless extended
to ________, 2016,
at the option of Maker and the placement agent in the
Offering).
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 2
[NOTE
HOLDER’ NAME TO BE INSERTED]
This
Note is (i) subordinated to certain of Maker's indebtedness as
defined in Section 6 herein as “Senior Debt"; (ii)
convertible into Maker's ordinary shares, no par value per share
(the "Common Stock"); and (iii) is unsecured all as set forth
below. It bears simple interest (the "Interest") at the annual rate
of ten percent (10%), payable, in arrears, on the Interest Payment
Dates (as defined in Section 1 below), until the
Principal and all accrued Interest thereon (collectively the
“Obligations”) shall be paid in full, or converted to
Common Stock; provided that, commencing on the 150th day after the
issuance of the initial Note issued in the Offering, if the Share
Authorization has not been completed the annual rate of interest
shall increase to 12% until such time as the Share Authorization
has been completed.
1.
Interest. Maker will pay
Interest on the fifteenth day of each July, October, January and
April, (the "Interest Payment Dates") commencing on January 15,
2017. Interest on this Note will accrue from the most recent date
to which Interest has been paid or, if no Interest has been paid,
from the date of delivery of this Note. If an Interest Payment Date
falls on a date that is not a Business Day, the Interest shall be
payable on the next succeeding Business Day. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. A
“Business
Day” is any day other than a Saturday, a Sunday or a
day on which commercial banking institutions in New York, New York
are authorized by law to be closed.
2.
Method of Payment. Maker will
pay Principal and Interest in money of the United States that at
the time of payment is legal tender for the payment of public and
private debts. Maker may, however, pay Principal and Interest by
its check, subject to collection, payable in such money. It may
mail an Interest check to ▇▇▇▇▇’s address as it first appears
on this Note or such other address as Payee shall give by notice to
Maker. ▇▇▇▇▇ must surrender this Note to Maker to collect Principal
payments or to convert to Common Stock. If less than the then
outstanding Principal is paid or converted, this Note shall be
surrendered only for notation by Maker of the Principal payment
made or converted and returned to Payee. Anything to the contrary
notwithstanding, in the event that Payee converts this Note as
provided in Section
3 below, at Payee’s option, Maker shall pay all then
accrued but unpaid Interest in cash or in Common Stock, at the sole
discretion of the Maker at the then existing Conversion Rate, as
defined in Section
3(a) below.
3.
Conversion.
(a)
▇▇▇▇▇'s right to
Convert. Except as provided in Paragraph 3(g)(iii) below,
Payee shall have the right, at any time commencing on the date that
Maker shall have effected the Share Authorizarion defined in
Section 3(h) below
until the close of business on the day the Obligations are paid in
full, to cause the conversion (a “Conversion”) of all
or any portion (if such portion is Five Thousand ($5,000) Dollars
or a whole multiple of Five Thousand ($5,000) Dollars) of the
Principal, and Interest as provided in Section 2 above, outstanding at
the time such Conversion is effected (the "Convertible
Obligations") into shares of Common Stock (the "Underlying
Shares"). The price for Conversion, subject to adjustment as
provided in Section
4 below, shall be Fifty ($0.50) Cents per share (the
“Conversion
Rate”), subject to adjustment as provided below. Maker
will not issue a fractional share of Common Stock upon Conversion
but will round any fractional share to the nearest share so that if
the fraction is less than 0.5 no share shall be issued and if the
fraction is 0.5 or higher Maker shall issue one full
share.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 3
[NOTE
HOLDER’ NAME TO BE INSERTED]
(b)
Manner of
Conversion. Payee may exercise ▇▇▇▇▇’s Conversion right by
completing, executing and sending to Maker a completed and executed
Note Conversion Form appended hereto as Annex A (the
“Conversion Notice”) setting forth the amount of the
Convertible Obligations to be converted and providing the other
information required in the Conversion Notice. Maker shall issue
the number of Underlying Shares into which the Convertible
Obligations are to be converted in accordance with the Conversion
Rate. If required by applicable federal or state securities laws or
regulations, ▇▇▇▇▇ shall represent in writing to Maker prior to the
receipt of the Underlying Shares that such Shares will be acquired
by Payee for investment only and not for resale or with a view to
the distribution thereof, and shall agree that any certificates
representing the Shares may bear a legend, conspicuously noting
such restriction, as Maker shall deem reasonably necessary or
desirable to enable it to comply with any applicable federal and/or
state laws or regulations.
(c)
Delivery of
Certificates Upon Conversion. Certificates for Underlying Shares to
be issued upon Conversion shall be transmitted by Maker’s
transfer agent (the “Transfer Agent”) to Payee
(A) by crediting the account of ▇▇▇▇▇’s prime broker with the
Depository Trust Company through its Deposit Withdrawal Agent
Commission (“DWAC”) system if Maker is then a
participant in such system and there is either (1) an effective
Registration Statement, as defined in Section 5 below, permitting the
issuance of the Underlying Shares to or resale of the Underlying
Shares by Payee or (2) the Underlying Shares are eligible for
resale by Payee without volume or manner-of-sale limitations
pursuant to Rule 144 under the Act, or (B) if Maker is not then a
participant in the DWAC system and there is not an effective
Registration Statement as aforesaid, by physical delivery of the
certificates, bearing the restrictive legends required by
Section 3(b) above
if the Underlying Shares are otherwise not publicly tradable or
without such restrictive legends if the Underlying Shares are
otherwise publicly tradable or eligible for resale by the Maker
without volume or manner-of-sale limitations pursuant to Rule
144, to the address specified by Payee in the Conversion
Notice by the date that is three (3) Business Days after the later
of (i) the delivery to Maker of the Conversion Notice or (ii)
surrender of this Note (such date, the “Underlying Share Delivery
Date”).
