exv10w1






Exhibit 10.1




PROMISSORY NOTE




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal	 	Loan Date	 	Maturity	 	Loan No	 	Call / Coll	 	Account	 	Officer	 	Initials
	$5,000,000.00
	 	07-31-2010
	 	07-28-2011
	 	7657418442-26
	 	 	 	10070010842
	 	K0096	 	 






References in the shaded area are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.




	 	 	 	 	 	 	 

	Borrower:

	 	Rocky Mountain Chocolate Factory, Inc.
	 	Lender:	 	Wells Fargo Bank, National Association
	 

	 	265 Turner Drive
	 	 	 	Durango Main
	 

	 	Durango, CO 81303
	 	 	 	200 West College Drive
	 

	 	 	 	 	 	Durango, CO 81301






 





			
	Principal Amount: $5,000,000.00
	 	Date of Note: July 31, 2010





PROMISE TO PAY. Rocky Mountain Chocolate Factory, Inc. (“Borrower”) promises to pay to Wells
Fargo Bank, National Association (“Lender”), or order, in lawful money of the United States of
America, the principal amount of Five Million & 00/100 Dollars ($5,000,000.00) or so much as may
be outstanding, together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until repayment of each
advance.



PAYMENT. Borrower will pay this loan in one payment of all outstanding principal plus all accrued
unpaid interest on July 31, 2011. In addition, Borrower will pay regular monthly payments of all
accrued unpaid interest due as of each payment date, beginning August 31, 2010, with all
subsequent interest payments to be due on the last day of each month after that. Unless otherwise
agreed or required by applicable law, payments will be applied first to any accrued unpaid
interest; then to principal; and then to any late charges. Borrower will pay Lender at Lender’s
address shown above or at such other place as Lender may designate in writing.





VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from time
to time based on changes in an index which is the floating rate equal to the Prime Rate set
from time to time by Lender that serves as the basis upon which effective rates of interest
are calculated for those loans making reference thereto (the “Index”). The Index is not
necessarily the lowest rate charged by Lender on its loans and is set by Lender in
its sole discretion. If the Index becomes unavailable during the term of this loan, Lender
may designate a substitute index after notifying Borrower. Lender will tell Borrower the
current Index rate upon Borrower’s request. The interest rate change will not occur more
often than each time the Index changes. Interest will accrue on the outstanding principal
balance of the Note at an interest rate equal to the sum of the Index and the Margin, subject
to any floor or ceiling rate that may apply. Each change in the Prime Rate of interest
hereunder Index shall become effective on the date each Prime Rate change is announced
within Lender. Lender may reamortize payments as described in the Note or from time to time
in Lender’s discretion to take into account changes in the interest rate. If payments are
intended to amortize principal and interest, the reamortization may adjust the
payment amount to an amount which would cause the Note to be fully paid over the
intended amortization period of the Note in approximately equal successive payments.
Reamortization will not change the Note’s maturity date. If Lender fails for any reason to
timely or properly adjust the interest rate or payment amount, Borrower shall notify
Lender of the oversight, and Lender may retroactively adjust the interest rate to
correct the oversight and/or reamortize and adjust the payment amount at any subsequent time
as may be necessary. In no event shall Lender’s failure to properly adjust the
interest rate or payment amount result in a forgiveness of any portion of the
indebtedness. The “initial rate” is the rate which Borrower and Lender agree shall be the
initial rate of thisthe Note, and the “Index currently” is the Index amount upon
which said initial rate is based; they do not necessarily reflect the Index in effect on the
date of thisthe Note. The “Margin” is the amount shown in the sentence below,
stated as “ <margin> percentage points over the Index”. If the margin value is stated
as “ <margin> percentage points under the index”, then the Margin is that value
expressed as a negative number. If the sentence states “using a rate equal to the Index”,
then the Margin is zero. Borrower understands that Lender may make loans based on other rates
as well. The Index currently is 3.250% per annum. The interest rate to be applied to the
Interest on the unpaid principal balance of this Note will be calculated as described
in the “INTEREST CALCULATION METHOD” paragraph using a rate of 0.500 percentage points under
the Index, adjusted if necessary for any minimum and maximum rate limitations described
below, resulting in an initial rate of 5.000%. NOTICE: Under no circumstances will the
interest rate on this Note be less than 5.000% per annum or more than the maximum rate
allowed by applicable law.


