Noble Roman’s gives in to shareholder demands

A major investor in local pizza chain Noble Roman’s Inc. finally will get the shareholder meeting he demanded in
a lawsuit earlier this year.

The meeting, scheduled for early in 2010, would be the first for Noble Roman’s
shareholders in more than seven years.

Shareholder Kevin McBride, who owns more than 966,000 Noble Roman’s
shares, or just under 5 percent, sued the company in Marion Superior Court in July. He said he agreed to dismiss the case
Nov. 17 after the company handed over a list of shareholders and agreed to finally hold an annual meeting.

Noble
Roman’s President A. Scott Mobley said the company’s attorneys have advised them that state law does not require
annual shareholder meetings. Presented with a citation of the actual statute, which explicitly requires local corporations
to hold annual meetings, Mobley pointed to another section that says if a company opts not to have a meeting it does not invalidate
company decisions.

Mobley said Noble Roman’s has kept investors informed with detailed press releases and
hasn’t received complaints from any other shareholders. The chain’s last annual meeting was held July 31, 2002.

“We believe our legal advice and interpretation of this matter are correct,” Mobley said.

Mark
Foster, chief investment officer at Columbus, Ind.-based investment advisory firm Kirr Marbach & Co., disagrees. He said
every U.S. public company is required to hold a shareholder meeting at least once a year.

“I know of companies
that have been delisted [from stock exchanges], and they still have annual meetings,” Foster said in an e-mail.

McBride, who lives in Florida, declined an interview request but said in a statement that he hopes Noble Roman’s uses
the meeting to propose changes that allow a board that is “less insular and more fully represents the interests of all
shareholders.”

“While I’m pleased with the agreement, I’m disappointed that it required
several months of effort and many thousands of dollars in legal fees for Noble Roman’s to comply with basic Indiana
shareholder-rights laws,” McBride wrote.

Mobley said the company’s decision to hold a shareholder meeting
was made independently of McBride’s lawsuit. The goal, he said, is to update shareholders about ongoing efforts to improve
the fortunes of Noble Roman’s.

Mobley said the company actually considered McBride for a post on the board
after he bought his first shares in 2006.

“He was obviously impressed with the company, as we understand
he later increased his shareholdings substantially,” Mobley wrote in an e-mail. “However, his board candidacy
was rejected early on in the process for a variety of reasons, including the determination that he did not offer any
expertise which we believed would be beneficial to the company and its other shareholders.”

Shares in Noble
Roman’s recently traded at 85 cents, near the top of the 52-week range. The chain operates in 45 states.

The
company has reinvented itself several times since it was founded in the 1970s as a chain of dine-in restaurants. In 1997,
after intense competition and rising costs made stand-alone pizza joints difficult to operate profitably, Noble Roman’s
sold franchises for more than 800 nontraditional outlets at convenience stores, bowling alleys, college campuses and elsewhere.
The low startup costs and low overhead attracted an onslaught of interest.

But in 2005, the chain shifted gears
again, selling stand-alone dual-brand Noble Roman’s and Tuscano’s Italian Style Sub locations. The strategy backfired.
More than half of roughly 100 locations have failed, giving the chain the highest rate of U.S. Small Business Administration
loan failures in 2008, at more than 50 percent.

A group of failed franchisees suing the chain in Hamilton County
claims Noble Roman’s failed to properly test the concept before rolling it out. The chain says the franchisees failed
because of their own “incompetence.”•