(d)
Rescission
Rights. If Maker fails to cause the Transfer Agent to
transmit to Payee a certificate or the certificates representing
the Underlying Shares pursuant to Paragraph 3.(c) above by the
Underlying Share Delivery Date, then, Payee will have the right to
rescind such Conversion, which will terminate on the earlier of the
actual delivery of the Underlying Shares or three (3) Business Days
after the Underlying Share Delivery Date.
(e)
Partial Conversion.
If only a portion of the Convertible Obligations then outstanding
is converted, Maker shall deliver to Payee, together with the
aforesaid certificate(s), a new note, in form and substance
identical to this Note, except that the principal amount thereof
shall equal that portion of the Obligations then outstanding which
has not been converted.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 4
[NOTE
HOLDER’ NAME TO BE INSERTED]
(f)
Taxes on Shares
Issued. The issue of stock certificates on Conversions of this Note
shall be made without charge to Payee for any tax in respect of
such issue. Maker shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the
issue and delivery of Common Stock in any name other than that of
Payee, and Maker shall not be required to issue or deliver any
certificates representing such Common Stock unless and until the
person or persons requesting the issue thereof shall have paid to
Maker the amount of such tax or shall have established to the
satisfaction of Maker that such tax has been paid.
(g)
Covenants of Maker
Relating to Conversion. Maker covenants and agrees that from and
after the date that Maker shall have effected the Share
Authorizarion defined in Section 3(h) below and until
the date of repayment of all of the Obligations, or Conversion of
all of the Convertible Obligations:
(i)
It shall reserve,
free from preemptive rights, out of its authorized but unissued
shares, or out of shares held in its treasury, sufficient shares to
provide for the Conversion of this Note from time to time as this
Note is presented for Conversion;
(ii)
All Underlying
Shares that may be issued upon Conversion of this Note will upon
issue be validly issued, fully paid and non-assessable, free from
all taxes, liens and charges with respect to the issue thereof, and
will not be subject to the preemptive rights of any stockholder of
Maker;
(iii)
If any Underlying
Shares to be provided for the purpose of Conversion of the
Convertible Obligations require registration with or approval of
any governmental authority under any federal or state law before
such shares may be validly issued upon Conversion, Maker will in
good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be, and Maker's
obligation to deliver shares of the Common Stock upon Conversion of
the Convertible Obligations shall be abated until such registration
or approval is obtained; provided, however, that this Note and the
Obligations shall remain outstanding unless paid in full until
Maker delivers the Underlying Shares and any then accrued but
unpaid Interest to Payee and in no event shall this Note be
converted until Maker effects such delivery; and
(iv)
If, and thereafter
so long as the Common Stock shall be listed on any securities
exchange, market or other quotation system, Maker will, if
permitted by the rules of such exchange, market or other quotation
system, list and keep listed and for sale so long as the Common
Stock shall be so listed on such exchange, market or other
quotation system, upon official notice of issuance, all Underlying
Shares issuable upon Conversion of the Convertible
Obligations.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 5
[NOTE
HOLDER’ NAME TO BE INSERTED]
(h)
Covenant
to Increase Authorization to Issue Common Stock. As of the date hereof Maker
is authorized to issue up to 25,000,000 shares of Common Stock and
there are 20,783,032 shares of Common Stock currently issued and
outstanding. Total additional shares needed for: currently
exercisable outstanding stock options, the conversion of the Notes
and the exercise of the
Class A Warrants are 6,675,091 shares. Accordingly, Maker
will not have a sufficient number of authorized shares to satisfy
the above requirement. Maker covenants that, within 150 days after
the date hereof it will take whatever action may be required,
including obtaining stockholder approval to amend the
Company’s Certificate of Incorporation to increase the number
of shares that the Company is authorized to issue so it can satisfy
this issuance requirement (the “Share Authorization”).
Maker’s failure to comply with the covenant contained in this
Section 3(h) shall
not be an Event of Default as defined in this Note.
4.
Adjustment in Conversion
Rate.
(a)
Adjustment for
Change in Capital Stock. Except as provided in Paragraph 4 (l) below, if Maker
shall (i) declare a dividend on its outstanding Common Stock in
shares of its capital stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock by
reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in
which Maker is the continuing corporation), then in each such case
the Conversion privilege and the Conversion Rate in effect
immediately prior to such action shall be adjusted so that if this
Note is thereafter converted, Payee may receive the number and kind
of shares which Payee would have owned immediately following such
action if Payee had converted this Note immediately prior to such
action. Such adjustment shall be made successively whenever such an
event shall occur. The adjustment shall become effective
immediately after the record date in the case of a dividend or
distribution and immediately after the effective date in the case
of a subdivision, combination or reclassification. If after an
adjustment Payee upon Conversion of this Note may receive shares of
two or more classes of capital stock of Maker, Maker's Board of
Directors shall determine, in good faith, the allocation of the
adjusted Conversion Rate between or among, as the case may be, the
classes of capital stock. After such allocation, the conversion
privilege and conversion rate of each class of capital stock shall
thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Section 4.