INTEREST CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by
applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance is outstanding.
All interest payable under this Note is computed using this method.



PREPAYMENT. Borrower may pay without penalty all or a portion of the amount owed earlier than it
is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower’s obligation to continue to make payments of accrued unpaid interest. Rather, early
payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked
“paid in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender
may accept it without losing any of Lender’s rights under this Note, and Borrower will remain
obligated to pay any further amount owed to Lender. All written communications concerning disputed
amounts, including any check or other payment instrument that indicates that the payment
constitutes “payment in full” of the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Wells
Fargo Bank, National Association, Attn: Commercial Loan Research Department, MAC # T7422-012, PO
Box 659713 San Antonio, TX 78265.



LATE CHARGE. If a payment is 15 days or more late, Borrower will be charged 5.000% of the unpaid
portion of the regularly scheduled payment or $15.00, whichever is greater.



INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final maturity, at Lender’s
option, and if permitted by applicable law, Lender may add any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate provided in this Note
(including any increased rate). Upon default, the interest rate on this Note shall be increased by
adding an additional 4.000 percentage point margin (“Default Rate Margin”). The Default Rate
Margin shall also apply to each succeeding interest rate change that would have applied had there
been no default. However, in no event will the interest rate exceed the maximum interest rate
limitations under applicable law.



DEFAULT. Each of the following shall constitute an event of default (“Event of Default”) under
this Note:




Payment Default. Borrower fails to make any payment when due under this Note.



Other Defaults. Borrower fails to comply with or to perform any other term, obligation,
covenant or condition contained in this Note or in any of the related documents or to comply
with or to perform any term, obligation, covenant or condition contained in any other
agreement between Lender and Borrower.



 









 






PROMISSORY NOTE




					
	Loan No: 7657418442-26
	 	(Continued)
	 	Page 2





 





Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan,
extension of credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially affect any of Borrower’s property
or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or
any of the related documents.




False Statements. Any warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower’s behalf under this Note or the related documents is false or
misleading in any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter.




Insolvency. The dissolution or termination of Borrower’s existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Borrower.




Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor
of Borrower or by any governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.
However, this Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or
forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.




Events Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor,
endorser, surety, or accommodation party of any of the indebtedness or any guarantor,
endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes
the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.




Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the
common stock of Borrower.




Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of this Note is impaired.




Insecurity. Lender in good faith believes itself insecure.


LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this
Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.



ATTORNEYS’ FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower will pay Lender the reasonable costs of such collection. This
includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal
expenses, whether or not there is a lawsuit, including without limitation attorneys’ fees and
legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any
court costs, in addition to all other sums provided by law.



GOVERNING LAW. This Note will be governed by federal law applicable to Lender and, to the extent
not preempted by federal law, the laws of the State of Colorado without regard to its conflicts of
law provisions. This Note has been accepted by Lender in the State of Colorado.



RIGHT OF SETOFF. To the extent permitted by applicable law. Lender reserves a right of setoff in
all Borrower’s accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open
in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the indebtedness against any and all such
accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to
protect Lender’s charge and setoff rights provided in this paragraph.



LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be
requested either orally or in writing by Borrower or by an authorized person. Lender may, but need
not, require that all oral requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender’s office shown above.
Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions
of an authorized person or (B) credited to any of Borrower’s accounts with Lender. The unpaid
principal balance owing on this Note at any time may be evidenced by endorsements on this Note or
by Lender’s internal records, including daily computer print-outs.



PAYMENT DUE DATE DEFERRAL. Payment invoices will be sent on a date (the “billing date”) which is
prior to each payment due date. If this Note is booked near or after the billing date for the
first scheduled payment, Lender may, in it’s sole discretion, defer each scheduled payment date
and/or the maturity date by one or more months. .



FINANCIAL STATEMENTS. Borrower agrees to provide to Lender, upon request, financial statements
prepared in a manner and form acceptable to Lender, and copies of such tax returns and other
financial information and statements as may be requested by Lender. Each financial statement shall
give a full and complete picture of Borrower’s financial condition as of the statement’s date,
with ownership accurately reflected, and shall be signed and dated or otherwise authenticated to
Lender’s satisfaction. Borrower shall also furnish such information regarding Borrower or the
Collateral or the use of loan proceeds as may be requested by Lender. Borrower warrants that all
financial statements and information provided to Lender are and will be accurate, correct and
complete. Borrower will permit Lender to examine or audit Borrower’s books, accounts, and records,
including any records in the possession of a third party, at any reasonable time upon request, at
no cost to Lender.