(b)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to Section
4(a) above, if at any time Maker grants, issues or sells any rights
to purchase stock, warrants, securities or other property pro rata
to the record holders of any class of shares of Common Stock (the
“Purchase Rights”), then Payee will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the
aggregate Purchase Rights which Payee could have acquired if Payee
had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without regard to any limitations
on exercise hereof), immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 6
[NOTE
HOLDER’ NAME TO BE INSERTED]
(c)
Action to Permit
Valid Issuance of Common Stock. Before taking any action that would
cause an adjustment reducing the Conversion Rate below the then par
value, if any, of the shares of Common Stock issuable upon
conversion of the Notes, Maker will take all corporate action which
may, in the opinion of its counsel, be necessary in order that
Maker may validly and legally issue shares of such Common Stock at
such adjusted Conversion Rate.
(d)
Minimum Adjustment.
No adjustment in the Conversion Rate shall be required if such
adjustment is less than 2% of the then existing Conversion Rate;
provided,
however, that any
adjustments which by reason of this Paragraph 4 (d) are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this
Section 4 shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. Anything to the contrary
notwithstanding, Maker shall be entitled to make such reductions in
the Conversion Rate, in addition to those required by this
Paragraph 4 (d), as
it in its discretion shall determine to be advisable in order that
any stock dividends, subdivision of shares, distribution of rights
to purchase stock or securities, or distribution of securities
convertible into or exchangeable for stock hereafter made by Maker
to its stockholders shall not be taxable.
(e)
Referral of
Adjustment. In any case in which this Section 4 shall require that an
adjustment in the Conversion Rate be made effective as of a record
date for a specified event (the “Conversion Event”), if
this Note shall have been converted after such record date, Maker
may elect to defer until the occurrence of the Conversion Event
issuing to Payee the shares, if any, issuable upon the Conversion
Event over and above the shares, if any, issuable upon such
Conversion Event on the basis of the Conversion Rate in effect
prior to such adjustment; provided, however, that Maker shall
deliver to Payee a due bill or other appropriate instrument
evidencing Payee’s right to receive such additional shares
upon the occurrence of the event requiring such
adjustment.
(f)
Number of Shares.
Upon each adjustment of the Conversion Rate as a result of the
calculations made in Paragraphs 4(a) and
(b) above, this Note shall thereafter
evidence the right to purchase, at the adjusted Conversion Rate,
that number of shares (calculated to the nearest one-hundredth)
obtained by dividing (i) the product obtained by multiplying the
number of shares issuable upon Conversion of this Note prior to
adjustment of the number of shares by the Conversion Rate in effect
prior to adjustment of the Conversion Rate by (ii) the Conversion
Rate in effect after such adjustment of the Conversion
Rate.
(g)
When No Adjustment
Required. No adjustment need be made for a transaction referred to
in Paragraphs 4(a)
and (b) above if
Payee is permitted to participate in the transaction on a basis no
less favorable than any other party and at a level that would
preserve Payee’s percentage equity participation in the
Common Stock upon Conversion of this Note. No adjustment need be
made for sales of Common Stock pursuant to a plan by Maker for
reinvestment of dividends or interest, the granting of options
and/or the exercise of options outstanding under any of Maker's
currently existing stock option plans, the exercise of any other of
Maker's currently outstanding options, or any currently authorized
warrants, whether or not outstanding. No adjustment need be made
for a change in the par value of the Common Stock, or from par
value to no par value or no par value to par value. If this Note
becomes convertible solely into cash, no adjustment need be made
thereafter. Interest will not accrue on the cash.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 7
[NOTE
HOLDER’ NAME TO BE INSERTED]
(h)
Notice of
Adjustment. Whenever the Conversion Rate is adjusted, Maker shall
promptly mail to Payee a notice of the adjustment together with a
certificate from Maker's Chief Financial Officer briefly stating
(i) the facts requiring the adjustment, (ii) the adjusted
Conversion Rate and the manner of computing it, and (iii) the date
on which such adjustment becomes effective. The certificate shall
be evidence that the adjustment is correct, absent manifest
error.
(i)
Voluntary
Reduction. Maker from time to time may reduce the Conversion Rate
by any amount for any period of time if the period is at least
twenty (20) days and if the reduction is irrevocable during the
period. Whenever the Conversion Rate is reduced, Maker shall mail
to Payee a notice of the reduction. Maker shall mail the notice at
least fifteen (15) days before the date the reduced Conversion Rate
takes effect. The notice shall state the reduced Conversion Rate
and the period it will be in effect. A reduction of the Conversion
Rate does not change or adjust the Conversion Rate otherwise in
effect for purposes of Paragraphs 4 (a)and(b) above. Anything to the
contrary notwithstanding, this Paragraph 4(i) shall be void
and of no effect if it violates the rules and/or regulations of any
exchange or inter-dealer quotation system on which the Common Stock
is then listed for trading.
(j)
Prohibition against
Certain Reductions of Conversion Rate. Anything to the contrary
notwithstanding, in no event shall the Conversion Rate be reduced
below the par value of the Common Stock.
(k)
Notice of Certain
Transactions. If (i) Maker takes any action that would require an
adjustment in the Conversion Rate pursuant to this Section 4; or (ii) there is a
liquidation or dissolution of Maker, Maker shall mail to Payee a
notice stating the proposed record date for a distribution or
effective date of a reclassification, consolidation, merger,
transfer, lease, liquidation or dissolution. Maker shall mail the
notice at least fifteen (15) days before such date. Failure to mail
the notice or any defect in it shall not affect the validity of the
transaction.
(l)
Reorganization of
Maker. If Maker and/or the holders of Common Stock are parties to a
merger, consolidation or a transaction in which (i) Maker transfers
or leases substantially all of its assets; (ii) Maker reclassifies
or changes its outstanding Common Stock; or (iii) the Common Stock
is exchanged for securities, cash or other assets; the person who
is the transferee or lessee of such assets or is obligated to
deliver such securities, cash or other assets shall assume the
terms of this Note. If the issuer of securities deliverable upon
Conversion of this Note is an affiliate of the surviving,
transferee or lessee corporation, that issuer shall join in such
assumption. The assumption agreement shall provide that the Payee
may convert the Convertible Obligations into the kind and amount of
securities, cash or other assets that Payee would have owned
immediately after the consolidation, merger, transfer, lease or
exchange if Payee had converted this Note immediately before the
effective date of the transaction. The assumption agreement shall
provide for adjustments that shall be as nearly equivalent as may
be practical to the adjustments provided for in this Section 4. The successor
company shall mail to Payee a notice briefly describing the
assumption agreement. If this Paragraph applies, Paragraph 4 (a) above does not
apply.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 8
[NOTE
HOLDER’ NAME TO BE INSERTED]
(m)
Adjustment Upon
Issuance of Shares of Common Stock. If and whenever on or after the
date hereof, Maker issues or sells, or in accordance with this
section is deemed to have issued or sold, any shares of Common
Stock (including the issuance or sale of shares of Common Stock
owned or held by or for the account of the Company, but excluding
any Exempt Issuance issued or sold or deemed to have been issued or
sold) for a consideration per share (the “New Issuance Price”) less
than a price equal to the Conversion Rate in effect immediately
prior to such issue or sale or deemed issuance or sale (such
Conversion Rate then in effect is referred to as the
“Applicable
Price”) (the foregoing a “Dilutive Issuance”), then
immediately after such Dilutive Issuance, the Conversion Rate then
in effect shall be reduced to the New Issuance Price. For all
purposes of the foregoing (including, without limitation,
determining the adjusted Conversion Rate and consideration per
share under this section), the following shall be
applicable:
i.
Issuance of Common
Stock Equivalents. If Maker in any manner issues or sells any
securities of Maker or any subsidiary which would entitle the
holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock (collectively, “Common Stock
Equivalents”) (other than Common Stock Equivalents
that qualify as Exempt Issuances) and the lowest price per share
for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed
to be outstanding and to have been issued and sold by the Company
at the time of the issuance or sale of such Common Stock
Equivalents for such price per share. For the purposes of this
section, the “lowest price per share for which one share of
Common Stock is issuable upon the conversion, exercise or exchange
thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable
by the Company with respect to one share of Common Stock upon the
issuance or sale of the Common Stock Equivalent and upon
conversion, exercise or exchange of such Common Stock Equivalent
and (y) the lowest conversion price set forth in such Common Stock
Equivalent for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof minus (2) the sum of all
amounts paid or payable to the holder of such Common Stock
Equivalent (or any other person) upon the issuance or sale of such
Common Stock Equivalent plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of
such Common Stock Equivalent (or any other Person). Except as
contemplated below, no further adjustment of the Conversion Rate
shall be made upon the actual issuance of such shares of Common
Stock upon conversion, exercise or exchange of such Common Stock
Equivalents.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page
9
[NOTE
HOLDER’ NAME TO BE INSERTED]
ii.
Change in Option
Price or Rate of Conversion. If the purchase or exercise price
provided for in any options, the additional consideration, if any,
payable upon the issue, conversion, exercise or exchange of any
Common Stock Equivalents, or the rate at which any Common Stock
Equivalents are convertible into or exercisable or exchangeable for
shares of Common Stock increases or decreases at any time, the
Conversion Rate in effect at the time of such increase or decrease
shall be adjusted to the Conversion Rate which would have been in
effect at such time had such options or Common Stock Equivalents
provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate, as the
case may be, at the time initially granted, issued or sold. For
purposes of this section, if the terms of any Common Stock
Equivalent that was outstanding as of the date of issuance of this
Note are increased or decreased in the manner described in the
immediately preceding sentence, then such Common Stock Equivalent
and the shares of Common Stock deemed issuable upon exercise,
conversion or exchange thereof shall be deemed to have been issued
as of the date of such increase or decrease. No adjustment pursuant
to this section shall be made if such adjustment would result in an
increase of the Conversion Rate then in effect.
iii.