EXTENSION AND RENEWAL. Lender may, at Lender’s discretion, renew or extend this Note by written
notice to Borrower. Such renewal or extension will be effective as of the maturity date of this
Note, and may be conditioned among other things on modification of Borrower’s obligations
hereunder, including but not limited to a decrease in the amount available under this Note, an
increase in the interest rate applicable to this Note and/or payment of a fee for such renewal or
extension Borrower will be deemed to have accepted the terms of such extensions and renewals if
Borrower does not deliver to Lender written rejection of such renewal or extension within 10 days
following the date of the written notice of such changes, or if Borrower draws additional funds
following receipt of such notice. After any renewal or extension of Borrower’s obligations under
this Note, the term “maturity date” as used in this Note will mean the new maturity date set forth
in the written notice of extension or renewal of this Note.
The Note may be modified, extended and renewed repeatedly in this manner.



LINE ADVANCES. Notwithstanding anything to the contrary, requests for advances communicated to any
office of Lender by any person believed by Lender in good faith to be authorized to make the
request, whether written, verbal, telephonic or electronic, may be acted upon by Lender, and
Borrower will be liable for sums advanced by Lender pursuant to such request. Such requests for
advances shall be deemed authorized by Borrower, and Lender shall not be liable for such advances
made in good faith, and with respect to advances deposited to the credit of any deposit account of
Borrower, such advances, when so deposited, shall be conclusively presumed to have been made to or
for the benefit of Borrower regardless of the fact that persons other than those authorized to
request advances may have authority to draw against such account. Borrower agrees to indemnify and
hold Lender harmless from and against all damages, liabilities, costs and expenses (including
attorney’s fees) arising out of any claim by




 









 







PROMISSORY NOTE




					
	Loan No: 7657418442-26
	 	(Continued)
	 	Page 3





 




Borrower or any third party against Lender in
connection with Lender’s performance of transfers as described above.



CREDIT BUREAU INQUIRIES. The parties hereto, and each individual signing below in a representative
capacity, agree that Lender may obtain business and/or personal credit reports and tax returns on
each of them in their individual capacities.



APPLICATION OF PAYMENTS. Notwithstanding the application of payment provided in the Payment
section of this Note, unless otherwise agreed, all sums received from Borrower may be applied to
interest, fees, principal, or any other amounts due to Lender in any order at Lender’s sole
discretion. If a final payment amount is set out in the Payment section of this Note, Borrower
understands that it is an estimate, and that the actual final payment amount will depend upon when
payments are received and other factors.



ADDITIONAL EVENTS OF DEFAULT.
 In addition to the Events of Default described above, the following
shall be an Event of Default, if applicable: (i) any change in ownership of an aggregate of
twenty-five percent (25%) or more of the common stock, members’ equity or other ownership interest
in Borrower (ii) the withdrawal, resignation or expulsion of any one or more of the general
partners in Borrower with an If aggregate ownership interest in Borrower of twenty-five percent
(25%) or more, or (iii) any of the preceding events occurs with respect to any general partner of
Borrower or guarantor of any indebtedness of Borrower under this Note.



DEFAULT RATE. At Lender’s option and without prior notice, upon default or at any time during the
pendency of any event of default under the Note or any related loan documents, Lender may impose a
default rate of interest (the “Default Rate”) equal to the pre-default interest rate plus four
percent per annum, not to exceed the maximum lawful rate. If the pre-default rate is a floating or
adjustable rate based upon an Index, it will continue to float or adjust on the same periodic
schedule, and the Default Rate will be a variable rate per annum equal to the applicable Index
plus the pre-default margin plus four percent, not to exceed the maximum lawful rate. The Default
Rate shall remain in effect until the default has been cured and that fact has been communicated
to and confirmed by Lender. Lender may, from time to time in its discretion, adjust or reamortize
payments to take into account changes in the interest rate. Lender shall give written notice to
Borrower of Lender’s imposition of the Default Rate, except that if the Note is not paid at
maturity, Lender may impose the Default Rate from the maturity date to the date paid in full
without notice. Lender’s imposition of the Default Rate shall not constitute an election of
remedies or otherwise limit Lender’s rights concerning other remedies available to Lender as a
result of the occurrence of an event of default. In the event of a conflict between the provisions
of this paragraph and any other provision of the Note or any related agreement, the provisions of
this paragraph shall control. If a default rate is prohibited by applicable law, then the
pre-default rate (including periodic rate adjustments for floating or adjustable rates) shall
continue to apply after default or maturity.