“Exempt Issuance” means
the issuance of (a) shares of Common Stock and options to officers,
employees, or directors of Maker issued pursuant to plans that have
been approved by a majority of the board of directors of Maker, (b)
securities upon the exercise or exchange of or conversion of any
securities issued in the Offering and/or other securities
exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date immediately prior
to the initial closing of this Offering, provided that such
securities and any term thereof have not been amended since such
date to increase the number of such securities or to decrease the
issue price, exercise price, exchange price or conversion price of
such securities, (c) full or partial consideration in connection
with a strategic merger, acquisition, consolidation or purchase of
substantially all of the securities or assets of a corporation or
other entity which holders of such securities or debt are not at
any time granted any registration rights but shall not include a
transaction in which Maker is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business
is investing in securities, and (d) securities in connection with
strategic license agreements and other partnering arrangements so
long as such issuances are not primarily for the purpose of raising
capital and which holders of such securities or debt are not at any
time granted registration rights.
5.
Right to Registration. ▇▇▇▇▇
has the right to require Maker to register the resale of the
Underlying Shares and the shares issuable upon exercise of the
Warrants owned by Payee (the “Warrant Shares”) under
the Act pursuant to a registration statement (a “Registration
Statement”) filed with the Securities and Exchange Commission
(the “Commission”) in accordance with the terms of an
agreement (the “Registration Rights Agreement”) dated
as of the date hereof among Maker, Payee and the holders of the
other Notes. The date that the first Registration Statement filed
pursuant to the Registration Rights Agreement is declared effective
by the Commission is herein referred to as the “Effective
Date.”
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 10
[NOTE
HOLDER’ NAME TO BE INSERTED]
6.
Subordination; Pari Passu with other
Notes. This Note is subordinated to “Senior
Debt,” which is the principal of and premium, if any, and
interest (including post-petition interest, if any)
on, and any other payment due pursuant to the terms of instruments
creating or evidencing Indebtedness of Maker outstanding on the
date of this Note or Indebtedness thereafter created, incurred,
assumed or guaranteed by Maker and all renewals, extensions and
refundings thereof, which is payable to banks or other
institutional lenders and including debt incurred in connection
with equipment leasing transactions, unless in the instrument
creating or evidencing such Indebtedness, it is not provided that
such Indebtedness is senior in right of payment to this Note. There
shall be no limitation on the amount of Senior Debt that Maker may
incur. Notwithstanding the foregoing, Senior Debt with respect to
Maker or any subsidiary thereof shall not include (i) any
Indebtedness of Maker to any such subsidiary for money borrowed or
advanced from such subsidiary, or (ii) any Indebtedness
representing the redemption price of any preferred stock.
"Indebtedness," as applied to any entity, means any indebtedness,
contingent or otherwise, in respect of borrowed money (whether or
not the recourse of the lender is to the whole of the assets of
such entity or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or letters of credit, or
representing the balance deferred and unpaid of the purchase price
of any property or interest therein, except any such balance that
constitutes a trade payable, if and to the extent that such
indebtedness would appear as a liability upon a balance sheet of
such entity prepared on a consolidated basis in accordance with
generally accepted accounting principles in the United States. So
long as any Senior Debt shall remain outstanding and unpaid or the
Lender has any obligation to extend credit to the Maker, no payment
shall be made on this Note without Lender's prior written consent;
provided, however, that payments of Principal and Interest may be
made on this Note on the due date and thereafter so long as (i)
Maker is not in default in the payment of principal or interest on
the Senior Debt, and (ii) Maker has not received written notice
that some other default has occurred and is continuing under any
Senior Debt. This Note shall be paid on a pari passu basis with all
other Notes.
7.
Covenants. Maker covenants and
agrees that from and after the date hereof and until the date of
repayment or conversion to Common Stock in full of the Obligations
it shall comply with the following conditions:
(i)
Maintenance of
Existence and Conduct of Business. Maker shall, and shall cause
each of its subsidiaries, if any, to (A) do or cause to be done all
things necessary to preserve and keep in full force and effect its
corporate existence and rights; and (B) continue to conduct its
business so that the business carried on in connection therewith
may be properly and advantageously conducted at all
times.
(ii)
Books and Records.
Maker shall, and shall cause each of its subsidiaries, if any, to
keep adequate books and records of account with respect to its
business activities.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 11
[NOTE
HOLDER’ NAME TO BE INSERTED]
(iii)
Insurance. Maker
shall, and shall cause each of its subsidiaries, if any, to
maintain insurance policies insuring such risks as are customarily
insured against by companies engaged in businesses and/or with
property similar to those operated and/or owned or leased by Maker
or any such subsidiaries, as the case may be, including but not
limited to, insurance policies covering real property. All such
policies are to be carried with reputable insurance carriers and
shall be in such amounts as are customarily insured against by
companies with similar assets and properties engaged in a similar
business.
(iv)
Compliance with
Law. Maker shall, and shall cause each of its subsidiaries, if any,
to comply in all material respects with all federal, state, local
and foreign laws and regulations applicable to it or such
subsidiaries, as the case may be, which, if breached, would have a
material adverse effect on Maker's or such subsidiaries', as the
case may be, business, prospects, operations, properties, assets or
condition (financial or otherwise).
(v)
Compliance with
Material Agreements, Leases, Licenses and Financial Obligations.
All of the terms of each of Maker’s and/or its
subsidiaries’, if any, and affiliates’, material
agreements, leases, licenses and financial obligations shall be
complied with, and each of them shall be kept in full force and
effect in accordance with their respective terms.
8.
Reorganization of Maker. If
Maker is party to a merger, consolidation or a transaction in which
it is not the surviving or continuing entity or transfers or leases
all or substantially all of its assets, the person who is the
surviving or continuing entity or is the transferee or lessee of
such assets shall assume the terms of this Note and the
Obligations.
9.
Representations and Warranties of
Maker. Maker represents and warrants that: (i) it, and each
of its subsidiaries, if any, is a corporation or other entity duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and has all requisite power to
carry on its business as now conducted and to own its properties
and assets it now owns; (ii) it, and each of its subsidiaries, if
any, is duly qualified or licensed to do business as a foreign
corporation or other entity in good standing in the jurisdictions
in which ownership of property or the conduct of its business
requires such qualification except jurisdictions in which the
failure to qualify to do business will have no material adverse
effect on its business, prospects, operations, properties, assets
or condition (financial or otherwise); (iii) it, and each of its
subsidiaries, if any, and/or affiliates thereof, holds all licenses
and otherwise complies with all laws, rules and regulations
required to permit it to own its property and conduct its business
in the jurisdictions in which it owns its property and conducts its
business; (iv) it has full power and authority to execute and
deliver this Note, and that the execution and delivery of this Note
will not result in the breach of or default under, with or without
the giving of notice and/or the passage of time, any other
agreement, financial instrument, arrangement or indenture to which
it is a party or by which it may be bound, or the violation of any
law, statute, rule, decree, judgment or regulation binding upon it;
(v) it, and each of its subsidiaries, if any, is in material
compliance with all of its financial obligations and all of its
material agreements; (vi) there is no action, suit, proceeding, or
investigation pending or currently threatened against it or any of
its subsidiaries, if any; and (vii) it has taken and will take all
acts required, including but not limited to authorizing the
signatory hereof on its behalf to execute this Note, so that upon
the execution and delivery of this Note, it shall constitute the
valid and legally binding obligation of Maker enforceable against
Maker in accordance with the terms thereof.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 12
[NOTE
HOLDER’ NAME TO BE INSERTED]
10.
Defaults and
Remedies.
(a)
Events of Default.
The occurrence or existence of any one or more of the following
events or conditions (regardless of the reasons therefor) shall
constitute an "Event of Default" hereunder:
(i)
Maker shall fail to
make any payment of Principal or Interest when due and payable or
declared due and payable pursuant to the terms hereof and such
failure shall remain uncured for a period of thirty (30) days
thereafter;
(ii)
Maker shall fail at
any time to be in material compliance with any of the covenants set
forth in Section
3(c) or Section
7 of this Note, or, except as provided in Section 3(h) above, shall fail
at any time to be in material compliance with or neglect to
perform, keep or observe any of the provisions of this Note to be
complied with, performed, kept or observed by Maker and such
failure shall remain uncured for a period of thirty (30) days after
notice thereof has been given by Payee to Maker;
(iii)
Any representation
or warranty made in this Note by Maker shall be untrue or incorrect
in any material respect as of the date when made or deemed
made;
(iv)
Maker shall commit
an Event of Default in any of the other Notes as that term is
defined therein;
(v)
Any money judgment,
writ or warrant of attachment, or similar process not covered by
insurance in excess of Fifty Thousand ($50,000) Dollars in the
aggregate shall be entered or filed against Maker or any of its
subsidiaries, if any, or any of their properties or other assets
and shall remain unpaid, unvacated, unbonded or unstayed for a
period of thirty (30) days;
(vi)
Maker or any of its
subsidiaries, if any, shall make an assignment for the benefit of
creditors or shall be unable to pay its debts as they become
due;
(vii)
Maker or any of its
subsidiaries, if any, shall have received a written notice of
default related to any material agreement to which it is a party
and such act of default shall remain uncured after any applicable
cure period;
(viii)
A case or
proceeding shall have been commenced against Maker or any of its
subsidiaries, if any, (each a “Proceeding Company”) in
a court having competent jurisdiction seeking a decree or order in
respect of a Proceeding Company (A) under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar
law; (B) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) of a Proceeding
Company, or any of its properties; or (C) ordering the winding-up
or liquidation of the affairs of a Proceeding Company, and such
case or proceeding shall remain unstayed or un-dismissed for a
period of sixty (60) consecutive days or such court shall enter a
decree or order granting the relief sought in such case or
proceeding; or
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 13
[NOTE
HOLDER’ NAME TO BE INSERTED]
(ix)
A Proceeding
Company shall (A) file a petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or
any other applicable federal, state or foreign bankruptcy or other
similar law; or (B) consent to the institution of proceedings there
under or to the filing of any such petition or to the appointment
of or the taking of possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official)
of such Proceeding Company, or any of its properties.