FURTHER ASSURANCES. The parties hereto agree to do all things deemed necessary by Lender in order
to fully document the loan evidenced by this Note and any related agreements, and will fully
cooperate concerning the execution and delivery of security agreements, stock powers, instructions
and/or other documents pertaining to any collateral intended to secure the Indebtedness. The
undersigned agree to assist in the cure of any defects in the execution, delivery or substance of
the Note and related agreements, and in the creation and perfection of any liens, security
interests or other collateral rights securing the Note. Borrower further agrees to pay
Lender immediately upon demand the full amount of all charges, costs and expenses (to include fees
paid to third parties) expended or incurred by Lender to monitor Lender’s interest in any real
property pledged as collateral for this Note, including without limitation all costs of
appraisals.



CONSENT TO SELL LOAN. The parties hereto agree: (a) Lender may sell or transfer all or part of
this loan to one or more purchasers, whether related or unrelated to Lender; (b) Lender may
provide to any purchaser, or potential purchaser, any information or knowledge Lender may have
about the parties or about any other matter relating to this loan obligation, and the parties
waive any rights to privacy it may have with respect to such matters; (c) the purchaser of a loan
will be considered its absolute owner and will have all the rights granted under the loan
documents or agreements governing the sale of the loan; and (d) the purchaser of a loan may
enforce its interests irrespective of any claims or defenses that the parties may have against
Lender.



FACSIMILE AND COUNTERPART. This document may be signed in any number of separate copies, each of
which shall be effective as an original, but all of which taken together shall constitute a single
document. An electronic transmission or other facsimile of this document or any related document
shall be deemed an original and shall be admissible as evidence of the document and the signer’s
execution.



SECURITY INTEREST AND RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
arising by law, Borrower pledges and grants to Lender as security for Borrower’s indebtedness and
obligations under the Note (excluding any consumer obligations subject to the Federal Truth In
Lending Act) a security interest and lien upon all monies, securities, securities accounts,
brokerage accounts, deposit accounts and other property of Borrower now or hereafter in the
possession of or on deposit with Lender or any Wells Fargo Affiliate, whether held in a general or
special account or for safekeeping or otherwise, excluding however all IRA and Keogh accounts. No
security interest, lien or right of setoff will be deemed to have been waived by any act or
conduct on the part of Lender, or by any neglect to exercise such right, or by any delay in so
doing, and every right of setoff, lien and security interest will continue in full force and
effect until specifically waived or released by Lender in writing.



LOAN FEE AUTHORIZATION. Borrower shall pay to Lender any and all fees as specified in the
“Disbursement Request and Authorization” executed by Borrower in connection with this Note. Such
fees are non-refundable and shall be due and payable in full immediately upon Borrower’s execution
of this Note.



TRADE FINANCE SUBFEATURE. Borrower shall have available a Letter of Credit Subfeature and a
Foreign Exchange Subfeature as described in this section, in a total amount not to exceed the
available principal amount of the line of credit evidenced by this Note.



A. Letters of Credit Subfeature. As a subfeature of this Note, Lender may from time to
time issue or cause to be issued by a Wells Fargo Affiliate (such Lender or Wells Fargo Affiliate
being referred to herein as the “Issuer”) for your account, commercial and/or standby letters of
credit (each individually, a “Letter of Credit” and collectively “Letters of Credit”); provided
however, that the form and substance of each Letter of Credit shall be subject to approval by the
Issuer in its sole discretion. Each Letter of Credit shall be issued for a term designated by
Borrower; provided however, that no Letter of Credit shall have an expiration subsequent to the
maturity of the Note unless otherwise agreed to by Issuer and Lender. Each Letter of Credit shall
be subject to the terms and conditions of a Letter of Credit Agreement and related documents, if
any, required by Issuer in connection with the issuance of such Letter of Credit (each
individually a “Letter of Credit Agreement” and collectively, the “Letter of Credit Agreements”).
Each draft paid by Issuer under a Letter of Credit and reimbursed by Lender shall be paid with an
advance under the Note and shall be repaid by Borrower in accordance with the terms and conditions
of the Note applicable to such advances; provided however, that if advances under the Note are not
available, for any reason whatsoever, at the time any amount is paid by Lender, then the full
amount of such advance shall be immediately due and
payable, together with interest thereon, from the date such amount is paid by Issuer or Lender to
the date such amount is fully repaid by Borrower, at the rate of interest applicable to advances
under the Note. In such event, Borrower agrees that Issuer or Lender, at Issuer’s or Lender’s sole
discretion, may debit Borrower’s deposit account(s) with Lender or a Wells Fargo Affiliate for the
amount of any such draft. Upon the issuance of an amendment to a Letter of Credit, upon the
reimbursement by Lender of a draft under any Letter of Credit, and otherwise as agreed by Borrower
and Issuer pursuant to the Letter of Credit Agreements, Borrower shall pay to Issuer or Lender
fees determined in accordance with Issuer’s/Lender’s standard fees and charges at such time.



B. Foreign Exchange Subfeature. As a subfeature of this Note, Lender or a Wells Fargo
Affiliate (such Lender or Wells Fargo Affiliate being referred to herein as the “Exchanger”) may
make available to Borrower a foreign exchange facility under which Exchanger, from time to time up
to and





 









 





PROMISSORY NOTE




					
	Loan No: 7657418442-26
	 	(Continued)
	 	Page 4





 






including the maturity date of the Note, will enter into foreign exchange contracts for the
account of Borrower for the purchase and/or sale by Borrower in United States Dollars of the
foreign currency or currencies specified in the foreign exchange agreement establishing the
foreign exchange facility. Each foreign exchange transaction shall be subject to the terms and
conditions of the foreign exchange agreement, the form and substance of which must be acceptable
to the Exchanger in all respects in its sole discretion.



C. Subfeature Limits. The amount available for drawing under all Letters of Credit, plus
the amount drawn under the Letters of Credit but not yet reimbursed, plus 120% of the amount of
all outstanding foreign exchange contracts, shall be reserved under the Note and shall not be
available for Note advances. The amount available for drawing under all Letters of Credit, plus
the amount drawn under such letters of credit but not yet reimbursed, plus 120% of the amount of
all outstanding foreign exchange contracts, plus the principal amounts of any advances outstanding
under the Note, shall not at any time exceed the principal amount of the Note, unless allowed by
Lender at Lender’s full discretion. Any excess amount shall be fully due and payable immediately
without notice. As used herein, Wells Fargo Affiliate means any present or future subsidiary of
Wells Fargo & Company, any subsidiary thereof, and any successors of such financial service
companies.



ARBITRATION AGREEMENT. Arbitration — Binding Arbitration. Lender and each party to this agreement,
hereby agree, upon demand by any party, to submit any Dispute to binding arbitration in accordance
with the terms of this Arbitration Program. A “Dispute” shall include any dispute, claim or
controversy of any kind, whether in contract or in tort, legal or equitable, now existing or
hereafter arising, relating in any way to any aspect of this agreement, or any related agreement
incorporating this Arbitration Program (the “Documents”), or any renewal, extension, modification
or refinancing of any indebtedness or obligation relating thereto, including without limitation,
their negotiation, execution, collateralization, administration, repayment, modification,
extension, substitution, formation, inducement, enforcement, default or termination. DISPUTES
SUBMITTED TO ARBITRATION ARE NOT RESOLVED IN COURT BY A JUDGE OR JURY.



A. Governing Rules. Any arbitration proceeding will (i) be governed by the Federal Arbitration Act
(Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in
any of the documents between the parties; and (ii) be conducted by the American Arbitration
Association (“AAA”), or such other administrator as the parties shall mutually agree upon, in
accordance with the AAA’s commercial dispute resolution procedures, unless the claim or
counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs
in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures
for large, complex commercial disputes (the commercial dispute resolution procedures or the
optional procedures for large, complex commercial disputes to be referred to herein, as
applicable, as the “Rules”). If there is any inconsistency between the terms hereof and the Rules,
the terms and procedures set forth herein shall control. Arbitration proceedings hereunder shall
be conducted at a location mutually agreeable to the parties, or if they cannot agree, then at a
location selected by the AAA in the state of the applicable substantive law primarily governing
the Note. Any party who fails or refuses to submit to arbitration following a demand by any other
party shall bear all costs and expenses incurred by such other party in compelling arbitration of
any Dispute. Arbitration may be demanded at any time, and may be compelled by summary proceedings
in Court. The institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the controversy or claim to arbitration if any other party contests such
action for judicial relief. The arbitrator shall award all costs and expenses of the arbitration
proceeding. Nothing contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under 12 U.S.C. Section 91 or any similar applicable state law.