(b)
Remedies. Upon the
occurrence of an Event of Default specified in Paragraphs 10(a) (viii) and
(ix) above, all
Obligations then remaining unpaid hereunder shall immediately
become due and payable in full, plus interest on the unpaid portion
of the Obligations at the highest rate permitted by applicable law,
without notice to Maker and without presentment, demand, protest or
notice of protest, all of which are hereby waived by Maker together
with all reasonable costs and expenses of the collection and
enforcement of this Note, including reasonable attorney's fees and
expenses, all of which shall be added to the amount due under this
Note. Upon the occurrence of any other Event of Default, the
holders of no less than 50.1% in principal amount of the Notes may
thereafter, at their option immediately by notice to Maker, declare
all Obligations then remaining unpaid or converted to Common Stock
hereunder immediately due and payable, whereupon the same shall
forthwith mature and become due and payable, without any further
notice to Maker and without presentment, demand, protest or notice
of protest, all of which are hereby waived by Maker. Upon a
declaration of acceleration, the entire Obligations then remaining
unpaid or not converted to Common Stock hereunder shall become
immediately due and payable in full plus interest on the unpaid
portion of the Obligations at the highest rate permitted by
applicable law and all reasonable costs and expenses of the
collection and enforcement of this Note, including reasonable
attorney's fees and expenses, all of which shall be added to the
amount due under this Note. The rights, powers, privileges and
remedies of Payee pursuant to the terms hereof are cumulative and
not exclusive of any other rights, powers, privileges and remedies
that Payee may have under this Note or any other instrument or
agreement.
11.
Maker's Right to Convert Note.
On or after the earlier of the Effective Date as long as a
Registration Statement remains effective or the date on which the
Underlying Shares may otherwise be sold publicly without
restriction pursuant to Rule 144 of the Act, Maker may, at its
option, convert all of this Note, but not any portion thereof, in
accordance with the provisions of Section 3 above at any time on
not less than thirty (30) days’ prior written notice,
provided that the daily
average weighted trading price of the Common Stock equals or
exceeds One dollar and fifty cents ($1.50) per share for a period
of thirty (30) consecutive trading days (which period must
commencing after the Effective Date) ending one trading day prior
to the notice of redemption. If this Note is converted pursuant to
the terms of this Section
11 then all of the Notes must be converted.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 15
[NOTE
HOLDER’ NAME TO BE INSERTED]
12.
Acknowledgment of ▇▇▇▇▇’s
Investment Representations. By accepting this Note, ▇▇▇▇▇
acknowledge that this Note has not been and will not be registered
under the Act or qualified under any state securities laws and that
the transferability thereof is restricted by the registration
provisions of the Act as well as the qualification provisions of
such state laws. Based upon the representations and agreements
being made by Payee herein, this Note is being issued to Payee
pursuant to an exemption from such registration provided by Section
4 (2) of the Act and Rule 506 promulgated there under, and such
applicable state securities law qualification exemptions. Payee
represents that Payee is acquiring this Note for ▇▇▇▇▇’s own
account, for investment purposes only and not with a view to resale
or other distribution thereof, or with the intention of selling,
transferring or otherwise disposing of all or any part of it for
any particular event or circumstance, except selling, transferring
or disposing of it only upon full compliance with all applicable
provisions of the Act, the Exchange Act, the Rules and Regulations
promulgated by the Commission there under, and any applicable state
securities laws. ▇▇▇▇▇ further understands and agree that no
transfer of this Note shall be valid unless made in compliance with
the restrictions set forth on the front of this Note, effected on
Maker's books by the registered holder hereof, in person or by an
attorney duly authorized in writing, and similarly noted hereon.
Maker may charge Payee a reasonable fee for any re registration,
transfer or exchange of this Note.
13.
Limitation of Interest
Payments. Nothing contained in this Note or in any other
agreement between Maker and Payee requires Maker to pay or Payee to
accept Interest in an amount that would subject Maker to any
penalty or forfeiture under applicable law. In no event shall the
total of all charges payable hereunder, whether of Interest or of
such other charges that may or might be characterized as interest,
exceed the maximum rate permitted to be charged under the laws of
the state of Indiana. Should Payee receive any payment, which is or
would be in excess of that permitted to be charged under such laws,
such payment shall have been and shall be deemed to have been made
in error and shall automatically be applied to reduce the Principal
outstanding on this Note.
14.
Miscellaneous.
(a)
Effect of
Forbearance. No forbearance, indulgence, delay or failure to
exercise any right or remedy by Payee with respect to this Note
shall operate as a waiver or as an acquiescence in any
default.