B. No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration requirement does
not limit the right of any party to (i) foreclose against real or personal property collateral;
(ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff
or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the pendency of any
arbitration proceeding. This exclusion does not constitute a waiver of the right or obligation of
any party to submit any Dispute to arbitration or reference hereunder, including those arising
from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.



C. Arbitrator Qualifications and Powers. Any arbitration proceeding in which the amount in
controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to
the Rules, and who shall not render an award of greater than $5,000,000.00. Any Dispute in which
the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of
three arbitrators; provided however, that all three arbitrators must actively participate in all
hearings and deliberations. Every arbitrator must be a neutral practicing attorney or a retired
member of the state or federal judiciary, in either case with a minimum of ten years experience in
the substantive law applicable to the subject matter of the Dispute. The arbitrator will determine
whether or not an issue is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide (by documents only
or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to
motions to dismiss for failure to state a claim or motions for summary adjudication. The
arbitrator shall resolve all Disputes in accordance with the applicable substantive law and may
grant any remedy or relief that a court of such state could order or grant within the scope hereof
and such ancillary relief as is necessary to make effective any award. The arbitrator shall also
have the power to award recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal
Rules of Civil Procedure, the applicable state rules of civil procedure, or other applicable law.
Judgment upon the award rendered by the arbitrator may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.



D. Discovery. In any arbitration proceeding discovery will be permitted in accordance with the
Rules. All discovery shall be expressly limited to matters directly relevant to the Dispute being
arbitrated and must be completed no later than 20 days before the hearing date. Any requests for
an extension of the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is essential for the
party’s presentation and that no alternative means for obtaining information is available.



E. Class Proceedings and Consolidations. No party shall be entitled to join or consolidate
disputes by or against others who are not parties to this agreement in any arbitration, or to
include in any arbitration any dispute as a representative or member of a class, or to act in any
arbitration in the interest of the general public or in a private attorney general capacity.



F. Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and the parties
shall take all action required to conclude any arbitration proceeding within 180 days of the
filing of the Dispute with the AAA. No arbitrator or other party to an arbitration proceeding may
disclose the existence, content or results thereof, except for disclosures of information by a
party required in the ordinary course of its business or by applicable law or regulation. If more
than one agreement for arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the documents between the parties or the subject
matter of the Dispute shall control. This arbitration provision shall survive the repayment of the
Note and the termination, amendment or expiration of any of the documents or any relationship
between the parties.





 









 






PROMISSORY NOTE




					
	Loan No: 7657418442-26
	 	(Continued)
	 	Page 5





 






G. State-Specific Provisions.




          If California law governs the Dispute, the following provision is included:




          Real Property Collateral; Judicial Reference: Notwithstanding anything herein to the
contrary, no Dispute shall be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of
the mortgage, lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue
to them by virtue of the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such
Dispute is not submitted to arbitration, the Dispute shall be referred to a referee in accordance
with California Code of Civil Procedure Section 638 et seq., and this general reference agreement
is intended to be specifically enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection
procedures. Judgment upon the decision rendered by a referee shall be entered in the court in
which such proceeding was commenced in accordance with California Code of Civil Procedure Sections
644 and 645.




          Small Claims Court. Any party may require that a Dispute be resolved in Small Claims Court if
the Dispute and related claims are fully within that court’s jurisdiction.




          If Idaho law governs the Dispute, the following provision is included:




          Real Property Collateral. Notwithstanding anything herein to the contrary, no Dispute shall be
submitted to arbitration if the Disputeconcerns indebtedness secured directly or indirectly, in
whole or in part, by any real property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the
arbitration waive any rights or benefits that might accrue to them by virtue of the single action
rule statute of Idaho, thereby agreeing that all indebtedness and obligations of the parties, and
all mortgages, liens and security interests securing such indebtedness and obligations, shall
remain fully valid and enforceable.




          If Montana law governs the Dispute, the following provision is included:




          Real Property Collateral. Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness secured directly or indirectly,
in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to
the arbitration waive any rights or benefits that might accrue to them by virtue of the single
action rule statute of Montana, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable.