(b)
Effect of Single or
Partial Exercise of Right. No single or partial exercise of any
right or remedy by Payee shall preclude any other or further
exercise thereof or any exercise of any other right or remedy by
Payee.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 16
[NOTE
HOLDER’ NAME TO BE INSERTED]
(c)
Governing Law;
Venue. This Note shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the
internal laws of the State of Indiana applicable to contracts made
and to be performed entirely within such State. Any action, suit or
proceeding in connection with this Note may be brought against
Maker in a federal or state court of record located in ▇▇▇▇▇▇
County, Indiana, and Maker and Payee each agrees to submit to the
personal jurisdiction of such court and waives any objection which either may have, based
on improper venue or forum non conveniens, to the conduct of any
proceeding in any such court and waives personal service of any and
all process upon it, and consents that all such service of process
be made by mail or messenger directed to it at the address referred
to in Paragraph 14(g)
below and that service so made shall
be deemed to be completed upon the earlier of actual receipt or
five (5) days after the same shall have been posted to its
address.
(d)
Headings. The
headings and captions of the various paragraphs herein are for
convenience of reference only and shall in no way modify any of the
terms or provisions of this Note.
(e)
Loss, Theft,
Destruction or Mutilation. Upon receipt by Maker of evidence
reasonably satisfactory to it of loss, theft, destruction or
mutilation of this Note, Maker shall make and deliver or caused to
be made and delivered to Payee a new Note of like date and tenor in
lieu of this Note.
(f)
Modification of
Note or Waiver of Terms Thereof. No modification or waiver of any
of the provisions of this Note shall be effective unless in writing
and signed by Maker and Payee and then only to the extent set forth
in such writing, or shall any such modification or waiver be
applicable except in the specific instance for which it is given.
This Note may not be discharged orally but only in writing duly
executed by ▇▇▇▇▇.
(g)
Notice. All offers,
acceptances, notices, requests, demands and other communications
under this Note shall be in writing and, except as otherwise
provided herein, shall be deemed to have been given only: (i) when
delivered in person; (ii) one (1) day after deposit with a
nationally recognized overnight courier service; or, (iii) five (5)
days after having been mailed by certified or registered mail
prepaid, to the parties at their respective addresses first set
forth above, or at such other address as may be given in writing in
future by either party to the other. Notice may also be given via
electronic or facsimile transmission to a party who provides such
party’s fax number or email address to the other party and
shall be deemed to have been given if receipt thereof is confirmed
by the recipient.
(h)
Transfer. This Note
shall be transferable only on the books of Maker upon delivery
thereof duly endorsed by Payee or by ▇▇▇▇▇’s duly authorized
attorney or representative, or accompanied by proper evidence of
succession, assignment, or authority to transfer. In all cases of
transfer by an attorney, executor, administrator, guardian, or
other legal representative, duly authenticated evidence of his or
its authority shall be produced. Upon any registration of transfer,
Maker shall deliver a new Note or Notes to the person entitled
thereto. Notwithstanding the foregoing, Maker shall have no
obligation to cause Notes to be transferred on its books to any
person if, in the reasonable opinion of counsel to Maker, such
transfer does not comply with the provisions of the Act and the
rules and regulations there under and/or applicable state
securities laws.
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 17
[NOTE
HOLDER’ NAME TO BE INSERTED]
(i)
Successors and
Assigns. This Note shall be binding upon Maker, its successors,
assigns and transferees, and shall inure to the benefit of and be
enforceable by ▇▇▇▇▇ and ▇▇▇▇▇’s successors and
assigns.
(j)
Severability. If
one or more of the provisions or portions of this Note shall be
deemed by any court or quasi-judicial authority to be invalid,
illegal or unenforceable in any respect, the invalidity, illegality
or unenforceability of the remaining provisions, or portions of
provisions contained herein shall not in any way be affected or
impaired thereby.
(k)
Gender. The use
herein of the masculine pronouns or similar terms shall be deemed
to include the feminine and neuter genders as well and vice versa
and the use of the singular pronouns shall be deemed to include the
plural as well and vice versa.
(signature page to
follow)
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 18
[NOTE
HOLDER’ NAME TO BE INSERTED]
IN
WITNESS WHEREOF, Maker has caused this Note to be executed on its
behalf by an officer thereunto duly authorized as of the date set
forth above.
|
|
Noble
Roman’s, Inc.
An
Indiana corporation
By:
▇▇▇▇ ▇.
▇▇▇▇▇▇, Executive Chairman
|
ATTEST:
_____________,
Secretary
Noble Roman’s, Inc. __.__.16
10% Convertible
Subordinated Note
Page 19
[NOTE
HOLDER’ NAME TO BE INSERTED]
ANNEX A
NOTICE
OF CONVERSION
The
undersigned hereby elects to convert principal under the 10%
Convertible Subordinated Unsecured Note due ________, 2019 of Noble
Roman’s, Inc., an Indiana corporation (the
“Company”),into
shares of common stock (the “Common Stock”), of the
Company according to the conditions hereof, as of the date written
below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by
the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if
any.
The
undersigned agrees to comply with the delivery requirements set
forth in the Subscription Agreement and Investment Letter to which
this Notice of Conversion is appended as Annex A under the
applicable securities laws in connection with any transfer of the
aforesaid shares of Common Stock.
|
Conversion
calculations:
|
Date to
Effect Conversion:
Principal Amount of
Debenture to be Converted:
Number
of shares of Common Stock to be issued:
Signature:
Name:
Address
for Delivery of Common Stock Certificates:
Or
DWAC
Instructions:
Broker
No:
Account
No:
|