          If Nevada law governs the Dispute, the following provision is included:




          Real Property Collateral. Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness secured directly or indirectly,
in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to
the arbitration waive any rights or benefits that might accrue to them by virtue of the single
action rule statute of Nevada, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable.




          If South Dakota law governs the Dispute, the following provision is included:




          Real Property Collateral. Notwithstanding anything herein to the contrary, no Dispute shall
be submitted to arbitration if the Dispute concerns indebtedness secured directly or indirectly,
in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security
interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to
the arbitration waive any rights or benefits that might accrue to them by virtue of the single
action rule statute of South Dakota, thereby agreeing that all indebtedness and obligations of the
parties, and all mortgages, liens and security interests securing such indebtedness and
obligations, shall remain fully valid and enforceable.




          If Utah law governs the Dispute, the following provision is included:




          Real Property Collateral; Judicial Reference. Notwithstanding anything herein to the
contrary, no Dispute shall be submitted to arbitration if the Dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of
the mortgage, lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue
to them by virtue of the single action rule statute of Utah, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such
Dispute is not submitted to arbitration, the Dispute shall be referred to a master in accordance
with Utah Rule of Civil Procedure 53, and this general reference agreement is intended to be
specifically enforceable. A master with the qualifications required herein for arbitrators shall
be selected pursuant to the AAA’s selection procedures. Judgment upon the decision rendered by a
master shall be entered in the court in which such proceeding was commenced in accordance with
Utah Rule of Civil Procedure 53(e).



ADDITIONAL PROVISION FOR FINANCIAL DERIVATIVES. However, if any financial derivative is provided
by Lender with respect to this Note, the following rules apply: (a) if a floating to fixed
interest rate swap (whether documented by an ISDA Master Agreement or a Rate Management Agreement)
is currently effective, the Floor Rate shall not apply, unless the interest rate swap is
documented pursuant to an ISDA Master Agreement and contains an embedded floor; and (b) if a rate
cap is currently effective, the Floor Rate shall apply.



ELECTRONIC TRANSMISSION OF DOCUMENTS. . Lender may, in its sole discretion, rely upon any
document, report, agreement or other communication (“Document”) you send by email, facsimile or
other electronic means, treating the Document as genuine and authorized to the same extent as if
it was an original document executed by you or your authorized representative. Lender may from
time to time in its sole discretion reject any such electronic Document and require a signed
original, or require you to provide acceptable authentication of any such Document before
accepting or relying on same. You understand and acknowledge that there is a risk that Documents
sent by electronic means may be viewed or received be unauthorized persons, and you agree that by
sending Documents by electronic means, you shall be deemed to have accepted this risk and the
consequences of any such unauthorized disclosure.



ADDITIONAL EVENTS OF DEFAULT. In addition to the Events of Default described herein, the following
shall be an Event of Default if applicable: (i) Borrower or Guarantor fails to comply with any
terms or conditions of any agreement with Lender or any Wells Fargo Affiliate; or (ii) Borrower or
Guarantor revoke or dispute the validity of any of its liabilities or obligations under the
Agreement, or any Related Documents or any other agreement with Lender or any Wells Fargo
Affiliate. For purposes of this provision Wells Fargo Affiliate shall mean Wells Fargo & Company
and any present or future subsidiary of Wells Fargo & Company.



PRIOR NOTE. This Note is given in renewal, extension and/or modification of, and not in
satisfaction of, that certain promissory note dated July 31,






 









 






PROMISSORY NOTE




					
	Loan No: 7657418442-26
	 	(Continued)
	 	Page 6





 





2009 in the original amount of $5,000,000.00. .



SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s
heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender
and its successors and assigns.



GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the
rest of the Note. Lender may delay or forgo enforcing any of its rights or remedies under this
Note without losing them. Borrower and any other person who signs, guarantees or endorses this
Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no
party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that Lender may renew or extend (repeatedly and
for any length of time) this loan or release any party or guarantor or collateral; or impair, fail
to realize upon or perfect Lender’s security interest in the collateral; and take any other action
deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made. The obligations under this Note are joint and several.



PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE,
INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.



BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.



BORROWER:




	 	 	 	 	 
	ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.

 	 	 
	By:  	/s/ Bryan Merryman
 	 	 
	 	Bryan Merryman, CFO/COO of Rocky Mountain 	 	 
	 	Chocolate Factory, Inc.